ORLANDO — The incoming 2017 President of the National Association of Realtors (NAR), Bill Brown, had strong words about the state of homeownership in the United States today at a media briefing at the NAR annual conference and expo in Orlando.
“It isn’t fair, and it needs to be addressed,” said Brown, discussing the barriers to homeownership for first-time buyers in particular.
“The good news is that we have a very clear picture of the challenge at hand,” Brown said. “Home prices are rising at a time when high rent, student debt and other factors are making it hard to save for a down payment. On top of that, credit is tighter than ever.”
“We also know that millions of Americans, particularly minorities, immigrants or simply low-income households,” tend to avoid debt and therefore don’t build credit, he added, and that some credit rating models exclude on-time rent payments and utility payments.
“The result is stiff competition” for buyers, he said.
“As President of NAR, I will be laser-focused on meeting these challenges head on.”
Brown mentioned other initiatives that he believes will help consumers and Realtors, too.
“Guaranteeing loans for investors to purchase ensures lenders continue to make safe, affordable mortgages that are available to borrowers,” he noted, adding that NAR will work to ensure that regulations surrounding loan sales and administration remain navigable.
And “far too many Realtors are falling short of their retirement savings goals,” he said, noting that although many agents make a good living, they haven’t been able to save for retirement as they’d like.
“NAR wants to see all of its members reach their financial goals,” he stated, noting that the association has launched a course on personal real estate investing for members.
Preparing for a wave of retirees
In many industries, experts are concerned about a potential “brain drain” — the exodus of more experienced employees, who reach retirement age and are not being replaced at equal rates.
This is something NAR is thinking about, said Brown. “We’re stressing that our agents really focus on technology,” he said, noting that agents need to understand where their sources of knowledge are (their broker, NAR and the internet), “and they need to use those resources to become really proficient in business.
“Their broker needs to make them aware of the practical, everyday occurrences that might happen when buying or selling a house,” he added, because the range of information available on the internet isn’t going to cover every question an agent should be able to answer — like, “what do you think about this house” or “is this a good deal?”
“That type of training is going to come one-on-one from the broker and other agents in the office.”
‘A decent run’ — about to end?
Lawrence Yun, NAR’s chief economist, said that when it comes to the housing market, “we have had five straight years of a decent run.
“Is it due for a correction? We are starting to see some flattening out in terms of buying activity, but that could be due to a lack of inventory and also an affordability issue.”
Buyers are least enthusiastic about buying in areas where price growth is sharpest, noted Yun, who said that he believes this is contributing to the flattening.
If builders could “tilt toward more moderate-priced home, the housing market would move along at a faster pace,” he said.
“Given the pent-up demand, I think in the next several years we should see a steady increase” — assuming there is no economic recession and also assuming there’s an increase in housing starts.
Yun said that between inventory, interest rates and affordability, he is most concerned about inventory for 2017, saying that a more robust supply is the best way to dial back the price growth we’re currently seeing.
Yun believes mortgage interest rates will rise to 4.3 percent in 2017.
Interest rates and the economy
Dennis Lockhart, president of the San Francisco Federal Reserve, also spent some time speaking in the media briefing.
“The momentum in employment is important to this industry and is also a good indicator of the overall momentum of the economy,” noted Lockhart when asked whether he agreed with the Fed’s decision to hold rates steady.
“I don’t know what the committee will decide in December, but for me, there’s a relatively high bar in purely economic terms to not moving in December,” he said.
And the political talk about becoming more protectionist when it comes to international trade, Lockhart said, could cause some pressure to increase inflation and therefore rates — if a more protectionist trade policy is manifested.
“If anything, inflation is running lower than we’d like to see it,” he said, “but there are good and not-so-good reasons for inflationary pressure, and I would say a not-so-good reason would be rising import prices” as a result of a protectionist trade policy.
Broadly speaking across the country, Lockhart said he didn’t believe “we are currently in bubble territory.”