real estate forecast what’s in store for us this year? march 18, 2014
TRANSCRIPT
Real Estate ForecastWhat’s in store for us this year?
March 18, 2014
Welcome
Thomas Francl, MBA, CNE, CMA
Associate FacultySchool of Business and Management
Introduction
Dr. Michael R. Cunningham
President, National University
Chancellor, National University System
Guest Speaker
Alan Nevin
Director of Economic and Market Research
Xpera Group
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UPThe Next 5 Years
Xpera Group Consultants to the Development, Legal, Investment
and Estate Planning Industries
(619) 417-1817 [email protected]
Alan Nevin
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“The situation is hopeless, but not serious.”
Count Leopold Bercktold - 1912
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Change in Gross Domestic ProductUnited States
1988-2013
Bureau of Economic Analysis
Year Avg. % Change1988-1992 6.0%1993-1997 5.6%1998-2002 5.0%2003-2007 5.7%2008-2013 2.5%
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Lehman Bros. Collapse
Torrey Pines Bank
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1/7/1995 1/7/1996 1/7/1997 1/7/1998 1/7/1999 1/7/2000 1/7/2001 1/7/2002 1/7/2003 1/7/2004 1/7/2005 1/7/2006 1/7/2007 1/7/2008 1/7/2009 1/7/2010 1/7/2011 1/7/2012 1/7/2013
First Time Unemployment Claims(Not Seasonally Adjusted)
United States1995 - 2013
LehmanBros
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Source: U.S Department of Labor
4Torrey Pines Bank
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-50
450
950
1450
1950
2450
NV
AZ
UT
FL
WA
OR
GA
TX
CA
VA
NM
CO
MD
NC
AV
ER
AG
E
NY
MA
SC
NJ
TN
MN
CT
AL
WI
KY
MO
AR IL NE
KS
PA IN OK IA
MS
WV
OH MI
LA
ECONOMIC STRENGTHHIGHER INDICATOR VALUE = STRONGER ECONOMIC STRENGTH FACTORS
Cyclical Downturn Systemic Downturn
Economic Strength Ratings by State
THE FUTURE OF AMERICA
Where the Action isn’tWhere the Action is
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Top 15 States Bottom 15 States0%
10%
20%
30%
40%
50%
60%
70%
80%
76%
47 million
3%
Population Change – U.S. – 1980-2010 – 62 Million People
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DECEMBER 2012 – DECEMBER 2013
THE WINNERS AND LOSERSEMPLOYMENT GAINS
The States % of All Job Gains
Top 15 73.0%
Bottom 15 4.3% Bureau of Labor Statistics
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State % Change State % Change
Nevada 23.9% Pennsylvania 3.3%California 19.7% Delaware 2.7%Michigan 14.0% Iowa 2.5%Oregon 13.7% West Virginia 2.1%Georgia 12.8% Connecticut 1.8%Arizona 12.4% Wisconsin 0.8%Maine 11.7% Kentucky 0.2%Utah 10.4% Mississippi -0.2%Washington 10.1% New Mexico -1.3%New York 9.6% Arkansas -1.5%
Average 13.8% Average 1.0%
(1 Including Distressed SalesSource: Corelogic
Single Family Home Price Change (1)Ten Top and Bottom States
(Population over 1,000,000)2012-2013
Highest % change Lowest % change
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Metropolitan Area 2012 2013 No. % Rank % GainSan Jose-Sunnyvale-Santa Clara California 924 955 31 3.35% 1Orlando-Kissimmee-Sanford Florida 1,059 1,091 32 3.05% 2Tampa-St. Petersburg-Clearwater Florida 1,179 1,215 35 3.00% 3Houston-Sugar Land-Baytown Texas 2,755 2,837 82 2.98% 4Austin-Round Rock-San Marcos Texas 842 866 24 2.81% 5Seattle-Tacoma-Bellevue Washington 1,736 1,781 45 2.59% 6Phoenix-Mesa-Glendale Arizona 1,804 1,849 45 2.52% 7Atlanta-Sandy Springs-Marietta Georgia 2,392 2,451 59 2.46% 8Miami-Fort Lauderdale-Pompano Beach Florida
2,322 2,378 57 2.44% 9
Denver-Aurora-Broomfield Colorado 1,266 1,297 31 2.43% 10Portland-Vancouver-Hillsboro Oregon 1,015 1,039 23 2.27% 11Dallas-Fort Worth-Arlington Texas 3,093 3,160 67 2.17% 12Sacramento--Arden-Arcade--Roseville California
828 845 18 2.15% 13
Boston-Cambridge-Quincy Massachusetts 2,540 2,594 54 2.11% 14Las Vegas-Paradise Nevada 839 855 17 1.99% 15Minneapolis-St. Paul-Bloomington Minnesota 1,788 1,823 35 1.95% 16San Diego-Carlsbad-San Marcos California 1,280 1,303 23 1.81% 17New York-Northern New Jersey-Long Island New York/New Jersey
8,707 8,842 135 1.55% 18
Los Angeles-Long Beach-Santa Ana California
5,371 5,452 81 1.50% 19
San Francisco-Oakland-Fremont California 2,023 2,052 29 1.43% 20
Source: Bureau of Labor Statistics
ChangeThousands
Change In Employment, Percent GainTop 20 States
2012-2013
Year End
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New Jobs Created in California2009-2013
2009 2010 201315,400,000
15,600,000
15,800,000
16,000,000
16,200,000
16,400,000
16,600,000
16,800,000
17,000,000
17,200,000
Civilian Employment
1,086,000 Jobs Created between
2009 and Oct 2013
17,036,100
15,949,600
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Demography is our Destiny
United States This past year, 1.15 million households were formed in
the United States (twice the previous year).
6.5 million persons doubled up during the recession.
2.2 million people got divorced. 2.2 million people got married.
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Do you sense the air is different in the Silicon Valley?
“There’s an enormous rejection of constraints.”
An interview with Larry Summers in Fortune Magazine
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NEVINOMICS 101: The Basics of Employment
Basic Jobs (Economic Drivers) (1/3rd of All Jobs)
Definition: Jobs whose source of revenues come from outside the metropolitan area
Support Jobs (2/3rds of All Jobs)
½ are jobs that serve businesses½ are jobs that serve consumers
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NEVIN ECONOMICS 101: Great Basic Jobs in California
•Military•Tourism•Manufacturing•Import/Export•High Tech•Universities•Retirees•Federal and State Government
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California Texas1964 23.5% 13.50%1977 23.5% 8.0%1983 21.9% 9.7%1990 18.4% 6.4%2000 16.0% 5.8%2012 17.2% 5.7%
1964-2012
Comparison of Union MembershipCalifornia and Texas
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Now let’s talk real estate!
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Year End CA Los Angeles San Diego Orange
Dec-11 $288,950 $306,950 $359,930 $484,630
Dec-12 $366,930 $367,400 $418,290 $582,930Dec-13 $438,090 $439,830 $479,690 $677,660
2011-2012 27% 20% 16% 20%2012-2013 19% 20% 15% 16%
Source: Cal. Assoc. of Realtors
Single-Family Detached Homes Resale PricesSelected Areas
CaliforniaDecember 2011-December 2013
Percent Change
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Now, here’s the 2014 forecast
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California- 2014 Nevinomics Forecast
• Population growth will continue at 300,000+
• New jobs will total more than 250,000
• 75,000 new housing units will be permitted
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• There will be 400,000 single family homes resold
• Condo conversions will return, a little
• Foreclosures and short sales will reach new lows.
• Interest rates will remain low, Very low.
• Home prices will increase 8-10%
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Xpera Group -- the West Coast’s largest source of experts in construction and real estate.
• Expert Witness Services• Market Studies• Construction Quality Assurance• Construction Management
Alan N. NevinDirector, Economic and Market Research
(619) 417-1817
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Next Event: May 20, 2014
Ron RobertsSupervisor, San Diego County
Register at:www.NU.edu/SOBM-Events