Today, Dr. Lawrence Yun, chief economist and senior vice president of research for the National Association of REALTORS® (NAR), gave the keynote presentation at NVBR’s Membership Meeting. It was a great presentation. Dr. Yun was able to communicate his outlook of both the National and Vermont real estate market in a way that was thoughtful yet easy to understand.
He spent most of the presentation communicating one simple point: As the real estate market stabilizes, so will the overall economy…and there are several reasons to believe that things are going in the right direction.
- Since least year, there has been a ten percent increase in real estate sales activity.
- Home prices are stabilizing and delinquency rates are expected to stabilize.
- Data is showing pent up demand for new home construction.
- Data also show that there is pent up demand for renters who “could” become home owners. In 2000 (pre boom) there were 11 million renters with qualifying income to buy a median priced home. In 2009 there were 16 million of these renters.
As a former student of economics, it was a delight to hear him describe the market as “bifurcated”. Not only did he use that fancy word, but he even defined it in layman’s terms relative to Vermont. The word “bifurcation” is typically used in the world of biology to describe how a river forks into different tributaries or the point in which a plant divides into different branches. The real estate market has several branches (affordable, moderate-priced, luxury, second home market etc.).
Some segments of the real estate market are doing better than others. The affordable home or first-time home buyer market is showing increased activity in the double digits and seeing modest gains in prices. The tax credit has helped encourage firt-time buyers that might have otherwise stayed on the fence. The inventories of these more affordable homes are coming down and prices are stabilizing.
The second home/ vacation market isn’t doing as well. People are simply cutting back on discretionary expenses and banks are less likely to make loans on second homes. Similarly, the market for land has cooled. Dr. Yun noted indicators showing pent up demand for new construction. The banks, however, have been unwilling to fund many of these new projects. Profits in the banking industry are beginning to increase. As this happens, Dr. Yun explains, the credit market will begin to free up and construction of new homes will increase again.
I left the event impressed by our presenter. His command of the market research coupled with his comfortable presentation style made this one of the more informational events that I have been to lately. I feel optimistic that both the real estate market and the larger macro-economy are continuing to improve.
There are plenty of opportunities in this market. I’m expecting to be busy over the next few months assisting first time buyers and move-up buyers take advantage of the expanded tax credit. For more information about the real estate market and the tax credit, take a look at other articles in this blog or contact me…I’d be happy to help.
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Dan Cypress
Realtor®, EcoBroker®, MBA
RE/MAX North Professionals
875 Roosevelt Highway
Colchester, VT 05446
cell.802.598.6219
office.802.861.3262
fax.802.655.0500
www.RealEstateVT.com
Jessica and I are happy to announce that RE/MAX of New England recognized us (Element Real Estate) as one of the Top 4 RE/MAX Teams in Vermont.
