If you read my February letter, I totally nailed the Super Bowl score but picked the wrong winning team! I was shocked to be so close and hope my local real estate evaluation proves to be on target as well.
Right now we are seeing a short supply of homes listed and more buyers than sellers. I know many sellers are getting ready and that is good news for values. But I am getting more cautious about the overall economy and anticipate changes that will impact the real estate market.
First, the Fed will likely raise interest rates this month. People are saying they may but I 100% believe they will. In this environment, the Fed can raise rates with little political impact amid the stories burning up the newswire. This is where the elections, politics, and the economy collide.
Second, with interest rates pushed higher, I anticipate a strong, negative stock market reaction and a more mild real estate reaction. The election of Trump has pushed stock markets higher. However, some of his politics have pushed consumer’s confidence lower. Whether it is a China trade war, travel ban, immigration, Obama accusations, or Russia, people are getting too much negative news at one time.
I believe negative news and a rate increase may lead to a 3-4% reduction in the stock market and a slowing of the real estate market. People are not comfortable buying homes and moving families when confidence in the president, congress, news, or economy is low. If this negativity expands, values will peak early and then potentially slide backward aggressively after summer, so plan accordingly.
Please keep in mind that these are my own predications and they could be a mile off target. But, it’s my job to warn you if I see market conditions that may impact you. I have been preaching to lock in refinances for the last few quarters. I hope you did and got a great, long-term rate. Real estate values are also climbing and if you want to know the current value of your home, please just give me a call. Thank you again for all the referrals – they are appreciated and we will take great care of your family, friends, and co-workers.
Stefan West – AKA Mr. Murrieta