Chief Economist addresses economy, real estate outlook

Dr. Lawrence Yun, Chief Economist for the National Association of Realtors®, addressed a crowd yesterday at the York County Economic Alliance’s Economics Club breakfast.

Dr. Yun spoke about the current economic and real estate outlook, including national and regional updates.

Overall, he said the view of the economy is a “mixed bag.” But, he did note we are “well out of the recession,” and the economy has been mostly positive since then.

In real estate, rents are rising, and are currently at a seven-year high. More people are renting, with fewer vacancies available.

However, he said annual home sales are “on a steady upward path,” and he predicts more buying activity is in the near future. He added that even with mortgage rates being 4 to 5 percent, “they are still great rates, and still affordable in most of America.” He also predicted that more people will qualify for mortgages.

Median home prices are raising nationally, and inventory is shrinking, he said. However, builders “are not really building.” He said that the bigger home builders are still building, while smaller companies are not, as most small builders rely on lending from community banks, and they are struggling to receive the funding Yet, houses they do build do get sold, Yun said.

As for commercial real estate, investments are steadily climbing up, and prices are also growing. However, bigger commercial deals are happening, but smaller commercial deals are still struggling.

Locally, he said the market in York has been slow, and the market in Lancaster has reached its peak, however there is an overall momentum in both areas, he said. He also noted that home sales are closer to their prices before the recession.

As for the economy, it is also still growing, and while 8 million jobs were lost during the recession, 12 million jobs have since been created, he said. Additionally, unemployment claims are dropping. However, he noted that the employment rate is not rising. Before the recession, about 62-64 percent of adults in America were employed full-time, and today it’s around 59 percent, he said. So, the unemployment rate is back to normal, but the employment rate is not.

Relatedly, part-time employment, which surged during the recession, remains high. However, wage growth overall remains sluggish, with rates being up only 2 percent from last year, said Dr. Yun.