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Timothy Sullivan, principal at Meyers, LLC, spoke at the HJ Sims Annual Conference on Financing Methods and Operating Strategies in the Senior Living Industry about “Looking Deep into the Evolving Residential Real Estate Markets.”
His message has 3 overarching themes:
The next step is for demand to exceed supply. Then, rents and home prices will rise. Construction will return to normal, which in turn will accelerate job growth.
Job growth and housing permits are already booming in some cities. Job growth in Austin tripled and housing permits doubled in 2012 compared to 2011.
In Phoenix, job losses in 2011 turned to job gains in 2012 while housing permits doubled. In Orlando, jobs grew in both 2011 and 2012 while housing permits doubled.
In 2012, prices rose the most in the following markets:
According to Tim, the U.S. needs 1.7 million new housing units per year; in 2012, only 800,000 were built. Home prices overall are back to 2004 prices with lower mortgage rates.
Some 10,000 people per day are turning 65, and 10,000 people per day are turning 30.
Homes are affordable, and prices have room to rise. However, rentals will continue to increase their market share because of mortgage lender restrictions including higher down payments.
Overall, Tim is bullish on residential real estate. Annual population growth of 3.2 million will drive demand while full construction recovery will take at least 3 years to reach 1.7 million starts.
He predicts that resale volume will reach 5.2 million annually.