A recent article in the Wall Street Journal suggests that the U.S. housing market is predicted to stumble even further in 2019. This past year has seen the housing market plummet, as the cost to buy a new home has increased while inventory has continued to fall.
The decline in the housing market has also been tied to recent political events. The 2017 tax bill capped the deduction for state and local taxes (which include property taxes) at $10,000. Economists suggest that this could have the effect of discouraging homebuyers from buying more expensive homes. Other contributing factors include a significant decline in the amount of foreign investing in U.S. real estate, which experts attribute to a rise in geo-political conflicts, including trade disputes.
As is often noted, the housing market—which comprises around 15-18% of the national gross domestic product—can often serve as a useful indicator for growth in other markets. 2018 has overall seen a decline in the housing market; however, for most of the year, other sectors of the U.S. economy performed well. Unemployment is currently at 50-year lows. The stock market was also performing well, but all of this may soon change. The stock market has recently taken a serious turn for the worse.
Robert Diez, chief economist at the National Association of Home Builders, claims that the housing market is “telling a story that the economy is slowing down.” If Mr. Diaz is correct, the rest of the economy might soon find itself in trouble. Prospective buyers and sellers should prepare for the possibility of rough times ahead.