NAR Conference: Top Issues Facing Housing Recovery

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More than 21,000 realtors descended on San Francisco this weekend for the National Association of Realtors' annual convention, a traditional benchmark for the industry.

Attendance was 10 percent higher than expected, a sign of the resurging budgets for realtors as the market continues to improve, chief economist Lawrence Yun told the audience.

Home sales have increased a cumulative 20 percent in the last two years and median home prices are up a total of 18 percent, Mr. Yun said, reviewing the much chronicled market recovery. NAR expects sales to flatten in 2014, but prices will continue to rise as home inventory levels remain low, as previously reported by WPC News.

But NAR used the conference to focus on the issues facing the industry, as the housing recovery continues to take hold. Rising interest rates were at the top of many discussions. NAR expects interest rates to hit 5.3 percent by the end of 2014.

"Interest rates are going to rise significantly, so my advice is to be careful about your investments today and lock in those low rates if you can," Scott Muldavin, president of The Muldavin Company Inc., a consulting firm, during a session entitled, "Top 10 Issues Affecting Real Estate."

The availability of financing is crucial for the industry going forward, executives said. The government must "preserve property and homeownership tax policies," NAR president Steve Brown told reporters.

"The nation cannot have a robust housing recovery, and therefore an economic recovery, until these important policy issues are addressed," Mr. Brown said.

But lenders said the industry needs to be prepared for increasing regulations and more documentation.

"It's important for realtors to be educated about the new documentation requirements so they can work with buyers and meet lender expectations," said Matt Vernon, home loan sales executive for Bank of America, during a panel discussion.

The housing recovery will face many headwinds, including the slow growth of household income. Affordability has fallen to a five-year low, Mr. Yun said. While there are no "inflation signs" for 2014, inflation may rise 4 to 6 percent in 2015, he said, further eating in to available income.

Although home sales are up, not all realtors are enjoying the boon, Mr. Yun said. Twenty percent of realtors make more than $100,000 a year, while one third make less than $10,000.

"Some people are making it big and others are still struggling," Mr. Yun told reporters.

Other issues that arose during the conference:

• NAR officials called for more communication with appraisers, who are wielding unusual power over the viability of sales, with lenders worried about valuations. "I've personally had more appraisal problems in the past year than I've had in the past three decades," John Anderson of Twin Oaks Realty Inc., in Crystal, Minn., told a panel on home valuations.

• NAR announced plans to begin assigning priority registration for .realtor domain names. NAR will provide the first 500,000 members who register for a .Realtor domain with a free one-year license. Only real estate professionals who are members of NAR and the Canadian Real Estate Association will be allowed to use the .Realtor domain.

• Dramatic increases in flood insurance premiums are negatively impacting home sales in coastal areas, the association reported. NAR is calling on the Federal Emergency Management Agency to convene a summit about the impact of premium increases on property owners. "At the summit, industry experts could develop valuable recommendations for how FEMA could minimize the impact of future premium increases, strategize ways to help property owners and communities lower their rates," the group said.

Video: Dr. Lawrence Yun's Real Estate Trends Presentation



Slideshow: Trends and Forecast

Residential Economic Issues & Trends Forum 2013 from Nar Res