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38 Selma Hepp is the Chief Economist and VP of Business Intelligence for Pacific Union International, Inc. She joined Pacific Union in 2016 to oversee the vital economic and technology intelligence for the company. Prior to joining Pacific Union, Hepp served as Chief Economist for Trulia, Senior Economist for the California Association of Realtors, and as an economist for the National Association of Realtors. She earned her Master of Arts in Economics from the State University of New York, Buffalo, and she holds a Ph.D. from the University of Maryland. Why did you first become interested in the study of economics? Economics is one of those disciplines that always made sense to me and I found it very intuitive. I studied urban economics, in particular, because I was always interested in how cities are organized and why they emerge. Why do people choose to live in high-density neighborhoods, or far from city centers in suburbs? Growing up in a European city where walkability and high density were a norm, I was interested in why American and European cities are so different. However, over the last 20-something years that I have been here, I notice many urban trends emerging that replicate that walkability, town-center feeling that I was used to. I think people gravitate towards common spaces and like to interact with other people. at will drive urban trends and define how cities change and grow. What are some of the biggest challenges facing the housing industry right now from an economic standpoint? How worried should we be about these challenges? Access to housing is becoming increasingly more challenging for the greater share of the population. I worry about affordability a lot. From an economic standpoint, we are having increasingly divergent income growth. In addition, younger generations are not equally benefiting from generational transfer of wealth, thus they are starting off in life at very different opportunity levels. I'm concerned how increasing inequality will limit ability for some to access housing, homeownership, and asset growth; and to what degree they will be able to accumulate their own wealth. We are in the middle of a technological revolution, and as with every revolution, there are winners are losers. Ideally, there should be more winners than losers, however it is hard to tell right now where we are on that spectrum. However, one-sided growth is challenging from an economic standpoint as we have seen in previous revolutions and consequent social unrests. And lastly, we cannot emphasize enough the importance of new construction in the viability of the housing industry. Some of the areas of the country that gained the most new jobs in the recent decade have not kept up with consequent demand for housing. Hence, the affordability concerns we keep talking about. To ensure economic growth persists in some of these areas, new construction is critically needed. What area of the country do you think will see the largest growth in homeownership? Affordability and access to finance and employment are critical in growing homeownership. While job growth has continued at a solid pace and is fueling demand for homeownership, affordability will be the factor determining where homeownership picks up the most. e South seems to continue to be the place where opportunities for employment and homeownership are plentiful; however, I think the spreading of the tech sector outside Silicon Valley will also help drive homeownership, particularly in those more affordable areas, such as Austin, Texas, for example. Unfortunately, this current hurricane season will expose more vulnerable parts of the country and, possibly, make us reconsider where we want to encourage growth. Nevertheless, homeownership in the coming years will come mostly from millennials and their employment opportunities will drive ASK THE ECONOMIST HEAR DIRECTLY FROM TODAY'S LEADING MARKET EXPERTS. "Unfortunately, this current hurricane season will expose more vulnerable parts of the country and, possibly, make us reconsider where we want to encourage growth. " Selma Hepp Chief Economist and VP of Business Intelligence Pacific Union International, Inc.