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Transcript of Economic summit presentation
OCHAR ECONOMIC SUMMIT& INSTALLATION
11:30 a.m.-2 p.m., Tuesday, Nov. 15
You’re tweeting? Use our hashtag: #OCHARmtg
WELCOME!
Sandra PaulOrange Chatham Association of REALTORS
2016 Board President
THANK YOU,FOUNDATION SPONSOR!
THANK YOU,ROOF SPONSORS!
THANK YOU WALL SPONSORS!
THANK YOU WINDOW & DOOR SPONSORS!
THANK YOU WINDOW & DOOR SPONSORS!
WELCOME!
Jaye KrellerOrange Chatham Association of REALTORS
2017 President-Elect
17,544
$17,544
THE FORMULA: GROSS COMMISSIONS EARNEDX 6% = ________________
THANK YOU, VOLUNTEERSAND SPONSORS OF
ANNE HOOLE, CHAIR
CAROLINE SHILLITO
CHRISTY BOWMAN
FRANK GLEN
DALE LOHREYJACKIE TANNER
JENNY MCMILLAN
LINDA MARTIN
MONICA HYDE
SAM BROOKS
TIM FERGUSON
PAUL & BELINDA CALDWELL
Nancy JohnsonRoof Sponsor
The Multari Group – Movement Mortgage
Tom HoltFoundation Sponsor
Bagwell Holt Smith PA
Dr. Lawrence YunChief Economist and Senior Vice President of Research
at the NATIONAL ASSOCIATION OF REALTORS®
Economic and Housing Market Outlook
By Lawrence Yun, Ph.D.Chief Economist, National Association of REALTORS®
Presentations At Raleigh Regional Association of REALTORS®At Orange-Chatham Association of REALTORS® At Durham Regional Association of REALTORS®
November 15 and 16, 2016
Lifetime Wealth at near All-Time High
1990 - Q1 1993 - Q4 1997 - Q3 2001 - Q2 2005 - Q1 2008 - Q4 2012 - Q30
100002000030000400005000060000700008000090000
100000
Median Household Income(Inflation Adjusted)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$50,000$51,000$52,000$53,000$54,000$55,000$56,000$57,000$58,000$59,000
Annual GDP … Below 3% for 11 straight years
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
-4
-2
0
2
4
6
8
10
GDP Annual Growth Rate
Sluggish GDP and Gap after Recession($2.5 trillion gap … $7,000 per person)
2000
- Q1
2000
- Q4
2001
- Q3
2002
- Q2
2003
- Q1
2003
- Q4
2004
- Q3
2005
- Q2
2006
- Q1
2006
- Q4
2007
- Q3
2008
- Q2
2009
- Q1
2009
- Q4
2010
- Q3
2011
- Q2
2012
- Q1
2012
- Q4
2013
- Q3
2014
- Q2
2015
- Q1
2015
- Q4
1000011000120001300014000150001600017000180001900020000
$ billion 3% Growth Line
Slow 2% Growth Line
Sluggish Business Spending Despite High Profit
2000
2002
2004
2006
2008
2010
2012
2014
0
500
1000
1500
2000
2500
ProfitsBusiness Spending
Jobs(8 million lost … 15 million gained)
2000 - Jan 2002 - Jan 2004 - Jan 2006 - Jan 2008 - Jan 2010 - Jan 2012 - Jan 2014 - Jan 2016 - Jan120,000
125,000
130,000
135,000
140,000
145,000
150,000In thousands
Non-farm Employment Growth By State
Jobs in Durham-Chapel Hill
2000 - Jan 2002 - Apr 2004 - Jul 2006 - Oct 2009 - Jan 2011 - Apr 2013 - Jul 2015 - Oct250
260
270
280
290
300
310 In thousands
Jobs in Raleigh
2000 - Jan 2002 - Apr 2004 - Jul 2006 - Oct 2009 - Jan 2011 - Apr 2013 - Jul 2015 - Oct400
450
500
550
600
650
Jobs in Greensboro-High Point
2000 - Jan 2002 - Apr 2004 - Jul 2006 - Oct 2009 - Jan 2011 - Apr 2013 - Jul 2015 - Oct300
310
320
330
340
350
360
370
380
390
Jobs in Rocky Mount
2000 - Jan 2002 - Apr 2004 - Jul 2006 - Oct 2009 - Jan 2011 - Apr 2013 - Jul 2015 - Oct50
55
60
65
70
75
Employment Rate: Men vs Women
1990 - Jan1992 - Oct 1995 - Jul 1998 - Apr2001 - Jan2003 - Oct 2006 - Jul 2009 - Apr2012 - Jan2014 - Oct40
45
50
55
60
65
70
75
80
Housing Market Turning?
Annual Home Sales
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
NewExisting
Median and Average Home Price
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
0
50000
100000
150000
200000
250000
300000Median Average
Dollar Volume Growth Rate%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-30
-20
-10
0
10
20
30
4.38.8
15.518.2
20.7
13.9
-8.0
-23.0-25.5
-5.6
-2.1 -1.1
15.219.0
0.9
10.97.0
Triangle Area Housing Stats• Closings … up 10% year-to-date• Price … up 5%
• Inventory … down 16%• Months Supply … 3 months
Home Price Index - NC
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
2015
- Q1
2016
- Q1
100110120130140150160170180190200
Raleigh Durham-Chapel Hill
Home Price Index – CO and PA
2007
- Q1
2007
- Q3
2008
- Q1
2008
- Q3
2009
- Q1
2009
- Q3
2010
- Q1
2010
- Q3
2011
- Q1
2011
- Q3
2012
- Q1
2012
- Q3
2013
- Q1
2013
- Q3
2014
- Q1
2014
- Q3
2015
- Q1
2015
- Q3
2016
- Q1
150
170
190
210
230
250
270
290
Allentown Denver
NAR HOME Survey(March 2015 to September 2016)
315
415
515
615
715
815
915
1015
1115
1215 11
621
631
641
651
661
671
681
691
650%55%60%65%70%75%80%85%90%
Do you believe that now is a good time to BUY a home or not? … YES
NAR HOME Survey(March 2015 to September 2016)
315 415 515 615 715 815 915 1015 1115 1215 116 216 316 416 516 616 716 816 916%
5%
10%
15%
20%
25%
30%
35%
Do you believe that now is a good time to BUY a home or not? … NO
REALTOR Buyer Traffic Index(% change from a year ago)
2011
- Jan
2011
- May
2011
- Sep
2012
- Jan
2012
- May
2012
- Sep
2013
- Jan
2013
- May
2013
- Sep
2014
- Jan
2014
- May
2014
- Sep
2015
- Jan
2015
- May
2015
- Sep
2016
- Jan
2016
- May
-40
-20
0
20
40
60
80
100
Mortgage Purchase Applications(% change from a year ago)
Jan 7 2011 Jan 6 2012 Jan 4 2013 Jan 3 2014 Jan 2 2015 Jan 1 2016
-60
-40
-20
0
20
40
60
Monthly Mortgage Payment for Buyers
2011
- Jan
2011
- Apr
2011
- Jul
2011
- Oct
2012
- Jan
2012
- Apr
2012
- Jul
2012
- Oct
2013
- Jan
2013
- Apr
2013
- Jul
2013
- Oct
2014
- Jan
2014
- Apr
2014
- Jul
2014
- Oct
2015
- Jan
2015
- Apr
2015
- Jul
2015
- Oct
2016
- Jan
2016
- Apr
2016
- Jul
500550600650700750800850900950
1000
Pending Home Sales Index(Seasonally Adjusted)
2011
- Jan
2011
- Apr
2011
- Jul
2011
- Oct
2012
- Jan
2012
- Apr
2012
- Jul
2012
- Oct
2013
- Jan
2013
- Apr
2013
- Jul
2013
- Oct
2014
- Jan
2014
- Apr
2014
- Jul
2014
- Oct
2015
- Jan
2015
- Apr
2015
- Jul
2015
- Oct
2016
- Jan
2016
- Apr
2016
- Jul
80
85
90
95
100
105
110
115
120
Rent Growth(% change from a year ago)
2011
- Jan
2011
- May
2011
- Sep
2012
- Jan
2012
- May
2012
- Sep
2013
- Jan
2013
- May
2013
- Sep
2014
- Jan
2014
- May
2014
- Sep
2015
- Jan
2015
- May
2015
- Sep
2016
- Jan
2016
- May
0.00.51.01.52.02.53.03.54.04.5
Market Turning? Not Clear,
though weakening momentum
Do You Ever Want to Own a Home in Future?
315 415 515 615 715 815 915 1015 1115 1215 116 216 316 416 516 616 716 816 916%
10%20%30%40%50%60%70%80%90%
100%
Yes No
Homeownership RateAt Near 50-year low
1965 - Q1 1971 - Q3 1978 - Q1 1984 - Q3 1991 - Q1 1997 - Q3 2004 - Q1 2010 - Q360
61
62
63
64
65
66
67
68
69
70
Younger Households Less Likely to Own a Home
34 and younger 65 and older0%
10%20%30%40%50%60%70%80%90%
Homeownership Rate
2004 (Peak) 2016 Q2
Source: Census Bureau
Median net worth of households headed by…
Wealth Gap Between Young Adults (under-35) and Retiree (65+)
1983 2013 2016 est.$0
$50,000
$100,000
$150,000
$200,000
$250,000
$15,260 $10,460 $8,500
$120,524
$210,500$230,000
Student Loan …NAR-ASA Study implies 5 year Delay
(in $billion)
2006
- Q1
2006
- Q3
2007
- Q1
2007
- Q3
2008
- Q1
2008
- Q3
2009
- Q1
2009
- Q3
2010
- Q1
2010
- Q3
2011
- Q1
2011
- Q3
2012
- Q1
2012
- Q3
2013
- Q1
2013
- Q3
2014
- Q1
2014
- Q3
2015
- Q1
2015
- Q3
2016
- Q1
0
200
400
600
800
1000
1200
1400
1600
Consumer Price Index over the Long Haul
(Rental Income > CPI by 25%)
1983 - Jul 1988 - Jul 1993 - Jul 1998 - Jul 2003 - Jul 2008 - Jul 2013 - Jul0
50
100
150
200
250
300
350
RentCPI
Consumer Price Index over the Long Haul
1983 - Jul 1988 - Jul 1993 - Jul 1998 - Jul 2003 - Jul 2008 - Jul 2013 - Jul0
100
200
300
400
500
600
Med-icalRentCPI
Consumer Price Index over the Long Haul
1983 - Jul 1988 - Jul 1993 - Jul 1998 - Jul 2003 - Jul 2008 - Jul 2013 - Jul0
100
200
300
400
500
600
700
800
900
Tu-itionMed-ical
Social Benefits to Homeownership
• Higher student test score• Lower juvenile delinquency rate• Better health outcome and higher self-esteem from
having a sense of control in life• Increased charitable donations and volunteering• Local civic engagement
• All benefits goes away if foreclosure … therefore need sustainable homeownership
Borrowers Not Defaulting(Serious Delinquency Rate)
2005
- Q1
2005
- Q3
2006
- Q1
2006
- Q3
2007
- Q1
2007
- Q3
2008
- Q1
2008
- Q3
2009
- Q1
2009
- Q3
2010
- Q1
2010
- Q3
2011
- Q1
2011
- Q3
2012
- Q1
2012
- Q3
2013
- Q1
2013
- Q3
2014
- Q1
2014
- Q3
2015
- Q1
2015
- Q3
2016
- Q1
0.0
2.0
4.0
6.0
8.0
10.0
12.0
U.S. All Mortgages
Veterans Affairs Mortgages
NC Mortgages
Distressed Property Sales(% of Total Sales)
2008
- Oct
2009
- Feb
2009
- Jun
2009
- Oct
2010
- Feb
2010
- Jun
2010
- Oct
2011
- Feb
2011
- Jun
2011
- Oct
2012
- Feb
2012
- Jun
2012
- Oct
2013
- Feb
2013
- Jun
2013
- Oct
2014
- Feb
2014
- Jun
2014
- Oct
2015
- Feb
2015
- Jun
2015
- Oct
2016
- Feb
2016
- Jun
0102030405060
Short Sale Foreclosure
Inventory of Homes per 100 Households
2000 - Jan 2002 - Jan 2004 - Jan 2006 - Jan 2008 - Jan 2010 - Jan 2012 - Jan 2014 - Jan 2016 - Jan1.0
1.5
2.0
2.5
3.0
3.5
4.0
Single-family Housing Permits and Starts –
Grossly InadequateThousand units
2000 - Jan 2002 - Jan 2004 - Jan 2006 - Jan 2008 - Jan 2010 - Jan 2012 - Jan 2014 - Jan 2016 - Jan0
200
400
600
800
1000
1200
1400
1600
1800
2000
Monthly New Home Sales
2014
- Jan
2014
- Mar
2014
- May
2014
- Jul
2014
- Sep
2014
- Nov
2015
- Jan
2015
- Mar
2015
- May
2015
- Jul
2015
- Sep
2015
- Nov
2016
- Jan
2016
- Mar
2016
- May
2016
- Jul
2016
- Sep
300
350
400
450
500
550
600
650Thousand units
Raleigh Housing Permits
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20160
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Durham-Chapel Hill Housing Permits
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20160
1000
2000
3000
4000
5000
6000
Median Price
2000 - Jan2002 - Jan2004 - Jan2006 - Jan2008 - Jan2010 - Jan2012 - Jan2014 - Jan2016 - Jan$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Existing New
If Housing Shortage Persist … Then
• Rent Control
• Vancouver– 15% foreign buyer tax
• Huey Long – Confiscate all second homes
No CPI Inflation – Yet
2000 - Jan 2001 - Oct 2003 - Jul 2005 - Apr 2007 - Jan 2008 - Oct 2010 - Jul 2012 - Apr 2014 - Jan
-3
-2
-1
0
1
2
3
4
5
6
Fed Policy and Mortgage Rate
2000 - Jan 2002 - Jan 2004 - Jan 2006 - Jan 2008 - Jan 2010 - Jan 2012 - Jan 2014 - Jan 2016 - Jan0123456789
Mortgage Rate Fed Funds Rate
Fed Rate Hike in December ‘15
Next hike in December ‘16?
then again in …
Federal Revenue and Spending
2000 - Jan 2002 - Apr 2004 - Jul 2006 - Oct 2009 - Jan 2011 - Apr 2013 - Jul 2015 - Oct1500000
2000000
2500000
3000000
3500000
4000000
Rolling 12-month total, in $million
Spending Revenue
Federal Debt (Held by Public, excluding intergovernmental obligations)
2001 - Jan 2002 - Jul 2004 - Jan 2005 - Jul 2007 - Jan 2008 - Jul 2010 - Jan 2011 - Jul 2013 - Jan 2014 - Jul 2016 - Jan0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
Tom Barrack
“Real Estate Market is Getting Bubblicious”
Commercial Property Price may be Bubblish
2000
- Q1
2000
- Q4
2001
- Q3
2002
- Q2
2003
- Q1
2003
- Q4
2004
- Q3
2005
- Q2
2006
- Q1
2006
- Q4
2007
- Q3
2008
- Q2
2009
- Q1
2009
- Q4
2010
- Q3
2011
- Q2
2012
- Q1
2012
- Q4
2013
- Q3
2014
- Q2
2015
- Q1
2015
- Q4
0
50
100
150
200
250
300
Source: Federal Reserve
Rising Cap Rates and Commercial Real Estate Prices
• Steady prices in mid-tier markets• Price drops in trophy properties
– Green Street price index could fall 4% to 8% over the next two years
Forecast
Normal vs. Now2000 (Likely Normal) 2016
Existing Home Sales 5.2 million 5.3 million
New Home Sales 900,000 500,000
Population 282 million 324 million
Jobs 132 million 145 million
Total U.S. Household Wealth
$44 trillion $85 trillion
Post-College Likely Renters(Age 25 to 29)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
18000
19000
20000
21000
22000
23000
24000
25000In thousands
Likely First-time Buyers(Age 30 to 39)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
18000
19000
20000
21000
22000
23000
24000
30-34 35-39
In thousands
Likely Trade-Up Buyers(Age 40 to 49)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
18000
19000
20000
21000
22000
23000
24000
40-44 45-49
In thousands
Vacation Home Buyers(Age 50 to 59)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
15000
16000
17000
18000
19000
20000
21000
22000
23000
50-54 55-59
In thousands
Retired - Relocation(Age 60+)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
40000
45000
50000
55000
60000
65000
70000
75000
80000In thousands
Percentage Living with Mom(2.5 million above Norm)
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
44
46
48
50
52
54
56
58
18-25
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
02468
10121416
26-35
Multifamily Housing Starts(12 month average; in thousands)
2000 - Jan 2001 - Dec2003 - Nov 2005 - Oct 2007 - Sep 2009 - Aug 2011 - Jul 2013 - Jun2015 - May0
50
100
150
200
250
300
350
400
450
Economic Forecast2015 2016
Likely2017
Forecast
2018 Foreca
st
GDP Growth
2.6% 1.5% 2.1% 2.5%
Job Growth
+2.6 million
+2.0 million
+2.1 million
+2.4million
CPI Inflation
0.3% 1.2% 2.5% 2.5%
Housing Forecast2015 2016
Likely2017 Foreca
st
2018 Foreca
stNew Home Sales
500,000 570,000 620,000 700,000
Existing Home Sales
5.3 million
5.4 million
5.5 million
5.7 million
Median Price Growth
+ 6.8% +4.0% 4.2% 2.5%
30-year Rate
3.9% 3.6% 4.1% 4.5%
Normal vs. Now2000 (Likely Normal) 2015
Existing Home Sales 5.2 million 5.2 million
New Home Sales 900,000 500,000
Population 282 million 320 million
Jobs 132 million 144 million
Total U.S. Household Wealth
$44 trillion $85 trillion
Commercial Real Estate Forecast 2016-2017
Vacancy Rent
Apartment From 4.7% to 5.0%
3.5% per year
Office From 13% to 12%
4% per year
Industrial Stable at near 9%
4% per year
Retail Stable at near 11%
2% per year
Trump Presidency• Dodd-Frank?
• Need Construction Workers … Community College Training
• Fannie/Freddie and Mortgage Availability?
• Tax Simplification?
• Natural Disaster and Flood Insurance?
• EPA, land use, development fees?
IT’S TIME FOR
THANK YOU FOR YOUR SERVICE!
Randy Cox Michael Fox Claire Billingsley
INSTALLATION OF THE 2017 OFFICERS & DIRECTORS
Mark Zimmerman
2017 OFFICERSPresident
Jaye Kreller Kyle Rank
President ElectPast President
Sandra Paul
2017 OFFICERS
Pat Serkedakis
Treasurer Assistant Treasurer
Linda Long
2017 DIRECTORS
Scott Kelley Erin Daniel Jo Ellen Munsee
Vickie McDaniel Melanie Girard
OATH OF OFFICE
THANK YOU!
MARK YOUR CALENDARSFOR UPCOMING EVENTS
COME MINGLE AT THEHOLIDAY PARTY & SANTA STRUT!
5:30-8 p.m., Wednesday, Dec. 7 at Carolina Brewery in Pittsboro *note location change
SAVE THE DATE FOR THE INAUGURAL BALL
6-11 p.m., Saturday, Feb. 4 at The Carolina Inn
OCHAR ECONOMIC SUMMIT& INSTALLATION
11:30 a.m.-2 p.m., Tuesday, Nov. 15
You’re tweeting? Use our hashtag: #OCHARmtg
