While waiting to moderate a panel discussion at the Sarasota International Real Estate Conference a few days ago, I listened to Lawrence Yun, chief economist of the National Association of Realtors, share his outlook for the market, and jotted down a few notes.
This is as good an answer as any to a question I get asked frequently: How will the market fare in 2015?
• In 2000, a normal year for home sales, 5.2 million homes sold. In 2013, 5.1 million sold. But the United States has 34 million more residents now than in 2000. The result is pent-up demand for homes, Yun said.
• American homebuilders overbuilt during the boom, but since then haven’t built the required number of homes needed to replace obsolete stock.
• Sarasota-area home building permits peaked at 14,000 in 2005 and 2006, fell to 8,000 in 2007 and were at less than 3,000 for five years. The past two years, about 5,500 permits were issued.
• New-home sales in 2013 were half of what they were in 2000, and interest rates (4 percent) were half, too.
• Builders can sell their homes quickly now, but they face labor shortages, and construction loans are difficult to get.
• Slightly more than 7 million homes sold in 2005. Slightly more than 5 million sold in 2013.
• Sarasota home sales were up 1 percent year-to-date through June; up nearly 20 percent in 2013; up 21 percent in 2012. The median home price is up 6 percent for houses and 29 percent for condos. The dollar volume (total price of all sales) is up 15 percent so far this year.
• How long has the Federal Reserve had a zero-percent rate policy? Six years.
• In the past two years, household income has gone up 4 percent while the median home price has gone up 19 percent.
• Shadow inventory is becoming less of a factor in the Florida market. At the beginning of 2010, 21 percent of the housing stock was distressed. Now it is less than 10 percent.
• U.S. household net worth is at an all-time high because of the soaring stock market. But 90 percent of Americans don’t invest in the stock market. The 10 percent that do are buying expensive properties on the water as second homes.
• Yun’s national housing forecast for 2015: Housing starts, 1.4 million; new-home sales, near 700,000; existing-home sales, 5.3 million; median price gain, 3 to 5 percent; average mortgage rate, 5.4 percent. (Good numbers.)
• Finally, he told his audience of Realtors, “Real estate sales is an entrepreneurial business.” Experience counts. “Twenty percent of agents have six-figure incomes,” said Yun. “Thirty percent make less than $15,000 a year.”
