Dr. Lawrence Yun, NAR Chief Economist, on Ann Arbor’s Economic and Housing Outlook

    Last week Dr. Lawrence Yun, National Association of REALTORS® (NAR) Senior Vice President of Research and Chief Economist, was the keynote speaker at the Ann Arbor Area Board of REALTORS® general membership meeting. Dr. Yun creates NAR’s forecasts, participates in many economic forecasting panels, appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress.

    Dr. Yun delivered an economic outlook and forecast of the local Ann Arbor housing market at the meeting. Among his key points:

    • The Economy is Good
      • Nationally:
        • Job Additions for 8 straight years
        • Unemployment Rate 4.0%
        • High Stock Market
        • High Net Worth
        • Wages Picking Up
        • Very Long Economic Expansion
        • Q2 GDP Growth Rate of 4.1%
        • Record High Wealth
      • Locally:
        • Unemployment Rate is low and below the national average
        • Total Job Growth in Ann Arbor: 10% growth vs 13% nationwide from 2000
      • Home Sales are Not Breaking Higher (over the last seven years)
        • Nationally:
          • Pending Contracts are Stable and Neutral
          • Low Inventory Means Weakening Affordability of Homes
          • Low Homeownership Rate
          • Low First-Time Buyers
          • Diminished Optimism of Home Buying
          • National Pending Sales Index: Lower Every Month in 2018
          • Lowest Inventory of Homes on Market in a Generation
        • Ann Arbor Market:
          • Home Sales Down 6.4%
          • New Listings Down 2.3%
          • Median Price Up 5.0%
        • Mortgage Rates
          • Will rise permanently, but not alarmingly
          • Waiting to purchase will cost consumers more money
            • Today: 4.5%
            • Spring 2019: maybe 5%
            • End of 2019: maybe 5.5%
          • Federal Reserve Balance Sheet Pace and Impact of Unwinding? Slow but Uncertain
          • Consumer Inflation Slowly Moving Up

    • Homeownership Rate Trying to Make a Comeback
      • Renters’ Desire to Own in Future? Strong Among Young Adults 18-34 years old
        • Older adults (65+) desire to own a home? Less than 5%
        • Wealth Build Up Between Home Owners and Renters Is Sizable
          • Homeowners Net Worth Currently is About $230,000
          • Renters Net Worth Currently is About $5,000
          • Renters Do Not Build Wealth Over Time as Homeowners Do
        • Diminished Optimism: NAR Survey of Consumers
          • 48% Strongly Indicated Good Time to Buy in 2017 Q3
          • 39% Strongly Indicated Good Time to Buy in 2017 Q2
          • Lack of Supply: Need to Boost Single-Family Housing Starts
        • Ann Arbor Single-family Housing Starts
          • Numbers Rising Slowly
          • Over 500 in 2018
      • Boost Home Construction
        • Provide Regulatory Relief to Community Banks
        • Remove Tariff on Lumber and Building Materials
        • Don’t be Too Stringent on Zoning Land Use
        • Repurpose Malls into Condominiums
        • Vocational Training for Construction Industry
    •  Forecast:
      • National Existing Home Sales Inching Higher 4% over 2 years
      • Median Home Price Rising 8% over 2 years

    In summary, Dr. Yun said, “The overall condition is that the economy is good, but isn’t lifting home sales at the moment, but that is due to the inventory shortage. As home builders begin to build more homes, and more inventory comes on, all of this work, all of this job creation will lead to more housing demand, and that will be the source of more business activity.”

    You can view the full recording of the AAABoR General Membership Meeting and Dt. Yun’s presentation here.

     

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