The real estate market is expected to experience continued growth in 2016, but factors such as available housing inventory, job growth and ongoing political issues could have an impact, said two leading industry economists at the Illinois Association of REALTORS® Public Policy Meetings in East Peoria on Wednesday.
Lawrence Yun, chief economist for the National Association of REALTORS®, and Geoffrey Hewings, director of the Regional Economics Applications Laboratory (REAL) at University of Illinois, offered their analysis of the real estate market at the Business Issues and License Law Forum.
An ongoing issue in Illinois and one that if unresolved, will impact the housing market, is the state’s political impasse, said Hewings. It could create economic uncertainty that could hinder future home sales and prices, he said.
Natasha Korecki, a senior reporter with Politico and the author of its Illinois Playbook, was the featured speaker during the event’s RPAC luncheon earlier in the day and spoke of the ongoing fiscal and political crises occurring in Chicago and Springfield.
The state was unable to pass a budget last year and the prospects aren’t looking good that one will be passed anytime soon, she said. The opposing political sides will be focusing on the upcoming March primary and November general election.
Taking a broader look, Yun said that while the desire to own a home remains strong and is growing, U.S. homeownership rates are at a 50-year low. First-time buyers are facing obstacles including: high college loan debt, higher home prices and competition from vacation and investment buyers, he said.
Housing inventory also remains lower after housing construction slowed during the recession and has not yet fully recovered, Yun said. Housing starts are forecast to climb to 1.2 million in 2016 compared to 1.1 million in 2015.
More takeaways from the session:
- The return of boomerang buyers who lost their home during the recession is good for the market as is the improving home equity for pent-up sellers, Yun said.
- As the construction industry recovers, the industry is having a hard time finding enough skilled construction workers, Yun said.
- Stabilized home prices depend on foreclosures returning to normal levels, Hewings said.
- Illinois’ fiscal problems will have a real impact on housing forecasts.