SAN FRANCISCO (November 8, 2019) – Consumer confidence, the employment market and housing innovation were heavily discussed topics at Friday’s National Association of Realtors®’ 2019 REALTORS® Conference & Expo in San Francisco, California.
The NAR session – Commercial Economic Issues & Trends Forum – allowed three housing experts to highlight recent commercial economic trends while projecting what they believe is to come in the future.
Dr. Lawrence Yun, chief economist and senior vice president of research at NAR, said the nation’s economic outlook is promising. “I do not foresee a recession in 2020,” he said, citing healthy consumer activity and job creation in every state.
Yun added that because the country has gone more than 10 years without one, some analysts believe the country is “due for a recession.” But Yun counters that theory, saying that current conditions are better than they were before other recessions.
“The U.S. is in need of more new housing,” he said. “Historically, anytime that we have needed to build, there was never a recession. This is an incentive for builders to start more construction. If they do, I think we will have at least 12 consecutive years of economic expansion.”
Yun noted that other countries are experiencing more dire circumstances, including Germany, which is said to be currently in a slight recession. He said even in a scenario where the U.S. avoids a recession, but if more countries face challenges of restricted global trade, then that would consequently harm the U.S. “The hope is that no other country has to deal with that. If other countries go down, it would be impossible for America to grow,” he said.
Kenneth T. Rosen, chairman of the Rosen Consulting Group, slightly disagreed with Yun’s outlook. “I think there is a rising risk of recession. If some things go wrong, we could get a recession,” he said. Rosen said failing to form a truce with China over tariffs, combined with political ramifications in the 2020 presidential election, could spur a decline of some sort.
However, Rosen said his example is not as likely, and that Yun’s outlook of avoiding a 2020 recession is more probable. “Around the country we have pretty strong job creation, we’re adding lots of jobs,” he said. “Consumers feel great so there are no signs of a recession, although a trade war does cause uncertainty. I think if we’re smart, we’ll get a truce on this and we’ll go forward.”
Patrick Kennedy, president and owner of Panoramic Interests, discussed a forthcoming project that is expected to address housing shortages. Kennedy shared with the audience an animation that essentially showed how his company would mitigate traditional construction times by using modular homes.
Kennedy said this housing is equivalent to a 40 unit apartment building. However, unlike such a unit that would take at least a year to build, his housing could be erected in a given community in about 14 weeks.
“Price is the best amenity,” he said. “The cost is 20 to 30% less and done approximately nine months sooner.”
Kennedy says the design would go a long way to provide affordable housing in California and that it can be duplicated on a massive scale in any community. He said that his target resident would be a person who wants to move to an area – perhaps for a job – but is otherwise unable to afford traditional housing or increasing rents. “The housing isn’t ideal for everyone. It’s for a niche group of people and it offers a first rung on the ladder.”
He says the Bay area, where this project is expected to launch, has the highest rents and contrition costs in the world. He believes his design is an answer to a lack of affordable housing in the 21st century.
The National Association of Realtors® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.