LINDA LEE

Chair, Residential Economic

Issues and Trends Forum

CHRISTIAN ZARIF
Vice Chair, Residential Economic
Issues and Trends Forum

HOUSING AND ECONOMIC OUTLOOK

LAWRENCE YUN, PH.D.
CHIEF ECONOMIST
NATIONAL ASSOCIATION OF REALTORS
PRESENTATION IN WASHINGTON, D.C.
MAY 12, 2016

EXISTING HOME SALES MODERATE RECOVERY

NATIONAL PENDING SALES INDEX GOOD SIGNS

(SEASONALLY ADJUSTED)

Source: NAR

REGIONAL PENDING CONTRACTS

(% CHANGE FROM ONE YEAR AGO TO MARCH)

REGIONAL MEDIAN PRICE CHANGE

(3-YEAR PRICE CHANGE FROM 2012 TO 2015)

HOUSING AFFORDABILITY INCOME GAP

AT 3.8% MORTGAGE RATE

HOUSING AFFORDABILITY INCOME GAP

AT 6% MORTGAGE RATE

VERY CYCLICAL VACATION HOME SALES

(50% DECLINE AND 100% INCREASE)

NEW HOME SALES STILL SUPER LOW

(75% DECLINE AND 60% GAIN)

SINGLE-FAMILY HOUSING STARTS

GROSSLY INADEQUATE
Thousand units

RISING SHARE OF PRICEY NEW HOMES

NEW HOME PRICE VS. EXISTING HOME PRICE

LOW INVENTORY MONTHS SUPPLY

U.S. POPULATION

EVEN LOWER INVENTORY

IN RELATION TO HOUSEHOLDS

MULTIFAMILY HOUSING STARTS

SUFFICIENTLY ADEQUATE

RENTAL VACANCY RATE

LOW BUT STABILIZING

BIG DRIVER OF FUTURE INFLATION

RENTS RISING AT 7-YEAR HIGH

NO CPI INFLATION YET,

BUT HIGHER FUTURE INFLATION WITH NUDGE RATES
HIGHER

RELIEF ON RENT?
If higher rent then higher inflation and
higher mortgage rates
If lower rent than lower inflation and
steady mortgage rates

WIDENING METRO HOME PRICES

(640% VS. 241% GROWTH FROM 1980)

SAN FRANCISCO AREA OUTMIGRATION

47,894 out of SF County

37,378 out of San Mateo County
73,925 out of Santa Clara County
71,551 out of Alameda County

Seattle
Portland
Boise
Salt Lake City
Denver
Austin
Raleigh

WIDENING JOBS
MOBILE AND CHARLESTON SC

BOEING AIRPLANE MADE IN CHARLESTON

WIDENING JOBS
NASHVILLE AND MEMPHIS

WIDENING JOBS
GRAND RAPIDS AND FLINT

JOBS
(8 MILLION LOST 14 MILLION GAINED)
In thousands

TOP AND BOTTOM STATES FOR JOBS

The Best

% Gain in 12 months

The Worst

% Gain in 12 months

Idaho

3.8

Wyoming

0.2

Utah

3.5

Oklahoma

0.1

Nevada

3.4

Louisiana

-0.4

Florida

3.0

West Virginia

-1.8

Washington

3.0

North Dakota

-2.0

California

2.9

South Carolina

2.9

Oregon

2.7

Arizona

2.3

STATE LEVEL EMPLOYMENT

HOME BUYER TRAFFIC

JOBS IN NORTH DAKOTA

In thousands

JOBS IN PUERTO RICO

In thousands

WHOS ON DECK AFTER PUERTO RICO?

States (worst and best)

Unfunded Liability %

Illinois

57%

Kentucky

50%

Connecticut

47%

Louisiana

44%

New Hampshire

43%

Tennessee

8%

North Carolina

5%

South Dakota

4%

Washington

2%

Wisconsin

0%

BIGGEST LIES OCCUR

After Fishing
During a War
Before an Election

FEDERAL DEBT CUMULATIVE

( $ MILLION; DEBT HELD BY PUBLIC EXCLUDING
INTRA-GOVERNMENTAL HOLDINGS)

QUANTITATIVE EASING

NEGATIVE INTEREST RATES

GOOD-BYE BEN?

HEALTHIER HOMEOWNERS

BORROWERS NOT DEFAULTING ESPECIALLY VETERANS

(SERIOUS DELINQUENCY RATE)

RISING HOUSING WEALTH

$ billion

MORTGAGE RATES SAY TODAYS HOMEBUYERS

ARE LUCKIEST IN A GENERATION
%

BUT UNLUCKIEST IN BECOMING HOMEOWNERS

%

STUDENT LOAN
NAR-ASA STUDY IMPLIES 5 YEAR DELAY
(IN $BILLION)

HOMEOWNERSHIP PARTICULARLY LOW

FOR MINORITY HOUSEHOLDS
%

HOMEOWNERSHIP PARTICULARLY LOW

FOR MINORITY HOUSEHOLDS
%

TUITION COSTS AT HARVARD?

FORECAST

ECONOMIC FORECAST
2014

2015

2016
Forecast

2017
Forecast

GDP Growth

2.6%

2.1%

1.6%

2.2%

Job Growth

+3.0 million

+2.6 million

+1.6 million

+2.2 million

CPI Inflation

1.6%

0.3%

1.7%

3.0%

10-year Treasury

2.6%

2.1%

2.1%

2.8%

HOUSING FORECAST
2014

2015

2016
Forecast

2017
Forecast

437,000

500,000

540,000

600,000

4.9 million

5.3 million

5.4 million

5.5 million

Median Price
Growth

+ 5.7%

+ 6.8%

+4.5%

3.2%

30-year Rate

4.2%

3.9%

3.9%

4.6%

New Home Sales

Existing Home Sales

REALTOR MEMBERSHIP

2016 PRESIDENTIAL ELECTION

STRONG FEELINGS, FOR AND AGAINST

POLLS: PEOPLE DO NOT LIKE TRUMP OR CLINTON!

SAY NO TO DEMOCRACY AND
YES TO PRIVATE PROPERTY RIGHTS?

Singapore
-

Had no Democracy
Higher per capita income than U.S.
Futuristic city
English: official language
Strong private property rights protection

REALTORS BELIEVE IN
DEMOCRACY AND PROPERTY RIGHTS

THE HONORABLE ELIZABETH WARREN

Senator, (D Massachusetts)