2018 Real Estate Forecast Breakfast. Real Estate Market Update

Transcription

1 2018 Real Estate Forecast Breakfast Central Oregon Association of REALTORS Real Estate Market Update Paul C. Bishop, PhD, CBE Vice President, Research NATIONAL ASSOCIATION OF REALTORS February 22, 2018

2 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:

3 Economic Contribution of Real Estate: Individual and Community Impact

4 Home Ownership is Key to Wealth Building Wide Gap in Wealth Between Renters and Owners Median Household Wealth $300,000 $250, $231,400 $200,000 $150,000 $100,000 $50,000 $5,200 $0 Renters Homeowners Source: Federal Reserve Survey of Consumer Finances

5 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

6 While Ownership Helps Build Wealth, Homeownership Rate is Near 50-Year Low 70% Homeownership Rate 69% 68% 67% 66% 65% 64% 63% 62% Above Median Income: 78.2% Below Median Income: 50.2% 61% 60% 59% Source: Census Bureau

7 and Younger Households Less Likely to Own a Home Today Homeownership Rate 90% 2004 (Peak) 2017Q4 80% 70% 60% 50% 40% 30% 20% 10% 0% U.S. 34 and younger years years years 65 and older Source: Census Bureau

8 The Economy: Steady Gains

9 Unemployment Rate Has Declined Quickly After Topping Out at 16% Locally 18.0% Unemployment Rate U.S. Oregon Bend-Redmond Metro Area 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Source: Bureau of Labor Statistics

10 Population Growth in Oregon is Supported by Strong Gain in Residents from Out of State Components of Population Growth in Oregon 80,000 70,000 60,000 50,000 Natural Increase Domestic Migration International Migration Population Change people Population Change 2012 to ,000 40,000 30,000 20,000 10, Source: Census Bureau

11 Index: 2009 = 100 Income Growth in Oregon Topping U.S. Pace Since 2015 Per Capita Income (adjusted for inflation) U.S. Oregon Source: Bureau of Economic Analysis

12 Market Conditions: Rising Prices and Too Few Homes for Sale

13 Consumers Believe Buying a Home is a Good Financial Decision 92% 90% 88% 86% 84% 82% 80% 78% 76% Agree that Buying a Home is a Good Financial Decision Source: National Association of REALTORS HOME Survey 2017Q4

14 Mortgage Rates Have Risen Sharply Since Start of the Year 4.6% 30-year FRM 4.4% 4.2% 4.0% 3.8% 3.6% 3.4% Jan Feb Mar Apr May Jun Jul Aug Oct Nov Dec Jan Source: WSJ

15 Less than 6 Months Supply of Existing Homes Since Late months U.S. Months Supply Source: National Association of REALTORS

16 Months Supply Low in Most Areas Locally months Months Supply 2012Q4 2017Q42 Source: Central Oregon Association of REALTORS

17 Limited Inventory has Held Back Home Sales, Especially Since ,500,000 U.S. Existing Home Sales 7,000,000 6,500,000 6,000,000 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000, Source: National Association of REALTORS

18 Nationally, Still not Building Enough Homes U.S. Single Family Starts U.S. Multi-family Starts 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, ,000 Avg Annual Starts , , , , , ,000 Avg Annual Starts , , , , ,000 50, Source: Census Bureau

19 Home Prices Growing at About 6% per Year Since 2012 $300,000 U.S. Existing Home Sale Price Growth $250,000 $200,000 $150,000 $100,000 $50,000 $ Source: National Association of REALTORS

20 14% Several Large Metros Are Experiencing Rapid Home Price Growth Median Metro Home Price Growth (2016Q4-2017Q4) 12% 10% 8% U.S. Average 6% 4% 2% 0% Source National Association of REALTORS /FHFA

21 Since the Recovery, Local Home Prices Have Risen More Quickly than the National Average Median Sale Price $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 40% 81% 153% % 117% 115% 58% 32% 104% Source: Central Oregon Association of REALTORS

22 What s Next: Challenges and Opportunities

23 Saving for Downpayment Increasingly Difficult for First-time Buyers Saving for Downpayment Difficult Expenses that Delayed Saving Downpayment (among those who indicated difficulty saving) 30% 25% 20% First-time Buyers Repeat Buyers 60% 50% 40% Student Loans Car Loan Healthcare Costs Credit Card Debt Child Care Expenses 15% 30% 10% 20% 5% 10% 0% 0% First-time Buyers Repeat Buyers Source: National Association of REALTORS

24 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? Why don t renters own a home? Can t afford to buy 36% Yes, 79% Life circumstances not suitable for owning now Need flexibility of renting vs owning 33% 16% No, 17% Don t want responsibility of owning 6% Not sure, 4% 56% of renters think it would be difficult to qualify for a mortgage Source: National Association of REALTORS HOME Survey 2017Q4

25 Although Renters Want to Own, Fewer First-time Buyers are Able to Move to Ownership 60% 50% Percent of Existing Homes Sold to First-time Buyers Long-term FTB Share 40% 30% 20% 10% 0% Source: National Association of REALTORS

26 The American Dream Includes Homeownership Is Homeownership Part of your American Dream? No 13% Yes 85% Strongly Agree 84% Don t Know 2% Moderately Agree 16% Source: National Association of REALTORS HOME Survey 2017Q4

27 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

28 Housing Forecast Forecast 2019 Forecast Housing Starts 1,174,000 1,205,000 1,338,000 1,390,000 New Home Sales 561, , , ,000 Existing Home Sales Median Existing Home Price Growth 5,450,000 5,510,000 5,540,000 5,710, % 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)

29 NAR Research NAR Research Reports Housing Statistics Blog: Twitter: Facebook: Instagram: Pinterest:

30 Paul C. Bishop PhD, CBE Vice President, Research linkedin.com/in/pcbishop/ Presentation Slides Available at: