2019 Real Estate Market Outlook
Oregon & Washington
By Nate Brantley
Market conditions have been all over the place for the last year or so, but real estate markets in Oregon and Washington are shaping up for a very busy 2019.
Turmoil in the stock market is good for interest rates, which is good for real estate. When stocks go down, bonds go up and interest rates go down.
The recent stock market volatility has created an opportunity to borrow money in all forms at far more attractive rates than even six months ago. There is a window, right now, for buying and refinancing at healthy prices. We have several excellent lenders, if you would like some honest to chat with.
Be Mindful Who You Listen To
Our local real markets have changed and the advice you lean on matters significantly. There are a lot of real estate newcomers who have never existed in any market environment other than prices going straight up. From pricing to marketing, the margin for error is finer but payoff can be tremendous.
The details matter immensely, now more than ever.
What To Watch For in 2019
The Trade War - As long as trade relations between China and the United States are strained, the stock market will be less attractive than it has been for the last several years.
Until the situation is resolved, real estate will grow in appeal from a risk adjusted return perspective. Big money is in preservation mode, not growth mode.
Real estate in the US is still the most coveted asset on earth, and that will only solidify as the rest of the world has greater relative risks and challenges.
Eventually, the trade war will end and the stock market will rally relentlessly, and so will interest rates.
SALT Reform - The changes in state and local tax deductions are impacting some of our clients in an amazingly negative manner. With a blue house sitting on January 3rd, expect the introduction of SALT tax reform in early or mid 2019.
Risks To The Market
1) A blue house and a red senate in it's current iteration may negotiate by increasing spending on both sides, further expanding the deficit growth. A rising deficit can lead to surges in interest rates like we experienced in 2018.
2) The federal government has made a tremendous bet (tax cuts and budget) on growth, which has not yet materialized. If economic growth does not improve and federal spending continues or grows, the deficit will swell, and flatten the 2-10 yield curve even further, creating liquidity issues.
3) The US Treasury is issuing record levels of short term debt (2, 5, 7 year) to finance the deficit spending. As the scale of these auctions climbs, typically so do the rates at which they are sold.
4) The 10 year note represents economic growth. If growth declines, so does the 10 year. If the 2 year goes up and the 10 year goes down, at a certain point banks don't making money writing mortgages.
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