Post on 19-Dec-2015
The 2011 Economic Outlook for Real Estate Investors
January 18, 2011
Dr. Stanley D. LonghoferWSU Center for Real Estate
Real GDP Growth since 1985
-10
-8
-6
-4
-2
0
2
4
6
8
10
1985 1990 1995 2000 2005 2010Source: Bureau of Economic Analysis
Percent
Real GDP Growth since 1950
-10
-5
0
5
10
15
20
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010Source: Bureau of Economic Analysis
Percent
Unemployment Rate
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
WichitaU.S.
Source: U.S. Bureau of Labor StatisticsData are seasonally adjusted
Percent
Total Non-Farm Employment
125,000
130,000
135,000
140,000
U.S
. Em
ploy
men
t in
1,00
0s
250
275
300
325
Wic
hita
Em
ploy
men
t in
1,00
0s
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
WichitaU.S.
Source: U.S. Bureau of Labor StatisticsData are seasonally adjusted
Wichita Office Employment
128
130
132
134
136
138
140
142
144
146
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: WSU Center for Real Estate using data from the U.S. Bureau of Labor Statistics
Data are seasonally adjusted
Employment in 1,000s
Wichita Retail Employment
54
55
56
57
58
59
60
61
62
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: WSU Center for Real Estate using data from the U.S. Bureau of Labor Statistics
Data are seasonally adjusted
Employment in 1,000s
Wichita Industrial Employment
70
80
90
100
110
120
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: WSU Center for Real Estate using data from the U.S. Bureau of Labor Statistics
Data are seasonally adjusted
Employment in 1,000s
WSU Economic Indices
80
90
100
110
120
130
2003 2004 2005 2006 2007 2008 2009 2010
Leading IndicatorsCurrent Conditions
Source: WSU Center for Economic Development and Business Research
Index
Consumer Inflation
-4
-2
0
2
4
6
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Consumer InflationCore Inflation
Source: U.S. Bureau of Labor Statistics
Percent
Mortgage Rates
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
30-year Fixed Rate1-year AdjustableMBA Forecast
Sources: Freddie Mac; Mortgage Bankers Association
Percent
Mortgage Underwriting Standards
-20
0
20
40
60
80
100
1990 1995 2000 2005 2010 2015
AllPrimeAlternativeSubprime
Source: Board of Governors of the Federal Reserve System
Net Percentage of Banks ReportingTightening Standard of Mortgages
Commercial Mortgage Standards
-40
-20
0
20
40
60
80
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: Board of Governors of the Federal Reserve System
Net Percentage of Banks ReportingTightening Standard for Mortgages
Existing Home Sales Activity
3,000
4,000
5,000
6,000
7,000
U.S
. Sal
es in
1,0
00s
4,000
6,000
8,000
10,000
12,000
Wic
hita
Sal
es
2006 2007 2008 2009 2010
WichitaU.S.
Sources: NAR and South Central Kansas MLSNote: Data are seasonally-adjusted annual rates
Existing Home Sales by Month
200
400
600
800
1,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
201020092008
Source: South Central Kansas MLS
Units
Existing Home Inventories
0
2
4
6
8
10
12
2006 2007 2008 2009 2010
WichitaU.S.
Sources: NAR and South Central Kansas MLSNote: Data are seasonally adjusted
Months' Supply
U.S. New Home Activity
300
600
900
1,200
1,500
1,800
2,100
U.S
. Sin
gle-
Fam
ily B
uild
ing
Per
mits
200
400
600
800
1,000
1,200
1,400
U.S
. New
Hom
e S
ales
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
SalesPermits
Source: U.S. Bureau of the CensusData are seasonally-adjusted annual rates
New Home Sales Activity
200
400
600
800
1,000
1,200
U.S
. Sal
es in
1,0
00s
0
1,000
2,000
3,000
4,000
5,000
Kan
sas
Sal
es
2006 2007 2008 2009 2010
KansasU.S.
Sources: U.S. Census Bureau and participating Kansas REALTOR MLS systemsNote: Data are seasonally-adjusted annual rates
New Single-Family Building Permits
0
500
1,000
1,500
2,000
U.S
. SF
Per
mits
in 1
,000
s
0
50
100
150
200
250
300
Wic
hita
Are
a S
F P
erm
its
2006 2007 2008 2009 2010
WichitaU.S.
Sources: Wichita Area Builders Associaiton and U.S. Bureau of the CensusData are seasonally adjusted annual rates
Home Price Appreciation
-10
-5
0
5
10
15
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
WichitaU.S.
Source: Federal Housing Finance Agency (FHFA)
Percent
Home Price Appreciation
100.00
120.00
140.00
160.00
180.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
WichitaU.S.
Source: Federal Housing Finance Agency (FHFA)
Index: 2000q1 = 100
Kansas Home Price Appreciation
95.00
100.00
105.00
110.00
115.00
2007 2008 2009 2010
Kansas City Lawrence ManhattanTopeka Wichita
Source: Federal Housing Finance Agency (FHFA)
Index: 2007q1 = 100
What Can We Expect for 2011?
2010 was a tumultuous yearHard to tell the current in the market with all the ripples
How fast markets recover depends in large part on the rest of the economy
Wichita Forecast
2009 Actual
2010 Forecast
2011 Forecast
Total Home Sales
8,617 units-14.2%
8,140 units-5.5%
8,680 units+6.6%
Building Permits
1,256 units-29.2%
1,070 units-14.8%
1,080 units+0.9%
Home Price Appreciation
+0.4% -0.1% +1.4%
Sources: South Central Kansas MLS; U.S. Bureau of the Census;
Federal Housing Finance Agency; WSU Center for Real Estate
2011 Housing Markets Forecast
Kansas City
Lawrence
Manhattan Topeka Wichita
Sales25,050 units
+2.5%
1,430 units
+9.2%
620 units+3.3%
2,700 units
+1.1%
8,680 units+6.6%
Permits
2,100 units
+1.9%
220 units
+10.0%
190 units-5.0%
310 units
+14.8%
1,080 units+0.9%
Home Prices -1.3% -0.5% +0.8% -0.5% +1.4%Sources: Heartland MLS; Lawrence Board of
REALTORS®; Manhattan Association of REALTORS®; Topeka Area Association of REALTORS®; South Central
Kansas MLS; U.S. Bureau of the Census; City of Manhattan; Federal Housing Finance Agency; WSU
Center for Real Estate
Laying a Foundation for Real Estate in Kansas
WSU Center for Real Estate