I am participating this week in the National Real Estate Cyber Convention and just attended a keynote presentation by Lawrence Yun, the chief economist of the 1.2 Million member National Association of Realtors and widely considered one of the top ten economic forecasters in the country. Here are some of the highlights of Mr. Yun's very interesting talk about what to anticipate in 2010. This is part one of my recap of his lecture. The second part will be covered in a separate blog post:
- Predictions are for 15% higher unit sales in 2010 which will cause inventory levels to stabilize.
- 2 Million first time buyers are expected to take the 1st time buyer credit to date
- An additional 2.4 Million (both 1st time and move up buyers) will take the credit by June 30 (when the credit is set to expire)
- The real estate recovery is bifurcated with the recovery taking place primarily in the lower end. The Boca Raton luxury market and market of properties in excess of $500,000 is sluggish and will continue to be as interest rates on jumbo mortgages are much higher than government backed mortgage rates.
- There are 16 million renters today as compared to 11 million in 2000 when the real estate market was "normal". This means there are about 5 million more renters than in normal times. Some of this excess are possibly people waiting on the sidelines for prices to continue to erode, but predictions are that the low interest rates and the tax credit will bring them into the market as buyers.
- The consumer fear factor has lessened which will cause more people to jump off the fence and into the market as a result of rising consumer confidence especially as the job recovery continues
- Household Formation: although the population nationally rises by approximately 3 million people/ year, however the number of households is not increasing. This is due in part to more people doubling up with roommates and more young adults moving back in with their parents. Mr. Yun predicts that when there are strong indications of signs of a job market recovery, this will spur additional household formation.
- What will cause the units sold to increase in 2010? The tax credit will help stimulate activity in the first half of the year, while the second half will increase due to job stabilization and increased consumer confidence.
- Mr. Yun discussed the possibility that the first time homebuyers credit is stimulating the market too much and bringing prices up. He says that especially in market such as the Boca Raton real estate market where prices bubbled so high and were unsustainable, that the price declines have possibly overcorrected.
I will continue to recap this very interesting information in my next blog post.
Gloria Singer is the Broker of Boca Expert Realty, a boutique Boca Raton real estate company with a focus on professional service and an unparalleled customer experience. Our select agents are amongst the top performing professionals in the field. Visit www.BocaExpert.com for information on Boca Raton, Delray Beach and Highland Beach real estate and to connect with an expert in the local market.