Friday Facts Dec. 14, 2012

December 14, 2012

Sound bites from the National Association of Realtors Conference – Economic Issues and Residential Business Trends Form – Lawrence Yun, Senior Economist for National Association of Realtors.

  • Inflation will rise by 2015.  Will stay at the Federal Reserves desired 2% in 2012 but will be from 4-6% by 2015.  He doubts it will reach the 1970’s style double digit level
  • The budget deficit implies we will have higher inflation.
  • Agrees that payroll taxes will increase in 2012.
  • Disagrees that Mortgage Interest Deduction will be changed.  MID carries a $90 billion cost.  Has been present for nearly 100 years and isn’t the source of the deficit.
  • Housing demand is up and supply is low.  Price growth could slow or accelerate.  Currently slow.  Hoping for a cumulative growth over 3 years of 15%.  Price rise would bring some underwater owners above water.
  • 2011 national sales were 4.26 million.  2012 estimated sales were 4.65 million.
  • Total payroll jobs – a lost decade.  Up, down, halfway up.  NO progress in the employment rate.  58% of adults have jobs.  Have to create 250,000 net new jobs every month for the next 8 years to get back to where we were.
  • Home inventory at an eight year low.  New construction is at a 50 year low.  Rising from a huge fall.  Financing is difficult.  Most local builders are shut out and only the big builders like Toll Brothers can get loans.
  • Shadow inventory is falling.  In 2011, 33%, in 2012, 25%, in 2013, 15%.  Will elevate the median price.
  • There will be more unequal wealth distribution.  Renters don’t accumulate wealth.  Rental properties are rising and home ownership is falling – currently 65.5%.  Homeowners build wealth after buying at a low price.  Average renter wealth is $5,000 and average homeowner wealth is $190,000.
  • Forecast:  GDP growth was 1.8% in 2011, will be 2.1% in 2012, 2.5% in 2013, 3.1% in 2014
  • Forecast:  30 year mortgage rate was 4.7% in 2011, will be 3.7% in 2012, 4.0 in 2012, and 4.6% in 2014



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