Economist Says Only "Full Blown Trade War" Will Spark Recession
June 6, 2019
The Chief Economist and Senior Vice President of Research for the National Association of Realtors gave a presentation on real estate trends and the economy in Genoa Township.
Roughly 60 realtors from the area came to hear Dr. Lawrence Yun’s findings and commentary on the national economy and what it means to the real estate market, Wednesday afternoon. This was the third time that Yun has presented to the Livingston County Board of Realtors and other stakeholders in the industry. He began with a recap on the state of the economy. With strong and historically lengthy economic expansion occurring, along with a rise in jobs being created and the average hourly wage rate accelerating, Yun says customer confidence about the economy is at an all-time high. Traditionally, after extended periods of economic growth, the country will enter a recession. Yun, however, says that with the current momentum for this year and 2020, he doesn’t see a recession happening. The one thing that can change that, in his opinion, is if “full blown trade war” happens.
On the real estate side, despite higher incomes and job rates, existing home sales have flattened, though new home sales have gone up. The problem Yun sees locally as well as nationally, though, is a lack of affordable housing, caused by developers ignoring the low and middle income markets. He said that starter and mid-priced housing developments have been under-produced by builders over the past decade, in favor of working on higher cost housing projects. He said we are now suffering the consequences of that which are that there is a now a shortage. Because of that, homeowners are staying in their current homes for longer periods of time, home prices are outpacing income growth, and boosts to local economies, like developers shopping for lumber, are not happening. Yun estimates that there is a shortage of 5-6 million homes, and that in a best case scenario, it will take builders 2-3 years to fill that gap.
He shared some ideas for solutions, including training more construction workers, as there aren’t enough skilled trade workers for the jobs needed. He also recommended that local governments make certain their zoning laws aren’t too constrictive and that the permit processes run in a smooth and timely manner. He closed with a housing forecast that suggested that new home sales will grow, especially in the mid-price range, as developers begin to build more units in that category.(MK)