Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Housing Market Update: Current Trends and Affordability Challenges

41 views

Published on

Market update for the Grosse Pointe Board of Realtors.

Published in: Real Estate
  • Be the first to like this

Housing Market Update: Current Trends and Affordability Challenges

  1. 1. Grosse Pointe Board of REALTORS® Housing Market Update: Current Conditions and Affordability Challenges Paul C. Bishop, PhD, CBE Vice President, Research NATIONAL ASSOCIATION OF REALTORS® June 6, 2018
  2. 2. Housing Market Update: Current Conditions and Affordability Challenges  Market Conditions Rising Prices and Too Few Homes For Sale  Challenge Ahead Affordability for Renters and Buyers
  3. 3. Market Conditions: Rising Prices and Too Few Homes For Sale
  4. 4. Less than 6 Months Supply of Existing Homes Since Late 2012 4.0 0 2 4 6 8 10 12 14 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Months Supply months Source: National Association of REALTORS®
  5. 5. Existing Home Sales in a Narrow Range Since 2016 Despite a Growing Economy 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Existing Home Sales Source: National Association of REALTORS® /Michigan REALTORS® Michigan Home Sales (through April) 2016 7.8% 2017 -2.7% 2018 -7.3%
  6. 6. More Local Associations in Michigan Report Declining Sales Levels 12 22 32 0 5 10 15 20 25 30 35 40 2016 2017 2018 April Year-to-date Sales Changes as Reported by 42 Local Associations Sales Decline Increase of up to 10% Increase of 10% or more Source: Michigan REALTORS®
  7. 7. Home Prices in U.S. Growing at a Consistent Single-digit Pace -20% -15% -10% -5% 0% 5% 10% 15% 20% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Existing Home Sale Price Growth percent change from one year ago Michigan Average Price Growth (through April) 2016 2.9% 2017 11.8% 2018 6.8% Source: National Association of REALTORS® /Michigan REALTORS®
  8. 8. Price Increases in a Majority of Areas in Michigan 21 19 21 11 19 15 0 5 10 15 20 25 30 35 40 2016 2017 2018 April Year-to-date Average Price Changes as Reported by 42 Local Associations Price Decline Increase of up to 10% Increase of 10% or more Source: Michigan REALTORS®
  9. 9. Nationally, Not Building Enough Homes… U.S. Single Family Starts 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 Avg Annual Starts 1997-2006 Source: Census Bureau
  10. 10. …and Much the Same Story in Michigan Michigan Single Family Permits 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Avg Annual Permits 1997-2006 Source: Census Bureau
  11. 11. A Deficit in Housing Construction in U.S. of Nearly 4 million Units in the 2010s Source: Census Bureau 15.1 15.5 11.0 13.3 9.0 9.0 17.6 15.0 13.7 15.4 7.4 11.2 0 2 4 6 8 10 12 14 16 18 20 22 1970s 1980s 1990s 2000s 2010-2017 2010-2017 New Households and Housing Starts by Decade New Households Housing Starts millions If Housing Starts were at the same relative pace as the 1990s… …we would have 3.8 million more housing starts in the 2010s
  12. 12. Number of Construction Job Openings Tops Previous Peak During Housing Boom 0 50,000 100,000 150,000 200,000 250,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Construction Job Openings 4-qtr moving average Source: Bureau of Labor Statistics
  13. 13. Challenge Ahead: Affordability for Renters and Buyers
  14. 14. Rent Growth May Be Slowing But Still Outpacing Other Segments of the Economy -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Core Consumer Price Inflation Rent Other than Shelter percent change from one year ago Source: Bureau of Labor Statistics
  15. 15. Why Renters Don’t Own a Home Millennials Gen X Younger Boomers Older Boomers Silent Gen Can’t afford a home 39% 46% 45% 32% 35% Life circumstances 31% 19% 29% 29% 21% Need flexibility of renting 15% 11% 15% 8% 2% Don’t want responsibility 9% 12% 8% 9% 15% Source: National Association of REALTORS® 62% of renters believe it would be “very” or “somewhat” difficult to get a mortgage
  16. 16. First-time Buyers Share Below Long-term Average 0% 10% 20% 30% 40% 50% 60% 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 First-time Buyer Share Source: National Association of REALTORS®
  17. 17. Where are all the Starter Homes? 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2008 2017 Percent of U.S. New Home Sales Less than $150,000 $500,000 or higher Source: Census Bureau
  18. 18. How Affordable Is the Current Market for Home Buyers? 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% $25,000 $50,000 $100,000 $150,000 $200,000 Household Income Percent of Homes Available for Sale Affordable to Different Income Levels U.S. Michigan Detroit-Warren-Dearborn Source: National Association of REALTORS®
  19. 19. What to Plan for… • No significant change in economic outlook, even as we prepare for modestly higher interest rates – Wildcards include possible trade war and consumer confidence • No relief for the inventory shortage – home building up, but a big shortfall to overcome • Prices will continue to rise due to tight inventory and solid demand for homes • Consumers remain optimistic about home ownership
  20. 20. Housing Forecast 2016 2017 2018 Forecast 2019 Forecast Housing Starts 1,174,000 1,203,000 1,318,000 1,390,000 New Home Sales 561,000 613,000 700,000 770,000 Existing Home Sales 5,450,000 5,510,000 5,540,000 5,650,000 Median Existing Home Price Growth 5.1% 5.7% 5.1% 3.8% 30-year Mtg Rate 3.6% 4.0% 4.6% 5.1% Source: National Association of REALTORS® (June 2018)
  21. 21. Paul C. Bishop PhD, CBE Vice President, Research pbishop@realtors.org 202-383-1246 linkedin.com/in/pcbishop/

×