John L. Scott welcomed Dr. Lawrence Yun, Senior VP of Research and Chief Economist for NAR, as our featured speaker on Wednesday, May 23, 2017, for the Top Producer event at the Golf Club at Newcastle. He had some very positive things to say about our market and the forecast for the future. Here are some highlights:
- We had a deep downturn about 8 years ago and since then we’ve been moving upwards, but it’s been a soundly based improvement. We’re nowhere near where we were with the subprime sales we saw previously in 2008, even with the inventory shortage. Thus, he does not see a real estate bubble on the horizon.
- Interest rates are not going to be going down. When talking to clients the conversation should be that the likelihood is that “rates are going to be higher the longer you wait.” He predicts rates will hover around 5 % by next year at this time and 6% a year after that in 2018.
- Consumers are facing higher interest rates but consumers are saying they don’t care and it’s not going to force them out of the market – in both resale and new construction.
- Getting people to sell is good for your business but to solve the inventory issue we need to get builders to build. Investors are buying but holding on to them. Here are the 4L’s of reasons builders aren’t building:1. Lots – finding those lots.2. Labor – tighter borders make for lower-skilled workers.3. Lending – builders are usually national companies who can tap Wall Street money, but historically more building was done by mom and pop local builders going to local banks. Local banks are saying the regulations are hampering loans from small banks.4. Lumber – NAFTA Canada issue – the tariff on Canadian lumber will be impacting the market and we’re waiting to see what that impact is going to be.
- Builders just can’t keep up with the demand we have today. There was a deeper downturn for homebuilders around 2011 and building still hasn’t increased to 2005 levels.
- NAR surveyed buyers to see if home ownership is still part of American dream. 80% still say yes. 85% say that want to buy in the future, and 85% of renters will want to buy.
Photos: AJ Canaria from PlanOmatic