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