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A Different World: Housing, Demographics and Technology. Mid Columbia Workforce Housing Summit Hood River, Oregon April 6, 2007 John Mitchell Economist Western Region U.S. Bank. Spring 2007. Six Year Old Upturn Housing Contraction-Subprime Implosion Mixed Data Fed on Hold

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a different world housing demographics and technology

A Different World: Housing, Demographics and Technology

Mid Columbia Workforce Housing Summit

Hood River, Oregon

April 6, 2007

John Mitchell

Economist Western Region

U.S. Bank

spring 2007
Spring 2007
  • Six Year Old Upturn
  • Housing Contraction-Subprime Implosion
  • Mixed Data
  • Fed on Hold
  • Global Strength
  • Unemployment Rate at 4.5 Percent
  • Wealth Increasing
  • Regional Strength
consumer price index and core 2005 2007 year over year february 2 4 annual average 2006 3 2
Consumer Price Index and Core 2005-2007 Year over Year February 2.4%Annual Average 2006 3.2%
2007 coasting and changing
2007 Coasting and Changing
  • Changing Leaders, Capacity Constraints Growth Moderating to 2.5%
  • Inflation Back towards the Comfort Zone 2-2.5%
  • Rates: “ Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless the economy seems likely to continue to expand at a moderate pace over coming quarters. ..In these circumstances the Committees predominant concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth as implied by the incoming information.” 3/21/2007
2007 questions
2007 Questions
  • How will the housing correction play out? What does the subprime implosion mean?
  • Will business investment and trade hold up? The investment data has softened.
  • Housing/auto adjustment, energy price increases-piling on?
  • How tight are labor markets and how fast can we grow?
house price appreciation annual to 12 31 2006 and q4 06
OFHEO Q4/2006

US 5.9% (1.1%)

Utah 17.55% (3.67%)

Wyoming 14.29% (3.28%)

Idaho 13.99% (2.14%)

Washington 13.7% (1.93%)

Oregon 13.49% (1.55%)

New Mexico 13.08% (2.14%)

Arizona 9.6% (1%)

Hawaii 7.33% (-.8%)

California 4.6% (-.38%)

Kansas 4.47% (1%)

Nevada 3.95% (-.16%)

Colorado 3.32% (.87%)

Iowa 3.07% (.9%)

Nebraska 2.61%( -.24%)

Minnesota 2.47% (.86%)

Ohio 1.05% (.36%)

Massachusetts .45%(.69%)

Michigan -.44% (.51%)

Kokomo, Indiana -5.3%

Source: OFHEO

NAR Q4 73 of 149 Metros down in Q4, 5 Unchanged, 71 up

House Price Appreciation Annual to 12/31/2006 and ( Q4 06)
perspective and how does it end
Perspective and How Does it end?
  • MBA 4.95% of Mortgages Delinquent in Q4 13.3% of Subprime
  • Majority of Subprime have no escrow for INS and Taxes
  • Fed 2004 Survey 69.4% of Homeowners have mortgage 47.9% of all Families
  • Mortgage Equity Withdrawal is Plummeting (-47% Annual Rate in Q4 Greenspan and Kennedy)
  • Construction Decline and Removal from Market
  • Increased Affordability: Prices, Rates, Income
  • Changed Expectations
job growth update january 2007 data 49 states growing
Louisiana 1

Arizona 2

Utah 3

Idaho 4

Nevada 5

Wyoming 6

Hawaii 7

North Dakota 8

New Mexico 13

Washington 14

Oregon 19

California 20

Florida 21

New York 29

Massachusetts 30

Indiana 46

Wisconsin 48

Ohio 49

Michigan 50

Job Growth Update –January 2007 Data-49 States Growing
environment
Environment
  • Adjacency: To Portland: One Metro County
  • Regional Centers
  • Falling Communications Costs-Maintain Infrastructure and Skills
  • Amenities-Gorge, Mountains, etc.
  • Dramatic Taxation Differences
  • Regulatory Hangover
  • Aging Crew