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39 » VISIT US ONLINE @ DSNEWS.COM ECONOMIC GROWTH EXPECTED TO SLOW DOWN AS UNEMPLOYMENT STAYS LEVEL Forecasters expect U.S. economic growth to slow down slightly over the next four years as unemployment remains steady. According to the Q 3 2015 Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia, 42 forecasters expect real GDP to grow at an annual rate of 2.7 percent this quarter and 2.8 percent next quarter. Annually, those surveyed indicated that real GDP will grow 2.3 percent in 2015, slightly lower than the previous estimate of 2.4 percent. e forecasters predict real GDP will grow 2.8 percent in 2016, 2.6 percent in 2017, and 2.4 percent in 2018. e Philadelphia Fed reported that the labor market outlook remains unchanged. e forecasters predicted similar results as the last survey for unemployment, noting that it will be an annual average of 5.3 percent in 2015, before falling to 5 percent in 2016, 4.8 percent in 2017, and 4.7 percent in 2018. e report also noted that the forecasters expect job gains to move further up in 2015 and 2016. Projections for the annual-average level of nonfarm payroll employment are at a monthly rate of 244,200 in 2015, up slightly from the previous estimate of 243,900, and 200,500 in 2016, up from the previous estimate of 180,100. Real GDP bounced back from a dismal first quarter with an annual growth rate of 2.3 percent in the "advance" estimate for Q2 released by the Bureau of Economic Analysis (BEA). e GDP growth rate in the first quarter, which was reported to be an annual rate of minus 0.2 percent in the BEA's third and final estimate released in late June, was revised upwardly and reported to be 0.6 percent. "ese results are in line with years past when we have had a very weak first quarters followed by more normal second quarters," said Mark Fleming, chief economist with First American. "e quarter-over-quarter jump isn't a signal of rebounding but is simply a return to more normal rates of growth. e 2.3 percent rate for the second quarter is probably in line with where we will land at the end of the year—2.3 percent for 2015." In late May, the U.S. Bureau of Economic Analysis (BEA) issued a downward revision of what analysts had already deemed "paltry" growth of 0.2 percent in the advance estimate for Q1 reported at the end of April. Despite economic growth taking a step backward, the forecast for housing for the rest of the year remains positive, according to Fannie Mae SVP and chief economist Doug Duncan. New home sales increased by 6.8 percent in April up to 517,000 annualized units; the National Association of Realtors' Pending Home Sales Index has risen by 14 percent in the last 12 months; existing-home sales are at a nine-year high; and purchase applications recovered at the end of May from a slow first half of the month up near a two-year high. "Housing indicators look good," Duncan said. "Pending home sales, new home sales, and starts look good. An underlying number in the GDP, the gross domestic income, was positive. And the confidence numbers seem to be doing well (the Conference Board's Index rose 1.1 points up to 95.4 in May). e GDP seems to be inconsistent with the underlying trend line." U.S. HOMEBUYERS HAVE BECOME MORE DIVERSIFIED With an ever-increasing number of foreign- born homebuyers, a higher share of single female home buyers, and more double-income, no-kids buyers than ever before, the U.S. homebuyer has become quite diversified, according to a report from John Burns Real Estate Consulting. Citing a recent report from the National Association of Realtors, Burns pointed out that single women were almost twice as likely to buy a home as single men (16 percent of homes sold went to single women, compared to 9 percent for men) and the gap widens even further after the age of 50. Meanwhile, 65 percent of homebuyers do not have children; 73 percent of homebuyers were couples (65 percent married, 8 percent unmarried) and 11 percent of homebuyers were foreign-born. Burns stated that since "foreign born buyers are less prone to purchase, foreign purchases are heavily skewed to those born in the 1970s. Seventeen percent of buyers aged 35–49 are foreign born—nearly double the percentage of any other age cohort." Millennials or generation Y (age 35 and under), which is the demographic many analysts have said will be critical for the future health of the housing market, comprised 32 percent of all buyers – the largest share of homebuyers for any age group. Baby boomers made up 31 percent of homebuyers and generation X made up 27 percent; the "Silent Generation" (those born between the 1920s and 1940s) made up 10 percent of buyers. About 68 percent of buyers under the age of 35 were first-time buyers, many of which chose a new home so as to avoid the problems associated with renovation. Burns noted that younger homebuyers place more emphasis on convenience than on affordability, further proof that the millennial generation values its time more than members of previous generations when they were the same age. e biggest hurdle to homeownership for younger buyers was the down payment; 63 percent of buyers under 35 put 10 percent or less down on a home, while 45 percent of young buyers put 5 percent or less down on a home. "Without FHA financing and a recovering mortgage insurance industry, this buyer would be almost extinct," Burns said. About 54 percent of young buyers cited student debt as the biggest obstacle to saving for a down payment, Burns noted, pointing out that an estimated 414,000 fewer homes were sold in 2014 than would have been sold if the student debt levels were the same as they had been in 2005. "Urban homes and homes closer to work have appreciated much faster, which our consulting team has verified in markets across the country," Burns wrote. "High-LTV programs have played a huge role in the housing recovery. All of these factors combine to create great opportunities for entrepreneurs who understand their local markets and can respond to these increases in demand that cannot be met by the resale market." Foreclosure starts totaled 75,400 for July 2015, a decline of 4.5 percent from June and nearly 17 percent from July 2014, according to Black Knight Financial Services. KNOW THIS

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