real estate insights

8/9/2019 Real Estate Insights

1/14

In This Issue

Two ronts. By most measures, the economy is on the mend. Does that mean

housing is as well? In his commentary this month, NAR Chie Economist Lawrence Yun

says the answer depends on two potentially big support actors: Jobs and Condence.

Read more.

Making sense o economic data. Liestyle, amily, and the enjoyment o owning

ones own home are important considerations or consumers when deciding to purchase

a home. Obviously buyers will look at price, availability and trends. But changes in the

economy and potential changes as well play a roll in a buyers decision. Were bom-

barded daily with the latest economic data. What economic indicators are the most sig-

nicant or real estate and or real estate proessionals and their clients? Jed Smith, NARs

Managing Director o Quantitative Research, gives us an overview. Read more.

Keeping up to date with Research Update. Beginning in June, another a new

eature will make its debut in Real Estate Insights. Research Update will be a regular

column in this newsletter, and will provide inormation about developments in thereal estate industry, current NAR Research studies, as well as links to other insightul

inormation. Meredith Dunn o NAR Research Communications provides a sneak peak

at what you will nd in Research Update. Read more.

Single Women A Signifcant Market.The most recent NAR Profle o Home

Buyers and Sellers indicates that single women account or a signicant share o home

buyers. Indeed, these home purchasers represent the second largest share o adult house-

holds who purchase homes. Research Economist Jessica Lautz takes a look at this market

and how single emale buyers dier rom other home purchasers.Read more.

Pending home sales rose in February, showing a healthy gain rom January as wellas rom a year ago. NARs Pending Home Sales Index, a orward-looking indicator

based on contracts signed in February, rose 8.2 percent to 97.6 rom a downwardly

revised 90.2 in January, and was 17.3 percent above February 2009 when it was 83.2.

All regions o the country posted year-over-year gains, and all regions except the West

registered monthly increases. Read more.

April 2010

Real Intelligence

Real Advantages

Table o Contents

Real Estate Monitor 2

Economic Commentary:Two Fronts 4

U.S. Economic Forecast andOutlook Table and Charts 6

In Focus:Looking at Key Economic Data 8

Using NAR Research:Research Update 10

Market Intelligence: SingleWomen Homebuyers 11

Links to Statistical Tables 13

Resources From NAR Research 14

Visit us on the web at

www.realtor.org/reinsights

Theres always more

INSIGHT-ul ino. Wewill continue over the next

several months to upgrade

and update Real Estate IN-SIGHTS. In the meantime, remember to

click on the special For more ino arrowicons throughout this issue. By clicking on

this icon when reading INSIGHTS, you canautomatically link to another web site ormore detailed inormation.
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2/14

Real Estate Insights / April 2010 / 2010 NATIONAL ASSOCIATION OF REALTORS2

Existing-home sales eased 0.6% in February toa seasonally adjusted annual rate o 5.02 millionunits. Year over year, resales were up 7.0%. The

national median home price or an eisting home was$165,100. At the end o the month, total housing inven-

tory was at an 8.6 month supply at the current sales pace.

New home sales also declined in February by 2.2% to a seasonally adjusted annual rate o 308,000 units. New

sales were o 13.% rom a year ago. While the inventory onew homes available or sale at the end o February was down28% rom February o 2009, the months supply was a 9.2 a

3.4% increase rom January.

Housing starts declined 5.9% in February to a season-ally adjusted annual rate o 575,000 units, but starts were

up slightly by 0.2% rom a year ago. Housing permits

generally a reliable indicator o uture starts were o 1.6%, butwere up 11.3% rom February o 2009.

Housing aordability remains at high levels. NARs

Housing Aordability Inde stood at 176.0 in February,down rom Januarys reading o 177.5. Increases in several

o the components o the inde, including mortgage rates,qualiying income, and a small month-to-month increase in themedian price o eisting homes contributed to the decline.

Mortgage rates The average 30 year ed rate mortgage

decreased slightly by 2 basis points in March romFebruary to 4.97%. With still-historic low lending costs,

consumers scramble to secure low rates as many economistsepect a rate hike during the second hal o the year. The aver-age rate was at 5 percent in March o 2009.

Employment The economy created 162,000 jobs dur-

ing March the biggest job gain in three years. Addingto payrolls in March were manuacturers, temporary

help services, the health care sector, and leisure and hospitality.The ederal government also added 48,000 temporary Censuspositions. But those newly created jobs had no impact on the

unemployment rate, which was unchanged at 9.7%.

Economic growth The economy grew at an annual rate

o 5.6% in the ourth quarter o 2009. Growth in thethird quarter o last year was 2.2% and GDP registered a

-5.4% growth rate in the ourth quarter o 2008. This is the thirdestimate o GDP growth, based on more complete data, and is

o rom the previous estimate o 5.9%. Increases in consumerspending, eports, ed investment and equipment and sotware

contributed to the growth.

Monthly Indicator Recent Figures Forecast

Likely DirectionOver the NextSix Months

Feb 2010 5,020 Jan 2010 5,050Feb 2009 4,690

Feb 2010 308 Jan 2010 315

Feb 2009 354

Feb 2010 575 Jan 2010 611

Feb 2009 574

Feb 2010 176.0

Jan 2010 177.5Feb 2009 180.7

Mar 2010 4.97%

Feb 2010 4.99%Mar 2009 5.00%

Mar 2010 +162

Feb 2010 -1412-month

total -2,320

2009:IV +5.6%

2009:III +2.2%2008:IV -5.4%

Declines in theimmediate months aterta credit ends

Remaining largely atsuppressed levels until

2011

Inaccessibility oconstruction loans

holding back ull

recovery

Modest decline rom

super high levels

Recovering economy

and high budget decitorces up rates

Job creation momentum

appears intact

To epand but not

robustly as wouldnormally happen post-recession

Notes: All rates are seasonally adjusted. Existing home sales, new home sales and housing starts are shown in thousands. Employment growth is shown as month-to-month change inthousands. Sources: NAR, Bureau o the Census , Bureau o Labor Statistics and Freddie Mac. This report reects data as o April 2, 2010. Compiled by Wannasiri Chompoopet, Ken Fearsand Lawrence Yun.

REAL ESTATE MONITOR
http://www.census.gov/const/www/newresconstindex.htmlhttp://www.freddiemac.com/pmms/http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htmhttp://www.bls.gov/http://www.freddiemac.com/pmms/http://www.realtor.org/research/research/housinginxhttp://www.census.gov/const/www/newresconstindex.htmlhttp://www.census.gov/const/www/newressalesindex.htmlhttp://www.realtor.org/research/research/ehsdata


3/14


Pending home sales rose in February. NARs pending home sales inde rose 8.2% inFebruary to 97.6. Februarys inde was 17.3% ahead o the reading in February 2009.

On a year over year basis, the inde rose in all our regions o the country. The Pending

Home Sales Inde is a orward-looking indicator based on pending sales o eistinghomes. A sale is listed as pending when the contract has been signed but the transac-tion has not yet closed. Sales are usually nalized within one to two months o signing.

The inde is based on a large national sample, typically representing about 20 percento transactions or eisting-home sales. In developing the model or the inde, it wasdemonstrated that the level o monthly sales contract activity rom 2001 through 2004

paralleled the level o closed eisting-home sales in the ollowing two months. Pleasenote there is a closer relationship between annual inde changes (rom the same

month a year earlier) and year-ago changes in sales perormance than with month-to-month comparisons. An inde o 100 is equal to the average level o contract activity

during 2001, which was the rst year to be eamined, as well as the rst ove consecutive record years or eisting-home sales. The improvementin pending sales in February is another hopeul sign or housing, potential-

ly signaling a second surge o home sales in response to the home buyerta credit.

0

1000

2000

3000

4000

5000

6000

7000

Feb pJan rDecNovOctSeptAugJulJunMayAprMarFeb

0

20

40

60

80

100

120

2010

Thousands

Pending

SalesIndex

2009

EHS PHS

Source: NAR Research

Pending Home Sales(existing home sales lagged by 1-2 months)

NARS PENDING HOME SALES INDEx
http://www.realtor.org/press_room/news_releases/2010/04/phs_gainhttp://www.realtor.org/press_room/news_releases/2010/04/phs_gain


4/14


Well, we may as well get ready or it. Yes, mortgage ratescontinue at historic lows, averaging around the 5-percent

mark recently. But rates are likely to rise. By December o

this year, the average mortgage rate could be close to 6percent perhaps as high at 6.5 percent. Why? The reasonsor the increase are the macroeconomic orces o a recovering

economy and a very high budget decit. I the U.S. governmenthas trouble borrowing and has to raise interest rates to attractinvestors to purchase U.S. debt, then the rest o the private

sector will also pay higher interest rates.The good news rom that somewhat sobering scenario is that

consumer price infation will remain relatively benign and wagegrowth tepid, keeping the lid on borrowing rates and preventing

them rom rising too high. I do not oresee the mortgage rate

going above 7 percent, at least or a prolonged period, in thenext two years. Those engaged in the jumbo loan market or

commercial real estate will note that rates are already thathigh. But current high rates on jumbo and commercial real

estate loans are due to the lack o government guarantees.As the nancial market exhibits clear signs o stabilization andas banks continue to build up their capital buer, it is only a

matter o time beore lenders start lending to non-governmentbacked sectors. So the underwriting standards or jumbo and

commercial real estate mortgages could become less stringentrom improvements in the bank capital situation just as interest

rates on conventional and FHA mortgages begin to rise.So, down the road we will have to ace into the headwinds

o higher mortgage rates on conventional and FHA loans, as

well as the expiration o the home buyer tax credit (which endsin April or contract signings). Foreclosures also will remain

troubling, as they will surely be just as high this year as last year.Is housing headed or more trouble or or a ull recovery? The

answer depends on two potentially big support actors: Jobs andCondence.

Jobs

Potential home buyers (both rst-timers and repeat buyers)who hold stable jobs respond to mortgage rate changes. But a

new cohort o stable job holders needs to be created in orderto sustain housing demand. In March, we saw the rst meaningul

job additions to the economy in more than three years as a net162,000 new workers (payrolls) were added to the economy.

Two Fronts: Jobs and Confdenceby Lawrence Yun, NAR Chie Economist

Marchs job creation gure looks light in the atermath o8 million brutal layos over the past two years, and it will take

some time to make up the dierence. From April to the end o

2010, one million jobs could be added to the economy. Anothertwo million could be in the ong next year. It may take ourull years to ully recover all the job losses, but at least the

darkest part o the job tunnel is behind us. Even the high-payingbut hard-hit manuacturing sector appears to have turned thecorner with 17,000 job gains. Surprisingly, the construction

sector added jobs as well, despite very weak housing starts anda dearth o commercial construction. Inrastructure spending no

doubt is helping. Employment in rental-and-leasing also rose by1,800. Separately, and to gauge competition, NAR membership

in March was 1.063 million, little changed rom the 1.068 millionone year ago, though down rom the peak 1.4 million membersin 2007. Past patterns indicate that NAR membership rises rom

spring well into autumn, beore a seasonal dip in winter.

Confdence

A second actor that will be important in supporting thehousing market is consumers views regarding home purchases.

In the past three years, most metro markets experiencedsuccessive price declines; rational consumers asked why buy

now when I can buy later or less? Renters have been stayingput or an average 19 months in recent times beore makinga move versus the typical 14 months (this, according to a

Wall Street Journalreport). Census data suggests suppressedhousehold ormation in the past two years meaning more

people living with roommates or with parents and so not

seeking their own housing.But with home prices showing signs o stabilization, the

change in attitude towards home buying could be at hand.NARs median home price data in February indicated only a

slight decline rom 12 months earlier, while the Case-Shillerprice index showed a modest price increase. This price

stabilization came about because home buyers responded tothe tax credit. There was a surge in home buying late last year

as the original tax credit deadline loomed. Pending home salesin February also stirred higher, hinting the beginning o a secondsurge as the April deadline approaches. This orward momentum

will likely perhaps denitively s ignal the bottoming outo home prices in ew months time. Only then will consumers

ully regain their condence about home purchases. O course,this home buying condence is not directly observable, though

we know it plays a big actor. A separate consumer condenceindex, based on several qualitative questions tallied by TheConerence Board, has not shown any notable improvement o

late, however. This index stood 70.2 in March, about the samelevel as the prior nine months, though much improved rom

late 2008 and early 2009 in the midst o the nancial marketcrisis. (For more inormation about The Conerence Boards

Consumer Condence Index, see the In Focus column in thisissue oReal Estate INSIGHTS.)

In March, we saw the frst

meaningul job additions to theeconomy in more than threeyears as a net 162,000 new

workers (payrolls) were addedto the economy.

ECONOMIC COMMENTARY


5/14


Two Fronts: Jobs and Confdence

(continued)

Economy

The broader production economy has been doing quite well.

GDP expanded robustly by 5.6 percent in the nal quarter o 2009ollowing the 2.2 percent growth in the prior quarter. Thats the

good news. The somewhat bad news: the increased productioncame about with ar ewer workers i.e., ewer workers doingmore work. But with GDP growth expected to continue in 2010,

albeit not very robustly, the job creation momentum appears intact.Business spending growth has been solid. International trade has

picked up volume. The stimulus impact o government spendingis also adding to production. But more importantly, the all-mighty

consumers are beginning to open up their wallets as they eel morecomortable about their nances.

The baseline outlook is or steady economic growth o near

3 percent this year and in 2011. Note that GDP growth typicallytends to be better than 5 percent in the immediate years

ollowing a recession, so the growth outlook can be consideredsubdued. Balance sheet readjustments by both banks and

consumers to put aside more or uture rainy days will be onekey reason holding back growth potential. Nonetheless, the near3 percent GDP expansion will accompany job growth o about 2

million each year rom 2011. Such job growth will boost existinghome sales to 5.5 million in 2010 and to 5.7 million in 2011. For

comparison, sales were 5.16 million last year and reached 7.1million at the peak o the housing boom in 2005.

Risks

There are always risks to orecasts. Energy is one: big oil priceswings always put a monkey wrench in any economic orecast. For

each $10 per barrel rise in oil prices, $80 billion is removed romthe economy, though oil-producing countries like Norway benet

immensely. For perspective, oil prices have risen rom an average$60 a barrel in 2009 to $85 a barrel in early April 2010.

Another bigger risk although with a smaller probability relatesto the budget decit and some possibility o ederal spending spiraling

out o control. Currently, both oreign and domestic investorsjustiy the high decit as necessary to boost the economy and tobe manageable over time. Keynesian economics backs up that view:

go into decit spending when private demand alters to pull theeconomy back on track. The recent enactment o truly historic health

care legislation will not bust the budget in act, it becomes a costsaver over time at least according to the Congressional Budget Ofce.

But what i the CBOs projections are way o the mark (which hashappened on a ew occasions). Then there could be some majorheadaches ahead. An uncontrollable budget decit will orce interest

rates up, perhaps signicantly i, or instance, China rushes to the exit.That would push the U.S. economy into another recession. Another

recession would mean an even higher budget decit as there will beewer people working, thus smaller tax revenues.

Amateur History

Sometimes it is worth a look back into history or someguidance and un. Decits do not matter, said ormer

Vice President Dick Cheney. Mr. Cheney was addressing the

Steady economic growth onear 3 percent this year andnext year will accompany

job growth o about 2 millioneach year rom 2011 such

job growth will boost existinghome sales to 5.5 million in2010 and to 5.7 million in 2011.

experience o the then very high Reagan era decits that

brought robust economic growth and huge job gains. But thatwas a time when oreigners had just started to nance a U.S.budget decit in a meaningul way. Todays decit is much larger

than during the Reagan years and more dependent than ever onoreigners, particularly China, buying U.S. debt.

Lets look back even urther. England truly became an unmatchedsuperpower beginning at the time o Queen Elizabeth I. She was

guided by an economist named Gresham, who had no knowledge oKeynesian economics (Keynes would have to wait several centuries)but an abundance o every-day common sense. Gresham had this

simple advice: we need to bring the borrowing costs down andstrengthen Her Majestys currency. To achieve that meant balancing

the books. Building a rainy day und was even better. The VirginQueen took his words o caution to heart. England invested in a navy

(or that rainy day) and Elizabeth did not build a single new palace

during her long years o reign. Queen Marie Antoinette, across thechannel and in a dierent era, was known or her rivolous spendinghabits. In act, she had a nickname during her reign: Madame Decit.France was acing ruinous budget problems, and while most o those

were unrelated to Maries penchant or spending, the image o outo control spending added to the revolutionary ervor as the basic

needs o the French people were not being met.I know times have changed rom those during Elizabethan

England and Revolutionary France. And the U.S. is neither othose nation states. President Obama will no doubt go down inhistory as one o the most transormative leaders or better or

worse primarily because o health-care reorm. The debate onthat health care law continues, sometimes vehemently rom both

sides. No American President will want to be labeled with MarieAntoinettes moniker. Only time will tell i President Obamas

health care legislation will go down in history as a monumentalsuccess o lowering cost and enlarging coverage or a monumentalailure o long queues and resentments and continuously climbing

budget decits. Perhaps one day U.S. policies and programs willallow our nation to build comortable rainy day reserves while

at the same time spend tax revenue on Americans to meet theirbasic needs. Easier said than done, o course. Which is why i it

were to ever happen, that President whoever he or she may be will go down in history as one o the greatest ever.


6/14


0

2

4

6

8

1-Year Adjustable Mortgage Rate

30-Year Fixed Mortgage Rates

History Forecast

200620052004

4 3 42 3 4 1 2 3 4 1 2 3 4 1

2007

2 3 4

per

cent

1 2

2008

3 1

2009

2 3 4 1 2

2010

1 2

2011

New Home Sales

Existing Home SalesHistory Forecast

0

2

4

6

8

10

200620052004

3 42 3 4 1 2 3 4 1 2 3 4 1

2007

Million

sofUnits

2 3 4 1 2

2008

3 4 1

2009

2 3 4 1 2

2010

1 2

2011

Sources: NAR, Bureau o the Census, NAR Forecast

Home SalesResales settling in the mid-5 million range ater tax credit expires

Sources: Freddie Mac, NAR Forecast

Mortgage RatesIncreases ahead as economy continues to improve

0

500

1000

1500

2000

2500Multi-Family Housing Starts

Single Family Housing StartsHistory Forecast

200620052004

4 3 42 3 4 1 2 3 4 1 2 3 4 1

2007

Thousands

2 3 4 1 2

2008

3 1

2009

2 3 4 1 2

2010

1 2

2011

Sources: Bureau o the Census, NAR Forecast

Housing StartsBuilding activity improves in late 2010 and 2011

-8

-6

-4

-2

0

2

4

6

8History Forecast

200620052004

3 42 3 4 1 2 3 4 1 2 3 4 1

2007

%

GDPGrowth(SAAR)

2 3 4

2008

1 2 3 4

2009

1 2 3 4 1 2

2010

1 2

2011

Sources: Bureau o Economic Analysis, NAR Forecast

Economic GrowthSteady, moderate growth

Source: Bureau o Labor Statistics, NAR orecast

UnemploymentRemaining at high levels due to new workers who cant fnd jobs

Source: Bureau o Labor Statistics, NAR orecast

Payroll JobsSome positive news, but still ar to go

0

2

4

6

8

10

12History Forecast

200620052004

3 42 3 4 1 2 3 4 1 2 3 4 1

2007

percent

2 3 4

2008

1 2 3 4

2009

1 2 3 4 1 2

2010

1 2

2011

-2500

-2000

-1500

-1000

-500

0

500

1000History Forecast

200620052004

3 42 3 4 1 2 3 4 1 2 3 4 1

2007

thousands

2 3 4

2008

1 2 3 4

2009

1 2 3 4 1 2

2010 2011

1 2

quarterly changein payrolls (job gains)


7/14


U.S. Economic OutlookApril 2010

U.S. Economy

Annual Growth Rate

Real GDP -6.4 -0.7 2.2 5.6 2.4 1.6 2.4 2.2 2.8 3.5 0.4 -2.4 2.6 2.7

Nonarm Payroll Employment -6.4 -5.0 -3.1 -1.3 0.0 0.8 0.9 0.9 0.9 1.6 -0.6 -4.3 -0.8 1.1

Consumer Prices -2.2 1.9 3.7 2.6 2.4 2.1 1.4 1.0 1.0 0.5 3.8 -0.3 2.3 1.1

Real Disposable Income 0.2 6.2 -3.6 1.0 -3.7 3.2 1.2 3.0 6.3 4.2 0.5 0.9 0.1 3.7

Consumer Condence 30 48 52 51 52 55 56 59 62 66 58 45 56 66

Percent Unemployment 8.2 9.3 9.7 10.0 9.7 9.9 9.9 9.8 9.8 9.6 5.8 9.3 9.8 9.7

Interest Rates, Percent

Fed Funds Rate 0.2 0.2 0.2 0.1 0.2 0.2 0.3 0.8 1.2 1.8 1.9 0.2 0.4 1.9

3-Month T-Bill Rate 0.2 0.2 0.2 0.1 0.2 0.2 0.3 0.7 1.2 1.8 1.4 0.2 0.4 1.8

Prime Rate 3.3 3.3 3.3 3.3 3.2 3.3 3.3 3.6 4.0 4.5 5.1 3.3 3.4 4.9

Corporate Aaa Bond Yield 5.3 5.5 5.3 5.2 5.3 5.4 5.4 5.4 5.5 5.7 5.6 5.3 5.4 5.710-Year Government Bond 2.7 3.3 3.5 3.5 3.7 3.9 4.0 4.0 4.1 4.3 3.7 3.3 3.9 4.4

30-Year Government Bond 3.5 4.2 4.3 4.3 4.3 4.4 4.6 4.6 4.7 4.9 4.3 4.1 4.5 4.9

Mortgage Rates, percent

30-Year Fied Rate 5.1 5.0 5.2 4.9 5.0 5.3 5.6 5.8 5.9 6.1 6.1 5.1 5.4 6.2

1-Year Adjustable 4.9 4.8 4.7 4.4 4.3 4.2 4.3 4.6 4.8 4.9 5.2 4.7 4.4 5.0

Housing Indicators

Thousands

Eisting Home Sales* 4,610 4,780 5,280 5,970 5,145 5,810 5,320 5,618 5,507 5,569 4,913 5,156 5493 5,699

New Single-Family Sales 338 372 406 370 333 342 370 456 552 609 485 374 377 591

Housing Starts 528 540 587 559 579 590 594 713 871 970 904 553 619 1,013

Single-Family Units 358 425 498 481 489 488 493 570 690 761 622 441 510 802

Multiamily Units 169 115 88 77 90 101 101 143 181 209 282 113 109 211

Residential Construction** 368 344 360 363 357 359 361 373 403 437 451 359 363 451

Percent Change Year Ago

Eisting Home Sales -6.8 -2.8 5.7 26.7 11.6 21.6 0.8 -5.9 7.1 -4.2 -13.1 4.9 6.5 3.7

New Single-Family Sales -40.1 -27.1 -11.7 -5.4 -1.6 -8.1 -8.9 23.2 66.0 78.1 -37.5 -22.8 0.6 56.9

Housing Starts -50.2 -46.9 -32.4 -15.1 9.6 9.2 1.3 27.5 50.6 64.6 -33.3 -38.8 11.8 63.7

Single-Family Units -51.2 -36.6 -16.6 4.3 36.5 14.9 -1.0 18.4 41.1 55.8 -40.5 -29.1 15.7 57.2

Multiamily Units -47.8 -66.8 -67.3 -60.7 -47.1 -12.1 14.4 84.6 102.0 106.9 -8.7 -60.1 -3.5 94.1

Residential Construction -23.9 -25.6 -18.9 -12.5 -3.0 4.1 0.4 2.8 12.9 21.9 -0.6 -20.5 1.1 24.4

Median Home Prices

Thousands o Dollars

Eisting Home Prices 167.6 174.4 178.1 170.8 165.9 177.2 184.5 177.8 172.9 184.8 198.1 172.5 177.2 184.8

New Home Prices 207.8 218.7 212.6 217.7 214.9 223.5 220.3 226.8 224.5 234.2 232.1 215.9 221.7 233.1

Percent Change Year Ago

Eisting Home Prices -15.6 -16.2 -11.6 -5.5 -1.0 1.6 3.6 4.1 4.2 4.3 -9.5 -12.9 2.7 4.3

New Home Prices -11.8 -7.6 -6.7 -1.7 3.4 2.2 3.6 4.2 4.5 4.8 -6.4 -7.0 2.7 5.1

Housing Aordability Inde 181 174 161 171 178 158 143 143 146 130 139 172 154 129

Quarterly gures are seasonally adjusted annual rates.

* Eisting home sales o single-amily homes and condo/co-ops; ** billion dollars

2009 2010 2011 2008 2009 2010 2011I II III IV I II III IV I II


8/14


Looking at Key Economic Data:Numbers, Forecasts, and the Housing Outlookby Jed Smith,Managing Director, Quantitative Research

As we emerge rom the Great Reces-sion we are bombarded with economic

commentary on a daily basis. In the recentpast the economy has eperienced a signi-cant number o problems:

n Jobs. The economy has shed over 8

million jobs between late 2007 (thebeginning o the recession) and the

present. At the same time, the economyneeds to create 1.4 million jobs per yearto accommodate new workers entering

the workorce.n Decreases in wealth. The Great Reces-

sion took a toll on household andnonprot wealth. According to the

Federal Reserve, overall household/non-prot wealth declined by $11.7 trillionin late 2009 rom its peak in 2007, in an

economy with a total output (that is,Gross Domestic Product or GDP) o

$14.5 trillion.n Home sales. Eisting-home sales

declined rom approimately 7 millionunits to 5 million sales per year. Duringthe same time, new home construc-

tion dropped rom a rate o 2.3 million

single amily homes per year to 575,000homes. Given that an eisting home salepulls through an additional $57,000 o

additional GDP spending, the declines inhome sales and construction have had amajor economic impact.

n The shadow banking system. Leh-man, General Electric Credit Corpora-

tion, AIG, Bear Stearns, among otherscrashed in October 2007, causing major

credit availability problems.n GDP growth turned negative during the

Great Recession, and has been some-

what weaker than would normally oc-cur during emergence rom a recession.

Liestyle, amily, and ownership enjoy-

ment are clearly important considerationsin the purchase o a new home. The clientwill be ocused on the local housing market

in terms o price, availability, and trends.But changes in the economy and perhaps

more importantly, consumers views othe economy can impact the outlook or

both residential and commercial sales as

well as new constructions. Consequently,many clients may ask: Where is the Econo-

my Headed?How do we understand where the

economy is going when there are so manyeconomic numbers and concepts men-

tioned on a continuing basis? And or realestate proessionals, the question is likely to

be: What do the economic numbers meanor our business and our clients?

Where is the Economy Headed?

A Look at Economic DataThere is no dearth o economic data;

indeed, theres tons o it out there. Monthlyand quarterly data on consumption, invest-

ment, eports, imports, Gross DomesticProduct (GDP), employment, interest rates,housing construction, housing sales, con-

sumer and producer prices, manuactur-ing, demographic data, and a wide variety

o other economic statistics are readilyavailable. What data are relevant to REAL-

TORS and their clients?There are ve major data releases

o particular interest that can give a good

overview o the economy, as well as signsabout the uture direction o housing.

1. Employment: I people dont have

jobs, they are unlikely to buy homes.Theyre also likely to cut back on other,non-essential ependitures. Data on

employment trends changes in em-ployment, the outlook or employment,

and stability o employment -- appearto be strong indicators or the housing

outlook. As o the rst quarter o 2010,there were 14.9 million people unem-

ployed. But the good news the latestjobs gures indicate that the economy

generated 162,000 new jobs in March,and the unemployment rateremained steady at 9.7 percent.

2. Interest Rates:A quarter o apercent change in the interest rate can

mean tens o thousands o dollars incosts over a thirty-year mortgage. An

increase rom 5-6 percent on a thirtyyear $200,000 loan can change themonthly payment o principal and inter-

est by $125, an increase o 11.6 percentInterest rates along with home prices

can have a major impact on housingaordability. In the rst quarter o 2010

rates were near 5 percent and are e-pected to remain reasonable, althoughwith some increases as the economy

continues to improve.3. Consumer Mood:Every month The

Conerence Board reports its survey oconsumer condence an overall sum-

mation o how people eel about thecurrent state o the economy. Changesin consumer condence tend to refect

uture changes in the economy. In 2007

IN FOCUS

Consumer Confidence Index (1985 = 100)

Existing-home Sales (SAAR)

Existing-homesales

thousands

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500

0

20

40

60

80

100

120

Jan2010

Jan2009

Jan2008

Jan2007

Jan2006

Jan2005

Jan2004

Jan2003

Jan2002

ConsumerConfidenceIndex

Sources: The Conerence Board, NAR Research, Haver Analytics

Consumer Confdence and Home Sales
http://www.bls.gov/


9/14


consumer mood averaged at 103, drop-ping to 25 in February o 2009. A read-

ing in the 90 to 100 range would signiy

an economy headed to ull employment.Currently, the data have shown someupward movement but tend to suggest

a slow but positive recovery.4. Gross Domestic Product (GDP):

GDP is a measure o the overall

economic output, and stood at $14.5trillion in the nal quarter o 2009.

Economic growth is orecast to increasein the neighborhood o 3 percent per

yearsomewhat slower than onewould epect when eiting a recession,but consistent with long-term trends.

5. Existing-home Sales:NAR dataon eisting-home sales are released

monthly, and quarterly reports areissued on resales by state. (Recent

and historical data are availableatwww.realtor.org/research/ehspage.)

Interpreting the Data : What Does ItMean or REALTORS?

Changes in the economy aect thehousing markets and also the ways in which

real estate proessionals can market their

property listings and manage their business.For eample, there is a matchnot perectbut certainly illustrative, between Consum-er Condence and Eisting Home Sales.

Currently, we epect Consumer Con-dence to keep on improving as both the

economy continues to grow and (hopeul-ly) the job market remains on an upswing.

Such improving consumer sentiment bodeswell or home sales going orward.

However, the myriad o inormation is

overwhelming. NAR provides an overalleconomic orecast plus a summary o

important data items: A one page summaryand orecast o economic indicators

can be ound atwww.real-

tor.org/research.The ve major types o data

(and changes in the data) are useul in sum-marizing the economy and the direction o

the real estate markets. O course, there isa lot more data out there: average weekly

earnings, home inventory (the number o

Looking at Key Economic Data

Numbers, Forecasts, and the Housing Outlook(continued)

homes available or sale), just to mentiontwo. And remember all real estate is local.

National trends may not be those refected

in local markets. This makes the role o alocal real estate proessional even morevital to property buyers and sellers.

The home purchase decision is aboutliestyle, amily, hopes, and the uture. How-ever, the economic side is clearly important.

An overview o the numbers can providethe basis or addressing clients questions

about the real estate outlook that is,where the economy has been, where it is

headed, and current prices and sales.
http://www.realtor.org/research/research/ehspagehttp://www.realtor.org/research/research/ehspagehttp://www.realtor.org/research/research/ehspagehttp://www.realtor.org/research/research/ehspagehttp://www.realtor.org/research/research/ehspagehttp://www.realtor.org/research/research/ehspagehttp://www.realtor.org/researchhttp://www.realtor.org/researchhttp://www.realtor.org/researchhttp://www.realtor.org/researchhttp://www.realtor.org/researchhttp://www.realtor.org/researchhttp://www.realtor.org/research/research/ehspage


10/14


USING NAR RESEARCH

Research Update Staying in Touch with the Latestrom NAR Researchby Meredith Dunn, Research Communications Representative

NAR Research keeps you up to dateon the latest statistics and analysis rom

NARs Research Division. Beginning inJune, we will premiere a new eature inReal Estate Insights. Research Updatewill be a regular column in this newslet-ter, which will provide inormation about

developments in the real estate industry,current NAR Research studies, as well

as links to other insightul inormation.What will you nd in Research Update?

Heres a look.

Latest Developments

Research Webinar or April:

Homebuyers and Sellers: A

Demographic Look

You know the overall home buyerand seller statistics, but this webinar will

dive deeper into the statistics to describedemographic dierences. How do single

emale buyers dier rom single malesor married couples? How do dierent

age groups and household compositionchange the way buyers nance and lookor homes? All these questions and more

will be answered during this webinar,

which is scheduled or April 28at 2pm EDT. Register now.

Multiamily Fundamentals

The economy concluded 2009 witha positive level o activity. Gross domes-

tic product advanced at a 5.6 percentrate. Other economic indicators alsopointed towards a continued recovery.

At the same time, commercial real estateconcluded the year with mixed results.

Fundamentals remained weak, invest-ments were down and the volume o dis-

tressed properties increased. Contractingcredit and a tightened lending environ-ment added to the pressure. In the broad

landscape o commercial properties, themultiamily sector has ared comparative-

ly better. Demand or space was mod-est but positive. Net absorption closed

the year at 105,458 units. Yet, there areactors which caused adverse impacts in

the sector. View the Commercial

Real Estate Outlook

News You Can Use

New: Relocation Reports

These reports pinpoint which coun-ties relocation clients are coming romand going to, along with relative income

inormation. Relocation Reports areavailable or all counties in the U.S. and

can now be downloaded online, or FREE.

Economists Podcast: Latest Housing Data

and the Economy

On the second Tuesday o every

month, NARs Chie Economist, Law-rence Yun, will discuss the current actors,

issues, and data aecting REALTORS andtheir businesses. Get a wealth o inor-

mation straight rom the source with aquick listen each podcast is around 5minutes long and provides a timely mar-

ket update. In this podcast, ChieEconomist Lawrence Yun discusses the

mixed messages on the economy thatthe latest housing data provides.Listento the latest Podcast

Research is Now on Face-book, Active Rain, RealTown,

and Twitter!

The National Association o REAL-TORS has been surveying members to

nd out about their use o technologylike websites and blogs or several years.

Now, Research, too, has its very own Fa-cebook group, Active Rain and RealTown

presences, as well as a presence on Twit-ter. Researchs social media pages are notonly a place or our members to receive

insight into our latest surveys, commen-taries and reports, but also an avenue or

you to make your thoughts known to us

and your ellow REALTORS

. There maybe certain special trends in the market-place that Research may be unaware o

such as a signicant rise in oot trac

at open houses or continuing long delaysin getting short sales to close. This is an

open orum or discussion rather than aone-sided monologue.

Another Valuable Tool rom NARResearch

Research Update is a great destination

to get the headlines rom NAR Re-search. And you can use the inormationrom Update in your own newsletters,

marketing materials, and presentations.But you dont have to wait until June. For

more inormation about Research Updatevisitwww.realtor.org/research/re-searchupdatearchives.

Research Store

Research Product Store

Commercial Real Estate

Commercial Outlook

Reports by Topic

Find the Research You Want

Real Estate Insights

Commentaries, Forecasts and Articles

NAR News Releases

News Releases

Contact Research StaDirectory

Useul Ino
https://realtors.webex.com/realtors/onstage/g.php?d=928656597&t=ahttp://www.realtor.org/wps/wcm/connect/08eb7c004187dea0aad3ba08069f8e0c/creo0210.pdf?MOD=AJPERES&CACHEID=08eb7c004187dea0aad3ba08069f8e0chttp://www.realtor.org/wps/wcm/connect/08eb7c004187dea0aad3ba08069f8e0c/creo0210.pdf?MOD=AJPERES&CACHEID=08eb7c004187dea0aad3ba08069f8e0chttp://www.realtor.org/wps/wcm/connect/08eb7c004187dea0aad3ba08069f8e0c/creo0210.pdf?MOD=AJPERES&CACHEID=08eb7c004187dea0aad3ba08069f8e0chttp://www.realtor.org/wps/wcm/connect/08eb7c004187dea0aad3ba08069f8e0c/creo0210.pdf?MOD=AJPERES&CACHEID=08eb7c004187dea0aad3ba08069f8e0chttp://www.realtor.org/wps/wcm/connect/08eb7c004187dea0aad3ba08069f8e0c/creo0210.pdf?MOD=AJPERES&CACHEID=08eb7c004187dea0aad3ba08069f8e0chttp://www.realtor.org/research/economists_outlook/economists_podcasts/economists_podcast031010http://www.realtor.org/research/economists_outlook/economists_podcasts/economists_podcast031010http://www.realtor.org/research/economists_outlook/economists_podcasts/economists_podcast031010http://www.realtor.org/research/researchupdatearchiveshttp://www.realtor.org/research/researchupdatearchiveshttp://www.realtor.org/research/researchupdatearchiveshttp://www.realtor.org/research/researchupdatearchiveshttp://www.realtor.org/wps/wcm/connect/08eb7c004187dea0aad3ba08069f8e0c/creo0210.pdf?MOD=AJPERES&CACHEID=08eb7c004187dea0aad3ba08069f8e0chttp://www.realtor.org/research/researchupdatearchiveshttp://www.realtor.org/research/economists_outlook/economists_podcasts/economists_podcast031010https://realtors.webex.com/realtors/onstage/g.php?d=928656597&t=ahttp://www.realtor.org/research/researchupdatearchives


11/14


Single-Women Home Buyers: A Growing SegmentBy Jessica Lautz, Research Economist

In the summer o 2009, NAR Re-search surveyed recent home buyers

about their eperience with the home

search process, and the use o realestate proessionals in purchas-ing a home. The results o

the survey were published inNARs 2009 Profle o Home

Buyers and Sellers.

Results o that survey show thata signicant share o home buyers are

single women. Indeed, the percentageo single-women buyers has increased

rom 14 percent in 1995 to 21 percentin 2009. These home purchasers accountor the second largest share o adult

households who purchase homes. Singleemales make up one-quarter o the rst-

time buyer population and 17 percento the repeat buyer population. We look

at some results below rom the mostrecent Profle to get a better descriptiono who single women buyers are.

Single Female Home BuyersThe median age o all home buyers

was 39 years old, compared to 41 orsingle emale buyers. Among single-emale

buyers, 58 percent were rst-time home

buyers in 2009, compared to 47 percento all home buyers. The median house-hold income or single-women homebuyers was lower than that o all other

homebuyer household types. Singleemales reported a median household

income o $47,900 in 2008 comparedto $73,100 among all home buying

households. This dierence in house-hold income should not be completelysurprising as 68 percent o home buying

households are couples and so perhapslikely to have two income earners. The

dierence in median income or singlewomen households compared to those

or single men is less strikingsinglemen typically made $53,700 in 2008. Ad-ditionally, single women households are

less likely to have children living at homethan couples. Results rom the survey

show that 22 percent o single womenhome buyers have children at home,

while 38 percent o all home buyers havechildren at home.

What They BuyWhile the majority o single emale

buyers purchase a single-amily home,single emale households are more likelythan other household types to purchase

an apartment/condominium or a town-house/rowhouse. One in our single

emale buyers purchase a house in anurban area/central city, which is a higher

percentage compared to all other house-hold compositions ecept single males.Still, the majority o single emale home

buyers purchase a home in the suburbs,similar to all buyers.

Single emale buyers are more likely topurchase an eisting home than are other

buyers. This makes the role o a real estateproessional even more important to single

emale buyers. Only 14 percent o singleemale buyers purchased a new homecompared to 18 percent o all buyers.

Single emale buyers also tend to purchasesmaller homes, typically buying homes that

are 1,480 square eet in size comparedto the median size o 1,800 square eet

purchased among all buyers. Once singleemales ound the home they purchased,they epect to live there or 10 years.

Why They BuyMore than one-third o all home buy-

ers buy a home or the desire to own.This has been the most cited reason

consistently or the last several years,

but it is even more true o single emalebuyers. Nearly hal o single emale buy-

ers purchase a home because they have adesire to own a home. The second mostcited reason or single emale buyers in

choosing to purchase a home is a changein amily situation13 percent o single

emale buyers purchase or this reason,compared to 9 percent o all buyers.

In comparison to other householdtypes, single emale buyers are morelikely to have lived with parents, rela-

tives or riends beore buying their ownresidence, 20 percent compared to

12 percent o all buyers. Single emalebuyers are also more likely to rent an

apartment or house beore buying theirown place compared to all buyers. Both

previous living situations are related tothe large share o single emale buyersbeing rst-time buyers.

Real Estate Proessionals and theHome Search

When single emale buyers rst startto look or a home they contacted a

real estate agent, contacted a mortgagebroker or talked with a riend or relativemore requently than did other buy-

ers. While 87 percent o single emalesuse the Internet in their home search, a

slightly larger percentage 89 percent --use a real estate agent. Real estate agents

are a trusted resource that single emale

MARKET INTELLIGENCE

0

5

10

15

20

25

200920082007200620052004**20032001

percent

212020

22

21

18

21

15

*buyers who purchased homes between July 2008 and June 2009**beginning in 2003, NARs survey o home buyers and sellers was conducted annuallySource: The 2009 NAR Profle o Home Buyers and Sellers

Single Women Home Buyers(as a percent o all home buyers)*
http://www.realtor.org/prodser.nsf/products/186-45-09?OpenDocumenthttp://www.realtor.org/prodser.nsf/products/186-45-09?OpenDocument


12/14


Single-Women Home Buyers: A Growing Segment(continued)

buyers turn to during their home search.A larger share o single emale home buy-

ers rst nd the home they purchased

rom their agent compared to all buyers 40 percent vs. 36 percent, respectively.Underscoring the importance o the real

estate agent to single women buyersis the act that a higher share o singleemales purchased their home through a

real estate agent than through any othersource: 79 percent compared to 77 per-

cent o all buyers.Single women buyers, like all other

buyers, most want their agent to helpthem nd the right home to purchase,but they place more importance than

other buyers on their agent helping themnegotiate the terms o sale. Similar to all

buyers, single women place a high impor-tance on honesty and integrity in their

agent and knowledge o the purchaseprocess.

Home Financing

Single emale buyers are similar to allbuyers when it comes to nancing their

home purchase. However, there are somedierences. Similar to all buyers, about

nine in ten nance their home purchase

through a mortgage, and the majority usesavings as the source o their down pay-ment. A higher share o single emale buy-ers receive a git rom a riend or relative

as a down payment source comparedto other buyers, and a smaller share use

proceeds rom the sale o their primaryresidence.

Despite record high housing aord-ability conditions, buyers are still makingsacrices to purchase homes and this

is also the case or emale home buy-ers. Single emales are more likely than

other buyers to have cut spending onluury items, entertainment, and clothes

in order to be able to purchase a home.Nearly nine in ten single emales believetheir home was a good nancial invest-

ment.

What it Means or Real Estate Pro-essionals

Single women are likely to continue tobe a signicant segment o home buyers.

By utilizing the inormation above as ahelpul tool, as well as other inorma-

tion ound in the 2009 NAR Profle o

Home Buyers and Sellers, real estateproessionals may be able to under-

stand and serve their clients better. Thisdiligence will be rewarded: single emales

are more likely than other buyers toturn to real estate agents rst and stay

with the real estate agent throughout thepurchasing process.

Source: The 2009 NAR Profle o Home Buyers and Sellersdetail may not add to 100 due to rounding

All Single-Female

Buyers Buyers

Desire to own a home 35 % 47 %

Job-related relocation or move 9 3

Desire or larger home 9 3

Change in amily situation 9 13

Aordability o homes 8 8

Desire or a home in a better area 4 2

Desire to be closer to amily/riends/relatives 4 4

Desire to be closer to job/school/transit 3 2

Primary Reason or Purchasing a Home(Percentage Distribution)


13/14


Residential Housing Market Data: Monthly Seriesn

Pending Home Salesn Eisting Home Sales

n Median Sales Prices

n Housing Aordability Inde

Residential Housing Market Data: Quarterly Seriesn Eisting Home Sales by State

n Metropolitan Area Median Sales Prices

n Housing Aordability Inde (quarterly and rst-time homebuyer)

Commercial Market Data and Reportsn Commercial Real Estate Forecast (quarterly)

n Commercial Real Estate Outlook (quarterly)

n Commercial Real Estate Leading Indicator (quarterly)

n 2009 NAR Commercial Member Prole

n Commercial Real Estate Market Survey

Web Exclusivesn Daily commentary

n Multimedia

n Webinars and Podcasts

n Facebook

LINKS TO STATISTICAL DATA AND NAR RESEARCH RESOURCES
http://www.realtor.org/research/research/phsdatahttp://www.realtor.org/research/research/phsdatahttp://www.realtor.org/research/research/ehsdatahttp://www.realtor.org/research/research/ehsdatahttp://www.realtor.org/research/research/ehsdatahttp://www.realtor.org/research/research/ehsdatahttp://www.realtor.org/research/research/housinginxhttp://www.realtor.org/research/research/housinginxhttp://www.realtor.org/research/research/metropricehttp://www.realtor.org/research/research/metropricehttp://www.realtor.org/research/research/metropricehttp://www.realtor.org/research/research/metropricehttp://www.realtor.org/research/research/housinginxhttp://www.realtor.org/research/research/housinginxhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/economists_outlookhttp://www.realtor.org/research/economists_outlookhttp://www.realtor.org/research/economists_outlook/multimediahttp://www.realtor.org/research/economists_outlook/multimediahttp://www.realtor.org/research/economists_outlook/multimediahttp://www.realtor.org/research/economists_outlook/multimediahttp://www.facebook.com/pages/NAR-Research/73888294183http://www.facebook.com/pages/NAR-Research/73888294183http://www.facebook.com/pages/NAR-Research/73888294183http://www.realtor.org/research/economists_outlook/multimediahttp://www.realtor.org/research/economists_outlook/multimediahttp://www.realtor.org/research/economists_outlookhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/reportscommercialhttp://www.realtor.org/research/research/housinginxhttp://www.realtor.org/research/research/metropricehttp://www.realtor.org/research/research/metropricehttp://www.realtor.org/research/research/housinginxhttp://www.realtor.org/research/research/ehsdatahttp://www.realtor.org/research/research/ehsdatahttp://www.realtor.org/research/research/phsdata


14/14

NARs 2010 Midyear Meetings

While attending NARs Midyear Meeting in May, be sure to takeadvantage o these inormative sessions rom NAR Research

Economic Issues & Residential Real Estate

Business Trends Forum

05/13/2010 | 08:00 AM - 10:00 AMThe U.S. Housing Market: Is Recovery In Sight? NAR ChieEconomist Lawrence Yun will be joined by Mark Zandi, ChieEconomist and Founder o Moodys Economy.com. Thesenationally recognized experts will oer insights, perspectives andorecasts regarding residential real estate and the economy, theuture o the U.S. mortgage fnance delivery system, and the roleo the ederal government in the operation o mortgage fnance.Following Drs. Yun and Zandi, learn how you can share theirinsights with your coworkers and clients. Leading marketing

and training experts Amy Chorew o The Tech Byte and GingerWilcox rom the Social Media Marketing Institute, will discussthe best practices to utilize NAR research and statistics in yoursocial media marketing campaign.

RESOURCES FROM NAR RESEARCH

Economic Issues & Commercial

Business Trends Forum

05/13/2010 | 1:00 PM - 3:00 PMLawrence Yun, NAR Chie Economist will be joined by AjayRajadhyaksha o Barclays Capital and Brendan Reilly rom theCommercial Mortgage Securities Association in a discussion othe economic recovery, developments in the capital markets andthe implications o fnancial changes or commercial real estatein 2010 and beyond.

For locations o these inormative sessions, check your Midyear

Conerence program. For more inormation about the meetings,visitwww.realtor.org/midyear.nsf/pages/expo .
http://www.realtor.org/midyear.nsf/pages/expohttp://www.realtor.org/midyear.nsf/pages/expohttp://www.realtor.org/midyear.nsf/pages/expohttp://www.realtor.org/midyear.nsf/pages/expo

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