Last week’s annual National
Association of Realtors® get-together opened with a grand gathering to hear what
some economics heavyweights would say about coming conditions in the country.
You could hear a pin drop through most of
it – despite the huge size of the auditorium. Our local real estate market is
never in total lockstep with the national picture – but it certainly is affected
by it. Economists are forced to play a guessing game, but the best are pretty
good at it.
Wells Fargo’s senior economist Mark
Vintner had good news and bad news. For those who have local real estate already in
their ‘owned’ portfolio, despite the downturn of recent years, he thinks they
own one of the few top-notch inflation-proof investments. “Real estate and
gold,” he said. He gave convincing reasons why, despite almost any curves the
middle-term future may send, the value of real estate (“housing”) should grow
even if the economy unexpectedly weakens.
The not-so-good news was Vintner’s
suspicion that the disparity in incomes will continue to widen, partly because
rising rents and tough lending conditions make it hard for first-timers to make
that first home purchase (of course, that’s good news for investors who own the
rentals).
Of equal interest was NAR’s Chief
Economist Lawrence Yun’s rapid-fire delivery of real estate stats and forecasts.
He thinks mortgage interest rates will stay at their current historic lows for a
while longer, but perhaps not so long as the Federal Reserve has been
indicating. Longer term, Dr. Yun expects interest rates to rise gradually, but
hold at the historically normal 5%-6% range. There were visible signs of relief
as he went through the slide show of charts and graphs which illustrated why a
return to double-digit inflation is unlikely.
The only moment of anything like
humor came when one of the experts was asked about the global economy, and what
will happen if no action is taken. “Europe has ‘kicked the can’ down the road
until there is no road left,” he said, “and no can, either.”
Then he paused thoughtfully
before adding, “But they’re still kicking.”
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