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