I just returned from the NAR Convention in Orlando.  I was representing the VBR in my role as Chair-Elect.  I felt the overall tone was much more optimistic than last year.  There are many areas in the country where sales are significantly up year-over-year and these markets are also seeing significant price increases.  As you all know, we tend to trail the pack but hopefully we will see some similar activity in the Valley.

Here are some bullet points from the presentation by Lawrence Yun, Chief Economist for NAR.  He was relatively optimistic regarding the national housing market but doesn’t seem to have much confidence in the government in making the right moves to address inflation, which he considers inevitable.

1. He sees no inflation 2013 but 4 to 6% annually by 2015.  The key factors that are driving inflation higher are:
   1. Rents are going up across the country making home purchases much more attractive but also negatively impacting inflation.
   2. The Fed is more concerned with unemployment than inflation.
   3. The Fed’s Qualitative easing program will cause inflation (historically, whenever a country prints money, inflation rises).
   4. Budget deficits will cause inflation because more parties are competing in the lending marketplace.
   5. Inflation will cause higher borrowing costs for the government increasing the deficit, which in turn will increase inflation, which will increase the deficit…………………..
   6. Inflation will increase mortgage rates.  They will probably stay low for 3-6 more months but they should start to increase by the middle of next year.
   7. Home prices will appreciate 15% over next 3 years nationally.
   8. The Unemployment rate may have dropped slightly over the past few years but the Employment rate (the actual number of employed persons) has remained flat since 2009.
   9. The US will need to create 250,000/mo for 8 years to get back to where we were before the great recession.
   10. There will be more unequal wealth distribution because home prices are now appreciating and renters will be left behind.