If you’re exhausted with media hurtling dire economic forecasts with a political agenda, you want to know What Ted Said.
If you don’t know who Ted Jones is, you might want to listen up. He is the chief economist for Stewart Title, internationally known as an applied real estate research expert, and gives 150 talks a year to major real estate organizations. There is a long, rich, resume in the fine print.
He was in town for two presentations, I attended on Tuesday, 11/19.
All of us are plagued with pundits whose opinions have an agenda to keep us on edge for political gain. What Ted Said quells the false storm. Key indicators are jobs and cheap energy. We have both.
So, what did Ted say?
- THERE ARE NO INDICATORS OF RECESSION. Recession is defined as 2 + quarters of negative growth. It isn’t happening, nor does it seem to be looming over 2020.
Retail sales are 68% of the GDP, and it’s up 4.5% YoY September 2018-2019. That’s the highest rate that they have ever been. Old Navy announced plans to open 800 new stores in 2020. Online sales jump 36% when linked to brick and mortar, storefronts aren’t going away. Unemployment is at the lowest point in 50 years, 3.5%. In Minnesota, it is 2.4%. Wages increased by 1.8% in the last 12 months, the highest in 10 years. Hospitality and Leisure jobs surged +2.4% year over year to meet demand. Leisure spending shows consumer confidence.
- Real estate gained 6% in sales YoY. There were 521,000 sales in October 2018 and 552,000 as of October 2019. That’s a +6% gain. Average home prices also increased to $272,000 a +6% gain. Interest rates are forecasted to slide into the 3-4% range. There will be 1.5 million new households in 2020, adding more pressure to find affordable housing. Boomers and Millenials are looking for the same thing, smaller, low maintenance, and affordable homes. McMansions are a thing of the past.
- The i Buyer slice of sales is about 1%. I buyers are not new, “We Buy Ugly Houses,” Hedge funds like Blackstone (bought 1200 homes in MN during the recession), and investors have been around for a very long time. What’s different is the institutional buyer on a bigger scale. Even if Zillow reaches its goal of buying 5000 homes a month, it’s still only 1% of the market. It boils down to how much people are willing to pay for convenience. So far, the cost vs. benefit isn’t wildly appealing for most homeowners.
- Minnesota economy is strong, with a few weak spots. Out of the 52 states, MN is ranked #45 in tax friendliness. Texas does way better, they have a 3% real estate tax, that’s it. The Texas Constitution doesn’t allow spending more than it takes in. Isn’t that an exciting thought? MN lost 14,000 jobs, and we have a 17% spike in mortgage delinquency. Farmers are being squeezed, but the tech and medical sectors are very growing.
Politics and economics are two separate entities, but politicians use the economy to scare you, threaten you, or even bribe you. Follow independent thinkers who offer information without a bone to pick. Ted Jones isn’t the only economist with a perspective, but one you might pick up a nugget or two. Check out the blog: http://blog.stewart.com, or his twitter account drtcj.
Give me a jingle if you’re thinking of making a move, or if you have friends or family that might need some help. Ph: 612 384 1360 Email: firstname.lastname@example.org