November 25, 2011
Here are some sound-bites from Lawrence Yun, Chief Economist of the National Association of Realtors, speaking at the Economic Issues & Residential Real Estate Business Trends Forum at the NAR Conference in Anaheim, California on November 11, 2011
- The world feels upside down. Too much strangeness going on. It’s difficult to get the recovery we need. Best affordability ever but no pick up in house sales.
- According to Case-Schiller, prices have stabilized over the past two years
- 40 year low in inventory of newly constructed homes
- Huge cash reserves at banks. Record high financial industry profits last year and very good profits this year, yet BOA stock in the tank.
- Federal Reserve is trying to stimulate yet regulations discourage lending
- Never before a better time to buy, yet home sales running flat
- Prices are up in Boston, San Francisco, D.C., San Diego and Buffalo. Prices are down in Atlanta, Chicago, Las Vegas, Miami, Phoenix and Portland, Oregon.
- New home construction at a 46 year low. Lowest rate since WWII for the past 3 years. Builders can’t get construction loans.
- Existing inventory elevated, but trending down.
- Only a third of Dodd-Frank bill has been implemented. Great uncertainty over remaining two thirds and what the regulations will be.
- Latest Home Buyer/Seller Survey for 2011 released. Last year’s home buyers had increasingly higher income. Creating a divided society. Home ownership possible to less and less of the middle class
- Work hard in America, you will be punished is the message coming from D.C.
- Traditionally, home price versus rent was 1 to 1. CPI rent is rising. Next year rent growth could be 3 to 4%. Home prices should rise concurrently.
- Cost comparison over the past 20 years – rent up 200%, food up 150%, gas up 197% yet mortgage payment rates have risen minimally
- Gold now rising. 5 years ago was okay as an inflation hedge. Now, real estate could be that hedge.
- Consumer confidence remains in the tank. Country leaders can change attitude: FDR, Truman, Ike, Regan all did. Inspiration doesn’t cost money. Dividing the country makes it worse.
- When will we see an end to the strangeness? Let prices recover without obstacles. If prices go up 5%, 2 million fewer will be underwater. Obstacles: Rising mortgage rates, QRM-20%. Attack on home ownership by academics and the media
- Tea party – leave us alone – against big government
- Occupy – someone screwed us – against corporations
- VA loans – 4 million no down-payment mortgages for WWII vets. Fueled unprecedented growth of the middle class.
- Simple fact: stay within your budget and you’ll be fine