REALTOR.COM MARKET OUTLOOK ®
Realtor.com Economics March 2018
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NATIONAL TRENDS © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
2
JOB CREATION CONTINUES 176,000 monthly average in past 12 months, Jan saw 200,000
Source: Bureau of Labor Statistics
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3
CONFIDENCE AT 15+ YEAR HIGH Plans to purchase a home improving markedly
Source: The Conference Board, Moody’s Analytics
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4
SALES FALLING EHS down 5.5% Y/Y in January
Source: National Association of REALTORS® Existing Home Sales Report
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5
INVENTORY AT RECORD LOWS Inventory down 8.4% year-over-year in February
Source: Realtor.com®
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6
PRICES NEAR RECORD HIGHS Median List Price at $275,000, Up 10.0% year-over-year (Feb)
Source: Realtor.com®
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7
INVENTORY DIVERGENCE 3.4 months for existing and 6.1 months for new
Source: National Association of REALTORS®, Commerce Department
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BOTH NEW/EXISTING SALES DOWN Sales down 5.4% for existing and down 1.0% for new Y/Y in Jan
Source: National Association of REALTORS®, Commerce Department
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CRISIS SHIFTED NEW HOME MARKET Average spread 2000-2008: 12%; 2009-2017: 33%
Source: National Association of REALTORS®, Commerce Department
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HOUSING STARTS UP Starts up 7.3% Y/Y in Jan with SF up 7.6% and MF up 6.7%
Source: Commerce Department
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11
OWNERSHIP RECOVERING 64.2% ownership rate off low; 1.5 M households last 4qs
Source: Census Bureau
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12
LISTING PRICES GREW 10% Y/Y IN FEB Median list price increases are widespread
February 2017 Source: Realtor.com®
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RENTS RELATIVELY FLAT Asking rents up 3.1% y/y in Feb compared to list prices up 10%
Source: Realtor.com® and Altos Research © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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RENTS RISING Y/Y IN 73% OF COUNTIES Rent increases adding to demand for buying
2018 Source: Realtor.com® Analysis of HUD Median Market Rents
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CHEAPER TO BUY IN 46% OF COUNTIES Simple monthly cost analysis favors renting now in more places
February 2018 Source: Realtor.com® Analysis of HUD Median Rents, Nielsen Pop-Facts Demographics and Realtor.com® Data
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16
HISTORIC AFFORDABILITY DECLINING 30-year conforming rate averaged 4.0% in past 12 months
Source: Moody’s Analytics, Freddie Mac, and National Association of REALTORS® © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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AFFORDABILITY IS RELATIVE Higher income households have more access to available inventory
Source: realtor.com and National Association of REALTORS® © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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DEMAND DRIVERS © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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DEMOGRAPHICS SET THE TABLE When viewed by age, importance of Millennials becomes clearer US Population by Age, End of 2016 78 million 61 million 88 million
5,000 65 million
Millennial
Z
4,500
X
29 million
Boomer
4,000
3,000 2,500 2,000 1,500 1,000 500
100+
96
92
88
84
80
76
72
68
64
60
56
52
48
44
40
36
32
28
24
20
16
12
8
4
0
0
Thousands
3,500
Source: Realtor.com® Analysis of US Census Bureau Population Estimates (2016)
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MILLENNIAL OWNERSHIP VARIES Strong correlation with affordable markets
Source: Realtor.com® Analysis of Nielsen Demographics PopFacts 2017
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21
JOB CREATION 25-34 growth volatile, no longer outpacing overall rate growth
25%
Source: Bureau of Labor Statistics, Realtor.com® Analysis
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LIFE DRIVES HOUSING DEMAND Everyone’s tired of waiting and Millennials are building families Top 10 Buying Triggers all
25-34
tired of current home
favorable home prices
30%
change of family circumstance/composition getting married/moving in with partner looking for a safer neighhorhood
25%
increase in family size relocated to a new city
13%
planning an increase to family size desire to live closer to good schools increase in income
32%
change of job/job location
0%
5%
10%
15%
20%
25%
30%
35%
Source: realtor.com Active Home Shopper Survey, September 2016 © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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BOOMERS KEEP DISTURBING Boomer wave is causing a major population shift Population by Age (US) Under 25
25-34
35-44
45-54
55-64
65+
400,000,000 Over the next 5 years:
350,000,000
Population grows 4%
18%
300,000,000
15%
65+ grows 18%
250,000,000
13%
55-64 grows 4%
13%
200,000,000
13%
45-54 declines 3%
12%
13%
35-44 grows 4%
150,000,000
13%
13%
25-34 is flat
13%
100,000,000 50,000,000
Under 25 grows 1%
33%
32%
0
2017
2022 Source: Nielsen Demographics Pop-Facts 2017 © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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CREDIT ACCESS DECELERATING Up 5.0% year-over-year in Jan but up avg 8.3% past 12 months
30%
26%
25%
13%
13%
33%
32%
Source: Mortgage Bankers Association, Haver Analytics © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
25
FICO SCORES Avg FICO score on a closed mortgage was 721 in January
13%
33%
Source: Ellie Mae and Fair Isaac Corporation © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
26
TOTAL REAL ESTATE TRAFFIC Up 14.3% Y/Y Jan 2018
Source: Realtor.com® Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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IMPEDIMENTS TO PURCHASE Just starting to explore and inventory challenges reign What's Getting in the Way of Making a Home Purchase? Repeat
First-Time
All Buyers
Just starting to explore Have not yet found a house that meets my needs
Cannot find a good house in my budget range Lack enough funds for down payment
Haven't decided on a specific neighborhood/town
25%
Need to improve credit score Currently on a lease
13%
Can't sell current home Always overbid by other buyers Having difficulty qualifying for a mortgage
32%
I owe more on my current home than it is worth
0%
5% 10% 15% 20% 25% 30% 35% 40% 45% Source: Realtor.com Survey of Buyer Traffic, February 2017 © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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2018 FORECAST Key economic and housing metrics from NAR and realtor.com • National Association of REALTORS® Macro Forecast: • Real GDP grows 2.9 in 2018 (vs. 2.3% in 2017) • Nonfarm payroll employment grows 1.6% in 2018 (vs. 1.4% in 2017) • Unemployment declines to 3.9% in 2018, (vs 4.4% in 2017)
• realtor.com® housing forecast: • • • • •
Existing home prices appreciate 3.2% Existing home sales grow 2.5% New home sales grow 7% Housing starts increase 3% (SF up 7%) 30-year fixed conforming rate averages 4.6%
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Economic Research realtor.com®
[email protected]
Access market data, research, and presentations at
research.realtor.com
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THANK
YOU © 2017 Move, Inc. All rights reserved. Do not copy or distribute.
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