815 western avenue, suite 400 seattle, wa 98104 206.442.9200 economic & real estate trends and...

815 Western Avenue, Suite 400

Seattle, WA 98104

206.442.9200

Economic & Real EstateTrends and Outlook

Presented toWindermere Real Estate

August 5th, 2010Presented by:

Matthew Gardner

Managing Principal

Which is it??

U.S Economic Outlook

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2009

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2010

-Q

3

% annualized growth rate

GDP Growth Forecast

Source: Gardner Economics LLC & BEA

Growth has Been driven by Stimuli, But Then What?

Economic & Real Estate ForecastAug. 05, 2010

-8,000

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Initial Jobless Claims are Leveling Out.

Concerns over Weak Growth Going Forward.

U.S. Job Losses Slow…

12-month payroll job changes; in thousandsSource: BLS – Seasonally Adjusted Figures – Data through June

2010


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0

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40

2000

2001

2002

2003

2004

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2006

2007

2008

2009

2010

Fluctuations in the Labor Market Remain Localized!!!

Detroit’s Employment Situation

Source: BEA – Seasonally Adjusted – Through June 2010


12-month payroll job changes; in thousands

Unemployment Will Peak at Around 10.0%

Need 200,000 jobs per Month that Would Signify Growth.

Last Months’ Figures Weren’t that Bad!

Monthly U.S. Payroll Change

Source: BLS – Seasonally Adjusted Figures


4%

5%

6%

7%

8%

9%

10%

11%

-800,000-700,000-600,000-500,000-400,000-300,000-200,000-100,000

0100,000200,000300,000400,000500,000

Une

mplo

ymen

t Rat

e

Net

Jobs Add

ed

Net Jobs …

Growth will Be Painfully Slow

Upswing In the Job Market Apparent?

Economic & Real Estate ForecastAug. 05, 2010 Source: BLS & Gardner Economics –Data Current through June 2010

-6.5%

-6.0%

-5.5%

-5.0%

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-4.0%

-3.5%

-3.0%

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-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839404142434445464748

Perc

ent C

umul

ativ

e Jo

b L

oss Re

lative

to

Peak

Em

plo

ymen

t M

onth

Number of Months After Peak Employment

1974 1981 1990

2001 2007

This Shows Our Credit Card Debt!

Consumers & Lenders are Both Belt Tightening.

…U.S. Revolving Debt

Source: Federal Reserve – Seasonally Adjusted

Data Through May 2010


$0

$200

$400

$600

$800

$1,000

$1,200

J-68

J-71

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In B

illio

ns

Lenders are Contracting Credit, and Consumers are Paying it Down.

Borrowing Back to Levels Not Seen Since Dec. ’05.

…U.S. Revolving Debt

Source: Federal Reserve – Seasonally Adjusted through May 2010


$800

$820

$840

$860

$880

$900

$920

$940

$960

$980

$1,000

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A-1

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In B

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ns

We Remain Concerned About Our Longer Term Prospects.

Labor Market Conditions Weighing on Confidence Levels.

U.S. Consumer Confidence & Sentiment

20

40

60

80

100

120

140

160

2000

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Confidence Sentiment

Source: University of Michigan & Conference Board


U.S. Economic Forecast• TARP and TALF & PPIP, Oh My!• Bank Recapitalization, Yes! But

Lending..? No!

• P.I.I.G.S.!!!!!

• Inflation Concerns?• The Recovery – V, U, W or ????• Overriding Question is whether the

Consumer Will Return?

Annual Existing-Home Sales Back Close to 2001

levels.In thousands of units

Source: NAR – Seasonally Adjusted Annual Rate

Momentum Has Slowed After Expiration of the Tax Extension…


3,000

4,000

5,000

6,000

7,000

8,000

National Total Existing-Home Sales

Source: NAR – Seasonally Adjusted Annual Rate

Buyers Certainly Took Advantage of Tax Credit!!


4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2006

-Ja

n20

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2010

-Apr

Sale Price of Existing Homes

Source: NAR – Median Price; Not Seasonally Adjusted

Year over Year, Prices are Down by 1 Percent.

Stability in Prices May be Offset by Further Foreclosure Activity. Economic & Real Estate ForecastAug. 05, 2010

$100,000

$120,000

$140,000

$160,000

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2005

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2003

2005

2007

2009

U.S Home Ownership Rates(As a Percentage of Households)

Source: US Census & Gardner Economics – Data Through Q2 2010

Returning to Historical Norms?


4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

Dec

-99

Jun-

00D

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n-01

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10

The Fed Started Buying Fannie &

Freddie Debt.

Source: Freddie Mac –Month End Figures.

Financing Remains Very Stringent but Rates remain at Historic Lows.

Jumbo Loans are Hard to Obtain Without a Substantial Down Payment.Economic & Real Estate ForecastAug. 05, 2010

30-Year Fixed Mortgage Rates

10-Year Treasury Yield Almost Hits 4%

0.00%

1.00%

2.00%

3.00%

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5.00%

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8.00%

9.00%

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11.00%

1990

1991

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1995

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1997

1998

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2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

prj

2011

prj

2012

prj

2013

prj

2014

prj

Source: Gardner Economics & Freddie Mac

Mortgage Rates Will Increase as Economic Growth Stimulates Inflationary Pressures.


30-Year Fixed Mortgage Rates

5-Year Forecast

0

500

1,000

1,500

2,000

Starts Sales

U.S. Single-Family Housing Starts & New

Home SalesIn

th

ou

san

ds o

f u

nit

s

Source: U.S. Census – Seasonally Adjusted Annual Rate

Sales are Down by 17 Percent Year over Year.

Single Family Housing Starts declined by 5 Percent from June 2009.Economic & Real Estate ForecastAug. 05, 2010

Average Annual Household Growth

In Thousands

These People Will Have to Live Somewhere!

Economic & Real Estate ForecastAug. 05, 2010 Source: Gardner Economics LLC – U.S. Household Growth

Some Signs of Hope• Mortgage Applications Moderately

Stronger.• Rates Remain at 50-Year Lows.• We Could See an Overcorrection

in Some States.• Traction in Pricing Appears to be

in Place, Specifically in Hardest Hit Markets.

• Extension to the Home Buyer Tax Credit Was Necessary.

Story of a Relationship.

• Published Quarterly in Washington Since the Spring of 2007.

• Published Quarterly – Approximately 5 Weeks after the End of the Quarter.

The Gardner Report

Non-Ag Employment Situation

Shows Employment Growth from the Prior Year as a Percentage and in Absolute Terms.


NON AG EMPLOYMENT SITUATION

Growth Growth

County Jun. '09-Jun. '10 Rate

Benton (Corvallis MSA) -1,130 -3.0%Clackamas -4,300 -3.1%Clark -1,800 -1.4%Clatsop -180 -1.0%Columbia -130 -1.3%Coos -100 -0.5%Cowlitz -400 -1.1%Deschutes (Bend MSA) -1,880 -3.0%Hood River -170 -1.7%Jackson (Medford MSA) -970 -1.3%Josephine -610 -2.6%Klamath -520 -2.3%Klickitat -50 -0.9%Lane (Eugene/Springfield MSA) -300 -0.2%Lincoln -580 -3.2%Linn -1,210 -3.1%Marion -2,224 -1.5%Multnomah -7,100 -1.7%Polk 241 0.7%Skamania -90 -4.0%Tillamook 80 0.9%Wasco -20 -0.2%Washington -3,900 -1.7%Yamhill -260 -0.9%(Not Seasonally Adjusted)



-4.0%

-3.2%

-3.1%

-3.1%

-3.0%

-3.0%

-2.6%

-2.3%

-1.7%

-1.7%

-1.7%

-1.5%

-1.4%

-1.3%

-1.3%

-1.1%

-1.0%

-0.9%

-0.9%

-0.5%

-0.2%

-0.2%

0.7%

0.9%

-6% -4% -2% 0% 2%

Skamania

Lincoln

Clackamas

Linn

Deschutes (Bend MSA)

Benton (Corvallis MSA)

Josephine

Klamath

Hood River

Washington

Multnomah

Marion

Clark

Columbia

Jackson (Medford MSA)

Cowlitz

Clatsop

Yamhill

Klickitat

Coos

Lane (Eugene/Springfield MSA)

Wasco

Polk

Tillamook

% CHANGE IN ANNUAL EMPLOYMENT


Current Total Non-Agricultural Employment together with the Current Unemployment Rate.


UNEMPLOYMENT RATE COMPARISON

Employment Unemployment

Metropolitan Area Rate

Benton (Corvallis MSA) 37,110 6.9%Clackamas 134,800 10.0%Clark 128,100 12.4%Clatsop 17,170 8.3%Columbia 9,870 11.8%Coos 21,370 12.2%Cowlitz 35,700 11.9%Deschutes (Bend MSA) 61,280 13.4%Hood River 9,890 8.6%Jackson (Medford MSA) 75,400 12.2%Josephine 23,060 13.4%Klamath 22,250 12.1%Klickitat 5,760 9.2%Lane (Eugene/Springfield MSA) 143,500 10.4%Lincoln 17,680 10.1%Linn 38,000 14.5%Marion 142,432 10.7%Multnomah 422,200 9.9%Polk 36,784 8.5%Skamania 2,140 10.4%Tillamook 8,810 8.7%

Wasco 9,710 8.0%Washington 229,400 8.8%Yamhill 29,220 10.6%


Historical Comparison of Unemployment Rates.


4% 6% 8% 10% 12% 14% 16%


Wasco

Clatsop

Polk

Hood River

Tillamook

Washington

Klickitat

Multnomah

Clackamas

Lincoln


Skamania

Yamhill

Marion

Columbia

Cowlitz

Klamath

Coos


Clark


Josephine

Linn

UNEMPLOYMENT RATE COMPARISON

Jun. '09

Jun. '10

The State Housing Market

Transactional Velocities (Closed Sales) versus the Prior Year. The number Represents Year-to-Date Sales.


CLOSED SALES ACTIVITY YTD YTD

EXISTING SF & CONDO Jun. Jun.

County 2010 2009

Benton (Corvallis MSA) 324 263Clackamas 1,640 1,148Clark 1,998 1,531Clatsop 156 82Columbia 177 131Coos 193 115Cowlitz 176 124Deschutes (Bend MSA) 1,164 790Hood River 60 41Jackson (Medford MSA) 1,199 987Josephine 406 343Klamath 275 192Klickitat 60 22Lane (Eugene/Springfield MSA) 1,404 1,006Lincoln 289 206Linn 471 401Marion 263 226Multnomah 3,679 2,675Polk 137 144Skamania 45 20Tillamook 87 57Wasco 70 60Washington 2,270 1,577

Yamhill 330 239



Where are We Versus The Same Period a Year Ago.


-20% 0% 20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

Polk

Marion

Wasco

Linn

Josephine



Clark

Columbia

Multnomah

Yamhill


Lincoln

Cowlitz

Clackamas

Klamath

Washington

Hood River


Tillamook

Coos

Clatsop

Skamania

Klickitat

% CHANGE IN YTDCLOSED SALES


Growth Rate in Sales Prices (Single Family & Condominium) Representing a Percentage Change as well As a Dollar Change.Economic & Real Estate ForecastAug. 05, 2010

SALES PRICE - SF & CONDO Growth Net

Rate Growth

Metropolitan Area

Jun. '09-Jun. '10 ($000's)

Benton (Corvallis MSA) -17.1% -50.4Clackamas -2.1% -7.0Clark 5.5% 13.0Clatsop -20.6% -76.0Columbia -11.8% -25.0Coos 2.7% 5.0Cowlitz -8.5% -16.0Deschutes (Bend MSA) -1.3% -3.0Hood River -19.6% -67.0Jackson (Medford MSA) -1.1% -2.4Josephine -19.2% -45.6Klamath -3.6% -5.7Klickitat -9.4% -21.0Lane (Eugene/Springfield MSA) -0.4% -1.0Lincoln -10.2% -32.9Linn -12.5% -20.2Marion -16.4% -34.8Multnomah -1.7% -5.0Polk 15.8% 26.9Skamania -30.0% -89.0Tillamook -0.5% -1.1Wasco -24.4% -51.0Washington 4.9% 14.0Yamhill 8.1% 18.0


Sales Price Data Represented Graphically


-40% -30% -20% -10% 0% 10% 20%

Skamania

Wasco

Clatsop

Hood River

Josephine


Marion

Linn

Columbia

Lincoln

Klickitat

Cowlitz

Klamath

Clackamas

Multnomah



Tillamook


Coos

Washington

Clark

Yamhill

Polk

HOME PRICE GROWTH RATE


Detailed Price Data over Time. Looking Back Over a 5-Year Time Horizon


AverageMetropolitan Area Price Quarter 1-Yr.* 2-Yr.* 5-Yr.*

Benton (Corvallis MSA) $244,137 6.7% -17.1% -13.3% -2.7%Clackamas $326,000 1.6% -2.1% -21.8% -7.1%Clark $249,000 3.8% 5.5% -7.1% -5.0%Clatsop $293,000 -28.5% -20.6% -19.3% -12.5%Columbia $187,000 -1.6% -11.8% -23.4% -8.8%Coos $187,000 21.4% 2.7% -24.3% -11.0%Cowlitz $173,000 5.5% -8.5% -9.9% -4.9%Deschutes (Bend MSA) $231,000 5.0% -1.3% -34.4% -30.0%Hood River $274,000 -8.1% -19.6% -29.6% -9.6%Jackson (Medford MSA) $217,541 1.0% -1.1% -29.3% -35.2%Josephine $192,156 -7.0% -19.2% -27.1% -37.2%Klamath $150,411 -2.6% -3.6% -36.6% -1.7%Klickitat $203,000 -30.7% -9.4% 7.4% 0.5%Lane (Eugene/Springfield MSA) $229,000 4.1% -0.4% -12.9% -5.0%Lincoln $289,624 12.9% -10.2% -24.3% 7.4%Linn $141,333 -6.8% -12.5% -21.9% -7.7%Marion $178,103 -12.6% -16.4% -22.2% 0.8%Multnomah $285,000 2.9% -1.7% -15.4% 5.2%Polk $197,273 8.4% 15.8% -11.0% 21.7%Skamania $208,000 -1.0% -30.0% -11.1%Tillamook $220,641 -2.9% -0.5% 28.6% -0.6%Wasco $158,000 5.3% -24.4% -23.7% -9.7%Washington $300,000 9.1% 4.9% -9.9% 5.6%Yamhill $240,000 12.1% 8.1% -13.4% 3.4%* Year over year from most recent month surveyed

Home Price Escalation


A Visual Representation of Price Change Data


-50% -40% -30% -20% -10% 0% 10% 20% 30% 40%

Josephine



Clatsop

Skamania

Coos

Wasco

Hood River

Columbia

Linn

Clackamas


Clark

Cowlitz


Klamath

Tillamook

Klickitat

Marion

Yamhill

Multnomah

Washington

Lincoln

Polk

MEDIAN HOME PRICE ESCALATION RATE

One-Year

Two-Year

Five-Year

Using the Report

• Windermere Has A Reputation for Accurate Reporting and Representation.

• This Report Can be Used as a Tool for Both Listing as Well as Selling Agents.

• It’s a Macro Report. Specific Sub-Markets will be Different.

Utilizing Gardner Economics

Office Meetings/Kick-Off Meetings;Client Appreciation Meetings;

Telephone Discussions.

Macroeconomic Analysis. Detailed Discussion on the Local

Economic & Real Estate Market.

www.MasterBuildersInfo.com

Follow My Thoughts!

http://blog.windermere.com/

© Gardner Economics LLC 2000-2010The Preceding Presentation may not be Copied

or Distributed without Prior WrittenPermission of

Gardner Economics LLC

Questions?

[email protected]

815 western avenue, suite 400 seattle, wa 98104 206.442.9200 economic & real estate trends and...

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economic real estate

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windermere real estate

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revolving debt source

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