Economists Think Arkansas Mortgage Demand, Housing Market Will Remain Steady
Economists at the University of Arkansas at Little Rock Economic Forecast Conference on Wednesday were more upbeat about the economy than one might expect, given the current slowdown.
THE GIST: There’s nothing great on the horizon, but there’s no recession, either.
Appearing in front of about 400 attendees, Mark Thompson, an economic forecaster with UALR’s Institute for Economic Advancement, said Arkansas’ economy has slowed similar to the national economy. He said slower growth will likely continue through the next couple of years.
The gross state product, similar to the national gross domestic product, has slowed from an annual growth rate of 6 percent in 2004 to 2.6 percent in 2005 to less than 1 percent in 2006, ArkansasBusiness.com reports.
The forecast for 2007 and 2008 is about 2 percent, which is below the long-run growth of 3 percent to 3.5 percent annually. Nominal GDP is expected to reach $100 billion in late 2008.
The housing market in the state has cooled from its 2004-05 levels, but levels are still above the previous five-year average. The housing bubble that’s being talked about nationally isn’t likely to affect Arkansas home loan demand, with the possible exception with high-end areas of W. Little Rock and northwest Arkansas.
It’s very early, experts say, but activity is very promising regarding the future of the Natural State’s economy. Inflation is still under control and the Federal Reserve will continue to take a wait-and-see attitude toward raising interest rates until the housing market settles down. That means good things for borrowers looking to take advantage of low mortgage rates.
Housing has had a huge drop-off across the U.S., mostly in single-family housing, although multi-family home construction has increased slightly.
What remains to be seen is how that sector will affect other businesses, such as furnishings, lawn products and home electronics. Home Depot, for instance, recently showed a drop in earnings for the third quarter, as home improvement loan demand and the need for materials lessen.
The home building slowdown will also affect not only real estate companies, but mortgage and title companies.