Lawrence Yun, the chief economist for the National Association of Realtors, is warning that today’s mostly positive jobs report should not be embraced as evidence of an improving economy.
“The job market continues to crank out jobs in high figures: 336,000 in September and over 4 million more compared to pre-Covid-19 March 2020. It does not mean all is well,” he stated.
Yun defined the jobs data as “a lagging indicator as the firms will only make a job cuts decision after having cut costs in other areas.” He pointed to the commercial real estate sector for proof that the situation is anything but copacetic.
“Commercial real estate, in particular, is flashing warning signs,” he continued. “Net leasing on retail and warehouse spaces is slowing. The office sector is continuing to bleed with rising vacancy rates. Community banks, many with exposures to commercial real estate, are watching their balance sheets carefully. The fast-rising interest rates are breaking several sectors of the economy. The remaining sectors will also likely crack if the rate hikes continue.”
Yun added that the Federal Reserve needs to reconsider its fiscal policy as quickly as possible.
“Given that the inflation rate is already cooling, the Fed needs to stop raising rates and strongly consider cutting interest rates next year. That would be the soft landing without the net job cuts to the economy,” he said.
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Finally, the Leadership at NAR gets what’s going on. I have been in the industry full-time and nonstop for 43 years. If the FEDs don’t change directions they will make the 2007-08 market seem like a walk in the park for most sectors of the economy.
The fed wants the economy to shrink. They have repeatedly said that there will be hurt before its better.Since Covid Real estate has become a game of hot potato and anyone who bought overinflated housing during this time of the gold rush I warned in my network. You are taking the risk of impulsing buying to get around covid lock-downs. Look at the latest statistics on buyers remorse. It is reporting almost 30% and I am sure it is worse than that. These houses are not worth what buyers have paid. There is no justification for it. Housing jumped only because the lock-downs and builder price gouging. The excuse on low materials is fading fast and they still expect to get over 350 dollars a square foot. Only the big builders are seeing and getting this now trying to get 200 per square foot and offering bigg commissions again to us Realtors. Look at Lennar? Custom builders were getting under 150 just before 2020.
Everything you said is true, except one thing “price gouging.” You have absolutely no understanding of economics if you use that word. However, since everything you else you said implies that you do understand economics, I have to think that you sought to inflame people on purpose.
Builders did not gouge. They went with the market conditions they found. It’s called supply and demand. During periods of extremely high demand and a stable inventory prices will rise. There is no gouging going on. It’s called market forces. Please be honest.
This FORECAST coming from the NAR Dummies who PREDICTED that the MORTGAGE Cri$i$ was just gonna be ” … a BUMP in the ROAD.”
That all sounds very reasonable, and I agree with the basic premises, however; we can less afford to make the mistake of stopping so soon that inflation reignites and causes a “real bust” like we saw happen in the ’80’s. It will be real hard to pick the right time, and how much to back off – kind of scary economic times from many perspectives…
Usually NAR’s economist has only positive things to say. Of course some commercial is soft. People found ways to work from home and liked it. Many found lots of retail purchasing could be done on line and delivered to their doorstep. There’s a shift in technology. There are adjustments going on. Welcome to a shifting economy.