1998 In Review
by Jim Scott

In 1998 Wall Street became Main Street. Not in the postwar world has international and national financial markets had such an impact on residential real estate. 1998 was the most volatile year I can remember and the stock market was equally so. Ordinarily demand for homes and apartments has been governed the local economy and interest rates. Now we are obliged to look over our shoulder to see what is happening in Third World economies or to divine what Alan Greenspan is thinking. We are generally richer because of our real estate and financial investments yet more vulnerable. Globalization means speed and that means events in other parts of the world can have an instant impact on our net worth. The 1500 point free-fall of the Dow Jones Industrial Average last summer killed [albeit temporarily] one the strongest residential markets in history. 

The Year 
1998 began with prices in the Mission Hills statistical area averaging $220 per square foot for the first quarter. This represented a ten percent increase over 1997. Prices rocketed up during the second quarter to over $240 per square foot. The final two quarters of the year saw flat pricing but relatively robust sales. However, I see no reason to fret over the flat performance of the market during the second half of the year. We just caught a touch of the Asian Flu. 

1999
Inventory remains high relative to last Spring but in an historical context, the number of homes for sale is low. Real inventory, homes that are priced such that they actually have a chance to be sold, represents about half of that total. Demand is unabated and interest rates are very attractive. Mission Hills and Hillcrest remain very desirable locations. It is possible, assuming interest rate stability, that prices will increase fifteen percent or more next year. All it will take is a strong year on Wall Street. If the Dow hits and remains above 10,000 during the first quarter, there will be nothing to restrain prices other than an increase in interest rates. We have the potential to repeat the follies of last spring. In the end house consumers can behave a lot like the owners of professional sports teams and drive up prices unreasonably. 

There is probably very little interest rate risk. The main concern should be the Asian Flu(and now Brazilian) and its' affect on our region and on the financial markets. The Dow at 7,000 would mean a nasty end to our residential bull market. 

You can reach Jim Scott by email or at his office at 1111 Fort Stockton Drive. Jim's direct line is 885-9511. 

Jim has been a homeowner in Mission Hills since 1976. Scott & Quinn is the oldest full service real estate company in Mission Hills. There is also a professional property management team on staff.