This post is not for those who replaced their pocket protectors and slide rulers with a laptop and an internet connection. You know who you are. Instead, it’s a straight forward, generalized and what I hope is considered a common sense perspective on Alaska’s overall near term market outlook. While I studied economics in college, I in no way pretend to know more than anyone else about the empirical formulas and politics and policies. But there are two things that I do know, especially after having been licensed in real estate since 1994. First, that “perception is reality” and second, that “uncertainty” is not our friend. If the general public believes hard times might be coming, they will in essence pull the hard times in by reducing their purchases and refrain from moving if they don’t have to. And the more uncertain they are about their income and expenses, the more they will burrow in and wait it out.
Which all begs the question “Are happy days in the real estate markets here again?”
Let me begin with the disclosure that there are good and bad aspects and extremes to everything. So, when I say something like “The energy industry is good for Alaska”, it should be understood that extremes are not part of what should be considered common sense discussion. It should also be understood that we’re not talking about anything being done badly. An old friend once said about the development of a mine “If it’s worth doing it at all, then doing it right and eliminating as much adverse long term risk as possible must be included in the overall investment cost of the plan.”
* A large strong energy industry is a good thing
* A large strong military is a good thing
* A large strong tourism industry is a good thing
* A reduction of income taxes is a good thing
* Reducing taxes for small and large businesses is a good thing
* No penalty for not having health insurance is a good thing
* Nationally competing health programs is a good thing
* Repatriating billions or trillions of corporate dollars is a good thing
* Reducing crime and fear of loss is a good thing
* More people with more money in their pockets is a good thing
The definition of “good” is key. Any time a household has more money and lower expenses is a good thing. When people have jobs they spread it around through buying things and using things and paying bills – and that’s a good thing. When a household is taxed less, they have more money to spend on their own lives and have to give less to government – and that’s a good thing. When more people have jobs there is more money circulating in the economy and more people paying taxes. More households paying taxes means more money to the various levels of government – it’s a volume thing – and that’s a good thing. If entrepreneurial small businesses or the energy industry or the military or the travel industry have lower taxes they spend more on everything else including expansion projects, research, technology, production and jobs – and that’s a good thing.
Each item on the list above contributes to people’s perception of the economy. Love or hate the new direction our country will be taken by our new president, these items are what he campaigned on and promised to America. If we collectively see and begin to expect even just a few of these items are implemented, our economy is on the road to a very robust recovery. And just knowing that recovery is a possibility is good for people’s spending habits which is also a good thing for real estate. I’m naturally positive and optimistic so I say “Happy days are here again.” Now, let’s see if we can collectively “pull” that good economy in!