Newsletter - January 2019
Every January, finance and real estate experts offer their predictions for the upcoming year. What does 2019 have in store for the housing market?
Some see “bubble trouble” ahead.
Housing prices aren’t the only thing that’s falling. In 2018, stocks fell by 1.5% overall, hedge funds had their worst year since the 2008 crisis, and household debt reached a record high of $13.5 trillion ($837 billion more than the previous peak, before the Great Recession).
Of the CFOs interviewed in the latest quarterly Duke University/CFO Global Business Outlook survey, 82% expect the United States to slide into a recession by 2020.
Economist Peter Schiff’s take is particularly bleak: “We won’t be able to call it a recession,” he said. “It’s going to be worse than the Great Depression… the U.S. economy is in so much worse shape than it was a decade ago.”
Others paint a far less gloomy picture, saying 2019 will simply bring a housing market correction that, while significant, is to be expected.
“We are seeing a normal housing progression,” said Rick Sharga, Executive Vice President of Carrington Mortgage Holdings.
A cool-off period in hot markets like San Francisco, Seattle, and Miami is not only inevitable, but normal, said Sharga. Demand outpaces supply, so prices go up. But at some point prices get too high for most homeowners, so they back away and wait for prices to come down. When they do, the buyers come back and the market levels out.
“That is, more or less, the normal cycle we are going through right now,” Sharga said.
Time will tell who’s right!
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