Residential

Economic Issues
& Trends Forum
Pouslng MarkeL and
Lconomlc CuLlook
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u.S. opulauon
0
30
100
130
200
230
300
330
1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
ln mllllons
!obs ln Amerlca - Less SmooLh
0
20000
40000
60000
80000
100000
120000
140000
160000
1
9
6
8

-

!
a
n

1
9
6
9

-

u
e
c

1
9
7
1

-

n
o
v

1
9
7
3

-

C
c
L

1
9
7
3

-

S
e
p

1
9
7
7

-

A
u
g

1
9
7
9

-

!
u
l

1
9
8
1

-

!
u
n

1
9
8
3

-

M
a
y

1
9
8
3

-

A
p
r

1
9
8
7

-

M
a
r

1
9
8
9

-

l
e
b

1
9
9
1

-

!
a
n

1
9
9
2

-

u
e
c

1
9
9
4

-

n
o
v

1
9
9
6

-

C
c
L

1
9
9
8

-

S
e
p

2
0
0
0

-

A
u
g

2
0
0
2

-

!
u
l

2
0
0
4

-

!
u
n

2
0
0
6

-

M
a
y

2
0
0
8

-

A
p
r

2
0
1
0

-

M
a
r

2
0
1
2

-

l
e
b

2
0
1
4

-

!
a
n

!obs Lo opulauon 8auo
(16 years and over)
30
32
34
36
38
60
62
64
66
1
9
6
8

-

!
a
n

1
9
6
9

-

C
c
L

1
9
7
1

-

!
u
l

1
9
7
3

-

A
p
r

1
9
7
3

-

!
a
n

1
9
7
6

-

C
c
L

1
9
7
8

-

!
u
l

1
9
8
0

-

A
p
r

1
9
8
2

-

!
a
n

1
9
8
3

-

C
c
L

1
9
8
3

-

!
u
l

1
9
8
7

-

A
p
r

1
9
8
9

-

!
a
n

1
9
9
0

-

C
c
L

1
9
9
2

-

!
u
l

1
9
9
4

-

A
p
r

1
9
9
6

-

!
a
n

1
9
9
7

-

C
c
L

1
9
9
9

-

!
u
l

2
0
0
1

-

A
p
r

2
0
0
3

-

!
a
n

2
0
0
4

-

C
c
L

2
0
0
6

-

!
u
l

2
0
0
8

-

A
p
r

2
0
1
0

-

!
a
n

2
0
1
1

-

C
c
L

2
0
1
3

-

!
u
l

Slugglsh CrowLh + Cap aer CreaL 8ecesslon
($1.3 Lrllllon gap . $4,700 per person)
0
3,000
10,000
13,000
20,000
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

2
0
1
4

K/, 1& HIIL /4MM"$6
8eal Cu 8eal Cu W/C 8ecesslon
3 CrowLh Llne
2.2 CrowLh Llne
8ecenL ?ear AcuvlLy
Cu ConLracuon ln 2014 C1
-10
-3
0
3
10
2007
- C1
2007
- C3
2008
- C1
2008
- C3
2009
- C1
2009
- C3
2010
- C1
2010
- C3
2011
- C1
2011
- C3
2012
- C1
2012
- C3
2013
- C1
2013
- C3
2014
- C1
K/, 9&&*"M1N%O K$4#7- ?"7%
8uL no lresh 8ecesslon ln SlghL
-6
-4
-2
0
2
4
K/, K$4#7- ?"7% 2$45 4&% E%"$ "C4
Cycllcal Pouslng SecLor:
Slngle-lamlly Lxlsung Pome Sales Cnly
(8esL Lsumauon - could be o by several polnLs)
0
1,000,000
2,000,000
3,000,000
4,000,000
3,000,000
6,000,000
7,000,000
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

2
0
1
4

C
1

Slngle-lamlly Sales Lo opulauon 8auo
(Average = 1.36)
0.0
0.3
1.0
1.3
2.0
2.3
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

2
0
1
4

C
1

P
# of eople per Pouslng unlL
0.00
0.30
1.00
1.30
2.00
2.30
3.00
3.30
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

Slngle-lamlly Sales Lo Pousehold 8auo
(Average = 3.66)
2.00
2.30
3.00
3.30
4.00
4.30
3.00
3.30
6.00
1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
MonLhly endlng Sales lndex
(Seasonally Ad[usLed)
70.0
73.0
80.0
83.0
90.0
93.0
100.0
103.0
110.0
113.0
Source: nA8
Lxlsung Pome Sales - Closlngs
3,000,000
3,300,000
4,000,000
4,300,000
3,000,000
3,300,000
2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
r

2
0
1
1

-

M
a
y

2
0
1
1

-

!
u
l

2
0
1
1

-

S
e
p

2
0
1
1

-

n
o
v

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
r

2
0
1
2

-

M
a
y

2
0
1
2

-

!
u
l

2
0
1
2

-

S
e
p

2
0
1
2

-

n
o
v

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
r

2
0
1
3

-

M
a
y

2
0
1
3

-

!
u
l

2
0
1
3

-

S
e
p

2
0
1
3

-

n
o
v

2
0
1
4

-

!
a
n

2
0
1
4

-

M
a
r

Causes of 8ecenL Sales Slowdown
8ad wlnLer
Cnly delayed sales noL cancellauon
Lack of lnvenLory
SLeadlly more lnvenLory comlng Lo markeL
Pome prlces rose Loo fasL
Showlng slgns of slowlng
MorLgage credlL dlmculues
new Cualled MorLgage 8ules
Surely cannoL geL worse!
MorLgage raLes [umped
1rouble !
lnvenLory of Pomes for Sale
0
300,000
1,000,000
1,300,000
2,000,000
2,300,000
3,000,000
3,300,000
4,000,000
4,300,000
2
0
0
7

-

!
a
n

2
0
0
7

-

M
a
y

2
0
0
7

-

S
e
p

2
0
0
8

-

!
a
n

2
0
0
8

-

M
a
y

2
0
0
8

-

S
e
p

2
0
0
9

-

!
a
n

2
0
0
9

-

M
a
y

2
0
0
9

-

S
e
p

2
0
1
0

-

!
a
n

2
0
1
0

-

M
a
y

2
0
1
0

-

S
e
p

2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
y

2
0
1
1

-

S
e
p

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
y

2
0
1
2

-

S
e
p

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
y

2
0
1
3

-

S
e
p

2
0
1
4

-

!
a
n

Change ln lnvenLory
( change from one year ago)
-30
-23
-20
-13
-10
-3
0
3
10
13
20
2
0
0
7

-

!
a
n

2
0
0
7

-

M
a
y

2
0
0
7

-

S
e
p

2
0
0
8

-

!
a
n

2
0
0
8

-

M
a
y

2
0
0
8

-

S
e
p

2
0
0
9

-

!
a
n

2
0
0
9

-

M
a
y

2
0
0
9

-

S
e
p

2
0
1
0

-

!
a
n

2
0
1
0

-

M
a
y

2
0
1
0

-

S
e
p

2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
y

2
0
1
1

-

S
e
p

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
y

2
0
1
2

-

S
e
p

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
y

2
0
1
3

-

S
e
p

2
0
1
4

-

!
a
n

Pome rlce lndex ln hoenlx and SL. Louls
8epeaL-1ransacuon Pome rlce lndex
80
130
180
230
280
330
1
9
9
3

-

C
1

1
9
9
3

-

C
4

1
9
9
6

-

C
3

1
9
9
7

-

C
2

1
9
9
8

-

C
1

1
9
9
8

-

C
4

1
9
9
9

-

C
3

2
0
0
0

-

C
2

2
0
0
1

-

C
1

2
0
0
1

-

C
4

2
0
0
2

-

C
3

2
0
0
3

-

C
2

2
0
0
4

-

C
1

2
0
0
4

-

C
4

2
0
0
3

-

C
3

2
0
0
6

-

C
2

2
0
0
7

-

C
1

2
0
0
7

-

C
4

2
0
0
8

-

C
3

2
0
0
9

-

C
2

2
0
1
0

-

C
1

2
0
1
0

-

C
4

2
0
1
1

-

C
3

2
0
1
2

-

C
2

2
0
1
3

-

C
1

Change ln Pome rlce
( change from one year ago)
-10
-3
0
3
10
13
2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
r

2
0
1
1

-

M
a
y

2
0
1
1

-

!
u
l

2
0
1
1

-

S
e
p

2
0
1
1

-

n
o
v

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
r

2
0
1
2

-

M
a
y

2
0
1
2

-

!
u
l

2
0
1
2

-

S
e
p

2
0
1
2

-

n
o
v

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
r

2
0
1
3

-

M
a
y

2
0
1
3

-

!
u
l

2
0
1
3

-

S
e
p

2
0
1
3

-

n
o
v

2
0
1
4

-

!
a
n

2
0
1
4

-

M
a
r

nA8 Case-Shlller CoreLoglc
Medlan Pome rlce - 8lslng
($40,000 LqulLy Caln ln 3 years)
$166,100
$176,800
$197,100
$208,200
$130,000
$160,000
$170,000
$180,000
$190,000
$200,000
$210,000
$220,000
2011 2012 2013 2014 forecasL
lnevlLable 8lse ln MorLgage 8aLes wlll furLher
hurL AordablllLy
1/3rd of homeowners have no morLgage
1/3rd have 4.3 raLe or lower
1/3
rd
have hlgher raLe
3
4
3
6
7
8
9
2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
l

2
0
1
4

-

!
a
n


Locked-ln LecL of Low 8aLes?
Pouslng cannoL geL back Lo normal ln a hurry
eople move even ln hlgh lnLeresL raLe envlronmenL
Marrlage, dlvorce, new baby, school dlsLrlcL, new [ob, fed-up
wlLh local governmenL, .
Many unplanned landlords
1ake advanLage of rlslng renLs whlle raLes are low and xed
oLenual fuLure lock from longer holdlng perlod for
caplLal galns Lax excluslon
8lslng 8enLers' and Pomeowners' 8enL CrowLh
(Cn Lhe Way Lo 3)
-1
0
1
2
3
4
3
2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
n

2
0
0
3

-

n
o
v

2
0
0
4

-

A
p
r

2
0
0
4

-

S
e
p

2
0
0
3

-

l
e
b

2
0
0
3

-

!
u
l

2
0
0
3

-

u
e
c

2
0
0
6

-

M
a
y

2
0
0
6

-

C
c
L

2
0
0
7

-

M
a
r

2
0
0
7

-

A
u
g

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
n

2
0
0
8

-

n
o
v

2
0
0
9

-

A
p
r

2
0
0
9

-

S
e
p

2
0
1
0

-

l
e
b

2
0
1
0

-

!
u
l

2
0
1
0

-

u
e
c

2
0
1
1

-

M
a
y

2
0
1
1

-

C
c
L

2
0
1
2

-

M
a
r

2
0
1
2

-

A
u
g

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
n

2
0
1
3

-

n
o
v

Cwners' LqulvalenL 8enL 8enLers' 8enL
8LAL1C8 8enL Survey -
Shows 8enL ressure
0
10
20
30
40
30
60
lalllng 8lslng
lf Lhere ls perslsLenL houslng
shorLage . Lhen Lhe baule beglns

Landlord from Pell
versus
8enL ConLrol

Pouslng SLarLs 8lslng . More lnvenLory
8uL needs Lo 8each 1.3 1.7 mllllon
0
300
1000
1300
2000
2300
2000
- !an
2001
- !an
2002
- !an
2003
- !an
2004
- !an
2003
- !an
2006
- !an
2007
- !an
2008
- !an
2009
- !an
2010
- !an
2011
- !an
2012
- !an
2013
- !an
2014
- !an
mulufamlly slngle-famlly
Thousand units (annualized)
Long-term Average
new Pome Sales
0
200
400
600
800
1000
1200
1400
1600
2000
- !an
2001
- !an
2002
- !an
2003
- !an
2004
- !an
2003
- !an
2006
- !an
2007
- !an
2008
- !an
2009
- !an
2010
- !an
2011
- !an
2012
- !an
2013
- !an
2014
- !an
ln Lhousand unlLs
Slugglsh 8ecovery ln Pouslng SLarLs
CosL of ConsLrucuon 8lslng lasLer Lhan Cl
Labor ShorLage for consLrucuon work
ConsLrucuon loan dlmculLy for small local
homebullders . uodd-lrank nanclal
regulauons?
Lxlsung vs. new Pome rlce
$0
$30,000
$100,000
$130,000
$200,000
$230,000
$300,000
$330,000
2000 -
!an
2002 -
!an
2004 -
!an
2006 -
!an
2008 -
!an
2010 -
!an
2012 -
!an
2014 -
!an
Lxlsung new
Lconomlc CuLlook
MoneLary ollcy
1aperlng Lnds by Lhe year end 2014
led lunds 8aLe . hlke ln 2013 C1
Larller Move Lo 1lghLen because of lnauon
ressure
Long-Lerm SLeady SLaLe 8aLe (2016 onwards) .. 10
year 1reasury aL 3.0 . 230 basls polnLs hlgher
Lhan currenL
04$% ,$1'% ;&Q"A4&R !%66 7-"& HPS
T*7 $46% "7 H.GP "&&*"M1N%O $"7%
UP '-"&C% 2$45 4&% E%"$ "C4V
0.00
0.30
1.00
1.30
2.00
2.30
3.00
3.30
1
9
9
9

-

!
a
n

1
9
9
9

-

!
u
l

2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
l

2
0
1
4

-

!
a
n

All lLems exlcudlng fuel and energy
Cu CrowLh = !ob Creauons
(8 mllllon losL . 8 mllllon galned)
124000
126000
128000
130000
132000
134000
136000
138000
140000
2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
y

2
0
1
3

-

n
o
v

In thousands
Local MarkeL !ob Comparlsons
>"67 K$4#1&C =7"7%6 FWE%"$ K$4#7- ?"7%
nevada 3.8
norLh uakoLa 3.7
Colorado 3.0
llorlda 3.0
Cregon 2.7
1exas 2.7
uLah 2.6
uelaware 2.4
Callfornla 2.3
Arlzona 1.9
=M4# D4X1&C =7"7%6 FWE%"$ K$4#7- ?"7%
new Mexlco -0.2
kenLucky -0.2
new !ersey 0.0
vlrglnla 0.1
Alaska 0.2
WesL vlrglnla 0.3
ennsylvanla 0.3
Maryland 0.3
u.C. 0.4
Mlsslsslppl 0.3
8uslness Spendlng ln relauon Lo CorporaLe roLs .
Puge oLenual for 8uslness Spendlng lncrease
0
300
1000
1300
2000
2300
1
9
8
0

-

C
1

1
9
8
1

-

C
3

1
9
8
3

-

C
1

1
9
8
4

-

C
3

1
9
8
6

-

C
1

1
9
8
7

-

C
3

1
9
8
9

-

C
1

1
9
9
0

-

C
3

1
9
9
2

-

C
1

1
9
9
3

-

C
3

1
9
9
3

-

C
1

1
9
9
6

-

C
3

1
9
9
8

-

C
1

1
9
9
9

-

C
3

2
0
0
1

-

C
1

2
0
0
2

-

C
3

2
0
0
4

-

C
1

2
0
0
3

-

C
3

2
0
0
7

-

C
1

2
0
0
8

-

C
3

2
0
1
0

-

C
1

2
0
1
1

-

C
3

2
0
1
3

-

C
1

roLs 8uslness Spendlng
Lconomlc lorecasL
HIFY HIFJ
24$%'"67
HIFG
24$%'"67
Cu CrowLh 1.9 2.2 2.9
!ob CrowLh 1.7 1.6 1.9
Cl lnauon 1.4 2.3 3.3
Consumer Condence 73 82 86
10-year 1reasury 2.3 3.0 3.8
Pouslng MarkeL CuLlook
enL up uemand
HIII HIFY
Lxlsung Pome Sales 3.2 m 3.1 m
new Pome Sales 880 k 430 k
MorLgage 8aLes 8.0 4.0
ayroll !obs 132.0 m 136.4 m
opulauon 282 m 316 m
vacauon Pome Sales
-
200
400
600
800
1,000
1,200
2003 2004 2003 2006 2007 2008 2009 2010 2011 2012 2013
ln Lhousands
Pousehold neL WorLh
40000
43000
30000
33000
60000
63000
70000
73000
2
0
0
0

-

C
1

2
0
0
0

-

C
4

2
0
0
1

-

C
3

2
0
0
2

-

C
2

2
0
0
3

-

C
1

2
0
0
3

-

C
4

2
0
0
4

-

C
3

2
0
0
3

-

C
2

2
0
0
6

-

C
1

2
0
0
6

-

C
4

2
0
0
7

-

C
3

2
0
0
8

-

C
2

2
0
0
9

-

C
1

2
0
0
9

-

C
4

2
0
1
0

-

C
3

2
0
1
1

-

C
2

2
0
1
2

-

C
1

2
0
1
2

-

C
4

$ bllllon
Pome CounLrles for lnLernauonal 8uyers
rellmlnary Analysls, Sub[ecL Lo Change
* lncludes eople's 8epubllc of Chlna, 1alwan, and Pong kong
8razll Canada Chlna* Cermany lndla !apan Mexlco 8ussla
unlLed
klngdom
2011 3 23 9 4 7 2 7 1 7
2012 3 24 12 3 6 1 8 2 6
2013 2 23 12 3 3 1 8 2 3
2014 2 18 18 3 4 2 9 1 6
0
3
10
13
20
23
30
ulsLrlbuuon of lnLernauonal Sales by CounLry of Crlgln
Wlll Chlna overLake Lhe u.S. ln Cu?
Pad AnuclpaLed around 2010
0
3000
10000
13000
20000
23000
1
9
2
9

1
9
3
3

1
9
3
7

1
9
4
1

1
9
4
3

1
9
4
9

1
9
3
3

1
9
3
7

1
9
6
1

1
9
6
3

1
9
6
9

1
9
7
3

1
9
7
7

1
9
8
1

1
9
8
3

1
9
8
9

1
9
9
3

1
9
9
7

2
0
0
1

2
0
0
3

2
0
0
9

2
0
1
3

2
0
1
7

2
0
2
1

2
0
2
3

u.S. (growlng 3) Chlna (growlng 8)
Chlnese ?uan vs. u.S. uollar
(?uan per $)
3.00
3.30
6.00
6.30
7.00
7.30
8.00
8.30
2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
l

2
0
1
4

-

!
a
n

Clobal enL-up uemand from 8lslng
World opulauon
0
2
4
6
8
10
1000 1100 1200 1300 1400 1300 1600 1700 1800 1900 2000 2100
ln bllllons
World-Class Clues wlll 8eneL !
8osLon, Chlcago, uallas, Mlaml, new ?ork, San ulego,
San lranclsco, WashlngLon u.C., eLc.
Pouslng lorecasL
HIFY HIFJ
24$%'"67
HIFG
24$%'"67
Pouslng SLarLs 923,000 1.07 mllllon 1.4 mllllon
new Pome Sales 430,000 310,000 710,000
Lxlsung Pome Sales 3.1 mllllon 4.9 mllllon 3.2 mllllon
Medlan rlce $197,000 $209,000 $219,000
30-year 8aLe 4.0 4.7 3.3
uollar volume LsumaLe +21 +3 +11
Pouslng MarkeL
and
Lconomlc CuLlook
!"#$%&'% )*&+ ,-./.
0-1%2 3'4&45167
89:;<89! 9==<0;9:;<8 <> ?39!:<?=
@

,$%6%&7"A4& 1& B"6-1&C74&+ /.0.

D"E FG+ HIFJ


2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Housing Demand
Eric Belsky
May 2014
Washington, DC
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Federal Surveys Providing a Murky Picture on Extent
of Recent Household Growth
0
500
1,000
1,500
2011 2012 2013
Change in Households (Thousands)
Housing Vacancy Survey Current Population Survey American Community Survey
Note: Data for 2013 American Community Survey is not yet available and is not presented on this slide. Household growth for
Housing Vacancy Survey uses revised 2010/12 vintage weights, and the Current Population Survey uses 2010 vintage weights
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Hard to Know Whats Happening With Household
Growth But . . . Long-Run Housing Production Is
WAY Below Narrow Normal Range
0
500
1,000
1,500
2,000
Lagging Ten-Year Annual Average Housing Completions and
Manufactured Home Placements (Thousands)
Median
Source: US Census Bureau
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
WAITING FOR STRONGER
DEMAND REBOUND


50
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Even CPS Suggests Cumulative Household Growth Is
Now 1.5 Million Below Even Modest 1.14M 95 -00 Trend
-4,000
-3,000
-2,000
-1,000
0
1,000
2006 2007 2008 2009 2010 2011 2012
Change in Number of Households (Thousands)
CPS vs 1995-2000 Rate CPS vs. 2000-2005 Rate
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Nearly 3 Million More Adults in Their 20s and Early 30s Lived
with their Parents In 2012 Than 2007
0
500
1,000
1,500
2,000
20-24 25-29 30-34
Age
Change from 2007-2012 in Number of Adult Children Living with Parents
(Thousands)
Source: JCHS tabulations of US Census Bureau, Current Population Survey
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Real Median Incomes for All Young Adult
Households Have Declined Since Great Recession
-15
-10
-5
0
20-24 25-29 30-34 35-39
Age
2007-2012 Change in Real Median Household Incomes (Percent)
Note: Percent change based on dollar values that have adjusted for inflation using the CPI-U for All Items.
Source: JCHS tabulations of US Census Bureau, Current Population Survey.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
A Significant But Lower Fraction of Adult Children Living
with Parents Were Employed Full Time in 12 than 07
0
50
100
20-24 25-29 30-34 35-39
Age
Share of Adult Children Living with Parents Who Have Full-Time
Employment (Percent)
2007 2012
Source: JCHS tabulations of US Census Bureau, Current Population Survey
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Student Default Rates Have Soared,
Hindering Ability to Qualify for a Mortgage
0
2
4
6
8
10
12
14
2
0
0
3
:
Q
1

2
0
0
3
:
Q
3

2
0
0
4
:

Q
1

2
0
0
4
:

Q
3

2
0
0
5
:

Q
1

2
0
0
5
:

Q
3

2
0
0
6
:

Q
1

2
0
0
6
:

Q
3

2
0
0
7
:

Q
1

2
0
0
7
:

Q
3

2
0
0
8
:

Q
1

2
0
0
8
:

Q
3

2
0
0
9
:

Q
1

2
0
0
9
:

Q
3

2
0
1
0
:

Q
1

2
0
1
0
:

Q
3

2
0
1
1
:

Q
1

2
0
1
1
:

Q
3

2
0
1
2
:

Q
1

2
0
1
2
:

Q
3

2
0
1
3
:

Q
1

2
0
1
3
:

Q
3

Share of Seriously Delinquent Student Loans (Percent)
Note: Seriously delinquent student loans are defined as 90-plus days delinquent.
Source: Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
0
10
20
30
40
50
60
70
80
90
100
2004 2010
Payments are 15
percent or greater of
monthly income
Payments are 10 to
14.9 percent of
monthly income
Payments are 5 to
9.9 percent of
monthly income
0
10
20
30
40
50
60
70
80
90
100
2004 2010
Share of Households with Head Aged 20 to 29 (Percent), By Tenure and Year
Student Debt Payments May Pose a Significant Barrier to
Mortgage Borrowing For As Many 1 in 10 Renters in Their 20s
Renters Owners
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
0
10
20
30
40
50
60
70
80
90
100
2004 2010
0
10
20
30
40
50
60
70
80
90
100
2004 2010
Payments are 15 percent
or greater of monthly
income
Payments are 10 to 14.9
percent of monthly
income
Payments are 5 to 9.9
percent of monthly
income
Payments are less than 5
percent of monthly
income
Has student loan debt but
not making payments on it
Has no student loan debt
And Even Smaller Share of Renters in Their 30s Are
Spending 5 Percent+ of Income on Student Debt
Renters
Owners
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances
Share of Households with Head Aged 30 to 39 (Percent), By Tenure and Year
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Household Growth Is Expected to Rival or Top
1995-2000 Annual Average Pace
500
600
700
800
900
1,000
1,100
1,200
1,300
1995-2000
CPS HVS
Source: JCHS Household Projections (for Projected Annual Average Household Growth)
500
600
700
800
900
1,000
1,100
1,200
1,300
2000-2010
Decennial Census
500
600
700
800
900
1,000
1,100
1,200
1,300
JCHS Projections 15-25
Low Projection Middle Projection
High Projection
Average Annual Household Growth (Thousands)
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Minority Households Will Account for 76 Percent
of Household Growth Over the Next Decade
0
20
40
60
80
100
Household Composition
in 2012 ACS
Projected Composition of
Household Growth,
2015-2025
Percent Share of Households, by Race and Ethnicity
Asian/other
Hispanic
Black, non-Hispanic
White, non-Hispanic
Source: JCHS tabulations of US Census Bureau, 2012 American Community Survey; JCHS Household Projections, Middle Series
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
The Greatest Increase in Households Will Be
Among Households 65 and Older
0
2
4
6
8
10
12
14
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+
2015 2025
Projected Households (Millions)
60
Source: JCHS households projections.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
WILL V. WAY

61
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Nearly All People Under Age 45 Expect
to Buy in the Future . . .
0
20
40
60
80
100
Under 25 25 to 34 35 to 44 45 to 54 55 to 64
% Who Expect to Buy a Home at Some Point in the Future

Source: Drew and Herbert, 2012. Based on Fannie Mae National Housing Survey 2010-2012.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
But Underwriting Has Tightened Dramatically
0
20
40
60
80
100
2006 2007 2008 2009 2010 2011 2012
Share of FHA-Insured Mortgages by
Dollar Volume (Percent)
Below 640 640-679
680-850
0
20
40
60
80
100
2001 2011
Share of Freddie Mac and Fannie Mae
Originations (Percent)
Higher Risk Medium Risk Lower Risk
Notes: Higher (lower) risk loans are to borrowers with credits scores under 690 (above 750) and have loan-to-
value ratios above 85% (below 75%). FHA data exclude records with no credit score information.
Sources: Amherst Securities; US Department of Housing and Urban Development.
Credit Score
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Demanding More Down or Capping Credit Scores
Disproportionately Impacts Minorities
12
38
11
29
60
27
18
49
18
5
23
6
0
10
20
30
40
50
60
70
3% Downpayment 10% Downpayment FICO 660
P
e
r
c
e
n
t

o
f

P
e
r
f
o
r
m
i
n
g

L
o
a
n
s

E
x
c
l
u
d
e
d

Non-Hispanic White African American Latino Asian
64
Percent of performing loans excluded from mortgage market 2004-2008 originations
(1
st
lien, owner occupied, full doc only--excludes IO, neg. am and < 5 year hybrid ARMs)
Source: Roberto Quercia, Lei Ding, and Carolina Reid (2012). Balancing Risk and Access: Underwriting Standards for
Qualified Residential Mortgages, Center for Community Capital Research Report, January 2012.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
. . . And those with Lower Incomes
25
49
25
22
49
18
13
42
12
7
32
8
0
10
20
30
40
50
60
3% Downpayment 10% Downpayment FICO 660
P
e
r
c
e
n
t

o
f

P
e
r
f
o
r
m
i
n
g

L
o
a
n
s

E
x
c
l
u
d
e
d

Low-Income Moderate-Income Middle-Income Upper-Income
65
Percent of performing loans excluded from mortgage market 2004-2008 originations
(1
st
lien, owner occupied, full doc only--excludes IO, neg. am and < 5 year hybrid ARMs)

Note: Income categories are defined as follows: lowless than 50% of MSA median income; moderate50-79%; middle80-119%; and upper
120%+ of MSA median income.
Source: Roberto Quercia, Lei Ding, and Carolina Reid (2012). Balancing Risk and Access: Underwriting Standards for Qualified Residential
Mortgages, Center for Community Capital Research Report, January 2012.