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


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


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


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


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


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


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


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


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


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?


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/

https://www.nar.realtor/research-and-statistics/research-reports

https://www.nar.realtor/research-and-statistics/housing-statistics

http://economistsoutlook.blogs.realtor.org/

https://twitter.com/nar_research

https://www.facebook.com/narresearchgroup

https://www.instagram.com/narresearch/

https://www.pinterest.com/narresearch/

Paul C. Bishop PhD, CBE

Vice President, Research

[email protected]

202-383-1246

linkedin.com/in/pcbishop/

Presentation Slides Available at:

http://bit.ly/COARForecastBreakfast2018

mailto:[email protected]

real estate market update - bend chamber of commerce · 2018-02-22 · need flexibility of renting...

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