Thank you DMAR for a great share and an amazing recap on the 2019 Economic Summit which addressed major factors of influence regarding the health of our real estate economy last week. In case you missed it [#takeaways]
#Interestrates: Will continue to rise. How much? That is unknown. It is said now we will likely see two rate hates in 2019 – which could affect rates up to a half of percentage. That said, the Fed is taking a ‘wait and see’ stance, assessing the ongoing health of our economy. As we know, trade war, slowed global growth, and job growth predictions are factors of influence in monitoring monetary policy. Home buyers — the next rate is not predicted to be seen until June, which is good news for you and your year-start home shopping pursuits.
#Jobgrowth: Will also continue to increase, however not at the same robust rate we saw in 2018 (that kept in mind, 2018 was the strongest year in job growth since 2015) . We are on track to see a 2% increase in 2019, down from 2.4% in 2018. Major growth sectors will include; manufacturing, health care, and retail. Takeaway here being more jobs, means more wages, means ultimately more people moving to Denver — keeping our housing economy steady (basic principles of supply and demand).
*Denver’s employment rate is one of the highest in the country.
#Homeprice growth and #supply demand: Home prices will continue to rise, but again not at the paces we saw in 2018 (which concluded at a 9.1% growth rate). Rising mortgage rates and still disproportioned wage growth numbers in comparisons to increased housing costs will slow price increases. This is good news for buyers that haven’t yet been priced out of the market via interest rate hikes and will help keep our market leaning toward a more balanced trajectory. That said, housing supply will continue to maintain at a low, as inventory comes in below 3 months supply and a balanced market being at 6. The most competitive market sector in 2019 will reflect that of 2018’s price point sector of the $300,000-500,000 home price range.
*Interesting fact that rising interest rates have a surprising effect on the number of homes for sale as seller’s are disincentivized to sell knowing they wont’ be able to get a loan for less than the currently have.
#Conclusion: Aggregately, in regards to all the above factors, it is important to realize that slower growth isn’t the same as falling or stalled growth. Despite our economy showing signs of cooling in 2019, we are nowhere near the catastrophic ‘recession’ that some may fear. The biggest factors in play right now leading to economic uncertainty rest in trade disputes and degrees of geopolitical turmoil. Overall concrete economy indicators remain strong on both a local and national level with increased job growth numbers, wages increases, low unemployment rate, and overall economic vitality. The housing market will continue to prevail at a healthy rate with any hindrances being of benefit to protect against catabolic deterioration due to overheated market trends.