Dr. Frank Nothaft is chief economist for CoreLogic, America’s largest provider of advanced property and ownership information, analytics and data-enabled services. He leads the economics team responsible for analysis, commentary and forecasting in global real estate, insurance and mortgage markets. Before joining CoreLogic Frank served in a variety of leadership positions at Freddie Mac. Prior to Freddie Mac, Frank was an economist with the Board of Governors of the Federal Reserve System in the mortgage and consumer finance section and served as assistant to Governor Henry C. Wallich.

Frank has served as president of the American Real Estate and Urban Economics Association, Board member of the National Association for Business Economics (NABE) and the Financial Management Association, Advisory Board member of the Real Estate Research Institute, Editorial Board member of the Journal of Real Estate Finance and Economics, and is a Weimer School Fellow of the Homer Hoyt Institute.  He received the NABE Outlook Award for having the most accurate macroeconomic forecast for 2018.

Frank graduated from New York University with a B.A. in mathematics and computer science, and holds a Ph.D. in economics from Columbia University.

Arranged by Geoff Rezek

Bryan Hooper’s notes on the talk:

Dr. Frank Nothaft, the chief economist at CoreLogic, a business-to-business firm specializing in providing analysis and solutions for the property market, reviewed the events of the past pandemic year and forecast the upcoming economic outlook for the country.

He noted that 2020 at a negative 3.5% saw the largest drop in GDP since 1946, a time when the country was adjusting from a wartime economic standing back toward peacetime operations. The current $1.9 trillion recovery bill should help boost growth in 2021 to around 4.8%, the biggest gain since 1984. Along with this growth should come a recovery from unemployment, which stood at 6.2% in February. The Federal Reserve is mandated by Congress to maximize employment and maintain price stability, and a return to a “full employment” level of 4.0 to 4.5% unemployment is considered feasible by the fourth quarter of 2022. While the stimulus package is also provoking concerns about inflation, Dr. Nothaft stressed that the central bank is looking at an inflation rate that has averaged only 1.8% since 2000, and the current target of 2% is achievable by fourth quarter 2022 given the intention to maintain the federal funds rate between zero and 0.25%.

Mortgage rates averaged 4.1% from 2010 through 2019, and currently stand at 3.0%, with growth to 3.5% predicted for 2022. Dr. Nothaft suggested that anyone with a rate above 4% should move to refinance. In terms of market demand for houses, He noted that the largest population demographic is in the 28-30 year old millenniums; with 33 the median age for first time house buyers there is impetus developing for increased demand. Millennials and the following generation Z are forecast to increase household formations in the US by over 12 million between 2018 and 2023, offsetting the decline in older age groups for a total increase of 6.3 million over the period. The situation in Connecticut for these younger groups is very different however: the millennial population is down by 30,000 over the past ten years. Housing demand is high and prices are, too, deterring all but the wealthier part of that generation from buying in-state. In terms of home sales overall in the US, 2020 was the best year since 2006 , and 2021 is looking to be better. This has been driven by low rates for the younger generation and a move to more space for the older generation X as the work from home movement developed over the year. The demand should be maintained even as the pandemic recedes with as many as 25% of workers remaining home-based. That will impact home equity, which increased an average of 4.8% from 2010 to 2020 in the country, but only 0.7% in Fairfield County: the forecast is for US growth of 7.9% in 2021 and 3.2% in 2022, but a greater rate of 9.7% and 4.4% for Fairfield County.

The slide pack and a video of Dr. Nothaft’s presentation can be accessed via the links below:

Presentation video: https://youtu.be/bDdY3cObbKw

Presentation slides: Darien Mens Assn 3-10-21 Nothaft