- The US economy grew at 2.9% in 2018 but is expected to slow in 2019 and 2020. Consumer confidence remains high while corporate profits and business investment have been strong. - Housing markets have slowed with existing home sales not breaking higher and inventory remaining low. Mortgage rates have declined but affordability issues remain. - The economic outlook predicts no recession in 2020 if there is no major trade war, with GDP growth of 1.6% and continued job and housing market growth, albeit at a more moderate pace than prior years.

1. Economic & Real Estate Market
Outlook
By Lawrence Yun, Ph.D.
Chief Economist, National Association of REALTORS®
Presentation at Chicago Association of REALTORS®
January 9, 2020

2. Annual GDP Growth Rate of 2.9% in 2018
but Slowing in 2019 and 2020
-3
-2
-1
0
1
2
3
4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

3. Consumer Confidence Remains High
0
20
40
60
80
100
120
140
160
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
2015-Jan
2015-Jul
2016-Jan
2016-Jul
2017-Jan
2017-Jul
2018-Jan
2018-Jul
2019-Jan
2019-Jul

4. After-Tax Corporate Profits
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000-Q1
2000-Q3
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
2013-Q3
2014-Q1
2014-Q3
2015-Q1
2015-Q3
2016-Q1
2016-Q3
2017-Q1
2017-Q3
2018-Q1
2018-Q3
2019-Q1
2019-Q3
In $billion

5. Business Investment in U.S.
-4
-2
0
2
4
6
8
10
12
14
2010-Q1
2010-Q2
2010-Q3
2010-Q4
2011-Q1
2011-Q2
2011-Q3
2011-Q4
2012-Q1
2012-Q2
2012-Q3
2012-Q4
2013-Q1
2013-Q2
2013-Q3
2013-Q4
2014-Q1
2014-Q2
2014-Q3
2014-Q4
2015-Q1
2015-Q2
2015-Q3
2015-Q4
2016-Q1
2016-Q2
2016-Q3
2016-Q4
2017-Q1
2017-Q2
2017-Q3
2017-Q4
2018-Q1
2018-Q2
2018-Q3
2018-Q4
2019-Q1
2019-Q2
2019-Q3
% change from one year ago

6. Commercial REALTORS® reported slower leasing
activity in 2019 Q2
3.1%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019Q1
2019Q2
Annual Change in REALTORS® Commercial Leasing Volume
Sources: National Association of REALTORS®, Real Capital Analytics

7. Existing and New Home Sales
Combined
4000
4500
5000
5500
6000
6500
7000
7500
8000
8500
9000
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
2015-Mar
2015-Oct
2016-May
2016-Dec
2017-Jul
2018-Feb
2018-Sep
2019-Apr
In thousand units

8. Recent National Existing Home Sales
(Not Breaking Higher)
4,000,000
4,200,000
4,400,000
4,600,000
4,800,000
5,000,000
5,200,000
5,400,000
5,600,000
5,800,000
2016-Jan
2016-Feb
2016-Mar
2016-Apr
2016-May
2016-Jun
2016-Jul
2016-Aug
2016-Sep
2016-Oct
2016-Nov
2016-Dec
2017-Jan
2017-Feb
2017-Mar
2017-Apr
2017-May
2017-Jun
2017-Jul
2017-Aug
2017-Sep
2017-Oct
2017-Nov
2017-Dec
2018-Jan
2018-Feb
2018-Mar
2018-Apr
2018-May
2018-Jun
2018-Jul
2018-Aug
2018-Sep
2018-Oct
2018-Nov
2018-Dec
2019-Jan
2019-Feb
2019-Mar
2019-Apr
2019-May
2019-Jun
2019-Jul
2019-Aug
2019-Sep

9. Good Time To Buy?
(% consumers who strongly agree)
30
35
40
45
50
2017 -
Q1
2017 -
Q2
2017 -
Q3
2017 -
Q4
2018 -
Q1
2018 -
Q2
2018 -
Q3
2018 -
Q4
2019 -
Q1
2019 -
Q2
2019 -
Q3

10. Inventory of Homes for Sale
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
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
2015-Mar
2015-Oct
2016-May
2016-Dec
2017-Jul
2018-Feb
2018-Sep
2019-Apr
2019-Nov

11. Federal Reserve Monetary Policy
0
1
2
3
4
5
6
7
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
2015-Jan
2015-Jul
2016-Jan
2016-Jul
2017-Jan
2017-Jul
2018-Jan
2018-Jul
2019-Jan
2019-Jun
Fed Funds Rate

12. Fed Funds Rate and 30-year Mortgage Rate
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
2018
- Jan
2018
- Feb
2018
- Mar
2018
- Apr
2018
- May
2018
- Jun
2018
- Jul
2018
- Aug
2018
- Sep
2018
- Oct
2018
- Nov
2018
- Dec
2019
- Jan
2019
- Feb
2019
- Mar
2019
- Apr
2019
- May
2019
- May
2019
- Jun
2019
- Jul
2019
- Aug
2019
- Sep
2019
- Oct

13. Mortgage Rates tied to 10-year Treasury
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
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
2015-Jan
2015-Jul
2016-Jan
2016-Jul
2017-Jan
2017-Jul
2018-Jan
2018-Jul
2019-Jan
2019-Jul

14. REALTORS® Buyer Traffic Index

15. 16% … 3% … 8%
90
95
100
105
110
115
120
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
2015-Jan
2015-Jul
2016-Jan
2016-Jul
2017-Jan
2017-Jul
2018-Jan
2018-Jul
2019-Jan
2019-Jul
Job Growth from 2000 to 2019
U.S. Illinois Chicago

16. Total Jobs in Chicago
3000
3100
3200
3300
3400
3500
3600
3700
3800
3900
4000
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
2015-Jan
2015-Jul
2016-Jan
2016-Jul
2017-Jan
2017-Jul
2018-Jan
2018-Jul
2019-Jan
2019-Jul
In thousands

17. Recent Movers to Chicago

18. Homeownership Rate Slow Recovery
70% to 63% to 65%
60
61
62
63
64
65
66
67
68
69
70
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
2014-Q2
2015-Q1
2015-Q4
2016-Q3
2017-Q2
2018-Q1
2018-Q4
2019-Q3

19. Home Price Index
based on conforming loans
Chicago Metro
100.0
120.0
140.0
160.0
180.0
200.0
220.0
1995-Q1
1995-Q4
1996-Q3
1997-Q2
1998-Q1
1998-Q4
1999-Q3
2000-Q2
2001-Q1
2001-Q4
2002-Q3
2003-Q2
2004-Q1
2004-Q4
2005-Q3
2006-Q2
2007-Q1
2007-Q4
2008-Q3
2009-Q2
2010-Q1
2010-Q4
2011-Q3
2012-Q2
2013-Q1
2013-Q4
2014-Q3
2015-Q2
2016-Q1
2016-Q4
2017-Q3
2018-Q2
2019-Q1

20. Rising Home Price means Rising Real Estate Wealth
(Total Asset – Outstanding Mortgage)
0
5000
10000
15000
20000
25000
30000
35000
2000-Q1
2000-Q3
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
2013-Q3
2014-Q1
2014-Q3
2015-Q1
2015-Q3
2016-Q1
2016-Q3
2017-Q1
2017-Q3
2018-Q1
2018-Q3
2019-Q1
In $billion

21. Wealth: From 2000 to 2016 to 2018
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Renters Homeowners

22. U.S. Housing Starts … Not Enough
Short by 5 to 6 million units
0
500
1000
1500
2000
2500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Multifamily Single-Family

23. Single-Family Starts in Chicago
0
5000
10000
15000
20000
25000
30000
35000
40000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

24. Multifamily Starts in Chicago
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

25. Economic Forecast: No Recession
If No Major Trade War
2016 2017 2018 2019
Forecast
2020
Forecast
GDP Growth 1.5% 2.2% 2.9% 2.0% 1.6%
Job Growth +2.5 million +2.2 million +2.4
million
+2.2
million
+1.5
million
CPI Inflation 1.3% 2.1% 2.4% 2.0% 1.7%

26. Housing Forecast:
Moderate Growth
2016 2017 2018 2019
Forecast
2020
Forecast
New Home Sales 560,000 613,000 617,000 670,000
(+9%)
750,000
(+11%)
Existing Home
Sales
5.4 million 5.5 million 5.3 million 5.4 million
(1%)
5.6 million
(+4%)
Median Price
Growth
+5.1% +5.7% +4.9% +4.3% +3.6%
30-year Rate 3.6% 4.0% 4.5% 4.0% 3.8%

27. Thank You !