815 western avenue, suite 400 seattle, wa 98104 206.442.9200 economic & real estate trends and...
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815 Western Avenue, Suite 400
Seattle, WA 98104
206.442.9200
Economic & Real EstateTrends and Outlook
Presented toWindermere Real Estate
August 5th, 2010Presented by:
Matthew Gardner
Managing Principal
Which is it??
U.S Economic Outlook
-7.00
-6.00
-5.00
-4.00
-3.00
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2009
-Q
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2010
-Q
3
% annualized growth rate
GDP Growth Forecast
Source: Gardner Economics LLC & BEA
Growth has Been driven by Stimuli, But Then What?
Economic & Real Estate ForecastAug. 05, 2010
-8,000
-6,000
-4,000
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0
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4,000
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2010
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Initial Jobless Claims are Leveling Out.
Concerns over Weak Growth Going Forward.
U.S. Job Losses Slow…
12-month payroll job changes; in thousandsSource: BLS – Seasonally Adjusted Figures – Data through June
2010
Economic & Real Estate ForecastAug. 05, 2010
-100
-80
-60
-40
-20
0
20
40
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Fluctuations in the Labor Market Remain Localized!!!
Detroit’s Employment Situation
Source: BEA – Seasonally Adjusted – Through June 2010
Economic & Real Estate ForecastAug. 05, 2010
12-month payroll job changes; in thousands
Unemployment Will Peak at Around 10.0%
Need 200,000 jobs per Month that Would Signify Growth.
Last Months’ Figures Weren’t that Bad!
Monthly U.S. Payroll Change
Source: BLS – Seasonally Adjusted Figures
Economic & Real Estate ForecastAug. 05, 2010
4%
5%
6%
7%
8%
9%
10%
11%
-800,000-700,000-600,000-500,000-400,000-300,000-200,000-100,000
0100,000200,000300,000400,000500,000
Une
mplo
ymen
t Rat
e
Net
Jobs Add
ed
Net Jobs …
Growth will Be Painfully Slow
Upswing In the Job Market Apparent?
Economic & Real Estate ForecastAug. 05, 2010 Source: BLS & Gardner Economics –Data Current through June 2010
-6.5%
-6.0%
-5.5%
-5.0%
-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
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-1.0%
-0.5%
0.0%
0.5%
1.0%
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839404142434445464748
Perc
ent C
umul
ativ
e Jo
b L
oss Re
lative
to
Peak
Em
plo
ymen
t M
onth
Number of Months After Peak Employment
1974 1981 1990
2001 2007
This Shows Our Credit Card Debt!
Consumers & Lenders are Both Belt Tightening.
…U.S. Revolving Debt
Source: Federal Reserve – Seasonally Adjusted
Data Through May 2010
Economic & Real Estate ForecastAug. 05, 2010
$0
$200
$400
$600
$800
$1,000
$1,200
J-68
J-71
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J-04
J-07
In B
illio
ns
Lenders are Contracting Credit, and Consumers are Paying it Down.
Borrowing Back to Levels Not Seen Since Dec. ’05.
…U.S. Revolving Debt
Source: Federal Reserve – Seasonally Adjusted through May 2010
Economic & Real Estate ForecastAug. 05, 2010
$800
$820
$840
$860
$880
$900
$920
$940
$960
$980
$1,000
J-05
A-0
5J-
05O
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-08
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9J-
09O
-09
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A-1
0
In B
illio
ns
We Remain Concerned About Our Longer Term Prospects.
Labor Market Conditions Weighing on Confidence Levels.
U.S. Consumer Confidence & Sentiment
20
40
60
80
100
120
140
160
2000
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2000
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2001
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2010
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Confidence Sentiment
Source: University of Michigan & Conference Board
Economic & Real Estate ForecastAug. 05, 2010
U.S. Economic Forecast• TARP and TALF & PPIP, Oh My!• Bank Recapitalization, Yes! But
Lending..? No!
• P.I.I.G.S.!!!!!
• Inflation Concerns?• The Recovery – V, U, W or ????• Overriding Question is whether the
Consumer Will Return?
Annual Existing-Home Sales Back Close to 2001
levels.In thousands of units
Source: NAR – Seasonally Adjusted Annual Rate
Momentum Has Slowed After Expiration of the Tax Extension…
Economic & Real Estate ForecastAug. 05, 2010
3,000
4,000
5,000
6,000
7,000
8,000
National Total Existing-Home Sales
Source: NAR – Seasonally Adjusted Annual Rate
Buyers Certainly Took Advantage of Tax Credit!!
Economic & Real Estate ForecastAug. 05, 2010
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
2006
-Ja
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06 -
Apr
2006
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06 -
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2007
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2007
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Oct
2009
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Apr
2009
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Jan
2010
-Apr
Sale Price of Existing Homes
Source: NAR – Median Price; Not Seasonally Adjusted
Year over Year, Prices are Down by 1 Percent.
Stability in Prices May be Offset by Further Foreclosure Activity. Economic & Real Estate ForecastAug. 05, 2010
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
$220,000
$240,000
2005
2006
2007
2008
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2008
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2008
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2009
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2010
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n
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1965
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1981
1983
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1987
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1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
U.S Home Ownership Rates(As a Percentage of Households)
Source: US Census & Gardner Economics – Data Through Q2 2010
Returning to Historical Norms?
Economic & Real Estate ForecastAug. 05, 2010
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
8.50%
9.00%
Dec
-99
Jun-
00D
ec-0
0Ju
n-01
Dec
-01
Jun-
02D
ec-0
2Ju
n-03
Dec
-03
Jun-
04D
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4Ju
n-05
Dec
-05
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ec-0
6Ju
n-07
Dec
-07
Jun-
08D
ec-0
8Ju
n-09
Dec
-09
Jun-
10
The Fed Started Buying Fannie &
Freddie Debt.
Source: Freddie Mac –Month End Figures.
Financing Remains Very Stringent but Rates remain at Historic Lows.
Jumbo Loans are Hard to Obtain Without a Substantial Down Payment.Economic & Real Estate ForecastAug. 05, 2010
30-Year Fixed Mortgage Rates
10-Year Treasury Yield Almost Hits 4%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
prj
2011
prj
2012
prj
2013
prj
2014
prj
Source: Gardner Economics & Freddie Mac
Mortgage Rates Will Increase as Economic Growth Stimulates Inflationary Pressures.
Economic & Real Estate ForecastAug. 05, 2010
30-Year Fixed Mortgage Rates
5-Year Forecast
0
500
1,000
1,500
2,000
Starts Sales
U.S. Single-Family Housing Starts & New
Home SalesIn
th
ou
san
ds o
f u
nit
s
Source: U.S. Census – Seasonally Adjusted Annual Rate
Sales are Down by 17 Percent Year over Year.
Single Family Housing Starts declined by 5 Percent from June 2009.Economic & Real Estate ForecastAug. 05, 2010
Average Annual Household Growth
In Thousands
These People Will Have to Live Somewhere!
Economic & Real Estate ForecastAug. 05, 2010 Source: Gardner Economics LLC – U.S. Household Growth
Some Signs of Hope• Mortgage Applications Moderately
Stronger.• Rates Remain at 50-Year Lows.• We Could See an Overcorrection
in Some States.• Traction in Pricing Appears to be
in Place, Specifically in Hardest Hit Markets.
• Extension to the Home Buyer Tax Credit Was Necessary.
Story of a Relationship.
• Published Quarterly in Washington Since the Spring of 2007.
• Published Quarterly – Approximately 5 Weeks after the End of the Quarter.
The Gardner Report
Non-Ag Employment Situation
Shows Employment Growth from the Prior Year as a Percentage and in Absolute Terms.
Economic & Real Estate ForecastAug. 05, 2010
NON AG EMPLOYMENT SITUATION
Growth Growth
County Jun. '09-Jun. '10 Rate
Benton (Corvallis MSA) -1,130 -3.0%Clackamas -4,300 -3.1%Clark -1,800 -1.4%Clatsop -180 -1.0%Columbia -130 -1.3%Coos -100 -0.5%Cowlitz -400 -1.1%Deschutes (Bend MSA) -1,880 -3.0%Hood River -170 -1.7%Jackson (Medford MSA) -970 -1.3%Josephine -610 -2.6%Klamath -520 -2.3%Klickitat -50 -0.9%Lane (Eugene/Springfield MSA) -300 -0.2%Lincoln -580 -3.2%Linn -1,210 -3.1%Marion -2,224 -1.5%Multnomah -7,100 -1.7%Polk 241 0.7%Skamania -90 -4.0%Tillamook 80 0.9%Wasco -20 -0.2%Washington -3,900 -1.7%Yamhill -260 -0.9%(Not Seasonally Adjusted)
Non-Ag Employment Situation
Economic & Real Estate ForecastAug. 05, 2010
-4.0%
-3.2%
-3.1%
-3.1%
-3.0%
-3.0%
-2.6%
-2.3%
-1.7%
-1.7%
-1.7%
-1.5%
-1.4%
-1.3%
-1.3%
-1.1%
-1.0%
-0.9%
-0.9%
-0.5%
-0.2%
-0.2%
0.7%
0.9%
-6% -4% -2% 0% 2%
Skamania
Lincoln
Clackamas
Linn
Deschutes (Bend MSA)
Benton (Corvallis MSA)
Josephine
Klamath
Hood River
Washington
Multnomah
Marion
Clark
Columbia
Jackson (Medford MSA)
Cowlitz
Clatsop
Yamhill
Klickitat
Coos
Lane (Eugene/Springfield MSA)
Wasco
Polk
Tillamook
% CHANGE IN ANNUAL EMPLOYMENT
Non-Ag Employment Situation
Current Total Non-Agricultural Employment together with the Current Unemployment Rate.
Economic & Real Estate ForecastAug. 05, 2010
UNEMPLOYMENT RATE COMPARISON
Employment Unemployment
Metropolitan Area Rate
Benton (Corvallis MSA) 37,110 6.9%Clackamas 134,800 10.0%Clark 128,100 12.4%Clatsop 17,170 8.3%Columbia 9,870 11.8%Coos 21,370 12.2%Cowlitz 35,700 11.9%Deschutes (Bend MSA) 61,280 13.4%Hood River 9,890 8.6%Jackson (Medford MSA) 75,400 12.2%Josephine 23,060 13.4%Klamath 22,250 12.1%Klickitat 5,760 9.2%Lane (Eugene/Springfield MSA) 143,500 10.4%Lincoln 17,680 10.1%Linn 38,000 14.5%Marion 142,432 10.7%Multnomah 422,200 9.9%Polk 36,784 8.5%Skamania 2,140 10.4%Tillamook 8,810 8.7%
Wasco 9,710 8.0%Washington 229,400 8.8%Yamhill 29,220 10.6%
Non-Ag Employment Situation
Historical Comparison of Unemployment Rates.
Economic & Real Estate ForecastAug. 05, 2010
4% 6% 8% 10% 12% 14% 16%
Benton (Corvallis MSA)
Wasco
Clatsop
Polk
Hood River
Tillamook
Washington
Klickitat
Multnomah
Clackamas
Lincoln
Lane (Eugene/Springfield MSA)
Skamania
Yamhill
Marion
Columbia
Cowlitz
Klamath
Coos
Jackson (Medford MSA)
Clark
Deschutes (Bend MSA)
Josephine
Linn
UNEMPLOYMENT RATE COMPARISON
Jun. '09
Jun. '10
The State Housing Market
Transactional Velocities (Closed Sales) versus the Prior Year. The number Represents Year-to-Date Sales.
Economic & Real Estate ForecastAug. 05, 2010
CLOSED SALES ACTIVITY YTD YTD
EXISTING SF & CONDO Jun. Jun.
County 2010 2009
Benton (Corvallis MSA) 324 263Clackamas 1,640 1,148Clark 1,998 1,531Clatsop 156 82Columbia 177 131Coos 193 115Cowlitz 176 124Deschutes (Bend MSA) 1,164 790Hood River 60 41Jackson (Medford MSA) 1,199 987Josephine 406 343Klamath 275 192Klickitat 60 22Lane (Eugene/Springfield MSA) 1,404 1,006Lincoln 289 206Linn 471 401Marion 263 226Multnomah 3,679 2,675Polk 137 144Skamania 45 20Tillamook 87 57Wasco 70 60Washington 2,270 1,577
Yamhill 330 239
Lane (Eugene/Springfield MSA)
The State Housing Market
Where are We Versus The Same Period a Year Ago.
Economic & Real Estate ForecastAug. 05, 2010
-20% 0% 20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
Polk
Marion
Wasco
Linn
Josephine
Jackson (Medford MSA)
Benton (Corvallis MSA)
Clark
Columbia
Multnomah
Yamhill
Lane (Eugene/Springfield MSA)
Lincoln
Cowlitz
Clackamas
Klamath
Washington
Hood River
Deschutes (Bend MSA)
Tillamook
Coos
Clatsop
Skamania
Klickitat
% CHANGE IN YTDCLOSED SALES
The State Housing Market
Growth Rate in Sales Prices (Single Family & Condominium) Representing a Percentage Change as well As a Dollar Change.Economic & Real Estate ForecastAug. 05, 2010
SALES PRICE - SF & CONDO Growth Net
Rate Growth
Metropolitan Area
Jun. '09-Jun. '10 ($000's)
Benton (Corvallis MSA) -17.1% -50.4Clackamas -2.1% -7.0Clark 5.5% 13.0Clatsop -20.6% -76.0Columbia -11.8% -25.0Coos 2.7% 5.0Cowlitz -8.5% -16.0Deschutes (Bend MSA) -1.3% -3.0Hood River -19.6% -67.0Jackson (Medford MSA) -1.1% -2.4Josephine -19.2% -45.6Klamath -3.6% -5.7Klickitat -9.4% -21.0Lane (Eugene/Springfield MSA) -0.4% -1.0Lincoln -10.2% -32.9Linn -12.5% -20.2Marion -16.4% -34.8Multnomah -1.7% -5.0Polk 15.8% 26.9Skamania -30.0% -89.0Tillamook -0.5% -1.1Wasco -24.4% -51.0Washington 4.9% 14.0Yamhill 8.1% 18.0
The State Housing Market
Sales Price Data Represented Graphically
Economic & Real Estate ForecastAug. 05, 2010
-40% -30% -20% -10% 0% 10% 20%
Skamania
Wasco
Clatsop
Hood River
Josephine
Benton (Corvallis MSA)
Marion
Linn
Columbia
Lincoln
Klickitat
Cowlitz
Klamath
Clackamas
Multnomah
Deschutes (Bend MSA)
Jackson (Medford MSA)
Tillamook
Lane (Eugene/Springfield MSA)
Coos
Washington
Clark
Yamhill
Polk
HOME PRICE GROWTH RATE
The State Housing Market
Detailed Price Data over Time. Looking Back Over a 5-Year Time Horizon
Economic & Real Estate ForecastAug. 05, 2010
AverageMetropolitan Area Price Quarter 1-Yr.* 2-Yr.* 5-Yr.*
Benton (Corvallis MSA) $244,137 6.7% -17.1% -13.3% -2.7%Clackamas $326,000 1.6% -2.1% -21.8% -7.1%Clark $249,000 3.8% 5.5% -7.1% -5.0%Clatsop $293,000 -28.5% -20.6% -19.3% -12.5%Columbia $187,000 -1.6% -11.8% -23.4% -8.8%Coos $187,000 21.4% 2.7% -24.3% -11.0%Cowlitz $173,000 5.5% -8.5% -9.9% -4.9%Deschutes (Bend MSA) $231,000 5.0% -1.3% -34.4% -30.0%Hood River $274,000 -8.1% -19.6% -29.6% -9.6%Jackson (Medford MSA) $217,541 1.0% -1.1% -29.3% -35.2%Josephine $192,156 -7.0% -19.2% -27.1% -37.2%Klamath $150,411 -2.6% -3.6% -36.6% -1.7%Klickitat $203,000 -30.7% -9.4% 7.4% 0.5%Lane (Eugene/Springfield MSA) $229,000 4.1% -0.4% -12.9% -5.0%Lincoln $289,624 12.9% -10.2% -24.3% 7.4%Linn $141,333 -6.8% -12.5% -21.9% -7.7%Marion $178,103 -12.6% -16.4% -22.2% 0.8%Multnomah $285,000 2.9% -1.7% -15.4% 5.2%Polk $197,273 8.4% 15.8% -11.0% 21.7%Skamania $208,000 -1.0% -30.0% -11.1%Tillamook $220,641 -2.9% -0.5% 28.6% -0.6%Wasco $158,000 5.3% -24.4% -23.7% -9.7%Washington $300,000 9.1% 4.9% -9.9% 5.6%Yamhill $240,000 12.1% 8.1% -13.4% 3.4%* Year over year from most recent month surveyed
Home Price Escalation
The State Housing Market
A Visual Representation of Price Change Data
Economic & Real Estate ForecastAug. 05, 2010
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40%
Josephine
Jackson (Medford MSA)
Deschutes (Bend MSA)
Clatsop
Skamania
Coos
Wasco
Hood River
Columbia
Linn
Clackamas
Lane (Eugene/Springfield MSA)
Clark
Cowlitz
Benton (Corvallis MSA)
Klamath
Tillamook
Klickitat
Marion
Yamhill
Multnomah
Washington
Lincoln
Polk
MEDIAN HOME PRICE ESCALATION RATE
One-Year
Two-Year
Five-Year
Using the Report
• Windermere Has A Reputation for Accurate Reporting and Representation.
• This Report Can be Used as a Tool for Both Listing as Well as Selling Agents.
• It’s a Macro Report. Specific Sub-Markets will be Different.
Utilizing Gardner Economics
Office Meetings/Kick-Off Meetings;Client Appreciation Meetings;
Telephone Discussions.
Macroeconomic Analysis. Detailed Discussion on the Local
Economic & Real Estate Market.
www.MasterBuildersInfo.com
Follow My Thoughts!
http://blog.windermere.com/
© Gardner Economics LLC 2000-2010The Preceding Presentation may not be Copied
or Distributed without Prior WrittenPermission of
Gardner Economics LLC
Questions?
M.Gardner@GardnerEconomics.com
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