How the election affects the real estate market?
Last Friday, I attended the Middle Tennessee Realtor Convention at the Music City Center. It’s such an amazing building.
And the keynote speaker was Jonathan Smoke, who is the chief economist for realtor.com and a DJ.
I’m not kidding about the DJ part.
For someone who is a high-level numbers nerd (and I mean that in the most complimentary way), he is thoroughly entertaining.
I was fortunate enough to speak with Jonathan for 20 minutes that afternoon. During that conversation, I asked three important questions and this is what I learned.
- What is the three-year outlook for the national real estate market?
Jonathan said the outlook for the nation real estate market looks good for the next two years. He expects homes to appreciate and the economy continue to improve. The outlook is not so clear for 2019 and 2020.
An improving economy means that interest rates will start to rise on mortgages. When both rates and prices are increasing, it’s like a 1-2 punch on affordability.
Jonathan said, “We are on the cusp — not just this year, not just next year, but at least a decade of the two largest generations in history having their lives centered around housing, so we should be seeing a more vibrant market. The challenge is handling that level of activity.”
2. Barring any national disaster, what are the top risks to the Nashville Real Estate Market?
Rising interest rates are the number one risk to the market.
We should start to feel the slow down when interest rates hit 5% and could hit a recession if they go past 6.5%.
The number two risk is home affordability.
Smoke said, “All the construction you’ve been seeing with apartments is key to seeing this mojo continue to happen, because people that move here can find affordable places to live,” he said, meaning rents are cheaper, giving renters the opportunity to save more toward down payments for future purchases.
3. What effect will the presidential election have on the real estate market.? (I had to ask…right?)
“The big question everybody asks me is, ‘What is the election doing to the housing market?’ And my answer is: It’s doing nothing to the housing market,” Jonathan Smoke said. “Yes, the election is a horrible thing that’s distracting all of us, but the reality is that life is what’s causing people to buy homes, not who’s in the White House.”
That’s some good stuff. Hope you enjoyed it as much as I do.