I was fortunate to get to attend a 2 hour economic forecast seminar with Lawrence Yun.
Yun is the chief economist for the National Association of Realtors, and he has been listed as one of the top 10 economic forecasters in the country by USA today, and one of the most influential people in Real Estate by Inman News. From nearly 2 hours of economic forecasting, here is the most important predictions:
-Iinflation could rise to 4% to as high as 6% a year in 2014 through 2015. But Yun projects inflation around 2% in 2013.
–Interest rates should remain low for the short term future. The Fed will continue to borrow at zero percent through 2015 if unemployment remains above 6.5%, (which it is expected to stay above 6.5%).
–Yun projects rates to rise to 4.5% by summer of 2014, and 5.5% by summer of 2015.
-Median home values projected to rise 10 to 15% total over the next 3 years (National average).
-Rental rates expected to continue rise locally, and nationally. Home values and rent rates are expected to climb primarily based on lack of supply and a growing demand. Household formation overdue to climb up since many young people have been living with their parents and others living with roommates. As job growth continues, people will be looking to get into move into buy their own home or apartment.
–Supply will stay low due to new home inventory being at a 50 year low. New home construction has been way below the historical average for 5 years. So the population is growing, and new home construction is not keeping pace. This is especially true in the Northwest.
-The forecast was very optimistic, with it a clear message from Yun that “now is the time to buy”. Below is a chart Yun presented showing that home values are still low. This is based on a long term average of 4% home appreciation.
See this link for chart. 2013+NAR+Economic+Forecast++-33