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June 2010
Index of all
messages
from the Association President
NAR Mid Year Meetings deliver hopeful message about economy
By David Barber, AAR President
I recently had the privilege of representing you at the National Association of REALTORS® Mid Year meetings in Washington, D.C., meeting with members of the housing industry who “hold the crystal ball” on the future of our business.
NAR Chief Economist Dr. Lawrence Yun indicated that we saw 4.4 million buyers take advantage of the recent tax credit program; of those, two-thirds were first-time buyers and one-third were repeat buyers. Nearly one million entered the marketplace primarily to take advantage of the credit – in other words, the tax credit brought buyers into the market who otherwise would have been sitting on the fence. The impact to inventory was to drop levels by two to two-and-a-half months.
Yun also stated that in the current market, 30 to 40 percent are distressed sales and that prices were temporarily propped up during the tax credit period.
What does this mean for the future? The key factors to continuing momentum will be:
1) Job creation. The tax credit neutralized the loss of four million jobs but job creation must be a key to the future.
2) New household formation. As the economy improves and jobs become more abundant, Gen-X-ers will move out of the family home and begin forming households of their own, bringing an increased demand for housing.
3) Consumer confidence. As this improves, so will the need for new households.
Yun expects that it will take four to six years to see all three factors come into play, but also emphasizes that things are moving in the right direction. He forecasts seven million home sales in 2012, but thinks price increases will be a slow following indicator because foreclosure activity will hold prices down in the next six to twelve months.
Economist Mark Zandi of Moody’s Analytics predicts that we will see a GDP rise of three percent in 2010 and an unemployment drop to 8.5 percent in the next year with the economy returning to full employment by 2013.
As we look forward, our prognosis is good but we still have a long way to go. It has never been more important to use the tools your Association provides to help ensure your success. Combined with NAR’s commitment to continuing the Right Tools/Right Now program, the future is as bright as you want to make it.
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