According to the National Association of Home Builders’ (NAHB’s) Fall Construction Forecast Webinar (CFW) which featured three renowned industry experts: NAHB Chief Economist David Crowe, Mark Zandi, Chief Economist at Moody’s Analytics, and NAHB Senior Economist Robert Denk; the net Gross Domestic Product (GDP) is predicted to increase from 1.5% in 2013 to as much as 4% at the end of 2015. The Webinar, a new addition to the dissemination of information to the real estate industry nationwide, was held to present views on the outlook for the US economy and the housing market more specifically.
All three participants had some of the same basic views on the economy and housing market in general. In addition the GDP being on the rise, private corporations are showing phenomenal job growth and hiring and are starting, once again to operate in the black. This factor along with the housing supply being more than the demand, “upside-down houses” regaining their value, and banks paying back the money from the bailout are all good news for the real estate industry.
On a psychological level, consumer confidence and builder confidence has increased to records highs not seen since 2007 in the 1st 2 quarters of the year. Also, the tight-fisted approach of American households throughout the Recession has eased as there is, for the first time in 6 years, an increase in the purchase of durable goods – cars, furniture, “big purchases.” These expenditures go hand-in-hand with consumer confidence. Even though the growth is extremely slow, across the board, there has been an increase in employment as well.
Trying to get back to “business as usual,” builders are getting aggressive about starting new inventory and custom homes. They are running into obstacles not seen in the last 20 or so years during the housing bust – a shortage of labor, increase materials cost, unavailable materials (no one is keeping any inventory in stock), and, of all things, a shortage of lots. Still, overall, the good news is that the reason for these challenges is because builders are in need of a supply that will have to increase to meet the demand, which will mean an increase of business and profit for vendors and sub-contractors alike.
Robert Denk pointed out the discrepancies of statistics from state to state. Not all housing markets in all states were affected “equally,” so in some regions, stronger and significantly weaker housing market growths skewed the statistics unevenly. Here in Louisiana, the real estate industry slowed noticeably for 2 – 3 years while in other markets, real estate has still not made a full recovery. 2013 has been a particularly strong year in real estate in St. Tammany Parish with sales and homes on the market increasing even from the 1st quarter to the 2nd quarter.
The only constant deterrant to a full recovery of the real estate industry is the problem of loan qualification for any buyer. The loan process can be arduous and painful for home buyers as well as those looking to refinance. Since federal regulations were put in place, the process for lenders, trying to adhere to the new rules, has been bogged down and full of obstacles. Until credit restrictions and loan qualifying rules are “figured out” or eased, home buyers will still struggle somewhat on getting financing for their new home purchase.