Uncategorized November 25, 2024

MARKET UPDATE: 11-19-2024

I had the opportunity to hear Mark Sprague, State Director of Information Capital, at Independence Title Austin on November 19, 2024.  Mark is well known locally and throughout the United States.  I would like to share some of the highlights of his presentation:

Where have we been (2020)?

  • Federal funds rate cut to near 0% during the COVID-19 pandemic shut down the globe economy and caused the largest dip and rise in GDP in history.
  • Supply chain disruptions and retail shortages are still effecting all industries.
  • Values will remain strong and continue to grow in 2024/2025
  • Inventory will continue to be challenging for the next 3 to 5 years.

U.S. Economic Concerns in 2025:

  • US economy facing challenges with slow recovery from 2009 recession and supercharged economy through 2023.
  • Only 3 of top 50 US metropolitan areas fully recovered since 2009 in terms of GDP, real estate values, and employment as of 2024.
  • Lack of qualified applicants, and immigration policies not helping situation, exasperating labor costs.
  • Declining population and falling labor participation also contribute factors globally as well as locally.

2025 U. S. Economic Outlook:

  • Rate hikes have already delivered their biggest hits in GDP growth
    • Don’t expect the low rates of the previous 10+ years (low rates equate to ailing economy)
    • The global and our national economy fared better than many economies expected in 2024 and will continue to improve in 2025.
    • Unemployment is historically low.

Texas Economic Outlook:

  • Texas is the 8th largest economy in the world.
  • The Lone Star State is home to 55 Fortune 500 Company Headquarters more than any other state.
  • Texas has no personal or corporate income tax
  • Texas is the largest energy producing state in the nation

Final Thoughts:

  • Is the Fed Done raising rates?   Tariffs, tax cuts without cutting spending will cause higher inflation and rates.
  • Mortgage rates will bounce around between 6 to 7.5% for the next 12 months
  • Residential will likely cost more in the Austin area – up 1-2-3% – each quarter of 2025
  • Quit comparing to the last 3 exceptional years and one down year.  The prior were outliers / once in a lifetime events.  The latter happens every 7 to 10 years when inflation gets out of control.
  • Prices will slow, but not crash.  A return to normalcy.