Will the housing recovery continue?
Will the housing recovery continue into the second half of 2014? How about next year, or until 2019?
The consensus among four expert economists at a panel at the Bipartisan Policy Center 2014 Housing Summit is a resounding yes.
That’s not to say there aren’t some risks to growth. But the economists agree that housing is unlikely to slide back into the economic doldrums.
During the luncheon panel moderated by Paul Jackson, CEO of HousingWire, four economists gave projections for housing over the next five years.
Jackson opened the panel by asking for people who believe housing is "on firm footing" to raise their hands. Only a few in attendance, packed into the Grand Ballroom at the Renaissance Hotel in Washington, summoned the courage to raise their hands. If Jackson would have also projected the same question to his four panelists, the result would have been different. All four would have raised their hands.
Jonathan Smoke, chief economist at Realtor.com believes we are firmly in recovery mode.
"All of our data points suggest a better second half of every year. Home-price appreciation is much healthier. Life is going to be changing from a demographics perspective. We put a major pause on all of our lives during the Great Recession. We have these waves of baby boomers, the wealthiest generation, even if they elect to stay in place we should see a substantial increase in home improvement."
Mike Fratantoni, economist for the Mortgage Bankers Association, pointed to macroeconomic conditions improving across the board. "I think we are on the edge where we’ll see meaningful wage growth for families," Fratantoni said.
"There is a concern the housing market may pull the economy back under. I see the housing market being pulled behind the locomotive of economy. People are spending, but not on housing. We’re running 10% behind. The weak demand is very disturbing. Disturbing at the entry-level of the market the share of homes going to first time homebuyers is as low as it’s ever been," he said.
Fratantoni added that the trend of rising rents will drive homeownership. “One benefit of owning a home is no one can raise rent on you," he added.
Beth Ann Bovino, chief economist of Standard & Poor’s, said certain negative economic conditions are now turning around, as proof that housing can be sustained.
"Real wages were negative, we’re starting to see that turn around. We’re wondering where the consumers were and it seems they’ve gone back to the mall. We’ll be looking to see housing starts finally reaching and holding 1.5 million in two years," Bovino added.
Raphael Bostic, USC Sol Price School of Public Policy, raised the question of when the national mental collective will swing back psychologically to support owning a home.
"All this conversation is that this is the recession in the past. Look at all the international instability. They look at the city and they’re scared Washington is going to do something to screw it all up again. Ownership doesn’t buy [millennials] very much right now. They want to innovate and create right now. My guess is when they start pairing up, they’re going to want a house all of their own. This economy will continue to grow," Bostic said.
Bostic eased back into his seat and looked over the large crowd finishing their lunch and launched a rhetorical question.
"Why can't we see sunshine on a partly cloudy day... Or partly sunny day?" he asked.