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Mel Watt Federal Housing Finance Agency (FHFA)Director
Real Estate Trends and Outlook Lawrence Yun, Ph.D. Chief Economist NATIONAL ASSOCIATION of REALTORS® Presentation at NAR Annual Residential Forum New Orleans, LA November 7, 2014
Expectations of Firm Profitability(over the next 12-months)
Consumer and REALTOR® Confidence
Zoom-inConsumer and REALTOR® Confidence
Monthly Pending Sales Index … Making Upward U-Turn(Seasonally Adjusted) Source: NAR
Existing + New Home Sales
Homebuilder Confidence(NAHB Market Index)
Single Family Housing Starts … ? the Normal Thousand units
Multifamily Housing Starts … Back to Normal Thousand units
Nationwide Home Price Recovery(Almost Doubled over 20 years) FHFA Home Price Index
Home Price Growth from 1995San Francisco, Miami, Dallas San Francisco Miami Dallas
Household Net Worth($5,500 vs. $195,500) Source: Federal Reserve Survey of Consumer Finances
From 2010 to Today Homeowners Recovering Wealth for those who bought during the bubble years Accumulating Wealth for those who bought since 2010 Renters No progress
Homeowner Households from 2010 (Decreased by 1 million) In thousands
Renter Households from 2010(Increased by 4 million) In thousands
Homeownership Rate by Age Group
Harvard Elderly Housing Study One in Five Americans will be 65 or over by 2030 Homeowners who have paid off mortgages before retirement have lower housing costs and have equity cushion health care expenses Renters face high housing costs and force millions of low-income older adults to sacrifice spending other necessities, including food and health care
Annual Income by Age
Do Elderly have Mortgage?
First-time Buyer Share (Less than 30% of All Buyers for 18 months) Among only primary owner-occupants (excluding investors) = 33% in 2014 … Lowest since 1987
30-year Mortgage Rates
Where Are Young People Hiding? 57 million Americans or 18.1% of the population live in a multi-generational family household in 2012, double the number who lived in such households in 1980 Of those who are 25-34: 20% of the unemployed live with parents 12% of employed live with parents Pew Research, Federal Reserve Bank of New York
Student Loan(in $billion)
Student Loans and Homeownership
Desire of Gen Y to Buy a Home? 75% believe home ownership is an important long-term goal 73% believe ownership is an excellent investment 59% of young renters (18 to 39) believe owning a home makes more sense, but 73% of young renters also believe it would be difficult to get a mortgage today REALTOR® Education Opportunity Many young people think 20 percent down payment is needed ! Fannie Mae, 2013 Demand Institute Housing and Community Survey
Opening the Credit Box FICO New Method Thank You Director Mel Watt But, please clarify put-back risk so that lenders can be confident Not Yet a Thank You Secretary Julian Castro FHA premiums need to come down commensurate with falling default rate Historic low mortgage default rates on recent vintages (2010-2014)
10 best cities for millennials to buy a home By MarketWatch Published: Aug 3, 2014 8:14 a.m. ET
Millennial Housing Demand Returns Austin Dallas-Ft. Worth Denver Des Moines Grand Rapids Minneapolis New Orleans Ogden Salt Lake City Seattle-Tacoma
The Economist – July 19, 2014
Annual GDP Growth(9 straight years of subpar growth)
Jobs(8 million lost … 10 million gained) In thousands
Percent Change in Non-farm Employment(Sept 2014/Sept 2013)
REALTORS® Confidence Index*: Outlook in Next Six Months for Single-Family Homes Based on July 2014-September 2014 RCI Surveys *An index above 50 means there are more respondents having “moderate” or “strong” outlook than respondents with “weak” outlook.
Weekly New Unemployment Insurance Claims In thousands
“Take This Job and Shove It … I ain’t working here no more” Quit Rate in thousands
Monetary Policy by Federal Reserve (zero rate policy for 6 years!) %
Non-worrisome CPI Inflation – YetCOLA of 1.7% in 2015
Rising Renters’ and Homeowners’ Rent Growth (Above 3%)
Monetary Policy Quantitative Easing … Finished Fed Funds Rate … hike in 2015 Q1/Q2 Earlier Move to Tighten because of Inflation Pressure Long-term Steady State Rate (2016 onwards) .. 10 year Treasury at 5.0% Mortgage Rates reaching 6% by 2016
Inventory of Homes for Sale
Shrinking Shadow Inventory(but not in CT, NY, NJ)
Distressed Property Sales(% of total sales)
Household Net Worth at All-Time High
Vacation Home Sales
Falling Birth Rate in the U.S.
U.S. Legal Immigration
Next China? … Mexico + Latin America!
Sales to International Buyers IncreasedBoth in Terms of Transactions and Price
Canada Leads in Number of TransactionsChina Leads in Dollar Volume
Florida—First Choice for International Buyers
Median Expected Price Change of REALTORS® in Next 12 Months, By StateBased on July 2014-September 2014 RCI SurveysJuly 2014-September 2014 RCI Surveys
Let’s Spin the Bottle !
How Young Are REALTORS® ?
Spin the Globe … Find the Source of Improving Standard of Living
When, How, What, Why? British Glorious Revolution of 1688 William and Mary arrive to say … Power not with King but with people via Parliament No Taxation with Representation Life, Liberty, and (Acquire) Property American Revolution of 1776 Power resides not with King but with people No Taxation with Representation Life, Liberty, and the Pursuit of Happiness
Participants in Democracy to Protect Property Rights!