new jersey housing outlook builders league of south...

Patrick J. O’Keefe

Director of Economic Research

New Jersey Housing Outlook

Builders League of South Jersey

January 13, 2016

13 January 2016

U.S. Gross Domestic Product – Real

2007 (Q-4) vs. 2015 (Q-3)

Dollars - Trillions

1

Source: Bureau of Economic AnalysisSeasonally adjusted annual rate; 2015 Q-3 third estimate

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

$10.1$11.3

$2.6

$2.9

-$0.6 -$0.5

$2.9

$2.9

$ -

Tri

llio

ns

Consumer Spending Private Investment Trade Government

2007 Q-4

$15.0 T

2015 Q-3

$16.4 T

13 January 2016

U.S. Gross Private Domestic Investment - Real

Residential & Nonresidential Structures

Dollars - Billions

0

200

400

600

800

1,000

1,200

1,400

$ -

Billi

on

s

Nonresidential Residential

2

Source: Bureau of Economic AnalysisSeasonally adjusted annual rate; 2015 Q-2 third estimate

15 Q-3

13 January 2016

U.S. Households

Net Worth

Peak-Nadir-Recent

3

Source: Federal Reserve

-20.0

0.0

20.0

40.0

60.0

80.0

100.0

$ -

Tri

llio

ns

Financial Assets Real Estate Consumer Durables Other Assets

Mortgages Consumer Credit Other Credit

Net

Worth

$54.9 T

Net

Worth

$85.2 T

Net

Worth

$67.6 T

2007 Q-3 2009 Q-1 2015 Q-3

13 January 2016

Households1 Net Worth

2007 - 2015

Dollars - Billions

4

Source: Federal Reserve1Includes nonprofit organizations

2007 Q-3 2015 Q-3 % ∆

Assets 81,832.4 99,550.0 21.7%

Financial 53,150.5 68,924.6 29.7%

Real Estate 23,923.1 24,981.0 4.4%

Consumer Durables 4,430.1 5,185.9 17.1%

Other 328.7 458.4 39.5%

Liabilities 14,188.0 14,368.4 1.3%

Home Mortgages 10,508.1 9,459.9 -10.0%

Consumer Credit 2,560.8 3,478.0 35.8%

Other 1,119.1 1,430.5 27.8%

Net Worth 67,664.5 85,181.5 25.9%

13 January 2016

U.S. Homeowner Equity

Homeowners’ Equity as Percent of Property Value

1945 - 2015

Source: Federal Reserve

0%

20%

40%

60%

80%

100%

2015*

*2015 through most recent quarter

13 January 2016

U.S. Home Sales - Existing

Millions of Units

2003 - 2015

6

Source: National Association of RealtorsSeasonally adjusted annual rate; break adjusted

3.0

4.0

5.0

6.0

7.0

8.0

Mil

lio

ns

Nov-15

1999 - 2003

Average

13 January 2016

30-Year Fixed Rate Mortgage

Interest Rate

1980 - 2015

7

Source: FreddieMacAnnual and monthly averages through most recent week

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Pe

rce

nt

Most Recent 12 Months

Jan-16

2016

13 January 2016

Domestic Banks

Residential Mortgages

Net Percentage Tightening Standards

-50.0

-25.0

0.0

25.0

50.0

75.0

100.0

Pe

rce

nt

8

Source: Haver Analytics

15 Q-4

Tightening

Easing

13 January 2016

U.S. Federal Reserve Bank

Balance Sheet

2008 - 2015

9

Source: Federal Reserve Bank

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

$ -

Billi

on

s

Treasury & Other Banks & Repos Other AIG & Bear Facilities Mortgage Related

Pre-Panic

March 2008

$ Billions

Pre-Panic 882

Panic Peak 2,249

Recent 4,440

Panic Peak

December 2008

December

2015

13 January 2016

U.S. Depository Institutions

Excess Reserves

Dollars - Billions

10

Source: Haver Analytics

0

500

1,000

1,500

2,000

2,500

3,000

$ -

Billi

on

s

Dec-08

Mar-10

Jul-11

Dec-15

Sep-08

*1978-2007 annual average; from 2008, daily average through most recent bi-week

Dec-12

Aggregate Reserves*

$ - Billions

78-07 2015

Total 47.6 2,581.3

Required 46.5 153.2

Excess 1.1 2,428.1

Aug-15

13 January 2016

United States and New Jersey

Gross Domestic Product and Employment

2014

11

Sources: Bureau of Economic Analysis & Bureau of Labor Statistics

Gross Domestic

Product - Real*Employment

U.S. N.J. U.S. N.J.

Total $15.8 T $504 B 141.5 M 4.0 M

Goods 19.0% 11.4% 13.7% 9.7%

Private Services 68.7% 78.0% 70.6% 74.6%

Government 12.3% 10.7% 15.7% 15.7%

*Inflation-adjusted; chained 2009 dollars

13 January 2016


Gross Domestic Product and Employment

2014

12

Sources: Bureau of Economic Analysis & Bureau of Labor Statistics

Gross Domestic

Product - Real*Employment

U.S. N.J. U.S. N.J.

Total $15.8 T $504 B 141.5 M 4.0 M

Goods 19.0% 11.4% 13.7% 9.7%

Construction 3.8% 3.4% 4.4% 3.6%

Private Services 68.7% 78.0% 70.6% 74.6%

Government 12.3% 10.7% 15.7% 15.7%

*Real; chained 2009 dollars

13 January 2016

Gross Domestic Product - Real*


Annual Percent Change

13

Source: Bureau of Economic Analysis

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Pe

rce

nt

United States New Jersey

N.J. GDP - Real

$ - Billions

2007 503.3

2009 484.8

2014 504.2

US Avg

’48 - ‘07

*Inflation-adjusted; chained 2009 dollars

13 January 2016

N.J. Gross Domestic Product and Construction - Real

Percent Change - Annual

2000 - 2014

14

Source: Bureau of Economic Analysis

-12.0%

-8.0%

-4.0%

0.0%

4.0%

8.0%

Gross Domestic Product Construction

13 January 2016

Employment Index


2000 - 2015

15

90

95

100

105

110

Ind

ex

: 2

00

0 =

10

0


Y2K

Nov-15N.J. Employment

(000)

Jan 2000 3,961.5

Jan 2008 4,092.2

Nov 2015 4,037.3

Source: Bureau of Labor Statistics

13 January 2016

Factors Affecting Growth

New Jersey Specific

16

Demographic Laggard

Wealthy With High Cost Profile

Regionally Interdependent

Rigorously Regulated

Mature Development Patterns

13 January 2016

N.J. Housing Profile

2014*

Total Housing Units 3,591,547

Owner Occupied 56.3%

Renter Occupied 32.7%

Vacant 11.2%

Mortgage Status - Owner Occupied

With Mortgage 68.4%

Single Mortgage 81.0%

Multiple Liens 19.1%

No Mortgage 31.6%

17

Source: Census Bureau*American Community Survey, 2014 One-Year Estimates

13 January 2016

Homeownership Rate

United States & New Jersey

1984 - 2015*

18

Source: Census Bureau

60.0

62.0

64.0

66.0

68.0

70.0

72.0

Pe

rce

nt


2015

*1984 - 2014 annual average; 2015 average through most recent quarter

13 January 2016

Housing Price Index


2001 - 2015

19

Source: Federal Housing Finance AdministrationPurchase only index, seasonally adjusted

100

120

140

160

180

200

220

240

260

280

Ind

ex

: 1

99

1(Q

-1)

= 1

00


2015 Q-3

06 Q-3

04 Q-4

13 January 2016

United States & New Jersey

Mortgage Delinquencies and Foreclosures

Percent of Total Mortgages

Source: Mortgages Bankers Association

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Pe

rce

nt

NJ Foreclosure Inventory NJ Distressed Mortgages

US Foreclosure Inventory US Distressed Mortgages

NJ Mortgages Serviced:

2001 Q-1 945,740

2007 Q-4* 1,292,704

2015 Q-3 1,142,369

15 Q-3

*Peak mortgages serviced

20

13 January 2016

Sales of Existing Homes - New Jersey

2011 - 2015

Year-to-Date through November

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

44.750.6 52.5 51.7

58.9

Th

ou

sa

nd

s

Single Family Townhouse/Condo Adult Community

Source: New Jersey Association of Realtors

62,990 71,976 75,749 74,469 83,579

13 January 2016

N.J. Inventory of Homes for Sale

Thousands-of-Units - November*

2011 - 2015

22

Source: NJ Association of Realtors

0

20

40

60

80

100

2011 2012 2013 2014 2015

Th

ou

sa

nd

s

Single Family Townhouse/Condo Adult

*Properties available for sale at end of period

81,239 59,58769,293 56,63362,887

13 January 2016

N.J. Residential Permits

Total Units & Percent Multifamily

2000 - 2015 - Year-to-Date*

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0%

10%

20%

30%

40%

50%

60%

70%

Total (Left) % Multifamily (Right)

*Year-to date through November, unadjusted Source: Census Bureau

23

13 January 2016

Building Permits - New Jersey

Dollar Value of Construction Authorized

2002 - 2015*

24

Source: NJ Department of Community Affairs

20%

30%

40%

50%

60%

70%

0

2

4

6

8

10

12

14

16

18

$ -

Billi

on

s

Residential Nonresidential % Residential

*Annual 2002 -2014; 2015 YTD through September

13 January 2016

Housing Outlook

New Jersey

2016

25

Resales Volume

Annual transactions slip to 80,000

Resales Prices

Prices rise 2.0% year-on-year

Distressed mortgage inventory drops sharply

Mortgage Finance

Rates rise moderately (≈ 50 basis points)

Underwriting standards unchanged

Homebuilding

Units authorized slips to 28,000

Multifamily accounts for 65% of total

13 January 2016

CohnReznick Economic Research

The statements, opinions, and conclusions contained herein are based solely upon

the author’s own studies, research, and personal experience. Neither CohnReznick

nor the author makes any representation or warranty as to the accuracy or

completeness of this information. CohnReznick and the author expressly disclaim

any liability for any loss or damage which may be incurred, of any kind whatsoever,

as a result of or arising from the use of any of the information contained herein or

reliance on the accuracy or completeness of it.

new jersey housing outlook builders league of south...

Documents