(TNS)—Affordable and attainable housing is not just a hot topic in Southwest Florida.
“Actually, it’s a national discussion,” says Douglas Duncan, the chief economist at Fannie Mae. “Sarasota is just joining what has become a national discussion.”
In Silicon Valley, for example, there is about a two-month supply of available housing, he said, compared with a normal level of six to seven months.
“Houses there are getting between 10 and 20 bids, and are selling above the asking price,” he said. “Rental apartments there are charging two months rent for pets.”
Duncan, who spoke Thursday at New College of Florida in Sarasota, said housing production is not at near the level the population requires. Home ownership peaked at 69.2 percent in June 2004, and has since dropped to 63.5 percent.
After millions of homeowners lost their homes in the housing crisis, the demand for rentals increased, which triggered strong apartment construction for the past four years, he said.
“Now that the millennials are moving out, and more of them are becoming first-time time home buyers, we expect to see apartment construction slow over the next three years,” Duncan said.
Most of the newly built apartments have been at the high end, which are more costly to rent, he said. That forces younger households to pay a higher percentage of their incomes for housing, which can delay their ability to afford homes.
“That is why you are seeing this discussion in Sarasota,” he said.
Millennials — those who reached adulthood at the turn of the century — will be a larger group than the baby boom generation, he said, and will have a significant impact on the housing market.
“Ninety percent of the millennials we surveyed say they eventually want to own a home,” he said. “The key word is eventually.”
Builders say their biggest challenges are the cost of labor and developable land. After huge layoffs in the construction industry during the recession era, thousands of laborers returned to their native Mexico — so much so that migration to Mexico from the U.S. has exceeded migration from Mexico for the past five years, he said.
On the economy, Duncan said Fannie Mae projects 1.9 percent economic growth this year and about the same in 2017. Unemployment will decrease to 4.7 percent this year, and the Federal Reserve will bump interest rates one more time in September.
Mortgage rates will remain steady, and home sales will rise 3 percent nationwide, he said.
At Fannie Mae, Duncan is responsible for providing all forecasts and analyses on the economy, housing and mortgage markets. He also oversees corporate strategy and is responsible for strategic research regarding external factors and their potential impact on the company and the housing industry.
Bloomberg/BusinessWeek named him to its “50 Most Powerful People in Real Estate.”
Prior to joining Fannie Mae, he was senior vice president and chief economist at the Mortgage Bankers Association. His experience also includes service as a LEGIS Fellow and staff member with the Committee on Banking, Finance, and Urban Affairs for Rep. Bill McCollum, and work on the Financial Institutions Project at the U.S. Department of Agriculture.
His speech was hosted by New College and the Global Interdependence Center and sponsored by Cumberland Advisors of Sarasota.
©2016 Sarasota Herald-Tribune, Fla.
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