Economic and Housing Market Trends and Outlook

Economic and Housing MarketTrends and Outlook

Lawrence Yun, Ph.D., Chief Economist, NATIONAL ASSOCIATION OF REALTORS®

Mike McGrew, 2014 NATIONAL ASSOCIATION OF REALTORS® Treasurer

Presentation at NAR Leadership SummitChicago, IL

August 27, 2013

Existing Home Sales

2000 - Jan 2002 - Jan 2004 - Jan 2006 - Jan 2008 - Jan 2010 - Jan 2012 - Jan3,000,0003,500,0004,000,0004,500,0005,000,0005,500,0006,000,0006,500,0007,000,0007,500,000

$8,000 tax credit

Existing Home Inventory(Bouncing at 13-year lows)

2000 - Jan 2002 - Jan 2004 - Jan 2006 - Jan 2008 - Jan 2010 - Jan 2012 - Jan0

50000010000001500000200000025000003000000350000040000004500000

New Home Sales


200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Up 30%

New Home Inventory(Newly Constructed Homes Inventory at 50-year low)


100,000

200,000

300,000

400,000

500,000

600,000

700,000

Shadow Inventory(% of Loans in foreclosure process or more than 90 days late)

2000 - Q1

2000 - Q4

2001 - Q3

2002 - Q2

2003 - Q1

2003 - Q4

2004 - Q3

2005 - Q2

2006 - Q1

2006 - Q4

2007 - Q3

2008 - Q2

2009 - Q1

2009 - Q4

2010 - Q3

2011 - Q2

2012 - Q1

2012 - Q4

02468

1012

U.S.

State Differences in Shadow Inventory

2000 - Q1

2001 - Q1

2002 - Q1

2003 - Q1

2004 - Q1

2005 - Q1

2006 - Q1

2007 - Q1

2008 - Q1

2009 - Q1

2010 - Q1

2011 - Q1

2012 - Q1

2013 - Q1

0

2

4

6

8

10

MarylandVirginia

Housing Starts … Need to Reach 1.5 million soon or persistent housing shortage

2000 - Jan2001 - Oct 2003 - Jul 2005 - Apr2007 - Jan2008 - Oct 2010 - Jul 2012 - Apr0

500

1000

1500

2000

2500multifamily single-family

Thousand units (annualized)

Long-term Average

Existing vs. New Home Price … Big Gap(single-family homes)

2000 - Jan 2002 - Jul 2005 - Jan 2007 - Jul 2010 - Jan 2012 - Jul0

50000

100000

150000

200000

250000

300000

NewExisting

Home Price Forecastby Wall Street Journal Economists Panel

Year WSJ Home Price Forecast

2013 7%

2014 5%

LiesDamn Lies and …

30-Year Fixed Mortgage Rate(been below 6% for 5 years)

2000 - Jan2001 - Oct 2003 - Jul 2005 - Apr2007 - Jan2008 - Oct 2010 - Jul 2012 - Apr3

4

5

6

7

8

9%

Sustainable Recovery?

Buyer and Seller Traffic from REALTOR® Survey

2008 - Jan

2008 - May

2008 - Sep

2009 - Jan

2009 - May

2009 - Sep

2010 - Jan

2010 - May

2010 - Sep

2011 - Jan

2011 - May

2011 - Sep

2012 - Jan

2012 - May

2012 - Sep

2013 - Jan

2013 - May

0

20

40

60

80

Buyer Seller

All-Cash Buyers(% as total)

0%5%

10%15%20%25%30%35%40%

Normal Range

First-time Homebuyers(% as total)

2008 - Oct

2009 - Jan

2009 - Apr

2009 - Jul

2009 - Oct

2010 - Jan

2010 - Apr

2010 - Jul

2010 - Oct

2011 - Jan

2011 - Apr

2011 - Jul

2011 - Oct

2012 - Jan

2012 - Apr

2012 - Jul

2012 - Oct

2013 - Jan

2013 - Apr

2013 - Jul

0%10%20%30%40%50%60%

1st-time Buyers

Normal Range

Renter Households

1980 - Q11984 - Q21988 - Q31992 - Q41997 - Q12001 - Q22005 - Q32009 - Q425,000

27,000

29,000

31,000

33,000

35,000

37,000

39,000

41,000In thousands

Homeowner Households has not Grown since 2006 … but Primed to Grow

1980 - Q11984 - Q21988 - Q31992 - Q41997 - Q12001 - Q22005 - Q32009 - Q450,000

55,000

60,000

65,000

70,000

75,000

80,000In thousands

Wealth Distribution (Federal Reserve data on median net worth)

Renter Owner$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

199820012004200720102014

2014 Forecast by NAR

Bubble Crash

• Dodd-Frank?• PATH?• Lawsuits?• Legacy?

U.S. Total Payroll Jobs


126000

128000

130000

132000

134000

136000

138000

140000 In thousands

Financial Industry High Profits … Ready to Dial Down Credit Stringency?

2001 - Q1

2001 - Q4

2002 - Q3

2003 - Q2

2004 - Q1

2004 - Q4

2005 - Q3

2006 - Q2

2007 - Q1

2007 - Q4

2008 - Q3

2009 - Q2

2010 - Q1

2010 - Q4

2011 - Q3

2012 - Q2

2013 - Q1

-200

-100

0

100

200

300

400

500$ billion

Forecast2011 2012 2013

Forecast2014Forecast

GDP Growth +1.8% +2.1% +1.6% +2.6%

Existing Home Sales 4.3 million 4.7 million 5.1 million 5.2 million

Housing Starts 610 K 780 K 1.0 million(not enough)

1.2 million(not enough)

Existing Home Price Growth

- 4% + 6% + 11% + 6%

30-yr Mortgage Rate (year-end)

4.7% 3.5% 4.6% 5.2%

Summary on What to Expect• Likely Multiyear Housing Recovery– No recession– Job growth and household formation – Lagging housing starts and continuing housing

shortage• Home prices are primed to rise further, by 16%

cumulatively in 2013 and 2014

What’s the Matter with Canada?

• Digging Earth• Arms

What’s the Matter with Kansas?

Who said “There is no place like home”

Who was raised in KS and was imbued with strong moral compass?

#1 Jayhawks Fan!

Primary Drivers of Membership

• Existing Home Sales and Real Home Price Growth– Lagged effect

• Job Market Conditions– More members if high unemployment

REALTOR® Median Gross Income

1995 1998 2000 2002 2004 2006 2007 2008 2009 2010 2011 2012 2013 est

$0$10,000$20,000$30,000$40,000$50,000$60,000

How many with more than $100,000? … 200,000How many with less than $10,000? … 360,000

Unemployment Rate

2000 - Jan 2001 - Oct 2003 - Jul 2005 - Apr2007 - Jan 2008 - Oct 2010 - Jul 2012 - Apr0

2

4

6

8

10

12

Part-time Workers not by Choice …Those who may try out real estate


2000

4000

6000

8000

10000

Part-time for Economic Reasons

Annual Membership(NRDS count at year-end)

Economic and Housing Market Trends and Outlook

Real Estate

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