Funny what a difference a day makes. While forecasters were feeling all warm and fuzzy about where the stock market would end in 2015, the predictions had a glow about them, too. That was not to last.
As we begin the new year, we now look back on 2015 and the stock market as the worst year since 2008. “It’s a lousy end to a pretty lousy year,” said Edward Campbell, Prudential Investment Management. Although preliminary calculations indicate a total return of 1.4 percent, that is the worst return since 2008 and it is down sharply from the 13.7 percent return in 2014.
There are always many factors that can influence market movement. U.S. employers added jobs at a solid pace in 2015, but with no growth in wages it is a nuanced kind of influence that leaves investors concerned. Consumer confidence, nevertheless, improved. While you will hear no complaints from consumers, the continued low prices in oil, coupled with continued low usage levels, threatens big economies like Saudi Arabia and Russia, whose economy is largely dependent on its processing of oil and gas products. The slowdown in China’s economy makes the news several times each week. ISIS, North Korea’s recent bomb test – all and more play into the activity we see in the stock market.
Analysts say we should expect more of the same in the new year. Recession fears were raised in 2015 but not seen. In 2016 there are no concerns about recession. That means that although the volatility is expected to continue, investments should not experience sustained slides.
Economic growth around the globe remains weak. China’s sputtering economy will keep our eyes focused on it. But resiliency in the U.S. is evident in the consistently strong job numbers throughout 2015. It was the second-best year for hiring since 1999.
Do we focus too much on the stock market? I think so. It is as much a part of our day as going to work. It is a part of our everyday activity. But it sends pangs of panic with every downward shift and calls for jubilation the following day. It’s a roller coaster and I’m not convinced that’s healthy. The daily grind of its every movement wears on people and makes it hard to relax. But I understand it is an important piece of information we all want to know about.
I want to turn the conversation to the core reason I write this blog – the housing market. How did it do in 2015 and what does it look like for the new year?
I read an interesting piece recently, published by Maryland Association of Realtors economist, Anirban Basu. He feels the slow but steady housing recovery will be sustained in 2016. Because he feels the U.S. is only halfway through its economic recovery, those hoping to get started in homeownership should not be facing sticker-shock because they’ve waited this long to get moving on this goal.
Mortgage interest rates were projected to rise closer to 5 percent by the close of 2015. They didn’t. While appreciation in home values did occur, it did so in a more traditional manner we are accustomed to seeing historically. With slow and steady home value appreciation, sellers will see gains in equity resulting in buyers continuing to see new home sale listings flowing into the market.
Rents are expected to continue to rise because availability is at all-time lows. This will make it difficult for some potential buyers to save money for closing and down payment costs. But new programs are entering the marketplace with these potential buyers in mind. Relaxed credit requirements, use of compensating factors, unlimited use of gift funds and expanded qualifying ratios are some of the new and friendly features of these programs.
I can help. If you need to talk to a professional and find out out more about programs or what the inventory of the kind of home you seek looks like, check with me. My goal is to help you better understand how right or possible homeownership might be for you. I offer my help with a no-pressure mannerism. I know people appreciate it, you may, too. Connect with me today and let’s find out.