Affordability a Top Concern as Economists Deliver 2020 Outlook
December 11, 2019
At its first-ever Real Estate Forecast Summit on Wednesday, the National Association of REALTORS® released a consensus forecast from 14 leading economists in the housing and finance industries, projecting continued but slowing growth in 2020. Housing analysts at the summit discussed policy challenges in the years ahead, including the need for zoning reform, and economists from California, Florida, Texas, and Virginia gave snapshots of the outlook in their regions.
One of the key themes throughout the event was the need for more affordable housing stock. “Affordable housing is one of the real challenges of our time,” said Department of Housing and Urban Development Secretary Ben Carson in a live interview at the summit with CNBC’s Diana Olick and 2019 NAR President John Smaby. New condo rules that will make it easier to obtain Federal Housing Authority financing for condo units is already having an impact on his home state of Minnesota, Smaby said.
“Condos are such an important first step into the housing market,” Carson agreed. He said the Trump administration’s White House Council on Eliminating Regulatory Barriers to Affordable Housing is looking at what incentives could be offered and what barriers could be eliminated at the federal level. But private industry, he said, will bring the best answers to the housing inventory and affordability challenges. “Real answers don’t come from the federal government,” he said. “They come from the people with boots on the ground, who are actually the stakeholders who are involved with the issues we are dealing with.”
Delivering the consensus forecast at a press conference, NAR Chief Economist Lawrence Yun said the economy is unlikely to achieve what's considered a healthy 3% GDP growth in 2020 but that recession is improbable. The economists expect unemployment to rise slightly to 3.9%—still well below the 5% level they consider “full employment”—and mortgage rates to rise incrementally to a still-historically low 4%. The economists said the Fed is unlikely to change the federal funds rate in the coming year, possibly because economic factors won’t warrant it, Yun said, or possibly “because, in an election year, the Federal Reserve does not want to be perceived as helping or hindering any presidential candidate.”
In the day’s opening panel, National Public Radio’s senior correspondent for housing, Amy Scott, talked with Michael Neal, senior research associate of the Urban Institute; Ed Pinto, director of the AEI Housing Center for the American Enterprise Institute; and Kermit Baker, senior research fellow at Harvard University’s Joint Center for Housing Studies.
In a second panel, Anna Bahney, a senior writer for CNN, talked with Brad O’Connor, chief economist for the Florida REALTORS®; James Gaines, chief economist for the Real Estate Center at Texas A&M University; Leslie Appleton Young, chief economist for the California Association of REALTORS®; and Lisa Sturtevant, chief economist for the Virginia Association of REALTORS®.
NAR First Vice President Leslie Rouda Smith kicked off the afternoon panels, introducing Denise Pellegrini, executive producer of Bloomberg Radio Asia Daybreak and host of Bloomberg’s Real Estate Report podcast. Pellegrini moderated a discussion on commercial real estate investment featuring Calvin Schnure, senior vice president for research and economic analysis for the National Association of Real Estate Investment Trusts; Greg Willett, chief economist for RealPage Inc., a software and data analytics provider for the industry; Jim Costello, senior vice president for Real Capital Analytics; and K.C. Conway, chief economist for the CCIM Institute.
Capping off the day, NAR CEO Bob Goldberg welcomed Michele Lerner, an award-winning writer for The Washington Post. Lerner moderated a panel that discussed the differences and commonalities in the various economists’ outlooks. Featured panelists were Danielle Hale, chief economist for realtor.com; James Chessen, executive vice president and chief economist for the American Bankers Association; Mike Fratantoni, chief economist for the Mortgage Bankers Association; Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analysis for the National Association of Home Builders; and NAR's Yun.
The Real Estate Forecast Summit was broadcast live via YouTube and Facebook. Watch the entire summit.
Updated: January 22, 2020