January 2019 Client Letter
I hope you had a wonderful Christmas and New Year. I love the holidays but I also love moving forward! Personally, I am very excited about 2019 as I found 2018 to be an “all over the place” type of year. It often felt like things were hurtling at breakneck speed with lots of dramatic swings. While I think 2019 will be more focused, we still seem to have many conflicting forces that will impact our real estate market.
When determining the health of the real estate market, you need to evaluate a variety of influences including consumer confidence, domestic unemployment, national politics, home pricing, home supply, interest rates, tax benefits, and local market forces. That is a significant amount of information to distill down just to be able to answer the deceptively simple question I get almost daily, “So what is the real estate market looking like?” I will humbly attempt to do so now.
In September 2018, consumer confidence reached its highest point in 18 years but has been in decline each month since. Unemployment remains very low, starting last year at 4.1% and improving to a fantastic 3.9% by year-end. In terms of national politics, the government shutdown, trade war with China, and escalating tensions between the parties have begun to erode both market and consumer confidence. Through the end of the year, home prices continued their decline from the summer. In June of 2018 we had a huge supply of homes surge onto the market right when buyers were pulling back due to rising interest rates.
What does all this mean? It means we had a very bumpy real estate market in 2018. However, the 2019 real estate market feels more grounded, with the majority of wild swings having already been experienced last year. Interest rates have dipped due to market uncertainty which increased new loan applications by 23.5% over the holidays. Let’s just hope those loans can close with the government shutdown going on!
Amid all these contributing factors, I anticipate the local real estate market moving 5% higher in the coming year. Bottom line, unemployment is very good and our economy remains strong. I also believe renters will have more money due to the new tax plan and increased child tax credit. That should spur additional buying as interest rates will likely remain under 6% through 2019.
Please let me know if you or anyone you know needs real estate help. My team and I are ready to help and wish you and your family an amazing 2019.
Stefan West aka Mr. Murrieta, your local real estate expert!