The week before Christmas is a make-or-break period of time for many retailers, so it’s not surprising that many economists became concerned in mid-December when the University of Michigan’s Survey of Consumers indicated the American public is feeling slightly less optimistic heading into the final sprint before the holiday season is over. “Consumer sentiment has remained quite favorable although it continued to slowly recede in early December from its October cyclical peak,” said Survey of Consumers chief economist Richard Curtin. Curtin credited the decline to concerns about “long-term prospects for the economy” and pointed out that for the most part, consumers still think that current economic conditions are improving.
The study also indicated that the population most concerned about long-term economic improvements tended to identify as democrats and said that their main concerns hinge on “concerns about the impact of proposed changes in taxes.” Regardless of political affiliation, respondents in the study did say that they expect both higher income levels and higher rates of inflation in 2018.
Possible Impacts on REIs
For real estate investors who are already active investors, news about consumer confidence falling by a relatively small amount (1.7 percent since November) is probably not cause for much concern. Over time, if consumers continue to feel less confident about the economy, it may affect the size of the buying population for properties or might make owning more rentals or different price-ranges in rentals or for-sale inventory attractive. At present, however, this index is likely something to simply monitor in case a future shift indicates that you should adjust your investment strategies.
On the other hand, if you have been considering real estate investing but have not yet gotten actively involved, this shift in consumer confidence might indicate that now is the time to act. While real estate investors are certainly affected by economic shifts, they are far less directly affected by swings in consumer confidence, unlike retailers, hospitality providers, and those who are employed by them. Take your confidence into your own hands and your future under your own control by making decisive, active moves toward your first real estate investment today.