December 7, 2012
Sound bites from the National Association of Realtors Conference – Economic Issues and Residential Business Trends Forum – Mark Vitner, Senior Economist for Wells Fargo.
- Fiscal cliff is coming – regardless. Expect that Bush tax cuts will be extended for all those making under $1million.
- If they don’t reduce deficit by at least $1 trillion, US credit rating will be dropped 1 or 2 times in the next few months.
- Mortgage Interest Deduction will be restricted
- Obamacare taxes will go into force January 1st. Social Security taxes will go up 2%. Add all together and .9% will be taken off growth. Hopefully, after a time, growth will return to 2%.
- Improvement in economy has been slow, but steady.
- Mortgage rates will be lower later this year and early next. 2/3 of the Federal Reserve governors believe rates will remain low through 2015. He doesn’t think these rates are sustainable and will have to be raised sooner than that.
- Employment. Jobs lost won’t be replaced until 2015.
- Homes get sold when confidence reaches a certain level. Expect to get there by 2014. Housing will strengthen. It will be better in 2012 than 2012
- Increase in single family construction. Haven’t yet cleared the distressed pipeline but a lot of what’s left isn’t prime and doesn’t compete with new construction
- Outer suburbs were created because of price increase. Now, people don’t want to live there.
- Home prices have firmed recently as foreclosures have become a smaller portion of overall sales. Prices will likely fluctuate along a low trajectory until foreclosures decline
- Global economy – nothing good coming out of Europe. Have to jettison the Euro. Probably won’t happen for 10 years. They’re still in denial.
- There was a Q3 slowdown in both residential and commercial.
- Is the light at the end of the tunnel an exit or an oncoming train?