If we’ve learned anything over the past couple of years, we’ve learned that anything can happen. The world is a dynamic place — a place where bad things can happen. Like a pandemic. A war. And, economic turmoil and uncertainty.
But, if you’ve lived long enough, you know that right alongside the bad, runs the good. Each and every day, there is reason to give thanks. There is good in the world and in people. You just have to look for it to see it.
Looking for the Positive
When it comes to the real estate market, many are concerned about increased interest rates, pressure on prices, the short supply of housing, and skyrocketing rents. All legitimate concerns. But, let’s look at what is good right now. Unemployment is the lowest it has ever been. People and businesses have excess cash. Corporate earnings are very strong. These are all good things that help to buoy our economy and the real estate market.
The Fed raising rates may be viewed as a bad thing, but again, let’s look for the good. The goal is to curb inflation, while keeping the unemployment rate strong and the economy robust. And, that’s a good goal.
How successful the Fed is at curbing inflation remains to be seen, but regardless, real estate has proven to serve as an important hedge against inflation. Historically, even despite recessionary periods, real estate values increase over time. Another good thing.
Housing prices may be adjusting downward, but downward from what — the unprecedented highs of 2020 and 2021? Overall, they’re still strong. And, even though interest rates may be increasing, they are still historically low and they are still good.
| Year | Average 30-Year Mortgage Rate |
|---|---|
| 1975 | 9.05% |
| 1980 | 13.74% |
| 1985 | 12.43% |
| 1990 | 10.13% |
| 1995 | 7.93% |
| 2000 | 8.05% |
| 2005 | 5.87% |
| 2010 | 4.69% |
| 2015 | 3.85% |
| 2020 | 3.11% |
2021 2.96%
(Information taken from Freddie Mac)
How We View Things Matters
What do you see? Do you read the headlines, listen to the doomsayers and worry? Or, are you able to put things into perspective? It’s important to have a long view of things. Markets always have corrections and there will always be reasons for concern. Yes, anything can happen. Anything. But, why not have a positive perspective? After all, “anything” includes good. So, why not look for the good even when things seem bad, because when you look for good, you’ll find it — in the market, in people, and in life.
Rich Moser
August 11, 2022
Thank you for emphasizing seeing and looking for the good, this is extremely important right now. But not to contradict myself, I must say that this quote doesn’t have to be seen as good for most people: “Unemployment is the lowest it has ever been. People and businesses have excess cash. Corporate earnings are very strong.” Unemployment statistics are biased in that they do not include people who are no longer actively seeking employment or in the unemployment system, so there are lots of chronic unemployed people being ignored. People do not have excess cash, I keep hearing that 20%+ of Americans are a paycheck away from being homeless; that means they have no cash. And corporate earnings pretty much take money away from small business earnings, especially during the lockdown (less competition due to closures!).