real estate trends and outlook lawrence yun chief economist national association of realtors ®...

Real Estate Trends and Outlook

Lawrence YunChief Economist

NATIONAL ASSOCIATION OF REALTORS®

Jonathan SmokeChief EconomistREALTOR.COM

Presentation at RPAC Presidential Circle Conference

February 27, 2015

Annual Home Sales

New Home Sales Share

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2015 Off to a Strong StartTraffic up 12% Over December and 24% over Jan 2014

4

Source: Realtor.com Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data


Inventory getting tighterPrice appreciation accelerating again

5

Source: Realtor.com®


Age of listings down 2 Days y/yMany areas are hot from a supply perspective


6

January 2015January 2015

Any Help from Shadow Inventory?

Distressed Property Sales

Shadow Inventory

Foreclosure Starts

Focus on Short-Term or Long-Term

• Keynesian …“In the long run, we are all dead”

• Classical …“There is no such thing as a free lunch”

• E.g. … unemployment insurance extension• E.g. … Fed should create jobs or contain inflation• E.g. … new “dynamic” scoring for federal budget

Shadow Comparison(% seriously delinquent)


Rates vary dramaticallyRates change daily and vary by lender and geo

13

Source: Realtor.com


Credit Access is a problemIn January FICO Score on a Closed Loan Was 731……………the Average Denied FICO Score Was 681

14

Source: Ellie Mae and Fair Isaac Corporation

Building Permit Activity in Recovery Period

(2012-2014)1

2

3

4

5

6

Grand Rapids, Grand Rapids, MIMI

Oxnard, CAOxnard, CA

Cape Coral, Cape Coral, FLFL

Atlanta, Atlanta, GAGA

NashvilleNashville, TN, TN

New York, New York, NYNY

Scranton, PAScranton, PA

Syracuse, Syracuse, NYNY

Harrisburg, Harrisburg, PAPA

Springfield, Springfield, MAMA

Little Rock, AR

Lancaster, Lancaster, PAPA

48%

-36%

-32%

-26%

-25%

-21%

7Provo-Provo-

Orem, UTOrem, UTEl Paso, El Paso,

TXTX -19%

8RiversidRiverside, CAe, CA

Lexington, KY -

17%

9

Corpus Corpus Christi, Christi,

TXTX

Albany, Albany, NYNY -

17%

10

Chicago, Chicago, IL-IN-IL-IN-

WIWI

Lansing, Lansing, MIMI -

15%

46%

42%36%

34%

33%

32%

31%

30%

30%

-39%

Will Low Gasoline Price

Last for Long Period?

Oil Price

Supply and Demand: Oil in U.S.

19

21

5

9

Inequality in America Intensifying?

Household Net Worth at All-Time High

Real Estate Asset and Liability

($ billion)


Listing Prices Grew 8.7% Y/Y in DecMedian list Price increases are widespread


22

January 2015

Renter Households over 10 years (Increased by 8 million)

In thousands

Homeowner Households over 10 years(Decreased by 2 million)

In thousands


Cheaper to Buy in 4/5 of CountiesSimple monthly cost analysis favors buying

Source: Realtor.com® Analysis of HUD Fair Market Rents, Nielsen Pop-Facts Demographics and Realtor.com Data

25

Household Net Worth($5,500 vs. $195,500)

Source: Federal Reserve Survey of Consumer Finances

The Almighty Dollar shows Who is the Boss!

U.S. Dollar – The Most Trusted

Shakespeare's Merchant of Venice • A guy needs money to impress a girl• The guy borrows from a Jewish lender• Pay back or a pound of flesh

– Hate Hate Hate … between religions• Merchant ships wreaked … cannot repay• Time to cut flesh• Judge demands exactly 1.00000 pound … impossible task

• Venice is prosperous because of – global reserve currency with full weight and honest

value• No shaving or debasing of Venetian coins

– the rule of law trumps religious sentiments

Who is Stalking the Dollar?

When Will Millennial Homebuyers Step Up?

Millennial Housing Demand Returns

•Austin•Dallas-Ft.

Worth•Denver•Des Moines•Grand Rapids•Minneapolis•New Orleans•Ogden•Salt Lake City•Seattle-

Tacoma

Homeownership Rate: Under 35 YearsNSA, %

141312111009080706050403020100Source: Census Bureau 02/23/15

44

42

40

38

36

34

44

42

40

38

36

34


Millennial ownership variesStrong correlation with affordable markets

33Source: Nielsen Demographics PopFacts 2014, Realtor.com® Analysis

21% 70%


Life Drives Housing DemandMillennials are building families

86% of Millennial shoppers indicate

some form of change in family size* as a trigger

*Change in Family Size includes: Change of family circumstances/composition, Increase in family size, Decrease in family size, Planning to increase family size,Upcoming decrease in family size, older parent moving into my home, getting married/moving in with partner.

Source: BDX June 2014 Home Shopper Study 34

ALLMILLENNIAL

U.S. Population and Voter Growth

U.S. Population

Job Growth and Electoral Map Change

Forecast

•Home Sales?

•Home Price?

•Worse Case Scenario?

real estate trends and outlook lawrence yun chief economist national association of realtors ®...

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