Will Election Year Politics Affect the Housing Market?

Will Election Year Politics Affect the Housing Market?


Hi. Today I want to talk
about the recession politics and the housing market. Hi this is David Pestana
owner of Rise Utah realty in Orem. I want to share with you what I
love Utah County join me as we explore
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and incredible geography here. This is Utah County Life.
all right. Thanks for watching
today’s episode. There’s so much to talk about. And before we get started
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Now to get started. There’s a lot of talk this year
about a recession. More and more people are saying
that a recession is coming. And I wanted to talk about
that because I think with this being a political
election year coming we are going to hear a lot
of of disaster talk and a lot of positive talk and you’re
not going to be sure quite what to believe now in November
of 2020 about 15 months away. We’re going to be electing
a new president. So the Democrats
and the Republicans are on the on the campaign
trail is that what they call it to win your vote. And what the reset what the
Republicans want you to know is that they’ve done
a great job for the economy
that the last seven years have been the longest
recovery in history. Things are good things
are still good. And anything that may be
a downturn they’re going to diminish the role of the
Democrats on the other hand are going to tell you that
look you know may have been a good run but man
because of Trump and his politics you know
things are going down and if you elect me
things are going to be better and I can solve these
problems and issues and social problems for you you know. And I’m not trying to talk
either side here but I think that’s a lot of what we’re
going to hear over the next 15 months until Election Day
and the way it affects the recession is is I don’t
know if they’re really going to talk about the recession
but they just want your vote. And so they’re not necessarily
going to give you like the reality of what’s
happening like if I was a Republican
I would downplay what’s happening if it’s
a recession and talk if I’m a Democrat I would want
to scare you into thinking that this recession is terrible
and you’ve got to vote for me. So either way you know you’re
going to hear these two sides over the next 15 months. And when we talk about recession
you know what we’re really talking about
by definition is when there’s two
consecutive quarters of slowing or negative
growth in the economy. So we’re retracting
and quite frankly we’re recession probably is coming. I mean it’s it’s bound
to you know when we’ve seen basically seven straight
years of positive housing growth. And if you live here in Utah
you know that the housing market is super
costly right now. We do need to take kind
of a leveling off effect where we can breathe
people’s jobs and incomes could catch up with the market. But what I want to emphasize
here is that most people when they hear the word
recession they associate it with crashing housing
market in and they think of that because the last
recession or this great recession or depression
that we had was actually caused by the housing market
in fact to be more specific. There was a lot of fraudulent
lending they were giving loans to people who couldn’t
afford it. People who had bad credit
they were giving subprime loans too. And what this amounted
to was kind of a stack of cards that fell. So as soon as the price hit
its tipping point and it started to go down
people didn’t have equity in their homes
they actually couldn’t afford the houses on these
high mortgages and it all crashed. And so the recession
was all started through the housing which was related
to the stock market and everything.
But it’s all done now. What we’re looking at is a much
much stronger housing market. And you know everybody
has to prove their income. There is no subprime. So the housing is has a much
much stronger base supported by real jobs. And the difference here
is that if we go into a recession it’s probably
not going to be caused by the housing market. In fact I saw a list and you
know maybe trade war you know economics could be
right up there at one or two and then all
the way at number nine. It actually says housing market
could cause it. So nobody really thinks
that the housing market’s going to cause
the next recession. In fact quite the opposite
because of the strength of the base of the
housing market. They feel that if a recession
was caused what was in the United States
housing market would actually help pull it out
of the recession not into it. So I want to show
you some evidence of that and that not
all housing recessions mean a housing crash. All right. I have a graph here that shows
the last five recessions. And what you’ll notice
is that out of the 5 3 of them show that there
was actually from the start to the finish of the recession. There was no decline
in housing prices. And this is this is a
general term throughout the whole
United States. So for four five recessions
three of them did not affect housing price and but
the most recent one which you’ll see which started
in 2008 really started in 20s 2007. But the stock market everything
crashed in 2008 through 2009 14 or 15. What happened there
that was caused by housing and therefore you see
the greatest difference. But even then I think you’ll
be surprised to see that in the worst housing
market of all time the average home depreciated
nineteen point seven percent. And what was hard about
that is that people had little equity because they
were cash out refinancing and because as rates
lowered they kept using it as like an A.T.M.. So housing housing definitely
went down but most people think it went down like 50
percent and in fact it only went down about
19 percent in general. So what we see is that there’s
there’s five years three positive ones to negative. And what they’re anticipating
is that this next one is going to be more like one
of those positives because we have so much
demand so much growth. And let me speak specifically
here about Utah that you know they’re expecting
our state to double in size in fact double in size.
Let me say in the next 20 years. So currently we have 600000
people in Utah County. That means we’ll have
one point two million in Utah County in 20 years. So that’s a lot of people
moving into this area every year. In fact you have to build
about forty five home forty five hundred four thousand five
hundred homes a year just to keep up with that kind
of growth. And because of like the airport
the airport in their construction they’re taking all
the labor force which has put an even
greater shortage of labor in the housing market
to build houses. And that’s one of the reasons
we’ve seen double digit appreciation just
because of that strong demand. So our local markets been good. We we don’t see those
forces changing. And let me let me say
what forces really drive housing. It’s not really the politics
although that’s going to be what drives what we call
consumer confidence the politics and what’s talked
about will scare people. And that could affect
the market in a way that is just the psychology
of people you know they’re they’re scared.
Secondly jobs. So if we we see a tremendous
shortage of jobs in this area you know because recession means
you lose your job you lose your income you can’t pay for your
house you can’t pay for anything. So if we lose a lot of jobs
were we could see a slowdown in the market. And you know retirement
you know people’s 401 K and stuff people associate
with a loss of income in a recession their
valuables decreased their their net worth decreases. But right now jobs are at
an all time low housing with the recent
decreases in interest rates. Got like fuel on the fire
over these last few months and you know the your 401 K
may go down because that would be the stock
market but the real estate side of it. We anticipate that we will
see a slow down in terms of the total number of housing
sold but we don’t think it will slow down
to the point that we’ll go negative. OK. Well this is my housing
update where we talked about recession politics and the
housing market I hope has been helpful please
Like or comment or dislike this video. If you disagree but let’s
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