Here It Goes…
- The U.S. is coming off a terrific economic year! Overall growth clocked in at 3.1%. Driven by a federal tax cut and solid fundamentals. I expect to see 2019 to slow a bit, logging growth at 2.5%. Strong, just not Chuck Norris strong 🥊
- For the first time in 10 years, the U.S. Economy is considered the most competitive in the world (based on The World Economic Forum). This means our economy is at the top for promoting efficiency and productivity…WhooHoo!
- The Global Growth Rate (a measure that drives how rich we all feel) came in at 3.7%. This is a good number but not great. It’s a key indicator for foreign investment in U.S. Real Estate.
- How about just the U.S.? Well, a lot of people have jobs and they’re getting paid well 👍. 2018 unemployment was 3.7% (which many experts consider full employment). There are still 7 million jobs that need to be filled. Also, wage growth is the highest in 10 years at 3.1%…BAM! Great news for those looking to sell a home…buyers have more money to spend.
- More goodness…inflation the #1 killer of asset value landed at 2.3% in 2018. This means inflation is being managed and isn’t chomping away the value of the cash we use to buy groceries, refrigerators, and pet costumes.
- I expect interest rates to hang-around 5% through 2019. This means it will still be economically advantageous for most of us to own a home instead of renting.
- The influx of venture capital in real estate is epic! Go figure, it’s been mainly focused on technology. Technology investment in 2010 was $30 million. Fast forward to 2017 it was 12 billion and we are expecting 15 billion in 2018!
- What’s that mean? Well, there’s a buffet of shiny new Real Estate tools for everyone to play with. What’s the result…Nothing! 90% of buyers and sellers used a real estate agent in 2018. The highest in number in history.
- Last year 9% of Real Estate agents were found online. However, 3.8% already knew the agent based on past business, referrals, or other marketing.
- Real estate transactions in 2017 totaled 5.5 million, 2018 landed at 5.29 million (mainly because of low inventory), and the best estimate for 2019 is flat at 5.3 million.
- In 2018 the average home sold in 19 days at 99% of list price. What…that’s crazy talk! Sounds great but not if you’re a buyer. The 2018 market was unbalanced and we are expecting some changes in 2019
- 2019…I expect the same number of transactions but the sales cycle will be longer. I expect on average a 30 day sales cycle. We are still going to experience limited inventory as increases in millennial buyers compete with the downsizing baby boomers. Interest rates will hover around 5% (for many this is mental barrier to purchase).
- The increased sale cycle will put increased value on full-service brokerages. Buyers and sellers will move away from discount brokerages and place a higher value on experience, marketing, and brand recognition.
- For Sale By Owner (FSBO) reached an all time low under 7% of total sales in 2018. Additionally, 50% of those sales were to family members or relationship transfers. So, true FSBO transactions only make up 3.5% of the sales market. Sellers agree…it’s just too much work to do it on your own!!
- Even with the crazy technology available, FSBO numbers continue to decrease (historical average ~12%). Buyers and sellers will continue to use experienced realtors in record numbers for 2019.
The Crescendo…2019 is going to have the same feel as 2018 but with higher interest rates, longer sales cycle for sellers, and less competitive bid transactions for buyers. 2019 is going to be strong…go get it!