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Market Update: Supply and Demand Forecast 2022
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Or market feb_2022_forecast
- 1. Market Update: 2022 Supply & Demand Forecast
- 2. WHERE ARE WE NOW?
- 3. • Pandemic accelerated trends already in place. • Some new factors now influence existing cyclical patterns (i.e. work from home). • What regulatory, migratory, demographic, economic, etc.? Assumptions Regarding Housing
- 4. We are here
- 6. -300 -200 -100 0 100 200 300 400 500 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Absolute Diff. Pending & Listed 2021 vs. 2020 Listed PDX Pending PDX Cumulative Net: Listed: 1,187 Pending: 3,633
- 8. $419,990 $460,000 $513,900 99.0% 100.6% 105.1% 101.4% $400,000 $420,000 $440,000 $460,000 $480,000 $500,000 $520,000 $540,000 97.5% 98.5% 99.5% 100.5% 101.5% 102.5% 103.5% 104.5% 105.5% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 % Sold to List Price MED Price Avg. % to List
- 9. $13 $29,777 $8,331 $32,024 $75,870,077 $6,986,597 -$10,000 -$5,000 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $(20,000,000) $(10,000,000) $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 $$ Impact - Avg. & Abs. Avg. $ Impact (rhs) Abs. $ Impact
- 10. 0 100000 200000 300000 400000 500000 600000 700000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Pending Ratio (demand indicator) & Avg. Sale Price - Portland Recession Recovery Expansion Hypersupply
- 11. The Demand/Supply Equation Demand Equation: 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 𝑰𝒏𝒄𝒓𝒆𝒂𝒔𝒆 𝒃𝒊𝒓𝒕𝒉𝒔 − 𝒅𝒆𝒂𝒕𝒉𝒔 + 𝒏𝒆𝒕 𝒎𝒊𝒈𝒓𝒂𝒕𝒊𝒐𝒏 + 𝑯𝒐𝒖𝒔𝒆𝒉𝒐𝒍𝒅 𝑭𝒐𝒓𝒎𝒂𝒕𝒊𝒐𝒏 = 𝑷𝒐𝒕𝒆𝒏𝒕𝒊𝒂𝒍 𝑫𝒆𝒎𝒂𝒏𝒅 Potential Demand × 𝑷𝒆𝒓𝒄𝒆𝒏𝒕 𝑸𝒖𝒂𝒍𝒊𝒇𝒊𝒆𝒅 𝒕𝒐 𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆 = 𝑸𝒖𝒂𝒍𝒊𝒇𝒊𝒆𝒅 𝑫𝒆𝒎𝒂𝒏𝒅 Qualified Demand × Percent Choosing to Buy = Actual Demand Supply Equation: 𝑵𝒆𝒘 𝑪𝒐𝒏𝒔𝒕𝒓𝒖𝒄𝒕𝒊𝒐𝒏 𝑭𝒐𝒓 𝑺𝒂𝒍𝒆 & 𝑹𝒆𝒏𝒕 + 𝑬𝒙𝒊𝒔𝒕𝒊𝒏𝒈 𝑺𝒆𝒍𝒍𝒆𝒓𝒔 & 𝑳𝒂𝒏𝒅𝒍𝒐𝒓𝒅𝒔 + 𝑫𝒊𝒔𝒕𝒓𝒆𝒔𝒔𝒆𝒅 & 𝑹𝑬𝑶 = 𝑷𝒐𝒕𝒆𝒏𝒕𝒊𝒂𝒍 𝑺𝒖𝒑𝒑𝒍𝒚
- 12. Five Determinants of Demand: 1. The price of the good or service (partially determined by scarcity) 2. The income and number of buyers (employment, migration, household formation) 3. The prices of related goods or services—i.e. rental housing or alternatives 4. The tastes or preferences of consumers – i.e. suburban vs. rural 5. Consumer expectations. Most often, this refers to whether a consumer believes prices for the product will rise or fall in the future. qD = f(price, income, prices of related goods, tastes, expectations)
- 13. Basis for Increased/Stable Demand for Housing •Population Growth & Demographics: •Inbound Migration (present, external) •Natural Increase (long-term, internal) •Household formation (short-term & long-term, demographic & economic)
- 14. DEMAND
- 18. 7,656,200 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 9,000,000 -40,000 -20,000 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 Washington State Components of Change Natural Increase Net Migration Washington State Population 1960 2020
- 19. 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 -4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 Annual Population Change: Natural Increase and Net In-migration Clark County Net Migration Natural Increase Cumulative Change 1960 2021
- 20. Percent Increase by County Clackamas County: 0.74% Washington County: 0.69% Multnomah County: 0.53% Clark County: 1.38% Marion: 0.29% Lane County: -0.14% Deschutes County: 2.07% Absolute Increase by County Clackamas County: 3,131 Washington County: 4,141 Multnomah County: 4,362 Clark County: 6,814 Marion: 988 Lane County: -534 Deschutes County: 4,131
- 22. 15.6 13.8 13.7 11.5 10.4 8.1 7.8 7.3 7.3 6.9 1.8 -3.3 -4.1 -4.9 -6.2 -6.8 -6.9 -12 -15 -10 -5 0 5 10 15 20 Idaho Nevada Arizona South Carolina Florida Washington North Carolina Colorado Delaware Oregon National California West Virginia Louisiana Hawaii Illinois New York Alaska Net migration, 2018-19 Net Migration per 1,000 residents Source: U.S. Census Bureau
- 23. 13.5% 7.8% 6.2% 6.1% 6.0% 3.1% 1.0% -1.8% -3.0% -3.8% -5.1% -7.7% -10.0% -10.7% -12.9% -13.0% -13.7% -14.5% -20.4% -21.4% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% NY CA NV OR GA AZ WA FL MN UT CO TX HI ID IL PA NC MT MA MI % Change in Moves To Portland-Vancouver-Hillsboro, OR-WA MSA Source: CBRE
- 24. 56.8% 45.2% 44.4% 28.2% 24.0% 22.4% 16.2% 11.3% 9.1% 8.6% 7.2% 6.5% 4.8% 4.4% 2.9% 2.6% 2.6% 0.5% -2.4% -6.5% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% MO AK TN ID UT FL MT MN IL CO OR NV TX HI AZ CA WA NC NM NY % Change in Moves From Portland-Vancouver-Hillsboro, OR-WA MSA Source: CBRE
- 26. Source: CBRE
- 33. 290,478 342,510 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+ Oregon Population by Age Cohort 2020 2025 2029 Source: PSU Population Forecast Center
- 34. 0 10,000 20,000 30,000 40,000 50,000 60,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Oregon - Inbound Migration Projected Source: PSU Population Forecast Center
- 36. SUPPLY
- 38. 0 0.5 1 1.5 2 2.5 3 January February March April May June July August September October November December Months of Inventory 2020 2021 2022
- 41. $463,000 $457,900 $465,500 $477,400 $479,700 $479,700 $502,300 $511,000 $510,000 $516,500 $521,200 $514,000 $514,700 $542,000 $554,300 $557,900 $582,200 $597,100 $593,100 $583,600 $571,500 $575,200 $575,600 $582,900 $586,600 $406,000 $407,000 $425,000 $424,000 $425,000 $435,000 $445,000 $449,000 $451,000 $460,000 $457,000 $455,000 $460,000 $479,100 $488,000 $500,000 $515,000 $521,000 $522,000 $525,000 $510,000 $516,000 $517,800 $511,000 $512,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Portland Metro - Average and Median SP by Month Average Sale Price Median Sale Price
- 42. $399,900 $512,000 $370,000 $390,000 $410,000 $430,000 $450,000 $470,000 $490,000 $510,000 $530,000 $550,000 -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Portland Appreciation 2019 - present MoM percent change Median Sale Price
- 43. $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Median Price Difference - Tri-County vs. Clark
- 44. $300,000 $320,000 $340,000 $360,000 $380,000 $400,000 $420,000 $440,000 $460,000 $480,000 2,500 4,500 6,500 8,500 10,500 12,500 14,500 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Avg. Loan Amounts & Refinance Volume Total # of Refinances (lhs) Avg. Refi Loan Amt. Avg. Purchase Loan Amt. Source: DataTrace
- 45. WHAT ABOUT DISTRESS IN THE MARKET?
- 48. Bend-Redmond, OR, 0.1 Median, 1.00 Eugene, OR, 0.4 Medford, OR, 0.5 Salem, OR, 0.5 Laredo, TX, 3.6 Portland-Vancouver-Hillsboro, OR-WA, 0.4 0 0.5 1 1.5 2 2.5 3 3.5 4 30-89 day mortgage delinquency rates Source: MBA
- 50. Note: Percentages are of first round of funding, $25 billion. Oregon received: $280 million 6.2% distributed: $17.4 million Source: National Low Income Housing Coalition. State figures reflect the most recently available data for each state as of August 9.
- 51. NEW CONSTRUCTION
- 52. 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Permits by Unit 121,774 127,036 Source: US Census Bureau
- 53. 0 2000 4000 6000 8000 10000 12000 14000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 SFR Permits by Year – Portland Metro Source: US Census Bureau
- 54. 61% 0% 10% 20% 30% 40% 50% 60% 70% 0 2000 4000 6000 8000 10000 12000 14000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Number of Units by Type & Percent MFR 1 Unit 5 Units or More % MFR Source: US Census Bureau
- 56. Risk & Opportunity: Interest Rates
- 57. 0.000 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 18.000 20.000 0 5000 10000 15000 20000 25000 30000 Apr-71 Apr-72 Apr-73 Apr-74 Apr-75 Apr-76 Apr-77 Apr-78 Apr-79 Apr-80 Apr-81 Apr-82 Apr-83 Apr-84 Apr-85 Apr-86 Apr-87 Apr-88 Apr-89 Apr-90 Apr-91 Apr-92 Apr-93 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Apr-25 M2 Money Supply & Interest Rates M2 Money Supply Avg. 30-year Mtg. Actual
- 61. 1.000 500001.000 1000001.000 1500001.000 2000001.000 2500001.000 3000001.000 3500001.000 4000001.000 1500.000 2000.000 2500.000 3000.000 3500.000 4000.000 4500.000 5000.000 5500.000 6000.000 6500.000 2011-07-01 2011-10-01 2012-01-01 2012-04-01 2012-07-01 2012-10-01 2013-01-01 2013-04-01 2013-07-01 2013-10-01 2014-01-01 2014-04-01 2014-07-01 2014-10-01 2015-01-01 2015-04-01 2015-07-01 2015-10-01 2016-01-01 2016-04-01 2016-07-01 2016-10-01 2017-01-01 2017-04-01 2017-07-01 2017-10-01 2018-01-01 2018-04-01 2018-07-01 2018-10-01 2019-01-01 2019-04-01 2019-07-01 2019-10-01 2020-01-01 2020-04-01 2020-07-01 2020-10-01 2021-01-01 2021-04-01 2021-07-01 Balance Sheet: Total Assets: Cash and Due from Depository Institutions, Millions of U.S. Dollars, Quarterly, Not Seasonally Adjusted Federal Debt Held by Federal Reserve Banks, Billions of Dollars, Quarterly, Not Seasonally Adjusted
- 62. 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Spread Average Spread Avg. 30-year Mtg. (rhs) Interest Rates – Deviation from Avg. Spread Between 10-year Treasury as a Rate Barometer Above Avg. Spread = Downward Pressure Below Avg. Spread = Upward Pressure
- 63. 2.00 2.20 2.40 2.60 2.80 3.00 3.20 3.40 3.60 3.80 4.00 30-Year Rate Actual & At Average Spread Actual At Avg. Spread
- 64. Looking ahead: FFC Rate Forecast Forecast 3.7% 3.39% Source: US Department of the Treasury; Financial Forecast Center 2.5 2.7 2.9 3.1 3.3 3.5 3.7 3.9 4.1 2022 Interest Rate Forecast Upper Range Lower Range Forecast
- 65. $300,000 $350,000 $400,000 $450,000 $500,000 $550,000 2.50 3.00 3.50 4.00 4.50 5.00 Interest Rate & Median Price - Portland Metro Avg. 30-year rate Median Price
- 66. 30-Year Mtg. Rate – 2022 Year End
- 67. Bottom Line – Market Drivers • Seasonal patterns become more apparent through 2022 • Structure remains > Cycle • Price ceilings appear to have been reached – appreciation moderates, velocity remains stable or increases, inventory remains below LTA • At what price would you list your home? • At what interest rate would you delay or move up a purchase? • Migratory patterns continue or accelerate? • Expectations of consumers – will prices continue to rise? • Effect of Pandemic on LT Behavior? • How do people work? • Where do people WANT to live?