Post on 09-Feb-2016
description
Economic and Housing Market Outlook
Lawrence Yun
National Existing Home Sales
010000002000000300000040000005000000600000070000008000000
1981 1986 1991 1996 2001 2006
Recent Pending Home Sales Rising, but Taking Longer to Close in Recent Months
6065707580859095
100105110
Appraisal Issues from HVCC• Good Intended Policy Gone Bad
– Appraisers getting paid less– Appraisal process taking shorter time– Consumers paying higher fee– Homeowners unable to refinance– Homebuyers wanting to buy but cannot
• Unintended Consequences of Slowing Housing Market Recovery … Slowing Economic Recovery
National Existing Median Home Price
0
50000
100000
150000
200000
250000
1970 1975 1980 1985 1990 1995 2000 2005
$
Serious Delinquency Rate(90+ days late or foreclosure)
0.0
5.0
10.0
15.0
20.0
25.0
30.0%
Subprime
•FHA Reserve Fund depleting … may need funds to implement a countercyclical policy•Fannie-Freddie will need funds … future reform of the secondary mortgage market•VA … slight rise … evev though a zero-down product … stay within budget and all will be OK!
VA (purple)
FHA
Prime (green)
Mortgage Payment to Incometo Buy a Median Price Home
(for those staying within budget … middle income person buying a middle priced home)
1015202530354045
Stay within budget and monthly payment will be manageable !
%
Home Price to Income Ratio(Enticing for All-Cash Buyers)
2.02.22.42.62.83.03.23.43.6
Stay within Budget and all will be OK !
Home Price Up in Select Regions•April to May according FHFA (Government) Home Price Index
%
-6.0
-3.0
0.0
3.0
6.0
9.020
05 -Q
1
2005
-Q3
2006
-Q1
2006
-Q3
2007
-Q1
2007
-Q3
2008
-Q1
2008
-Q3
2009
-Q1
2009
-Q3
2009
Q4
Economy to Recover Slowly
GDP annualized growth rate
Source: BEA
Latest Data
Forecast
Job Changes in U.S. … Unemployment Rate to 10.5%
-1000
-800
-600
-400
-200
0
200
400
600
Source: BLS, NAR forecast
One-month payroll job changes in thousands
Federal Budget Deficit … Impact?Future Generation and Housing
-2,000,000
-1,500,000
-1,000,000
-500,000
0
500,000
19901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
$ million
Source: Congressional Budget Office Projections
Tax Revenue Collections(4-quarter change as of 2009 Q1)
Tax Assessors and Appraisers need to meet
%
Housing Market Recovery Helps Reduce Budget Deficit
• Housing Market Impact on the Economy– $62,000 from each home sale (furniture, moving truck, carpeting,
title search, etc.)– Home values are most American’s wealth … and consumer
spending– Higher home sales … reduce inventory … stabilize home values– Home values strongly impact bank balance sheets and foreclosures
• Home Buyer Tax Credit … Extend and Expand
Commercial Credit Freeze
Economic Outlook 2008 2009
2010forecast
50 year average
GDP 1.1% -2.9% 1.5% 3.3%
CPI Inflation 3.8% -0.5% 2.1% 4.1%
Unemployment Rate 5.8% 9.5% 10.0% 5.9%
Mortgage Rate 6.1% 5.2% 5.8% 9.1%
Existing Home Sales 4.9 m 4.9 m 5.2 m
N/A5.2 m in 2000
(before bubble)
Customer Satisfaction• Historically 80% of customers would
recommend their specific REALTOR® to a friend and colleagues
• Some Decline in satisfaction bust-years• Serve your client well and assure that clients
stay within budget