real%estate%and%economic%outlook% · 2020. 1. 6. · real%estate%and%economic%outlook%...

Real Estate and Economic Outlook

Lawrence Yun, Ph.D. Chief Economist

NATIONAL ASSOCIATION OF REALTORS®

PresentaAon at Cleveland State University

Cleveland, OH

October 3, 2012

Exis3ng Home Sales Recovery: Best in 5 years, but only up 8% year-‐to-‐date

7.08 6.52

5.02

4.12 4.34 4.18 4.26 4.62

0 1 2 3 4 5 6 7 8

2005 2006 2007 2008 2009 2010 2011 2012 est.

In million units

One Reason for Slower Recovery, aside from credit bubble hangover, is the falling mobility rate

From 18% to 12%

.1

.12

.14

.16

.18

.2

Frac

tion o

f pop

ulatio

n

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010Year

(Any Distance)Fraction of Population Who Moved in the Last 12 Months

Source: Raven Molloy, Federal Reserve Economist, Current Popula3on Survey.

Investors in the Market; and Homebuyers Frustrated

0

500

1000

1500

2000

2500

2005 2006 2007 2008 2009 2010 2011 2012 est.

Investor Sales In thousands

0

2000

4000

6000

2005 2006 2007 2008 2009 2010 2011 2012 est

Owner-‐occupant Sales In thousands

Cleveland Area Housing Sta3s3cs (August 2012)

•  Units Sold … up 17.0% from one year ago

•  Median Price to $127,600 … up 4.1%

•  Dollar Volume … up 21.8%

•  Pending contracts for Ohio … up 15.6%

Source: OAR using Northeast Ohio Real Estate Exchange

Everyone Seeing Low Home Prices Warrant Buffet: Buy Low (not Buy High)

100

150

200

250

300

350

1995 -‐ Q1

1996 -‐ Q1

1997 -‐ Q1

1998 -‐ Q1

1999 -‐ Q1

2000 -‐ Q1

2001 -‐ Q1

2002 -‐ Q1

2003 -‐ Q1

2004 -‐ Q1

2005 -‐ Q1

2006 -‐ Q1

2007 -‐ Q1

2008 -‐ Q1

2009 -‐ Q1

2010 -‐ Q1

2011 -‐ Q1

2012 -‐ Q1

Phoenix

Cleveland

Source: FHFA

New versus Exis3ng Home Price

0

50000

100000

150000

200000

250000

300000

1968 -‐ Jan

1969 -‐ Jan

1970 -‐ Jan

1971 -‐ Jan

1972 -‐ Jan

1973 -‐ Jan

1974 -‐ Jan

1975 -‐ Jan

1976 -‐ Jan

1977 -‐ Jan

1978 -‐ Jan

1979 -‐ Jan

1980 -‐ Jan

1981 -‐ Jan

1982 -‐ Jan

1983 -‐ Jan

1984 -‐ Jan

1985 -‐ Jan

1986 -‐ Jan

1987 -‐ Jan

1988 -‐ Jan

1989 -‐ Jan

1990 -‐ Jan

1991 -‐ Jan

1992 -‐ Jan

1993 -‐ Jan

1994 -‐ Jan

1995 -‐ Jan

1996 -‐ Jan

1997 -‐ Jan

1998 -‐ Jan

1999 -‐ Jan

2000 -‐ Jan

2001 -‐ Jan

2002 -‐ Jan

2003 -‐ Jan

2004 -‐ Jan

2005 -‐ Jan

2006 -‐ Jan

2007 -‐ Jan

2008 -‐ Jan

2009 -‐ Jan

2010 -‐ Jan

2011 -‐ Jan

2012 -‐ Jan

Exis3ng Home Price New Home Price

Investors seeing Rising Rent (Not deterred by 3.8% Health Care Tax on Rental Income …

because some of it will be passed on to renters)

-‐1

0

1

2

3

4

5

2000 -‐ Jan

2000 -‐ Jul

2001 -‐ Jan

2001 -‐ Jul

2002 -‐ Jan

2002 -‐ Jul

2003 -‐ Jan

2003 -‐ Jul

2004 -‐ Jan

2004 -‐ Jul

2005 -‐ Jan

2005 -‐ Jul

2006 -‐ Jan

2006 -‐ Jul

2007 -‐ Jan

2007 -‐ Jul

2008 -‐ Jan

2008 -‐ Jul

2009 -‐ Jan

2009 -‐ Jul

2010 -‐ Jan

2010 -‐ Jul

2011 -‐ Jan

2011 -‐ Jul

2012 -‐ Jan

% change from one year ago

Investors also seeing rising # of renters

25,000 27,000 29,000 31,000 33,000 35,000 37,000 39,000 41,000

1980 -‐ Q1

1981 -‐ Q3

1983 -‐ Q1

1984 -‐ Q3

1986 -‐ Q1

1987 -‐ Q3

1989 -‐ Q1

1990 -‐ Q3

1992 -‐ Q1

1993 -‐ Q3

1995 -‐ Q1

1996 -‐ Q3

1998 -‐ Q1

1999 -‐ Q3

2001 -‐ Q1

2002 -‐ Q3

2004 -‐ Q1

2005 -‐ Q3

2007 -‐ Q1

2008 -‐ Q3

2010 -‐ Q1

2011 -‐ Q3

Rental Households

Homeowners not Rising

50,000

55,000

60,000

65,000

70,000

75,000

80,000

1980 -‐ Q1

1981 -‐ Q3

1983 -‐ Q1

1984 -‐ Q3

1986 -‐ Q1

1987 -‐ Q3

1989 -‐ Q1

1990 -‐ Q3

1992 -‐ Q1

1993 -‐ Q3

1995 -‐ Q1

1996 -‐ Q3

1998 -‐ Q1

1999 -‐ Q3

2001 -‐ Q1

2002 -‐ Q3

2004 -‐ Q1

2005 -‐ Q3

2007 -‐ Q1

2008 -‐ Q3

2010 -‐ Q1

2011 -‐ Q3

Homeowners

Homeownership Rate at 65.4% (Lowest in 15 years)

59 60 61 62 63 64 65 66 67 68 69 70

1965 -‐ Q1

1966 -‐ Q4

1968 -‐ Q3

1970 -‐ Q2

1972 -‐ Q1

1973 -‐ Q4

1975 -‐ Q3

1977 -‐ Q2

1979 -‐ Q1

1980 -‐ Q4

1982 -‐ Q3

1984 -‐ Q2

1986 -‐ Q1

1987 -‐ Q4

1989 -‐ Q3

1991 -‐ Q2

1993 -‐ Q1

1994 -‐ Q4

1996 -‐ Q3

1998 -‐ Q2

2000 -‐ Q1

2001 -‐ Q4

2003 -‐ Q3

2005 -‐ Q2

2007 -‐ Q1

2008 -‐ Q4

2010 -‐ Q3

%

Visible Housing Inventory (Exis3ng inv. At 8-‐year low; New inv. at 50-‐year

low)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

2000 -‐ Jan

2001 -‐ Jan

2002 -‐ Jan

2003 -‐ Jan

2004 -‐ Jan

2005 -‐ Jan

2006 -‐ Jan

2007 -‐ Jan

2008 -‐ Jan

2009 -‐ Jan

2010 -‐ Jan

2011 -‐ Jan

2012 -‐ Jan

Exis3ng New

Shadow Inventory … Falling (Seriously delinquent mortgage + homes in foreclosure process)

million units

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 -‐ Q1

2000 -‐ Q3

2001 -‐ Q1

2001 -‐ Q3

2002 -‐ Q1

2002 -‐ Q3

2003 -‐ Q1

2003 -‐ Q3

2004 -‐ Q1

2004 -‐ Q3

2005 -‐ Q1

2005 -‐ Q3

2006 -‐ Q1

2006 -‐ Q3

2007 -‐ Q1

2007 -‐ Q3

2008 -‐ Q1

2008 -‐ Q3

2009 -‐ Q1

2009 -‐ Q3

2010 -‐ Q1

2010 -‐ Q3

2011 -‐ Q1

2011 -‐ Q3

2012 -‐ Q1

Distressed Sales Market Share 2010 … 33% 2011 … 33% 2012 … 25% 2013 … 15% 2014 … 8%

Distressed Property Sales

0%

10%

20%

30%

40%

50%

60%

2008 -‐ Oct

2008 -‐ De

c 2009 -‐ Feb

2009 -‐ Ap

r 2009 -‐ Jun

2009 -‐ Au

g 2009 -‐ Oct

2009 -‐ De

c 2010 -‐ Feb

2010 -‐ Ap

r 2010 -‐ Jun

2010 -‐ Au

g 2010 -‐ Oct

2010 -‐ De

c 2011 -‐ Feb

2011 -‐ Ap

r 2011 -‐ Jun

2011 -‐ Au

g 2011 -‐ Oct

2011 -‐ De

c 2012 -‐ Feb

2012 -‐ Ap

r 2012 -‐ Jun

2012 -‐ Au

g

REO Short-‐Sale

Foreclosures Rapidly Falling in Non-‐Judicial States

Example: Seriously Delinquent Mortgages in AZ, CA , MI

0 2 4 6 8

10 12 14

2005 -‐ Q1

2005 -‐ Q2

2005 -‐ Q3

2005 -‐ Q4

2006 -‐ Q1

2006 -‐ Q2

2006 -‐ Q3

2006 -‐ Q4

2007 -‐ Q1

2007 -‐ Q2

2007 -‐ Q3

2007 -‐ Q4

2008 -‐ Q1

2008 -‐ Q2

2008 -‐ Q3

2008 -‐ Q4

2009 -‐ Q1

2009 -‐ Q2

2009 -‐ Q3

2009 -‐ Q4

2010 -‐ Q1

2010 -‐ Q2

2010 -‐ Q3

2010 -‐ Q4

2011 -‐ Q1

2011 -‐ Q2

2011 -‐ Q3

2011 -‐ Q4

2012 -‐ Q1

2012 -‐ Q2

AZ MI CA

%

Foreclosures Clogged in Judicial States Example Seriously Delinquent Mortgages in CT and IL

0 2 4 6 8

10 12

2005 -‐ Q1

2005 -‐ Q2

2005 -‐ Q3

2005 -‐ Q4

2006 -‐ Q1

2006 -‐ Q2

2006 -‐ Q3

2006 -‐ Q4

2007 -‐ Q1

2007 -‐ Q2

2007 -‐ Q3

2007 -‐ Q4

2008 -‐ Q1

2008 -‐ Q2

2008 -‐ Q3

2008 -‐ Q4

2009 -‐ Q1

2009 -‐ Q2

2009 -‐ Q3

2009 -‐ Q4

2010 -‐ Q1

2010 -‐ Q2

2010 -‐ Q3

2010 -‐ Q4

2011 -‐ Q1

2011 -‐ Q2

2011 -‐ Q3

2011 -‐ Q4

2012 -‐ Q1

2012 -‐ Q2

CT IL %

Should a trigger be set up to foreclose without a court approval? •  Vacant property •  Missed Mortgages for 6 months or longer

Foreclosures in Ohio Example Seriously Delinquent Mortgages

0 1 2 3 4 5 6 7 8 9

10

2005 -‐ Q1

2005 -‐ Q2

2005 -‐ Q3

2005 -‐ Q4

2006 -‐ Q1

2006 -‐ Q2

2006 -‐ Q3

2006 -‐ Q4

2007 -‐ Q1

2007 -‐ Q2

2007 -‐ Q3

2007 -‐ Q4

2008 -‐ Q1

2008 -‐ Q2

2008 -‐ Q3

2008 -‐ Q4

2009 -‐ Q1

2009 -‐ Q2

2009 -‐ Q3

2009 -‐ Q4

2010 -‐ Q1

2010 -‐ Q2

2010 -‐ Q3

2010 -‐ Q4

2011 -‐ Q1

2011 -‐ Q2

2011 -‐ Q3

2011 -‐ Q4

2012 -‐ Q1

2012 -‐ Q2

%

Housing Starts (Well Below 50-‐year average of 1.5 million each year)

0

500

1000

1500

2000

2500

2000 -‐ Jan

2000 -‐ Jul

2001 -‐ Jan

2001 -‐ Jul

2002 -‐ Jan

2002 -‐ Jul

2003 -‐ Jan

2003 -‐ Jul

2004 -‐ Jan

2004 -‐ Jul

2005 -‐ Jan

2005 -‐ Jul

2006 -‐ Jan

2006 -‐ Jul

2007 -‐ Jan

2007 -‐ Jul

2008 -‐ Jan

2008 -‐ Jul

2009 -‐ Jan

2009 -‐ Jul

2010 -‐ Jan

2010 -‐ Jul

2011 -‐ Jan

2011 -‐ Jul

2012 -‐ Jan

mul3family single-‐family Thousand units (annualized)

Long-‐term Average

Source: Census, HUD

Cleveland-Lorain-Elyria Housing Permits

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Falling Inventory of Homes for Sale 2010 July 2011 July 2012 July

Exis3ng Homes for Sale 3.41 million 3.15 million 2.40 million

Newly Constructed Homes for Sale

210,000 165,000 142,000

“Shadow” Es3mate (Seriously Delinquent Mortgages and Homes in Foreclosure Process)

4.2 million 3.5 million 3.2 million

Homeowners wai3ng •  for higher home

prices •  To be freed from Tax

Credit Lock Period

??? ??? Inconsequen3al Impact since most will list homes, but with intent also on buying

Wealth Distribu3on … Who will get Future Wealth?

(Federal Reserve data on median net worth)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

Renter Owner

1998

2001

2004

2007

2010

2014

2014 Forecast by NAR

Improving Factors for Sales in 2012 and Beyond:

1.  High Affordability and Job Crea3on 2.  Solid stock market recovery from 2008 3.  Rising rents and a larger pool of qualified renters 4.  Pent-‐up release of Household Forma3on

•  Rising demand for ownership and rentals as young-‐adults move out of parent’s basement

5.  Smart money chasing real estate (i.e., investors) 6.  Consumer confidence in buying an apprecia3ng

asset

Best Affordability Conditions

50

70

90

110

130

150

170

190

210

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

S&P 500 (Almost 100% from low point)

NASDAQ (More than 100% increase from low point)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2005 -‐ Jan

2005 -‐ Jun

2005 -‐ Nov

2006 -‐ Ap

r 2006 -‐ Sep

2007 -‐ Feb

2007 -‐ Jul

2007 -‐ De

c 2008 -‐ May

2008 -‐ Oct

2009 -‐ Mar

2009 -‐ Au

g 2010 -‐ Jan

2010 -‐ Jun

2010 -‐ Nov

2011 -‐ Ap

r 2011 -‐ Sep

2012 -‐ Feb

S&P 500

NASDAQ

Annual Household Forma3on… Future Rent Pressure?

(3 separate Census data) In millions

Household Forma3on leads to increase ownership and renters; Could begin to return to normal of at least 1 million from 2012.

Home Prices Metric % change from one year ago Comment

NAR + 9.5% Mix of homes impact price … fewer distressed sales recently … Leading Data

Case-‐Shiller +0.5% 30% annualized gains for two straight months

FHFA + 3.6% Monthly gains in 7 of recent 8 months

Monthly Pending Home Sales Index (Seasonally Adjusted)

70 75 80 85 90 95

100 105 110 115

2007 -‐ Jan

2007 -‐ Ap

r 2007 -‐ Jul

2007 -‐ Oct

2008 -‐ Jan

2008 -‐ Ap

r 2008 -‐ Jul

2008 -‐ Oct

2009 -‐ Jan

2009 -‐ Ap

r 2009 -‐ Jul

2009 -‐ Oct

2010 -‐ Jan

2010 -‐ Ap

r 2010 -‐ Jul

2010 -‐ Oct

2011 -‐ Jan

2011 -‐ Ap

r 2011 -‐ July

2011 -‐ Oct

2012 -‐ Jan

2012-‐Apr

2012 -‐ Jul

Homebuyer Tax Credit

Source: NAR

Foot Traffic

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

2008 -‐ Jan

2008 -‐ Ap

r

2008 -‐ Jul

2008 -‐ Oct

2009 -‐ Jan

2009 -‐ Ap

r

2009 -‐ Jul

2009 -‐ Oct

2010 -‐ Jan

2010 -‐ Ap

r

2010 -‐ Jul

2010 -‐ Oct

2011 -‐ Jan

2011 -‐ Ap

r

2011 -‐ Jul

2011 -‐ Oct

2012 -‐ Jan

2012 -‐ Ap

r

2012 -‐ Jul

Buyer Seller

29

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

1,000,000 1,100,000 1,200,000 1,300,000 1,400,000 1,500,000

Annual Membership (NRDS count at year-‐end)

Banks/Regulators Restric3ng Credit

(Average Credit Scores of Approved Loans)

Normal 2009 2010 If Normal

Fannie 720 761 762 720

Freddie 720 757 758 720

FHA 650 682 698 660

15% to 20% Higher Sales

Financial Industry Profits (excluding Federal Reserve)

-‐200

-‐100

0

100

200

300

400

500

2001 -‐ Q1

2001 -‐ Q3

2002 -‐ Q1

2002 -‐ Q3

2003 -‐ Q1

2003 -‐ Q3

2004 -‐ Q1

2004 -‐ Q3

2005 -‐ Q1

2005 -‐ Q3

2006 -‐ Q1

2006 -‐ Q3

2007 -‐ Q1

2007 -‐ Q3

2008 -‐ Q1

2008 -‐ Q3

2009 -‐ Q1

2009 -‐ Q3

2010 -‐ Q1

2010 -‐ Q3

2011 -‐ Q1

2011 -‐ Q3

2012 -‐ Q1

$ billion

Economy

Economy Growing, though Slowly (No Fresh Recession because of Housing Recovery)

Real GDP Growth Rate

-‐4

-‐3

-‐2

-‐1

0

1

2

3

4

2005 2006 2007 2008 2009 2010 2011 2012 forecast

2013 forecast

%

Payroll Jobs Changes (December to December)

-‐6

-‐5

-‐4

-‐3

-‐2

-‐1

0

1

2

3

2005 2006 2007 2008 2009 2010 2011 2012 forecast

2013 forecast

In millions

Cleveland Area Payroll Jobs

900

950

1000

1050

1100

1150

1200

2000 -‐ Jan

2001 -‐ Jan

2002 -‐ Jan

2003 -‐ Jan

2004 -‐ Jan

2005 -‐ Jan

2006 -‐ Jan

2007 -‐ Jan

2008 -‐ Jan

2009 -‐ Jan

2010 -‐ Jan

2011 -‐ Jan

2012 -‐ Jan

In thousands

Ohio Payroll Jobs from 1939

0

1000

2000

3000

4000

5000

6000

1939 -‐ Jan

1942 -‐ Jan

1945 -‐ Jan

1948 -‐ Jan

1951 -‐ Jan

1954 -‐ Jan

1957 -‐ Jan

1960 -‐ Jan

1963 -‐ Jan

1966 -‐ Jan

1969 -‐ Jan

1972 -‐ Jan

1975 -‐ Jan

1978 -‐ Jan

1981 -‐ Jan

1984 -‐ Jan

1987 -‐ Jan

1990 -‐ Jan

1993 -‐ Jan

1996 -‐ Jan

1999 -‐ Jan

2002 -‐ Jan

2005 -‐ Jan

2008 -‐ Jan

2011 -‐ Jan

In thousands

U.S. Car and Truck Produc3on

400000

500000

600000

700000

800000

900000

1000000

1100000

1200000 2000 -‐ Jan

2000 -‐ Jul

2001 -‐ Jan

2001 -‐ Jul

2002 -‐ Jan

2002 -‐ Jul

2003 -‐ Jan

2003 -‐ Jul

2004 -‐ Jan

2004 -‐ Jul

2005 -‐ Jan

2005 -‐ Jul

2006 -‐ Jan

2006 -‐ Jul

2007 -‐ Jan

2007 -‐ Jul

2008 -‐ Jan

2008 -‐ Jul

2009 -‐ Jan

2009 -‐ Jul

2010 -‐ Jan

2010 -‐ Jul

2011 -‐ Jan

2011 -‐ Jul

2012 -‐ Jan

12-‐month average

Consumer Price Infla3on (Slightly Above Fed’s preferred 2% core infla3on rate)

-‐1.00

0.00

1.00

2.00

3.00

4.00

5.00

2005 2006 2007 2008 2009 2010 2011 2012 forecast

2013 forecast

All Items Core %

Monetary Policy by Federal Reserve (no change to 2014)

0 1 2 3 4 5 6 7

2005 2006 2007 2008 2009 2010 2011 2012 forecast

2013 forecast

2014 forecast

Fed Funds 30-‐year Mortgage %

Modestly higher rates could help home sales as banks re-‐staff mortgage work for home purchase applica3ons and less refinance applica3ons.

Huge Federal Budget Deficit … Will Push Up Borrowing Cost

(% of GDP)

-‐12

-‐10

-‐8

-‐6

-‐4

-‐2

0

2

4

1960 -‐ Jan

1964 -‐ Jan

1968 -‐ Jan

1972 -‐ Jan

1976 -‐ Jan

1980 -‐ Jan

1984 -‐ Jan

1988 -‐ Jan

1992 -‐ Jan

1996 -‐ Jan

2000 -‐ Jan

2004 -‐ Jan

2008 -‐ Jan

2012 -‐ Jan

But … Falling Treasury Borrowing Rate

0 2 4 6 8

10 12 14 16

1982 -‐ Au

g 1983 -‐ Oct

1984 -‐ De

c 1986 -‐ Feb

1987 -‐ Ap

r 1988 -‐ Jun

1989 -‐ Au

g 1990 -‐ Oct

1991 -‐ De

c 1993 -‐ Feb

1994 -‐ Ap

r 1995 -‐ Jun

1996 -‐ Au

g 1997 -‐ Oct

1998 -‐ De

c 2000 -‐ Feb

2001 -‐ Ap

r 2002 -‐ Jun

2003 -‐ Au

g 2004 -‐ Oct

2005 -‐ De

c 2007 -‐ Feb

2008 -‐ Ap

r 2009 -‐ Jun

2010 -‐ Au

g 2011 -‐ Oct

10-‐year 3-‐month

Impact to Deficit

•  Mortgage Interest Deduc3on … $90 billion – Not the source of the current budget deficit since MID was present for nearly 100 years

•  Interest Rates Revert back to historical average … $300 billion in extra interest expense

World Report Card Country 10-‐Year Borrowing Rate

Switzerland 0.5%

Germany 1.5%

United States 1.6%

United Kingdom 1.7%

Canada 1.7%

France 2.2%

Italy 5.1%

Spain 5.8%

Greece 18.9%

Source: Bloomberg as of October 1, 2012

State Report Card State 10-‐year Borrowing Rate above

Benchmark (% points)

Average State borrowing costs Around 3.5%

Rhode Island Benchmark + 0.5%

Michigan Benchmark + 0.7%

Nevada Benchmark + 0.7%

California Benchmark + 0.9%

Illinois Benchmark + 1.6%

Source: WSJ

Housing Forecast Summary 2011 History

2012 Forecast

2013 Forecast

Exis3ng Home Sales 4.26 million 4.6 million 5.0 million

New Home Sales 301,000 385,000 608,000

Housing Starts 611,000 775,000 1,150,000

Exis3ng Home Price $166,100 $173,900 $182,700

GDP Growth +1.8% +2.2% +2.6%

Payroll Job Gains +1.7 million +1.5 million +2.3 million

Fed Funds Rate 0.1% 0.1% 0.1%

30-‐yr Mortgage 4.7% 3.8% 4.1%

Risks to Forecast •  Washington Policy

–  QRM 20% down payment requirement? –  Basel 3 … capital rule that punishes private mortgage with low down payment and commercial loans

–  Trim mortgage interest deduc3on? –  Capital gains tax on home sale?

–  Fiscal Cliff on January 1, 2013 … if no new compromised budget, then:

•  Automa3c deep cuts to military and domes3c spending •  Automa3c higher taxes •  3% shaved off GDP … Fresh Economic Recession

Commercial Real Estate

Source: Real Capital Analy3cs, 4Q 2011.

Big Transac3ons Coming Back $2.5 million property and above

13

Tepid Commercial Construc3on

200000

250000

300000

350000

400000

450000 2000 -‐ Jan

2000 -‐ Jul

2001 -‐ Jan

2001 -‐ Jul

2002 -‐ Jan

2002 -‐ Jul

2003 -‐ Jan

2003 -‐ Jul

2004 -‐ Jan

2004 -‐ Jul

2005 -‐ Jan

2005 -‐ Jul

2006 -‐ Jan

2006 -‐ Jul

2007 -‐ Jan

2007 -‐ Jul

2008 -‐ Jan

2008 -‐ Jul

2009 -‐ Jan

2009 -‐ Jul

2010 -‐ Jan

2010 -‐ Jul

2011 -‐ Jan

2011 -‐ Jul

2012 -‐ Jan

$ million; value of construc3on put in place

REALTOR® Business Deals (Majority are less than $1 million)

Method of Finance

Underwri3ng Standards?

Mul3family Fundamentals

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

-‐50,000

0

50,000

100,000

150,000

200,000

250,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Comple3ons Net Absorp3on Vacancy

Source: NAR/REIS

Office Fundamentals

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

-‐150

-‐100

-‐50

0

50

100

150

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Millions


Source: NAR/REIS

Industrial Fundamentals

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

-‐100

-‐50

0

50

100

150

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Millions


Source: NAR/REIS

Retail Fundamentals

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

-‐30

-‐20

-‐10

0

10

20

30

40

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Millions


Source: NAR/REIS

Commercial Market Forecast OFFICE 2011 2012 2013

Vacancy Rate 16.6% 16.3% 15.9% Net Absorp3on ('000 sq. w.) 20,178 31,700 53,000

Comple3ons ('000 sq. w.) 11,659 25,474 37,847 Rent Growth 1.4% 1.7% 2.4%

INDUSTRIAL 2011 2012 2013


Comple3ons ('000 sq. w.) 20,462 26,947 54,881 Rent Growth -0.5% 1.8% 2.3%

RETAIL 2011 2012 2013


Comple3ons ('000 sq. w.) 4,207 12,677 19,878 Rent Growth -0.2% 0.7% 1.4%

MULTI-‐FAMILY 2011 2012 2013

Vacancy Rate 5.4% 4.6% 4.5% Net Absorp3on (Units) 238,398 126,621 102,687

Comple3ons (Units) 38,014 88,839 93,706 Rent Growth 2.5% 3.5% 3.8%

For Daily Update and Analysis

•  Twixer @NAR_Research

real%estate%and%economic%outlook% · 2020. 1. 6. · real%estate%and%economic%outlook%...

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