Currently we have a unique dichotomy in the economy and markets. On one hand, there has been a lack of legislation or reform passed, North Korean missile testing, Russian investigations and a barrage of tweets. Despite this being our current environment, the stock market continues to climb to record highs, there is a low unemployment rate and interest rates remain low. A high stock market and low interest rates have been our environment for quite some time but it is only recently that we have reached a low unemployment rate. Lets examine how this affects the real estate market on a micro and macro level.
One the plus side, not only is the unemployment rate low but companies are also not firing employees in this tight labor market. Companies understand the market and are hesitant to let employees go knowing that they may not be able to find a replacement. Jobs are relatively secure, the stock market is high and interest rates are low, this raises consumer confidence making people confident to (finally) spend money.
Although it is great to see a low unemployment rate, it is also unsustainable for long periods of time. During this period of tight labor markets we are seeing an affect, especially in Denver as construction is very prominent. We are finding a labor shortage, especially skilled labor. This is slowing down construction, as we do not have enough (or any) labor to build homes or buildings. If you are considering new construction, be sure to keep this in mind when being provided a timeline of when a home is expected to be ready to move in. A lack of labor most likely will slow down the construction of your new home.
In my opinion, no problems are imminent. A few things to watch out for would be the Fed continuing to raise interest rates, inflation rising, an aging workforce and baby boomers retiring. Also, continue to keep a pulse on the unemployment rate and whether it remains low and for how long.
Liz works full-time as a Real Estate Agent with LUX. Denver.
