By Haisten Willis
Kennesaw State University economics professor Roger Tutterow, who delivered the keynote economic overview at the InterFace Seniors Housing Southeast conference on Aug. 21, has good news to share about the future of the economy.
Tutterow, who has made appearances on CNN and been quoted in The Wall Street Journal, opened up by saying consumer confidence will return to what he considers “normal” levels by the end of this year. He also predicted there will be a lot more movement in the housing industry — including seniors housing — in the near future.
While many homeowners remain upside-down in their mortgages, Tutterow predicted a “great unlockening” later this year as housing prices recover and more people are able to make long-awaited moves.
“For the vast majority of American households, a large percentage of their wealth was not in their 401(k), but in their house,” Tutterow said. “We at one time had $13.5 trillion in equity in our homes. That was the peak of the housing market. By the time we got to late 2008, early 2009, it was down 60 percent… The good news is we’ve been gradually amortizing these loans, and home prices have been rising.”
Many of those moves, he predicted, will come in the form of Baby Boomers settling into seniors housing. Their children, often called the “Echo Boom” generation, have embraced living with their parents for a few years after college, but will soon be purchasing their own houses on a large scale.
Many factors point to strong growth in the seniors housing industry, according to Tutterow, not the least of which is the sheer number of Boomers reaching retirement age every day. On top of that, people are living longer on average.
“Between 1960 and 2010, we saw about a five-and-a-half year increase in the life expectancy for someone at the age of 60,” Tutterow said. “Not only are Baby Boomers moving into the senior age, but as life expectancy goes up it means they will occupy senior housing for a longer period of time. The question that has to be resolved is what will happen to the age at which they enter senior housing.”
Taking a look around the country, Dallas and Denver homes already are worth as much as they were before the recession, said Tutterow. Atlanta is a top market for investors buying homes to rent. Florida enjoyed a bigger housing boom than the rest of the Southeast before the recession, and fell harder than its regional neighbors when the economy tumbled. However, the Sunshine State is now recovering nicely and home prices are again rising faster than they are in the rest of the Southeast.
This trend coupled with stabilization of the banking industry points to a stronger economy in the near future. “At the end of July, more banks were profitable nationwide and in Georgia than at any time since 2006,” Tutterow said to the crowd gathered in Atlanta’s Westin Buckhead hotel. “The banks are coming back.”
Job growth has been slower than anticipated. According to the Bureau of Labor Statistics, total nonfarm employment increased by 142,000 nationwide in August, compared with an average monthly gain of 212,000 over the prior 12 months. The economy has been adding jobs since early 2010.
Tutterow said the economy has reached December 2007 employment levels. States with a heavy exposure to residential real estate, such as Florida, Arizona and Nevada, lost the most during the recession. In contrast, states with rich oil resources, including Texas and North Dakota, have fared the best.
“It’s all about oil,” he said. “My friends in Texas never really thought we had a recession.”
In fact, Tutterow said fracking could lead the United States to become oil independent within the next 10 years. Oil prices are seeing a positive trend as well, recently falling below $100 per barrel.