Sept. 2, 2019

This paid piece is sponsored by The Tony Ratchford Group.

By Tony Ratchford

Someone asked me the other day, “What will the recession do to my home value?” I was taken aback as I don’t see a recession coming soon. Although, listening to the news, one might think the sky is about to fall; it’s as if they are trying to create a crisis or a self-fulfilling prophecy for the economy to falter.

Regarding real estate in the Sioux Empire, it is as solid as it has been. Watching the ebb and flow of the market during these past decades, there was always evidence trouble was brewing before it arrived.

Before a downturn, sales of real estate slowed, the stock market dropped, and consumer confidence fell. Today, sales have slowed, although there is good reason for it. The stock market continues to be strong, and so is consumer confidence. Retail sales are up, GDP is stronger than most years over the past decades, unemployment is historically low, there are more people working than ever before, household incomes are up, and mortgage rates are down.

Certainly, there are factors of concern but not strong enough to pull us off course. The tariff issue will correct itself because it benefits everyone to do so. Ego exploiting and muscle flexing eventually will give way to practicality. The agriculture world showed signs of worry earlier this year, but those fears have somewhat subsided.

Real estate sales are down for 2019 compared to 2018 but less now than the beginning of the year. The extreme cold and wet spring was a factor, as well as a lack of purchasing by the 20-year-old generation who have put off commitment and are yearning for more freedom.

Low inventory levels also contributed to fewer sales. Many move-up buyers didn’t want to place their house on the market for fear their house would sell and they had no place to go.

In addition, lower levels of inventory are influenced by the increasing need from year-over-year population growth, single-family homes being transformed into rental properties, continued demolition of older and smaller homes, plus higher cost of new construction.

Owning a house, regardless of style, is more about a place to call home, a place to enjoy our personal lifestyle with freedom. It also allows one to pay off the mortgage over time with some tax savings, and it becomes somewhat of a savings account. The appreciated value on the average home is 1 percentage point higher than inflation, thus protecting your money’s buying power in the future. It continues to be part of the American Dream, something no other place in the world can create.

So not to worry. No recession is headed our way for a while, and if there was one, it wouldn’t make a difference in the long run. Buy the home that fits your lifestyle when you need it. Enjoy it every day. Make the monthly investment payments, and pay it off in less than 30 years. And when the day comes when you don’t need a house, you can expect to have a handful of money to live on.

As always, we invite you to call or text at 605-359-4100.