This document contains a presentation by Lawrence Yun, Chief Economist at the National Association of REALTORS, given at their annual residential forum. It includes over 30 charts and graphs related to housing, real estate, and economic trends. The charts show data on home sales, prices, construction, affordability, and demographics. Yun discusses improving consumer confidence and housing market recovery, but also the challenges of student debt loads, tight credit availability for first-time buyers, and rising rents burdening many households.
3. 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
4. Expectations of Firm Profitability
(over the next 12-months)
0
10
20
30
40
50
60
70
80
Residential Firm Commercial Firm
Decrease
About Same
Increase
10. Single Family Housing Starts …
½ the Normal
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000
- Jan
2001
- Jan
2002
- Jan
2003
- Jan
2004
- Jan
2005
- Jan
2006
- Jan
2007
- Jan
2008
- Jan
2009
- Jan
2010
- Jan
2011
- Jan
2012
- Jan
2013
- Jan
2014
- Jan
Thousand units
11. Multifamily Housing Starts …
Back to Normal
0
100
200
300
400
500
600
2000
- Jan
2001
- Jan
2002
- Jan
2003
- Jan
2004
- Jan
2005
- Jan
2006
- Jan
2007
- Jan
2008
- Jan
2009
- Jan
2010
- Jan
2011
- Jan
2012
- Jan
2013
- Jan
2014
- Jan
Thousand units
13. Home Price Growth from 1995
San Francisco, Miami, Dallas
100
150
200
250
300
350
400
1995-Q1
1996-Q1
1997-Q1
1998-Q1
1999-Q1
2000-Q1
2001-Q1
2002-Q1
2003-Q1
2004-Q1
2005-Q1
2006-Q1
2007-Q1
2008-Q1
2009-Q1
2010-Q1
2011-Q1
2012-Q1
2013-Q1
2014-Q1
San Francisco
Miami
Dallas
14. Household Net Worth
($5,500 vs. $195,500)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
Renter Homeowner
1998 2001 2004 2007 2010 2013
x31 x46x36 x34x46
Homeowner net worth
ranges from 31 to 46
x36
Source: Federal Reserve Survey of Consumer Finances
15. 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
19. Homeownership Rate by
Age Group
30
40
50
60
70
80
90
1995-Q1
1996-Q1
1997-Q1
1998-Q1
1999-Q1
2000-Q1
2001-Q1
2002-Q1
2003-Q1
2004-Q1
2005-Q1
2006-Q1
2007-Q1
2008-Q1
2009-Q1
2010-Q1
2011-Q1
2012-Q1
2013-Q1
2014-Q1
65 and over
55-64
45-54
35-44
Under 35
20. 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
21. Annual Income by Age
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
50-64 65-79 80 +
22. Do Elderly have Mortgage?
0
10
20
30
40
50
60
70
80
1992 1998 2004 2007 2010
50-64 65 and Over
23. First-time Buyer Share
(Less than 30% of All Buyers for 18 months)
0
10
20
30
40
50
60
Among only primary owner-occupants (excluding investors)
= 33% in 2014 … Lowest since 1987
24. 30-year Mortgage Rates
0
1
2
3
4
5
6
7
8
9
2000
- Jan
2001
- Jan
2002
- Jan
2003
- Jan
2004
- Jan
2005
- Jan
2006
- Jan
2007
- Jan
2008
- Jan
2009
- Jan
2010
- Jan
2011
- Jan
2012
- Jan
2013
- Jan
2014
- Jan
25. 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
28. 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
29. 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)
30. 10 best cities for millennials to buy a home
By MarketWatch
Published: Aug 3, 2014 8:14 a.m. ET
31. Millennial Housing Demand Returns
• Austin
• Dallas-Ft. Worth
• Denver
• Des Moines
• Grand Rapids
• Minneapolis
• New Orleans
• Ogden
• Salt Lake City
• Seattle-Tacoma
36. 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.
53. Sales to International Buyers Increased
Both in Terms of Transactions and Price
$ 66.4
$ 82.5
$68.2
$92.2
2011 2012 2013 2014
Estimated Sales Dollar Volume of U.S. Residential Property
to International Buyers ( in Billion Dollars)*
Estimate is for 12 month period April 2013 - March 2014.
54. Canada Leads in Number of
Transactions
China Leads in Dollar Volume
Brazil Canada China* France Germany India Japan Mexico Russia
United
Kingdom
2010 1% 23% 9% 3% 4% 5% 1% 10% 3% 9%
2011 3% 23% 9% 4% 4% 7% 2% 7% 1% 7%
2012 3% 24% 12% 3% 3% 6% 1% 8% 2% 6%
2013 2% 23% 12% 2% 3% 5% 1% 8% 2% 5%
2014 2% 19% 16% 2% 3% 5% 2% 9% 1% 5%
0%
5%
10%
15%
20%
25%
30%
International Transactions by Country of Origin
57. Housing Forecast
2013 2014
Likely
2015
Forecast
2016
Forecast
Housing Starts 925,000 1.0 million 1.3 million 1.4 million
New Home
Sales
430,000 440,000 620,000 700,000
Existing Home
Sales
5.1 million 4.9 million 5.3 million 5.4 million
Median Price
Growth
+ 11.5% + 5.3% + 4% + 4%
30-year Rate 4.0% 4.2% 4.9% 6.0%
Underwriting
Standards
Strict Strict Transition Normal
58. Median Expected Price Change of REALTORS® in Next
12 Months, By State
Based on July 2014-September 2014 RCI Surveys
July 2014-September 2014 RCI Surveys
60. How Young Are REALTORS® ?
0
10
20
30
40
50
60
70
Under 30 In 30s In 40s In 50s In 60s
Retiree
Working Age
61. Spin the Globe … Find the Source
of Improving Standard of Living
62. 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