A few weeks ago, I wrote about the importance of consulting an expert, whether it’s a REALTOR®, physician, or a mechanic. This past week I was privileged to do just that while attending our Economic Outlook Luncheon with speaker Dr. Jessica Lautz, who is NAR’s Vice President of Demographics and Behavioral Insight.
The annual Economic Outlook Luncheon is an extremely insightful event that the Greater Chattanooga Realtors® holds each year with the Homebuilders Association of Greater Chattanooga. These meetings involve engaging speakers from the National Association of Home Builders (NAHB), and from the National Association of Realtors® (NAR).
This year, 200 Realtors® and home builders met to discuss today's evolving real estate market. As Dr. Jessica Lautz of NAR put it, “We are in a new housing market paradigm, but we continue to see multiple offers for properties due to limited housing inventory. Affordability is the concern, where local home prices have risen 17.5% year over year.”
Dr. Lautz summarized the current housing situation by showing that tight lending, low housing inventory, and changing housing demographics are affecting the market in ways we haven’t seen before. Different from 2008, sub-prime lending is not happening, which shows that our country is not experiencing a housing bubble, but the low housing inventory is a result of under-building by anywhere between 4.5 and 6.5 million homes. As a result of the market, more families consisting of multiple generations are living in the same home, which is increasing the average amount of time an individual stays in a home.
Dr. Lautz also showed a study from NAR that surveyed individuals on the amount needed for a down payment. Typically, a down payment is around 10% of the price of a home, but a large chunk of respondents (35%) still believes that 16%-20% is required to finance a property. It’s crucial that, as Realtors®, we help educate buyers that this large amount isn’t normally required for a down payment.
There were also some generational findings that Dr. Lautz shared that brought a particular group into focus. Dr. Lautz jokingly said that Millennials were everyone’s favorite topic, and their housing situation is an interesting snapshot of what the real estate looks like for younger Americans. Millennials, who Dr. Lautz defines as being between 22 and 40 years old, are the “largest adult generation today and they are the largest generation of home buyers at 37%. Millennials and first-time buyers face multiple challenges such as rampant competition in the housing market, low housing inventory, and buyers who are able to pay all cash for properties.” She also noted that the median age for first time homebuyers is 33, and the percentage of young adults (25-34) who are living at home is over 17%. This represents a large group of people who may look to enter the housing market down the road.
We should never stop learning, and that’s why I love these events. The collective knowledge of our local home builders and Realtors helps us all serve our community better. And so, whether you’re looking to build or purchase a property, it’s crucial to look to the experts. Realtors help our community and serve our clients in so many different ways every day. That’s Who We R®.