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Paul C. Bishop, Ph.D. Managing Director, Research NATIONAL ASSOCIATION OF REALTORS ®. Real Estate Market Outlook: Peering Through the Clouds. OHIO ASSOCIATION OF REALTORS ® Winter Conference January 14, 2008 . Overview. The Market Setting Sales are down and consumers are skittish

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Paul c bishop ph d managing director research national association of realtors l.jpg

Paul C. Bishop, Ph.D.

Managing Director, Research

NATIONAL ASSOCIATION OF REALTORS®

Real Estate Market Outlook:Peering Through the Clouds

OHIO ASSOCIATION OF REALTORS®

Winter Conference

January 14, 2008


Overview l.jpg

Overview

  • The Market Setting

    • Sales are down and consumers are skittish

  • The Outlook

    • Partly cloudy

  • What do Buyers and Sellers Expect from You in this Market?

    • Expertise and guidance


Buyers and sellers are jittery about the u s economy l.jpg

Buyers and Sellers are Jittery about the U.S. Economy

  • Unemployment: 5% (Dec), up from 4.7%

  • Job growth: +18,000 (Dec)

  • GDP: +4.9% (Q3)

  • Consumer spending: +2.8% (Q3)

  • Business investment: +9.3% (Q3)

  • Residential investment: -20.5% (Q3)

  • Exports: +19.1% (Q3)

  • Oil prices: $100/bbl

  • Stock market: Up, Down and Sideways


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New Construction HasBeen Hit Hard

thousands of units

38% decline from peak

Source: U.S. Census


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Consumers RethinkNew Home Purchase Plans

thousands of units

40% decline from peak

Source: U.S. Census


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Existing Home Sales Have Also Fallen

thousands of units

20% decline from peak

Source: NAR


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More Sellers than Buyers = Rising Inventory

months supply

Source: U.S. Census, NAR


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As a Result PricesHave Declined

%

New Home Prices: -2.1%

Existing Home Prices: -1.9%

Source: NAR


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Some Markets Remain Quite Robust

Source: NAR, 2007Q3


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But Others are Suffering

Source: NAR, 2007Q3


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Tough Job Situationin Ohio

thousands

Decline from peak:-195,000; -3.5%

Source: BLS


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Areas of Strength and Weakness in Local Job Market

Source: BLS


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No Upturn in Existing Home Sales in Ohio Yet

Q3 06 to Q3 07

U.S: -13.7%

Ohio: -11.6%

Indiana: -9.4%

Kentucky: -7.2%

Michigan: -4.0%

Pennsylvania: -3.2%

West Virginia: -19.0%

11% decline from peak

thousands of units

Source: NAR


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Median Prices Weak in Many Ohio Markets

Source: NAR, 2007Q3


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Subprime Loan Implosion

  • Homeowners facing higher resetting rates and foreclosures

  • Wall Street reassessing risk

  • Sub-prime brokers getting out or being pushed out

  • Potential home buyers left out in the cold


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Mortgage Delinquencies:A Tale of Two Sectors

%

Stagnant prices limit ability to refinance out of high risk loans

Housing boom permits

re-financing and

lowers delinquency rate

Job losses push up

Delinquency rate

Source: Mortgage Bankers Assn


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Foreclosure Rates Far Higher Among Subprime

%

Source: Mortgage Bankers Assn (3Q07)


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Share of Subprime Loans is Relatively Small…

Source: NAR Estimate


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…But Subprime Loans Account for Most Foreclosures

Source: NAR Estimate


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Wide Regional Differences in Foreclosure Rates

%

Source: Mortgage Bankers Assn (3Q07)


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Highest Foreclosure Rates in the Upper Midwest

%

Source: Mortgage Bankers Assn (3Q07)


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U.S. Economic Outlook

Source: NAR, January 2008 forecast


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U.S. HousingMarket Outlook

Source: NAR, January 2008 forecast


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Getting to KnowToday’s Buyer and Sellers

  • In today’s market, what do buyers and sellers want?

    • First-time buyers are the leading edge of the home buying market

    • Evolving demographics influence who is in the market to purchase a home

    • Generational differences affect preferences for location, features, search process and reasons for buying or selling a home


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What do Buyers do First When Looking for a Home?

91% used the Internet during their home search

Desire for a smaller home is one of the top reasons for buying

Over half blog or use social network sites at least a few times a week

Over half visited an open house

Source: 2007 NAR Profile of Home Buyers and Sellers

Age of Home Buyer


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Buyers Look for Information Online…

Age of Home Buyer

Source: 2007 NAR Profile of Home Buyers and Sellers


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…But Most Find their Agent Through Referrals

Source: 2007 NAR Profile of Home Buyers and Sellers


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Sellers Also Depend on Referrals When Choosing an Agent

Source: 2007 NAR Profile of Home Buyers and Sellers


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What Buyers Want Most from Real Estate Agents

Small differences among demographic groups

Source: 2007 NAR Profile of Home Buyers and Sellers


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Trust and Reputation are Key in Buyers’ Use of Agent

Source: 2007 NAR Profile of Home Buyers and Sellers


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What Sellers Want Most from Real Estate Agents

Source: 2007 NAR Profile of Home Buyers and Sellers


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Educating Sellers – Your Role as an Expert

24% of homes were on the market for 17 or more weeks

Weeks home was on the market

Source: 2007 NAR Profile of Home Buyers and Sellers


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What Does it All Mean

  • Big changes in the real estate market

    • Sluggish activity in many (but not all) regions

    • Foreclosures will hold back market in some areas

    • Pent-up demand will lift many markets in the next year or so

  • In a tough market, buyers and sellers need your expertise

  • Real estate remains one of the best investments for most households


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For more information:

Paul C. Bishop

NAR Research Division

202-383-1246

pbishop@realtors.org

www.realtor.org/research


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