MARKET OUTLOOK · PDF file... 2010.12 2011.02 2011.04 2011.06 2011.08 2011.10 2011.12 2012.02...

© 2015 Move, Inc. All rights reserved. Do not copy or distribute. 1

REALTOR.COM® MARKET OUTLOOK Jonathan Smoke Chief Economist

June 2, 2015


NATIONAL CONTEXT

© 2015 Move, Inc. All rights reserved. Do not copy or distribute.

JOB EXPANSION MODE After cold start to year, April back up to 223,000 jobs created

3

-

2.0

4.0

6.0

8.0

10.0

12.0

122.0

124.0

126.0

128.0

130.0

132.0

134.0

136.0

138.0

140.0

142.0

144.0

2000

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2000

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.09

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2012

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2012

.09

2013

.01

2013

.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

Mill

ions

Employment and Unemployment Nonfarm Employment Unemployment Rate

Source: Bureau of Labor Statistics


REAL ESTATE RECOVERY Sales decline in April from March but up 6% over last year

4

Source: National Association of REALTORS® Existing Home Sales Report

$0

$50,000

$100,000

$150,000

$200,000

$250,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2000

.01

2000

.05

2000

.09

2001

.01

2001

.05

2001

.09

2002

.01

2002

.05

2002

.09

2003

.01

2003

.05

2003

.09

2004

.01

2004

.05

2004

.09

2005

.01

2005

.05

2005

.09

2006

.01

2006

.05

2006

.09

2007

.01

2007

.05

2007

.09

2008

.01

2008

.05

2008

.09

2009

.01

2009

.05

2009

.09

2010

.01

2010

.05

2010

.09

2011

.01

2011

.05

2011

.09

2012

.01

2012

.05

2012

.09

2013

.01

2013

.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

Existing Home Sales and Prices EHS SAAR Med Exist Home Price


COMPOSITION RETURNING TO NORMAL Distress activity down substantially

5

Source: National Association of REALTORS® Monthly Realtor Confidence Survey

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008

.10

2008

.12

2009

.02

2009

.04

2009

.06

2009

.08

2009

.10

2009

.12

2010

.02

2010

.04

2010

.06

2010

.08

2010

.10

2010

.12

2011

.02

2011

.04

2011

.06

2011

.08

2011

.10

2011

.12

2012

.02

2012

.04

2012

.06

2012

.08

2012

.10

2012

.12

2013

.02

2013

.04

2013

.06

2013

.08

2013

.10

2013

.12

2014

.02

2014

.04

2014

.06

2014

.08

2014

.10

2014

.12

2015

.02

2015

.04

Composition of Sales by Type Foreclosed Short Sale Normal


INVENTORY HAS BEEN A CONSTRAINT Demand continues to exceed supply

6

Source: National Association of REALTORS®, Commerce Department

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000

.01

2000

.05

2000

.09

2001

.01

2001

.05

2001

.09

2002

.01

2002

.05

2002

.09

2003

.01

2003

.05

2003

.09

2004

.01

2004

.05

2004

.09

2005

.01

2005

.05

2005

.09

2006

.01

2006

.05

2006

.09

2007

.01

2007

.05

2007

.09

2008

.01

2008

.05

2008

.09

2009

.01

2009

.05

2009

.09

2010

.01

2010

.05

2010

.09

2011

.01

2011

.05

2011

.09

2012

.01

2012

.05

2012

.09

2013

.01

2013

.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

Months' Supply of Homes for Sale Existing New


NEW CONSTRUCTION SLOW AGAIN Another harsh winter but strong 20% rebound in April

7

Source: Commerce Department

0

500

1000

1500

2000

2500

Residential Construction Single-Family Starts Multi-Family Starts


HOMEOWNERSHIP STILL FALLING Households growing again but with more renters

8

Source: Census Bureau

60.0

61.0

62.0

63.0

64.0

65.0

66.0

67.0

68.0

69.0

70.0

90,000

95,000

100,000

105,000

110,000

115,000

120,000

Households and Home Ownership Households Home Ownership Rate


INVENTORY IS TIGHT Age of inventory consistently lower year-over-year

9

0

20

40

60

80

100

120

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Listings and Median Age of Inventory Listings Median Age of Inventory

Source: Realtor.com®


ASKING PRICES AND RENTS UP Rents and home prices both accelerating growth this year

10

Source: Realtor.com® and Altos Research

$1,350

$1,400

$1,450

$1,500

$1,550

$1,600

$1,650

$1,700

$1,750

160000

170000

180000

190000

200000

210000

220000

230000

National Home Price and Rent Trends Median Existing List Price Median Asking Rent


LISTING PRICES GREW 8% Y/Y IN APR Median list price increases are widespread

April 2015

Source: Realtor.com®


RENTS RISING Y/Y IN 2/3 OF COUNTIES Rent increases adding to demand for buying

2015

Source: Realtor.com® Analysis of HUD Fair Market Rents


AFFORDABILITY REMAINS STRONG Low rates have enabled purchasing power but now weakening

13

0.0

50.0

100.0

150.0

200.0

250.0

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2000

.01

2000

.05

2000

.09

2001

.01

2001

.05

2001

.09

2002

.01

2002

.05

2002

.09

2003

.01

2003

.05

2003

.09

2004

.01

2004

.05

2004

.09

2005

.01

2005

.05

2005

.09

2006

.01

2006

.05

2006

.09

2007

.01

2007

.05

2007

.09

2008

.01

2008

.05

2008

.09

2009

.01

2009

.05

2009

.09

2010

.01

2010

.05

2010

.09

2011

.01

2011

.05

2011

.09

2012

.01

2012

.05

2012

.09

2013

.01

2013

.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

Income and Affordability Median Family Income Affordability Index

Source: Commerce Department and National Association of REALTORS®


CHEAPER TO BUY IN 4/5 OF COUNTIES Simple monthly cost analysis favors buying

Source: Realtor.com® Analysis of HUD Fair Market Rents, Nielsen Pop-Facts Demographics 2015 and Realtor.com® Data


HOME OWNERSHIP BUILDS WEALTH Over 30 years, buying now would create over $200k on average

Realtor.com®


INCREDIBLE RATES REMAIN Last call for a once-in-a-lifetime opportunity

16

Source: Freddie Mac

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Published Mortgage Rates

30 yr Fixed 1 Yr Adj


DEMAND DRIVERS


DEMOGRAPHICS SET THE TABLE Population and its composition define the future

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

US Live Births by Year and Generation

Boom X Y Z

Source: Realtor.com® Analysis of US National Center for Health Statistics


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70

Thou

sand

s

Current US Population By Age, 0-74

19

DEMOGRAPHICS SET THE TABLE When viewed by age, importance of Millennials becomes clearer

Source: Realtor.com® Analysis of US Census Bureau Population Estimates

Boom X Y Z


EMPLOYMENT BEGETS OPPORTUNITY 2014 was best year for growth in 25-34 employment since 1987

20

26%

13%

33%

30%

25%

13%

32%

Source: Bureau of Labor Statistics, Realtor.com® Analysis

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Year-Over-Year Gains in Civilian Employment Civilian Employment 25-34 Employment


MILLENNIAL OWNERSHIP VARIES Strong correlation with affordable markets

Source: Nielsen Demographics PopFacts 2015, Realtor.com® Analysis


LIFE DRIVES HOUSING DEMAND Millennial are building families

26%

13%

33%

30%

25%

13%

32%

Source: BDX June 2014 Home Shopper Study

13

14

15

15

16

17

25

26

15

31

17

17

18

19

23

28

30

30

32

32

0% 25% 50%

Desire to live closer to good schools

Change of job/job location

Increase in family size

Getting married/moving in with partner

Increasing rent

Increase in income

Favorable home prices

Favorable interest rates

Planning to increase to family size

Tired of current home

% of respondents

Top 10 millennial triggers

86% of Millennial shoppers indicate

some form of change in family size* as a trigger

*Change in Family Size includes: Change of family circumstances/composition, Increase in family size, Decrease in family size, Planning to increase family size, upcoming decrease in family size, older parent moving into my home, getting married/moving in with partner.

ALL MILLENNIAL


BOOMERS KEEP DISTURBING Boomer wave is causing a major population shift

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2015 2020

Population by Age (United States) Under 25 25-34 35-54 55+

Over the next 5 years:

Population grows 4%

55+ grows 12%

35-54 declines 1%

25-34 grows 1%

Under 25 grows 1%

27%

26%

13%

33%

30%

25%

13%

32%

Source: Nielsen Demographics Pop-Facts 2015


WE COULD DO MORE


ACCESS TO CREDIT REMAINS AN ISSUE Mortgage access up 7% year-over-year in April

25

26%

13%

33%

30%

25%

13%

32%

Source: Mortgage Bankers Association, Haver Analytics

0

100

200

300

400

500

600

700

800

900

1000

Mortgage Credit Availability Index Mar-2012=100


CREDIT ACCESS HAS BEEN A PROBLEM In April the average FICO score on a closed mortgage loan was 729; the average denied score fell to 674

26%

13%

33%

30%

25%

13%

32%

Source: Ellie Mae and Fair Isaac Corporation

300-499 5.8 500-549

8.4

550-599 9.8

600-649 10.2

650-699 12.7 700-749

16.3

750-799 18.4

800-850 18.6

FICO Population Distribution (2013)

300

350

400

450

500

550

600

650

700

750

800

2011

.08

2011

.10

2011

.12

2012

.02

2012

.04

2012

.06

2012

.08

2012

.10

2012

.12

2013

.02

2013

.04

2013

.06

2013

.08

2013

.10

2013

.12

2014

.02

2014

.04

2014

.06

2014

.08

2014

.10

2014

.12

2015

.02

2015

.04

Average FICO Score by Closed and Denied Applications

Closed Denied 2013 Median FICO (711)


• More jobs • Millennials reaching tipping point of key 25-34 year range • More households • More life events

• Mortgage rates on the move up from historic lows • Qualification standards should loosen in a risk-appropriate way • New conventional 3% down payment mortgages •  Lower FHA insurance premiums

•  This is the perfect year to list

27

KEY FACTORS COMING TOGETHER More demand and recovery in first-time buyers


2015 OFF TO A STRONG START Traffic up to 15% over April 2015; 21-34 year olds up 32%

28

26%

13%

33%

30%

25%

13%

32%

Source: Realtor.com® Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data

0

20,000

40,000

60,000

80,000

100,000

120,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Thou

sand

s

Thou

sand

s

Real Estate Web Unique Visitors by Age 21-34 35-54 55+ All Traffic (Right Axis)

32% of 55+, 50% of 35-54, and 62% of 21-34 in April


IMPEDIMENTS TO PURCHASE Biggest issues are supply, time and down payment

29

26%

13%

33%

30%

25%

13%

32%

Source: Realtor.com Survey of Buyer Traffic, April 2015

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Have not yet found a house that meets my needs

Cannot find a good house in my budget range

Always overbid by other buyers

Just starting to explore

Haven't decided on a specific neighborhood/town

Need to improve credit score

Lack enough funds for down payment

I owe more on my current home than it is worth

Can't sell current home

Currently on a lease

Having difficulty qualifying for a mortgage

What's Getting in the Way of Making a Home Purchase? Repeat First-Time All Buyers


REMEMBER THESE THEMES

1.  Mortgage rates and home prices are solidly on an upward trajectory

2.  Affordability and impact of mortgage options will greatly influence demand

3.  Behold the enormous impact of Millennials and Boomers and what that means for demand

4.  The real estate market is returning to a normal rhythm—life drives demand but supply impacts the results


THERE IS NO SUCH THING AS A US HOUSING MARKET


EVEN MORTGAGE RATES VARY Pennsylvania Close to National Averages

32

Source: Realtor.com


JOBS RECOVERED Unemployment rate back down and better than US overall

33

Source: BLS, Moody’s Analytics

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

5,400,000

5,450,000

5,500,000

5,550,000

5,600,000

5,650,000

5,700,000

5,750,000

5,800,000

5,850,000

5,900,000

Jan-

00

Jun-

00

Nov

-00

Apr

-01

Sep

-01

Feb-

02

Jul-0

2 D

ec-0

2 M

ay-0

3 O

ct-0

3 M

ar-0

4 A

ug-0

4 Ja

n-05

Ju

n-05

N

ov-0

5 A

pr-0

6 S

ep-0

6 Fe

b-07

Ju

l-07

Dec

-07

May

-08

Oct

-08

Mar

-09

Aug

-09

Jan-

10

Jun-

10

Nov

-10

Apr

-11

Sep

-11

Feb-

12

Jul-1

2 D

ec-1

2 M

ay-1

3 O

ct-1

3 M

ar-1

4 A

ug-1

4 Ja

n-15

Pennsylvania Employment and Unemployment Rate Non-Farm Employment (SA) Unemployment Rate (%, SA)


PRICES NEARLY RECOVERED Existing home prices near peak but affordability remains strong

34

Source: National Association of Realtors®, Moody’s Analytics

0

50

100

150

200

250

300

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

Existing Home Prices and Affordability Median Existing Home Price Affordability Index


LIST PRICES KEEPING MOMENTUM Prices Still Rising in Most Metros Y/Y (April 2015)

35

Source: Realtor.com


Y/Y PRICE VARIATION IN APRIL Top Metros Experiencing Growth Y/Y (April 2015)

36

Source: Realtor.com


FOCUS ON HARRISBURG Wide Variation in Y/Y Price Growth (April 2015)

37

Source: Realtor.com


INVENTORY STILL TIGHT Only Pittsburgh Metro is Seeing Y/Y Growth (April 2015)

38

Source: Realtor.com


TWO METROS DOMINATE INVENTORY Half of Active Inventory in Pittsburgh/Philly (April 2015)

39

Source: Realtor.com


AGE OF INVENTORY Inventory Moving Faster and Faster (April 2015)

40


FOCUS ON HARRISBURG Median Age in Harrisburg Metro is 80 Days (April 2015)

41


PENNSYLVANIA INTEREST BY ZIP Most Viewed Zips YTD 2015

42

Source: Realtor.com


HOTTEST ZIPS YEAR-TO-DATE 2015 Adjusting Interest by Household Count

43


HARRISBURG HOTTEST ZIPS YTD Where Interest Outpaces Size

44

Source: Realtor.com


HOTTEST HOMES MAY 2015 60 of the Top 300 Hottest Listings are in Pennsylvania

45


HOTTEST HOMES MAY 2015 Five of the Top 300 Hottest Listings are in Harrisburg

46

Source: Realtor.com


RENT PRICES STABLE Rents Virtually Flat Year-Over-Year in 2/3 Counties

47

Source: Realtor.com® Analysis of HUD Fair Market Rents


CHEAPER TO BUY IN 4/5 COUNTIES Relative to Income, Monthly Costs Favor Buying

48

Source: Realtor.com® Analysis of Nielsen Pop-Facts Demographics, HUD Fair Market Rents and Realtor.com Data


OLDER SHIFT IN PENNSYLVANIA TOO Population growth because of Boomers and Millennials only

49


0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2015 2020

Population by Age (Pennsylvania) Under 25 25-34 35-54 55+

27%

26%

13%

33%

30%

25%

13%

32%

Over the next 5 years:

Population grows 1%

55+ grows 9%

35-54 declines 6%

25-34 grows 1%

Under 25 declines 2%


HOME OWNERSHIP IS STRONG Ownership Rate in PA (70%) is 5% higher than US average (64%)

50



MILLENNIAL OWNERSHIP Ownership Rate (46%) also 5% higher than US average (41%)

51



HOUSEHOLD GROWTH 2015-2020 Growth hot spots throughout the state

52



AFFORDABILITY IS STRONG IN PA Most zip codes priced within range of median household

53

"Bad Zips” are those where at least half of the households in the zip cannot afford to buy a home.

Source: Realtor.com® Analysis of Nielsen Pop-Facts Demographics and Realtor.com Data


BENEFIT OF BUYING 30 YR FULL Average benefit in Pennsylvania metros $170K

54

Source: Realtor.com® Opportunity Cost Report May 2015.


OPPORTUNITY COST FOR DELAY 1 YR Average opportunity cost in Pennsylvania metros $13K

55

Source: Realtor.com® Opportunity Cost Report May 2015.


• GDP grows 2.6% • Payroll growth of 3 million jobs •  1.3 million household formations

• Home prices appreciate 5.4% on median existing home price • Existing home sales grow 6% to 5. 2 million • New home sales grow 18% to 516,000 • Housing starts increase 14% to 1.14 million •  30-year fixed rate ends year at 4.45%

• Affordability declines 4%

56

REALTOR.COM® 2015 FORECAST Key economic and housing metrics


Jonathan Smoke Chief Economist

realtor.com® [email protected]

@SmokeonHousing 703.634.9193

THANK YOU


MARKET OUTLOOK · PDF file... 2010.12 2011.02 2011.04 2011.06 2011.08 2011.10 2011.12 2012.02...

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Transcript of MARKET OUTLOOK · PDF file... 2010.12 2011.02 2011.04 2011.06 2011.08 2011.10 2011.12 2012.02...