Economist gives update on housing market, unemployment

“Household formation is improving,” said Dr. Elliot Eisenberg in a recent presentation at the Pennsylvania Housing Finance Agency’s Commonwealth Housing Forum. “Credit is generally very hard to get, it’s getting easier, but very slowly.”

However, a lack of wealth among millennials is impacting their homebuying, in addition to rising home prices. “We are aging in place. We are living longer and people have low mortgages in the last few years, so they don’t want to sell their houses. House prices are going up at 5.5 percent each year. It’s unsustainable. Housing is in general is rising too quickly, as are rents. Wages aren’t going up,” he said, noting that bigger houses still continue to get built.

Eisenberg said that first-time buyers remain largely MIA, but recent existing home sales are solid with very steady improvement. Additionally, first-time mortgage applications are up 10 percent. “The future looks better than the present,” he said. “House prices are going up everywhere, Pittsburgh is best, Philadelphia has recovered, and Allentown is recovering.”

Locally, the unemployment rates in big Pennsylvania cities are improving. Lancaster is No. 1, Harrisburg is No. 2, both showing “decent, nice growth, with more workers working, but no new workers coming in.”

Dr. Eisenberg said that the stock market is doing very well, and households are repairing their balance sheets.

“Debt level is near where it was 10 years ago,” he said. “At best, it will delay people from buying. Household debt for mortgage is not rising, but student loan debt is,” he said. “We’re buying lots of cars. Cars are the second most expensive thing you buy besides a home. But we aren’t buying as many as we were a few years ago. Sales are flat, but high.”

Additionally, government spending is a “real problem.” With social security, medicare and other human services eating up more money, the budget is an issue, he said.

However, “labor markets are good. They’re as good as they are going to get,” said Eisenberg. “The tide has already risen, creating 180,000 jobs a month, 2.1 million a year. This is spectacular. We are running out of workers. The unemployment rate is falling to a very low level at 4.4 percent, it doesn’t get much lower. The number of unemployed per job opening keeps falling, its at the best level in a decade. Its almost as low as it was during the dot-com boom. There is no one left to hire.”