What Does 2020 Look Like?

Yesterday I attended the Idaho Business Review’s Forum on the Future panel. Some of the questions asked were:

Should we be expecting a recession in 2020?

Many of the panelists feel there may be a softening in the market nearing the end of 2020. That said, there is an optimism that it will be a slight reduction and for a short period of time where we cool off and get through unscathed for the most part.

What are the major differences between our current economic environment compared to where we were in 2006?

The major differences between where we are today and where we were in 2006 is the lack of supply in both the residential and commercial markets compared to the surplus we were seeing before the recessions. We also have more strict lending regulations today that require people and businesses to qualify for the purchases we are making today.

Is there going to be a softening in the housing market?

This one isn’t popular for someone looking to purchase a house, but it doesn’t sound like there will be a softening in the housing market in 2020. Instead it appears the lack of supply and increase in demand will cause the market to continue to grow. The positive to this is we have some of the lowest interest rates we’ve ever seen which may allow more people to qualify to purchase their home.

My thoughts are that I am more optimistic than most of the panelists about 2020. We have far more clients looking to buy and build than we do willing sellers looking to cash out. I don’t remember everything from my economics class, but when I was paying attention, I heard something about the balance of supply and demand. Right now we are very far out of balance and have a sellers’ market in both commercial and residential. As long as that continues we should continue on a path of growth.

That said, it is an election year and that can cause some people to hold off on the sidelines until there is a clear direction of where public policy will take us the next four years. This may cause some leveling off, but ultimately real estate is still seen as a very attractive asset class when there is uncertainty. I think the fundamentals of real estate in our valley are strong and we should see a good year in 2020.  

Chase Erkins
Principal
Erkins Commercial Real Estate of Lee & Associates Idaho, LLC