Realtors® Annual Expo: Low Unemployment, Low Interest Rates, but Higher Housing Cost

SAN FRANCISCO (November 8, 2019) – Analysts and researchers who calculate and distribute some of the most coveted housing data in the nation took the stage Friday at the National Association of Realtors®’ Residential Economic Issues & Trends Forum during the 2019 REALTORS® Conference & Expo in San Francisco, California.

The five presenters, all staff members of NAR’s research team, discussed historically low mortgage rates, recent home buyers’ behaviors and expectations for 2020’s housing market, among other topics. The group held a brief question and answer session at the conclusion of their presentation. 

Dr. Lawrence Yun, chief economist and senior vice president of research at NAR, spoke first, explaining the role the Federal Reserve has played in helping to bring about significantly low mortgage rates.

“The rates,” Yun said “are more tied to communication, not policy. In prior years, mortgage rates dropped just based on the Fed’s consideration of policy changes, not actual changes.”

Yun also addressed 2019 home sales and gave a forecast of his expectations for sales in the coming year.

“Interest rates will remain low, as long as we have government backing of mortgage-backed securities. But mortgage rates may increase as inflation kicks in and economic activity markedly picks up.” Yun added that there has been underbuilding of houses for years and buyers are facing higher housing costs as a result.

Overall, Yun painted a favorable outlook for the future. “We will not have a recession, and will see a baseline growth rate of 1.5% for 2020.”

“New and existing-home sales are expected to increase,” he said while addressing current low unemployment rates. “Every state is creating jobs. Some states are doing it faster than others, but we see job creation in every state. That and lower mortgage rates are helping first-time buyers get into the market.”  

Dr. Jessica Lautz, vice president of demographics and behavioral insights at NAR, discussed the associations’ 2019 Profile of Home Buyers and Sellers, which was released earlier today. The survey – considered the industry source of trusted insight into consumer behavior – revealed some unique shifts in home buyer and seller behavior in 2019, according to Lautz.

“As birth rates dropped nationwide, fewer buyers have children under the age of 18 in their homes.” This, Lautz explained, can impact the size of a home and how long a family remains in a particular home.

Another shift discussed was an increase in dog parks throughout various neighborhoods. “Just a few years ago, buyers were concerned about living near the best schools, but now we’re seeing a jump in the desire to accommodate pets with outdoor spaces and proximity to dog parks and vets.”

Brandi Snowden, NAR’s director of member and consumer survey research, spoke about consumer sentiments toward the housing market and trends in home remodeling. Her presentation took a look at home buyer perceptions, along with some disparities between homeowners and renters. Over the last year, consumers believing whether or not “now is the time to buy” have been trending downward, according to Snowden. However, she says that research also indicates that consumers overwhelmingly say that now is a good time to sell a home. “A kitchen remodel is a great way to increase the functionality and livability of a home,” she said. It also helps those looking to sell.

But not all homeowners are looking to put their home on the market. Based on NAR’s home buyers and sellers’ data, tenure in homes is increasing. Snowden added that a number of homeowners have chosen to stay in their current homes and tackle remodeling projects. Such projects, she says, often offer high returns on investment, increased happiness, and more comfort in the home.

Gay Cororaton, NAR’s director of housing and commercial research, spoke on the latest results from the Profile of International Transactions in U.S. Residential Real Estate 2019 and discussed the 2019 U.S. Vacation Home Counties Report – two projects she helped author. “Foreign buyer purchases have declined sharply since 2017 amid weakening global economic conditions and rising U.S. home prices,” she said. Cororaton noted that Chinese buyers have been most impacted by the weakening of the yuan, tighter control on dollar outflows, and strained US-China trade relations. Foreign buyer purchases dropped to $77.9 billion in 2019 from the $153 billion level in 2017.

Regarding the 2019 Vacation Home Counties report, vacation buyers are a large part of the market in counties in Maine, Wisconsin and Michigan, said Cororaton.

Data Scientist Julianne Heller spoke on predictive analytics. She discussed predicting members who are likely to achieve a certification or designation. Heller says specific course topics and membership data allow researchers to match certain courses with the interest of a given member. Even an individual’s everyday personal tastes are helpful, she says. “We can look at a member’s choice in music or whether they like coffee and learn a great deal from that.” The goal, she says, is to tailor resources to each member’s interests, to engage at an individual level, and to assist in the personalized growth of every member’s career as a Realtor®.

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.