2018 CAR Market Outlook Joe Kirchner
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Transcript of 2018 CAR Market Outlook Joe Kirchner
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REALTOR.COM®
MARKET OUTLOOKRealtor.com Economics
January 2018
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NATIONALTRENDS
4
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JOB CREATION CONTINUES173,000 monthly average in past 12 months, Nov saw 228,000
5
Source: Bureau of Labor Statistics
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CONFIDENCE AT 15+ YEAR HIGHPlans to purchase a home improving markedly
6
Source: The Conference Board, Moody’s Analytics
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SALES RISING EHS rising, up 3.8% Y/Y in November
7
Source: National Association of REALTORS® Existing Home Sales Report
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INVENTORY AT RECORD LOWSInventory down 8.7% year-over-year in December
8
Source: Realtor.com®
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PRICES AT RECORD HIGHSMedian List Price at $270,000, Up 8.0% year-over-year (Dec)
9
Source: Realtor.com®
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INVENTORY DIVERGENCE3.4 months for existing and 4.6 months for new
10
Source: National Association of REALTORS®, Commerce Department
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NEW SALES UPSales up 3.8% for existing and up 26.6% for new Y/Y in Nov
11
Source: National Association of REALTORS®, Commerce Department
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CRISIS SHIFTED NEW HOME MARKETAverage spread 2000-2008: 12%; 2009-2017: 33%
12
Source: National Association of REALTORS®, Commerce Department
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HOUSING STARTSStarts up 12.9% Y/Y in Sep with SF up 13.0% and MF up 12.6%
13
Source: Commerce Department
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OWNERSHIP RECOVERING?63.9% ownership rate off low; 1.4 M households last 4qs
14
Source: Census Bureau
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RENT INCREASES HAVE SLOWEDAsking rents down 1.3% y/y in Dec compared to list prices up 8%
15
Source: Realtor.com® and Altos Research
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CHEAPER TO BUY IN 47% OF COUNTIESSimple monthly cost analysis favors renting now in more places
16
Source: Realtor.com® Analysis of HUD Median Rents,
Nielsen Pop-Facts Demographics and Realtor.com® Data
December 2017
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HISTORIC AFFORDABILITY DECLINING30-year conforming rate averaged 4.0% in past 12 months
17
Source: Moody’s Analytics, Freddie Mac, and National Association of REALTORS®
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Fo
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Aff
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Income Percentile
February Affordability Distribution Equality Line
AFFORDABILITY IS RELATIVEHigher income households have more access to available inventory
18
Source: realtor.com and National Association of REALTORS®
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DEMANDDRIVERS
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Thousands
US Population by Age, End of 2016
DEMOGRAPHICS SET THE TABLEWhen viewed by age, importance of Millennials becomes clearer
20
Source: Realtor.com® Analysis of US Census Bureau Population Estimates (2016)
BoomerXMillennialZ
78 million61 million88 million65 million 29 million
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MILLENNIAL OWNERSHIP VARIESStrong correlation with affordable markets
21
Source: Realtor.com® Analysis of Nielsen Demographics PopFacts 2017
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0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
change of job/job location
increase in income
desire to live closer to good schools
planning an increase to family size
relocated to a new city
increase in family size
looking for a safer neighhorhood
getting married/moving in with partner
change of family circumstance/composition
favorable home prices
tired of current home
Top 10 Buying Triggers
all 25-34
LIFE DRIVES HOUSING DEMANDEveryone’s tired of waiting and Millennials are building families
22
30%
25%
13%
32%
Source: realtor.com Active Home Shopper Survey, September 2016
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CREDIT ACCESS IMPROVINGCredit access up 7.0% year-over-year in October
23
26%
13%
33%
30%
25%
13%
32%
Source: Mortgage Bankers Association, Haver Analytics
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• National Association of REALTORS® Macro Forecast:
• GDP grows 2.5% in 2017, 3.0 in 2018 (vs. 1.5% in 2016)
• Nonfarm payroll employment grows 1.5% in 2017, 1.8% in 2018
• Unemployment declines to 4.4% in 2017, 4.0% in 2018
• realtor.com® housing forecast:
• Existing home prices appreciate 3.2%
• Existing home sales grow 2.5%
• New home sales grow 7%
• Housing starts increase 3% (SF up 7%)
• 30-year fixed conforming rate averages 4.6%
2018 FORECASTKey economic and housing metrics from NAR and realtor.com
24
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LOCATION
LOCATIONLOCATION
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LIST PRICES IN COOK COUNTYListing Prices Up in Cook County, 8% Y/Y (Dec 2017)
26
Source: Realtor.com
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LIST PRICE GROWTH IN CHICAGO METROCook County Saw 8% Growth Year-on-Year (Dec 2017)
27
Source: Realtor.com
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PRICE GROWTH IN CHICAGO METRO
66% of Zips in Region Experienced List Price Growth Y/Y (Dec 2017)
28
Source: Realtor.com
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INVENTORY IN COOK COUNTYActive Listings Still Decreasing, But Potentially Stabilizing
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Source: Realtor.com
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ACTIVE INVENTORY IN CHICAGO METROSingle Family and Condo Active Listings (Dec 2017)
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Source: Realtor.com
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ACTIVE INVENTORY IN COOK COUNTYSingle Family and Condo Active Listings (Dec 2017)
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Source: Realtor.com
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AGE OF INVENTORY IN COOK COUNTYInventory Moving Faster Year-on-Year, but Pace Decelerating
32
Source: Realtor.com
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HOTTEST COUNTIES IN CHICAGO METROQ3 2017
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Source: Realtor.com
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HOTTEST ZIPS IN COOK COUNTYQ3 2017
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Source: Realtor.com
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GENERATIONAL PROPENSITYInterest by Age Groups (Q3 2017)
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Source: Realtor.com
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GENERATIONAL PROPENSITYInterest in Hottest Zips (Q3 2017)
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Source: Realtor.com
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RENT PRICES IN CHICAGO METROCook and Other Counties seeing 5.3% Rent Growth Year-on-Year
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Source: Realtor.com® Analysis of HUD Fair Market Rents
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RENT VS BUYMonthly Costs Favor Renting Throughout Most of Chicago Metro
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Source: Realtor.com® Analysis of Nielsen Pop-Facts Demographics, HUD Fair Market Rents and Realtor.com Data
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HOME OWNERSHIPOverall Rate in Cook County is 58%
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Source: Nielsen Demographics Pop-Facts 2017
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MILLENNIAL OWNERSHIP25-34 Rate in Cook County is 33%
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Source: Nielsen Demographics Pop-Facts 2017
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HOUSEHOLD GROWTH 2018-2022Chicago Proper Expected to See Growth, Outer Cook Remains Flat
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Source: Nielsen Demographics Pop-Facts 2017
THANK
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LISTING PRICES GREW 8% Y/Y IN DECMedian list price increases are widespread
48
Source: Realtor.com®
December 2017
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RENTS RISING Y/Y IN 78% OF COUNTIESRent increases adding to demand for buying
49
2017Source: Realtor.com® Analysis of HUD Median Market Rents
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JOB CREATION25-34 growth outpacing overall rate growth
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25%
Source: Bureau of Labor Statistics, Realtor.com® Analysis
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0
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100,000,000
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2017 2022
Population by Age (US)
Under 25 25-34 35-44 45-54 55-64 65+
BOOMERS KEEP DISTURBING Boomer wave is causing a major population shift
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15%
13%
13%
33%
18%
12%
13%
32%
Source: Nielsen Demographics Pop-Facts 2017
13% 13%
Over the next 5 years:
Population grows 4%
65+ grows 18%
55-64 grows 4%
45-54 declines 3%
35-44 grows 4%
25-34 is flat
Under 25 grows 1%
13% 13%
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FICO SCORES STABLEAvg FICO score on a closed mortgage was 724 in October
52
13%
33%
Source: Ellie Mae and Fair Isaac Corporation
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TOTAL REAL ESTATE TRAFFICUp 12.0% Y/Y Nov 2017
53
Source: Realtor.com® Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data
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0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
I owe more on my current home than it is worth
Having difficulty qualifying for a mortgage
Always overbid by other buyers
Can't sell current home
Currently on a lease
Need to improve credit score
Haven't decided on a specific neighborhood/town
Lack enough funds for down payment
Cannot find a good house in my budget range
Have not yet found a house that meets my needs
Just starting to explore
What's Getting in the Way of Making a Home Purchase?
Repeat First-Time All Buyers
IMPEDIMENTS TO PURCHASEJust starting to explore and inventory challenges reign
54
26%
13%
33%
30%
25%
13%
32%
Source: Realtor.com Survey of Buyer Traffic, February 2017
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HOTTEST HOMES IN THE LAST 60 DAYSTop Homes Get 20-35 Times More Pageviews than State Avg
55
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MORTGAGE RATES IN ILLINOIS30-Year-Fixed in IL Low of 3.75% (Sep ‘17), High of 4.3% (Mar ‘17)
56
Source: Realtor.com