Mike Theo | January 14, 2019
New things are fun. Think of wearing new clothes or visiting a new city. It’s that feeling when you walk into a new school, eat at a new restaurant, meet new people, or sit inside your new car. Even more so, when you walk over the threshold of your new home in a new neighborhood! New things, big and small, are fun and come with a sense of anticipation, excitement and perhaps even a tinge of trepidation.
I don’t know about you, but the dawn of a new year conjures up those same feelings for me. About this time every year, I’m filled with equal parts of uncertainty and optimism for the year ahead. And 2019 is no different.
The elections produced divided government in Wisconsin, and with that comes a bit of apprehension. Will this electoral outcome generate legislative gridlock or compel cooperation between the two political parties and the separate branches of government? The voters chose Democrats for governor and attorney general while re-electing strong Republican majorities in both the state Assembly and Senate. At this point, it’s unclear how the two-year legislative session will unfold — ergo the uneasiness. Major issues involving Foxconn, environmental regulations, protecting private property rights and holding the line on property taxes could be controversial. But in our conversations with Gov. Tony Evers, Attorney General Josh Kaul and legislative leaders, we have identified numerous issues of common interest that will hopefully serve as the basis for a productive session — ergo the optimism. Key issues like housing affordability, transportation funding, K-12 education and removing hurdles to successful real estate transactions are issues where we could find common ground. We shall see.
A similar situation presents itself in the nation’s capital. A Republican President and Senate face a new, Democratic-controlled House of Representatives. What will emerge — combative stalemate or productive engagement? The National Association of REALTORS® — under the new D.C. leadership team of Bill Malkasian, Chief Advocacy Officer and Shannon McGahn, our new chief lobbyist — will be navigating these tricky political waters to focus on key industry issues like reforming Fannie Mae and Freddie Mac, extending and/or reforming the National Flood Insurance Program (NFIP), revisiting last year’s tax changes to possibly index for inflation related to the deductions for state and local taxes and mortgage interest expenses, reforming banking and mortgage lending rules, investments in broadband and transportation infrastructure, to name just a few. We shall see.
The marketplace produces a similar mix of uncertainty and optimism. According to Dr. Dave Clark of Marquette University, the 2018 market in Wisconsin will be remembered for strong demand and tight supply. Mortgage rates drifted upward throughout the year as the Federal Reserve Board sought to control inflationary pressures but remain at historically low rates, below 5 percent. These market realities pushed median home prices up nearly 7 percent over the year, more than twice the rate of inflation. Moreover, the current economic expansion is now nearly 10 years long. The last three expansions lasted less than eight years. So, it would seem we are due for another recession — ergo the consternation. But the fundamentals of the economy remain solid with the national unemployment rate at 3.7 percent — virtually full employment. The Fed has kept core inflation on target at 2 percent. Real GDP growth, in each of the first three quarters of the year, ranged between 2.2 percent and 4.2 percent. Economic forecasters still put the risk of a negative quarter of GDP growth at no more than 20 percent through the third quarter of 2019. And despite some angst over tariffs and volatile foreign markets, as well as the prospect for continued housing inventory shortages throughout 2019, consumer confidence is high and, thus, there are no immediate alarm bells suggesting a recession is imminent — ergo the sanguinity. We shall see.
I guess I’ve always been a “glass half full” kind of guy, and coming off the holiday season, why not? More importantly, REALTORS® remain among the most optimistic people in the world. In the coming new year, let’s work hard and commit ourselves to impacting what we can — through advocacy — and adopting where we must in the marketplace. Let’s embrace the uncertainties in our government and marketplace and capitalize on our positivity to make 2019 a wonderful, happy and successful year.
Happy New Year!