Inman is interviewing industry thought leaders to find out what’s next in 2016. Here’s Elliot Eisenberg, founder of Graphs & Laughs.
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Are you optimistic about the economy in 2015?
Yes, the economy should grow slightly faster in 2016. This is because Europe is growing faster and China will hopefully not slow any further. As a result, inflationary pressures should build slightly, and that would be a good thing given their current anemic levels.
More importantly, as the unemployment rate falls, we should begin to see wages rise, and that will boost consumer spending, which would boost corporate investment and growth. Also, government spending will be slightly more expansionary that it was in 2015. So added up, things look a bit better in 2016.
The housing market?
It should grow by all measures, be it new sales, new starts, existing sales or prices. Builders will increase construction activity and starts should rise by about 10 percent from 2015 levels, and household formation will continue to be good.
But we will still not be producing enough new houses. As such, house prices will continue to rise, as will rents, but less dramatically due to the rise in multifamily starts, which should dampen the rise in rental rates.
Lastly, existing sales should rise by about 5 percent to 6 percent, and prices should rise by hopefully slightly less than that. Much depends on the size of existing inventory and to date homeowners are reluctant to put their houses on the market and this dearth of supply pushes prices up.
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Your success?
My business will continue to grow and expand.
Why?
A relentless focus on the customer, their needs and how best to meet them as painlessly as possible from their perspective.
What are you worried about?
China is the biggest threat. If it continues to slow, it would badly hurt developing nations, which would drag down Europe, which in turn would weaken our economy. And given at best 2.6 percent GDP (gross domestic product) growth next year, we can ill afford economic headwinds,
How much do you fret about global events?
Outside of China, the other threat is the large amount of U.S. dollar denominated debt issued by developing nations. If GDP growth falls too much in those nations, they will default on their debts. But, again, as long as China continues trying to prop up growth, this should not be a big problem.
So, yes, I worry, but not all that much. Besides, it doesn’t do any good.
Will mortgage rates go up or down next year?
Mortgage rates on 30-year mortgages will rise by half-of-one percentage point, or 50 bps. Of course, borrowers can take out ARMs and other types of loans to reduce the impact of rising rates.
Will home prices appreciate in your market next year?
Nationally house prices should rise 3 percent to 5 percent.
Will agents be more productive next year? Why? Or why not?
TRID has slightly hurt productivity but I think it that in a few months the impacts of it should be history.
What will be the biggest source of real estate leads next year?
Referrals.
Are you making plans to expand, contract or maintain your business this year?
Expand, but judiciously.
What is your biggest challenge in the coming year?
Finding talented, enthusiastic and creative employees who love economics!
