The chief economist of the National Association of Realtors told Northwest Indiana's Realtors Thursday that the country needs more home construction if it wants to moderate the rise in home prices and continue to grow sales.
Lawrence Yun addressed members of the Greater Northwest Indiana Association of Realtors during their annual meeting at Avalon Manor in Hobart.
Yun said a low supply of homes for sale has led to unusually fast price growth and has put pressure on housing affordability, particularly for first-time buyers.
The current market has developed in an expanding economy with good job growth and high household net worth, he said, though Northwest Indiana has lagged in job growth.
"The question is, how many people will have their opportunity for home ownership?" Yun said. "We need to assure that this good economy still extends to real estate, so the American Dream of home ownership is available to a wider number of people."
Yun said more construction is key. "If you had more inventory, particularly the moderate-priced homes, you'd make more sales," Yun told the Realtors.
In Northwest Indiana, the dollar-volume of sales has increased by double digits in recent years, Yun said, but "the dollar-volume increase is largely coming from price rises" rather than the increased number of sales.
Existing home sales in Northwest Indiana totaled 5,123 the first half of 2018, with a median price of $160,000, according to statistics from GNIAR's Multiple Listing Service. Sales were 1.4 percent higher than the first half of 2017, with the median price up 6.7 percent.
Yun said recent Federal Reserve actions will almost certainly cause mortgage rates to rise over the next year. He predicted an average rate of 5 percent a year from now.
But ultimately, "I believe home sales will slowly inch higher as more home construction gets done," he said.
Yun also mentioned the possibility of local stimuli to the housing market. The South Shore Line commuter railroad's planned expansion projects might be one for Northwest Indiana, Yun said — though he stopped short of making a firm prediction. "The locality with good public transport — their property value generally tends to rise," he said.
GNIAR members work in Lake, Porter, LaPorte, Newton, Jasper, Pulaski and Starke counties. At Thursday's meeting, they also reviewed the past year's activities and elected new board members.