Southern Oregon Economic Summit

Lawrence Yun is chief economist and vp of research for the National Association of Realtors.
Recovery appears to be genuine and will last four or five years.

Real estate sales is highly entrepreneurial, relationship building is very important and the number of hours worked.
Pending sales are at a five-year high. Homebuyer tax credit created two spikes during the recession. Natural forces of lowe interest rates, job creation, household formation has boosted pending sales.
Actual closing figures don’t match 1 to 1, but things are moving in the right direction, Yun said.
We won’t reach peak levels for another six years.
New home sales have been down and only scratching surface of recovery — 28 percent of peak levels.
It’s a supply constraint, but not a lack of demand.
2008-2011 existing home sales was difficult for the industry. In the past two years, investment sales have picked up.
Institutional investors went into places like Phoenix and Detroit, bought 2,000 properties at a shot and are doing well.
Accidental landlords: Homeowners who need to move for whatever reason. They are underwater and don’t want to do a shortsale. They rent out their old homes and buy elsewhere.
Vacation home sales have been lagging. It will see a good recovery in 2013 and 2014, Yun said. That’s because stock market has been at all-time high and money will be available to buy those vacation homes.
Lower end of economy still in recession, no exposure to the stock market. Younger people trying to scrape together money to save.
Buyes are more active than sellers when it comes to traffic. We’re finding buyer interest is almost off the charts, going to open houses. There is a gap with too many buyers, chasing too few homes.
90 percent of agents think prices will rise, market trends tend to follow what Realtors expect.
NAR reports double-digit price gains for a 5-straight months.
Medford vs. Houston. Medford grew much faster during boom, collapsed below in 2009 and is now growing closer to Texas. Yun says state should consider limiting home equity loans to where homeowners always have 20 percent equity.
In Oregon, the price expectation is for between 4.13 and 8.75% during the next 12 months.
New homes carry premium over existing home prices, but Yun said the gap should be narrower. The cost of materials boosts new home prices.
WSJ analysts forecast 5.3 percent hike in prices 5.3% and 5.1% in 2014, Yun says it will be higher because of low inventories. Builders will sell what they build.
Builders are dragging their feet: They say they want to build more homes, and can’t get construction loans because of regulatory issues.
Dodd Frank appears to be an over-reaction. Only half of Dodd Frank rules have been implemented, community banks are frozen, they don’t know what the rules are yet. They don’t have the legal staff to review the rules.
Builders who don’t have to rely on construction homes, the Wall Street funded builders.
The big boys are bigger and the small boys have been shut out.
In aggregate the small builders have built more homes than big builders, but that’s not the case now. As a result, the housing shortage will persist.
Closed sales are down 16% and inventory is down locally.
Household formation will boost sales.
There will be no fresh recession. There is more oil produced in North Dakota than Alaska.
In 20 years we may be exporting oil, rather than importing.
In Northern California employment is at 95 percent of prior peak, and 104% of of 2000.
There are more renting households than ever, but fewer homeowners than 8 years ago.

Net worth among home owners is close to $200,000, while renters are remaining with virtually nothing. Good renters can’t get a loan. The banking sector is sitting on piles of cash that they can’t loan.
Home sales could be 15 percent higher and more renters could get into homes if standards weren’t overly tight.
The choke point is about home building, Yun said.
Mortgage rates will go up, but not that much
A 3% cap on fees would hurt title companies.
Eminent domain for foreclosures will lead mortgage firms to close and go into other sectors.
Medford is lagging, but Northern California is read hot and that will spill over. Yun see values here rising 13% over next two years.

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