Last week, I had the pleasure of getting to see a presentation from nationally acclaimed economist, Elliot Eisenberg, which was quite educational and extremely enjoyable. Dr. Eisenberg began with some background on the current economic conditions and examples of how the economy is thriving, referencing key economic indicators as well as some fun indicators of a thriving economy - like how RV sales are through the roof.
That being said, Dr. Eisenberg said the economy should thrive for 15 more months, but he forewarned of changes coming at the end of 2019 due in part to expiring tax cuts - recent tax cuts that he likened to throwing gas on a fire, saying the economy was thriving without the need for additional government stimulus in the form of tax breaks.
On the housing side of things, Dr. Eisenberg doesn't feel we're in a bubble due to the lack of new development and household mortgage health. Home Builders simply aren't and haven't been building enough new homes to keep pace with population growth, keeping pressure on supply. A lack of new development was something I was referencing all the way back in 2011 as a key indicator of future price gains, not just for Greater Seattle real estate, but more importantly nationwide.
As it relates to household mortgages - Dr. Eisenberg said he doesn't think we have a mortgage debt problem due to there being only a gradual increase in Total Debt Balance, which compares favorably to the real estate bubble when Total Debt Balance skyrocketed... this reaffirms the common dialogue about the loans being issued today are generally less risky than during the bubble (i.e. lots of 20% down borrowers with high credit scores).
As it relates to interest rates, Dr. Eisenberg pointed to the likelihood of the Fed continuing to raise rates throughout the year.
In short... on one hand I was hearing 'we're not in a housing bubble,' while on the other hand I was hearing about a looming economic downturn.
Economic cycles are inevitable, and though I don't have a crystal ball, I feel pretty safe saying we'll have another downturn in the not too distant future. Even without signs of a housing bubble, one has to wonder how an economic downturn would affect home values and appreciation.