Last week, I had the privilege of attending the National Association of REALTORS® Conference in San Francisco. There were a number of highlights on my trip, including speaking to the Women’s Council of REALTORS® on the power of Memorable Marketing. Additionally, I got to know a number of fantastic agents who visited my booth to learn about their individual design styles. I also learned one of my very special agents not only got to see Hillary Clinton from the front of the theater, but actually got to meet her backstage. And of course, I was able to listen to the NAR officials, especially NAR Chief Economist, Lawrence Yun, discuss what will be coming in the real estate industry.
First he shared that more than 21,000 agents attended the conference which is 10% more than they expected and was a strong sign of continued improvement.
He reported that home sales have increased a cumulative 20% in the last two years with median home prices increasing a cumulative 18% over the same period.
NAR’s prediction is that home prices will continue to climb nationally 6% in 2014 with interest rates rising to 5.4%. What is interesting is that he also predicted that demand will plateau as prices and interest rates rise. This will help in areas that still have low inventory compared to the number of homes that the market is demanding. Nationally, there are under one million units currently available, and Mr. Yun indicated that the amount of inventory needs to increase 50-60% to 1.5 million to get back to a sustainable level.
He indicated that there are a few variables which could affect the continued recovery including employment (which could either positively or negatively affect the recovery) or loosening underwriting standards (which would positively affect the recovery by allowing more buyers to get a loan).
A critical factor is the continued availability of real estate loans and the ease of the lending process.
Additionally, NAR officials discussed appraisal parameters for improving appraisals as there have been notable inconsistencies.
The number of homes sold next year will be consistent with what is predicted for this year – around 5.1 million units. New construction units may increase by 25% (partially due to the recent availability of new construction units). Our builders are still seriously underfunded which is limiting the amount of new construction that can enter the market.
He also discussed the impact of the government shutdown, noting that buyer traffic tapered off during the shutdown. The number of purchase applications dropped dramatically during the shutdown. Additionally, he was concerned that as the government revisits this issue in the beginning of 2014, this may affect the real estate market again.
All in all, Lawrence Yun has indicated, “We’ve had a decent year this year and next year will be roughly the same.”
If you haven’t attended a National Association of REALTORS conference, I urge you to do so. Next year the conference will be in New Orleans so reserve the date! November 7th-10th, 2014.