Many economists are predicting somewhat of a mild recession in 2020. However, their predictions are not unanimous and those who believe the economy will continue to grow are pointing to the real estate sector having the potential to keep us out of a recession. Certainly, we can see the economy has slowed when you consider that the last six months the economy has grown by around 2.0%. It is quite apparent that the positive effects of the tax overhaul were temporary, at least in this regard.
The last recession was led by a contracting real estate market. Thus, it would be quite a turnaround if real estate bolstered this economy just enough to keep us out of the next recession. Yes, the economy is slower, but that does not necessarily mean that it will slip into negative territory. The weaker economy is the factor which has caused interest rates to fall more than expected. And those lower rates are the biggest factor bolstering real estate. Rates fell back last week after rising for three straight weeks. For the week ending November 7, Freddie Mac announced that 30-year fixed rates fell to 3.69% from 3.78% the week before. ABBA First follows the trend by keeping in step with the market movement although the radical pricing is typically found on the west coast and priced in other markets such as Florida where the rates are slightly lower than the rest of the USA.
Real estate has also been given a boost by increased household formulation. The Census Bureau recently reported that nearly 1.5 million households were formed in the past year. That formulation is increasing demand for housing nationwide. And lower rates have made owning more affordable. That is a good combination, and if it holds, a factor which might boost the economy by just enough.