It is certainly a new year and a new playing field. Will it change much in the months ahead? As I intimated in the earlier blog, I think there are a couple of divergent paths that the market could follow.
The first direction that many see as the more likely is a continuation of what we’re seeing now, namely rises in prices fueled by increased demand and tight inventory. Add to this continued low interest rates that are predicted to go higher if there’s a whiff of inflation and you have the perfect scenario for a rush to buy with a lot of Buyers getting really disappointed as they get outbid for the best properties. The is great for Sellers but no for Buyers.
The other direction the market might take is in a different direction, and is being voiced by a growing number of people, one influenced by the overall economic picture, a complex combination of local, national and international influences. In earlier posts I’ve mentioned my twin concerns about continuing high unemployment and that things in Europe either appear to be getting worse or are festering. Now I have a new concern and that’s Consumer Confidence, which has been taking a hit largely because the government can’t find a permanent solution to the “fiscal cliff” fiasco. If this keeps getting kicked down the road each few months we’ll could slide into an endless loop of uncertainty about the country’s credit worthiness which will be reflected in a drop in Consumer Confidence which in turn impacts growth, jobs and just about everything else. In other words, the economy going in the wrong direction, with housing taking another hit.
I try to express cautious optimism. The truth is I have no idea which direction we’ll go in, Maybe the surge in home buying won’t be affected by the general economy, or maybe Consumer Confidence won’t slide as much as some think. However, it is a simple chain of event. Cross your fingers we can somehow muddle through it!
2 responses so far ↓
1 Robert Bradley // Feb 17, 2013 at 3:38 am
At this point it is too soon to predict a quick recovery in our real estate market. While we have seen some substantial price appreciation over the last 6-8 months, I believe most of the movement in price has been more of a function of the lack of inventory then appreciation as the result of an improvement in the overall economy.
The local real estate market does have a great ally in the media who are hyping up the improvements in the real estate market by overstating market appreciation with the misuse of statistical information. All of this hype drives consumer confidence in real estate. While much of the increase in consumer confidence is a result of these hyped media stories and not any real improvement in the economy, the media is really just restoring much of the damage to consumers’ confidence caused by their over hyped negative reporting on MLS over the past several years.
Our local economy (Northern California) is improving with high-tech surging again in the Silicon Valley and the explosion of startups within the city of San Francisco. Serial entrepreneurs and their disciples are once again busy working 80 weeks with the help of triple lattés and Redbull. However, with the turmoil in the broader national and international economies it is prudent to be cautious. We cannot expect the local economy to shield us from a broader downturn US or World economies.
Real Estate remains a good investment for those who purchase wisely and are in the market for the long term. The good news is that we live in one of the greatest places on the planet…we have affluence, intellect, environment and opportunity. Northern California is a great place to live and it is that will always be the dominate factor driving our real estate market over the long term.
2 Ed // Feb 24, 2013 at 1:13 am
I couldn’t agree with you more, especially your comments about the role the press has played in our downturn and the role it is playing today. Atonement? Not sure about that.
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