It's The Same, But It Seems Different

February 12, 2016

It happened again. We just had another January of low inventory, high demand, and frustrated buyers. There’s brisk traffic at open houses and aggressive offer activity. One open house that I know of had 70 groups of people visit in a single day!

 

While the early indications point to another year of scarce inventory, there are signs in the broader economy that make me think that things will be different in terms of inventory availability this year.

 

As I’ve stated in the past, I believe housing inventory will improve when people have a reason to move. Typically, the reason is associated with their employment or a change to their financial situation. Job relocation, layoffs, and declines in asset portfolios are among the key drivers. In short, an expanding economy (like today) tightens the housing inventory and a contracting one loosens it.

 

Nowhere is this relationship more evident than in our local economy where the technology sector plays a huge role. In the late 1990’s, the sector was booming and unemployment was 2-3%. After the Dot Com bust, unemployment shot up to 9%. Things later improved, but the tech sector got hit again in 2009 and unemployment was back over 11%. During each cycle, the housing inventory fluctuated in kind.

 

Right now, the employment situation is good and it looks good for the coming months. However, I think the broader economy could be facing some formidable headwinds that could affect us locally. For example, as of February 5, 80% of the 71 companies in the S&P 500 who reported earnings gave negative guidance for the upcoming quarter.

 

And then there’s other concerns such as China’s economy, the oil industry, the US dollar, and how The Fed is going to handle interest rates.

 

The reason these concerns matter is because they could have an impact on our local economy and ultimately affect people’s jobs.

 

To be clear, I’m not an economist and I’m not suggesting our local economy is in any kind of crisis. I’m just pointing out that although the beginning of this year looks a lot like last year, there’s enough data to make me think this year could be different. I’ll keep you posted!

 

 

 

Share on Facebook
Please reload

Featured Posts

2019 Market Forecast

January 9, 2019

1/10
Please reload

Recent Posts
Please reload

Archive
Please reload

Search By Tags
Follow Us
  • Facebook Basic Square
  • LinkedIn Social Icon