Trump, Dems need to address housing shortage, Realtor economist says – Daily News

on Nov9
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The Realtors’ chief economist has a message for President Trump and his Democratic rivals: You need to focus more on the nation’s housing shortage.

“People may say we have a high stock market, (good) job creation, low unemployment. But you ask people about housing, especially renters, and they are extremely frustrated,” National Association of Realtors Chief Economist Lawrence Yun said at the trade group’s annual convention in San Francisco on Friday, Nov. 8. “If we continue (to have) a housing shortage, inflation will pick up and mortgage rates will pick up.”

Yun’s comments were delivered as part of his 2020 housing outlook, which forecasts continued gains in both home prices and sales and sales next year, called chances of a recession unlikely and said mortgage interest rates will continue to stay low. If accurate, those are factors likely to help home sellers and frustrate home shoppers who are waiting for prices to come down.

This year’s outlook comes a little over a year after most economists were predicting a housing correction. Then, interest rates began a 10-month slide, dropping more than a full percentage point from November 2018.

“Things are better now compared to a year ago, but a year ago things were very soft,” Yun told the opening session of the Realtor conference, which is expected to draw about 20,000 participants. “You are seeing home sales in many markets higher than a year ago. This is the magical power of low interest rates.”

Here are highlights of the NAR 2020 forecast:

How much will home prices and sales rise?

Yun predicted the median price of an existing house will rise 3.6% in 2020, the smallest gain in at least five years. Sales of existing houses will rise 4% next year to 5.6 million transactions, the biggest sales tally in at least five years.

How does that compare with the outlook for California?

“It’s pretty much in line with what we said in our forecast,” said Oscar Wei, an economist and director of research for the California Association of Realtors.

For example, CAR predicted California house prices will rise 2.5% next year and sales will rise 0.8%.

But in California forecasters expect to see continued sluggishness for higher-cost housing — homes priced at $750,000 or above, Wei said. That’s why the San Francisco Bay Area — California’s priciest region — has seen home price drops in recent months. And why Southern California’s priciest county — Orange County — has been seeing prices level off.

Wei said California economists also were a lot more sober about how economic uncertainties like stock market volatility and the trade war with China will impact the housing market.

Will more people be able to buy a home?

The number of first-time homebuyers fell this year to 33% of all purchasers, a NAR buyer-seller survey shows, down from a high of 50% to one of the lowest numbers in history. First-time homebuyers also are consistently older, as are repeat buyers.

The median age of a first-time buyer is 33, vs. 29 in the early 1980s. And the median age of a repeat buyer is 55, compared with 36 in the early 1980s.

Yun blamed a lack of affordability for the change. About a third of first-time buyers, for example, relied on help from family or friends to come up with a down payment for a home purchase.

“What does this mean for families that don’t have deep pockets?” Yun asked.

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