winding down to an expansion david lereah ph.d., chief economist national association of realtors ®...

9
Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ®

Upload: cameron-king

Post on 03-Jan-2016

215 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Winding Down to anExpansionWinding Down to anExpansion

David Lereah

Ph.D., Chief Economist

NATIONAL ASSOCIATION OF REALTORS®

David Lereah

Ph.D., Chief Economist

NATIONAL ASSOCIATION OF REALTORS®

Page 2: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Painting the BoomPainting the Boom

• Record Home Sales

• Second Homebuying Frenzy

• Stretching Credit

• Media Frenzy

• Doom/Gloom Predictions

• Record Home Sales

• Second Homebuying Frenzy

• Stretching Credit

• Media Frenzy

• Doom/Gloom Predictions

Page 3: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Hot Markets in the Past 3 Years(2005 Q2 vs 2002 Q2)

Hot Markets in the Past 3 Years(2005 Q2 vs 2002 Q2)

0%

20%

40%

60%

80%

100%

120%

Price Appreciation

0%

20%

40%

60%

80%

100%

120%

Price Appreciation

Source: NAR

Page 4: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Signs of TiringSigns of Tiring

• Stretching credit

• Rising mortgage rates

• Affordability dropping

• Rising inventories

• Lengthening days on market

• More speculation

• Rolling activity

• Stretching credit

• Rising mortgage rates

• Affordability dropping

• Rising inventories

• Lengthening days on market

• More speculation

• Rolling activity

Page 5: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

But Real Estate Expansion IntactBut Real Estate Expansion Intact

• Economic growth sufficient

• 4 million new jobs in the past 2 years

• Unsteady stock market

• Mortgage rates will remain under 7%

• Katrina (and Wilma) ’06 bounce back effect

• Near-term demographic trends favorable

– Boomers, Immigrants, Boomer Children

• Supply/Demand better balanced

• Economic growth sufficient

• 4 million new jobs in the past 2 years

• Unsteady stock market

• Mortgage rates will remain under 7%

• Katrina (and Wilma) ’06 bounce back effect

• Near-term demographic trends favorable

– Boomers, Immigrants, Boomer Children

• Supply/Demand better balanced

Page 6: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Favorable Near-Term Demographic Trends Favorable Near-Term Demographic Trends

0

10

20

30

40

50

60

70

80

90

Retired Baby Boomers Bust EarlyImmigrants

Echo RecentImmigrants

0

10

20

30

40

50

60

70

80

90

Retired Baby Boomers Bust EarlyImmigrants

Echo RecentImmigrants

Million Looking for Second HomesLooking for Second Homes

Trade Up BuyersTrade Up Buyers

First-time BuyersFirst-time Buyers

Large Wealth Transfer To Younger Ones

Large Wealth Transfer To Younger Ones

Page 7: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Most Metros are Healthy, Few Fragile

Most Metros are Healthy, Few Fragile

• Fundamentals

• Market Analysis

• Influencing Factors

• Stress Test

• Fundamentals

• Market Analysis

• Influencing Factors

• Stress Test

Page 8: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Risks on the HorizonRisks on the Horizon

• Economic Risks– Rising Oil Prices

– Inflationary Pressures

– Potential Job Losses

– Swelling Federal Budget Deficit

• Political Risks– Tax Reform

– Fannie Mae/Freddie Mac Regulatory Reform

• Economic Risks– Rising Oil Prices

– Inflationary Pressures

– Potential Job Losses

– Swelling Federal Budget Deficit

• Political Risks– Tax Reform

– Fannie Mae/Freddie Mac Regulatory Reform

Page 9: Winding Down to an Expansion David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION OF REALTORS ® David Lereah Ph.D., Chief Economist NATIONAL ASSOCIATION

Winding Down to anExpansionWinding Down to anExpansion

David Lereah

Ph.D., Chief Economist

NATIONAL ASSOCIATION OF REALTORS®

David Lereah

Ph.D., Chief Economist

NATIONAL ASSOCIATION OF REALTORS®