Economic and Real Estate Market Outlook

Transcription

1 Economic and Real Estate Market Outlook By Lawrence Yun, Ph.D. Chief Economist, National Association of REALTORS Presentation at Miami International Congress Miami, FL November 1, 2016

2 Lifetime Wealth at near All-Time High $ billion Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1

3 Median Household Income (Inflation Adjusted) $59,000 $58,000 $57,000 $56,000 $55,000 $54,000 $53,000 $52,000 $51,000 $50,

4 Annual GDP 10 Below 3% for 11 straight years GDP Annual Growth Rate

5 Sluggish Business Spending Despite High Profit Profits Business Spending 500 0

6 Exports and Imports Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q3 Imports Exports

7 U.K. vs. U.S. (How many Pound to $1) Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul

8 China vs. U.S. (How many Yuan to $1) Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul

9 Russia vs. U.S. (How many Rubles to $1) Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep

10 150, ,000 In thousands Jobs (8 million lost 15 million gained) 140, , , , , Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul

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12 Miami-Ft. Lauderdale-West Palm Beach (Total Payroll Jobs, in thousands) May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep May Sep

13 Recession over the Horizon?

14 Total Job Openings In thousands Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul

15 Total Job Separations In thousands Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul

16 Initial Unemployment Insurance Filings Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun

17 S&P 500 Index 2,500 2,000 1,500 1, Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul

18 Consumer Confidence Index (Conference Board) Mar May Jul Sep Nov Mar May Jul Sep Nov Mar May Jul Sep Nov Mar May Jul Sep Nov Mar May Jul Sep Nov Mar May Jul Sep Nov Mar May Jul Sep Nov Mar May Jul Sep Nov Mar May Jul Sep

19 Single-family Housing Permits and Starts Thousand units Grossly Inadequate Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr Sep

20 Probability of Recession (NY Fed: based on interest rate spread)

21 Is the Economy Turning? No strong recession signals Softer growth momentum

22 Barrack Real Estate Market is Getting Bubblicious

23 Miami Metro Home Price Index Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1

24 Investor Sales (% of Total Sales; 12-month average) Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep

25 Rent Growth (% change from a year ago)

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27 Inventory of Homes per Households (currently 1.5 homes for 100 households)

28 Single-family Housing Starts Grossly Inadequate Thousand units

29 Miami Area Housing Starts

30 Borrowers Not Defaulting (Serious Delinquency Rate) FL Mortgages U.S. All Mortgages Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2

31 Commercial Property Price may be Bubblish (60% gain in 5 years) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1 Source: Federal Reserve

32 Fed Rate Hike in December 15 Next hike in December 16? then again in

33 NCREIF Cap Rates Likely Already Hit Low %

34 Capital seeking yield drives prices REALTORS Commercial Capitalization Rates 10.0% RCA Capitalization Rates 12.0% Office Retail Industrial Multifamily 9.0% 11.0% Hotel 8.0% 7.0% 6.0% 5.0% '09 '10 '11 '12 '13 '14 '15 Hotel Sub-Office Industrial Retail Apartment CBD-Office 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% Source: NAR, RCA

35 Rising Cap Rates and Commercial Real Estate Prices Steady prices in mid-tier markets Price drops in trophy properties Green Street price index could fall 4% to 8% over the next two years

36 Global Dimension

37 Foreign Buyer Purchases: $102.6 B (7 Percent of Existing Home Sales) Billions $120 $100 $80 $60 $40 $20 $0 Dollar Volume of Foreign Buyer Residential Property Purchases $49 $45 $59 $41 $33 $33 $33 $41 $47 $54 $35 $ Recent Immigrants Pure Foreign National

38 Percent of Respondents Who Had an International Client Decreased Across All Counties Percent of Respondents Who Worked With an International Client, By Main Business Area of Respondent 77% 74% 71% 62% 57% 51% 38% 35% Miami-Dade County Broward County Palm Beach County Martin County

39 62 Percent Reported the Exchange Rate Changes Had a Significant Effect, Higher than in Previous Years Effect of Exchange Rate Changes on International Clients 39% 47% 36% 37% 39% 53% 62% 49% 40% 12% 13% 43% 43% 43% 21% 20% 18% 37% 28% 10% 5% Not much of an effect Moderate effect Very significant effect Don t Know

40 Top Tier Countries of Origin to Miami Area 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Venezuela Argentina Brazil Colombia Canada Mexico France Peru % 11% 11% 8% 10% 5% 5% 3% % 13% 12% 8% 9% 4% 4% 3% % 11% 11% 8% 8% 4% 5% 3% % 12% 11% 8% 7% 4% 5% 3% % 10% 12% 10% 7% 5% 4% 2% % 11% 10% 10% 6% 4% 4% 4% * Includes some purchases in areas outside Miami-Dade, Broward, Palm Beach, and Martin County.

41 Second Tier Countries of Origin to Miami Area 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Italy Ecuador China, People's Republic Dominican Republic United Kingdom % 3% 1% 3% 3% % 3% 1% 3% 1% % 2% 2% 3% 2% % 3% 2% 2% 2% % 3% 2% 3% 2% % 3% 3% 3% 3% * Includes some purchases in areas outside Miami-Dade, Broward, Palm Beach, and Martin County.

42 On Average, Miami* Foreign Buyers Purchased More Expensive Properties Compared to Other Foreign Buyers Average Purchase Price Among Residential Foreign Buyers $570,000 $412,100 $477,500 Foreign Buyers-Miami* Foreign Buyers-Florida Foreign Buyers- U.S. * Refers to Miami-Dade County, Broward County, Palm Beach County, and Martin County.

43 72 Percent of Miami* Foreign Buyers Paid Cash Type of Foreign Buyer Financing 21% 24% 74% 72% All cash With mortgage financing - Home country Don't know With mortagage financing - US sources Other *Miami refers to Miami-Dade County, Broward County, Palm Beach County and Martin County.

44 55 Percent of Miami* Foreign Buyers Purchased Condominiums 55% Type of Residential Property Foreign Buyers Purchased 27% 14% 3% Condominium Single-family, detached Townhouse/rowhouse Land/Other *Miami refers to Miami-Dade County, Broward County, Palm Beach County and Martin County.

45 Markets to Target - Inbound Columbia China Eastern Europe Czech Republic, Poland Canada Chile

46 Markets to Target - Outbound Costa Rica Nicaragua Panama Colombia Cuba (wildcard)

47 Forecast

48 Economic Forecast Forecast 2017 Forecast 2018 Forecast GDP Growth 2.6% 2.1% 1.6% 2.2% 2.5% Job Growth +3.0 million +2.6 million +2.0 million +2.2 million +2.2 million CPI Inflation 1.6% 0.3% 1.4% 2.7% 2.5%

49 Housing Forecast Forecast 2017 Forecast New Home Sales 437, , , ,000 Existing Home Sales Median Price Growth 4.9 million 5.3 million 5.4 million 5.5 million + 5.7% + 6.8% +4.5% 3.2% 30-year Rate 4.2% 3.9% 3.7% 4.1%

50 Commercial Real Estate Forecast Vacancy Rent Apartment From 4.7% to 5.0% 3.5% per year Office From 13% to 12% 4% per year Industrial Stable at near 9% 4% per year Retail Stable at near 11% 2% per year

51 24-Hour Cities Boston Chicago Las Vegas Miami New York San Francisco Washington D.C.