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2015 Idaho Real Estate Summit- Ada County Association of REALTORS

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Our second Housing Summit included current housing trends and a look at our economy.
Our Keynote speaker is Lawrence Yun: Lawrence Yun is Chief Economist and Senior Vice President of Research at the NATIONAL ASSOCIATION OF REALTORS®.
Topics include: Local Residential & Commercial and 2015 Forecast

Published in: Real Estate
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2015 Idaho Real Estate Summit- Ada County Association of REALTORS

  1. 1. The State of Real Estate in Ada County December 10, 2014 Presented by The Ada County Association of Realtors
  2. 2. Dave Ferguson 2014 ACAR President
  3. 3. Kit Fitzgerald Idaho Real Estate Summit - Chairperson
  4. 4. Gerald Hunter Executive Director Idaho Housing and Finance Association
  5. 5. Housing Summit 2015 www.idahohousing.com
  6. 6. IHFA Statewide Loan Production
  7. 7. IHFA Ada County Loan Production
  8. 8. IHFA Loan Servicing
  9. 9. Foreclosure Rates: FHA Loans
  10. 10. Foreclosure Rates: Conventional Loans
  11. 11. Delinquency Rates: FHA Loans
  12. 12. Delinquency Rates: Conventional Loans
  13. 13. Who Are Our Borrowers? Borrower Characteristics FY2014 FY2008 Age 37 31 Income $51,000 $44,000 Family Size 2.4 2.0 FICO 720 693 First-time homebuyer 81% 92% Loan Characteristics Average Loan Size $149,000 $169,000 DPA Percentage 44% 26% Government Insured 50% 60% Max Eligible Income $ 90,000 $ 85,260
  14. 14. 2014 Product Overview
  15. 15. Access to Credit • Existing home sales to first-time buyers down to 33% from normal of 40% • Home purchase loans to low-to-moderate income borrowers declined to 28.4% from 33.4% from 2012 to 2013 • Homeownership rate down to 64.3%, lowest in 20 years • NAHB estimates loss of 18,700 home sales to tight credit • Urban Institute estimates that in 2012 alone, as many as 1.2 million loans were lost due to low credit availability.
  16. 16. Access to Credit FNMA Credit Scores* <700 700-750 >750 2011 – Q3 2013 8.3% 23.2% 68.5% 2007 37.9% 25.6% 36.5% 1999 - 2004 37.1% 30.4% 32.4% * Data provided by Urban Institute
  17. 17. Actions to Open Credit Box • GSE 97% Loan to Value Ratios • GSE Rep and Warrant Changes • Freddie Mac Specialized HFA Products • FHA HAWK Program • FHA Quality Assurance Program
  18. 18. LeAnn Hume, CCIM, CLS
  19. 19. COMMERCIAL REAL ESTATE IN IDAHO LeAnn Hume, CCIM, CLS
  20. 20. LeAnn M. Hume, CCIM, CLS Global National Regional Local ACAR Housing Summit • Idaho Native • Grew up with Realtors • Started career at Albertsons corporate – 17 years ago • Certified Commercial Investment Member • Certified Leasing Specialist – ICSC • Specialize in Retail Tenant Representation, Investment • Team with Andrea Nilson
  21. 21. STATE OF RETAIL - GLOBAL Downtown – $15-$26 NNN The Village – $30-$36 NNN Depending on Concessions and TI’s ACAR Housing Summit
  22. 22. NATIONAL RETAIL TRENDS RETAIL INDUSTRY COMP SALES Company Name % Sales Increase Yr/Yr Amazon.com 24.0 Michael Kors 22.9 Netflix 22.2 Burberry 17.0 Lululemon Athletica 5.0 Chico’s (1.9) Family Dollar (2.8) Sears (4.0) Gordmans (6.1) Abercrombie & Fitch (14.0) Aeropostale (15.0) Coldwater Creek (16.8) Under Armour (26.0) ACAR Housing Summit
  23. 23. NATIONAL RETAIL TRENDS 100 Locations 300 Locations ACAR Housing Summit
  24. 24. NATIONAL RETAIL TRENDS • The Enclosed Mall • Lifestyle Centers – Providing an Experience • Sense of Place • Retailers downsizing • Closures – Staples, Radio Shack • Consolidation – Safeway/Albertsons • Counterfeit Goods – 10% of all sales • Buy Local! ACAR Housing Summit
  25. 25. LOCAL TRENDS • Capital Chasing Yields – Pacific NW • Low Cap Rates for Single Tenant NNN Investments Starbucks Wendys Popeyes Freddys • Lending Environment Still Favorable • Multi-Family Development • Distribution is Key to some expansion • Grocery category expansion • Consumer Confidence is Good ACAR Housing Summit
  26. 26. LOCAL COMMERCIAL ACTIVITY LEADERSHIP CONFERENCE
  27. 27. FUN FACTS LEADERSHIP CONFERENCE • Cyber Monday - $2.04 Billion in Sales – Up 17.8% • Black Friday – Down 11.3% from 2013 - $57.4 B • Why? Retailers offering specials earlier • Average holiday Household spending = – $684 – down 6.9% • Most Popular Purchases for holidays? – Clothing & Clothing Accessories
  28. 28. ACAR HOUSING SUMMIT Questions? LeAnn Hume, CCIM, CLS 208-287-8436 ACAR Housing Summit
  29. 29. Marc Lebowitz, RCE, CAE Executive Director Ada County Association of REALTORS®
  30. 30. Ada County sales for 2014 “comme ci comme ça” Sales in 2014 (compared to 2013): • Up in all price points above $160,000 • Down in all price points below $160,000 o $100,000 to $120,000 75% o $120,000 - $160,000 18% As far back as 2006 we began seeing the availability of entry-priced housing begin to decline.
  31. 31. $225,000 $200,000 $175,000 $150,000 $125,000 $100,000 Median Home Price November +5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Median 168995 165000 156495 149900 153350 162400 160000 163000 154000 147900 150000 145000 2011 Median 134900 149000 137000 135000 144500 154900 152750 156900 147500 152500 149500 149300 2012 Median 139000 158000 154900 158777 179900 174255 173000 180,399 174990 178000 177400 177971 2013 Median 185909 180000 186750 187,000 195000 212000 207000 201992 194500 214000 205700 198512 2014 Median 208180 199650 197,900 209450 209000 218650 213800 218900 205551 208698 215700
  32. 32. Ada County Median Home Price $162,536 $141,763 Average by Year $232,921 $190,031 $223,468 $203,273 $170,155 $156,337 +48% 2003 - 2014 $168,883 $146,979 $209,900 $197,364 $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
  33. 33. 6000 5000 4000 3000 2000 1000 0 Active Inventory Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2007 2008 2009 2010 2011 2012 2013 2014
  34. 34. To the Bottom and Back again – A Timeline Median $240,000 July 2007 Median $165,000 December 2009 Inventory <$160,000 40% Median $147,000 December 2010 Inventory Down 32% from 2007 Levels Inventory <$160,000 26% Sales <$160,000 61% Median $198,000 2013 Inventory <$160,000 20% Median $209,000 Today Inventory <$160,000 12% Sales <$160,000 24%
  35. 35. 2014 Indicators Available Inventory Jan Oct Change $ 0- $120K 70 42 -40% $120K - $160K 336 292 -13% $160K - $200K 416 519 25% $200K - $250K 362 449 24% $250K - $300K 220 379 72% $300K - $400K 346 444 28% $400K - $500K 111 202 82% Sales Jan Oct Change $ 0- $120K 32 16 -50% $120K - $160K 90 145 61% $160K - $200K 74 149 101% $200K - $250K 74 116 57% $250K - $300K 55 83 51% $300K - $400K 65 92 42% $400K - $500K 16 40 150%
  36. 36. Dr. Lawrence Yun Chief Economist National Association of REALTORS®
  37. 37. Real Estate Trends and Outlook Lawrence Yun, Ph.D. Chief Economist NATIONAL ASSOCIATION OF REALTORS® Presentation at Ada County Association of REALTORS® Boise, ID December 10, 2014
  38. 38. GDP Rebound in 2014 Q2 and Q3 6 4 2 0 -2 -4 -6 -8 -10 2007 - Q1 2007 - Q3 2008 - Q1 2008 - Q3 2009 - Q1 2009 - Q3 2010 - Q1 2010 - Q3 2011 - Q1 2011 - Q3 2012 - Q1 2012 - Q3 2013 - Q1 2013 - Q3 2014 - Q1 2014 - Q3 GDP Annualized Growth Rate
  39. 39. Jobs (8 million lost … 10 million gained) 122000 124000 126000 128000 130000 132000 134000 136000 138000 140000 142000 2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - May 2013 - Nov 2014 - May 2014 - Nov In thousands
  40. 40. Weekly New Unemployment Insurance Claims 250 300 350 400 450 500 550 600 2000 - Jan 2000 - Aug 2001 - Mar 2001 - Oct 2002 - May 2002 - Dec 2003 - Jul 2004 - Feb 2004 - Sep 2005 - Apr 2005 - Nov 2006 - Jun 2007 - Jan 2007 - Aug 2008 - Mar 2008 - Oct 2009 - May 2009 - Dec 2010 - Jul 2011 - Feb 2011 - Sep 2012 - Apr 2012 - Nov 2013 - Jun 2014 - Jan 2014 - Aug In thousands
  41. 41. Unemployment Rate 0 2 4 6 8 10 12 2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul
  42. 42. Jobs in Boise Area 200 210 220 230 240 250 260 270 280 290 300 2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul In thousands
  43. 43. Jobs: U.S. vs Boise Area 90 95 100 105 110 115 120 125 130 135 2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul
  44. 44. Household Net Worth at All-Time High 85000 80000 75000 70000 65000 60000 55000 50000 45000 40000 $ billion
  45. 45. But Wait … “I am not feeling it”
  46. 46. GDP Still not Robust … Below 3% for 9 straight years -4 -2 0 2 4 6 8 10 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 GDP Annual Growth Rate
  47. 47. Sluggish Growth + Gap after Great Recession ($1.5 trillion gap … $4,700 per person) 18000 17000 16000 15000 14000 13000 12000 11000 10000 GDP in 2009 Dollars 3% Growth Line 2.2% Growth Line 1998 - Q1 2000 - Q1 2002 - Q1 2004 - Q1 2006 - Q1 2008 - Q1 2010 - Q1 2012 - Q1 Real GDP Real GDP W/O Recession
  48. 48. Employment Rate 54 56 58 60 62 64 66 2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul
  49. 49. Renter Households from 2010 41,000 (Increased by 4 million) 25,000 27,000 29,000 31,000 33,000 35,000 37,000 39,000 1980 - Q1 1981 - Q1 1982 - Q1 1983 - Q1 1984 - Q1 1985 - Q1 1986 - Q1 1987 - Q1 1988 - Q1 1989 - Q1 1990 - Q1 1991 - Q1 1992 - Q1 1993 - Q1 1994 - Q1 1995 - Q1 1996 - Q1 1997 - Q1 1998 - Q1 1999 - Q1 2000 - Q1 2001 - Q1 2002 - Q1 2003 - Q1 2004 - Q1 2005 - Q1 2006 - Q1 2007 - Q1 2008 - Q1 2009 - Q1 2010 - Q1 2011 - Q1 2012 - Q1 2013 - Q1 In thousands
  50. 50. Homeowner Households from 2010 (Decreased by 1 million) 50,000 55,000 60,000 65,000 70,000 75,000 80,000 1980 - Q1 1981 - Q1 1982 - Q1 1983 - Q1 1984 - Q1 1985 - Q1 1986 - Q1 1987 - Q1 1988 - Q1 1989 - Q1 1990 - Q1 1991 - Q1 1992 - Q1 1993 - Q1 1994 - Q1 1995 - Q1 1996 - Q1 1997 - Q1 1998 - Q1 1999 - Q1 2000 - Q1 2001 - Q1 2002 - Q1 2003 - Q1 2004 - Q1 2005 - Q1 2006 - Q1 2007 - Q1 2008 - Q1 2009 - Q1 2010 - Q1 2011 - Q1 2012 - Q1 2013 - Q1 In thousands
  51. 51. Homeownership Rate 60 61 62 63 64 65 66 67 68 69 70 1990 - Q1 1991 - Q1 1992 - Q1 1993 - Q1 1994 - Q1 1995 - Q1 1996 - Q1 1997 - Q1 1998 - Q1 1999 - Q1 2000 - Q1 2001 - Q1 2002 - Q1 2003 - Q1 2004 - Q1 2005 - Q1 2006 - Q1 2007 - Q1 2008 - Q1 2009 - Q1 2010 - Q1 2011 - Q1 2012 - Q1 2013 - Q1 2014 - Q1
  52. 52. Household Net Worth ($5,500 vs. $195,500) $250,000 $200,000 $150,000 $100,000 $50,000 $0 1998 2001 2004 2007 2010 2013 Homeowner net worth ranges from 31 to 46 times that of renters x31 x36 x46 x46 x34 x36 Renter Homeowner Source: Federal Reserve Survey of Consumer Finances
  53. 53. Median Home Price (Near 20% gain in 2 years) $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  54. 54. The Reason for Not Feeling It • Very Slow Housing Market Recovery • Very Slow Commercial Market Recovery • Holds Back Economic Recovery
  55. 55. Existing Home Sales 20% cumulative increase over 2 years 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 20002001200220032004200520062007200820092010201120122013
  56. 56. Monthly Pending Sales Index … Making Upward U-Turn (Seasonally Adjusted) 70.0 75.0 80.0 85.0 90.0 95.0 100.0 105.0 110.0 115.0 2011 - Jan 2011 - Mar 2011 - May 2011 - July 2011 - Sep 2011 - Nov 2012 - Jan 2012- Mar 2012 - May 2012 - Jul 2012 - Sep 2012 - Nov 2013 - Jan 2013 - Mar 2013 - May 2013 - Jul 2013 - Sep 2013 - Nov 2014 - Jan 2014 - Mar 2014 - May 2014 - Jul 2014 - Sep Source: NAR
  57. 57. Two and Out? Or Multi-year Expansion? (Single-Family Existing Home Sales Only) 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 H11
  58. 58. Pent Up Demand 2000 2013 Existing Home Sales 5.2 m 5.1 m New Home Sales 880 K 430 K Mortgage Rates 8.0% 4.0% Payroll Jobs 132.0 m 136.4 m Population 282 m 316 m
  59. 59. Housing Starts Rising … Too Slowly 0 500 1000 1500 2000 2500 3000 1970 - Jan 1972 - Jan 1974 - Jan 1976 - Jan 1978 - Jan 1980 - Jan 1982 - Jan 1984 - Jan 1986 - Jan 1988 - Jan 1990 - Jan 1992 - Jan 1994 - Jan 1996 - Jan 1998 - Jan 2000 - Jan 2002 - Jan 2004 - Jan 2006 - Jan 2008 - Jan 2010 - Jan 2012 - Jan 2014 - Jan Thousand units
  60. 60. Time to Sell a New Spec Home (in months) 16 14 12 10 8 6 4 2 0 2000 - Jan 2001 - Jan 2002 - Jan 2003 - Jan 2004 - Jan 2005 - Jan 2006 - Jan 2007 - Jan 2008 - Jan 2009 - Jan 2010 - Jan 2011 - Jan 2012 - Jan 2013 - Jan 2014 - Jan
  61. 61. Sluggish Recovery in Housing Starts • Cost of Construction Rising Faster than CPI • Labor Shortage for construction work • Construction loan difficulty for small local homebuilders … Dodd-Frank financial regulations?
  62. 62. Ada County Housing Statistics • Home Sales down 1% year-to-date October • 2013 up 14% • 2012 up 1% • 2011 up 9% • Average Price up 10% • 2013 up 17% • 2012 up 13% • 2011 down 9%
  63. 63. Boise Area Housing Permits (year-to-date) 14000 12000 10000 8000 6000 4000 2000 0 2000 - Jan 2001 - Jan 2002 - Jan 2003 - Jan 2004 - Jan 2005 - Jan 2006 - Jan 2007 - Jan 2008 - Jan 2009 - Jan 2010 - Jan 2011 - Jan 2012 - Jan 2013 - Jan 2014 - Jan
  64. 64. Multiyear Recovery Likely • More Jobs • Manageable Mortgage Rates • Population Pent-Up Demand • More Inventory • Record High Household Wealth
  65. 65. “Take This Job and Shove It … I ain’t working here no more” 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul Quit Rate in thousands
  66. 66. Multiyear Recovery Likely • More Jobs • Manageable Mortgage Rates • Population Pent-Up Demand • More Inventory • Record High Household Wealth
  67. 67. Monetary Policy by Federal Reserve (zero rate policy for 6 years!) 6 5 4 3 2 1 0 % Fed Funds 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
  68. 68. Federal Reserve Balance Sheet from Quantitative Easing 0 500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 2005 - Jan 2005 - Jun 2005 - Nov 2006 - Apr 2006 - Sep 2007 - Feb 2007 - Jul 2007 - Dec 2008 - May 2008 - Oct 2009 - Mar 2009 - Aug 2010 - Jan 2010 - Jun 2010 - Nov 2011 - Apr 2011 - Sep 2012 - Feb 2012 - Jul 2012 - Dec 2013 - May Total Asset Purchase $ million
  69. 69. 30-year Mortgage Rates 9 8 7 6 5 4 3 2 1 0 2000 - Jan 2001 - Jan 2002 - Jan 2003 - Jan 2004 - Jan 2005 - Jan 2006 - Jan 2007 - Jan 2008 - Jan 2009 - Jan 2010 - Jan 2011 - Jan 2012 - Jan 2013 - Jan 2014 - Jan
  70. 70. Non-worrisome CPI Inflation – Yet COLA of 1.7% in 2015 -3 -2 -1 0 1 2 3 4 5 6 2000 - Jan 2000 - Aug 2001 - Mar 2001 - Oct 2002 - May 2002 - Dec 2003 - Jul 2004 - Feb 2004 - Sep 2005 - Apr 2005 - Nov 2006 - Jun 2007 - Jan 2007 - Aug 2008 - Mar 2008 - Oct 2009 - May 2009 - Dec 2010 - Jul 2011 - Feb 2011 - Sep 2012 - Apr 2012 - Nov 2013 - Jun 2014 - Jan 2014 - Aug
  71. 71. Rising Renters’ and Homeowners’ Rent Growth (Above 3%) -1 0 1 2 3 4 5 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul Owners' Equivalent Rent Renters' Rent
  72. 72. REALTOR® Rent Survey – Shows Rent Pressure 0 10 20 30 40 50 60 2010 - Dec 2011 - Feb 2011 - Apr 2011 - Jun 2011 - Aug 2011 - Oct 2011 - Dec 2012 - Feb 2012 - Apr 2012 - Jun 2012 - Aug 2012 - Oct 2012 - Dec 2013 - Feb 2013 - Apr 2013 - Jun 2013 - Aug 2013 - Oct 2013 - Dec 2014 - Feb 2014 - Apr 2014 - Jun Falling Rising
  73. 73. Oil Price 0 20 40 60 80 100 120 140 160 2000 - Jan 2000 - Aug 2001 - Mar 2001 - Oct 2002 - May 2002 - Dec 2003 - Jul 2004 - Feb 2004 - Sep 2005 - Apr 2005 - Nov 2006 - Jun 2007 - Jan 2007 - Aug 2008 - Mar 2008 - Oct 2009 - May 2009 - Dec 2010 - Jul 2011 - Feb 2011 - Sep 2012 - Apr 2012 - Nov 2013 - Jun 2014 - Jan 2014 - Aug
  74. 74. Monetary Policy • Quantitative Easing … Finished • Fed Funds Rate … hike in 2015 Q2 • Earlier Move to Tighten because of Inflation Pressure • Long-term Steady State Rate (2016 onwards) .. 10 year Treasury at 5.0% • Mortgage Rates reaching 6% by 2016
  75. 75. Erratic Credit Availability • FICO New Method • Mel Watt – New overseer of Fannie/Freddie • Consumer Financial Protection Bureau’s – Lawsuits … Bleeding Big Banks – Other 2000-page shuffling of Dodd-Frank … Squeezing Small Banks • Ridiculous FHA premiums … should decline • Historic low mortgage default rates on recent vintages (2010-2014)
  76. 76. Multiyear Recovery Likely • More Jobs • Manageable Mortgage Rates • Population Pent-Up Demand • More Inventory • Record High Household Wealth
  77. 77. U.S. Population 350 300 250 200 150 100 50 0 In millions 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
  78. 78. Multiyear Recovery Likely • More Jobs • Manageable Mortgage Rates • Population Pent-Up Demand • More Inventory and Moderate Price Growth • Record High Household Wealth
  79. 79. Inventory of Homes for Sale 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 2007 - Jan 2007 - May 2007 - Sep 2008 - Jan 2008 - May 2008 - Sep 2009 - Jan 2009 - May 2009 - Sep 2010 - Jan 2010 - May 2010 - Sep 2011 - Jan 2011 - May 2011 - Sep 2012 - Jan 2012 - May 2012 - Sep 2013 - Jan 2013 - May 2013 - Sep 2014 - Jan 2014 - May Maryland inventory up 18% in July
  80. 80. Shadow Inventory in Idaho 8 7 6 5 4 3 2 1 0 2000 - Q1 2001 - Q1 2002 - Q1 2003 - Q1 2004 - Q1 2005 - Q1 2006 - Q1 2007 - Q1 2008 - Q1 2009 - Q1 2010 - Q1 2011 - Q1 2012 - Q1 2013 - Q1 2014 - Q1 % of mortgages in foreclosure process or seriously delinquent
  81. 81. Multiyear Recovery Likely • More Jobs • Manageable Mortgage Rates • Population Pent-Up Demand • More Inventory and Moderate Price Growth • Record High Household Wealth
  82. 82. Vacation Home Sales 1,200 1,000 800 600 400 200 - In thousands 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  83. 83. Economic Forecast 2013 2014 Likely 2015 Forecast 2016 Forecast GDP Growth 2.2% 2.2% 2.7% 2.9% Job Growth +2.3 million +2.5 million +2.5 million +2.6 million CPI Inflation 1.5% 1.6% 2.7% 3.3% Consumer Confidence 73 87 95 98 10-year Treasury 2.5% 2.6% 3.2% 4.3%
  84. 84. Housing Forecast 2013 2014 Likely 2015 Forecast 2016 Forecast Housing Starts 925,000 1.0 million 1.3 million 1.4 million New Home Sales 430,000 440,000 620,000 700,000 Existing Home Sales 5.1 million 4.9 million 5.3 million 5.4 million Median Price Growth + 11.5% + 5.3% + 4% + 4% 30-year Rate 4.0% 4.2% 4.9% 6.0% Underwriting Standards Strict Strict Transition Normal
  85. 85. Commercial Real Estate
  86. 86. Commercial Investment Sales of Large Properties (Properties valued at $2.5 million and over) 130 212 362 423 Commercial Sales in $Billions 571 174 67 147 233 299 355 400 420 430 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
  87. 87. Federal Reserve Commercial Property Price Index 0 50 100 150 200 250 300 2000 - Q1 2000 - Q4 2001 - Q3 2002 - Q2 2003 - Q1 2003 - Q4 2004 - Q3 2005 - Q2 2006 - Q1 2006 - Q4 2007 - Q3 2008 - Q2 2009 - Q1 2009 - Q4 2010 - Q3 2011 - Q2 2012 - Q1 2012 - Q4 2013 - Q3
  88. 88. REALTOR® Markets & Deal Size (Not $2.5 million Properties) 2013 CRE Lending Survey: Value of most recent sales transaction 22% 21% 26% 17% 12% 2% 1% > $10,000,000 $5,000,000 - $10,000,000 $2,000,000 - $5,000,000 $1,000,000 - $2,000,000 $500,000 - $1,000,000 $250,000 - $500,000 < $250,000 Source: NAR
  89. 89. Small Banks Important to REALTORS® Current sources of financing for commercial deals 8% 17% 25% 7% 1% 11% 6% 18% 4% 3% National banks (“Big four”) Regional banks Local banks Credit unions Life insurance companies REITs Private investors Public companies Small Business Administration Other, please specify Source: NAR
  90. 90. Forecast over the next 2 years • Increased occupancy and falling vacancy (new supply lacking) • Rising rents … can offset rising rates to support property values • Overall … improving business opportunities
  91. 91. Commercial Real Estate Forecast OFFICE 2014 2015 2016 Vacancy Rate 16.2% 15.8% 15.6% Net Absorption ('000 sq. ft.) 36,192 50,678 57,782 Completions ('000 sq. ft.) 26,450 41,799 44,862 Rent Growth 2.6% 3.2% 3.6% INDUSTRIAL 2014 2015 2016 Vacancy Rate 8.9% 8.5% 8.1% Net Absorption ('000 sq. ft.) 107,580 104,948 105,044 Completions ('000 sq. ft.) 83,424 68,755 61,720 Inventory ('000,000 sq. ft.) 8,468 8,537 8,598 Rent Growth 2.4% 2.8% 2.9% RETAIL 2014 2015 2016 Vacancy Rate 9.8% 9.7% 9.4% Net Absorption ('000 sq. ft.) 11,214 19,314 24,313 Completions ('000 sq. ft.) 7,275 12,196 16,342 Rent Growth 2.0% 2.4% 3.0% MULTI-FAMILY 2014 2015 2016 Vacancy Rate 4.0% 4.0% 4.2% Net Absorption (Units) 223,421 170,065 140,128 Completions (Units) 191,481 146,461 122,381 Rent Growth 4.0% 3.9% 3.5% Sources: National Association of REALTORS® / Reis, Inc.
  92. 92. Washington Policy Watch on Commercial Real Estate • Facilitate Covered Bonds to help credit flow • Raise cap on holding of commercial RE loans by credit unions • Preserve Like-Kind Exchanges • Preserve Terrorism Insurance • Preserve capital gains status on carried interest • Depreciation Rules should match economic life • Oppose lease-accounting changes
  93. 93. How Young Are REALTORS® ? 70 60 50 40 30 20 10 0 Under 30 In 30s In 40s In 50s In 60s Retiree Working Age
  94. 94. Let’s Spin the Bottle !
  95. 95. Spin the Globe … Find the Source of Improving Standard of Living
  96. 96. When, How, What, Why? • British Glorious Revolution of 1688 – William and Mary arrives to say … – Power not with King but with people via Parliament – No Taxation with Representation – Life, Liberty, and (Acquire) Property • American Revolution of 1766 – Power resides not with King but with people – No Taxation with Representation – Life, Liberty, and the Pursuit of Happiness
  97. 97. Participants in Democracy to Protect Property Rights!
  98. 98. Miguel Legaretta, RCE Director, Public Policy Ada County Association of REALTORS®

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