Economic and Housing

Market Outlook
By Lawrence Yun, Ph.D.
Chief Economist, National Association of REALTORS
Presentation at NAR Annual Convention
Orlando, FL
November 4, 2016

Annual Home Sales

Median and Average Home

Price

Dollar Volume Growth Rate

%

Housing Market Turning?

NAR HOME Survey

(March 2015 to September 2016)

NAR HOME Survey

(March 2015 to September 2016)

REALTOR Buyer Traffic Index

(% change from a year ago)

Buyer Traffic By State

Mortgage Purchase
Applications
(% change from a year ago)

SentriLock Openings
(Diffusion Index: 50=neutral)

Monthly Mortgage Payment for

Buyers

Pending Home Sales Index

(Seasonally Adjusted)

Rent Growth
(% change from a year ago)

Market Turning?
Not Clear,
though weakening
momentum

Do You Ever Want to Own a Home in

Future?

Younger Households
Less Likely to Own a Home

Source: Census Bureau

Wealth Gap Between Young Adults (under-35)

and Retiree (65+)
Median net worth of households headed by

Student Loan
NAR-ASA Study implies 5 year Delay
(in $billion)

Consumer Price Index over the Long

Haul
(Rental Income > CPI by 25%)

Consumer Price Index over the Long

Haul

Consumer Price Index over the Long

Haul

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

Some Policies to Change

Demand

Tax Changes?

MID
Property tax deduction
Capital Gains Exclusion time for indexing !

Credit Availability?

Fannie/Freddie/FHA
Condo Rules
Help Credit Invisibles?
Help with Down payment assistance?

Borrowers Not Defaulting

(Serious Delinquency Rate)

Distressed Property Sales

(% of Total Sales)

Investor Sales

(% of Total Sales; 12-month average)

Inventory of Homes per

Households

Weak Seller Traffic Index in

Most States

Median Days on Market By

State in September 2016

Median Expected Price Growth

in Next 12 Months by State

Single-family Housing Permits and

Starts
Grossly Inadequate
Thousand units

Monthly New Home Sales

Thousand units

Median Price

First 100 Days of New

Presidency
to improve Housing Supply
Liberate small-size banks from Dodd-Frank
Assist in trade skills from community colleges
Infrastructure spending, including on housing

Grand Infrastructure
Projects

U.S. continental railroads

U.S. interstate highways
Australia with rehabilitated workers
Marshall Plan for Europe

What about Housing Infrastructure

Demolish blight tear down vacant homes

Build affordable homes with tax credits
Re-examine local zoning regulations and impact fees
Down payment assistance?

If Housing Shortage Persist

Then

Rent Control
Vancouver

15% foreign buyer tax

Huey Long
Confiscate all second homes

Economy?

Annual GDP
Below 3% for 11 straight years

Most Recent 3rd Quarter Annualized

Rate

Exports and Imports

U.K. vs. U.S.

(How many Pound to $1)

China vs. U.S.

(How many Yuan to $1)

Russia vs. U.S.

(How many Rubles to $1)

Foreign Buyer Purchases: $102.6 B

(7 Percent of Existing Home Sales)

Recent
Immigrants
Pure Foreign
National

Jobs
(8 million lost 15 million gained)
In thousands

Non-farm Employment Growth By

State

Employment Rate: Men vs

Women

Two Swing States

Jobs in Lehigh Valley

(4% gain in 10 years)

Jobs in Denver
(16% gain in 10 years)

Average Hourly Wage Rate

Home Price Index

Federal Revenue and

Spending

Federal Debt
(Held by Public, excluding intergovernmental
obligations)

In the end, more than

freedom, they wanted security.
They wanted a comfortable
life, and they lost it all
security, comfort, and freedom.

When they wanted not to give

to society but for society to
give to them, they ceased to
be free and was never free
again.

Italian Migration to
Americas

Wealthy Northern Italians to

Argentina, Brazil, and Venezuela
and became poorer
Poor Southern Italians to USA and
became wealthier

Forecast

Normal vs. Now

2000 (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)

Likely First-time Buyers

(Age 30 to 39)

In thousands

Likely Trade-Up Buyers

(Age 40 to 49)

In thousands

Vacation Home Buyers

(Age 50 to 59)

In thousands

Retired - Relocation
(Age 60+)

In thousands

Percentage Living with Mom

(2.5 million above Norm)

Multifamily Housing Starts

(12 month average; in thousands)

Condo Share of Total Home

Sales

Economic Forecast
2015

2016
Likely

2017
Forec
ast

2018
Forec
ast

2.6%

1.5%

2.1%

2.5%

Job Growth

+2.6
million

+2.0
million

+2.1
million

+2.4
million

CPI Inflation

0.3%

1.2%

2.5%

2.5%

GDP Growth

Housing Forecast
2015

2016
Likely

2017
2018
Foreca Foreca
st
st

New 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%

The End of the World after

Election?
Even if I knew that tomorrow the world
would go to pieces, I would still plant my
apple tree.
Martin Luther and Martin Luther King Jr.