This document summarizes key points from a presentation on current economic issues and trends in residential real estate. It discusses:
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2) An improving but still weak labor market.
3) Strengthening but uneven consumer spending and confidence.
4) A recovering but decelerating housing market still dependent on multifamily construction.
The Center welcomed Hon. David M. Walker, Founder and CEO of Comeback America Initiative and Former Comptroller General of the United States, for a Pre-NH Primary Discussion: "America at a Crossroads: The Fiscal Challenges and a Way Forward". The event was held on Monday, January 9th in Filene Auditorium, Dartmouth College.
The Center welcomed Hon. David M. Walker, Founder and CEO of Comeback America Initiative and Former Comptroller General of the United States, for a Pre-NH Primary Discussion: "America at a Crossroads: The Fiscal Challenges and a Way Forward". The event was held on Monday, January 9th in Filene Auditorium, Dartmouth College.
2013 Profile of International Buyers: SummaryNar Res
A summary of the 2013 Profile of International Home Buying Activity in PowerPoint form. This was presented to the Massachusetts Association of REALTORS® by Jed Smith in August 2013.
Economic and Housing Market Trends and OutlookNar Res
Jed Smith, Managing Director, Quantitative Research
NATIONAL ASSOCIATION OF REALTORS®
North Carolina Real Estate Summit
Cary, North Carolina
July 16, 2013
Presentation, Economic Outlook for 2013 and Beyond, presented by Michael Brown, Wells Fargo Securities, presented at Winter 2012 NCLGBA Conference, 12/7/12
The expanded version of our PowerPoint presentation that clearly lays out the fiscal challenge facing the United States. For more, visit http://crfb.org/go-big.
Study of Debit, Credit & Prepaid Programs. Member Preferences and Marketing S...NAFCU Services Corporation
The Discover Spending Monitor is a quarterly report that polls over 8,000 consumers on a monthly basis. This survey details the spending intentions of consumers and reports trends about their outlook of finances and their perception of the economy. It is unique because it is the only survey of its kind to measure the behavior of credit union members. Lately, there has been a spike in consumer confidence, which opens the door for credit unions to grow and market their products. So how sharp is this increase in consumer confidence? How can your credit union take advantage of this opportunity? This presentation will provide a detailed analysis of current trends and point out how your credit union can take advantage of the improving economy. Learn more at: www.nafcu.org/discover
Learn. Live. Lead. Life-long Learning and Real Estate Success.Nar Res
There is a significant relationship between Realtors®’ educational attainment and their income level, according to panelists at today’s “Learn. Live. Lead. Lifelong Learning and Real Estate Success” forum during the 2013 REALTORS® Conference and Expo.
Jed Smith, Managing Director, Quantitative Research
NATIONAL ASSOCIATION OF REALTORS®
North Carolina Real Estate Summit
Cary, North Carolina
July 16, 2013
Challenges & Opportunities in Housing and Homeownership Nar Res
Moderator: NAR Chief Economist Lawrence Yun
Panelists:
James Shilling, PhD, Institute for Housing Studies, DePaul University
Lisa Sturtevant, PhD, Center for Regional Analysis, George Mason University
Margaret McFarland, JD, Colvin Institute of Real Estate Development University of Maryland
Lucy Gorham, PhD, Center for Community Capital, University of North Carolina
2013 NAR Issues Conference Economists' Panel (February 2013)Nar Res
For those interested in NAR Chief Economist Lawrence Yun’s conversation with Christina Romer and Gregory Mankiw at the 2013 NAR Issues Conference, here is the PPT that was used.
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Presentation to Windust Meadows HOA Board of Directors June 4, 2024: Focus on Public Safety as Job #1, Engagement, Wealth of HOA, Branding, Communication, Culture, Civic Responsibility
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Rixos Tersane Istanbul Residences Brochure_May2024_ENG.pdfListing Turkey
Tersane Suites Residences is a luxurious real estate project located in the heart of Istanbul, next to the beautiful Golden Horn. This unique development offers hotel concept residences with Rixos management, making it the perfect choice for both homeowners and investors.
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Rams Garden Bahcelievler - Istanbul - ListingTurkeyListing Turkey
Implemented by Rams Global in Bahcelievler, the Rams Garden Bahcelievler Apartments includes 796 residences of different types from 2+1 to 5+1.
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The SVN® organization shares a portion of their new weekly listings via their SVN Live® Weekly Property Broadcast. Visit https://svn.com/svn-live/ if you would like to attend our weekly call, which we open up to the brokerage community.
Sense Levent Kagithane Catalog - Listing TurkeyListing Turkey
Sense Levent offers a luxurious living experience in the heart of Istanbul’s vibrant Levent district.
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The SVN® organization shares a portion of their new weekly listings via their SVN Live® Weekly Property Broadcast. Visit https://svn.com/svn-live/ if you would like to attend our weekly call, which we open up to the brokerage community.
10. Economic Growth
U.S. Real GDP
Bars = CAGR Line = Yr/Yr Percent Change
10% 10%
GDP - CAGR: Q3 @ 2.0%
8% GDP - Yr/Yr Percent Change: Q3 @ 2.3% 8%
6% 6%
We are more than three years 4% Forecast 4%
into the economic recovery and
2% 2%
there is still a considerable
amount of uncertainty regarding 0% 0%
sovereign debt issues in Europe,
-2% -2%
the federal budget deficit and
the willingness of businesses -4% -4%
and households to commit to -6% -6%
major capital purchases.
-8% -8%
-10% -10%
2000 2002 2004 2006 2008 2010 2012 2014
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 10
11. Financial Crises Are Becoming More Frequent
10-Year Treasury & Fed Funds Target
Yield
21% 21%
10-Year Treasury Yield: Oct @ 1.75%
Fed Funds Target: Oct @ 0.25%
18% 18%
15% 15%
Treasury yields are currently 12% 12%
near record low levels. We
believe uncertainty is the 9% 9%
primary driver of
ultra-low interest rates. 6% 6%
3% 3%
0% 0%
1971 1976 1981 1986 1991 1996 2002 2007 2012
Source: IHS Global Insight and Wells Fargo Securities, LLC
Economic Outlook 11
12. The Timing of The First Fed Rate Hike
The timing for the Fed’s first tightening move has been pushed even further out.
Long-term growth estimates have also been scaled back.
Consensus Fed Funds Rate Hike Individual FOMC Member Forecasts
Appropriate Timing of Policy Firming Appropriate Pace of Policy Firming
Number of Participants Target Federal Funds Rate at Year-End
14 14 5.0% 5.0%
June Release June Projection
September Release 4.5% September Projection 4.5%
12 12
4.0% 4.0%
10 10 3.5% 3.5%
3.0% 3.0%
8 8
2.5% 2.5%
6 6
2.0% 2.0%
4 4 1.5% 1.5%
1.0% 1.0%
2 2
0.5% 0.5%
0 0 0.0% 0.0%
2012 2013 2014 2015 2016 2012 2013 2014 2015 Longer Run
Source: Federal Reserve Board and Wells Fargo Securities, LLC
Economic Outlook 12
13. Federal Reserve Balance Sheet
Federal Reserve Balance Sheet
Trillions
$3.5 $3.5
Other: Oct @ $206.0B
Foreign Swaps: Oct @ $12.6B
$3.0 PDCF & TAF $3.0
Commercial Paper & Money Market
Repos & Dis. Window: Oct @ $0.1B
$2.5 Agencies & MBS: Oct @ $918.4B $2.5
Treasuries: Oct @ $1,648.5B
The massive expansion of the $2.0 $2.0
Fed’s balance sheet has lifted
asset prices and has also given $1.5 $1.5
the economy a boost. But all
magic comes with a price! $1.0 $1.0
$0.5 $0.5
$0.0 $0.0
2007 2008 2009 2010 2011 2012
Source: Federal Reserve Board and Wells Fargo Securities, LLC
Economic Outlook 13
14. Labor Market
Unemployment Rate - SA vs. NSA
Percent
12.0% 12.0%
12-Month Rolling Average (NSA): Oct @ 8.2%
Unemployment Rate (SA): Oct @ 7.9%
10.0% 10.0%
8.0% 8.0%
Unemployment is gradually
trending down, although much
of the improvement has come 6.0% 6.0%
from unusual forces.
4.0% 4.0%
2.0% 2.0%
1994 1997 2000 2003 2006 2009 2012
Source: U.S. Department of Labor and Wells Fargo Securities, LLC
Economic Outlook 14
15. Labor Market
Employment Cycles
Percent Change from Cycle Peak
20% 20%
1948-1949 Cycle
1981-1982 Cycle
16% 1989-1991 Cycle 16%
2001 Cycle
2007-To-Date
12% Forecast 12%
8% 8%
Job losses exceeded every post-
World War II downturn, and the
4% 4%
modest recovery to date has
been extremely disappointing.
0% 0%
-4% -4%
-8% -8%
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84
Source: U.S. Department of Labor and Wells Fargo Securities, LLC
Economic Outlook 15
16. Consumer Related
This year’s improved stock market has helped bolster consumer spending at a time when real
incomes are barely growing, and consumer confidence remains historically low.
Household Wealth Consumer Confidence
Household Assets Confidence vs. Retail Sales and Income
Trillions of Dollars Conference Board Consumer Confidence, Yr/Yr % Chg. 3-MMA
$90 $90 210 16.0%
Financial Assets: Q2 @ $51.9 Trillion Confidence Yr/Yr % Chg: Oct @ 76.7%
$80 Household Real Estate Holdings: Q2 @ $16.9 Trillion $80 Confidence: Oct @ 72.2 (Left Axis)
180 Retail Sales Ex-Auto: Sep @ 3.9% (Right Axis) 12.0%
Other Tangible Assets: Q2 @ $7.3 Trillion
Real Disposible Per Cap Inc.: Sep @ 1.1% (Right Axis)
$70 $70
150 8.0%
$60 $60
$50 $50 120 4.0%
$40 $40 90 0.0%
$30 $30
60 -4.0%
$20 $20
30 -8.0%
$10 $10
$0 $0 0 -12.0%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 93 95 97 99 01 03 05 07 09 11
Source: U.S. Department of Commerce, Conference Board and Wells Fargo Securities, LLC
Economic Outlook 16
17. Consumer Confidence
Economic growth is unlikely to accelerate in a meaningful way until consumers feel better
about current economic conditions than they do about future economic prospects.
Consumer Confidence Confidence Gap
Conference Board Consumer Confidence Confidence Gap
Present Situation and Expectations Index Present Situation Minus Expectations
250 250 100 100
Present Situation Yr/Yr % Chg: Oct @ 107.1%
Expectations Yr/Yr % Chg: Oct @ 65.8%
75 75
Present Situation: Oct @ 56.2
200 Expectations: Oct @ 82.9 200
50 50
25 25
150 150
0 0
100 100
-25 -25
-50 -50
50 50
-75 -75
Confidence Gap: Oct @ -26.8
0 0 -100 -100
87 89 91 93 95 97 99 01 03 05 07 09 11 87 89 91 93 95 97 99 01 03 05 07 09 11
Source: Conference Board and Wells Fargo Securities, LLC
Economic Outlook 17
18. Retail Sales
Retail Sales Ex. Auto & Gas Stations vs. Income
3-Month Moving Average
15% 15%
Stock Market Tax Cut 2 Housing Refi
Bubble Tax Cut 1 Boom
Tax
Rebates
10% 10%
5% 5%
Retail sales have risen sharply in
0% 0%
recent months, while disposable
income growth has begun to
stagnate. -5% -5%
-10% -10%
Disposable Personal Income, Yr/Yr % Change: Aug @ 3.2%
Retail Sales, ex. Autos & Gas, 3-Month Annual Rate: Sep @ 4.6%
-15% -15%
96 98 00 02 04 06 08 10 12
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 18
19. Retail Sales
Furniture Stores Sales
3-Month Moving Average
25% 25%
20% 20%
15% 15%
10% 10%
5% 5%
0% 0%
Furniture store sales continue to -5% -5%
rise, but the pace is decelerating.
-10% -10%
-15% -15%
-20% -20%
-25% Year-over-Year Percent Change: Sep @ 8.9% -25%
3-Month Annual Rate: Sep @ 7.6%
-30% -30%
93 95 97 99 01 03 05 07 09 11
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 19
20. Residential Investment
Real Residential Investment
Bars = CAGR Line = Yr/Yr Percent Change
30% 30%
Forecast
20% 20%
10% 10%
0% 0%
Our forecast calls for continued -10% -10%
strengthening in residential
investment. -20% -20%
-30% -30%
-40% -40%
Res. Investment - CAGR: Q3 @ 14.4%
Res. Construction - Yr/Yr Percent Change: Q3 @ 13.8%
-50% -50%
2000 2002 2004 2006 2008 2010 2012 2014
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 20
21. Homebuilding
Housing Starts
Millions of Units
2.4 2.4
Thousands
Multifamily Starts
Multifamily Forecast
2.1 2.1
Single-family Starts
Single-family Forecast
1.8 1.8
Forecast
1.5 1.5
We believe housing starts have
1.2 1.2
bottomed and will increase
modestly over the next few
0.9 0.9
years.
0.6 0.6
0.3 0.3
0.0 0.0
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 21
22. Housing Market
NAHB Housing Market Index &
U.S. Distressed Sales
50 50
Total Distressed: Sep @ 24.0%
NAHB Housing Market Index: Oct @ 41.0
40 40
30 30
The share of distressed sales has
come down concurrently with
the rise of the the NAHB 20 20
Housing Market Index.
10 10
0 0
Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12
Source: NAHB, NAR and Wells Fargo Securities, LLC
Economic Outlook 22
23. Housing Starts
Apartment construction accounts for much of the recent improvement in homebuilding.
We believe multifamily housing will account for a larger proportion of future starts.
Single & Multifamily Housing Starts Multifamily Housing Starts
Single & Multifamily Housing Starts Multifamily Housing Starts
SAAR, In Thousands, 3-Month Moving Average SAAR, In Thousands, 3-Month Moving Average
2,000 600 500 200
5+ Units: Sep @ 226.3 (Left Axis)
1,800 540 2-4 Units: Sep @ 9.0 (Right Axis)
1,600 480 400 160
1,400 420
1,200 360 300 120
1,000 300
800 240 200 80
600 180
400 120 100 40
Single-family Housing Starts: Sep @ 551K (Left Axis)
200 60
Multifamily Housing Starts: Sep @ 235K (Right Axis)
0 0 0 0
87 89 91 93 95 97 99 01 03 05 07 09 11 87 89 91 93 95 97 99 01 03 05 07 09 11
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 23
24. New Home Sales
New home sales have begun to creep back up but are still near the lows of the Great Recession.
Inventories of new homes have come down, and month’s supply has dropped to 4.5 months in
September, which may lead to improvement in the housing market.
New Home Sales Inventory of New Homes
New Home Sales Inventory of New Homes for Sale
Seasonally Adjusted Annual Rate, In Thousands Non-Seasonally Adjusted, In Thousands
1,500 1,500 600 600
Inventory: Sep @ 146,000
Completed New Homes: Sep @ 38,000
1,300 1,300
450 450
1,100 1,100
900 900
300 300
700 700
500 500
150 150
300 300
New Home Sales: Sep @ 389,000
3-Month Moving Average: Sep @ 376,667
100 100 0 0
89 91 93 95 97 99 01 03 05 07 09 11 89 91 93 95 97 99 01 03 05 07 09 11
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 24
25. Existing Home Sales
Existing home sales have recovered much faster than new home sales.
New Home Sales Inventory of New Homes
Existing Home Resales Existing & New Single-Family Home Sales
Seasonally Adjusted Annual Rate - In Millions In Millions, Seasonally Adjusted Annual Rate
7.5 7.5 1.6 8.0
7.0 7.0 1.4 7.0
6.5 6.5
1.2 6.0
6.0 6.0
1.0 5.0
5.5 5.5
0.8 4.0
5.0 5.0
0.6 3.0
4.5 4.5
0.4 2.0
4.0 4.0
0.2 New Home Sales: Sep @ 389 Thousand (Left Axis) 1.0
3.5 3.5
Existing Home Sales: Sep @ 4.75 Million Existing Home Sales: Sep @ 4.2 Million (Right Axis)
3.0 3.0 0.0 0.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 94 96 98 00 02 04 06 08 10 12
Source: NAR, U.S. Department of Commerce and Wells Fargo Securities, LLC
Economic Outlook 25
26. Home Prices
Home Prices
Year-over-Year Percentage Change
24% 24%
16% 16%
8% 8%
Home prices have firmed
recently as foreclosures have 0% 0%
become a smaller portion of
overall sales. Prices will likely -8% -8%
fluctuate along a low trajectory
until more foreclosures clear -16% -16%
through the pipeline.
Median Sale Price: Sep @ $184,300
-24% Median Sales Price 3-M Mov. Avg.: Sep @ 9.9% -24%
FHFA (OFHEO) Purchase Only Index: Aug @ 4.7%
S&P Case-Shiller Composite 10: Aug @ 1.3%
-32% -32%
96 98 00 02 04 06 08 10 12
Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp. and Wells Fargo Securities, LLC
Economic Outlook 26
27. NAHB/Wells Fargo Housing Market Index
NAHB/Wells Fargo Housing Market Index
Diffusion Index
90 90
80 80
70 70
60 60
Homebuilder sentiment has 50 50
risen significantly over the past 40 40
year, but it is still at a relatively
low level. 30 30
20 20
10 10
NAHB Housing Market Index: Oct @ 41.0
0 0
87 89 91 93 95 97 99 01 03 05 07 09 11
Source: National Association of Home Builders and Wells Fargo Securities, LLC
Economic Outlook 27
28. U.S. Mortgage Rates
Conventional 30-Year Mortgage Rate
Percent, FHLMC Fixed-Rate Mortgage
7.0% 7.0%
6.5% 6.5%
6.0% 6.0%
5.5% 5.5%
5.0% 5.0%
Mortgage rates are at historic
lows and are likely to remain 4.5% 4.5%
low for some time.
4.0% 4.0%
3.5% 3.5%
3.0% 3.0%
Conventional 30-Year Fixed Mortg. Rate: Oct @ 3.4%
2.5% 2.5%
2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: FHLMC and Wells Fargo Securities, LLC
Economic Outlook 28
29. International Forecast
Real Global GDP Growth (Wells Fargo)
Year-over-Year Percent Change, PPP Weights
7.5% 7.5%
6.0% 6.0%
Period Average
4.5% 4.5%
The European financial crisis is
dragging global economic 3.0% 3.0%
growth lower, but we believe
growth should pick up by 2014. 1.5% 1.5%
0.0% 0.0%
-1.5% -1.5%
1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: Congressional International Monetary Fund and Wells Fargo Securities, LLC
Economic Outlook 29
30. Issues to Watch
European Credit Availability
Debt Crisis & Financial Reform
Fiscal Cliff
Deleveraging
Uncertainty
China Economic Fiscal &
Slowdown Monetary Policy
Geopolitical Energy/Commodity
Tensions Price Swings
Economic Outlook 30
33. Wells Fargo Economics Group Publications
A Sampling of Our Recent Special, Regional & Industry Commentary
Recent Special Commentary
Date Title Authors
November-01 North Carolina Economic Outlook Vitner, Brown & Watt
October-29 Housing Data Wrap-Up: October 2012 Vitner & Khan
October-24 2012 Holiday Sales Outlook Aleman, Iqubal & Brown
October-18 U.S. Fiscal Primer III: Federal Revenues Silvia, Bryson & Brown
October-18 Retirement in America: Extending the Finish Line Bryson, Iqbal & Watt
October-12 The Great Unemplyoment Rate Debate Silvia, Watt & Swankoski
October-08 The Unemployment Rate: Seasonality and Sampling Silvia, Iqbal & Watt
October-02 Housing Chartbook: September 2012 Vitner, Khan & Silverman
To view any of our past research September-25
September-17
Local Budgets Under Pressure: A Fiscal Outlook
Global Chartbook: September 2012
Silvia & Brown
Bryson, Aleman & Quinlan
please visit: September-10
September-06
U.S. Fiscal Primer II: Federal Government Spending
Commercial Real Estate Chartbook: Quarter 2
Silvia, Bryson & Brown
Vitner & Khan
September-05 Brazilian Economy Slows Down; Better Times Ahead Aleman
http://www.wellsfargo.com/ August-22 Mexico: Thanks to Auto Demand Aleman
economics August-15
August-14
California's Economy: Gaining Momentum
Real GDP in Eurozone Slumped in Q2
Vitner & Watt
Bryson
August-09 Rocky Mountain Summit: July 2012 Silvia
August-06 Orders and Production: No Time for Complacency Silvia, Quinlan & Watt
August-01 U.S. Fiscal Primer I: The Deficit and Debt Silvia, Bryson & Brown
July-19 U.S. States Grapple with Europe's Woes Vitner & Brown
To join any of our research July-13
July-11
The Lowdown on Consumer Spending
Employment: Beyond the Sound Bites—Reading the Signals IX
Vitner & Quinlan
Silvia & Watt
distribution lists please visit: July-10
July-09
Employment: Beyond the Sound Bites—Reading the Signals VIII
Employment: Beyond the Sound Bites—Reading the Signals VII
Silvia & Watt
Silvia & Watt
July-05 Housing Data Wrap-Up: June 2012 Vitner & Khan
http://www.wellsfargo.com/ July-02 Do Too Many Dollars Make Us an Inflation Nation? Bullard & Quinlan
economicsemail June-29
June-22
2012 State Budget Outlook
Student Loans: The Best of Intentions
Silvia & Brown
Silvia, Seydl & Watt
June-20 FOMC: Keep On Twisting Until Europe's Fever Breaks Vitner
June-20 The Fiscal Cliff: Likelihood and Economic Impact Silvia, Brown & Watt
June-20 Credit Quality Monitor: June 2012 Anderson & Kashmarkek
June-19 The Fed: Same Goal, Different Method Silvia & Khan
June-15 Economic Growth Appears to Be Lost in a Fog of Uncertainty Vitner
June-07 What Happens if Span or Italy Leaves EMU? Bryson, Quinlan & Swankoski
June-07 Housing Chartbook: May 2012 Vitner, Khan & Seydl
May-29 Implications of a Euro Exit to Greece Bryson, Quinlan & Swankoski
Economic Outlook 33
34. Wells Fargo Securities, LLC Economics Group
Global Head of Research and Economics Economists
Diane Schumaker-Krieg ………………… ….diane.schumaker@wellsfargo.com
……
Azhar Iqbal, Econometrician………………………………azhar.iqbal@wellsfargo.com
Global Head of Research & Economics
Tim Quinlan, Economist …………………………………..tim.quinlan@wellsfargo.com
Chief Economist
Michael A. Brown, Economist ………………… michael.a.brown@wellsfargo.com
John Silvia … ...................... …
. john.silvia@wellsfargo.com
Economic Analysts
Senior Economists
Sarah Watt, Economic Analyst …………………………… .sarah.watt@wellsfargo.com
Mark Vitner, Senior Economist……………....………. . mark.vitner@wellsfargo.com
Kaylyn Swankoski, Economic Analyst kaylyn.swankoski@wellsfargo.com
.
Jay Bryson, Global Economist …………………....……….jay.bryson@wellsfargo.com Zachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.com
Eugenio Aleman, Senior Economist …………….eugenio.j.aleman@wellsfargo.com Sara Silverman, Economic Analyst sara.silverman@wellsfargo.com
Sam Bullard, Senior Economist ………………………….sam.bullard@wellsfargo.com Administrative Assistants
Anika Khan, Senior Economist .… . anika.khan@wellsfargo.com Peg Gavin, Executive Assistant. peg.gavin@wellsfargo.com
Cyndi Flowe, Administrative Assistant cyndi.h.flowe@wellsfargo.com
Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the
Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but
not limited to, Wells Fargo & Company, Wells Fargo Bank N.A, Wells Fargo Advisors, LLC, and Wells Fargo Securities International Limited. The information and opinions herein are for general
information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from
the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as
an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated
banks and is a wholly owned subsidiary of Wells Fargo & Company.
SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE
Important Information for Non-U.S. Recipients
For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the
Financial Services Authority. The content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in
Financial Instruments Directive 2007. The FSA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, not will the Financial
Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. This document and any other materials accompanying this
document (collectively, the “Materials”) are provided for general informational purposes only.
Economic Outlook 34
36. GEORGE RATIU
Manager, Quantitative & Commercial Research
National Association of REALTORS®
Economic Issues & Residential Real Estate
Business Trends Forum
2012 REALTORS® Conference & Expo
Orange County Convention Center
November 9, 2012
Orlando, FL
42. Commercial Sales
$160 Office Industrial Retail Apartment Hotel
Billions
$140
$120 $570B in 2007 $181 B in 2012.ytd
$100
$80
$60
$40
$20
$-
Source: Real Capital Analytics
43. 110
130
170
190
210
150
90
2000 December
April
August
2001 December
April
August
2002 December
April
August
2003 December
April
August
2004 December
Apartment
April
August
2005 December
April
Retail
August
2006 December
April
August
2007 December
Industrial
April
August
Moody's/RCA CPPI - Composite Indices
2008 December
April
Office
August
2009 December
April
Commercial Prices
August
2010 December
April
August
2011 December
April
Source: Real Capital Analytics
44. Tale of Two Commercial Markets
Sales Volume (YoY % Chg)
Major CRE Markets REALTOR Markets
200%
150%
100% Deals of $2M +
50%
0%
08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3
-50%
Deals < $2M +
-100% Source: NAR, Real Capital Analytics
45. REALTOR® Commercial Markets
Did you complete a sales Dollar amount of last transaction
transaction?
Under $250K 33%
Between $250K and $500K 23%
Between $500K and $1 M 19%
35%
Yes Between $1 M and $2 M 17%
No 65%
$2 M and $5 M 6%
92% of deals are <$2M
Between $5 M and $10 M 1%
Over $10 M 1%
Source: National Association of REALTORS®
49. REALTOR® Markets - Financing
REALTORS® 2012 Commercial Lending Survey
Other, please specify 3%
Small Business Administration 11%
Public companies 1%
Private investors 18%
REITs 4%
Life insurance companies 6%
Credit unions 7%
Local banks 25%
Regional banks 17%
National banks (“Big four”) 8% Source: National Association of REALTORS®
0% 5% 10% 15% 20% 25% 30%
50. REALTOR® Markets – Financing
Lending Hampers Sales
Have you had a sales transaction fail Have your clients failed to complete a
during the past 12 months due to re-financing transaction during the
lack of financing? past 12 months?
33%
Yes Yes
50% 50%
No No
67%
Source: National Association of REALTORS®
51. 50%
100%
150%
200%
250%
-100%
0%
-50%
Manhattan
Los Angeles
Chicago
San Francisco
Source: Real Capital Analytics
Dallas
Seattle
Boston
Phoenix
Houston
San Jose
Atlanta
Denver
Miami
DC
San Diego
NYC Boroughs
Improving Fundamentals & Rising Sales
Growth of Secondary & Tertiary Markets
Orange Co.
Charlotte
Baltimore
2012.H1 Sales Volume (YoY % Chg)
Broward Co.
East Bay
Austin
Minneapolis
Nashville
Raleigh/Durham
Orlando
Portland
Hawaii
Detroit
Commercial Markets Outlook
Las Vegas
52. Light at End of Tunnel – Exit?
Total ($Bil) Loans with LTV > 100% Banks CMBS Life Cos. Other
350 70% 350
300 60% 300
250 50% 250
200 40% 200
150 30% 150
100 20% 100
50 10% 50
0 0% 0
2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014
Source: Foresight Analytics Source: Foresight Analytics
53. Light at End of Tunnel – Train?
FEDERAL
VS
REGULATIONS
+
“FISCAL CLIFF”
Source: Real Capital Analytics
59. Housing Market
and
Economic Outlook
Lawrence Yun, Ph.D.
Chief Economist
NATIONAL ASSOCIATION OF REALTORS®
Presentation at NAR Annual Conference
Orlando, FL
November 9, 2012
60. Forecast #1: Inflation will be Notably
Higher by 2015
• No Threatening Inflation Signs for 2013
• But Inflation rises to 4% to 6% in 2015
• Well above Fed’s preferred rate of 2%
• But not in double-digits as in 1970s
61. -4
-2
0
2
4
6
8
10
12
16
14
1970 - Jan
1972 - Jan
1974 - Jan
1976 - Jan
1978 - Jan
1980 - Jan
1982 - Jan
1984 - Jan
1986 - Jan
Core
1988 - Jan
1990 - Jan
1992 - Jan
1994 - Jan
1996 - Jan
Overall
1998 - Jan
(% change from one year ago)
2000 - Jan
2002 - Jan
2004 - Jan
Consumer Price Inflation
2006 - Jan
2008 - Jan
2010 - Jan
2012 - Jan
62. 0
1
2
3
4
5
-1
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
Owners' Equivalent Rent
2007 - Jan
2007 - Jul
2008 - Jan
2008 - Jul
2009 - Jan
2009 - Jul
2010 - Jan
(the biggest weight to Consumer Price Index)
2010 - Jul
Renters' Rent
2011 - Jan
2011 - Jul
2012 - Jan
Rising Renters’ and Homeowners’ Rent Growth
2012 - Jul
63. Percent of REALTORS® Reporting Changing
Rent Levels as Compared to 12 Months Ago
60%
Sept '12: Rising rent: 57%
50%
40%
30%
20%
10%
0%
Higher Rents Lower Rents Constant rents
64. Monetary Policy by Federal Reserve
(zero rate policy to 2015 ?)
Fed Funds
6 %
5
4
3
2
1
0
65. Federal Reserve Balance Sheet from
Quantitative Easing
Total Assets
3500000
3000000 $ million
2500000
2000000
1500000
1000000
500000
0
1-Aug-07 1-Aug-08 1-Aug-09 1-Aug-10 1-Aug-11 1-Aug-12
66. 1000000
1500000
2000000
2500000
3000000
4000000
0
500000
1970 - Jan
1971 - Nov
1973 - Sep
1975 - Jul
1977 - May
1979 - Mar
1981 - Jan
1982 - Nov
3500000 12-month tally in $ million
1984 - Sep
1986 - Jul
Revenue
1988 - May
1990 - Mar
1992 - Jan
1993 - Nov
1995 - Sep
Spending
1997 - Jul
1999 - May
Federal Government
2001 - Mar
2003 - Jan
Tax Revenue and Spending
2004 - Nov
2006 - Sep
2008 - Jul
2010 - May
2012 - Mar
67. Huge Federal Budget Deficit … Will Push Up
Borrowing Cost and/or Ignite Inflation
4
Deficit in relation to GDP
2
0
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
-2
- Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan
-4
-6
-8
-10
-12
68. Impact to Deficit
• Mortgage Interest Deduction … $90 billion
– Not the source of the current budget deficit since
MID was present for nearly 100 years
• Interest Rates Revert back to historical
average … $300 billion in extra interest
expense
69. Mortgage Rate Forecast
(Average Rate of 5.5% in 2015 ?)
30-year Mortgage
%
7
6
5
4
3
2
1
0
Modestly higher rates could help home sales as banks re-staff mortgage
work for home purchase applications and less refinance applications.
70. Forecast #2: Meaningfully Higher
Home Prices
• Demand is Up … Supply is Down
• 4% to 5% in 2012 (Case-Shiller, FHFA)
• 5% to 7% in 2012 (Median Home Price)
• Home price growth could slow or accelerate … all
depends on housing starts
• Probably 15% cumulative growth over 3 years
71. 10.0
20.0
30.0
40.0
50.0
60.0
70.0
0.0
2008 - Jan
2008 - Apr
2008 - Jul
2008 - Oct
2009 - Jan
2009 - Apr
2009 - Jul
2009 - Oct
Buyer
2010 - Jan
2010 - Apr
2010 - Jul
2010 - Oct
Seller
2011 - Jan
2011 - Apr
2011 - Jul
from REALTOR® Survey
Buyer and Seller Traffic
2011 - Oct
2012 - Jan
2012 - Apr
2012 - Jul
73. 70
75
80
85
90
95
100
105
110
115
2007 - Jan
2007 - Apr
Source: NAR
2007 - Jul
2007 - Oct
2008 - Jan
2008 - Apr
2008 - Jul
2008 - Oct
2009 - Jan
2009 - Apr
Homebuyer Tax Credit
2009 - Jul
2009 - Oct
2010 - Jan
2010 - Apr
(Seasonally Adjusted)
2010 - Jul
2010 - Oct
2011 - Jan
2011 - Apr
2011 - July
2011 - Oct
2012 - Jan
2012-Apr
2012 - Jul
Monthly Pending Home Sales Index
74. Annual Existing Home Sales:
U-Shaped Recovery
8
In million units
7 7.08
6 6.52
5 5.3
5.6
5.02 5.05
4 4.65
4.12 4.34 4.18 4.26
3
2
1
0
2014
2005
2006
2007
2008
2009
2010
2011
2013
2015
2012 est.
75. 124000
126000
128000
130000
132000
134000
136000
138000
2000 - Jan
2000 - Jul
2001 - Jan
2001 - Jul
140000 In thousands
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
Total Payroll Jobs
2008 - Jul
2009 - Jan
2009 - Jul
2010 - Jan
2010 - Jul
2011 - Jan
(Lost Decade: Up, Down, ½ Up)
2011 - Jul
2012 - Jan
2012 - Jul
76. 0
4
6
8
10
12
2
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
Unemployment Rate
2009 - Jul
(Slow Steady Progress)
2010 - Jan
2010 - Jul
2011 - Jan
2011 - Jul
2012 - Jan
2012 - Jul
77. 54%
58%
60%
62%
64%
66%
56%
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
(How many of the civilian population is working)
2011 - Jan
Employment Rate … No Progress
2011 - Jul
2012 - Jan
2012 - Jul
78. Visible Housing Inventory
(Existing home inventory at 8-year low)
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
- Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan
79. 0
100
200
300
400
500
700
600
1964 - Jan
1966 - Jan
1968 - Jan
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
Visible Housing Inventory
2004 - Jan
2006 - Jan
2008 - Jan
(Newly Constructed Homes Inventory at 50-year low)
2010 - Jan
2012 - Jan
80. Housing Starts
(Well Below 50-year average of 1.5 million each year)
multifamily single-family
Thousand units (annualized)
2500
2000
Long-term Average
NASDAQ up 13%
1500
Dow up 9%
Homebuilder stocks up 62%
1000 in 12 months
500
0
2002 - Apr
2005 - Apr
2008 - Apr
2011 - Apr
2000 - Oct
2003 - Oct
2006 - Oct
2009 - Oct
2001 - Jul
2004 - Jul
2007 - Jul
2010 - Jul
2000 - Jan
2003 - Jan
2006 - Jan
2009 - Jan
2012 - Jan
82. Home Prices
Metric % change from one year ago Comment
NAR + 11.3% (September) Mix of homes impact price …
Median Price fewer distressed sales recently …
Case-Shiller +2.0% (June, July, August average) Lagging indicator
Near double-digit on an
annualized basis in recent months
FHFA + 4.7% (August) Monthly gains in 9 of recent 10
months