I got to hear Dr. Lawrence Yun, NAR’s Chief Economist speak at SMDRA last week and here are some highlights that I heard—
He is expecting that 2nd quarter GDP growth will be about 5%, the highest we have seen in a long time.
Average hourly wage in Denver is approximately $30 an hour, so if you work full-time that’s $62k a year.
Metro Denver has seen job growth of 25% since 2000, nearly double the national rate of growth (13%).
He did say after a question that a Balanced Market today may be just 4-5 months of inventory instead of 6 months because the internet has allowed people to find and research homes faster.
97% of CO homeowners pay < $10,000 in property taxes.
93% of CO homeowners owe < $750k on their PR mortgage.
From a Fed study in 2016—the average homeowner in our country has a net worth of $220k. The average renter in our country has a net worth of just $5,000.
Dr. Yun also gave 5 reasons why mortgage rates will NOT decline—
The Fed is increasing short-term rates (the Fed Funds Rate)
The Fed is raising long-term rates by Quantitative Tightening, the reversal of their Quantitative Easing program.
Inflation is increasing.
Our national debt is increasing.
Thus, our Treasury debt is increasing and this extra supply will cause the Treasury to raise rates.
Dr. Yun was also asked why he thinks wages are NOT rising faster. He said 50 years ago our biggest companies like GM had hundreds of thousands of employees who demanded higher wages when times were good. Today, our biggest companies or most profitable companies are tech companies like Facebook or Google who have far fewer employees and they have less clout.
Also, tech companies pay out bonuses and stock options instead of higher wages unlike the GMs of old. Plus, 50 years ago unions were prevalent and they are not today outside of the government.
Finally, I did ask him privately about his concerns of housing affordability when comparing income increases to home price increases as I explained my example from my Bubble class, but he didn’t answer my question really, other than to say that this can’t continue forever.