Housing: What’s Next
New College of Florida April 18, 2012 David Crowe Chief Economist
Builder Sentiment Up since September 2011 NAHB/Wells Fargo Housing Market Index 30
Index
25
20
10
0
What Else?
Improving Signs - Macro • GDP growth improving: • 11H1=0.8%, 11H2=2.3% • Employment gains improving: • 11Q2=97K, 11Q4=137K, Feb=227K • Unemployment dropped: • Sept=9.0%, Mar=8.2% • U-6 Sept=16.2%, Mar=14.5% • New unemployment claims falling: • Sept 4wk avg=418K, Recent 4wk avg=368.5K
• Consumer confidence recovering: • Sept=46.4, Mar=70.2 • Small business optimism increased: • Sept=88.9, Mar=92.5
Improving Signs - Housing • Mortgage distress remains high but is falling and is concentrated: • Seriously Delinquent: 09Q4=9.7%, 11Q4=7.7% • 5 states have 53% of foreclosures, 12 states have 72% • NAHB/Wells Fargo Housing Market Index up 11 points in seven months: • Sept=14; Apr=25 • Housing starts 3-month moving average up 9 consecutive months: • Apr=553K, Jan=706K, Feb=698K • Single-family permits 3-month moving average up 10 consecutive months: • Apr=390K, Feb=472K • New and existing single-family home sales up from Sept • New> Sept=302K, Feb=313K, Existing> Sept=3,800K, Feb=4,060K • Improving Markets Index up 7 consecutive months: • Sept=12, Apr=101
Household Shortfall Demographic Trends Are Positive 114
2.5%
Number of Households 1 to 2 million gap
(million households)
113 112
2.0%
111 110 Percentage Change
109
1.5%
108
1.0%
107 106
0.5%
105 104
% Chg HHLDS
# HHLDS
Linear (# HHLDS)
Linear (# HHLDS)
2011
2010
2009
2008
2007
2006
2005
2004
2003
0.0% 2002
103
Housing Fundamentals Remain Good Mortgage Rates 20
Percent
18 16
14 12 10
Fixed-Rate
8 6
5.2
Adjustable-Rate
4
3.2 2 0
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
House Prices Below Long-term Averages House Price-to-Income Ratio 6.0
5.5
Long-term 3.2 Peak 4.7 Current 3.2
5.0
U.S.
4.5
4.0
3.5
3.0
2.5
2.0 90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
Seriously Delinquent Loans Trending Lower Mortgages 90+ days delinquent or in foreclosure, % of all loans 11 10 9 8 7 6 5 4 3
2 1 0 05
06
07
08
09
10
11
But Delinquency Inventory Varies by State Foreclosure inventory plus 90-day+ delinquencies month’s supply at annual sales rate
24 states with less than six months inventory of distressed
U.S. = 8.4 months Six states with more than one year’s inventory of distressed
FL NJ MD IL DE CT WA CA NY RI UT IN OR DC SC GA NC PA MI NV NM HI LA VA ME MA TN MN WI OH AZ NH MO CO MS AL KY ID TX IA OK KS VT AR WV WY NE MT SD AK ND
20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0
Markets Are Local
Increase in Employment Greater Than National Average
Change in Employment Below U.S. average
0.6% to < 0.9% 0.9% to < 1.3%
1.3% to < 1.8% 1.8% or greater
Increase in Building Permits Greater Than National Average
Change in Building permits Below U.S. average
6.7% to < 11.7% 11.7% to < 18.3%
18.3% to < 31.2% 31.2% or greater
Change in House Prices Relative to U.S.
Change in House prices Below U.S. average
-4.2% to < -2.8% -2.8% to < -1.7%
-1.7% to < -0.6% -0.6% and greater
NAHB/First American Improving Markets Index – The Number of Markets is Improving 120
98
100
80
99
101
Mar 12
Apr 12
76
60
41
40
30 23 20
12
0 Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
101 Improving Metropolitan Areas AR Little Rock
FL Tampa
CA Fresno
GA Rome
CA Merced
IA
CO Boulder
MD Cumberland Hagerstown
NC Charlotte
OH Springfield
TX College Station
Goldsboro
OK Tulsa
Dallas
Ames
ME Lewiston
Greensboro
OR Corvallis
Laredo
Des Moines
MI Detroit
Greenville
OR Portland
Longview
PA Altoona
McAllen
Erie
Midland
Denver
Dubuque
Flint
Rocky Mount
Fort Collins
Iowa City
Grand Rapids
Winston-Salem
Greeley
Sioux City
Lansing
ND Bismarck
Lancaster
Odessa
CT New Haven
Waterloo
Monroe
Fargo
Pittsburgh
San Antonio
Muskegon
Grand Forks
Williamsport
Tyler
DC Washington FL Cape Coral Crestview
ID Boise City Coeur d’Alene IN Elkhart
Saginaw
NE Lincoln
MN Minneapolis
NJ Ocean City
MO Columbia
NY Buffalo
SC Charleston Spartanburg SD Sioux Falls
Victoria UT Provo
Deltona
Evansville
Jacksonville
Indianapolis
Jefferson City
Glens Falls
TN Chattanooga
VT Burlington
North Port
Lafayette
Joplin
Rochester
Kingsport
WV Huntington
Kansas City
Utica
Nashville
WY Casper
Orlando
KY Louisville
Panama City LA Lake Charles MS Jackson Punta Gorda
Monroe
NC Burlington
OH Columbus Dayton
TX Amarillo Brownsville
St. George
Cheyenne
101 Improving Metropolitan Areas Improving Markets
Forecast
Real GDP Growth – Hesitated but Improving Q/Q Percent Change, SAAR
10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
Sales Dipped, But Due to Recover New and Existing Single-Family Home Sales Million
Million
1.6
8
1.4
7
1.2
6
1.0
5
Existing (R) 0.8
4
New (L) 0.6
3
0.4
2
0.2
1
0.0
0 90
92
94
96
98
00
02
04
06
08
10
12
Single-Family Starts – Waiting for Job Recovery Thousands 2,000
1995-2003
1,256,000
2010
471,000
2011
433,000
-8%
2012
506,000
17%
2013
660,000
30%
1,800
1,600 1,400 1,200 1,000 800 600
Trough to Current: Mar 09 = 353,000 Feb 12 = 457,000 +28%
400 200 0 90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
Multifamily Housing Starts Healthy Response from Growth in Renters Thousands 600
1995-2003 2010 2011 2012 2013
450
331,000 114,000 177,000 216,000 235,000
55% 22% 9%
300
Trough to Current: 4th Q 09 = 82,000 4th Q 11 = 204,000 149%
150
0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
Residential Remodeling – Continuous Improvement Owner-Occupied Improvements 150
Billions 2005 $, SAAR
YR 2011 2012 2013
140 130 120
4Q/4Q Chg 3.5% 12.0% 7.9%
110 100 90 80 70 60 93
94
95
96
97
98
99
00
01
02
03
04
05
Source: U.S. Census Bureau, NAHB Economic and Housing Forecast.
06
07
08
09
10
11
12
13
Long Road Back to Normal* for Single-Family Housing Starts – Q4 2013
Single-Family Housing Starts Relative to Normal Less than 51% 51% to 60% 60% to 67% 67% to 76% Greater than 76%
* Normal Production is measured as SingleFamily housing starts between Q1 2000 and Q4 2003
* Normal is the average from Q1 2000 to Q4 2003
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