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Cardinal Bank and George Mason University17th Annual Economic Conference
January 13, 2009
Dr. Alan Merten, President, GMU
Steven Pearlstein, The Washington Post
John McClain, GMU
Dr. Stephen Fuller, GMU
Alex Orfinger, Washington Business Journal
The Washington Regions
Housing Market and Outlook
John McClain, AICPSenior Fellow and Deputy Director,
January 13, 2009
en er or eg ona na ys s, c oo o u c o cyGeorge Mason University
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Where is the Housing Market?
Inventory/Supply
Prices
Foreclosures
What is the Outlook?
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Inventory /Supply
Sales and Total Active ListingsWashington MSA, December Each Year
501000s
15
20
25
30
35
40
45
Listings
0
5
10
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Units Sold Percent ChangeBy Subregion
All Housing Types%
-
0
20
40
60
80
NVA
MSA
DC
SMD
2007 2008
-60
-40
-
Jan
Feb
Mar
Apr
May
JunJul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
JunJul
Aug
Sep
Oct
Nov
Dec
Source: MRIS, GMU Center for Regional Analysis
Total Active Listings Per SaleDecember Each Year
18
68
10121416
LDN
PW
FFX
ARL
DCMONT
02
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Total Existing Units SoldWashington Metro Area
120,000
40,000
60,000
80,000
100,000Avg. =86,800
57
0
20,000
Source: MRIS, GMU Center for Regional Analysis
New Housing Units SoldWashington Metro Area
10 000
15,000
20,000
25,000
,
Avg. =18,500
0
5,000
Source: Hanley-Wood, GMU Center for Regional Analysis * Annualized
6.4
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Building Permits
Washington MSA
20,000
30,000
40,000
,
Avg. =33,000
0
10,000
Source: US Census, GMU Center for Regional Analysis * Annualized
Housing Prices
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800
900
Housing Price Index TrendsU.S. and Washington Metro Area
Both Series Indexed to 1976 = 100
300
400
500
600
700
US
Washington
100
200
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Source: Federal Housing Finance Agency (OFHEO) and GMU Center for Regional Analysis
ConformingLoans Only
25
30
Housing Price Index Annual ChangeU.S. and Washington Metro Area%
-5
0
5
10
15
20
US
Washington
-15
-10
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Source: Federal Housing Finance Agency (OFHEO) and GMU Center for Regional Analysis
ConformingLoans Only
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Metro Comparisons
Percent Change in House Prices
2000 2007 (October)
128
130
L A
Miami%
52
64
79
86
90
90
106
Chicago
SF-Oakland
Seattle
N Y
San Diego
Phoenix
Single-FamilySame Unit Sales
2
18
27
47
48
0 50 100 150
Detroit
Dallas
Atlanta
Minneapo
Boston
Source: Case-Schiller, GMU Center for Regional Analysis
Metro Comparisons
Percent Change in House Prices2007 2008 (October)
-6
-3
Boston
Dallas
%
-20
-19
-16
-11
-11
-10
-8
Detroit
Minneapolis
Atlanta
Chicago
Seattle
N Y
WASHINGTON Single-FamilySame Unit Sales
-33
-31
-29
-28-27
-40 -30 -20 -10 0 10 20
Phoenix
SF-Oakland
Miami
L A
San Diego
Source: Case-Schiller, GMU Center for Regional Analysis
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Housing Price IndexWashington MSA
3rd Quarter Each Year300
1995Q1=100
100
150
200
250
ConformingMortgages Only
0
50
Source: Office of Federal Housing Enterprise Oversight, GMU Center for Regional Analysis
Housing Price IndexAnnual % Change
Washington MSA3rd Quarter Each Year
1995 Q1 = 100%
05
10152025
32-Yr = 6.4%
Conforming Mortgages Only
-15-10-5
1977
1980
1985
1990
1995
2000
2005
2008
Source: Office of Federal Housing Enterprise Oversight, GMU Center for Regional Analysis
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Average Sales Price
All Housing TypesWashington Metro458 900467,900468,700
500,000
$
197,500210,100228,400
260,800
295,900
375,700394,700
200,000
300,000
400,000
0
100,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: MRIS, GMU Center for Regional Analysis
Average Sales PriceSingle-Family Detached
Washington Metro
567,000 580,500600,000
$
449,200
,
466,500
200 000
300,000
400,000
500,000
- .
0
100,000
,
2004 2005 2006 2007 2008
Source: MRIS, GMU Center for Regional Analysis
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Average Sales PriceSingle-Family Attached / Townhouse
Washington Metro600,000
$
323,200
396,800 407,900 409,300
320,900
300,000
400,000
500,000
-21.6%
0
100,000
,
2004 2005 2006 2007 2008
Source: MRIS, GMU Center for Regional Analysis
Average Sales PriceCondominiums
Washington Metro
600,000
$
263,200
324,200 325,200 338,000 310,800
200 000
300,000
400,000
500,000
-8.0 %
0
100,000
,
2004 2005 2006 2007 2008
Source: MRIS, GMU Center for Regional Analysis
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% of Sales at Price < $400,000NVAR (Arl., Alex., Fairfax)
100
%
64
48
33 3740
61
40
50
60
70
80
90
010
20
2003 2004 2005 2006 2007 2008
Source: MRIS, GMU Center for Regional Analysis
Area 2007 Price 2008 Price Change % Change
Dist. Of Columbia $537,400 $543,500 + $6,100 + 1.1 %
Arlington $559,000 $539,300 - $19,700 - 3.5 %
Annual Price Changes by Jurisdiction
Alexandria $502,900 $471,200 - $31,700 - 6.3 %
Montgomery $550,200 $503,900 - $46,300 - 8.4 %
Prince Georges $331,100 $290,200 - $40,900 - 12.4 %
Fairfax $542,000 $445,900 - $96,100 - 17.7 %
Loudoun $516,800 $389,000 - $127,800 - 24.7 %
Prince William $395,000 $257,900 - $137,100 - 34.7 %
MD SUBURBS $435,800 $400,400 - $35,400 - 8.1 %
VA SUBURBS $488,300 $373,200 - $115,100 - 23.6 %
METRO AREA $468,700 $394,700 - $74,000 - 15.8 %
Source: MRIS, GMU Center for Regional Analysis
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Miami
Phoenix
Metro Comparisons
Mortgage Foreclosure RatesQ3 - 2008
Foreclosures /10,000 Owner-Occupied Units
Dallas
Houston
U.S.
Chicago
Washington
Detroit
Atlanta
SF-Oakland
Los Angeles
San Diego
0 50 100 150 200 250 300 350 400
Boston
Minneapolis
N Y
Seattle
Philly
Source: RealtyTrac, GMU Center for Regional Analysis
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Foreclosure Rate by QuarterWashington Metro Area
160
Foreclosures/10,000 owner-occupied units
60
80
100
120
140
0
20
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2006 2007 2008
Source: RealtyTrac and GMU Center for Regional Analysis
Mortgage Foreclosure Rates
by County Jan 08 & Jan 09
Arlington
Montgomery
Foreclosures /10,000 units
PrinceGeorge's
METRO AREA
Alexandria
D.C.
Frederick
0 100 200 300 400 500 600 700 800
Pr William
Loudoun
Stafford
Fairfax
Source: RealtyTrac, GMU Center for Regional Analysis
Jan 2008 Jan 2009
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Alt-A Loan Numbers
Feb 2008 Richmond FedReserve Data
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Outlook
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SUPPLY / INVENTORY
Key Indicators to Watch
,permits low
PRICES
See continued stabilization in inner areas of the region,easing of declines in outer areas and continuedincreases in sales in those areas
FORECLOSURES
See an easing of foreclosure rates, price declines to stopand level off, head up in some areas
SUPPLY / INVENTORY
THE OUTLOOK
,some time to work through
PRICES
Market norms will return depending on geographicareaclose in areas now/soonBeltway areas mid-late2009outer jurisdictions into 2010
FORECLOSURES Subprime part of the problem ending soonAlt A and
Option Arm is looming and needs to beaddressedthere is time.
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