1. 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

2. Annual Home Sales

3. Median and Average Home Price

4. Dollar Volume Growth Rate %

5. Housing Market Turning?

6. NAR HOME Survey (March 2015 to September 2016)

7. NAR HOME Survey (March 2015 to September 2016)

8. REALTOR Buyer Traffic Index (% change from a year ago)

9. Buyer Traffic By State

10. Mortgage Purchase Applications (% change from a year ago)

11. SentriLock Openings (Diffusion Index: 50=neutral)

12. Monthly Mortgage Payment for Buyers

13. Pending Home Sales Index (Seasonally Adjusted)

14. Rent Growth (% change from a year ago)

15. Market Turning? Not Clear, though weakening momentum

16. Do You Ever Want to Own a Home in Future?

17. Homeownership Rate At Near 50-year low

18. Younger Households Less Likely to Own a Home
Source: Census Bureau

19. Wealth Gap Between Young Adults (under-35) and Retiree (65+)
Median net worth of households headed by…

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

22. Consumer Price Index over the Long Haul (Rental Income > CPI by 25%)

23. Consumer Price Index over the Long Haul

24. Consumer Price Index over the Long Haul

25. 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

26. 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?

27. Borrowers Not Defaulting (Serious Delinquency Rate)

28. Distressed Property Sales (% of Total Sales)

29. Investor Sales (% of Total Sales; 12-month average)

30. Inventory of Homes per Households

31. “Weak” Seller Traffic Index in Most States

33. Median Days on Market By State in September 2016

34. Median Expected Price Growth in Next 12 Months by State

35. Single-family Housing Permits and Starts – Grossly Inadequate
Thousand units

36. Monthly New Home Sales
Thousand units

37. Median Price

38. 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

39. 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?

40. If Housing Shortage Persist … Then
Rent Control
Vancouver
15% foreign buyer tax
Huey Long
Confiscate all second homes

41. Economy?

42. Annual GDP … Below 3% for 11 straight years

43. Most Recent – 3rd Quarter Annualized Rate

44. Exports and Imports

45. U.K. vs. U.S. (How many Pound to $1)

46. China vs. U.S. (How many Yuan to $1)

47. Russia vs. U.S. (How many Rubles to $1)

48. Foreign Buyer Purchases: $102.6 B (7 Percent of Existing Home Sales)
Recent Immigrants
Pure Foreign National

49. Jobs (8 million lost … 15 million gained)
In thousands

50. Non-farm Employment Growth By State

51. Employment Rate: Men vs Women

52. Two Swing States

53. Jobs in Lehigh Valley (4% gain in 10 years)

54. Jobs in Denver (16% gain in 10 years)

55. Average Hourly Wage Rate

56. Home Price Index

57. Federal Revenue and Spending

59. Federal Debt (Held by Public, excluding intergovernmental obligations)

60. “In the end, more than freedom, they wanted security
“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.”

61. Italian Migration to Americas
Wealthy Northern Italians to Argentina, Brazil, and Venezuela … and became poorer
Poor Southern Italians to USA … and became wealthier

62. Forecast

63. 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

64. Post-College Likely Renters (Age 25 to 29)

65. Likely First-time Buyers (Age 30 to 39)
In thousands

66. Likely Trade-Up Buyers (Age 40 to 49)
In thousands

67. Vacation Home Buyers (Age 50 to 59)
In thousands

68. Retired - Relocation (Age 60+)
In thousands

69. Percentage Living with Mom (2.5 million above Norm)

70. Multifamily Housing Starts (12 month average; in thousands)

71. Condo Share of Total Home Sales

74. Economic Forecast 2015 2016 Likely 2017 Forecast 2018 GDP Growth 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%

75. Housing Forecast 2015 2016 Likely 2017 Forecast 2018 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%

76. 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.