co. ted c. jones chief economist stewart title guaranty · recession recovery the recovery in every...
TRANSCRIPT
It’s All About the Price: Washington-W
all
Street -Real Estate and the Economy
Ted C. Jones Chief Economist Stewart Title Guaranty Co.
Recession Recovery
The recovery in every
recession since 1949
has been led by a
recovery in the
housing m
arket
US Civilian Employment
131.0
133.0
135.0
137.0
'07
'08
'09
Millions of Jobs
247 Thousand Jobs Lost in July 2009
6.59 M
illion Jobs Lost Since January 2008
4.864 M
illion Job Losses Since Nov 2008 Elections
US Civilian Employment Job Loss
010
020
030
040
050
060
070
0 '08 J
anFe
b MarAp
r MayJu
nJu
l Aug SepOc
t Nov Dec '09
Jan
Feb Mar
Apr May Jun
r Jul p
Thousands of Jobs Lost Per Month
US Car Sales
05
10
15
20
25
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
Millions –Seasonally-Adjusted Annualized Rate
Cash For Clunkers
•$3 Billion
•$3,500 to $4,500 Per Car ($4,000)
•750,000 Sales
•Less Than ½
US Made Models
1.Ford Focus 6. Ford Escape
2.Toyota Corolla 7. Hyundai Elantra
3.Honda Civic 8. Dodge Caliber
4.Toyota Prius 9. Honda Fit
5.Toyota Camry 10. Chevy Cobalt
Obama Stimulus Plan
$787 Billion Cost
Save or Create 3.5 Million Jobs
Spending
787,000,000,000
$
Jobs
3,500,000
Cost Per Job
224,857
$
Ted’s No-Tax Solution Stimulus
Allow every homeowner that is current
on their loan to refinance at 5
percent
Include all jumbos --No cash out
Make Fannie and Freddie buy all
and guaranty repayment of principle
after three years
Federal Budget Surplus (Deficit)
-$500.0
-$400.0
-$300.0
-$200.0
-$100.0
$0.0
$100.0
$200.0
90
91
92
93
94
95
96
97
98
99
'00
'01
'02
'03
'04
'05
'06
'07
'08
$ Billions
Federal Budget Surplus (Deficit)
-$2,000.0
-$1,800.0
-$1,600.0
-$1,400.0
-$1,200.0
-$1,000.0
-$800.0
-$600.0
-$400.0
-$200.0
$0.0
$200.0
9091929394
9596979899
'00'01'02'03'04
'05'06'07'08f'09f
$ Billions
Deficit Growth Per Household
112.992 Million Households
$11.53 Trillion Current US
Federal Debt
$102,000 US Federal Debt
Per Household
Deficit Growth Per Household
112.992 Million Households
$2 Trillion Deficit 2009
$17,700 Increase in US Debt
Per Household in 2009 Alone
17.4 Percent Increase in 1 Year
Ted’s Solution Stimulus
Force Congress to No Deficit
And then….
Give EVERY Household $10,000
Deficit W
ould Shrink 43.5 Percent
$0
$20
$40
$60
$80
$100
$120
$140
72
75
78
81
84
87
90
93
96
99
'02
'05
'08
4710
13
16
19
Oil Prices
30-Year
Residential
Rates %
Oil Prices & 30-Year Conventional Loan Rates
April 2009 Dollars
$20
$40
$60
$80
$100
$120
$140
'02
'03
'04
'05
'06
'07
'08
'09
$0.85
$1.05
$1.25
$1.45
$1.65
Oil Prices
Dollars
Per
Euro
Oil Prices & Exchange Rates $US Per Euro
Oil inApril 2009 Dollars
Oil Price
Housing
30-Year
Rate
6.0
6.2
‘09
Ted’s Forecast12-31-09
Big 2010
Upside…
LETTER TO THE BANK
Dear Banker,
In view of current developments in the
banking m
arket,
if one of my checks is
returned m
arked ‘insufficient funds',
does that refer to m
e or to you?
Sincerely Yours,
Loans
EXOTIC
$3.5 Trillion in Total
Commercial Loans
$400 Billion to
Refinance
Per Year for Next
10 Years
Commercial Real Estate
“….only $8 billion in significant apartment, industrial,
office and retail had traded. The quarter-over-quarter
pace of decline in volume actually accelerated to 59
percent during the first three m
onths of 2009 from the
already depressed level of transactions at year-end 2008.”
Deutsche Bank analysts said that tougher
underw
riting standards and an eventual 50% drop in
property values would prevent a "vast swath" of
commercial real estate borrowers from refinancing
their loans as they come due over the next four years
.
1. Las Vegas
2. Portland, Ore.
3. Orlando
4. San Diego, Calif.
5. Phoenix
6. Chapel Hill, N.C.
7. Atlanta
8. Madison, Wisc.
9. Youngstown, Ohio
10. Austin, Texas
Top 10 Do-Business Cities
“California remains
one of the top places
to create
asuccessful small
business; all you
need is to have
isasuccessful large
business to begin
with.”
Technology
Analyst
Alaska Jobs
1.58%
1.28%
0.29%
0.47%
-0.32%
-1.00%
1.00%
10 Years
5 Years
3 Years
2 Years
June Comparison Compound Annual Growth Rate
1 Year
1 Year
-5.5%
-3.5%
-1.5%
0.5%
2.5%
4.5%
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
US
Alaska
Percent Change from Same M
onth Prior Year
Alaska Job Growth
1,100 Net Lost Jobs in the Past 12 M
onths
Not Seasonally Adjusted
Anchorage Jobs
1.77%
1.25%
0.52%
0.52%
-0.28%
-1.00%
1.00%
10 Years
5 Years
3 Years
2 Years
June Comparison Compound Annual Growth Rate
1 Year
1 Year
-5.5%
-3.5%
-1.5%
0.5%
2.5%
4.5%
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
US
Anchorage
Percent Change from Same M
onth Prior Year
Anchorage Job Growth
500 Net Lost Jobs in the Past 12 M
onths
Not Seasonally Adjusted
Anchorage
Civilian Unemployment Rate
0.0
2.0
4.0
6.0
8.0
'07
'08
'09
Percent Unemployment Seasonally Adjusted
7.9 Percent
US Existing Housing Sales
75%
100%
125%
'02
'03
'04
'05
'06
'07
'08
'09
2002 Q1 = 100 Percent
National Association of REALTORS®
Washington Housing Sales
50%
75%
100%
125%
150%
'02
'03
'04
'05
'06
'07
'08
'09
2002 Q1 = 100 Percent
National Association of REALTORS®
Florida Housing Sales
50%
75%
100%
125%
150%
'02
'03
'04
'05
'06
'07
'08
'09
2002 Q1 = 100 Percent
National Association of REALTORS®
California Housing Sales
50%
75%
100%
125%
'02
'03
'04
'05
'06
'07
'08
'09
2002 Q1 = 100 Percent
National Association of REALTORS®
Alaska Housing Sales
75%
100%
125%
150%
175%
200%
225%
'02
'03
'04
'05
'06
'07
'08
'09
2002 Q1 = 100 Percent
National Association of REALTORS®
Anchorage Residential Closings
0
100
200
300
400 '0
0
'01
'02
'03
'04
'05
'06
'07
'08
'09
Number Per Month
Anchorage Residential Closings
180
200
220
240
260
280
300 '0
0
'01
'02
'03
'04
'05
'06
'07
'08
'09
Average Number Per Month For Prior 12 Months
Anchorage Months Inventory
01234567 '95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
(Active Listings/Number Sold in Prior 12 Months) x 12
Anchorage Home Prices
$0
$100,000
$200,000
$300,000 2008
July
2009
July
Average Price
Anchorage
Single
Multi
Year
Family
Family
Total
98
1,152
549
1,701
99
783
482
1,265
00
821
369
1,190
01
1,055
910
1,965
02
923
1065
1,988
03
885
1,502
2,387
04
767
1,008
1,775
05
668
998
1,666
06
550
812
1,362
07
309
526
835
08
223
177
400
09p
239
268
507
Residential Building Perm
its
Anchorage
Last 12 M
onths
New Jobs
(500)
Residential Perm
its
507
New Jobs Per Dwelling
(0.99)
Jobs Per Dwelling
Norm
al markets typically create 1.25
to 1.5 net new jobs per new
dwelling unit.
Interest Rates Vs. Price Changes
Original $100,000 Loan
Price Change
0%
-5%
-10%
-15%
-20%
Loan Amount
100,000
$
95,000
$
90,000
$
85,000
$
80,000
$
Interest Rate
Monthly Payment
4.0%
$477.42
$453.54
$429.67
$405.80
$381.93
4.5%
$506.69
$481.35
$456.02
$430.68
$405.35
5.0%
$536.82
$509.98
$483.14
$456.30
$429.46
5.5%
$567.79
$539.40
$511.01
$482.62
$454.23
6.0%
$599.55
$569.57
$539.60
$509.62
$479.64
6.5%
$632.07
$600.46
$568.86
$537.26
$505.65
7.0%
$665.30
$632.04
$598.77
$565.51
$532.24
7.5%
$699.21
$664.25
$629.29
$594.33
$559.37
8.0%
$733.76
$697.08
$660.39
$623.70
$587.01
2009-2010 Economic Concerns
•Wall Street—
Washington--Liquidity
•Tim
e Bomb Loans
•Cold W
ar II—Terrorists
•Pandemic (bird flu…..) 2 years ago forecast
•Inflation (and Cap Rates)--Recession
•Tax Cut Clock Ticking…………….
•Energy: US Imports 63 Percent of Oil
•Real Estate-Autos-Credit Cards-Banks
Ted’s Blog
http://blog.stewart.com/
2009It’s All About the Price
Washington-W
all Street
Real Estate and the Economy
Ted C. Jones PhD
Senior Vice President-Chief Economist
Stewart Title Guaranty Company
Director of Investor Relations
Stewart Inform
ation Services Corporation