Mark Vitner, senior economist at Wells Fargo Securities, speaks at BMC's meeting in Las Vegas on Jan. 13, 2016
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Mark Vitner, managing director and senior economist at Wells Fargo, spoke Jan. 14 in Las Vegas to several thousand people gathered at BMC Stock Holdings' annual meeting and trade show. Here are the major takeaways from his 90-minute presentation:

  1. The nation's gross domestic product should grow about 2% this year. The inflation rate, which has averaged 1.7% over the past seen years, probably won't even beat that.
  2. Housing starts will rise to roughly 1.2 million in 2016 from about 1.1 million last year. Single-family starts will rise by about 10%. Multifamily at one point was forecast to hold still or retract, but now even that should edge up.
  3. Over the last six years, one-third of U.S. growth came from the energy sector, and that was largely in six states. Another third came from the tech sector. And one-third from export-oriented manufacturing, much of it from the rise in China. "That concerns me, when you look at what's happening in the economy now: tech is top-heavy, energy is in full retreat, and China is dialing back.
  4. There's a great divide among the nation's local markets. If you're in an industry or region that depends on the global economy, then 2016 will be tough. The nation's two weakest markets are Peoria, Ill., and Iowa's Quad Cities. Both are dominated by farm implement manufacturers that sell extensively aboard. And Houston, which is thought of rightly as being an energy powerhouse, is also the biggest export market in the U.S. Energy-dependent markets also will suffer, and tech-dependent markets won't grow as fast as they have in recent years.
  5. Meanwhile, if you're in an industry or market that's more dependent on the U.S. economy and isn't related to energy or tech, your area's economic growth should run closer to 3%. For instance, Midwestern states with auto plants are going to hold up relatively well. "There's a rebound story in Detroit. There's even a housing story there.
  6. China's problems are casting a shadow over the entire globe. "The forces that are driving that slowdown are structural in nature, long -lasting with us, and will be with us for a decade to come, maybe a couple of decades."
  7. Wells Fargo Securities had forecast that the Fed's rate hike in December would be followed by three more rate hikes this year. "I now think it will be difficult for the Fed to do that."
  8. "We're running into a bit of an affordability crisis," especially with millennials. They're burdened by student loans, banks have tightened home-lending standards in the past decade, and the price of homes generally is rising faster than the inflation rate.
  9. "We hear that millennials prefer to rent. My gut feeling is that millennials don't have any money. ... It's a drag on the housing market." Even among people who have moved out of home, many are still being supported by their folks. "Kids aren't off the payroll. Parents aren't willing to move out of where they live. The housing market is clogged up in a lot of ways."
  10. The strongest job growth has been in two sectors. The first has largely occurred in unskilled, mostly part-time, often low paying jobs. The second sector is in skilled positions that require education, are fewer in number, and pay very well. Depending on where you live, you might not be in a good place to get a good job. And that's where labor force participation rate is lowest. In areas with skilled jobs, there's a fevered search for workers. "It's an issue that's going to be there, particularly in the construction business, where the average worker is older than the economy as a whole."
  11. There's been a move back into the center city for many parts of the south and west. In the 1990s, suburban growth was double city growth. Last decade it was three times. This decade, suburbs and cities are running even. Austin, Orlando, Atlanta, Charlotte, and Denver, all are attracting scores of young people. They're relatively affordable, with more activities in downtown and urban areas. "This seems to be a change that has some legs to it. ... Part of this move back to the city is driven by smart phones. Smart phones let you improvise, call an audible. It enables you to do more things. To do more things, you need to live in a place that gives you more things to do." Also, the economy is getting more tech based, and to get those people you're better off in the city.
  12. "I don't know that large suburban residential development is going to come back all that quickly." Some of the biggest suburban growth is in active adult communities. Some adults also will move back into town, but that's a small group. "It's beyond millennials, it's not just a short-term thing." Even within millennials, it's not just their age. It's their demographic composition. 25 to 34 years olds are much more comfortable with an urban lifestyle. Generation Z--people born from 2000 onward--is even more so. "It doesn't have reverse suburbanization, but it slows the recovery there. Values in the city will grow more rapidly." Among other things, you'll see more tear downs within cities than you have already.
  13. In the first 11 months of 2015, Houston was the nation's biggest housing market, with 35,244 building permits. And even with the price of oil so low, "I don't lose a lot of sleep over Houston. This is not a repeat of the 1980s." One big difference between then and now is that then, we believed we had less oil and gas in the ground. Now we know better.
  14. We still have about 1 million vacant units too many in the housing market. Until we pull through those, we won't get back to a 1.5 million starts level on a regular basis.
  15. New York and Charlotte both have roughly 1.5 female college graduates aged 25 to 34 for every male college graduate the same age. That's the biggest imbalance in the United States. This creates a selection problem, as women who graduate from college prefer men with college degrees. As a result, the women are getting married later.