The Current Status and Outlook for the U.S. Economy, Housing and Mortgage Markets Specially Prepared for: The 61 st  Annua...
Presentation Outline <ul><li>The National Economy </li></ul><ul><ul><li>Economic Growth or Recession? </li></ul></ul><ul><...
The National Economy
GDP Growth is Positive, but Weak
Employment Growth is Under Growing Pressure, but Strong by Historical Standards
Consumer Inflation is Rising and the Outlook Remains Uncertain
Consumer Inflation is Being Driven by Continuing Increases in Food and Energy Prices
Consumer Confidence has fallen, but Spending has not fallen dramatically…Yet
As Real Estate Loan Delinquencies and Charge-offs have Risen…
Growth in Bank Credit has Gone to Zero.
Regional Housing Markets
The PMI U.S. Market Risk Index <ul><li>Proprietary econometric model developed by The PMI Group, Inc. that estimates the p...
Actual Decline Percent vs. Predicted Percent 4 th  Qtr 1986 to 3 rd  Qtr 2005 Risk Rank 5 Risk Rank 4 Risk Rank 3 Risk Ran...
Geographic Distribution of House Price Risk 1 st  Quarter 2008 - 1 st  Qtr 2010
Selected Indicators of the Current Status and Outlook for the Housing Market <ul><li>Declining Excess Housing Supply </li>...
Four Characteristic MSAs Chicago Miami Washington, DC Dallas
 
Excess Housing Supply is Falling Source:  Census Bureau / Moody’s Economy.com
MSA Comparisons of Excess Housing Supply Source:  Census Bureau / Moody’s Economy.com
 
Housing Affordability is Rising Source:  Census Bureau / Moody’s Economy.com
MSA Comparisons of Housing Affordability Source:  Census Bureau / Moody’s Economy.com
 
House Price/Rent Ratios are Coming back into line with Historical Standards Source:  National Association of Realtors / HU...
MSA Comparison of Housing Price-to-Rent Ratios Source:  National Association of Realtors / HUD / Moody’s Economy.com
 
Existing Home Sales are Flattening Out, but at Significantly Lower Levels Source:  National Association of Realtors / Mood...
MSA Comparison of Existing Single Family Home Sales Source:  National Association of Realtors / Moody’s Economy.com
 
House Prices are still Declining in General, but the Rate of Decline is Slowing in Many Areas Source:  Loan Performance Co...
MSA Comparison of House Price Appreciation Source:  Loan Performance Corporation
 
Unemployment is Rising in Many Sectors of the Economy Source:  Bureau of Labor Statistics
MSA Comparison of Civilian Unemployment Rates Source:  Bureau of Labor Statistics
 
Foreclosures are Rising at Record Rates Source:  Mortgage Bankers Association
The State of the  African-American Housing Market
Homeownership Rates have Remained Fairly Steady for All Ethnic Groups…Despite
… The Growth in Subprime Lending. Percent of Conventional Mortgage Loans by Subprime Lenders By Race and Ethnic Group, 2005
And in Conclusion… <ul><li>The General Economy is in a State of Slow Growth with Rising Inflation and Unemployment </li></...
NAREB - Annual Conference
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NAREB - Annual Conference

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Presentation to the National Association of Real Estate Brokers Annual Conference

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NAREB - Annual Conference

  1. 1. The Current Status and Outlook for the U.S. Economy, Housing and Mortgage Markets Specially Prepared for: The 61 st Annual NAREB Convention Memphis, TN Presented by: LaVaughn M. Henry, Ph.D. Director, U.S. Economic Analysis Economics & Strategy Group August 9, 2008
  2. 2. Presentation Outline <ul><li>The National Economy </li></ul><ul><ul><li>Economic Growth or Recession? </li></ul></ul><ul><ul><li>U.S. Labor Market </li></ul></ul><ul><ul><li>Inflation </li></ul></ul><ul><ul><li>Role of the Consumer </li></ul></ul><ul><ul><li>Financial Market Stability and Liquidity </li></ul></ul><ul><li>The Regional Housing Markets </li></ul><ul><ul><li>Outlook for House Price Appreciation by Metro Area </li></ul></ul><ul><ul><li>Seven Signs of a Stabilizing Housing Market </li></ul></ul><ul><li>The State of African-American Homeownership </li></ul><ul><ul><li>Trends in Homeownership Rates </li></ul></ul><ul><ul><li>The Subprime Mortgage Crisis </li></ul></ul><ul><ul><li>Affordability: The Basis for Sustained Recovery </li></ul></ul>
  3. 3. The National Economy
  4. 4. GDP Growth is Positive, but Weak
  5. 5. Employment Growth is Under Growing Pressure, but Strong by Historical Standards
  6. 6. Consumer Inflation is Rising and the Outlook Remains Uncertain
  7. 7. Consumer Inflation is Being Driven by Continuing Increases in Food and Energy Prices
  8. 8. Consumer Confidence has fallen, but Spending has not fallen dramatically…Yet
  9. 9. As Real Estate Loan Delinquencies and Charge-offs have Risen…
  10. 10. Growth in Bank Credit has Gone to Zero.
  11. 11. Regional Housing Markets
  12. 12. The PMI U.S. Market Risk Index <ul><li>Proprietary econometric model developed by The PMI Group, Inc. that estimates the probability that prices will fall in each of the nation’s 381 MSAs by the end of the next two years. </li></ul><ul><li>Based on OFHEO’s quarterly house price index for conventional, conforming loans. </li></ul><ul><li>Considers factors including price movement, housing affordability, local employment conditions, housing supply and foreclosures. </li></ul><ul><li>Utilizes more than 25,000+ observations of MSAs and quarterly combinations </li></ul><ul><li>All of the Model’s Primary Econometric Determinants are Statistically Significant at the 99% level or greater </li></ul>
  13. 13. Actual Decline Percent vs. Predicted Percent 4 th Qtr 1986 to 3 rd Qtr 2005 Risk Rank 5 Risk Rank 4 Risk Rank 3 Risk Rank 2 Risk Rank 1
  14. 14. Geographic Distribution of House Price Risk 1 st Quarter 2008 - 1 st Qtr 2010
  15. 15. Selected Indicators of the Current Status and Outlook for the Housing Market <ul><li>Declining Excess Housing Supply </li></ul><ul><li>Improving Housing Affordability </li></ul><ul><li>Declining Price/Rent Ratios </li></ul><ul><li>Flattening Home Sales </li></ul><ul><li>Decelerating House Price Depreciation </li></ul><ul><li>Slowing Growth in Unemployment Rates </li></ul><ul><li>Declining Delinquency and Foreclosure Rates </li></ul>
  16. 16. Four Characteristic MSAs Chicago Miami Washington, DC Dallas
  17. 18. Excess Housing Supply is Falling Source: Census Bureau / Moody’s Economy.com
  18. 19. MSA Comparisons of Excess Housing Supply Source: Census Bureau / Moody’s Economy.com
  19. 21. Housing Affordability is Rising Source: Census Bureau / Moody’s Economy.com
  20. 22. MSA Comparisons of Housing Affordability Source: Census Bureau / Moody’s Economy.com
  21. 24. House Price/Rent Ratios are Coming back into line with Historical Standards Source: National Association of Realtors / HUD / Moody’s Economy.com
  22. 25. MSA Comparison of Housing Price-to-Rent Ratios Source: National Association of Realtors / HUD / Moody’s Economy.com
  23. 27. Existing Home Sales are Flattening Out, but at Significantly Lower Levels Source: National Association of Realtors / Moody’s Economy.com
  24. 28. MSA Comparison of Existing Single Family Home Sales Source: National Association of Realtors / Moody’s Economy.com
  25. 30. House Prices are still Declining in General, but the Rate of Decline is Slowing in Many Areas Source: Loan Performance Corporation
  26. 31. MSA Comparison of House Price Appreciation Source: Loan Performance Corporation
  27. 33. Unemployment is Rising in Many Sectors of the Economy Source: Bureau of Labor Statistics
  28. 34. MSA Comparison of Civilian Unemployment Rates Source: Bureau of Labor Statistics
  29. 36. Foreclosures are Rising at Record Rates Source: Mortgage Bankers Association
  30. 37. The State of the African-American Housing Market
  31. 38. Homeownership Rates have Remained Fairly Steady for All Ethnic Groups…Despite
  32. 39. … The Growth in Subprime Lending. Percent of Conventional Mortgage Loans by Subprime Lenders By Race and Ethnic Group, 2005
  33. 40. And in Conclusion… <ul><li>The General Economy is in a State of Slow Growth with Rising Inflation and Unemployment </li></ul><ul><li>Many MSAs are Starting to Show Signs of Stabilization in Price and Sales </li></ul><ul><li>African-American Homeownership is Down Slightly, but Not Out </li></ul><ul><li>Strong and Growing Affordability Will be the Savior of the Current Downturn Leading to Long-Term Sustainability </li></ul>

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