[intense_column size=”4″ medium_size=”4″]In this video RealWealth’s Geraldine Barry talks with Dr. Douglas Duncan, Chief Economist for Fannie Mae.
- Predictions for the single-family rental market in 2017
- Housing appreciation potential
- Will there be a recession next year? If so, what housing markets will be affected and why?
- Florida housing market predictions for 2017.
- Why are millennials more financially conservative than their parents? How will this affect the housing market.
- And more![/intense_column]
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Geraldine Barry: I’m here today with chief economist for Fannie Mae, Dr. Douglass Duncan. We’re going to chat about the markets and see what’s on the horizon.
What are you seeing today in the single-family rental market?
Dr. Douglas Duncan: We think it will grow in 2017, but not as much as it grew in 2015 and 2016. So, still positive but slowing over that three year time period.
House prices are still going to appreciate strongly due to lack of supply and the fact that younger households are moving to buy homes, and there’s just not a lot of supply for them at the bottom of the market
So strong price appreciation, some improvement in sales, but slowly.
Geraldine Barry: Is there going to be a recession next year? What markets will be impacted by that?
Dr. Douglas Duncan: The possibility of a recession is never zero. Right now if you asked economists there’s about a 20% chance in the next 12 months. We actually think it might be a little higher than that.
If there were a recession it would probably be a regional recession. So, if you think about the decline in oil prices, that was one possibility. It didn’t happen, but some of those markets have slowed significantly.
If the federal reserve tightening of monetary conditions were to cutoff supply of funding to the tech start ups in Silicon Valley that could lead to a downturn in the Silicon Valley which has very high prices at the moment.
If agricultural commodities fell off there could be a slow down in the Midwest.
It’ll will be a regional thing, and each local housing market will depend on whether it’s one of those regions that’s affected.
Geraldine Barry: You work in Washington, but your home base is in Florida. What are you thinking about Florida, specifically Tampa, and the fact that 200 people are moving in there every day?
Dr. Douglas Duncan: Florida has picked up faster than California and Texas in terms of employment growth. It’s actually doing very well right now and house prices have been recovering in a large part of the state. There’s more growth on the west coast of Florida than the east coast, because the east coast is going to be much more expensive.
Buying rental properties is going to be a good business for a while, simply because of the structure of our workforce. A lot of younger people couldn’t afford homes, so they became renters.
These young people saw the downside to the crisis, so and they’re going to be more conservative when becoming owners. They will eventually become owners, but there’s going to be a rental period in there for a while.
Geraldine Barry: So you think they’re more price sensitive than their parents maybe?
Dr. Douglas Duncan: I think they are.
Geraldine Barry: They want to have a life too, millennials.
Dr. Douglas Duncan: That’s absolutely true. They’ve seen what over leverage causes and they’re reluctant to go there.