Seeing the Future

Peering into my crystal ball for trends affecting (for better or worse) the Fredericksburg Texas real estate market I see:

1.  1.   Mortgage interest rates will rise.  Bumping along near historic lows for the last several quarters, these rates are under tremendous pressure to increase as they are the single largest factor affecting the current weakness in the value of the U.S. dollar.  The weak dollar is reflected most prominently in the record price we are now paying for oil (and hence, gasoline), food and other consumer staples.

2.  2.   It is only a renewed strength in the U.S. dollar (created, in part by rising interest rates) that will ease our pain at the pump (in the sort term) but look for the price of oil to remain well over $100/bbl and gas to remain above $3.00/gal. for the foreseeable future.  The ever-increasing global demand will not be abating.  The silver-lining in this is that folks will travel but stay closer to home which has traditionally benefitted the community of Fredericksburg TX with our proximity to Austin, San Antonio, Dallas and Houston.

3.   3.  Pain at the pump will continue to translate into decreased US demand for oil/gas, increasing pressure on politicians to produce more “supply” and more downward pressure on consumer spending.

4.  4.   The “credit markets” will recover from the sub-prime fiasco but lenders will be ever-more cautious about extending credit to all but the most well-qualified borrowers.  This, in turn, will contribute to a continued “softening” overall of real estate markets where prices in most areas will not return to their pre-2007 levels for some time.

5.   5.  The value of and demand for rural real estate will recover quickly be the lead the sector in sales volume and appreciation (especially land with surface water and/or capable of producing a consumer crop).  Provided existing tax rules (valuation methods, exemptions, capital gains, etc.) remain relatively constant, there is no place else to invest sizeable funds with very little risk, very low carrying costs and historically favorable returns.

6.   6.  Ever more savvy real estate buyers/investors/sellers will rely more and more on the internet to research purchases/comparable sales, etc. and appreciate that market knowledge, experience and outside-the-box thinking will increasingly be found outside the doors of the more traditional “branded” models of brokerage service providers.

7.  7.   As the internet continues to be the “great equalizer” in the real estate industry, consumers will realize that bigger is not necessarily better and that industry knowledge and market experience will trump “branded name recognition” every time.

8.   8.  Fractional real estate offerings and purchases will emerge as the single most important innovation in property ownership in the last 25 years.  Popular in high-end resort-oriented communities for years, this “new” form of ownership will open a door to luxury ownership that simply has not been available before now.  The ability to own a deeded, mortgage-able, depreciable and inheritable share of high-end property (one that will likely appreciate and can be bought or sold as easily as a single family residence) will unlock billions in baby-boomer wealth that has heretofore been unable (or unwilling) to pursue the second home of their dreams at a fraction of the traditional price.

Remember, you heard it here first!