Nar+midyear2010+residential final 51310
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  • This graph shows the number of distressed loans by category. The bottom category is the foreclosure inventory, which as you can has been steadily rising but the increase over the last 2 quarters of 2009 tempered off some. The green group are foreclosures started which have also decreased in the last quarter of 2009. this is, as I will talk about it more later on, due to pressure on mortgage companies to modify distressed loans and minimize the numbers going into foreclosure. Many states have also put moratorium on foreclosures towards the end of the year. The pink group are mortgages 90+ days past due which have also leveled out at the end of 2009. finally is the orange group, which are newly delinquent loans and that is the most positive news, showing that loans entering delinquent status are decreasing and possibly indicating that the foreclosure crisis in 2010 might not be as bad as was in 2009.

Nar+midyear2010+residential final 51310 Presentation Transcript

  • 1. Economic and Housing Market Outlook Lawrence Yun, Ph.D. Chief Economist NATIONAL ASSOCIATION OF REALTORS ® Presentation at NAR’s Midyear Economic Issues and Residential Forum Washington, D.C. May 13, 2010
  • 2. Recent Pending Home Sales Source: NAR
  • 3. Recent National Pending Home Sales (year-over-year % change) Source: NAR Tax Credit Help to Sales Despite 3.7 million job losses
  • 4.  
  • 5. Distressed Home Sales Source: NAR Foreclosed Short-Sale
  • 6. Latest Home Price Trend - Stabilizing % change from one year ago Loan Performance in Yellow FHFA in Red Case-Shiller in Green NAR in Blue Pre-tax credit Tax credit
  • 7. Sample Markets with Price Increases Source: NAR % change from one year ago
  • 8. Tax Credit was Not-Impactful
    • 4.4 million homebuyers to get tax credit
      • 2/3 to 1 st -time buyers
      • 1/3 to repeat buyers
    • 1.0 million buyers would not have entered without tax credit (stimulative impact)
    • 3.4 million getting bonus money
    • $30 billion tax credit wasted on people who would have bought anyway
  • 9. Tax Credit was Huge Success
    • 1 million additional buyers
    • 1 million fewer inventory
    • Reduced months supply by 2 to 2.5 months
    • Correspond to price impact of 5% to 8% points
    • Preserved Housing Wealth (mostly middle-class) by nearly $1 trillion
    • Consumer spending impact
    • Banks’ capital pushed above ‘stress levels’
    • Builds home buying confidence … with no further big price worries
    • Limit future foreclosures
  • 10. After the Tax Credit
    • Need Job Creation
    • Need Household Formation
    • Need Mobility
    • Improved Consumer Confidence
    • Low Mortgage Rates
    • Lending for Jumbo and Second Home Mortgages
  • 11. Source: BLS In thousands NET Job Changes in U.S. (Monthly Payroll Job Change) 2 million job creation each year … will take 4 years to recover all the job losses … will take 6 years to fully absorb new workers and get back to 6% unemployment rate
  • 12. Source: BLS In thousands Job Turnover in U.S. (Total job gains and total job losses) Fewer firings but people seeking for unemployment insurance because of lack of hirings
  • 13. Household Formation (2-year moving average)
  • 14. People Mobility (How many move each year?) Intra-state mobility modestly down Inter-state mobility significantly down %
  • 15. Consumer Confidence Chart about future expectations according to Conference Board But no true measure for home buying confidence
  • 16. 30-year Rate on Conforming and FHA ( Not Jumbo or 2 nd Home ) Source: Freddie Mac
  • 17. 30yr Mortgage and 10yr Treasury Spread % points Financial Crisis
  • 18. Swings in Primary and Second Home Sales Index Source: NAR Primary Home Sales 2 nd Home Sales
  • 19. Non-Government Backed Mortgages
    • Jumbo Mortgages
    • Second Home Mortgages
    • Commercial Real Estate Loans
    • Construction Loans
    • Many Small Business Loans
    • Showing nascent recovery signs because banks are making profits and easily above ‘stress-test levels’
  • 20. Risk to Recovery
    • Future Housing Shortage
      • Too fast price growth means fewer buyers qualifying for mortgages
      • Past lax lending should not and will not return
    • Lingering Past Lending Mistakes and Continuing High Foreclosures
    • Greece
  • 21. High Existing Home Inventory In thousand units
  • 22. High Homeowner Vacancy Rate In thousand units % About 700,000 extra vacant homes above normal
  • 23. Depressed Housing Starts In thousand units In thousands
  • 24. Low New Home Inventory In thousand units In thousands
  • 25. Future Housing Shortage? Year Housing Starts Historical Normal Cumulative Surplus/Deficit 2003 1.85 million 1.6 million + 0.25 million 2004 1.95 million 1.6 million + 0.60 million 2005 2.07 million 1.6 million + 1.07 million 2006 1.81 million 1.6 million + 1.28 million 2007 1.34 million 1.6 million +1.02 million 2008 0.90 million 1.6 million + 0.32 million 2009 0.55 million 1.6 million - 0.73 million 2010 forecast 0.68 million 1.6 million -1.65 million 2011 forecast 0.95 million 1.6 million - 2.30 million
  • 26. Serious Delinquency Rate (90+ days late or foreclosure) % Subprime
    • FHA Reserve Fund depleting … Bailout ???
    • Fannie-Freddie … future reform without private profit and taxpayer loss
    • Veterans Affairs backed mortgages … slight rise … even though a zero-down product … stay within budget and all will be OK!
    VA (purple) FHA Prime (green)
  • 27. Number of Distressed Loans
  • 28. Greece
    • One of the Highest Homeownership Rate with few mortgage defaults
      • Bridal families often buy a home all-cash
    • But Greece Government potential default
      • Too high deficit and too high debt
      • Default … European banks’ capital reserve take hit … less lending to Portugal and Spain
      • Debt default contagion spreads
      • Less capital available for jumbo and 2 nd homes
  • 29. U.S. Budget Deficit Source: Congressional Budget Office Projections Source: CBO, NAR estimate U.S. to be Greece in 25 years?
  • 30. Economic Outlook 2008 2009 2010 forecast GDP 0.4% -2.5% 3.1% CPI Inflation 3.8% -0.2% 2.0% Unemployment Rate 5.8% 9.3% 9.7% 10-year Treasury 3.7% 3.3% 3.9%
  • 31. Housing Outlook 2008 2009 2010 forecast Existing Home Sales 4.9 m 5.2 m 5.4 m New Home Sales 485 k 375 k 400 k Home Price Growth -10% -13% 2% to 3% Mortgage Rate 6.1% 5.1% 5.3% Consumer confidence about home buying Down Down Up
  • 32. Right Tools Right Now
    • Many Free Products
      • REALTOR ® Member Profile
        • Difficult to make it in the first few years
      • Home Buyer and Home Seller Survey
        • Referrals and Repeat Clients are Important
      • Daily Forecast Update
      • Connect to Facebook
    • www.realtors.org
      • Then click Research