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"It appears that some home buyers are taking advantage of much lower home prices," reports Lawrence Yun, chief economist for the National Association of REALTORS ®In fact, NAR is forecasting sales gains in 2009. Were those gains to occur, it would be the first time since 2005 that home sales throughout the nation actually increased. "But the market is still far from balanced conditions," Yun added. "Buyers will continue to have an edge over sellers for the foreseeable future." Nowhere is that more true than in northwestern Oregon. While the region lagged the rest of the nation in the housing market's skid, the region also is likely to lag in the market's recovery. Home sales and prices fell throughout the Portland and Salem metropolitan areas in 2008. Where many communities saw double-digit percentage gains in the run up to the 2007 price peak, many were seeing double-digit losses last year. The worst may be yet to come, but more and more economists are starting to predict that the housing woes and other economic troubles of the last couple years will be a fading memory by the end of 2010. Forecasts from NAR show the nation's economic indicators falling for most of 2009, but then recovering by the end of the year. The organization's forecasts show strong growth in 2010. In recent years, home sales have been underperforming, which has harmed the broader economy. But economist Yun is forecasting home sales nationally to rise slightly in 2009, and then climb substantially the year after. Home sales overall should go up about 1 percent this year, and rise more than 8 percent next year, say NAR predictions. Existing homes comprise by far the largest portion of home sales each year, and NAR is predicting this sales segment to increase about 4 percent in 2009, followed by a nearly 6-percent gain in 2010. At the same time, the much smaller segment of new home sales is predicted to fall about 30 percent in 2009, followed by a gain of more than 40 percent in 2010. Likewise, housing starts are forecast to rise more than 30 percent in 2010 after a sharp drop in 2009. As buyers eventually start to burn through some of the national housing inventory that has built up over the last few years, data from other agencies show that the broader economy also is expected to improve. The International Monetary Fund, which monitors economies around the world, predicts that economic output in the United States will rise about 1.6 percent in 2010 after falling about the same amount this year. The Bureau of Labor Statistics, which gathers income and employment data for the federal government, projects that unemployment will remain relatively high in 2009. But projections show that while the number of unemployed people will be high, the percentage of those unemployed is likely to remain lower than in previous recessions in the 1980s and early 1970s. At the same time, mortgage interest rates are projected to remain low. While they may not reach the historic lows set in 2003, the Federal Home Loan Mortgage Corp., which tracks rates on conventional 30-year mortgages, says rates are likely to remain below 6 percent throughout 2009. NAR figures show rates remaining below 6 percent for much of 2010. This contrasts with record-high mortgage rates that were set in 1981 and 1982, when fixed-rate mortgage interest skyrocketed to more than 18 percent. The average annual interest rate in 2000 was just above 8 percent. Lawrence Yun has been an NAR economist since 2000. He received his Ph.D. from the University of Maryland and has taught economics in the United States and Russia. He also has served as an economics consultant to the U.S. Department of Education and the U.S. Department of Veterans Affairs. The tables below give a statistical view of how some economists expect the nation's economy and the residential real estate market to perform in 2009, along with comparisons for prior years. Single-Family Home Sales
Multi-Family Rentals
Economic Indicators
* Estimated ^ Projected 1. Includes sales of condominiums and cooperatives. 2. Condo and co-op sales only, and not other existing-home types. 3. Total number of units rented minus the total number of units vacated. 4. Real Gross Domestic Product; reflects the value of all goods and services produced, after adjusting for inflation. 5. Average annual commitment rate on 30-year, fixed-rate mortgages (not including points). SOURCES - Data in this report came from the following organizations: Federal Home Loan Mortgage Corp.; International Monetary Fund; National Association of REALTORS®; U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics. |
| Craig Loughridge has been an Oregon-licensed real estate practitioner and consultant since 1999. He has represented buyers, sellers and investors in a variety of transactions involving many millions of dollars worth of residential and agricultural real estate. He is a graduate of the Oregon Realtor® Institute, and a member of the elite Real Estate Buyer's Agent Council. He can be reached at 503-632-8258. |  |
