With the Dow-Jones Industrial Average closing last night at 14035.67, its highest close since October, 2007, there are grounds for believing our economy is headed northward. We thought it may prove of interest to our clients considering real estate investment in the mountains to focus some of our attention on the general economy and my perspective on its affect in the high country. When I began practicing real estate in the mountains after an automotive career in Chicago it was a very different market. That was 1999 and the housing market in the Boone area was surging despite Y2K, the tech bubble bust of 2000, 9/11 and numerous other perturbations of that era. However, once Florida fell into a housing tailspin in 2006 we began to feel serious market shocks from the lack of Florida investors who had previously represented probably 1/3 of our business. Then when Lehman Brothers collapsed in September of 2008 we all ended up in the same hole. So here we are in 2013, five years later and from the activity that my son, Matt and I are experiencing in this business I believe that the housing market in the high country is on the rebound.
There will be a lot to keep our eyes on. Should monetary policy allow long term interest rates in the secondary mortgage market to climb significantly or the mortgage interest deduction be tampered with we may see some uncertainty for the housing recovery. With the Fed’s Ben Bernanke due to retire soon I’ve been watching Janet Yellen’s comments more closely. She appears to favor a continuation of her predecessor’s policy to keep long term rates low for the 1-2 year future. Recently I’m reading a more lively discussion of the general board at the Fed concerned about inflation risks engendered by these easy money policies. With several industries like Auto doing well we may well be looking at an improving economy as it relates to high country real estate value appreciation in 2013.
Watching a simple thing like my son and his girlfriend moving out and creating one new household and just the expenditures he has made at Lowes I think is a microcosm for this area’s economy. This natural tendency for people to move on with their lives, create new households, buy their first home or their first mountain vacation home is hard to suppress. It’s a rising tide that floats all boats.
This column won’t be a highly technical affair but merely the reflections of a business executive who’s found his way into mountain resort real estate in the high country of North Carolina on the business of real estate in the mountains. I hope you enjoy the journey!