January 16, 2019
How Do the Hearty Economy and the Labor Shortage Affect Home-Ownership?
We at Topouzis & Associates, P.C., keep a keen eye on the vicissitudes of the economy and the housing market. While historically the two have tended to walk in relative lock-step, particularly when it comes to lagging markets, there appears to be a bit of anomaly afoot in today’s relatively healthy economy: the consumer indices appear strong, but the housing market is showing signs of trouble.
The LegalShield Law Index released on October 8th provides a sense of the state of things. This index is a report made using information from a number of varying economic indicators as to the health of the financial and economic pulse of small businesses and households in the U.S.
While the report’s Consumer Financial Index shows a robust level of confidence in the consumer financial stress component—which indicates good signs of health when viewed against historical trends—the report’s Housing Activity Index hints that its crafters are not as optimistic when it comes to the housing market. Included among stressors on the market in this report were the Federal Reserve’s plan to raise rates a fourth and final time for 2018 in December, which was bound to put more upward pressure on mortgage rates, an activity that always results in making housing less affordable for buyers. Meanwhile, as we’ve covered before, where builders normally ramp up production in the sort of situation we’ve been seeing in the market—where there is a shortage of available housing already driving prices upward—we haven’t seen much activity in the housing construction sector. This is a result of various stressors, including structural issues such as a shortage in the labor supply, and financial hurdles like the corresponding rises in labor wages and the effects of recent tariffs placed on lumber, aluminum and steel.
All of this appears to mean that housing prices are unlikely to ease much in the short term, which has the effects of preventing first-time home-buyers from entering the market and of diminishing the likelihood that homeowners will trade up for the time being.
But so long as the market exists, some houses will be bought and sold. Whether you’re a player in the market in Florida, Massachusetts, or Rhode Island, contact us at Topouzis & Associates, P.C. to be absolutely sure title to a property is conveyed and purchased clear of judgments and defects.