Real Estate Market Update - Bend Chamber of Commerce · 2018-02-22 · Need flexibility of renting...
Transcript of Real Estate Market Update - Bend Chamber of Commerce · 2018-02-22 · Need flexibility of renting...
2018 Real Estate Forecast Breakfast
Central Oregon Association of REALTORS®
Real Estate Market Update
Paul C. Bishop, PhD, CBEVice President, Research
NATIONAL ASSOCIATION OF REALTORS®
February 22, 2018
Real Estate Market Update
Economic Contribution of Real Estate
Individual and Community Impact
The Economy
Steady Gains
Market Conditions
Rising Prices and Too Few Homes for Sale
What’s Next
Challenges and Opportunities
Presentation Slides Available at:
http://bit.ly/COARForecastBreakfast2018
Economic
Contribution of
Real Estate:
Individual and
Community Impact
Home Ownership is Key to Wealth Building – Wide
Gap in Wealth Between Renters and Owners
$5,200
$231,400
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Renters Homeowners
Median Household Wealth
2004 2007 2010 2013 2016
Source: Federal Reserve Survey of Consumer Finances
The Economic Impact of a Home Sale is Significant
Average Impact of a Home Sale in Oregon
Income from real
estate-related industries: $25,700
Furniture, appliances
and remodeling: $4,600
“Multiplier” effect: $14,500
“Induced” effect: $35,700
TOTAL (per home sale at median price) $80,500
Real estate (residential and commercial) account for 18.3% of all U.S. economic activity
Source: National Association of REALTORS®
While Ownership Helps Build Wealth,
Homeownership Rate is Near 50-Year Low…
59%
60%
61%
62%
63%
64%
65%
66%
67%
68%
69%
70%
2000 2002 2004 2006 2008 2010 2012 2014 2016
Homeownership Rate
Source: Census Bureau
Above Median Income: 78.2%
Below Median Income: 50.2%
…and Younger Households Less Likely to
Own a Home Today
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
U.S. 34 and younger 35-44 years 45-54 years 55-64 years 65 and older
Homeownership Rate
2004 (Peak) 2017Q4
Source: Census Bureau
The Economy:
Steady Gains
Unemployment Rate Has Declined Quickly
After Topping Out at 16% Locally
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2005 2007 2009 2011 2013 2015 2017
Unemployment RateU.S. Oregon Bend-Redmond Metro Area
Source: Bureau of Labor Statistics
Population Growth in Oregon is Supported by
Strong Gain in Residents from Out of State
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2012 2013 2014 2015 2016 2017
Components of Population Growth in Oregon
Natural Increase Domestic Migration International Migration Population Change
people
Population Change 2012 to 2017
277,000
Source: Census Bureau
Income Growth in Oregon Topping
U.S. Pace Since 2015
85
90
95
100
105
110
115
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Per Capita Income(adjusted for inflation)
U.S. Oregon
Index: 2009 = 100
Source: Bureau of Economic Analysis
Market Conditions:
Rising Prices and Too
Few Homes for Sale
Consumers Believe Buying a Home is a Good
Financial Decision
76%
78%
80%
82%
84%
86%
88%
90%
92%
Agree that Buying a Home is a Good Financial Decision
Source: National Association of REALTORS® HOME Survey 2017Q4
Mortgage Rates Have Risen Sharply
Since Start of the Year
3.4%
3.6%
3.8%
4.0%
4.2%
4.4%
4.6%
Jan 32017
Feb 72017
Mar 142017
Apr 172017
May 192017
Jun 232017
Jul 282017
Aug 312017
Oct 52017
Nov 82017
Dec 132017
Jan 192018
30-year FRM
Source: WSJ
Less than 6 Months Supply of Existing Homes
Since Late 2012
3.2
0
2
4
6
8
10
12
14
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
U.S. Months Supply
months
Source: National Association of REALTORS®
Months Supply Low in Most Areas Locally
0
1
2
3
4
5
6
7
8
9
10
Months Supply
2012Q4 2017Q42
Source: Central Oregon Association of REALTORS®
months
Limited Inventory has Held Back Home Sales,
Especially Since 2013
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
7,000,000
7,500,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
U.S. Existing Home Sales
Source: National Association of REALTORS®
Nationally, Still not Building Enough Homes…
U.S. Single Family Starts
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Avg Annual Starts
1997-2006
U.S. Multi-family Starts
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000Avg Annual Starts
1997-2006
Source: Census Bureau
Home Prices Growing at
About 6% per Year Since 2012
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
U.S. Existing Home Sale Price Growth
Source: National Association of REALTORS®
Several Large Metros Are Experiencing
Rapid Home Price Growth
0%
2%
4%
6%
8%
10%
12%
14%
Median Metro Home Price Growth (2016Q4-2017Q4)
U.S.
Average
Source National Association of REALTORS®/FHFA
Since the Recovery, Local Home Prices Have
Risen More Quickly than the National Average
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Median Sale Price
2012 2017
40%
Source: Central Oregon Association of REALTORS®
81%
117%
126%
115%
58%
32%
104%
153%
What’s Next:
Challenges and
Opportunities
Saving for Downpayment Increasingly Difficult
for First-time Buyers
Saving for Downpayment Difficult
0%
5%
10%
15%
20%
25%
30%
First-time Buyers Repeat Buyers
Expenses that Delayed Saving
Downpayment(among those who indicated difficulty saving)
0%
10%
20%
30%
40%
50%
60%
First-time Buyers Repeat Buyers
Student Loans Credit Card Debt
Car Loan Child Care Expenses
Healthcare Costs
Source: National Association of REALTORS®
Current Renters Point to Affordability as Main Hurdle
to Ownership – Many Think Getting a Mortgage
Would be Difficult
Do renters ever want to own a home?
Yes, 79%
No, 17%
Not sure, 4%
Why don’t renters own a home?
Can’t afford to buy 36%
Life circumstances not
suitable for owning now33%
Need flexibility of renting
vs owning16%
Don’t want responsibility
of owning6%
56% of renters think it would be
“difficult” to qualify for a mortgage
Source: National Association of REALTORS® HOME Survey 2017Q4
Although Renters Want to Own, Fewer First-time
Buyers are Able to Move to Ownership
0%
10%
20%
30%
40%
50%
60%
2009 2010 2011 2012 2013 2014 2015 2016 2017
Percent of Existing Homes Sold to First-time Buyers
Source: National Association of REALTORS®
Long-term FTB
Share
The American Dream Includes
Homeownership
Don’t Know2%
No13%
Strongly Agree84%
Moderately Agree16%
Yes85%
Is Homeownership Part of your American Dream?
Source: National Association of REALTORS® HOME Survey 2017Q4
What to Plan for in 2018…
• No significant change in economic outlook, even as we
prepare for modestly higher interest rates
• No relief for the inventory shortage – home building up, but
a big shortfall to overcome
• Prices will continue to rise due to tight inventory and solid
demand for homes
• Consumers remain optimistic about home ownership
Housing Forecast
2016 20172018
Forecast
2019
Forecast
Housing Starts 1,174,000 1,205,000 1,338,000 1,390,000
New Home Sales 561,000 608,000 701,000 760,000
Existing Home
Sales5,450,000 5,510,000 5,540,000 5,710,000
Median Existing
Home Price Growth5.1% 5.8% 2.5% 3.4%
30-year Mtg Rate 3.6% 4.0% 4.4% 4.8%
Source: National Association of REALTORS® (February 2018)
NAR Research
NAR Research Reports
https://www.nar.realtor/research-and-statistics/research-reports
Housing Statistics
https://www.nar.realtor/research-and-statistics/housing-statistics
Blog: http://economistsoutlook.blogs.realtor.org/
Twitter: https://twitter.com/nar_research
Facebook: https://www.facebook.com/narresearchgroup
Instagram: https://www.instagram.com/narresearch/
Pinterest: https://www.pinterest.com/narresearch/
Paul C. Bishop PhD, CBE
Vice President, Research
202-383-1246
linkedin.com/in/pcbishop/
Presentation Slides Available at:
http://bit.ly/COARForecastBreakfast2018