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NAR Economist Presents Economic Forecast for 2011

Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), presented an economic forecast on Tuesday, January 11, 2011 to a group of Realtors at the Little America Hotel.

According to Yun, Salt Lake City is one of the most desirable places to live, along with other mountain states such as Nevada, Idaho and Colorado.

Based on data from NAR, consumers are feeling awful about the present economic conditions, which imply that they aren’t likely to spend money in the current climate. However, consumers are feeling better about the future.

Some actions that have already been taken that have positively affected the economy are by the government. The homebuyer tax credit, a $30 billion program, did its job, according to Yun. Before the credit, prices were falling and unstable. Yet, after the credit, home prices stabilized.

Looking forward, Yun thinks the economy will stabilize even further with the increase of jobs. He estimates adding 100,000 jobs will keep the economy in the same place. However, adding 400,000 jobs each month would employ a large portion of the public in as little as 2.1 years.

Yun stated that Utah’s economy is doing much better than the rest of the country. While the nation is experiencing employment numbers similar to those in 2000, Utah has steadily grown and doubled available jobs over the past 30 years.

Real estate is closely connected to the overall economy. Yun predicted that if interest rates rise, the real estate industry will be one of the first hit.

With the proposal of eliminating the mortgage tax deduction in Congress, it could decrease home values across the nation by 15 percent. Not only will home values be affected, but it could possibly destroy the wealth of property owners that have saved or even paid off their homes.

For the future, Yun emphasized the need to make home loans available for middle-class families. He predicts mortgage rates will rise, but will not return to 10 or 18 percent. Another forecast was the unemployment rate will still remain at nine percent, but an addition of two million jobs will be added over the next two years.