Patrick J. O’Keefe
Director of Economic Research
New Jersey Housing Outlook
Builders League of South Jersey
January 13, 2016
13 January 2016
U.S. Gross Domestic Product – Real
2007 (Q-4) vs. 2015 (Q-3)
Dollars - Trillions
1
Source: Bureau of Economic AnalysisSeasonally adjusted annual rate; 2015 Q-3 third estimate
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
$10.1$11.3
$2.6
$2.9
-$0.6 -$0.5
$2.9
$2.9
$ -
Tri
llio
ns
Consumer Spending Private Investment Trade Government
2007 Q-4
$15.0 T
2015 Q-3
$16.4 T
13 January 2016
U.S. Gross Private Domestic Investment - Real
Residential & Nonresidential Structures
Dollars - Billions
0
200
400
600
800
1,000
1,200
1,400
$ -
Billi
on
s
Nonresidential Residential
2
Source: Bureau of Economic AnalysisSeasonally adjusted annual rate; 2015 Q-2 third estimate
15 Q-3
13 January 2016
U.S. Households
Net Worth
Peak-Nadir-Recent
3
Source: Federal Reserve
-20.0
0.0
20.0
40.0
60.0
80.0
100.0
$ -
Tri
llio
ns
Financial Assets Real Estate Consumer Durables Other Assets
Mortgages Consumer Credit Other Credit
Net
Worth
$54.9 T
Net
Worth
$85.2 T
Net
Worth
$67.6 T
2007 Q-3 2009 Q-1 2015 Q-3
13 January 2016
Households1 Net Worth
2007 - 2015
Dollars - Billions
4
Source: Federal Reserve1Includes nonprofit organizations
2007 Q-3 2015 Q-3 % ∆
Assets 81,832.4 99,550.0 21.7%
Financial 53,150.5 68,924.6 29.7%
Real Estate 23,923.1 24,981.0 4.4%
Consumer Durables 4,430.1 5,185.9 17.1%
Other 328.7 458.4 39.5%
Liabilities 14,188.0 14,368.4 1.3%
Home Mortgages 10,508.1 9,459.9 -10.0%
Consumer Credit 2,560.8 3,478.0 35.8%
Other 1,119.1 1,430.5 27.8%
Net Worth 67,664.5 85,181.5 25.9%
13 January 2016
U.S. Homeowner Equity
Homeowners’ Equity as Percent of Property Value
1945 - 2015
Source: Federal Reserve
0%
20%
40%
60%
80%
100%
2015*
*2015 through most recent quarter
13 January 2016
U.S. Home Sales - Existing
Millions of Units
2003 - 2015
6
Source: National Association of RealtorsSeasonally adjusted annual rate; break adjusted
3.0
4.0
5.0
6.0
7.0
8.0
Mil
lio
ns
Nov-15
1999 - 2003
Average
13 January 2016
30-Year Fixed Rate Mortgage
Interest Rate
1980 - 2015
7
Source: FreddieMacAnnual and monthly averages through most recent week
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Pe
rce
nt
Most Recent 12 Months
Jan-16
2016
13 January 2016
Domestic Banks
Residential Mortgages
Net Percentage Tightening Standards
-50.0
-25.0
0.0
25.0
50.0
75.0
100.0
Pe
rce
nt
8
Source: Haver Analytics
15 Q-4
Tightening
Easing
13 January 2016
U.S. Federal Reserve Bank
Balance Sheet
2008 - 2015
9
Source: Federal Reserve Bank
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
$ -
Billi
on
s
Treasury & Other Banks & Repos Other AIG & Bear Facilities Mortgage Related
Pre-Panic
March 2008
$ Billions
Pre-Panic 882
Panic Peak 2,249
Recent 4,440
Panic Peak
December 2008
December
2015
13 January 2016
U.S. Depository Institutions
Excess Reserves
Dollars - Billions
10
Source: Haver Analytics
0
500
1,000
1,500
2,000
2,500
3,000
$ -
Billi
on
s
Dec-08
Mar-10
Jul-11
Dec-15
Sep-08
*1978-2007 annual average; from 2008, daily average through most recent bi-week
Dec-12
Aggregate Reserves*
$ - Billions
78-07 2015
Total 47.6 2,581.3
Required 46.5 153.2
Excess 1.1 2,428.1
Aug-15
13 January 2016
United States and New Jersey
Gross Domestic Product and Employment
2014
11
Sources: Bureau of Economic Analysis & Bureau of Labor Statistics
Gross Domestic
Product - Real*Employment
U.S. N.J. U.S. N.J.
Total $15.8 T $504 B 141.5 M 4.0 M
Goods 19.0% 11.4% 13.7% 9.7%
Private Services 68.7% 78.0% 70.6% 74.6%
Government 12.3% 10.7% 15.7% 15.7%
*Inflation-adjusted; chained 2009 dollars
13 January 2016
United States and New Jersey
Gross Domestic Product and Employment
2014
12
Sources: Bureau of Economic Analysis & Bureau of Labor Statistics
Gross Domestic
Product - Real*Employment
U.S. N.J. U.S. N.J.
Total $15.8 T $504 B 141.5 M 4.0 M
Goods 19.0% 11.4% 13.7% 9.7%
Construction 3.8% 3.4% 4.4% 3.6%
Private Services 68.7% 78.0% 70.6% 74.6%
Government 12.3% 10.7% 15.7% 15.7%
*Real; chained 2009 dollars
13 January 2016
Gross Domestic Product - Real*
United States and New Jersey
Annual Percent Change
13
Source: Bureau of Economic Analysis
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Pe
rce
nt
United States New Jersey
N.J. GDP - Real
$ - Billions
2007 503.3
2009 484.8
2014 504.2
US Avg
’48 - ‘07
*Inflation-adjusted; chained 2009 dollars
13 January 2016
N.J. Gross Domestic Product and Construction - Real
Percent Change - Annual
2000 - 2014
14
Source: Bureau of Economic Analysis
-12.0%
-8.0%
-4.0%
0.0%
4.0%
8.0%
Gross Domestic Product Construction
13 January 2016
Employment Index
United States and New Jersey
2000 - 2015
15
90
95
100
105
110
Ind
ex
: 2
00
0 =
10
0
United States New Jersey
Y2K
Nov-15N.J. Employment
(000)
Jan 2000 3,961.5
Jan 2008 4,092.2
Nov 2015 4,037.3
Source: Bureau of Labor Statistics
13 January 2016
Factors Affecting Growth
New Jersey Specific
16
Demographic Laggard
Wealthy With High Cost Profile
Regionally Interdependent
Rigorously Regulated
Mature Development Patterns
13 January 2016
N.J. Housing Profile
2014*
Total Housing Units 3,591,547
Owner Occupied 56.3%
Renter Occupied 32.7%
Vacant 11.2%
Mortgage Status - Owner Occupied
With Mortgage 68.4%
Single Mortgage 81.0%
Multiple Liens 19.1%
No Mortgage 31.6%
17
Source: Census Bureau*American Community Survey, 2014 One-Year Estimates
13 January 2016
Homeownership Rate
United States & New Jersey
1984 - 2015*
18
Source: Census Bureau
60.0
62.0
64.0
66.0
68.0
70.0
72.0
Pe
rce
nt
United States New Jersey
2015
*1984 - 2014 annual average; 2015 average through most recent quarter
13 January 2016
Housing Price Index
United States and New Jersey
2001 - 2015
19
Source: Federal Housing Finance AdministrationPurchase only index, seasonally adjusted
100
120
140
160
180
200
220
240
260
280
Ind
ex
: 1
99
1(Q
-1)
= 1
00
United States New Jersey
2015 Q-3
06 Q-3
04 Q-4
13 January 2016
United States & New Jersey
Mortgage Delinquencies and Foreclosures
Percent of Total Mortgages
Source: Mortgages Bankers Association
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Pe
rce
nt
NJ Foreclosure Inventory NJ Distressed Mortgages
US Foreclosure Inventory US Distressed Mortgages
NJ Mortgages Serviced:
2001 Q-1 945,740
2007 Q-4* 1,292,704
2015 Q-3 1,142,369
15 Q-3
*Peak mortgages serviced
20
13 January 2016
Sales of Existing Homes - New Jersey
2011 - 2015
Year-to-Date through November
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
44.750.6 52.5 51.7
58.9
Th
ou
sa
nd
s
Single Family Townhouse/Condo Adult Community
Source: New Jersey Association of Realtors
62,990 71,976 75,749 74,469 83,579
13 January 2016
N.J. Inventory of Homes for Sale
Thousands-of-Units - November*
2011 - 2015
22
Source: NJ Association of Realtors
0
20
40
60
80
100
2011 2012 2013 2014 2015
Th
ou
sa
nd
s
Single Family Townhouse/Condo Adult
*Properties available for sale at end of period
81,239 59,58769,293 56,63362,887
13 January 2016
N.J. Residential Permits
Total Units & Percent Multifamily
2000 - 2015 - Year-to-Date*
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0%
10%
20%
30%
40%
50%
60%
70%
Total (Left) % Multifamily (Right)
*Year-to date through November, unadjusted Source: Census Bureau
23
13 January 2016
Building Permits - New Jersey
Dollar Value of Construction Authorized
2002 - 2015*
24
Source: NJ Department of Community Affairs
20%
30%
40%
50%
60%
70%
0
2
4
6
8
10
12
14
16
18
$ -
Billi
on
s
Residential Nonresidential % Residential
*Annual 2002 -2014; 2015 YTD through September
13 January 2016
Housing Outlook
New Jersey
2016
25
Resales Volume
Annual transactions slip to 80,000
Resales Prices
Prices rise 2.0% year-on-year
Distressed mortgage inventory drops sharply
Mortgage Finance
Rates rise moderately (≈ 50 basis points)
Underwriting standards unchanged
Homebuilding
Units authorized slips to 28,000
Multifamily accounts for 65% of total
13 January 2016
CohnReznick Economic Research
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