Strong optimism in the growth prospects for the 2015 housing market was the unifying factor at panel of housing economists at the Inman Connect conference this morning in New York City.
All four of the housing experts – Stan Humphries, the chief economist at Zillow, Jed Kolko, chief economist and vice president of analytics for Trulia, Nela Richardson, chief economist for Redfin, and Jonathan Smoke, chief economist for Realtor.com – saw hopeful signs for the further recovery of the market in 2015.
"We are seeing record levels of buyer demand for Redfin. There are more people going on tours with us and signing offers with us than ever before in our history, which is a big deal," especially during the traditionally slow winter months, said Richardson.
The current low rates are proving a boon to the market, which should help increase sales through the beginning of the year. There was some disagreement among the economists on how long the market could expect to enjoy those low rates, with Smoke in particular forecasting at least a small bump for later in the year.
"When the Fed loses ‘patience,’ rates are going to go up 20 to 40 basis points," Smoke said, explaining that the recent Fed statements have all used that keyword to describe their attitude toward the economy. The last time the Fed abruptly stopped applying that adjective in its public statements, rates posted a similar bump.
The biggest open question for most of the panel was whether or not first-time buyers would flock to the market in 2015. Richardson and Humphries both agreed that while such buyers are appearing, a lack of affordable inventory may hinder their ability to purchase. Kolko, however, demurred; the median age of the Millennial generation people is still only 23, he pointed out. Many young people may be planning to get their own place this year, but he feels their increased demand will have far greater impact on the rental market and not the purchase side.
Long-term, the aftereffects of the crash persist. The economists agreed that the recent surge in housing prices is likely to slow this year. That’s helpful for affordability, but also means that "negative equity is going to be with us for the balance of the decade," Humphries pointed out, as many homes, especially lower priced ones, remain underwater.
Forced by moderator Brad Inman to put a number on how confident they were that 2015 will be a strong year for housing, however, the group remained positive, with Smoke saying he’s 90 percent sure that 2015 will be a good year for housing, Richardson said she’s 80 percent sure it will be a strong year, as long as there’s sufficient inventory, and Humphries saying he’s 70 percent sure it would be a good year – "We’re making great strides, but we’re a long way from normal," he cautioned. Kolko was the most pessimistic, saying he feels 65 percent sure it will be a good year for housing purchases, but 95 percent sure there will be strong growth on the rental side.
