u.s. economic & housing outlook david crowe chief economist april 4, 2013 nalhfa annual...
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U.S. Economic & Housing Outlook
David CroweChief Economist
April 4, 2013NALHFA Annual Educational Conference
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Outline
Macro Economy
Demographics (i.e., demand)
Housing Stock and Flow (i.e., supply
Forecasts
Markets
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Macro
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Real GDP Growth – Hesitated in Q4, but expected to improve
0%
200%
400%
600%
800%
1000%
1200%Q/Q Percent Change, SAAR
Last 4 Qs Avg = 1.7%
1.8%
2.6%
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GDP and Housing in RecoveryHousing component now growing faster than economy
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
4.1%2.0% 1.3%
3.1%0.4%
12.0%
20.6%
8.4%
13.6%
17.5%
GDP RFI
An
nu
al C
ha
ng
e Be
gin
nin
g o
f R
ec
ov
ery
En
d o
f b
uye
r cr
edit
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Payroll Employment – A little over half-way back to peak
00 01 02 03 04 05 06 07 08 09 10 11 12 13125,000
128,000
131,000
134,000
137,000
140,000
143,000
138056
129360
135046
Trend in employmentTotal employment
Millions
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Unemployment Will Remain High
00 01 02 03 04 05 06 07 08 09 10 11 12 130
2
4
6
8
10
12Percent, Seasonally Adjusted
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Improving Markets Index – at 273 markets in April
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Demographics (i.e., Demand)
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Population by Single-Year of AgeRising population in prime household formation years
0123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100+0.0
500,000.0
1,000,000.0
1,500,000.0
2,000,000.0
2,500,000.0
3,000,000.0
3,500,000.0
4,000,000.0
4,500,000.0
5,000,000.04,592,336.0
3,827,920.0
Millions
Born 1979 or later Born 1965-78 Born 1946-64 Born 1945 or earlier
He
ad
sh
ip r
ate
s i
nc
rea
se
fro
m 1
6%
to
48
%
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Household Formations Are on the RiseYear-over-year change in households rising again
02
02
02
02
03
03
03
03
04
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
08
08
08
09
09
09
09
10
10
10
10
11
11
11
11
12
12
12
12
0
500
1,000
1,500
2,000
2,500Thousands
Avg: 1.38 million
Avg: 0.5 million
Avg: 0.86 million
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Annual Average Household Changes – Switch to Renting
2002-2005 2007-2010 2011-2012-400
-200
0
200
400
600
800
1,000
1,200
1,400
1,6001,384
522
863
164
676
1,034
Total Owners Renters
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Homeownership Rates by Age GroupDecline from peak 2 to 6.9 percentage points
0
10
20
30
40
50
60
Under 25 (down 3.1 pts)
25-34 (down 6.9 pts)
92 94 96 98 00 02 04 06 08 1060
65
70
75
80
50+ (down 2 pts)
35-49 (down 5.5 pts)
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Housing Stock and Flow (i.e., supply)
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Stock of Homes by Building Size Share of 2-4 unit buildings falling in stock, but flow significantly different
1970 1980 1990 2000 2011 2012YTD Flow
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
72% 70% 71% 72% 74% 68%
14% 12% 10% 10% 8%
1%
15% 18% 19% 18% 18%30%
SF 2 to 4 5+
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2002 2003 2004 2005 2006 2007 2008 2009 2010 201115%
20%
25%
30%
35%
40%
45%
50%
30%
34%
43%43%
Single family 2-4 5+
Share of Rental Units by Building SizeRising share of rentals coming from single-family stock
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Share of Production For RentSingle-family and multifamily rising
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
20102012
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
0%
1%
2%
3%
4%
5%
6%
Multifamily Single-family
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Rental Production and JobsProduction generally follows job market changes
Mar-74
Oct-75
May-77
Dec-78Jul-8
0
Feb-82
Sep-83
Apr-85
Nov-86
Jun-88
Jan-90
Aug-91
Mar-93
Oct-94
May-96
Dec-97Jul-9
9
Feb-01
Sep-02
Apr-04
Nov-05
Jun-07
Jan-09
Aug-10
Mar-12
0
100
200
300
400
500
600
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
0.50
1.00
1.50
2.00 MF Rental Starts Chg in Employment
100 jobs = 74 apartments
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But, Linkage ChangesDuring high direct and tax incentives, strong relationship
Mar-74
Aug-74
Jan-75
Jun-75
Nov-75
Apr-76
Sep-76
Feb-77Jul-7
7
Dec-77
May-78
Oct-78
Mar-79
Aug-79
Jan-80
Jun-80
Nov-80
Apr-81
Sep-81
Feb-82Jul-8
2
Dec-82
May-83
Oct-83
Mar-84
Aug-840
100
200
300
400
500
600
-2
-1
0
1
2
Rental Starts Emplm Chg
100 jobs = 83 apartments
(000s) %
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Lower Linkage in 1990sDuring readjustment to different subsidies
Mar-90
Aug-90
Jan-91
Jun-91
Nov-91
Apr-92
Sep-92
Feb-93Jul-9
3
Dec-93
May-94
Oct-94
Mar-95
Aug-95
Jan-96
Jun-96
Nov-96
Apr-97
Sep-97
Feb-98Jul-9
8
Dec-98
May-99
Oct-99
Mar-00
Aug-000
50
100
150
200
250
300
350
400
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Rental Starts Emplm Chg
(000s) %
100 jobs = 40 apartments
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Relationship disrupted Slow 2002 economic recovery and likely switch to condos
Mar-01
Jun-01
Sep-01
Dec-01
Mar-02
Jun-02
Sep-02
Dec-02
Mar-03
Jun-03
Sep-03
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-05
Mar-06
Jun-06
Sep-060
50
100
150
200
250
300
350
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Rental Starts Emplm Chg
100 jobs = 130 apartments
%(000s)
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Back to Normal?As job growth slowly returns, rental starts moving up
Mar-10
May-10Jul-1
0
Sep-10
Nov-10
Jan-11
Mar-11
May-11Jul-1
1
Sep-11
Nov-11
Jan-12
Mar-12
May-12Jul-1
2
Sep-12
Nov-120
50
100
150
200
250
300
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Rental Starts Emplm Chg
100 jobs = 39 apartments
%(000s)
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ForecastsRemodelingMultifamilySingle family
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Remodeling Market Index (RMI)Above 50 for 1 quarter
20
01
Q1
Q3
20
02
Q1
Q3
20
03
Q1
Q3
20
04
Q1
Q3
20
05
Q1
Q3
20
06
Q1
Q3
20
07
Q1
Q3
20
08
Q1
Q3
20
09
Q1
Q3
20
10
Q1
Q3
20
11
Q1
Q3
20
12
Q1
Q3
20
25
30
35
40
45
50
55
6055
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Residential Remodeling – Strong Finish to 2012
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1460,000
70,000
80,000
90,000
100,000
110,000
120,000
130,000
140,000
150,000
YR 4Q/4Q Chg -0.7% 7.4% 2.2% 1.6%
Billions 2005 $, SAAR
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Multifamily Production Index38-point increase in four years; above 50 for 4 quarters
10
15
20
25
30
35
40
45
50
55
60
0
50
100
150
200
250
300
350
400
5+ Starts (R)
NAHB MMI (L)
16
54
(000s)
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1995-2003 331,000 2010 114,0002011 178,000 56%2012 247,000 39%2013 312,000 26%2014 331,000 6%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 140
50
100
150
200
250
300
350
400
450
500
550Thousands
76% fall
Multifamily Housing Starts Healthy Response from Growth in Renters
Trough to Current:4th Q 09 = 82,0004th Q 12 = 312,000
280%
2012Q4 = 92% of “Normal”
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Distribution of Multifamily Starts by Type
2008 2009 2010 2011 2012F 2013F 2014F0
50
100
150
200
250
300
350
67
18 17 19 23 32 39
18
12 11 12 11 16
19
44
25 2545
59
7478
155
57 61
102
154
190 195
Condo 2 - 4 LIHTC Mkt 5+
331Thousands
112 114
178
284
247
312
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NAHB/Wells Fargo Housing Market Index - 30 point rise since September 2011
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
0
10
20
30
40
50
60
70
80
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
14
Single-family starts (R)
HMI (L)
(000s)
8
44
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2000-2003 1,300,000 ”Normal”2010 471,000 2011 434,000 -8%2012 534,000 23%2013 664,000 24%2014 855,000 29%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 140
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000Thousands
80% fall
Single-Family Starts – Beginning a Recovery
Trough to Current:Mar 09 = 353,000Feb 13 = 618,000
+75%
2012Q4 = 44% of “Normal’
2014Q4=71%
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Markets
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Top Multifamily Markets: Now and ThenTotal Housing Permits (yellow shaded on both lists)
Top Ten Multifamily Markets 2012Top Ten Multifamily Markets 2000-2002
1 New York 1 New York
2 Dallas-Fort Worth 2 Miami
3 Houston 3 Chicago
4 Los Angeles 4 Los Angeles
5 Washington 5 Dallas-Fort Worth
6 Austin 6 Denver
7 Seattle 7 Washington
8 Denver 8 Phoenix
9 Miami 9 Houston
10 Raleigh 10 Seattle
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State Markets Nearest ‘Normal’Ratio of 2012 Multifamily permit levels to 2000-2002 annual average
2012 MF Permits/2000-2002 Avg MF Permits
DISTRICT OF COLUMBIA 4.11 TENNESSEE 1.04
NORTH DAKOTA 3.49 MONTANA 1.02
DELAWARE 2.64 OKLAHOMA 1.00
CONNECTICUT 2.17 NEBRASKA 0.96
TEXAS 1.44 OREGON 0.96
WYOMING 1.42 WASHINGTON 0.95
HAWAII 1.39 ALABAMA 0.94
SOUTH DAKOTA 1.34 NEW MEXICO 0.90
NEW JERSEY 1.33 VERMONT 0.86
MASSACHUSETTS 1.29 UTAH 0.86
MARYLAND 1.05 PENNSYLVANIA 0.85
NORTH CAROLINA 1.05 MINNESOTA 0.82
KENTUCKY 1.05 UNITED STATES 0.75
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Metro Markets Nearest ‘Normal’Ratio of 2012 Multifamily permit levels to 2000-2002 annual average
2012 MF Permits/2000-2002 Avg MF Permits
San Angelo TX 52.80 Tulsa OK 1.51
Dover DE 6.46 Charleston-North Charleston SC 1.48
Harrisonburg VA 6.21 Austin-Round Rock TX 1.42
Odessa TX 6.17 Dallas-Fort Worth-Arlington TX 1.42
Birmingham-Hoover AL 2.34 Boston-Cambridge-Quincy MA-NH 1.38
Honolulu HI 2.29 San Francisco-Oakland-Fremont CA 1.34
Columbia SC 2.21 Des Moines IA 1.30
Raleigh-Cary NC 2.18 Wilmington NC 1.26
Laredo TX 2.08 Fort Wayne IN 1.25 Nashville-Davidson--Murfreesboro TN 1.81
Philadelphia-Camden-Wilmington PA-NJ-DE-MD 1.22
Trenton-Ewing NJ 1.80 Richmond VA 1.21
Houston-Baytown-Sugar Land TX 1.63 San Jose-Sunnyvale-Santa Clara CA 1.18
Tulsa OK 1.51 UNITED STATES 0.75
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Questions?Answers: www.housingeconomics.comeyeonhousing.wordpress.comdcrowe@nahb.org