ADDISON – For the next four or five years, the housing market will be in recovery, predicts Lawrence Yun.
Yun is the chief economist for the National Association of REALTORS. He directs research for the association and provides commentary on the real estate market trends. USA Today listed him among the Top 10 Economic Forecasters in the country. He was also named among the 100 Most Influential Real Estate Leaders by INMAN News.
Yun spoke on the Chicago and national housing market at the Real Estate and Economic Outlook event presented by the Mainstreet Organization of REALTORS in Addison June 25.
When the economy crashed in 2007, every aspect of American life was affected. People lost their jobs, possessions, homes and realtors were unable to sell homes, Yun said. In Yun’s research, he found that new home sales had decreased, vacation home sales fell and households were not worth anything near what they used to be.
But, there is no longer such a dismal outlook, he said.
“I see good things coming,” said Yun during his presentation in Addison.
Yun predicts job growth and more households being formed throughout the country. This year alone the number of households increased from around .6 million households being formed to around 1.10 million.
Even with more people getting jobs and the ability to buy a new home, less new homes are being built than ever before. Yun said newly constructed home inventory is at a 50-year low. The Chicago area housing inventory is specifically down 29 percent since last year. Builders rely on construction loans to build and the banks are not giving out as much money. With rising guarantee fees and Federal Housing Administration insurance premiums, less people have the money to build a new house. Due to these factors, Yun predicted home prices are ready to rise by 13% cumulatively in 2013 and 2014.
Even though people aren’t building new homes, lots of people are renting. The renter population is at an all-time high since 1980. Yun explained that this rising renters population will cause an uneven wealth distribution between renters and homeowners. For 2014, Yun predicts the net worth of homeowners will be a little below $200,000, up from around $170,000 last year. On the other hand, renters’ net worth will be well below $50,000 with some renters barely scraping by day to day.
But overall, Yun is optimistic about the market. It will just take four or five years for the economic and housing markets to completely recover.
“I’m so happy to hear there is an optimism,” said Addison realtor Branka Poplonski.
Poplonski enjoyed attending the event to learn more about the economic and housing market for herself and for her clients. She plans to use this knowledge to help her clients understand the market. She also plans to print out copies of Yun’s powerpoint presentation for her clients.
“We like to answer the questions,” she said. “When you have a graph, it says a thousand words.”
According to Poplonski’s observations, rentals in Addison are selling quickly. But just as Yun noted, the inventory is down and people are not building as many houses in the Addison area.
Poplonski’s suggestions for people looking to buy or sell a house is to call a realtor agent, get pre-qualified and be honest about needs and restrictions. She said this way the realtor can work with the client’s needs to help the client find the best place for them.