The prior 4 articles were written through our Facebook page prior to October 2018. Now that we are 6 months on from those posts, we want refer you to some great information written just after our series. In the prior posts we looked at the lessons learned, patterns and warnings of the 2007-2008 housing collapse. The previous reporting that we shared showed that many of the dangers that caused the 2008 collapse are still in place, and that many of the safe guards against it happening again have been slowly dismantled. While this has occurred, other portions of the market (consumer debt, student loans, international market weakness, and growing national debt, rising interest rates) have shown increasing weakness, beyond that seen in 2007. There are many factors that represent a head wind to the US economy and housing market in 2019-2020. If 2007 warns us of anything, it will be to watch out for increasingly unethical strategies by the banks to attempt to protect their bottom lines.
Housing starts have slowed in 2019 Q1, Days on market have increased, and price appreciation has flattened in the growth season nationwide. All while consumer confidence is falling, and jobs increases were lower than typical for the last 5 years.
https://www.cbreglobalinvestors.com/insights/americas-watch-april-2019/
Since our last post, numerous high end markets have seen significant downturns nationwide.
https://www.wsj.com/articles/wealthy-greenwich-home-sellers-give-in-to-market-realities-11555348468
40% of commercial real estate executives (owning a total of 2 Trillion dollars in property) believe the commercial market has peaked and plateaued. With market confidence falling 5% year over year. http://www.rer.org/Q1-2019-Sentiment-Index/
Canada’s housing market showed a 30% decline year over year. THIS is a brilliant analysis of the current market forces that are facing the US economy, and how higher Dow Jones levels are not the only thing to be watching:
https://seekingalpha.com/article/4240221-housing-market-crisis-2_0-jury-2018minus-2019
Since our last post, “the yield curve” has inverted (a historic measure of the difference between the 3 month and 10 year Treasury yields). This has been a historic indicator of recessions. https://www.advisorperspectives.com/articles/2019/04/01/a-historical-perspective-on-inverted-yield-curves
The current macro real estate market has significant signs of weakness that should not be ignored. Previously “Hot markets” (read also, “overheated”) will likely see the impacts of such corrections. Pockets of the greater Pittsburgh area, specifically higher end new construction, and areas that have experienced explosive growth of development, are likely most vulnerable to these trends if they become more wide spread.