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Economic and Housing Market Trends and Outlook

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Economic and Housing Market Trends and Outlook

  1. 1. Economic and Housing Market Trends and Outlook Lawrence Yun, Ph.D., Chief Economist, NATIONAL ASSOCIATION OF REALTORS® Mike McGrew, 2014 NATIONAL ASSOCIATION OF REALTORS® Treasurer Presentation at NAR Leadership Summit Chicago, IL August 27, 2013
  2. 2. Existing Home Sales 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 5,500,000 6,000,000 6,500,000 7,000,000 7,500,000 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 $8,000
  3. 3. Existing Home Inventory (Bouncing at 13-year lows) 0 500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 4500000 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
  4. 4. New Home Sales 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 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 Up 30%
  5. 5. New Home Inventory (Newly Constructed Homes Inventory at 50-year low) 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 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
  6. 6. Shadow Inventory (% of Loans in foreclosure process or more than 90 days late) 0 2 4 6 8 10 12 U.S.
  7. 7. State Differences in Shadow Inventory 0 2 4 6 8 10 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 Maryland Virginia
  8. 8. Housing Starts … Need to Reach 1.5 million soon or persistent housing shortage 0 500 1000 1500 2000 2500 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 multifamily single-family Thousand units (annualized) Long-term Average
  9. 9. Existing vs. New Home Price … Big Gap (single-family homes) 0 50000 100000 150000 200000 250000 300000 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 New Existing
  10. 10. Home Price Forecast by Wall Street Journal Economists Panel Year WSJ Home Price Forecast 2013 7% 2014 5%
  11. 11. Lies Damn Lies and …
  12. 12. 30-Year Fixed Mortgage Rate (been below 6% for 5 years) 3 4 5 6 7 8 9 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 %
  13. 13. Sustainable Recovery?
  14. 14. Buyer and Seller Traffic from REALTOR® Survey 0 20 40 60 80 2008-Jan 2008-Apr 2008-Jul 2008-Oct 2009-Jan 2009-Apr 2009-Jul 2009-Oct 2010-Jan 2010-Apr 2010-Jul 2010-Oct 2011-Jan 2011-Apr 2011-Jul 2011-Oct 2012-Jan 2012-Apr 2012-Jul 2012-Oct 2013-Jan 2013-Apr 2013-Jul Buyer Seller
  15. 15. All-Cash Buyers (% as total) 0% 5% 10% 15% 20% 25% 30% 35% 40% 2008-Oct 2009-Jan 2009-Apr 2009-Jul 2009-Oct 2010-Jan 2010-Apr 2010-Jul 2010-Oct 2011-Jan 2011-Apr 2011-Jul 2011-Oct 2012-Jan 2012-Apr 2012-Jul 2012-Oct 2013-Jan 2013-Apr 2013-Jul Normal Range
  16. 16. First-time Homebuyers (% as total) 0% 10% 20% 30% 40% 50% 60% 2008-Oct 2009-Jan 2009-Apr 2009-Jul 2009-Oct 2010-Jan 2010-Apr 2010-Jul 2010-Oct 2011-Jan 2011-Apr 2011-Jul 2011-Oct 2012-Jan 2012-Apr 2012-Jul 2012-Oct 2013-Jan 2013-Apr 2013-Jul 1st-time Buyers Normal Range
  17. 17. Renter Households 25,000 27,000 29,000 31,000 33,000 35,000 37,000 39,000 41,000 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
  18. 18. Homeowner Households has not Grown since 2006 … but Primed to Grow 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
  19. 19. Wealth Distribution (Federal Reserve data on median net worth) $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 Renter Owner 1998 2001 2004 2007 2010 2014 2014 Forecast by NAR Bubble Crash • Dodd-Frank? • PATH? • Lawsuits? • Legacy?
  20. 20. U.S. Total Payroll Jobs 124000 126000 128000 130000 132000 134000 136000 138000 140000 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 In thousands
  21. 21. Financial Industry High Profits … Ready to Dial Down Credit Stringency? -200 -100 0 100 200 300 400 500 2001-Q1 2001-Q3 2002-Q1 2002-Q3 2003-Q1 2003-Q3 2004-Q1 2004-Q3 2005-Q1 2005-Q3 2006-Q1 2006-Q3 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 $ billion
  22. 22. Forecast 2011 2012 2013 Forecast 2014 Forecast GDP Growth +1.8% +2.1% +1.6% +2.6% Existing Home Sales 4.3 million 4.7 million 5.1 million 5.2 million Housing Starts 610 K 780 K 1.0 million (not enough) 1.2 million (not enough) Existing Home Price Growth - 4% + 6% + 11% + 6% 30-yr Mortgage Rate (year-end) 4.7% 3.5% 4.6% 5.2%
  23. 23. Summary on What to Expect • Likely Multiyear Housing Recovery – No recession – Job growth and household formation – Lagging housing starts and continuing housing shortage • Home prices are primed to rise further, by 16% cumulatively in 2013 and 2014
  24. 24. What’s the Matter with Canada? • Digging Earth • Arms
  25. 25. What’s the Matter with Kansas? Who said “There is no place like home” Who was raised in KS and was imbued with strong moral compass?
  26. 26. #1 Jayhawks Fan!
  27. 27. Primary Drivers of Membership • Existing Home Sales and Real Home Price Growth – Lagged effect • Job Market Conditions – More members if high unemployment
  28. 28. REALTOR® Median Gross Income $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 1995 1998 2000 2002 2004 2006 2007 2008 2009 2010 2011 2012 2013 est How many with more than $100,000? … 200,000 How many with less than $10,000? … 360,000
  29. 29. Unemployment Rate 0 2 4 6 8 10 12 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
  30. 30. Part-time Workers not by Choice … Those who may try out real estate 0 2000 4000 6000 8000 10000 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 Part-time for Economic Reasons
  31. 31. 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 1,100,000 1,200,000 1,300,000 1,400,000 1,500,000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Annual Membership (NRDS count at year-end)

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