ABBA First Mortgage News

Looking forward to a prosperous and HAPPY NEW YEAR

As we come to the end of the year, we can look back and see plenty of pot holes the economy had to overcome. But the economy did overcome the challenges and we had a very good year — for stocks, bonds and real estate. Of course, that is all old news. What we all want to know is what 2020 will look like. As in any year, there are a modicum of predictions. And none of these highly paid economists or analysts are likely to really be able to predict the future. But it is all interesting to see what they say.

For the U.S. economy overall, Kiplinger expects growth of 1.8% in 2020, compared with an expected 2.3% in 2019 and 2.9% in 2018. Business spending in the U.S. has been subdued by uncertainty about a trade deal, the fallout from Brexit and angst over the presidential election. But with unemployment at decades-long lows, consumers, who account for the bulk of the U.S. economy, remain a strong underpinning. Kiplinger expects the unemployment rate to inch up to 3.8% in 2020 from 3.6% in 2019, and the Fed to cut rates at least once early in 2020. “The economy is in a tug-of-war between geopolitical risk and the underlying resilience of the American household, plus the Fed,” says Mike Pyle, global chief investment strategist at BlackRock.

As far as real estate, sales of new homes probably will rise to a 13-year high in 2020 as the U.S. dodges a recession, according to Lawrence Yun, chief economist of the National Association of Realtors®. New-home sales probably will jump 11% to 750,000, according to Yun’s new forecast, which would be the highest reading since 2007. Sales of existing homes likely will increase 3.7% to 5.56 million in 2020, the highest tally since 2017, Yun said. “Some loosening in inventory will happen in 2020, and so we expect home sales to rise,” Yun said. “We’ll see an increase in inventory, but not any oversupply, so home prices should continue to move higher – our hope is in a much tamer fashion.”

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