2016 market updatekw-sites.s3-us-west-2.amazonaws.com/kw-images-prod/s3fs...homes remain in a...
TRANSCRIPT
2016 Market UpdateGary Keller and Jay Papasan
©2016 Keller Williams Realty, Inc.
Housing Market Cycles
©2016 Keller Williams Realty, Inc.
The Numbers That Drive U.S. Real Estate
1. Home Sales
2. Home Price
3. Months Supply of Inventory
4. Mortgage Rates
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1. Home Sales
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 Feb Apr Jun
5.65.55.45.45.1
5.55.3
5.05.14.7
4.34.34.6
4.4
5.0
5.7
6.26.0
5.45.0
4.74.64.74.5
4.03.8
3.53.63.4
3.22.92.93.0
Total Annual Single-Family Home Sales (in Millions) 2016 Monthly Home Sales (Annualized)
Nationally home sales are on pace for another post-crisis record. However, sales are slowing in some markets as affordability becomes a serious issue.
Source: NAR
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'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Annual Median Home Price (in Thousands)
$235 (projected)$222
$179 $198
$95
$166
$222
Home prices continue to rise as mortgage rates remain low. Price gains have been in the sustainable range for the majority of 2016.
Source: NAR
3. Home Price - Annual
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4. Months Supply of Inventory
Jun '14 Sep Dec Mar Jun '15 Sep Dec Mar Jun '16
Inventory Balanced = 6 months
4.64.74.74.44.443.954.84.85.14.955.15.2
4.64.74.64.455.25.45.65.65.5
Buy
er’s
Mkt
Selle
r’s M
ktB
alan
ced
6
We are now seeing many markets split by price point. Entry-level homes remain in a buyer’s market, but some luxury and move-up markets show signs of shifting.
Source: NAR
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7. Mortgage Rates - Monthly
Jan '11 Jul '11 Jan '12 Jul '12 Jan '13 Jul '13 Jan '14 Jul '14 Jan '15 Jul '15 Jan '16 Jul '16
Monthly Mortgage Rate
3.9%
4.8%
3.35%
4.5%
4.2%3.4%
Source: Freddie Mac
Home sales benefited from near record-low interest rates so far in 2016, as lackluster economic growth has kept the Federal Reserve from making substantial changes to policy and pushed more money into treasuries.
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The U.S. Economy1. Gross Domestic Product
2. Unemployment
3. Inflation
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1. Gross Domestic Product - Quarterly
Q2 '07 Q4 '07 Q2 '08 Q4 '08 Q2 '09 Q4 '09 Q2 '10 Q4 '10 Q2 '11 Q4 '11 Q2 '12 Q4 '12 Q2 '13 Q4 '13 Q2 '14 Q4 '14 Q2 '15 Q4 '15 Q2 '16
1.2%0.8%1.4%
2%
3.9%
0.6%
2.1%
4.3%4.6%
-0.9%
3.5%4.5%
1.8%2.7%
0.1%
2.5%1.6%
2.3%
4.6%
0.8%
2.9%
-1.5%
2.5%2.7%
3.9%
1.7%
3.9%
1.3%
-0.5%
-5.4%
-8.2%
-1.9%
2.0%
-2.7%
1.4%
2.7%3.1%
0.2%
Real GDP Growth Rate, Quarterly, Seasonally Adjusted (Percentage) 2015 2016Source: BEA
Growth has been held back by low levels of investment in 2016, but consumer spending remains strong.
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2. Unemployment - Monthly
Source: BLS
Jan '08 Jan '09 Jan '10 Jan '11 Jan '12 Jan '13 Jan '14 Jan '15 Jul '16
10%
5%5.7%
4.9%
Employment has been stable below 5% so far in 2016, as other statistics on unemployment continue to show progress.
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3. Inflation - Annual
Persistent low levels of inflation will be another factor holding down interest rates.
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
4.5%
5.4%
1.4%
CPI (Includes Energy and Food) Core CPI (Excludes Energy and Food) Target = 2%Source: BEA
1.5%2% 2%
(projected)
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Special Topics1. Affordability
2. New Home Construction
3. New Home Sales
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1. Affordability
Source: NAR
Affordability Definition: A value of 100 means that a family earning the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that a family earning the median income has more than enough income.
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Jan Feb Mar Apr May
159164170174171164164176
197186
172169
138115108113
124131126128122131133127126125128131122110108106
Yearly Monthly
Affordability has been declining since January as prices continue to outpace wage growth.
2016
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2. New Home Construction
Historical '15 Jan Feb Mar Apr May Jun
778764762753845
771715
1,082
New Homes (in Thousands)
Construction has been focused in higher price ranges, which may create issues down the line.
Source: Census Bureau
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3. New Home Sales (compared to 2000)
0
45
90
135
180
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
<$200K $200 to $300K $300K to $400K >$400k
100
160
176
168
124
49
3621
848071
27
The lack of construction in the entry-level price range has contributed to shortages, causing extremely low inventory levels of entry-level houses in many cities.
Source: Census Bureau
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The Numbers That Drive Canadian Real Estate
1. Home Sales
2. Home Price
3. Inventory
4. Mortgage Rates
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1. Home Sales - Monthly
Jul '14 Aug Sep Oct Nov Dec Jan '15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan '16 Feb Mar Apr May Jun
45K45K47K
46K44K44K44K44K
43K42K43K43K43K43K
42K41K
39K38K
39K
42K42K42K42K41K
Total Monthly Home Sales
Home sales have been at record paces in Canada despite slowing sales in Alberta.
Source: CREA
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2. Home Price - Monthly
Jul '14Aug Sep Oct Nov DecJan '15Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
$503K$503K$508K$508K$503K
$470K$454K$456K$455K
$433K$433K$437K$453K$450K$449K
$439K$432K
$402K$405K$414K$420K
$409K$399K$402K
Average Monthly Home Price
The Greater Toronto and Greater Vancouver areas continue to be the main drivers of price growth in the Canadian market.
Source: CREA
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3. Inventory - National
Jul '14 Aug Sep Oct Nov DecJan '15Feb Mar Apr May Jun Jul '15 Aug Sep Oct Nov DecJan '16Feb Mar Apr May Jun
Monthly Single-Family Home Sales 40% 60%
63%65%65%62%60%59%56%57%58%57%57%57%57%58%56%54%53%50%52%
56%56%56%56%54%
Source: CREA
60%
40%
Seller’s
Balanced
Buyer’s
Inventory levels fell into seller’s market territory for the first time since 2009 as sales accelerated through the first half of 2016.
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4. Mortgage Rates
‘89
‘91
‘93
‘95
‘97
‘99
‘01
‘03
‘05
‘07
‘09
‘11 '1
3
Jan '
15 MarMay Ju
lSe
pNov
Jan '
16 MarMay
Jul '1
6
5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%5%6%6%
7%7%7%
6%6%6%7%
7%
8%8%
7%7%8%
9%10%9%
10%
11%
13%
12%
Average Annual Mortgage Rate (Percentage) '15 - '16 Actual Monthly Mortgage Rate (Percentage)
MonthlyYearly
4.7%
13%12%
10% 8%
6% 7%
5%
Mortgage rates held steady for first half of 2016, and rose slightly in July.
Source: Bank of Canada
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Industry UpdateRestrictions on how real estate teams advertise are becoming more widespread.
1. A bill recently passed in South Carolina that outlaws the use of “realty” and “real estate” in team names.
2. Nine other states already have regulations on team advertising.
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Technology Trends
Search
Home Ownership Transaction
3. UPSTREAM
5. SHOWING INNOVATION
2. ARTIFICIAL INTELLIGENCE
1. PREDICTIVE ANALYTICS
4. RESPONSE TIMES
6. TRANSPARENT OFFER MANAGEMENT
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1. Predictive AnalyticsIncreased competition in the predictive analytics space will drive accuracy, leading to higher conversion rates.
1. LEAD SCORING
2. TARGETED MARKETING
3. AVMs
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2. Artificial IntelligenceARTIFICIAL INTELLIGENCE - The theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.
Source: CB Insights
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3. Upstream ModelMLS
Broker Public Portal
Zillow
Realtor.com
Homes.com
Trulia
KWLS
300+ others
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4. Instantaneous Response TimeThe industry is beginning to leverage technology to improve a longtime weakness: response time.
Text Phone Email
Agent Response Rate
51%
71%
45%
Text Phone Email
Agent Response Time
5h 35m
1h 45m
30m
Source: Baylor University
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5. Showing InnovationsShowings are going through a period of innovation where different providers are offering users unique tools to schedule and tour showings on demand with or without an agent.
1. AGENT-LESSSHOWINGS
2. SMART LOCKBOXES
3. ON-DEMAND
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6. Transparent Offer ManagementNew competitors are entering the real estate market offering “transparent offer management” solutions that allow consumers to place offers on homes online with or without an agent. Some are even making these offers visible to the public.
Date Price Status
8/5/16 $325,000 Declined
8/1/16 $318,000 Declined
7/25/16 $312,000 Declined
List Price
$350,000
MAKE AN OFFER
OFFER HISTORY
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