'Final thoughts' on the housing economy
The 2022 ProDealer Industry Summit in Washington, D.C., featured some of the industry’s top forecasters and economic analysts in a forward-looking review of business and the economy. Forecasts are continually revised (see here and here), but many of the ideas presented in D.C. deserve repeating.
At the close of the session that dealt with all the usual macro-economic trends and many others, panelists were asked to share “any final thoughts.” Here are excerpts:
• Matt Saunders, VP building products, John Burns Real Estate Consulting:
“If you’re looking for new construction building materials spending, watch builder cycle times, more than watching starts in this environment. And for those of you who are just now watching [the 1970s hit show] Star Trek, inventories are probably too lean for the demand that’s coming.”
• Danushka Nanayakkara-Skillington, assistant VP for forecasting and analysis, NAHB:
“Everyone was blaming the millennials for eating avocado toast and just saving money, but they are out buying houses now. So coupled with the demand from the millennials and the housing shortage, we have so much demand coming through. But it's the supply side — the labor, the lots, the lumber the lending, the regulation costs. We should be able to rise to the challenge, but it is a huge challenge.”
• Lawrence Yun, chief economist, National Association of Realtors:
“When the price of bread increased in India, there were massive street protests. When the price of gasoline rose after an adjustment of French policy, the Yellow Vests came out [to protest in France.] Is there anything that could really trigger social dissidence here? What about housing costs? With prices going up so high, we have a permanent division between owners and renters. Owners continue to save the equity, using housing wealth to fund a college education for children, while the renters feel completely left out. And this is the path we may be going on, where the rising home prices and home ownership rate not rising. At what point do we have this housing crises move into huge social discontent?”
• Michael Fratantoni, chief economist, Mortgage Bankers Association:
“I was on a panel with one of my members recently and his comment was, ‘Look, over four or five years this is a fantastic business to be in. Quarter to quarter it is a bear.’ And it is just a challenge. And I imagine that is what many of you are feeling these days as well. The next three-to-five year period is probably going to be the strongest housing demand we’re going to have in history in this country. So enjoy it over this three-to-five year period, even if the next couple of quarters are a little bumpy.”
The ProDealer Industry Summit in Washington, D.C. concluded April 2.
