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© 2017 Move, Inc. All rights reserved. Do not copy or distribute.
CHICAGOMARKET OUTLOOKJonathan SmokeChief EconomistJanuary 12, 2017
© 2017 Move, Inc. All rights reserved. Do not copy or distribute. 4
NATIONALTRENDS
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JOB CREATION POSITIVE BUT WEAKER229,000 jobs created by month in 2015; 180,000 average in 2016
5
Source: Bureau of Labor Statistics
2000.012001.022002.032003.042004.052005.062006.072007.082008.092009.102010.112011.122013.012014.022015.032016.04120,000
125,000
130,000
135,000
140,000
145,000
150,000
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Employment and UnemploymentNonfarm Employment Unemployment Rate
Thou
sand
s
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VERY STRONG FALL RESALE MARKETSales rate up to 5.61 million in November, highest since Feb 2007
6
Source: National Association of REALTORS® Existing Home Sales Report
2000.012001.022002.032003.042004.052005.062006.072007.082008.092009.102010.112011.122013.012014.022015.032016.040
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Existing Home Sales and PricesEHS SAAR Med Exist Home Price
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INVENTORY FALLING FASTERInventory down 11% in November and December
7
Source: Realtor.com®
2013
.02
2013
.04
2013
.06
2013
.08
2013
.10
2013
.12
2014
.02
2014
.04
2014
.06
2014
.08
2014
.10
2014
.12
2015
.02
2015
.04
2015
.06
2015
.08
2015
.10
2015
.12
2016
.02
2016
.04
2016
.06
2016
.08
2016
.10
2016
.12 -
500,000
1,000,000
1,500,000
2,000,000
2,500,000
0
20
40
60
80
100
120
Listings and Median Age of InventoryListings Median Age of Inventory
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SALES SHIFTING TOWARDS NEWSeasonally adjusted sales flat y/y for pending, +17% new in Nov
8
Source: National Association of REALTORS®, Commerce Department
2001.012002.012003.012004.012005.012006.012007.012008.012009.012010.012011.012012.012013.012014.012015.012016.010.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Home Sales (New Contracts) SAARPending Home Sales (Existing) New Home Sales
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INVENTORY REMAINS A CONSTRAINT51 straight months of home supply below normal; now 4.0/5.1 mos
9
Source: National Association of REALTORS®, Commerce Department
2000.01 2001.01 2002.01 2003.01 2004.01 2005.01 2006.01 2007.01 2008.01 2009.01 2010.01 2011.01 2012.01 2013.01 2014.01 2015.01 2016.010.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Months' Supply of Homes for SaleExisting New
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STARTS UP AND DOWN IN FALLStarts up 25% y/y in October, down 7% y/y in November
10
Source: Commerce Department
2000.012001.012002.012003.012004.012005.012006.012007.012008.012009.012010.012011.012012.012013.012014.012015.012016.010
500
1,000
1,500
2,000
2,500
Residential ConstructionSingle-Family Starts Multi-Family Starts
Thou
sand
s
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LISTING PRICES GREW 9% Y/Y IN DECMedian list price increases are widespread
11
Source: Realtor.com®
December 2016
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RENT INCREASES HAVE SLOWEDAsking rents down 1% y/y in Dec compared to list prices up 9%
12
Source: Realtor.com® and Altos Research
2013
.02
2013
.04
2013
.06
2013
.08
2013
.10
2013
.12
2014
.02
2014
.04
2014
.06
2014
.08
2014
.10
2014
.12
2015
.02
2015
.04
2015
.06
2015
.08
2015
.10
2015
.12
2016
.02
2016
.04
2016
.06
2016
.08
2016
.10
2016
.12 $150,000
$170,000
$190,000
$210,000
$230,000
$250,000
$270,000
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
$1,900
$2,000
National Home Price and Rent TrendsMedian Existing List Price Median Asking Rent
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CHEAPER TO BUY IN 52% OF COUNTIESSimple monthly cost analysis favors buying
Source: Realtor.com® Analysis of HUD Median Rents,Nielsen Pop-Facts Demographics and Realtor.com® Data
2016
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Jan-7
1
May-72
Sep-73
Jan-7
5
May-76
Sep-77
Jan-7
9
May-80
Sep-81
Jan-8
3
May-84
Sep-85
Jan-8
7
May-88
Sep-89
Jan-9
1
May-92
Sep-93
Jan-9
5
May-96
Sep-97
Jan-9
9
May-00
Sep-01
Jan-0
3
May-04
Sep-05
Jan-0
7
May-08
Sep-09
Jan-1
1
May-12
Sep-13
Jan-1
5
May-16
Sep-17
0.00
50.00
100.00
150.00
200.00
250.00
0
2
4
6
8
10
12
14
16
18
20
Affordability and Mortgage RatesHousing Affordability Index Composite (Left Axis) Average 30-Year Conforming Rate (Right Axis)
30-year conforming rate averaged 3.65% in 2016AFFORDABILITY ON THE DECLINE
14
Source: Moody’s Analytics, Freddie Mac, and National Association of REALTORS®
Oct170
Jun 3.57
Dec 2012 3.34 Jul- Aug 3.44 Sep 3.46 Oct 3.47
Nov 3.77
Dec 4.20
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CONFIDENCE AT 15 YEAR HIGHPlans to purchase a home also strong (3 mo ave 6.3%)
15
Source: The Conference Board, Moody’s Analytics
2000.012001.012002.012003.012004.012005.012006.012007.012008.012009.012010.012011.012012.012013.012014.012015.012016.010
20
40
60
80
100
120
140
160
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Consumer Confidence and Plans to Purchase a HomeConsumer Confidence Index Plans to Purchase
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JOB CREATION FAVORS THE YOUNG1,095,000 jobs created in last 12 months for 25-34 year olds
16
26%
13%
33%
30%
25%
13%
32%
Source: Bureau of Labor Statistics, Realtor.com® Analysis
Jan-2007 Oct-2007 Jul-2008 Apr-2009 Jan-2010 Oct-2010 Jul-2011 Apr-2012 Jan-2013 Oct-2013 Jul-2014 Apr-2015 Jan-2016 Oct-2016
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Year-Over-Year Gains in Civilian EmploymentCivilian Employment 25-34 Employment
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LIFE DRIVES HOUSING DEMANDEveryone’s tired of waiting and Millennials are building families
17
26%
13%
33%
30%
25%
13%
32%
Source: realtor.com Active Home Shopper Survey, September 2016
change of job/job location
increase in income
desire to live closer to good schools
planning an increase to family size
relocated to a new city
increase in family size
looking for a safer neighhorhood
getting married/moving in with partner
change of family circumstance/composition
favorable home prices
tired of current home
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
Top 10 Buying Triggersall 25-34
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CREDIT ACCESS IMPROVINGCredit access up 7% year-over-year in December; up 5% since Sep
18
26%
13%
33%
30%
25%
13%
32%
Source: Mortgage Bankers Association, Haver Analytics
2004.06 2005.03 2005.12 2006.09 2007.06 2008.03 2008.12 2009.09 2010.06 2011.03 2011.12 2012.09 2013.06 2014.03 2014.12 2015.09 2016.060
100
200
300
400
500
600
700
800
900
1000
Mortgage Credit Availability IndexMar-2012=100
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300-4994.9 500-549
7.6
550-5999.4
600-64910.3
650-69913
700-74916.6
750-79918.2
800-85019.9
FICO Population Dis-tribution (Apr 2015)
19
YET CREDIT METRICS HAVE MOVED UPIn November the ave FICO score on a closed mortgage was 728
26%
13%
33%
13%
Source: Ellie Mae and Fair Isaac Corporation
2011
.08
2011
.11
2012
.02
2012
.05
2012
.08
2012
.11
2013
.02
2013
.05
2013
.08
2013
.11
2014
.02
2014
.05
2014
.08
2014
.11
2015
.02
2015
.05
2015
.08
2015
.11
2016
.02
2016
.05
2016
.08
2016
.11620
640
660
680
700
720
740
760
780
Average FICO Scores US and By Mortgage Type
US All Closed Loan Conv PurchFHA Purch VA Purch
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IMPEDIMENTS TO PURCHASEInventory is back on top; time and finances plague first-timers
20
26%
13%
33%
30%
25%
13%
32%
Source: Realtor.com Survey of Buyer Traffic, December 2016
I owe more on my current home than it is worth
Always overbid by other buyers
Currently on a lease
Having difficulty qualifying for a mortgage
Can't sell current home
Lack enough funds for down payment
Need to improve credit score
Haven't decided on a specific neighborhood/town
Cannot find a good house in my budget range
Just starting to explore
Have not yet found a house that meets my needs
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
What's Getting in the Way of Making a Home Purchase?Repeat First-Time All Buyers
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LOCATIONLOCATIONLOCATION
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MORTGAGE RATES VARY30-Year-Fixed in IL Low of 3.4% (Sep ‘16), High of 4.3% (Dec ‘16)
22
Source: Realtor.com
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EMPLOYMENT AT RECORD HIGHSUnemployment rate still a full percentage point higher than US
23
Source: BLS, Moody’s Analytics
Jan-9
0
Nov-90
Sep-91
Jul-9
2
May-93
Mar-94
Jan-9
5
Nov-95
Sep-96
Jul-9
7
May-98
Mar-99
Jan-0
0
Nov-00
Sep-01
Jul-0
2
May-03
Mar-04
Jan-0
5
Nov-05
Sep-06
Jul-0
7
May-08
Mar-09
Jan-1
0
Nov-10
Sep-11
Jul-1
2
May-13
Mar-14
Jan-1
5
Nov-15
Sep-16
3,400,000
3,600,000
3,800,000
4,000,000
4,200,000
4,400,000
4,600,000
4,800,000
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Employment and Unemployment Rate in Chicago MSATotal Nonfarm Employment (SA) Unemployment Rate (% SA)
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TOTAL STARTS REMAIN LOWStarts down in November but single-family up 24%
24
Source: Commerce Department, Moody’s Analytics
Jan-9
0
Oct-90
Jul-9
1
Apr-92
Jan-9
3
Oct-93
Jul-9
4
Apr-95
Jan-9
6
Oct-96
Jul-9
7
Apr-98
Jan-9
9
Oct-99
Jul-0
0
Apr-01
Jan-0
2
Oct-02
Jul-0
3
Apr-04
Jan-0
5
Oct-05
Jul-0
6
Apr-07
Jan-0
8
Oct-08
Jul-0
9
Apr-10
Jan-1
1
Oct-11
Jul-1
2
Apr-13
Jan-1
4
Oct-14
Jul-1
5
Apr-16
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
New Construction Starts in Chicago MSASingle-family Multi-family
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ACTIVE INVENTORY IN REGIONCook County dominates single family and condo active listings
25
Source: Realtor.com
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INVENTORY TIGHTENEDActive listings down 16.7% Y/Y in Cook County (December 2016)
26
Source: Realtor.com
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AGE OF INVENTORYInventory moving fastest in Cook County (December 2016)
27
Source: Realtor.com
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LIST PRICES ALSO GROWINGAsking prices up 10% Y/Y in Cook County (December 2016)
28
Source: Realtor.com
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LIST PRICE APPRECIATION COOK68% of zips seeing 5%+ listing price growth Y/Y (Dec 2016)
29
Source: Realtor.com
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HOTTEST ZIPS COOK COUNTY (Q3 2016)Based on Supply and Demand
30
Source: Realtor.com
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HOTTEST ZIPS IN CHICAGOBased on Supply and Demand
31
Source: Realtor.com
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BIG DATA IN CHICAGO Interest by age groups (H1 2016)
32
Source: Realtor.com
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CHICAGO INTEREST BY AGE GROUPS Interest in hottest zips (H1 2016)
33
Source: Realtor.com
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HOTTEST LISTINGS IN LAST 60 DAYSTop homes get 24-36 times more views than Chicago average
34
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RENT VS BUYMonthly costs slightly favor buying in Cook County
35
Source: Realtor.com® Analysis of Nielsen Pop-Facts Demographics, HUD Fair Market Rents and Realtor.com Data
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HOUSEHOLD GROWTH 2017-2022Growth hot spots in the city and suburbs of Chicago
36
Source: Nielsen Demographics Pop-Facts 2017
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FOCUS ON CHICAGOGrowth hot spots in city favor urban growth areas
37
Source: Nielsen Demographics Pop-Facts 2017
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• National Association of REALTORS® Macro Forecast:• GDP grows 2.2% (vs. 1.6% in 2016)• Nonfarm payroll employment grows 1.3% (156k per mo)
• realtor.com® housing forecast:• Existing home prices appreciate 3.9% (Chicago MSA 2.0%)• Total home sales grow 2.6% (Chicago MSA 2.3%)• 30-year fixed conforming rate ends 2017 at 4.5%
38
2017 FORECASTKey economic and housing metrics from NAR and realtor.com
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Good Grief
Bastille
Chase You Down
Runaground
She Sets the City on Fire
Gavin Degraw
HOT TRACKS TO JOG YOUR MEMORYFrom DJ Smokey Smoke…
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Jonathan SmokeChief Economist
realtor.com®
[email protected]@SmokeonHousing
Access market data, research, and presentations at research.realtor.com