RESIDENTIONAL ECONOMIC ISSUES AND TRENDS FORUM May 13, 2020 | 12 - - PowerPoint PPT Presentation

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RESIDENTIONAL ECONOMIC ISSUES AND TRENDS FORUM May 13, 2020 | 12 - - PowerPoint PPT Presentation

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RESIDENTIONAL ECONOMIC ISSUES AND TRENDS FORUM May 13, 2020 | 12 PM 1 PM Eastern Time GDP Collapse in 2020 after a decade of growth 4 3 2 1 ??? 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -1 -2 -3

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SLIDE 1

RESIDENTIONAL ECONOMIC ISSUES AND TRENDS FORUM

May 13, 2020 | 12 PM– 1 PM Eastern Time

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SLIDE 2

GDP Collapse in 2020 after a decade of growth

  • 3
  • 2
  • 1

1 2 3 4

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

???

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SLIDE 3

GDP Details in 2020 Q1 2020 Q1 % change annualized rate GDP

  • 4.8%

Consumer Spending

  • 8%

Business Spending

  • 9%

Residential Investment (Home building, home sales, remodeling) +21% Commercial Structure Completion

  • 7%

Federal and State Government Spending on Investment Modestly Positive Personal Income +2% Personal Savings +152%

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SLIDE 4

Spending Growth at Grocery Shops versus Restaurants

  • 30
  • 20
  • 10

10 20 30 40

2019 - Jan 2019 - Feb 2019 - Mar 2019 - Apr 2019 - May 2019 - Jun 2019 - Jul 2019 - Aug 2019 - Sep 2019 - Oct 2019 - Nov 2019 - Dec 2020 - Jan 2020 - Feb 2020 - Mar

% change from one year ago

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SLIDE 5

Consumer Retail Spending in March

% change from one year ago to March

Building Material and Gardening +10.4% Clothing Stores

  • 52.5%

Sporting and Hobby Stores

  • 23.8%

Department Stores

  • 24.5%

Non-Store Purchase +15.5%

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SLIDE 6

Total Cases: Unemployment Insurance Filers (26 million estimated due to data lag)

5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000

Jan 4 2020 Jan 11 2020 Jan 18 2020 Jan 25 2020 Feb 1 2020 Feb 8 2020 Feb 15 2020 Feb 22 2020 Feb 29 2020 Mar 7 2020 Mar 14 2020 Mar 21 2020 Mar 28 2020 Apr 4 2020 Apr 11 2020 Apr 18 2020 Apr 25 2020 May 2 2920

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SLIDE 7

New Cases: Unemployment Insurance Filers: (33 million cumulative since Lockdown)

1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 Jan 4 2020 Jan 11 2020 Jan 18 2020 Jan 25 2020 Feb 1 2020 Feb 8 2020 Feb 15 2020 Feb 22 2020 Feb 29 2020 Mar 7 2020 Mar 14 2020 Mar 21 2020 Mar 28 2020 Apr 4 2020 Apr 11 2020 Apr 18 2020 Apr 25 2020 May 2 2020

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SLIDE 8

Maryland: New Cases Increased because of New Website for Independent Contractors

20000 40000 60000 80000 100000 120000 140000

Jan 4 2020 Jan 11 2020 Jan 18 2020 Jan 25 2020 Feb 1 2020 Feb 8 2020 Feb 15 2020 Feb 22 2020 Feb 29 2020 Mar 7 2020 Mar 14 2020 Mar 21 2020 Mar 28 2020 Apr 4 2020 Apr 11 2020 Apr 18 2020 Apr 25 2020 May 2 2020

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SLIDE 9

Pre-Pandemic: Unemployment Insurance Filers:

In 2019 … 218,000 new filers each week … 11.3 million new first-time unemployment filers In 2019 … Yet, over 2 million net new job creations

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SLIDE 10

20.5 M jobs lost in April 2020; one in three jobs lost were in leisure/ hospitality

  • 3.3
  • 50
  • 254
  • 262
  • 362.8
  • 584.1
  • 975
  • 980
  • 1267
  • 1330
  • 2106.9
  • 2128
  • 2544
  • 7653

Utilities Mining and Logging Employment Information Financial Activities Wholesale Trade Transportation and Warehousing Construction Government Other Services Manufacturing Retail Trade Professional and Business Services Education and Health Leisure and Hospitality

Nonfarm Payroll Jobs Lost in April 2020 (‘000)

ce: BLS

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SLIDE 11

Unemployment insurance benefits don’t fully replace wages in some states

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SLIDE 12

Local Disaster Events: Katrina and 9-11 Unemployment Rates

2 4 6 8 10 12 14 16 18

2000 - Jan 2001 - Jan 2002 - Jan 2003 - Jan 2004 - Jan 2005 - Jan 2006 - Jan 2007 - Jan 2008 - Jan 2009 - Jan 2010 - Jan 2011 - Jan 2012 - Jan 2013 - Jan 2014 - Jan 2015 - Jan 2016 - Jan 2017 - Jan 2018 - Jan 2019 - Jan 2020 - Jan

New Orleans

2 4 6 8 10 12

2000 - Jan 2001 - Jan 2002 - Jan 2003 - Jan 2004 - Jan 2005 - Jan 2006 - Jan 2007 - Jan 2008 - Jan 2009 - Jan 2010 - Jan 2011 - Jan 2012 - Jan 2013 - Jan 2014 - Jan 2015 - Jan 2016 - Jan 2017 - Jan 2018 - Jan 2019 - Jan 2020 - Jan

NYC Metro

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SLIDE 13

Federal Reserve All-In Quantitative Easing including buying Corporate Debts

1 2 3 4 5 6 7

2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul 2015 - Jan 2015 - Jul 2016 - Jan 2016 - Jul 2017 - Jan 2017 - Jul 2018 - Jan 2018 - Jul 2019 - Jan 2019 - Jun 2019 - Dec 2020 - Jun

Fed Funds Rate

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SLIDE 14

No Inflation … No Worries for Now

  • 3
  • 2
  • 1

1 2 3 4 5 6

2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul 2015 - Jan 2015 - Jul 2016 - Jan 2016 - Jul 2017 - Jan 2017 - Jul 2018 - Jan 2018 - Jul 2019 - Jan 2019 - Jul 2020 - Jan

CPI Inflation

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SLIDE 15

Oil Price Collapse … Global Economic Collapse … Russia and Saudi Oil War

20 40 60 80 100 120 140 160

2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul 2015 - Jan 2015 - Jul 2016 - Jan 2016 - Jul 2017 - Jan 2017 - Jul 2018 - Jan 2018 - Jul 2019 - Jan 2019 - Jul 2020 - Jan

West Texas

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SLIDE 16

Beef Price Rising … Cattle Price Falling

0.5 0.6 0.7 0.8 0.9 1 1.1

2019 - Jan 2019 - Feb 2019 - Mar 2019 - Apr 2019 - May 2019 - Jun 2019 - Jul 2019 - Aug 2019 - Sep 2019 - Oct 2019 - Nov 2019 - Dec 2020 - Jan 2020 - Feb 2020 - Mar 2020 - Apr

Index

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SLIDE 17

Home Price

NAR Median Home Price … 8% higher from a year ago

$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000

2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul 2015 - Jan 2015 - Jul 2016 - Jan 2016 - Jul 2017 - Jan 2017 - Jul 2018 - Jan 2018 - Jul 2019 - Jan 2019 - Jul 2020 - Jan

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SLIDE 18

Inventory

Low Pre-Pandemic … Lower During Pandemic

4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000

2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul 2015 - Jan 2015 - Jul 2016 - Jan 2016 - Jul 2017 - Jan 2017 - Jul 2018 - Jan 2018 - Jul 2019 - Jan 2019 - Jul 2020 - Jan

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SLIDE 19

Home Sales Strong Pre-Pandemic

4000 4500 5000 5500 6000 6500 7000 7500 8000 8500 9000 2000 - Jan 2001 - Jan 2002 - Jan 2003 - Jan 2004 - Jan 2005 - Jan 2006 - Jan 2007 - Jan 2008 - Jan 2009 - Jan 2010 - Jan 2011 - Jan 2012 - Jan 2013 - Jan 2014 - Jan 2015 - Jan 2016 - Jan 2017 - Jan 2018 - Jan 2019 - Jan 2020 - Jan

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SLIDE 20

60% of Buyers and 90% of Sellers believe Stable Price

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SLIDE 21

Pending Contracts … March Pandemic Impact shaves 20% and Likely in April and in May

20 40 60 80 100 120

2019 - Jan 2019 - Feb 2019 - Mar 2019 - Apr 2019 - May 2019 - Jun 2019 - Jul 2019 - Aug 2019 - Sep 2019 - Oct 2019 - Nov 2019 - Dec 2020 - Jan 2020 - Feb 2020 - Mar 2020 - Apr 2020 - May

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SLIDE 22

Key Indicator will be Days on Market

If Swift then Need More Listings to Satisfy Demand If Lingering then Trouble with Demand

10 20 30 40 50 60

2019 - Jan 2019 - Feb 2019 - Mar 2019 - Apr 2019 - May 2019 - Jun 2019 - Jul 2019 - Aug 2019 - Sep 2019 - Oct 2019 - Nov 2019 - Dec 2020 - Jan 2020 - Feb 2020 - Mar

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SLIDE 23

Mortgage Application to Buy a Home … Worst is Over?

  • 40
  • 30
  • 20
  • 10

10 20 30

Jan 3 2020 Jan 10 2020 Jan 17 2020 Jan 24 2020 Jan 31 2020 Feb 7 2020 Feb 14 2020 Feb 21 2020 Feb 28 2020 Mar 6 2020 Mar 13 2020 Mar 20 2020 Mar 27 2020 Apr 3 2020 Apr 10 2020 Apr 17 2020 Apr 24 2020

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SLIDE 24

April Housing Market Indicators

% change from a year ago Pending Down 25% to 30% in Midwest and South Down 45% to 55% in Northeast and West Inventory Down 40% to 45% Days on Market 25 to 30 days Time to Close 33 days to 40 days States faring better GA, TX, UT States faring worse CA, NY, MI, PA

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SLIDE 25

1930s Great Depression versus 2020 Pandemic

1930s 2020 Unemployment Rate 25% 20% (?) Job Losses Steady downward for 5 years Abrupt downward for 5 months (?) Government Spending Contracted To Balance Budget Expands To Provide Income Monetary Policy Contracted Loosened to Max

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SLIDE 26

30-Year Mortgage Rate can fall Further … Because of Super-low 10-year Treasury Yields … But Jumbo Loans not Working

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2000 - Jan 2000 - Jul 2001 - Jan 2001 - Jul 2002 - Jan 2002 - Jul 2003 - Jan 2003 - Jul 2004 - Jan 2004 - Jul 2005 - Jan 2005 - Jul 2006 - Jan 2006 - Jul 2007 - Jan 2007 - Jul 2008 - Jan 2008 - Jul 2009 - Jan 2009 - Jul 2010 - Jan 2010 - Jul 2011 - Jan 2011 - Jul 2012 - Jan 2012 - Jul 2013 - Jan 2013 - Jul 2014 - Jan 2014 - Jul 2015 - Jan 2015 - Jul 2016 - Jan 2016 - Jul 2017 - Jan 2017 - Jul 2018 - Jan 2018 - Jul 2019 - Jan 2019 - Jul 2020 - Jan

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SLIDE 27

Housing Shortage … Falling Below Normal Again during Pandemic

500 1000 1500 2000 2500

2000 - Jan 2001 - Jan 2002 - Jan 2003 - Jan 2004 - Jan 2005 - Jan 2006 - Jan 2007 - Jan 2008 - Jan 2009 - Jan 2010 - Jan 2011 - Jan 2012 - Jan 2013 - Jan 2014 - Jan 2015 - Jan 2016 - Jan 2017 - Jan 2018 - Jan 2019 - Jan 2020 - Jan

In thousand units

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SLIDE 28

Federal Budget Deficit … $4 trillion in 2020 … Who will buy U.S. debt?

  • 4500000
  • 4000000
  • 3500000
  • 3000000
  • 2500000
  • 2000000
  • 1500000
  • 1000000
  • 500000

500000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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SLIDE 29

1970 High Inflation pushed up Mortgage Rates

0.5 2.5 4.5 6.5 8.5 10.5 12.5 14.5 16.5 18.5 20.5

1971 - Jan 1974 - Jan 1977 - Jan 1980 - Jan 1983 - Jan 1986 - Jan 1989 - Jan 1992 - Jan 1995 - Jan 1998 - Jan 2001 - Jan 2004 - Jan 2007 - Jan 2010 - Jan 2013 - Jan 2016 - Jan 2019 - Jan

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SLIDE 30

2025 to 2030 … Delayed Inflation

Future Possibilities Inflation Rate 4% to 7% Mortgage Rate 6% to 9% Home Sales Negative Homeownership Rate 62% Home Price Appreciation 5% to 10% College Tuition, Medical Expenses Rising Income, Rent, Food Rising Mortgage Payment for Those who bought in 2020-21 Not Rising

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SLIDE 31

OUTLOOK 2020-2021

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SLIDE 32

2020 Quarterly Forecast

Annualized Rate Year over year change 2018 5.34 million 2019 5.34 million 2020 Q1 actual 5.48 million +5% 2020 Q2 3.2 million

  • 39%

2020 Q3 4.7 million

  • 13%

2020 Q4 5.1 million

  • 6%
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SLIDE 33

Annual Forecast

2019 2020 Forecast 2021 Forecast

GDP Growth 2.3%

  • 4.5%

+3% Job Gains 2.2 million

  • 4 million

+ 2 million Home Prices 4.8% 0% to 2% 1% to 3% Home Sales 0%

  • 10% to -15%

+13 to +18%

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SLIDE 34

Empty Malls into Healthcare Armory?

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SLIDE 35

Permanent Changes after Pandemic

End of Open-Houses Virtual House Tours Virtual Office Meetings More Remote Working Less Traffic near City Centers Move Further Out Larger House

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SLIDE 36

Advancement of Civilization

People have enough to eat even in times of natural disasters People starve even in normal times

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SLIDE 37