Recently, I attended a seminar put on by Matthew Gardner, Chief economist for Windermere Real Estate. He had great information on where the housing market is today and what is to come for the future.
Matthew Gardner, Chief economist for Windermere Real Estate, believes we will hit a recession but it will not happen until the end of 2020. This is not a bad thing. It is cyclical for our economy. Our economy has been thriving for many years and it is only normal to go into a recession after seeing so much growth.
The concerns that Gardner sees are interest rates. Because interest rates continue to fall, the Federal Reserve may not have any way to spur economic activity once a recession hits our economy. The Fed uses lower interest rates as their biggest tool to get out of a recession.
A recession does not mean home prices will drop. In fact, in our history, they rarely drop during a recession. The only reason why they did in the last recession was because the housing market was the cause of that hit.
Gardner sees the housing market nationwide starting to become more rational. He has noticed buyer’s fatigue. There are many areas in our country that have been experiencing bidding wars, and Gardner believes buyers are going to sit back and wait for the market to turn around.
The other major concern in the housing market is building. No one is building anymore. Why? No one is going to vocational school so labor is extremely expensive for those looking to build structures. Also, the regulations on building have become overwrought with expenses that is becomes unaffordable to build for many people and companies.
THE NEXT GENERATION
Millennials are starting to come into the housing market. Their credit scores are high (average 741) and they have the money to put down. Most Millennials are putting an average 18% down. The number one concern in this area is the $1.5T student debt. It is crippling some from coming into the housing market.
WHERE TO INVEST
Bad investment areas = Los Angeles, San Francisco and Bend, OR. The prices for housing are too much, even for those who are making a significant living in those cities.
Good investment areas = Idaho and Seattle
WASHINGTON STATE ECONOMY
Speaking of Seattle and Washington State, the economy continues to boom. There is very low unemployment and people are able to afford more home on their higher salaries.
The single-family-residences have grown 7.4% and mortgage rates are very low. Appreciation continues to flourish, especially in King County. Homes in Capitol Hill and Ballard saw 11% appreciation in the past year, and West Seattle saw 6.2% appreciation.
Homebuyers looking to get into the housing market should look at places like Burien, Rainier Beach, Mount Baker and White Center. You can find affordable housing in these parts as people start moving away from the center of the city.
Follow Matthew Gardner on social media. He is a great source for information on the housing market.
– Haley Thayer, Washington Branch Manager and Marketing Director
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