Picking Up Real Estate Soundbites

FRIDAY FACTS

SOUNDBITES FROM AN ECONOMIC REVIEW – JED SMITH, MANAGING DIRECTOR OF QUANTITATIVE RESEARCH, NATIONAL ASSOCIATION OF REALTORS

  • 3% growth this year, last year 2.5-3%.  Can expect to see about the same next year.
  • 5 million sales last year, 4.9 million this year.
  • 3 trillion/year GDP.    What would happen if a major catastrophe and 6 million people killed?  Would immediately impact 3.5 billion and eventually 7 billion in GDP – a 4% impact on the economy.  Chances of that happening infitesimal.
  • Real estate strongly dependent on job creation.  Economy a bit of a disappointment.
  • Emerged from Great Recession 5 years ago – all still a little gun shy.  No fast fixes.   Today 2.5 trillion less than we would have been if there hadn’t been the recession.
  • Economic growth 2.9 – 3% rate for 2015.  Rates in 4-5% range, relative bargain.  Prices a relative bargain.
  • Close to 30 trillion in equity.
  • Big issue:  jobs.  Participation down from 67 to 63%.  Job creation lagged.  Small business created about 63% of the jobs – continues to complain about over regulation.  Education misalignment.  Good to study history or ceramics but make sure you know some accounting and some computer technology if you want a job.  Work force, too many part time workers.
  • Consumer confidence starting to come back.
    Incomes have been stagnant.  Middle America remains constant.
  • Missing demographic.  Household growth restrained.  Less household formation.  Prolonged adolescence.
    Predicting flat markets.  Credit crunch has been a major slow-down.  Lawrence Yun estimated 600,000 more home sales per year with easing of credit.
  • Home prices up
  • Cost of rentals continues to rise.
  • Distressed sales down significantly.  10-15% range now.  Normal 2-3%.
  • International economic outlook  slightly down but shouldn’t have much impact. International buyers make up 4.6% of US market.
  • We’re in a good, normal, dull market.
  • Massachusetts: Economic activity up over national. Employment slightly down over national
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