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Economic and Housing Market

OUTLOOK. Economic and Housing Market. Lawrence Yun, Ph.D. Chief Economist NATIONAL ASSOCIATION OF REALTORS ® Presentation at 2012 Resort and Second-Home Symposium Kiawah Island, SC March 19, 2012. Monthly Existing Home Sales … Recovering. Tax Credit Impact. Old Data. New Data.

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Economic and Housing Market

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  1. OUTLOOK Economic and Housing Market Lawrence Yun, Ph.D. Chief Economist NATIONAL ASSOCIATION OF REALTORS® Presentation at 2012 Resort and Second-Home Symposium Kiawah Island, SC March 19, 2012

  2. Monthly Existing Home Sales … Recovering Tax Credit Impact Old Data New Data

  3. Annual U.S. Existing Home Sales … Flat Line for 4 tough years

  4. Second Home Sales In thousands

  5. Case-Shiller Price Index…Stability from 2009

  6. Median Price of Transacted Homes: Vacation Home Suffered More Primary (Blue) vs Vacation (Red) Source: NAR

  7. Columbia and Myrtle Beach(Home Price Index: 1995 = 100) Source: Federal Housing Finance Agency

  8. Bend and Portland, Oregon(Home Price Index: 1995 = 100) Source: Federal Housing Finance Agency

  9. Santa Fe and Albuquerque(Home Price Index: 1995 = 100) Source: Federal Housing Finance Agency

  10. Las Vegas and Miami vs Kansas City and Milwaukee(Home Price Index: 1995 = 100) Source: Federal Housing Finance Agency

  11. U.S. Housing Starts Lowest since the Second World War… in the past three years Housing Starts in thousands

  12. New Home Inventory – 50 year low

  13. Visible Existing Home Inventory(6-year lows)

  14. Serious Delinquent Mortgages … Mostly those who took out loans in bubble years(90+ days late or in foreclosure process)

  15. Fannie and Freddie PerformanceMortgage Default after 18 months Source: Federal Housing Finance Agency

  16. Foreclosure Starts(% of all mortgage outstanding; about 1/3 of homes are free and clear)

  17. Foreclosure Inventory(% of all mortgage outstanding; about 1/3 of homes are free and clear)

  18. Economic Expansion(GDP growth after recession should be sustained 4% to 5% … not 1.7% as occurred in 2011) Desired Pace

  19. Total U.S. Payroll Jobs … Recovering(3.4 million job creation from low point in 2010) In thousands

  20. Labor Force Participation Rate %

  21. Financial Industry Corporate Profits

  22. Federal Reserve Loose Monetary Policy

  23. Banks/Regulators Restricting Credit(Average Credit Scores of Approved Loans) 15% to 20% Higher Sales

  24. CPI Rent is Rising…Biggest Weight to CPI(% change from 12 month ago)

  25. Home Value Undervaluation(Recent analysis by The Economist magazine)

  26. Improving Factors for Higher Home Sales • Improving Factors • Job Creation • Solid stock market recovery from 2008 • Rising rents and larger pool of qualified renters • Pent-up Release of Household Formation • Smart money chasing real estate (instead of gold?) • Consumer confidence OK (no longer dire) • Great affordability conditions • Favorable demographics for second home buyers • Potential Huge Positive … Lending opens up • Potential Huge Negative … Washington policy

  27. Annual Household Formation… Future Rent Pressure?(3 separate Census data) In millions Household Formation leads to increase ownership and renters; Could begin to return to normal of at least 1 million from 2012.

  28. Expensive Gold Price(Hedge against Inflation?) Will Investors shift money to alternative inflation hedge instrument … to real estate?

  29. Consumer Confidence

  30. Best Affordability Conditions

  31. Monthly Pending Home Sales Index(Seasonally Adjusted) Homebuyer Tax Credit

  32. Median Age and Income of Homebuyers • Primary 37 years old with $69,600 • Investment 45 years old with $87,600 • Vacation 49 years old with $99,500

  33. U.S. Population Aged 55-to-64

  34. Forecast Population Aged 55-to-64

  35. Rising World Population

  36. Washington Policy Obstacles • QRM 20% downpayment rules • Mortgage Interest Deduction Limitation on second homes • Capital gains tax increase • Lower loan limit for conforming mortgages • More consumers face jumbo mortgages • Rising mortgages rates (market forces of higher inflation and high budget deficit)

  37. Forecast Second Home and Resort Markets suffered more … Therefore, Ripe for a stronger recovery for both sales and prices

  38. For Daily Update and Analysis • FACEBOOK http://www.Facebook.com/NarResearchGroup • Twitter @NAR_Research

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