There’s a lot of change on the horizon as we sail into the new year.
To help us process it all, we dialed up some of the biggest brains we know to share their insights, perspectives, and predictions.
In part one of our two-part Predictions Panel, we’ll have these smart guests take a look into their crystal balls and introduce the hot topics that will help YOU inform your investing decisions in 2018.
In this episode of The Real Estate Guys™ show, you’ll hear from:
- Your future-predicting host, Robert Helms
- His predictable co-host, Russell Gray
- John Burns of John Burns Consulting
- Frank Holmes from U.S. Global Investors
- Money Strong’s Danielle DiMartino Booth
- Peak Prosperity’s Chris Martenson
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What is 2018 going to be like for investors?
This is the big question on everyone’s minds. As real estate investors, there are a lot of factors that impact our marketplace. So, we need to look beyond the real estate market and examine the broader economy.
There are many variables that will determine how 2018 plays out … like the new tax law, the second year of the Trump administration, a new chairman of the Federal Reserve, record high stock markets, the rebirth of U.S. manufacturing, and international trade deals.
And that’s just the beginning!
Any of our guests today could fill an entire show … and most of them have! But today we are just hitting the highlights. It’s part one of our 2018 Predictions Panel.
What the Trump administration means for real estate investors
“Trump is a disrupter,” says Frank Holmes of U.S. Global Investors, “but that’s not necessarily a bad thing. Many positive changes can come because of that.”
We’ve seen how other great disrupters … like AirBnB, Amazon, and Uber … have boosted marketplaces in the end.
“I think the government won’t be able to raise rates too much and is going to do everything they can to maintain economic growth,” Frank adds.
One of the biggest changes the Trump administration is facing in the new year is at the Federal Reserve. Money Strong’s Danielle DiMartino Booth reminds us that President Trump has three vacancies to fill at the Fed. And A LOT is riding on who he chooses to fill those positions.
“2017 was clearly the year of the natural disaster, so we are seeing a ‘sugar high’ from the rebuilding that is happening in places like Puerto Rico, California, Florida, and Texas,” Danielle says. “But we are also starting to see signs that the U.S. household is simply buckling under the strain of inflation.”
How these Fed appointees choose to adjust rates could have a major impact on the economy … and that means the real estate market too.
What about the new tax cuts? John Burns of John Burns consulting predicts that the new tax cuts will be a boost to the economy, particularly to entry level buyers looking for median-priced homes.
Get educated on cryptocurrency
Cryptocurrency is a hot topic in the investment industry. From Bitcoin to Ethereum, it seems like everyone is rushing to get a piece of the pie. But what do our experts think?
“I am completely in love with the technology itself,” says Peak Prosperity’s Chris Martenson. “But it’s hard to predict who is going to be the winner in the end. Which piece of cryptocurrency will survive and still be viable 10 years from now?”
For Chris, it’s really too early to say. He likens it to when the technology to record movies and play them back at home hit the scene.
The core technology was amazing, but who could have predicted that it would evolve from VHS to DVDs to Blockbuster to Netflix?
“My advice would be to understand that when it comes to cryptocurrency, you are speculating,” Chris says. “If you’re interested in these assets, have a small portion of your speculative money there. This isn’t investing at this stage. It really is just speculation.”
Danielle agrees, “The exchanges of the world are not your friends. When it comes to cryptocurrency, I’m not saying avoid it altogether. Just remember that there is nothing backing this right now, so be careful.”
Watch for signs of an economic downturn
They say what goes up must come down. So, it’s natural in times of good economics to wonder when the next recession will arrive.
The number one most important thing in real estate is the economy. If any other sector collapses, the real estate industry will suffer too.
Pay close attention to other industries to spot indicators of economic change.
“After Hurricane Harvey, one of the things I will be watching most closely in 2018 is car sales,” Danielle says. “They’re a good sign of where the economy is heading.”
Danielle also suggests monitoring economic conditions internationally. With so many geopolitical ties and trade deals, our economy relies heavily on the economies of other countries.
“I wouldn’t be surprised if the catalyst for the next American recession came from somewhere overseas,” Danielle says.
Real estate investors can also look within the U.S. market to monitor conditions. For John, one area to keep an eye on is the growth and supply of new homes coming to market.
“If you look at the numbers of new homes coming into the marketplace, you’ll see that those numbers are pretty stagnant,” John says. “Construction costs have gotten so out of control that many homebuilders aren’t able to grow their businesses over time.”
However, John says that right now, he feels there aren’t any major markers pointing toward recession in the real estate industry. But it’s always a good idea to keep an eye out for potential risks.
In the words of Frank Holmes, “A lot of money has gone into real estate, so I think it is going to remain attractive to investors.”
Now you … the investor … get to take all these ideas and ask, “What does it mean to me?”
And there’s more information to come next week in part two of our Predictions Panel. Tune in so you can gather even more facts and be ready to make a plan for a profitable 2018.
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