This document provides an economic outlook and overview of real estate market trends from the Chief Economist of the National Association of REALTORS. It summarizes that while the US economy continues expanding, growth is slowing both domestically and abroad. Unemployment remains low but risks include high household and government debt levels and potential impacts from international trade disputes. The housing market faces affordability challenges from rising home prices and rents outpacing inflation. Barring a major trade war escalation, the forecast is for continued US expansion in 2020, albeit at a more moderate pace.

1. Economic & Real Estate Market
Outlook
By Lawrence Yun, Ph.D.
Chief Economist, National Association of REALTORS®
Presentation at Charleston Trident Association of REALTORS®
October 23, 2019

2. Longest Expansion Ever? # of months of GDP growth
0
50
100
150
Jun 2009 -
Sep 2019
Mar 1991 -
Mar 2001
Feb 1961 -
Dec 1969
Nov 1982 -
Jul 1990
Nov 2001 -
Dec 2007
Mar 1975 -
Jan 1980

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

4. Slower Global Economic Growth
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
U.S. Britain EU Germany Australia Canada
2018 2019

5. Economic Growth in Asia
0
1
2
3
4
5
6
7
8
China India Japan South Korea Thailand Taiwan Singapore
2018 2019

6. 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

7. Jobs
(21 million gained from 2010 … 2.1 million in 12 months)
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
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
2014
- Jan
2015
- Jan
2016
- Jan
2017
- Jan
2018
- Jan
2019
- Jan
In thousands

8. Super-Low Unemployment Rate of
3.7%
0
5
10
15
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

9. After-Tax Corporate Profits
0
500
1000
1500
2000
2500
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
In $billion

10. 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
% change from one year ago

11. SIOR® members reported weaker industrial and
office markets in 2019 Q2
0.0
50.0
100.0
150.0
200.0
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
SIOR Commercial Real Estate Index
Industrial Office Source: SIOR, NAR

12. Commercial REALTORS® reported modest price
growth in 2019 Q2
0.8%
-25%
-20%
-15%
-10%
-5%
0%
5%
10% 2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019Q1
2019Q2
Annual Price Change
REALTOR® CRE Markets % Chg Y/Y
Source: National Association of REALTORS®, Real Capital Analytics

13. 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

14. U.S. International Trade
(Growing 5% per year, twice as fast as GDP)
0
500
1000
1500
2000
2500
3000
3500
4000
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
Imports
Exports
In $billion

15. Other Risk to the Economy:
Inverted Yield Curve? What is Different This Time?
0
5
10
15
20
1970-Jan
1971-Jan
1972-Jan
1973-Jan
1974-Jan
1975-Jan
1976-Jan
1977-Jan
1978-Jan
1979-Jan
1980-Jan
1981-Jan
1982-Jan
1983-Jan
1984-Jan
1985-Jan
1986-Jan
1987-Jan
1988-Jan
1989-Jan
1990-Jan
1991-Jan
1992-Jan
1993-Jan
1994-Jan
1995-Jan
1996-Jan
1997-Jan
1998-Jan
1999-Jan
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
2015-Jan
2016-Jan
2017-Jan
2018-Jan
2019-Jan
10-Yr Fed Funds

16. Total Jobs Charleston from 2000
(44% vs 16% growth nationwide from 2000)
200
250
300
350
400
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
2015
- Jan
2016
- Jan
2017
- Jan
2018
- Jan
2019
- Jan
In thousands

17. Average Weekly Earnings
in Charleston Metro
500
550
600
650
700
750
800
850
900
950
1000
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
2014-Sep
2015-Jan
2015-May
2015-Sep
2016-Jan
2016-May
2016-Sep
2017-Jan
2017-May
2017-Sep
2018-Jan
2018-May
2018-Sep
2019-Jan
2019-May
2019-Sep

18. Home Price Index New High
Charleston (black) and Columbia (red)
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
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

19. U.S. Housing Starts … Not Enough
Short by 5 to 6 million units
0
500
1000
1500
2000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Multifamily Single-Family

20. Rent Growth Faster than CPI Inflation
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2013-Jan
2013-Mar
2013-May
2013-Jul
2013-Sep
2013-Nov
2014-Jan
2014-Mar
2014-May
2014-Jul
2014-Sep
2014-Nov
2015-Jan
2015-Mar
2015-May
2015-Jul
2015-Sep
2015-Nov
2016-Jan
2016-Mar
2016-May
2016-Jul
2016-Sep
2016-Nov
2017-Jan
2017-Mar
2017-May
2017-Jul
2017-Sep
2017-Nov
2018-Jan
2018-Mar
2018-May
2018-Jul
2018-Sep
2018-Nov
2019-Jan
2019-Mar
2019-May
2019-Jul
2019-Sep
Rent CPI

21. Commercial Real Estate Price
New High and Doubling in 10 years
0
50
100
150
200
250
300
350
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

22. Too Much Borrowing?
• Households … homeowners with sizable equity,
but not renters
• Corporations … huge profits, but to diminish, and
elevated borrowing
• Government … ???

23. National Debt to GDP (%)
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

24. Foreign Holdings of U.S. Securities
(Treasury, Corporate, Fannie and Freddie)
$10
$11
$12
$13
$14
$15
$16
$17
$18
$19
$20
2012-Jan
2012-Apr
2012-Jul
2012-Oct
2013-Jan
2013-Apr
2013-Jul
2013-Oct
2014-Jan
2014-Apr
2014-Jul
2014-Oct
2015-Jan
2015-Apr
2015-Jul
2015-Oct
2016-Jan
2016-Apr
2016-Jul
2016-Oct
2017-Jan
2017-Apr
2017-Jul
2017-Oct
2018-Jan
2018-Apr
2018-Jul
2018-Oct
2019-Jan
2019-Apr
$ trillion

25. Foreign Holdings of U.S. Securities
by Japan (red) and China (blue)
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
$2.2
$2.4
2012-Mar
2012-Jun
2012-Sep
2012-Dec
2013-Mar
2013-Jun
2013-Sep
2013-Dec
2014-Mar
2014-Jun
2014-Sep
2014-Dec
2015-Mar
2015-Jun
2015-Sep
2015-Dec
2016-Mar
2016-Jun
2016-Sep
2016-Dec
2017-Mar
2017-Jun
2017-Sep
2017-Dec
2018-Mar
2018-Jun
2018-Sep
2018-Dec
2019-Mar
$ trillion

26. 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
+2.0
million
+1.5
million
CPI Inflation 1.3% 2.1% 2.4% 2.0% 1.7%

27. Thank You !