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!