BY BRAD BECKETT ON OCTOBER 24, 2018
Local Market Monitor, a National REIA preferred vendor, recently released their National Economic Outlook for October, 2018 where they share their thoughts on developments taking place in the U.S. economy.
National Economic Outlook – October 2018
October 23, 2018
By: Ingo Winzer
After the wrenching ups and downs of real estate markets over the last ten years, it’s fair to ask where we are now. Home construction can give us a partial answer. Back in the boom days before 2008, when sub-prime mortgages put an extra 5 million people into a home, builders were putting up units as fast as they could – about 2 million per year. It still wasn’t enough, though, and home prices kept climbing.Then, during with the recession, when many sub-prime loans ended in foreclosure, construction plunged to little more than half a million units per year – and many builders went out of business. In recent years activity picked up again and last year 1.3 million new homes were built.
For the size of the US population, however, the average number of homes built per year should be 1.8 million. We haven’t seen that level since 2006. What this means is that even though too many homes were built before 2008, we’re now facing a chronic shortage. Builders can’t possibly scale up fast enough, so we’ll see demand greater than supply for years – and higher home prices.
Total jobs in September were up 1.7 percent from last year, the same rate we’ve seen for months. Jobs were up 2.2 percent in manufacturing, 0.4 percent in retail, 1.4 percent in finance, 2.8 percent in business services, 1.9 percent in healthcare, and 1.7 percent at restaurants. As usual, government jobs were almost flat.
The increase in manufacturing jobs is encouraging, but it’s business services that’s pulling the economy along. The lack of growth in retail jobs – online shopping – looks like it’s permanent.Don’t miss what else Ingo has to say about the economy this month.
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About the Author: Ingo Winzer is President of Local Market Monitor, and has analyzed real estate markets for more than 20 years. His views on real estate markets are often quoted in the national press and in 2005, he warned that many housing markets were dangerously over-priced. Previously, Ingo was a founder and Executive Vice President of First Research, an industry research company that was acquired by Dun and Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in Finance from Boston University. He resides in Cambridge, Massachusetts.