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Economic and Housing Market Outlook Lawrence Yun


National Existing Home Sales 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 1981

1986

1991

1996

2001

2006


Recent Pending Home Sales Rising, but Taking Longer to Close in Recent Months 110 105 100 95 90 85 80 75 70 65 60


Appraisal Issues from HVCC • Good Intended Policy Gone Bad – – – – –

Appraisers getting paid less Appraisal process taking shorter time Consumers paying higher fee Homeowners unable to refinance Homebuyers wanting to buy but cannot

• Unintended Consequences of Slowing Housing Market Recovery … Slowing Economic Recovery


National Existing Median Home Price $

250000 200000 150000 100000 50000 0 1970

1975

1980

1985

1990

1995

2000

2005


Serious Delinquency Rate (90+ days late or foreclosure)

30.0 25.0 20.0

% Subprime

15.0 10.0

FHA

5.0

VA (purple)

0.0

Prime (green)

•FHA Reserve Fund depleting … may need funds to implement a countercyclical policy •Fannie-Freddie will need funds … future reform of the secondary mortgage market •VA … slight rise … evev though a zero-down product … stay within budget and all will be OK!


Mortgage Payment to Income to Buy a Median Price Home

(for those staying within budget ‌ middle income person buying a middle priced home ) 45 40 35 30 25 20 15 10

%

Stay within budget and monthly payment will be manageable !


Home Price to Income Ratio (Enticing for All-Cash Buyers)

3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 2.0

Stay within Budget and all will be OK !


Home Price Up in Select Regions •April to May according FHFA (Government) Home Price Index %


Economy to Recover Slowly 9.0

GDP annualized growth rate Latest Data

6.0 3.0

Forecast -Q 3

-Q 1

-Q 3

-Q 1

-Q 3

-Q 1

-Q 3

-Q 1

-Q 3

5 0 2

6 0 2

6 0 2

7 0 2

7 0 2

8 0 2

8 0 2

9 0 2

9 0 2

-6.0

Source: BEA

4 Q 9 0 2

-Q 1

-3.0

5 0 2

0.0


Job Changes in U.S. ‌ Unemployment Rate to 10.5% One-month payroll job changes in thousands 600 400 200 0 -200 -400 -600 -800 -1000

Source: BLS, NAR forecast


Federal Budget Deficit ‌ Impact? Future Generation and Housing

1 0 2

1 0 2

Source: Congressional Budget Office Projections

1 0 2

-2,000,000

9 0 2

-1,500,000

8 0 2

-1,000,000

7 0 2

-500,000

6 0 2

0

5 0 2

$ million

4 0 2

3 0 2

0 2

1 0 2

0 2

9 1

8 9 1

7 9 1

6 9 1

5 9 1

4 9 1

3 9 1

2 9 1

9 1

0 9 1 500,000


Tax Revenue Collections (4-quarter change as of 2009 Q1)

%

Tax Assessors and Appraisers need to meet


Housing Market Recovery Helps Reduce Budget Deficit

• Housing Market Impact on the Economy

– $62,000 from each home sale (furniture, moving truck, carpeting, title search, etc.) – Home values are most American’s wealth … and consumer spending – Higher home sales … reduce inventory … stabilize home values – Home values strongly impact bank balance sheets and foreclosures

• Home Buyer Tax Credit … Extend and Expand


Commercial Credit Freeze


Economic Outlook 2008

2009

2010 forecast

50 year average

GDP

1.1%

-2.9%

1.5%

3.3%

CPI Inflation

3.8%

-0.5%

2.1%

4.1%

Unemployment Rate

5.8%

9.5%

10.0%

5.9%

Mortgage Rate

6.1%

5.2%

5.8%

9.1%

Existing Home Sales

4.9 m

4.9 m

5.2 m

N/A 5.2 m in 2000 (before bubble)


Customer Satisfaction • Historically 80% of customers would recommend their specific REALTOR® to a friend and colleagues • Some Decline in satisfaction bust-years • Serve your client well and assure that clients stay within budget


Lawrence Yun's 2009 Economic and Housing Market Outlook