As I prepared to write this article…
..I spent many hours listening to business news and reading online articles, all of which seemed to be filtered by any media outlet’s political lens. Frankly, it was very difficult to get a straight story regarding the state of our economy or the predictions for the housing market for the coming year. Big money has flooded into the real estate space, so even statistics you might get from Zillow or Redfin must be taken with a grain of salt. Here are some economic indicators that we will continue to have a strong economy in the coming year, some cautionary notes regarding our local markets, and finally some opportunities to thrive and grow in the new decade.
All economic indicators trend toward a very successful year.
Inflation is low at 1.8%, Unemployment is low at 3.6%, Labor Participation Rate is high at 63.3%, and Interest Rates are low, hovering around 3.75%. We have a Stock Market that is extremely Bullish and, at the time I am writing this article, has crested twenty-eight thousand. It is an election year so beware what you hear from either party, but barring a major war or geopolitical disruption, we are set to have another stellar year.
One of the most affordable waterfront cities in the bay.
California and Benicia specifically have some micro-economics we should be watchful of. In the Bay Area, affordability remains an issue. Luckily, Benicia is one of the most affordable waterfront cities in the bay. I expect to see inventory grow this year, which is good news for Buyers as we come out of a period of extreme scarcity of available homes to buy. This will continue to promote a balanced market that is neither a Buyer nor a Seller Market. We should expect to see modest appreciation in 2020, allowing more new Buyers to step into the market. Sellers should be prepared to present their home in the best condition possible and at a reasonable price to attract multiple Buyers, gone are the days of listing anything on Friday and being in contract on Monday. Due to recent state laws passed like statewide rent control, changes in the evictions process, and how landlords deal with government housing assistance, we expect to see rents to continue to climb. Landlords should be consulting their property managers or attorneys to make sure they are following the new laws taking effect this year. Renters should be taking a serious look at entering the market and buying their next home. In fact, everyone should take a hard look at their overall investment plan to see if the addition of real estate might be a good move this year.
In short, be careful of what you hear on the news.
What happens in a far-off country is likely not going to affect you here at home. No, the FED is not going to dramatically raise or lower interest rates, they are fantastic right where they are. There is no real estate “bubble” that is waiting to burst. The American Economy is the best in the world and shows no signs of significantly slowing. Yes, there will be ongoing trade wars, but so far trade wars have not affected consumer confidence. We will have inflammatory rhetoric and certainly some exhausting political babble in the year to come. Remember to put the emphasis on YOUR STORY, not the one you see on Facebook or hear about on CNN or FOX. The dawn of this new decade is also the dawn of new opportunity in business, in your personal goals and dreams, and in real estate. Surround yourself with a team of folks that specialize in certain areas of your life, allowing you to focus on what makes you tick and what you want to do in the coming year. Do you have a good Tax Professional, Attorney, Realtor, Property Manager, Insurance Agent, Investment Advisor? Go see the Doctor and Dentist so you will be in good health to enjoy all the adventures 2020 will bring.
Eric P. Hoglund RMP, SRES, GRI
California BRE Lic.# 01420325