Real Estate and Economic Outlook, Midyear NAR Forecast Summit July 22, 2024.
The National Association of Realtors (NAR) has released its mid-year Outlook. You can view the entire video here. I have also taken notes from this Economic Outlook along with video time stamps. As a comprehensive Certified Financial Planner(tm) who specializes in investment real estate matters, my notes reflect this interest.
Presenter NAR Chief Economist Lawrence Yun
6:30 The Percentage Change of Pending Contacts (Year over Year) in May 2024 was worse than ever since 2001. It's not a question of lack of buyers. There is a lack of inventory (Listings). Low mortgage rates inspire owners to hold onto their homes and mortgages. "They are loving their mortgage rates."
12:45 International buyers are also down, the lowest mark since NAR began tracking this in 2009. Reason: There are not enough choices and a lack of inventory. Less lack of interest from International buyers.
14:45 Where are international buyers coming from? The number one country is Canada, with 13% of international buyers from this country. China (11%), Mexico (11%), and India (10%) follow.
16:19 US Population and population growth. The US population rises by two to three million annually, driving higher demand for homes. The US Population today is about 335 to 340 million people.
18:55 "The Lock-in effect. Due to life changes, not everyone with low mortgages will be able to keep their rates. Life happens. Every two years, 7 million babies are born, 3 million couples get married, 1.5 million couples get divorced, there are 50 million job switches and 4 million deaths, etc.
21:25 Existing home listings by price category: The largest bucket of homes listed are those over $1m and the upper-end categories overall.
22:25 Only two percent (2%) of the reported recent quarter sales are due to sellers being seriously delinquent (3+ months in arrears. (Source Mortgage Brokers Association). Also discussed at 41:51
23:52 Home price appreciation from Pre-Covid. All states are listed. The top five states with the highest appreciation during this period are Florida (66.4%), Montana, Tennessee, Arizona (60%), and Main (59.7%).
24:31 Homeowners maintain greater wealth than renters. In 2024, the NAR's estimated net worth for owners is $415,000. For renters, it is $10,000. Net worth includes equity in a home.
29:31. New multifamily construction and the tale of two stories: While Multifamily (construction) completions are high, multifamily (construction) starts are nearing recent lows (collapsing). Rationale: Current interest rates make it expensive to start new projects. Although rents are soft right now, this drop in multifamily starts may cause rents to increase sharply in a few years.
34:38 Long-term interest rates. Through 2025, likely calmer. There will be several cuts. Smaller banks are still hurting. Lower interest rates will help smaller banks. In earlier slides, the presenter indicated there could be 6 to 8 interest rate cuts into 2025.
Pat 2: NAR Deputy Chief Economist Jessica Lautz
40:12 A perspective on interest rates: Current interest rates are slightly lower than before the historical average since 1971 (Freddie Mac).
About the author/planner/teacher
As the Founder and CEO of The Real Estate Whisperer™ Financial Planning, Rich is a flat-fee financial advisor who provides advice only. By focusing solely on providing client-centered financial advice rather than managing investments, he ensures his undivided attention to his clients' needs.
Drawing on his extensive expertise, Rich provides valuable advice on various real estate topics, including buy-sell-hold strategies, tax-deferred and highly appreciated tax reduction strategies, real estate succession planning, and rental property cash flow analysis.
His exceptional knowledge and real estate strategies have earned him recognition in business and finance publications such as the Wall Street Journal, The New York Times, Newsweek, Kiplinger, and The Journal of Financial Planning. As an esteemed adjunct professor at UC Berkeley and UC Santa Cruz Personal Financial Planning programs, Rich has been Honored for his excellence in teaching.
Comments