Jonathan Smoke Chief Economist - · PDF fileJonathan Smoke Chief Economist March 30, ... Strong correlation with affordable markets Source: Nielsen Demographics PopFacts ... Nielsen

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CONSUMER TRENDS: ARIZONA EDITION

Jonathan Smoke Chief Economist

March 30, 2016

© 2016 Move, Inc. All rights reserved. Do not copy or distribute.

SALES ARE RETURNING TO NORMAL Existing back to pre-boom levels, but new sales remain depressed

2

Source: National Association of REALTORS® Existing Home Sales Report

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

US Home Sales 1989-2016 forecast Existing New


EXPLORING THE GROWTH IN SALES Existing home sales grew 6.5% in 2015

3

First-time +12%

Normal/Non-distress +10%

Relocation/Job Change +8%

Second Home -8%

Investor -10%

International Buyer -12%

Distressed Sales -19%

Leveraging monthly NAR® existing sales data and REALTOR® Confidence Survey data, we can see that not all types of sales increased:


VOLUME AND REPRESENTATION VARY Older Gen-X and Younger Boomers are MIA

4

18 to 24, 3%

25 to 34, 28%

35 to 44, 20% 45 to 54, 15%

55 to 64, 17%

65 to 74, 14%

75+, 4%

2015 Buyers by Age Group

23

162

121

85

103

127

49

0 20 40 60 80 100 120 140 160 180

18 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65 to 74

75+

Buying Index


0

500

1,000

1,500

2,000

2,500

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4,000

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5,000

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96

Thou

sand

s

US Population by Age

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DEMOGRAPHICS SET THE TABLE When viewed by age, importance of Millennials becomes clearer

Source: Realtor.com® Analysis of US Census Bureau Population Estimates (2014)

Boom X Y Z 80 million 61 million 83 million 57 million 38 million


MILLENNIAL OWNERSHIP VARIES Strong correlation with affordable markets

Source: Nielsen Demographics PopFacts 2015, Realtor.com® Analysis


MILLENNIAL OWNERSHIP 25-34 homeownership rate in Arizona is 42%

7

Source: Nielsen Demographics Pop-Facts 2015


0

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250,000,000

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2016 2021

Population by Age (US) Under 25 25-34 35-54 55-64 65+

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BOOMERS KEEP DISTURBING Boomer wave is causing a major population shift

15%

26%

13%

33%

17%

25%

13%

32%


13% 13%

Over the next 5 years:

Population grows 4%

65+ grows 18%

55-64 grows 5%

35-54 is flat

25-34 grows 1%

Under 25 grows 1%


0

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2016 2021

Population by Age (Arizona) Under 25 25-34 35-54 55-64 65+

9

BOOMERS IMPACTING ARIZONA TOO But every age range has substantial growth

16%

25%

13%

34%

18%

24%

13%

33%


12% 12%

Over the next 5 years:

Population grows 6%

65+ grows 16%

55-64 grows 5%

35-54 grows 4%

25-34 grows 5%

Under 25 grows 4%


12

12

12

13

13

14

16

18

24

26

27

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0 5 10 15 20 25 30

Increase in family size

Looking for a safer neighborhood

Change of job/job location

Increasing rent

Desire to live closer to family/friends

Considering retirement

Relocated to a new city

Change of family circumstance/composition

Increase in income

Favorable home prices

Favorable interest rates

Tired of current home

% of Respondents

REASONS FOR PURCHASE VARY Clear patterns emerge from top 12 triggers for 2015 buyers

10

Source: BDX Home Shopper Insights Panel, Summer 2015


INVENTORY HAS BEEN A CONSTRAINT Demand continues to exceed supply

11

Source: National Association of REALTORS®, Commerce Department

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000

.01

2000

.05

2000

.09

2001

.01

2001

.05

2001

.09

2002

.01

2002

.05

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.09

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.01

2003

.05

2003

.09

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.01

2004

.05

2004

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2005

.01

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.05

2005

.09

2006

.01

2006

.05

2006

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2007

.01

2007

.05

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.01

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2008

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2009

.01

2009

.05

2009

.09

2010

.01

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.05

2010

.09

2011

.01

2011

.05

2011

.09

2012

.01

2012

.05

2012

.09

2013

.01

2013

.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

2015

.05

2015

.09

2016

.01

Months' Supply of Homes for Sale Existing New

© 2016 Move, Inc. All rights reserved. Do not copy or distribute. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.

HOME PRICE RECOVERY VARIES Markets not recovered face the most existing inventory challenges

12

Source: Realtor.com®


CONFIDENCE IS STRONG Plans to purchase a home in the next 6 months at 9-year highs

13

Source: The Conference Board, Moody’s Analytics

0.0%

1.0%

2.0%

3.0%

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5.0%

6.0%

7.0%

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10.0%

0

20

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.07

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.12

2003

.05

2003

.10

2004

.03

2004

.08

2005

.01

2005

.06

2005

.11

2006

.04

2006

.09

2007

.02

2007

.07

2007

.12

2008

.05

2008

.10

2009

.03

2009

.08

2010

.01

2010

.06

2010

.11

2011

.04

2011

.09

2012

.02

2012

.07

2012

.12

2013

.05

2013

.10

2014

.03

2014

.08

2015

.01

2015

.06

2015

.11

Consumer Confidence Index Plans to Purchase


CREDIT ACCESS REMAINS TIGHT Mortgage access up only 4% year-over-year in February

14

26%

13%

33%

30%

25%

13%

32%

Source: Mortgage Bankers Association, Haver Analytics

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123.8

0

100

200

300

400

500

600

700

800

900

1000

Mortgage Credit Availability Index Mar-2012=100


0

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40,000

60,000

80,000

100,000

120,000

140,000

0

10,000

20,000

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2013

.06

2013

.07

2013

.08

2013

.09

2013

.10

2013

.11

2013

.12

2014

.01

2014

.02

2014

.03

2014

.04

2014

.05

2014

.06

2014

.07

2014

.08

2014

.09

2014

.10

2014

.11

2014

.12

2015

.01

2015

.02

2015

.03

2015

.04

2015

.05

2015

.06

2015

.07

2015

.08

2015

.09

2015

.10

2015

.11

2015

.12

2016

.01

2016

.02

2016

.03

Thou

sand

s

Thou

sand

s

Real Estate Web Unique Visitors by Age 21-34 35-54 55+ All Traffic (Right Axis)

STRONG START TO 2016 IN TRAFFIC Traffic up in February 23%yy; 21-34 year olds up 34% yy

15

Source: Realtor.com® Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data

35% of 55+, 56% of 35-54, and 67% of 21-34 in February


EVEN MORTGAGE RATES VARY 30-Year-Fixed in AZ: High 4.18 (Jun’15) Low 3.61 (Feb ‘16)

16 Source: Realtor.com


<4,000 JOBS AWAY FROM RECOVERY Unemployment down substantially

17

Source: BLS, Moody’s Analytics

0.00

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Jan-

90

Sep

-90

Ma y

-91

Jan-

92

Sep

-92

Ma y

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Jan-

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Sep

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Ma y

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Ma y

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Ma y

-01

Jan-

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Ma y

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-04

Ma y

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Sep

-06

May

-07

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Sep

-08

Ma y

-09

Jan-

10

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-10

May

-11

Jan-

12

Sep

-12

Ma y

-13

Jan-

14

Sep

-14

Ma y

-15

Jan-

16

Employment and Unemployment Rate in Arizona Total Nonfarm Employment (SA) Unemployment Rate (% SA)


HOTTEST ZIPS IN ARIZONA Q4 2015 Based on Supply and Demand

18

Source: Realtor.com


CRYSTAL BALL


•  The youngest of the Silent Generation and the oldest Boomers

•  Wealthiest age cohort, ready to focus on retirement

KEY SEGMENT: RETIREES Born 1942-1951, these wild things have rocked the world for decades

20


Why: Second Age Cohort Most Likely to Buy

Timing: Spring

Current Tenure: Own But Motivated to Downsize

Type: Mix, Active Adult

Preference: Newly Constructed Homes

Reason: Desires, Cost of Living

Focus: Ability to Customize

Trigger: Relocation and Retirement

Challenges: Selling Current Home; Inventory

21

KEY SEGMENT: RETIREES 65 is the new 55, and housing is central to their plans


RETIREE HOT SPOTS Where 65-74 year olds are looking at listings the most

22


•  Dwarfed by the generations before and after them, these Gen-X’ers are a force in part because they are entering their prime earning years

•  They still love the suburbs

KEY SEGMENT: YOUNGER GEN-X’ERS Born 1972-1981, music has been central to their experience

23


Why: Second Biggest Age Cohort of Buyers

Timing: Spring

Current Tenure: Own But Want to Trade Up

Type: Entry-Level to Move-Up

Preference: Existing Homes

Reason: Driven by Family Needs

Focus: Quality

Trigger: Tired of Current Home; Increase in Income

Challenges: Selling Current Home, Inventory, Down Payment

24

KEY SEGMENT: YOUNGER GEN-X’ERS The hardest hit by the downturn see solid economic improvements

Why: Sec

Timing: S

Current T

Type: Ent

Preferenc

Reason: D

Focus: Qu

Trigger: T

Challenge


GEN-X HOT SPOTS Where 35-44 year olds are looking at listings the most

25


•  The generation that gave us #selfie & #FOMO •  Starting to experience #RealLife •  But doing it in their own way

KEY SEGMENT: OLDER MILLENNIALS Born 1982-1991, these social artists continue to break molds

26

••


Why: Biggest Cohort of Buyers and Cohort Most Likely to Buy

Timing: Spring and Summer

Current Tenure: Renting

Type: Entry-Level to Move-Up

Preference: Existing Homes

Reason: Driven by Family Needs

Focus: Safety, Quality

Trigger: Increase in Income

Challenges: Inventory, Time, Down Payment, Lease

27

KEY SEGMENT: OLDER MILLENNIALS Mainly first-time buyers are already showing their numbers

Why: Bigge

Timing: Sp

Current Te

Type: Entry

Preference

Reason: D

Focus: Saf

Trigger: Inc

Challenges


MILLENNIAL HOT SPOTS Where 25-34 year olds are looking at listings the most

28


HOUSEHOLD GROWTH 2015-2020 Half of zip codes in AZ should see 4%+ growth in the next 5 years

29



THIS IS MY KIND OF SPIN…

1.  Rents are rising, it’s cheaper to buy a home in 77% of the country, and real estate is viewed very positively, especially by young people—owning is cool again. Welcome to My House! My House by Flo Rida

2.  Planning to buy in 2016? Don’t mess around. More than 85% of buyers who plan to purchase in 2016 are focused on the spring and summer. Mess Around by Cage the Elephant

3.  The world’s pain is the real estate market’s gain—rates have fallen and increased buying power. Whatcha gonna do with that dessert? Dessert by Dawin

4.  We all benefit from the occasional Smoke break. Smoke Break by Carrie Underwood

Courtesy of DJ Smokey Smoke


Jonathan Smoke Chief Economist

realtor.com® [email protected]

@SmokeonHousing 703.634.9193

© 22016016 Move, Inc. All rrighgghhhtsttststs ts ts ts sts tss s rrrrererereresrere eerved. Do not copy or dr dististttttttrribribribribribibribibr brrrrrr uteuteuteuteteeeee.. 3333333331

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Jonathan Smoke Chief Economist - · PDF fileJonathan Smoke Chief Economist March 30, ... Strong correlation with affordable markets Source: Nielsen Demographics PopFacts ... Nielsen