to the eastside economic forecast - c.ymcdn.com · ken perlman annie radecki. title: slide 1...

1

John Burns Real Estate Consulting, LLC © 2016 Distribution to Non-Clients is Prohibited

To the Eastside Economic Forecast

HOUSING MARKET OUTLOOK

Trusted Analysis for Executive Decisions

Presented by:John Burns, CEO

[email protected]

mailto:[email protected]

2


Demo-graphic

Shifts

New Insights in

to Your Business

Innovating Ideas

Market Trends

Today’s Mission is the Same as our Company Mission: To help executives make the most informed housing industry investment decisions

3


CARD ON YOUR TABLE WITH CODE FOR DOWNLOAD OF 300 SLIDES.

4


We work all over the country. Ken Perlman and Annie Radecki lead our Northwest team.

5


Our Seattle-area clients.

6


Short-Term View: Goldilockshousing market – not too Hot, not too Cold

Seattle Hot

7


Medium-Term View: Low Risk74% Low Risk24% Medium Risk

2% High Risk

A measurement of today’s demand, supply and affordability in comparison to historical levels in each market.

SeattleLow-Medium Risk

8


Long-Term View: OverpricedNational market is 13% overpriced if you believe rates will return to 6% some day

Seattle 20%

9


Most markets are still in the expansion phase.Seattle has entered the Exuberance phase.

• Mainly distressed capital investment

• Declining to flattish pricing/volumes

• Rising sales and prices• Good affordability• Low construction• Capital investment picking up

• Surging prices and volumes

• Affordability getting worse and/or construction getting high

• Consumer overly exuberant

• Capital should become more cautious

• Capital still being deployed

• Sales volumes declining

• Capital questioning what to do

• Sales volumes and pricing declining

• Invested capital losing money

• New capital raising for new opportunities

Houston

Orange County

Los Angeles

Riverside-SBern.

Chicago

Dallas

Austin

Orlando

Las Vegas

Wash. DC

Tampa

Nashville

Phoenix

Atlanta

CharlotteRaleighSan Antonio

Bay Area

DenverSeattle

Philadelphia suburbs

Minneapolis

Kansas City

ManhattanPortland

Miami (SF)Boston urbanSan Diego

Jacksonville

Salt Lake City

10


The President of the United States appoints the heads of mortgage policy

11


Tight documentation and unwillingness to dip into the bottom 30% of credit scores will hold back homeownership

Source: John Burns Real Estate Consulting presentation of American Enterprise Institute data and calculations.

12


Seattle Metro Area Multifamily Construction hit a 28 year high last year!We expect a 50% decline by 2019.

13


Seattle apartment occupancy remains high, at 96%.Rent growth has outpaced income growth.

14


Seattle single-family construction has recently ramped up to 7,100 homes.

15


We expect a slight increase and a level SF construction volume in the low 7,000s per year in Seattle.Actively selling communities have declined 6% since last year.

16


Seattle single-family affordability remains reasonable…But only thanks to low mortgage rates.

17


Labor is holding construction backProblems getting worse, not better

18


Lenders holding construction backConstruction lenders have 56% less outstanding than in 2008

19


31 years oldWorking Father

16 years old High School Junior

53 years oldJunior’s Father

70 years oldRetired Grandfather

BOOMER

What do these people have in common?

20


321 million Americans identify well with people their own age2015 US POPULATION BY PLACE OF B IRTH

Source: John Burns Real Estate Consulting, LLC calculations of US Census Bureau 2014 National Projections

21


Economic growth has declinedfor each generationAVERAGE REAL GDP GROWTH PER PERSON DURING PRIME WORKING YEARS (25 -54)

2.4%2.1%

1.9%

1.5%

1.1%1.0%

1930sSavers

1940sAchievers

1950sInnovators

1960sEqualers*

1970sBalancers*

1980sSharers*

* Prime working years not yet completeSource: John Burns Real Estate Consulting, LLC calculations of Bureau of Economic Analysis data

22


Those born in the 1990s and later will drive most future household formationsNET CHANGE IN HOUSEHOLDS BY DECADE BORN, 2016–2025 (MILLIONS)

-3.1

-4.9-3.8

-1.4 -0.1

1.6

4.3

14.0

5.9

-5

0

5

10

15

Pre 1930s

1930sSavers

1940sAchievers

1950sInnovators

1960sEqualers

1970sBalancers

1980sSharers

1990sConnectors

2000sGlobals

Sources: John Burns Real Estate Consulting, LLC

13.3 million losses

25.8 million gains

23


Households headed by people 65+will increase by 10.2 millionthis decadeHOUSEHOLD FORMATION BY AGE GROUP, 2016–2025

Under 45

Aged 45–64

Aged 65+

2000sGlobals

1990sConnectors

1980sSharers

1970s Balancers

1960sEqualers

1950sInnovators

1940sAchievers

1930s Savers

Source: John Burns Real Estate Consulting, LLC

0 M

0.8 M

2.5 M

-0.8 M -0.2 M

5.4 M

4.3 M

0.5 M

1940s AchieversAge 67-76

1950s InnovatorsAge 57-66

24


1930s

I N N O V A T O R S

1950s

40 Million Aged 57-66

25


Source: John Burns Real Estate Consulting, LLC calculations of US Census Bureau Population Estimates and 2014 National Projections

The 1950s Innovators will drive an explosion of 18 million more people aged 65+ over6 5 + P O P U L AT I ON B Y D E C A D E O F B I RT H

26


The retirement surge will force the “labor pool” to grow much more slowly over the next decadeGROWTH OF US RESIDENT POPULATION AGED 20–64

1986-1995 1996-2005 2006-2015 2016-2025

+16.6 M

+21.0 M

+14.6 M

+6.3 M

FORECAST

Source: John Burns Real Estate Consulting, LLC calculations of US Census Bureau Population Estimates and 2014 National Projections

27


Moveup and empty nester households will not grow in size this decadeHOUSEHOLD FORMATION BY AGE GROUP, 2016–2025

Aged 45–64

2000sGlobals

1990sConnectors

1980sSharers

1970s Balancers

1960sEqualers

1950sInnovators

1940sAchievers

1930s Savers


0 M

0.8 M

2.5 M

-0.8 M -0.2 M

5.4 M

4.3 M

0.5 M

1960s EqualersAge 47-56

1970s BalancersAge 37-46

28


EQUALERS1960s


29

John Burns Real Estate Consulting, LLC © 2016 Distribution to Non-Clients is ProhibitedSource: John Burns Real Estate Consulting, LLC calculations of National Center for Education Statistics data

Women receive 58% of college degreesPERCENT OF ALL BACHELOR’S AND MASTER’S DEGREES CONFERRED

30


SURBAN™

31


1930s

B A L A N C E R S

1970s


32


Source: John Burns Real Estate Consulting, LLC calculations of Bureau of Labor Statistics data; color-coded based on the year a generation turns 20

37%

Fewer women worked after 9/11;Fewer men worked tooFEMALE LABOR FORCE PARTICIPATION RATE, AGES 20–64

33


44%

23%

29%

The Balancers led a reversal,with more stay-at-home momsSHARE OF MOMS WHO STAY AT HOME FULL T IME

Source: John Burns Real Estate Consulting, LLC calculations of US Census Bureau, Current Population Survey, Annual Social and Economic Supplements via IPUMS-CPS; colors based on a 30-year-old mother

34


SHARERS1980s


35


36


37


Less than 1/2 of 1980s Sharers are married / with a partner at their 10-year high school reunion

1930sSavers

1940sAchievers

1950sInnovators

1960sEqualers

1970sBalancers

1980sSharers

85% 84%

73%

64%60%

49%

Source: US Census Bureau Decennial Census (1950-2000), American Community Survey (2010-2013) via IPUMS-USA, forecast by JBREC

38


We forecast 5.2 million more homeowners by 2025HOMEOWNER GROWTH BY GENERATION (MILL IONS) , 2016–2025

Pre 1930s

1930s Savers

1940s Achievers

1950s Innovators

1960s Equalers

1970s Balancers

1980s Sharers

1990s Connectors

2000 Globals

-2.2

-4.1

-3.2

-1.1

0.6

2.8

5.4

6.2

0.9

15.9 M

-10.6 M


39


1930sC O N N E C T O R S

1990s


40


+14.7 +14.6

+12.0

+14.0

+6.7

+12.5

12.5 million more householdswill boost the economyHOUSEHOLD GROWTH BY DECADE (MILL IONS)

FORECAST

Source: John Burns Real Estate Consulting, LLC based on US Census Bureau data.

41


+26 million (net 12.5) newly formed households

+8 million more busy working women

+8 million more increasingly affluent immigrants

+18 million increasingly affluent retirees

Five opportunities over the next decade, much of which will be surban™ living:

+16 million (net 5.2) new homeowners

42


We are here to help youmake great decisions

Presented by:John Burns, CEO

[email protected]

Ken Perlman

Annie Radecki

mailto:[email protected]

to the eastside economic forecast - c.ymcdn.com · ken perlman annie radecki. title: slide 1...

Documents