nareb convention 08072011
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Specially Prepared for
TheNational Association of Real Estate
Brokers64th Annual Convention
Presented by:LaVaughn M. Henry, Ph.D.Vice President & Sr. Regional OfficerAugust 7, 2011
From Recession to Recovery:The Status and Outlook for
Economic Growth in the African-American Community
2
Economic
Growth
Employment
Housing Income
&
Wealth
Creation
3
Homeownership Rates have decreased for all demographics groups since their peak…
4
Source: Census Bureau
African-American Hispanic White0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
42.1 40.3
69.8
49.7 50.1
76.2
44.2 46.6
73.7
1994Q1 Peak 2011Q2
…but African-American Homeownership Rates fell sharply during the economic boom period..
1994
Q1
1994
Q4
1995
Q3
1996
Q2
1997
Q1
1997
Q4
1998
Q3
1999
Q2
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
Q240.0
42.0
44.0
46.0
48.0
50.0
52.0
5
Source: Census Bureau
…much before House Price Appreciation began to fall…
1998
Q1
1998
Q3
1999
Q1
1999
Q3
2000
Q1
2000
Q3
2001
Q1
2001
Q3
2002
Q1
2002
Q3
2003
Q1
2003
Q3
2004
Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
42.00
43.00
44.00
45.00
46.00
47.00
48.00
49.00
50.00
51.00
S&P Case Shiller National Price Index AA Homeownership Rate
6
Source: S&P Case Shiller, Mortgage Bankers Association
Correlation Coefficient: 0.34
…and much before Subprime Foreclosure Rates began to rise…
1998
Q1
1998
Q3
1999
Q1
1999
Q3
2000
Q1
2000
Q3
2001
Q1
2001
Q3
2002
Q1
2002
Q3
2003
Q1
2003
Q3
2004
Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q30.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
42.00
43.00
44.00
45.00
46.00
47.00
48.00
49.00
50.00
51.00
Foreclosure Rate - Subprime Loans AA Homeownership Rate
7
Source: Mortgage Bankers Association
Correlation Coefficient: -0.28
…and before Unemployment Rates for African-Americans began to rise.
1998
Q1
1998
Q3
1999
Q1
1999
Q3
2000
Q1
2000
Q3
2001
Q1
2001
Q3
2002
Q1
2002
Q3
2003
Q1
2003
Q3
2004
Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q30.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
42.00
43.00
44.00
45.00
46.00
47.00
48.00
49.00
50.00
51.00
AA Unemployment Rate AA Homeownership Rate
8
Source: S&P Case Shiller, Mortgage Bankers Association
Correlation Coefficient: -0.31
9
Unemployment Rates of African-Americans remain twice as high as that of white Americans…
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
110.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
African-American Hispanic White, non-Hispanic
Rate
10
Source: : Bureau of Labor Statistics
…with Employment Growth of African-Americans suffering greatly during the Great Recession.
11
Source: : Bureau of Labor Statistics, Current Population Survey
Jun-
03 to
Jun-
05
Jun-
05 to
Jun-
07
Jun-
07 to
Jun-
09
Jun-
09 to
Jun-
11-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
4.6%3.7%
-5.7%
-1.2%
WhiteBlackHispanic
A major cause of the decline has been the loss of jobs in the manufacturing and construction sectors…
Dec-03 to Dec-05
Dec-05 to Dec-07
Dec-07 to Jun-09
Jun-09 to Jun-11
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Total NonfarmGovernmentConstructionManufacturing
12
Source: : Bureau of Labor Statistics, Current Population Survey
Pre-Bubble RecoveryRecessionHousing Bubble
13
Median Household Income fell significantly for all groups during the Great Recession…
14
Source: : Census Bureau
Jan-
2000
Jan-
2001
Jan-
2002
Jan-
2003
Jan-
2004
Jan-
2005
Jan-
2006
Jan-
2007
Jan-
2008
Jan-
2009
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
African-AmericanHispanicWhite
12
-Mo
nth
%’a
ge
Ch
an
ge
…however, Median Net Worth declined was largest for persons of color…
Whites Hispanics African-Americans Asians $-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$134,992
$18,359 $12,124
$168,103
$113,149
$6,325 $5,677
$78,066
2005 2009
15
Source: : PEW Research Center
…with the collapse of the housing market being the primary cause of the decline.
Total Excluding Home Equity
2005 2009 Change 2005 2009 Change
All $96,894 $70,000 -$26,894 $17,088 $13,566 -$3,522
Whites $134,992 $113,149 -$21,843 $32,961 $29,169 -$3,792
Hispanics $18,359 $6,325 -$12,034 $3,285 $2,806 -$479
African-Americans
$12,124 $5,677 -$6,447 $1,676 $1,050 -$626
Asians $168,103 $78,066 -$90,037 $27,137 $20,300 -$6,837
16
Median Net Worth of Households with and Without Home Equity, 2005 and 2009
Source: : PEW Research Center
African-Americans and Hispanics are much more dependent on the housing market for wealth creation.
17
Whites Hispanics African-Americans Asians
2005 2009 2005 2009 2005 2009 2005 2009
Own Home
44% 38% 65% 55% 59% 56% 50% 35%
Stocks and
Mutual Funds
8% 16% 3% 3% 2% 5% 6% 32%
IRA and KEOUGH accounts
9% 10% 3% 6% 5% 6% 6% 6%
401(k) and thrift accounts
11% 12% 8% 11% 12% 14% 10% 10%
Unsecured
Liabilities-3% -5% -5% -13% -7% -12% -3% -4%
Source: : PEW Research Center
However, despite the downturn, wealth concentration grew within all groups.
Whites Hispanics African-Americans Asians0%
10%
20%
30%
40%
50%
60%
70%
80%
46%
56%59%
44%
51%
72%67%
61%
2005 2009
Pe
rce
nt
of
Gro
up
We
alt
h S
ha
re
18
Source: : PEW Research Center
Share of Wealth Held by the Wealthiest 10% of Households, 2005 and 2009
So where do we go from here?
· Wealth creation in the AA community is critically dependent upon improvement in the labor market
· National unemployment rates are projected to remain high through at least the end of 2012, thwarting significant improvement in the housing market
· Significant recovery in the AA housing market will require non-traditional approaches to address issues of economic blight, foreclosure, and credit
19
20
Thank You.
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