The NAR Chief Economist said WHAT!?
Along with other Association Board of Directors from our region, I just returned from the 2019 Regional Leadership Day. It was a great day, full of ideas. As part of the overwhelming amount of information and brainstorming provided, we were given an insightful presentation by the National Association of Realtors Chief Economist, Dr. Lawrence Yun. I’ve heard him speak a few times and his outlook on the housing market and external indicators is always interesting, both from a national and local perspective. I wanted to highlight four quick takeaways that really struck me from his thoughts today:
Even though we are currently experiencing a partial government shutdown, a volatile stock market, fluctuating interest rates, and flirting with international trade wars, the overall economic metrics show a very healthy economy. Unemployment is at 3.9%, the DC metro area has seen 23% growth compared to the 13% national average since 2000, and nationally 90% of all metro areas have seen price gains in recent years. All positive indications for long term stability and growth, even while we do face temporary uncertainty. Dr. Yun referred to the DC area as somewhat “recession proof” and our insulation from nationwide changes provides us with a great market for home buyers and sellers.
Once again, the idea of walk-ability and convenience is continuing to drive downtown areas to stronger price gains versus distant suburbs or rural areas. While both areas have experienced full recovery in our area since 2008, those properties closer to downtown areas have seen a stronger pricing position and are more desirable to today’s home buyers.
NAR continually conducts consumer surveys to gauge buyer optimism towards the housing market and majority of buyers believe prices will continue to rise in a healthy way, but there is diminished optimism in the overall home purchase process. Lack of inventory has made it tough for some buyers to get the home they want, when they want it, but patience and education pay off huge for those buyers who can stake their claim in the American dream as they begin building their own equity.
That leads me to the fourth and final takeaway. There was a slide provided to show the overall wealth built by homeowners versus renters over the past 18 years. I’ve included it here:
It’s not a surprise, but it is visually shocking. While homeowners have gained in their overall net worth, from just under $200K in 2000 to over $250K in 2018, renters’ net worth has remained flat since 2000. Tenants usually don't want to rent forever, but this should provide motivation to anyone out there currently paying their landlords’ mortgage by showing them that in order to build their own wealth, home ownership seems to be key.
If you’d like to dive deeper on any of these specific takeaways or want a more detailed run down of the economics of our local and national real estate market, please let me know. I’d love to share more with you!