How Will The Trump Trade War Affect The Gilbert Housing Market

There has been no lack of drama surrounding the trade war with China.  At first many Americans believed the trade war would be over quickly and China would give into the demands of President Trump.  The stock market and home prices were largely unaffected in the beginning. As the tariffs on Chinese imports continued to rise there was more market volatility but it always seemed as though a deal was around the corner.   Now that talks have broken down and the tariffs have been increased to 25% more people are starting to believe we are in for the long haul on the China trade war. At The Reeves Team we are frequently asked for our opinion. So if we are in for a long trade war how can we expect this to affect the housing market and the Gilbert housing market in particular?  This is a complex issue and we are in some very interesting financial times.  What we mean by that its possible bad news for the housing market could actually end up being good news, at least in the short term.  Confused?  We will explain.

Trade war direct affect on housing market

First, lets put this into perspective.  There are direct effects that the trade war will have on real estate, and there are indirect effects.  The direct effects caused by the tariffs are the cost of material goods needed to build new houses as well as the goods needed to remodel existing homes. Rob Dietz the chief economist at the National Association of Home Builders stated that the new 25% tariffs will cost home builders an additional 2.5 billion when funding the construction of new houses.  This cost will need to be passed on to the consumer in the form of higher home prices which could in turn lower the amount of home sales and slow the economy further.

Some of the indirect effects the trade war has on housing prices is the increase in uncertainty.  Across the country over 12 million people plan on selling their primary residence within the next year.  Among those 12 million homeowners 44% of them said the trade war has made them consider selling their home earlier than anticipated to keep from losing value if the trade war continues.  If many homeowners decide to sell and the market begins to get saturated with homes you will see the prices start to dip and houses staying on the market longer.

What happens if the federal reserve lowers rates?

So we have laid out the reasons why a trade war could hurt the United States economy, and in normal financial times this would be it.  Its fairly obvious that tariffs on foreign goods from China and negative sentiment from homeowners can only be a negative right?  Well not so fast, it turns out we don’t live in normal financial times.   With the federal reserve seemingly eager to cut rates the trade war and the resulting slowing economy may give the federal reserve the ammunition that they need to decrease rates.   I know what you may be thinking, didn’t the federal reserve just increase rates multiple times last year and promise three more cuts in 2019?  If that is what your thinking you would be right, however it seems like they are set to do a complete 180.  Many economists have estimated the fed may cut rates up to 3 times over the next year.  So how does this affect homeowners?  Great question! Well the primary way it will help homeowners is that buyers will be able to pay more for houses because interest rates will chew up a smaller amount of the payment they can afford.  The second way that it will help home prices is that lower interest rates tend to help spur economic growth and will help with consumer confidence.  So we may be in a rare situation where good news is good, and bad news is good.  If there is a trade agreement announced that should be good for the overall housing market, if the trade war drags on and the fed cuts rates that could also be good for the housing market.

So what do you think?  Are we in a win/win situation?  Let us know in the comments section below.

When will the huge water park being built in Gilbert open?

Gilbert Arizona has announced it will be opening one of the worlds biggest and best water parks in the nation.  As families look to find any way they can to get outdoors during the summer months, aquatic centers and splash pads have been popping up all over the valley.  We haven’t seen anything quite like this before however.  The town of Gilbert recently announced the park will called The Strand @ Gilbert.

What is it?

The Strand will be a massive new Gilbert Regional Park.  This park will be unique in that it will be operated by a private company once built.  The park will encompass more than 270 acres and the water park itself will be 25 acres in size.

Where is it?

The Strand @ Gilbert is being built at the intersection of Higley and Queen Creek roads.

What activities will be there?

This is where it gets really exciting.  Current plans include some incredible attractions.  A cable ski lake is being built that will allow skiers and wakeboarders to be pulled by an electrically driven cable.  This will be a huge advantage for all those that love water sports.  Currently Gilbert residents flock to the lakes that surround the phoenix metro area, but soon they wont have to leave the neighborhood, oh and don’t forget you wont need to buy a boat either! A surf lagoon is also being built.  This isn’t your standard wave pool as there will be rideable waves for those brave enough to give it a go. There is also going to be a massive inflatable water park for kids of all ages.   There will be multiple swimming areas of varying depths for kids and adults of all sizes to enjoy.  Another very unique feature to be included will be real sand beaches to give you the feel of the ocean without the 5 hour drive to the coast.  There will also be restaurants and clubhouse to relax at.

When will it be ready?

The Strand is expected to open in the summer of 2020.  Stay tuned to RelocateAZ for updates when an exact date is announced.

How can we expect this to affect Gilbert housing prices?

This should have a very positive affect on housing prices in the Gilbert area.  While we at The Reeves Team expect it to help all Gilbert housing, the impact will be felt most for houses directly surrounding the new park.  If you are interested in purchasing a house near the new park let us know and we will be happy to find your dream home.

So what do you think of the new park being built?  Are you as excited as we are or do you have reservations? Let us know in the comment section below.