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Lawrence Yun, chief economist for the National Association of Realtors, foresees "moderate" GDP expansion of 1.5 percent to 2.5 percent over the next two years and offers this flat prediction: "We will not have another recession."
He also tried to calm fears about the debt crisis in Greece, saying that "even if Greece goes down, indeed even if Europe goes down," the fallout would have limited impact in the U.S.
Yun spoke Tuesday to the Charlotte Regional Realtor Association at the Charlotte Marriott Executive Park off Tyvola Road. In his closing remarks, he predicted a national unemployment rate of 8.7 percent at this time next year, down slightly from the current rate of 9.1 percent. He forecast 1 million to 1.5 million annual job additions in the next two years.
In an interview with the Observer after his talk, Yun said the housing market is recovering, "but the recovery is very slow, so one would have to describe it as fragile. Inventories are falling, but prices have yet to show a definitive stabilizing pattern."
Asked about a more robust housing recovery, he said that depends on improvement in the economy and job creation. "Charlotte is typically one of the fastest-growing labor markets compared to the rest of the country, but in this economic cycle that is not the case, so Charlotte has been lagging behind the rest of the country in job creation.
"But as the job market improves, naturally there will be additional homebuyers reaching the market, bringing inventory down even further, and lower inventory will help stabilize home prices."
Yun even raised the possibility of a housing shortage down the road if current trends persist.
"Housing construction activity remains very depressed, and it's been depressed for the last three years," he said. "If this low level were to persist for another one or two years, one could easily foresee there is insufficient housing in relation to the population."
He also cautioned the so-called supercommittee of lawmakers charged with reducing the budget deficit not to tinker with the mortgage interest deduction. "This is a middle-class tax benefit that people are accustomed to. Many people bought their homes understanding the mortgage interest deduction would be in place, and if that would be changed, it would greatly harm this fragile housing market recovery and subsequently the economic recovery."
His outlook for the next six to 12 months?
"The housing market has clearly faced challenges over the past three years, but it is healing," Yun said. "It will continue to heal. So by this time next year, one may begin to sense that the market is returning to normal, where prices begin to steadily rise."
