By Louis S. Barnes, Capital Markets, Premier Mortgage Group
Since the inauguration, the administration has been… active. Half of the electorate seem anxious, the other half seems hopeful and even gleeful. So barely a month in, let’s evaluate the new administration’s impact on housing and related financial markets.
Mortgage rates jumped quickly after the election from 3.75 percent to 4.50 percent. The effect on home sales, local and national? Undetectable. We’re still hot locally, and we’ve seen steady gains nationally. We still have just as many buyers and just as few sellers.
The effect on the economy in light of plans for change, tax reform, and stimulus? Negligible. GDP growth is a little slower than last fall, but at 2 percent annualized, we look a lot better than one year ago. The economy is so good overall that the Fed will continue to raise the overnight cost of money, which may or may not push up mortgage rates. The Fed says it’s trying to remove “excess stimulus” while the administration proposes to add stimulus. There is a collision ahead, but so far, the Fed is one of the few institutions to not be tweeted.
There are roughly 324,000,000 of us in the U.S., and no matter what, most of us have to go to work every day, tend to our kids and families, try to save some money, and buy or rent the best housing we can afford. Big stuff in government can have a big effect, but most of the time it’s just us.
And when it comes to housing, it’s all local. We have the fantastic good fortune to live along the Front Range of Colorado, which is a great place to live for many reasons, but high on the list is this: we have one of the world’s most diversified economies. Our economy is nearly self-sustaining due to the quality of life here, which acts as a magnet for capable people and interesting businesses all over the country. And that remains true regardless of who’s in Washington.