NAR’s Chief Economist Speaks in Greenwich, Connecticut.
June 29, 2011 ~ Greenwich, Ct.
Lawrence Yun, Ph.D., Chief Economist at National Association of Realtors gave presentation at Belle Haven Country Club in Greenwich on “Housing Market and Economic Outlook”. Data is saying worse is over, delinquent mortgages have topped off, smart money investors are looking at real estate and pending home sales are up from last year.
With the United States adding about 3 million people a year to its population there will be a point when housing does not meet demand. Housing and economics go hand in hand and with banks not lending as much as in the past to new construction there could be a pent up demand accumulating. Existing Homes make up 95% of the market while new homes are making up 5%, building permits are down from previous years and we are at a 40 year low of new home inventory.
Mortgage loans have been around for decades, it was not a Housing Bubble that we saw a few years ago but instead a Credit Bubble. Easy lending practices back in 2006 and 2007 created a Credit Bubble that could not work. Going back to basic lending practices in 2009 and 2010 you can see by the chart below show very low default rates. The 2010 default numbers are not in but it looks like they will mirror 2009 or be a little less.
Improving Factors for Higher Home Sales.
~ The Pending Home Sales Index is 13.4 percent higher than the 78.3 reading in May 2010. If sales can hold at current levels then 4% annual increase in 2011, without homebuyer tax credit stimulus.
~ The remainder of the year looks to be better:
- Job creation
- Robust stock market recovery from 2008
- Rising rents and larger pool of qualified renters
- Buyers want distressed properties … at deep discounts
- International buyers cashing in on the weakened dollar
- Smart money investors go to real estate, possible hedge against future inflation
- Potential huge positive… Lending opens up
Downside Potential Surprise.
~ Washington Policy Changes could have huge negative effects.
- Going after the middle class raising down payment to 20% (Republicans)
- Going after the rich, limit mortgage interest deductions (Democrats)
~ Economic Hurdles.
- Inflation, higher gas and oil prices along with food and transportation costs (see chart below)
- Huge pool of under employed
- Budget Deficit
- Consumer confidence
HOUSING BASELINE OUTLOOK
Home ownership creates hard workers, responsibility, values and communities. Franklin Delano Roosevelt said “a nation of homeowners is unconquerable.”
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David Popoff is a license Realtor in Connecticut with William Raveis office in Darien. A life time resident of Fairfield County he has worked throughout lower Fairfield County for over 30 year. He grew up in Rowayton, resided in Greenwich for 10 years and is now in Darien, Ct since 2004.
- Member of the Connecticut Association of Realtors, CAR.
- Member of the National Association of Realtors, NAR.
- NAR Green Designee.
- David Popoff is an accredited LEED Accredited Professional (LEED AP) Homes and USGBC member of the Connecticut chapter (CTGBC).
- Associate member and an accredited Certified Green Professional (CGP) of National Association of Home Builders (NAHB) and the local chapter HBRA-Fairfield County, Ct. .
- Contact David Popoff for all your real estate needs in Darien, New Canaan, Rowayton and other parts of Connecticut.
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