Dr. David Crowe, NAHB Chief Economist

On Monday, August 23, 2010, The Homebuilders Association of Lexington was fortunate to have Dr. David Crowe, NAHB Chief Economist speak to the local Home Builders and Bankers with an overview on the industry and outlook for the economy.  He also addressed how Kentucky homes are weathering the downturn.

I was in attendance at his presentation and would like to share with you some “take aways” from the event.

His top 10 Reasons There Won’t Be a Double Dip are as follows:

1. 45 of the Top economists in the Blue Chip arena say so in their forecast.
2. Consumers are repairing their balance sheets and debt burdens.
3. Consumer spending has increased since 2009 back to where it was in 2006.
4. Pent up demand will continue to reveal itself.
5. Corporate earnings and corporate taxes are up since beginning of 2010 .
6. Economic indicators are better at this point in the recovery than they were in prior two recessions.
7. Productivity has increased for 8 quarters and can’t keep going that way.
8. Employment has increased in every month in 2010.
9. ARRA (Stimulus Package) spending is coming to the market later rather than sooner.
10. Because, DR. CROWE SAYS SO!

According to Dr. Crowe, there are approximately 111 million households in the country today.  There are 6 million homes in mortgage distress today and foreclosures make up about 1/3 of homes for sale.

Of course, all of this is National data and here in Kentucky we are fortunate that our foreclosure rate is way below the National average.

Crowe says, “ The economy must get rolling before the housing does”. While it is said that housing is what determines the economy we won’t see home sales and new home starts to rise until consumer confidence is in check.

New homes for sale are the lowest since 1968 and Crowe states the reason being because consumers are prudent and can’t get loans. He does report that new home starts are up in 2010 by 14% and he predicts they will continue to rise to 45% in 2011 and 39% in 2012.

Dr. Crowe predicts a 3-3 ½ % growth in home sales in the next two years and for interest rates to be at 6% in 2012. As for homes  in Kentucky, we should see a modest return to shallow home appreciation.

We are recovering, but we aren’t quite there yet. Hang in there !