National Housing Starts Historical Chart from Macrotends.net
If you’ve ever attended an economic presentation, you know there’s a chance it can be pretty dry. I’m confident that if my economics classes in college were taught with as much enthusiasm as Dr. Elliot Eisenberg, a.k.a. the “Bowtie Economist” brings to his presentations, I probably would have paid a lot more attention. He may have even inspired me to pursue economics!
Dr. Eisenberg gave a presentation last week during REALTOR® Day at the Capitol, a two-day event when over 200 Colorado REALTORS® met at the State Capitol to discuss a variety of state and federal policy issues that impact the real estate industry. It was also an opportunity for REALTORS® to share ideas from the REALTOR® community with our state legislators.
Photo of Dr. Elliot Eisenberg from Econ70.com
Dr. Eisenberg lives in Washington D.C. and is attuned to the pulse of our economy. He is an internationally acclaimed economist and public speaker specializing in making economics fun, relevant, and educational. As the former Senior Economist with the National Association of Home Builders, he is an expert in analyzing the economy and its relevance to real estate. His current position is Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the country.
I have attended the annual circuit of economic presentations this year, and in general, I have found that their reports about economic conditions and their predictions have been very similar. Here is a quick review of what Dr. Eisenberg had to say.
Gross Domestic Product (GDP)
2018 was a strong growth year for the U.S. economy with GDP at a 3% growth rate. Dr. Eisenberg is expecting growth to slow to about 2.4% in 2019 and around 1.9% in 2020.
Tax cuts helped create large corporate profits in 2018
Corporate profits were exceptional in 2018, largely due to the tax cuts from tax reform. Corporate profits should still be strong in 2019, but not as high as 2018.
As a nation, we are still not building enough houses to keep up with population increase to the tune of about 400,000 short each year. Hence, we will still have a housing shortage in the year ahead. The housing shortage is the greatest at the entry level. This is due to the inability of the home builders to produce a lower priced product because of land costs, regulations, and fees.
New home sales
Even with demand for housing very high, builders of new homes only have slightly rising inventory.
Existing home inventory and home sales
Existing home inventory has been rising moderately making it a little bit easier for buyers. However, the total number of sales are down, largely due to the fact that home prices have increased faster than incomes.
Labor and employment
The labor market is the tightest it has been since 1969. Unemployment is at record low levels. Job openings are hard for employers to fill. The “quit your job” rate is also high with baby boomers retiring and people leaving their jobs for higher paying work.
Manufacturing is slowing, but it is not as significant a part of the economy as the service sector.
The service sector is a strong segment of the economy and makes up one of the largest shares of the GDP.
The bottom line is that he does not see recessionary periods in 2019. Nevertheless, in the economic world, the crystal ball always gets a little fuzzy any further out.
If you want to stay current with economic news, Dr. Eisenberg sends out quick economic updates (70 words or less) on a daily basis. To receive it, visit www.econ70.com and sign up. This website also offers a wealth of economic information in articles, blog posts, videos, and more.
About Duane Duggan: Duane Duggan has been a Realtor® for RE/MAX of Boulder in Colorado since 1982 and has facilitated over 2,500 transactions over his career, the vast majority from repeat and referred clients. He has been awarded two of the highest honors bestowed by RE/MAX International: the Lifetime Achievement Award and the Circle of Legends Award. Living the life of a Realtor and being immersed in real estate led to the inception of his book, REALTOR® for Life. Also see his video podcasts about real estate topics on RE/MAX of Boulder’s YouTube channel.
For questions, email Duane at DuaneDuggan@BoulderCo.com or call 303-441-5611