I recently attended a short lecture by Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of Realtors®. He explained why pundits of all stripes get it wrong so much of the time. “The only thing I can predict with 100% accuracy,” he said, “is how old you will be 10 years from now.” I’ll give him the unspoken caveat, “if you don’t die.”
He then went on to make a series of predictions, many of them based on age demographics, about the short-term future of the national real estate economy. And while real estate is a local business, all local markets are informed to some degree by the national economy. In Austin’s case, the two are remarkably parallel based on Dr. Yun’s data.
Here are some of my take-aways from the lecture:
- We’re past due for a correction, but the indicators don’t point to one any time soon.
- Rental markets are probably going to remain strong for the next few years.
- Older populations remaining in their houses longer are one factor in tight inventory. So are millennials staying with mom.
- New home starts are inadequate to stabilize inventory, but drive up the cost of existing inventory in several ways.
- About 20% of millennials skip renting and go straight to home ownership.
- Interest rates will rise, but so what?