Real estate market forecast for the rest of 2010 provided by Jed Smith, economist for National Association of REALTORS - presented on the Real Estate RoundTable show on BlogTalkRadio March 5, 2010.
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2010 Real Estate Market Forecast: Jed Smith Real Estate Roundtable Presentation
1. NPMA Legislative Day, Monday, March 1, 2010, at the Mayflower Hotel on Connecticut Avenue. As the session stands, we are set for 10:30am to noon and it is a breakout. Economic Outlook Residential and Commercial Real Estate Market Conditions Jed Smith Managing Director for Quantitative Research NATIONAL ASSOCIATION OF REALTORS®
2. Economic Snapshot Recovering from a recession—slowly. Continued high unemployment. Key Issue: JOBS, JOBS, JOBS. Consumer Confidence: Short term and long term outlooks. Entitlement Programs, Government Spending, and Budget. National Debt. National Wealth Housing Issues Liquidity For 2010: EHS: 5.7 Million. Price: +3%, Starts 668,000 up from 552,000.
18. Where Are We Now?Recent Real Estate Market Experience Financial System: Cleaning Up From The Tsunami. Weakened Balance Sheets, Increased Risk Aversion. Financial Institutions: Credit less available. Impacting Housing Markets: Debris from Tsunami. Major Loss of Wealth, Low Consumer Confidence, Lost Jobs. Distressed Property: Foreclosures and Short Sales Negative Equity. The Current Housing Markets. Residential Sales: Recovering, Price Still an Issue. Commercial: Financing, Price, Foreclosures, Slow Recovery. Continuing Issues: Concern over market trends and outlook. The KEY ISSUE: Jobs
19. Where Are We Now?Recent Real Estate Market Experience National Sales – Existing Homes. Down 30% as of January ‘10 from Sept 05 peak. Up 11.5% January 09 vs. January ‘10. Market forecast is 5,700,000 nationally for 2010. National Prices – Existing Homes. Median Down 29% as of January 09 from July 2006 peak. Median Constant January 09 vs. January ‘10. Sales – New Single Family Homes Sold. National Down 78% from July 2005 peak as of January ‘10. National Down 6% January ‘10 vs. January ‘09. Real Estate Trends. Distressed Sales: 38% of total including foreclosures and short sales. Negative Equity—est. at 25 percent of mortgages– continuing problem. REALTOR® expectations: 67% currently see constant/rising prices during next year, vs. 61% who saw declining prices in January 09.
20. Where Are We Now?Interest Rates: At Historic Lows Source: Freddie Mac
24. What is the Housing Outlook? Home Sales—Have recovered from their lows. Foreclosures—are clearing the market. Price—Stabilizing/Stabilized—depending on market. New Attitudes towards risk, spending, expectations. Housing Affordability High—Interest rates, price. Tax Credit and Higher Loan Limits Raised Sales by 350,000 to 400,000. Extended to move-up market. Outlook. Government Programs: Mixed Results.
27. Prices Increasingly In Line With History(Median Home Price to Median Income Ratio) Source: NAR
28. Monthly Home Price TrendsCase-Shiller, Government (FHFA), NARSeasonally Adjusted Data $ thousand FHFA NAR Case-Shiller
29. Housing Starts: Down Significantly New Units Needed 3 million more people each year … 1 to 1.4 million household formation … need to account for 300,000 demolitions …. need 1.3 to 1.7 new units
30. What is the Housing Outlook?Existing Home Sales In thousand units Source: NAR
48. Many Problem Loans Not ResolvedDistressed Problem Potentially Significant Source: Real Capital Analytics
49. Major Changes in Funding SourcesFinancing: Sellers, Assumptions, Regional Banks Source Real Capital Analytics
50. Commercial Market Outlook Negative Absorption, Higher Vacancies, Declining Rents. Pricing and Financing Challenges. CMBS—Modest recovery; insufficient to address maturing debt. Vacancy Rates—2010. Office: National 18.3%, up from 15.8%. Industrial: National 15.2%, up from 13.2%. Retail: 13% up from 11.9%. Multi-Family: 7.6% up from 7.3%. Economic Recovery: Jobs, spending, uncertainties. Commercial Sector--Dependent on Additional Jobs, Consumer Spending.
51. Using NAR Information During A Difficult Economy Examples of NAR Information on Housing Markets. Local Market Reports: http://www.realtor.org/research/subscription_data/09localmarketreports Realtors Confidence Index: http://www.realtor.org/research/research/reps Existing-Home Sales Series: http://www.realtor.org/research/research/ehsdata Prices and Sales at MSA and State levels: http://www.realtor.org/research/research/metroprice Local Market Data: http://www.realtor.org/research/research/ehsdata Commercial Real Estate Market Survey: http://www.realtor.org/research/research/cre_market_survey Commercial Outlook: http://www.realtor.org/research/research/commercialhome
52. Major NAR ReportsProviding Customer Information NAR Profile of Home Buyers and Sellers: Extensive information on the market. NAR Investment and Vacation Home Buyers Survey. NAR Member Profile. NAR Commercial Member Profile. NAR Profile of Buyer’s Home Feature Preferences.
53. Concluding Comments GDP: Weak recovery. Major Issues: Jobs, Consumer Confidence, Consumer Balance Sheets, Financial System/Credit Availability, Deficit. Highly dependent on Administration/Fed actions. U.S. Real Estate Outlook Residential: Distressed real estate: clearing market/lower price. Sales—Have recovered from lows. Price: Varies by individual market-- distressed real estate, consumer expectations/confidence. Bifurcated Markets Commercial: Still declining; slow markets; financing issues. Foreign transactions: U.S. is attractive. Looking Forward: Consumer Confidence, risk management, addressing balance sheets, caution. Jobs, Jobs, Jobs!