Myth Busters: 2019 Market Outlook
I have been so excited for this post and to bring you all of this information that I uncovered during the LA holiday break. This year I didn’t go on vacation, I was too busy thanks to all of your referrals! I can’t thank you all enough for referring my name to all of your colleagues, friends and family.
I just keep seeing all this negative information, headlines and rumors that the sky is falling with regards to our housing market. So, during some of my off time during the holiday, I dug in and did some serious research and frankly, my mind was blown. So I’m going to share some of it with you know and we’ll see how you feel about it.
Welcome to today’s episode of Myth Busters:
Myth: #1: "Recessions have a negative effect on home prices."
Fact: Well, we went back and looked at the last six recessions and, with the exception of 2008, prices were up at the end of each recession.
Myth: #2: "Interest rate hikes are bad for housing."
Fact: We know that the Fed raises rates to cool down the economy. I went into the Freddie Mac archives and the last six times the Fed raised interest rates by a point or more home prices rose in that year 2% - 13% annually. Pretty wild.
Myth #3: "No one is able to predict a housing collapse."
Fact: Well, Robert Shiller precisely predicted the last market downturn. He told CNBC in October of 2018 that he did not predict a huge turn in the housing market. He also is part of the Case-Shiller Index and owns a company called CoreLogic which analyzes and publishes housing market data. They put out a state by state map predicting housing changes for 2019. Their outlook for the state of California was over 8% growth in 2019.
While this is all very contrary to what you’re hearing on the street, I know why you’re hearing it. People are complaining about longer days on market and more inventory and are looking for a reason to pinpoint. The truth is, yes, rising interest rates have affected things but specifically price appreciation. Our market is still up, inventory is still low and inventory being low will still act as a tailwind for our market place.
So don’t believe the hype, don’t believe your uncle, and don’t believe the headlines because the actual data says that, yes, we are stabilizing but we’re still growing.