As we stride into 2020, there is a battle of perspectives raging among the realms of real estate, economics, politics, fiscal policy, and consumer confidence. Rarely have I seen consumer sentiment so divided.
If someone is optimistic, they are heavily invested in Apple, Tesla, or the stock market as a whole. They believe the economy is good and will only get better. If they are pessimistic, they believe we are in the midst of a housing and stock market bubble that will soon burst in some capacity. They feel that being conservative is the right course, especially given that we are in an election year.
In terms of politics, we have a trade war that may be calming down, impeachment proceedings that are heating up, and gritty foreign policy in the Middle East, making even the calmest of consumers nervous. Economically, our manufacturing base is declining but unemployment levels are fantastically low. In terms of fiscal policy, interest rates are the lowest they’ve been in years and appear to be headed even lower.
But how low can interest rates go and are perpetually low rates a good thing? In real estate, we have a shortage of homes with strong buyer demand. However, home prices are really high, and even with these low rates, buyers are getting maxed out. All this creates a mixed bag of consumer confidence. While confidence is high right now, many people are simultaneously wondering when the other shoe will drop.
So what does all this mean for our local real estate market? I am so glad you asked! What would be the point of studying this stuff every day if I didn’t share my thoughts? J Ultimately, our actual market results are determined by the fundamentals so I always go back to basics. Low interest rates and a short supply of homes means prices will be rising through July. We will see peak pricing in May and early June. I anticipate interest rates staying low throughout the summer for both economic and political reasons.
Economic forecasts estimate a 2.5% appreciation in 2020 but I just can’t see it being that low given the current conditions. Our local community is in HIGH demand. Murrieta was recently ranked the third safest city in America by 24/7 Wallstreet. We are consistently in the top 50 safest cities - usually the top 15 - so I will not be surprised to see a 6-8% increase going into summer and then a reduction of 2-3% in prices from August until year-end. A great community has value and with these interest rates, Murrieta’s real estate values will shine in 2020!
If you or a family member has real estate plans for 2020, please give me a call so we can game plan early. I will always give you my best recommendation built around YOUR goals.