ANAHEIM, CA-The US economy is sluggish…GDP growth after the recession should be sustained 4% to 5% to compensate for the downfall, but it is at a subpar performance—at 1% to 2%. So said National Association of Realtors’ chief economist, Lawrence Yun at the NAR conference on Friday at the Anaheim Convention Center, an event that expected to draw approximately 18,000 realtors and guests. “The unemployment rate is still at 9% and if this current slow expansion were to persist at this rate, it would take 10 years to bring it to where it needs to be.”
Despite the high rate of unemployment, Yun did focuses on the positives, noting that “at least job creation is happening…though slowly.”
Corporate profits are record high, said Yun. “Not only a Disney, Microsoft or Apple-type company, but the financial industry has recovered nicely as well,” he said. There is plenty of cash within companies, he said, which is another improving factor, but the issue, he said, is that they aren’t spending their cash.
“Businesses have been collecting plenty of profit, but they are hesitant to spend,” he said. “The good news, is that because of the healthy cash situation of large businesses, I don’t see another US hitting another recession coming up in the next few years.”
It has never been a better time to borrow money and go out and spend it, Yun said, but companies aren’t borrowing. Another struggle for the US, according to the economist is that small businesses aren’t recovering. “Small businesses cannot go to Wall Street and borrow money, so they rely on their housing equity to start their small businesses but because of weak housing equity recovery, which is the source of funds for small business owners, small businesses will continue to struggle,” he said.
Other improving factors for the CRE world, according to Yun, include: no recession in sight despite shaky Europe; stock market recovery from 2008…including REIT; huge corporate cash reserves; expanding corporate cash reserves; expanding international trade; commercial prices bottomed and rising; international buyers taking advantage of currency; and inflation hedge.
Earlier in the day, during an opening session, NAR president Ron Phipps outlines obstacles and opportunities facing the real estate industry. “For the first time in generations, the American dream of homeownership is being threatened,” said the broker-president of Phipps Realty in Warwick, RI. “We need to keep housing first on the nation’s public policy agenda, because housing and home ownership issues affect all Americans.”
According to Phipps, “mortgage availability remains a real concern since the private market has yet to return. While the housing market is still in recovery, we firmly believe that lower loan limits will only further restrict the mortgage markets.”
NAR’s 2012 president, Moe Veissi, also shared his perspective and insights into some key issues facing the industry. “It’s a difficult time in many ways for real estate; some would go as far to say that homeownership itself is under attack.” With that said, he pointed out that challenging times often present opportunities.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
