Tonight President Obama will give his 5th state of the union speech since he took office. The President is likely to present a case that state of the union is better off than when he took office, but there is still a long way to go. I am not foolish enough to comment on whether that is true or not, but with regards to the economy, the facts speak for themselves.
The experts have a very hard time trying to predict with any certainty which way this economy is heading. There is a very good reason for this. Every time the economists try to say with definitive certainty that the Nation is on its way to recovery; there is new data suggesting we are still in a very bad place economically. In fact, 75% of the people polled still believe we are in a recession.
So what is the truth?
How does this data affect your decision to buy or sell Real Estate?
What is the state of the union when it comes to the Real Estate market in Los Angeles?
The economy and the relative health of the economy are measured by several key data points:
- Consumer sentiment
- Durable goods
- GDP ( Gross Domestic Product)
- ISM ( the manufacturing report)
- Employment ( Jobs Report)
- CPI Inflation
- New housing data
- Pending home sales
- Existing home sales
- Interest rates
There is more but if you pay close attention to these key data points, you should start to have a handle on why the experts are having such a hard time figuring it all out. Today is a perfect example of what is causing all the confusion. Home sales according to S&P/CASE-SHILLER HOME PRICE INDICES ARE up 20% year over year! but down for November and December.
One key report is amazingly positive, while another is equally negative.So is it a surprise that no one actually can predict with any certainty where we are economically?
Here is the bottom line. This economy is different from in years past. The economic crises of 2008 has changed the way in which world economies relate to each other. The U.S. is more interdependent on the world economy than ever before. The tools that the Government used to try to dig us out of the crises have worked in some cases and failed in others. The Federal Reserve’s monetary policy with regards to using quantitative easing to stimulate the economy has worked for some and failed for others.
What is absolutely obvious is that there are 2 distinct economies happening at the same time.The wealthy are getting wealthier, a lot wealthier while the middle class is getting practically squeezed out of existence. That’s a problem that only time and effective monetary and fiscal policy will correct.
This is what I would like to say, and I have said it before. You cannot time a market it is impossible in the best of times. Take advantage of the market you know not the market you think you know.
How is this affecting YOUR local Real Estate market?
The answer is that you have a small window of opportunity at the present time.The poor jobs report and tumbling stock market have actually had a very positive effect on the 30 year interest rate. While the rate is much higher than this time last year, they have recently dipped. This is extremely good news for home buyers, and it will not last for long. The housing inventory is still extremely low this is potentially good news for sellers.Home prices are up approximately 20% over this time last year in the greater Los Angeles area. So for right now, for this moment in time, the state of the union for the Los Angeles housing market is strong.
I would like you to consider that this is a very volatile and changing economy. The Housing market is NO different.Things can and often do change in an instant, especially now! If you’re considering, buying or selling a home, you would be well advised to avoid age-old myths like the spring and summer are the best times to buy and sell a home. Focus instead on the market data, housing inventory in your local market, and what the public perception of the market is at any given time know that what I am about to say may seem obvious, but it is one of my favorite sayings. “You never know what you don’t know until you know it!”