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Economic and Real Estate Outlook With Guest Speaker Dr. Jessica Lautz

In the latest episode of DBrief (watch here), Washington REALTORS® President Jeff Smart hosted Dr. Jessica Lautz, Deputy Chief Economist and Vice President of Research at the National Association of REALTORS® (NAR). Dr. Lautz provided a helpful analysis of the current housing market, its trends, and the broader economic outlook.

Understanding the Current Housing Market
Dr. Lautz began by addressing the unique challenges faced by the housing market today. Despite regional variations, a common theme is the lack of inventory, driven by higher mortgage interest rates compared to just a few years ago. This "lock-in effect" has kept many homeowners from selling, resulting in a significant reduction in available homes.

Key Trends and Statistics

  • Historical Comparison: The current housing market's inventory levels are comparable to 1995, despite a 70 million increase in the U.S. population since then.
  • Mortgage Interest Rates: Rates have hovered around 7%, which, while high compared to recent years, are still below the historical average of 7.74% since 1971.
  • First-time Home Buyers: The median age of first-time buyers is now 35, the highest it has ever been. These buyers tend to be wealthier and more financially diverse, utilizing stocks, cryptocurrency, and retirement funds for down payments.

Demand and Competition
Despite higher interest rates, demand remains robust, with over a quarter of homes selling above the asking price. The market is seeing fierce competition, particularly from all-cash buyers, who made up 28% of purchases last month. This trend has been growing for over 19 months, reflecting the substantial housing equity among homeowners.

Debunking Myths
Dr. Lautz addressed the misconception that the market is heading for a bubble or a significant drop in home prices. She pointed out that distressed sales (foreclosures and short sales) make up only 2% of the market. Tight lending practices and the substantial equity held by homeowners make a widespread market crash unlikely.

Demographic Shifts and Future Demand
Dr. Lautz highlighted important demographic changes impacting the housing market:

  • Millennials: The largest generation in the U.S. is entering the prime home-buying age, driving significant demand.
  • Baby Boomers: This generation is the largest group of home sellers and the second-largest group of buyers, often looking for homes to age in place.
These shifts indicate sustained pressure on the housing market for years to come.

The Role of Real Estate Agents
Despite technological advancements and market changes, the role of real estate agents remains crucial. Dr. Lautz emphasize that both buyers and sellers overwhelmingly prefer using agents to navigate the complex and competitive market. Agents provide essential services, from finding the right home to negotiating deals and managing the sales process.

Staying Informed and Prepared
Dr. Lautz stressed the importance of accessing reliable information amidst the crowded and sometimes misleading data landscape. Realtors should utilize trusted sources such as NAR's websites, and, to stay updated on market trends and policy changes.

Additional Resources
For those interested in diving deeper into the data and trends discussed, here are some valuable resources:

The presentation by Dr. Jessica Lautz underscores the ever changing reality of today's housing market. By staying informed and leveraging reliable data, REALTORS® can better navigate these challenges and continue to provide exceptional service to their clients. Stay tuned for more updates and trends in future DBrief sessions.