2016 Market Outlook Presentation by REALTOR.com's Jonathan Smoke

2016 Move, Inc. All rights reserved. Do not copy or distribute.

REALTOR.COMMARKET OUTLOOKJonathan SmokeChief Economist

January 7, 2016


JOB CREATION SOFTENED IN AUG-SEP211,000 jobs created in November, 2.6 million jobs in last 12 mos.

2

Source: Bureau of Labor Statistics

-

2.0

4.0

6.0

8.0

10.0

12.0

120.0

125.0

130.0

135.0

140.0

145.0

2000

.01

2000

.05

2000

.09

2001

.01

2001

.05

2001

.09

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.01

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.05

2002

.09

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.01

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.05

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.09

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.01

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.09

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.01

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.05

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.09

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.01

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.05

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.09

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.01

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.09

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.01

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.05

2009

.09

2010

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2010

.05

2010

.09

2011

.01

2011

.05

2011

.09

2012

.01

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.05

2012

.09

2013

.01

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.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

2015

.05

2015

.09

Mill

ions

Employment and UnemploymentNonfarm Employment Unemployment Rate


THANK TRID FOR NOVEMBER DIPSales down 4% over 15 in Nov; new high for median $ in June

3

Source: National Association of REALTORS Existing Home Sales Report

$0

$50,000

$100,000

$150,000

$200,000

$250,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2000

.01

2000

.05

2000

.09

2001

.01

2001

.05

2001

.09

2002

.01

2002

.05

2002

.09

2003

.01

2003

.05

2003

.09

2004

.01

2004

.05

2004

.09

2005

.01

2005

.05

2005

.09

2006

.01

2006

.05

2006

.09

2007

.01

2007

.05

2007

.09

2008

.01

2008

.05

2008

.09

2009

.01

2009

.05

2009

.09

2010

.01

2010

.05

2010

.09

2011

.01

2011

.05

2011

.09

2012

.01

2012

.05

2012

.09

2013

.01

2013

.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

2015

.05

2015

.09

Existing Home Sales and PricesEHS SAAR Med Exist Home Price


INVENTORY HAS BEEN A CONSTRAINTDemand continues to exceed supply

4

Source: National Association of REALTORS, Commerce Department

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000

.01

2000

.05

2000

.09

2001

.01

2001

.05

2001

.09

2002

.01

2002

.05

2002

.09

2003

.01

2003

.05

2003

.09

2004

.01

2004

.05

2004

.09

2005

.01

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.05

2005

.09

2006

.01

2006

.05

2006

.09

2007

.01

2007

.05

2007

.09

2008

.01

2008

.05

2008

.09

2009

.01

2009

.05

2009

.09

2010

.01

2010

.05

2010

.09

2011

.01

2011

.05

2011

.09

2012

.01

2012

.05

2012

.09

2013

.01

2013

.05

2013

.09

2014

.01

2014

.05

2014

.09

2015

.01

2015

.05

2015

.09

Months' Supply of Homes for SaleExisting New


NEW CONSTRUCTION SOLIDLY UPGrowth accelerating; in Nov SF up 15% and MF up 20% y/y

5

Source: Commerce Department

0

500

1,000

1,500

2,000

2,500

Thou

sand

s

Residential ConstructionSingle-Family Starts Multi-Family Starts


INVENTORY NOW PAST PEAK BUTNot falling as fast and age of inventory not growing like normal

6

Source: Realtor.com

0

20

40

60

80

100

120

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Listings and Median Age of InventoryListings Median Age of Inventory


RENTS RISING FASTER THAN PRICESRents up 14% y/y in November compared to home prices up 7.5%

7

Source: Realtor.com and Altos Research

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

$2,000

$150,000

$170,000

$190,000

$210,000

$230,000

$250,000

$270,000

National Home Price and Rent TrendsMedian Existing List Price Median Asking Rent


LISTING PRICES GREW 7.5% Y/Y IN NOVMedian list price increases are widespread

8

Source: Realtor.com

November 2015

PresenterPresentation NotesAbove national gains

2016 Move, Inc. All rights reserved. Do not copy or distribute. 9

RENTS RISING Y/Y IN 68% OF COUNTIESRent increases adding to demand for buying

2015

Source: Realtor.com Analysis of HUD Fair Market Rents


NEARING THE END OF THIS ERALow rates and prices enabled incredible affordability

10

Source: Moodys Analytics, Freddie Mac, and National Association of REALTORS

165

3.94

0

2

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15

Affordability and Mortgage RatesHousing Affordability Index (left axis) Ave 30-year fixed conv % (right axis)

PresenterPresentation NotesAverage over 44 years is 125


CHEAPER TO BUY IN 77% OF COUNTIESSimple monthly cost analysis favors buying

Source: Realtor.com Analysis of HUD Fair Market Rents,Nielsen Pop-Facts Demographics and Realtor.com Data


CONFIDENCE RECOVERING FROM FALLPlans to purchase a home up, pointing to strong spring

12

Source: The Conference Board, Moodys Analytics

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0

20

40

60

80

100

120

140

160

2000

.01

2000

.06

2000

.11

2001

.04

2001

.09

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.02

2002

.07

2002

.12

2003

.05

2003

.10

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.03

2004

.08

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.01

2005

.06

2005

.11

2006

.04

2006

.09

2007

.02

2007

.07

2007

.12

2008

.05

2008

.10

2009

.03

2009

.08

2010

.01

2010

.06

2010

.11

2011

.04

2011

.09

2012

.02

2012

.07

2012

.12

2013

.05

2013

.10

2014

.03

2014

.08

2015

.01

2015

.06

2015

.11

Consumer Confidence Index Plans to Purchase


DEMANDDRIVERS


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96

Thou

sand

s

US Population by Age

14

DEMOGRAPHICS SET THE TABLEWhen viewed by age, importance of Millennials becomes clearer

Source: Realtor.com Analysis of US Census Bureau Population Estimates (2014)

BoomXYZ80 million61 million83 million57 million 38 million


LIFE DRIVES HOUSING DEMANDTodays Millennial home shoppers are propelled by success

26%

13%

33%

30%

25%

13%

32%

Source: BDX Home Shopper Insights Panel, Summer 2015

8

8

12

9

18

13

27

26

28

24

14

14

18

19

20

22

28

32

34

35

0% 25% 50%

Desire to live closer to work/office

Desire to live closer to good schools

Increase in family size

Planning to increase family size

Change of family circumstance/composition

Increasing rent

Favorable interest rates

Favorable home prices

Tired of current home

Increase in income

% of respondents

Top 10 millennial triggers

69% of Millennial shoppers indicate

some form of change in family size* as a trigger

*Change in Family Size includes: Change of family circumstances/composition, Increase in family size, Decrease in family size, Planning to increase family size, Upcoming decrease in family size, Older parent moving into my home, Getting married/moving in with partner.

ALLMILLENNIAL


BOOMERS KEEP DISTURBING Boomer wave is causing a major population shift

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2015 2020

Population by Age (United States)Under 25 25-34 35-54 55+

Over the next 5 years:

Population grows 4%

55+ grows 12%

35-54 declines 1%

25-34 grows 1%

Under 25 grows 1%

27%

26%

13%

33%

30%

25%

13%

32%

Source: Nielsen Demographics Pop-Facts 2015


CREDIT ACCESS SLOWLY IMPROVINGMortgage access up 11% year-over-year in November

17

26%

13%

33%

30%

25%

13%

32%

Source: Mortgage Bankers Association, Haver Analytics

127.40

100

200

300

400

500

600

700

800

900

1000

Mortgage Credit Availability IndexMar-2012=100


300-4994.9 500-549

7.6

550-5999.4

600-64910.3

650-69913700-749

16.6

750-79918.2

800-85019.9

FICO Population Distribution (Apr 2015)

18

CREDIT SCORES SEE SOME CHANGESIn November the average FICO score on a closed mortgage loan was 721; the average denied score was 651

26%

13%

33%

13%

Source: Ellie Mae and Fair Isaac Corporation

300

350

400

450

500

550

600

650

700

750

800

2011

.08

2011

.10

2011

.12

2012

.02

2012

.04

2012

.06

2012

.08

2012

.10

2012

.12

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

Average FICO Score by Closed and Denied Applications

Closed Denied 2014 Median FICO (713)


0

20,000

40,000

60,000

80,000

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120,000

140,000

0

5,000

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15,000

20,000

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30,000

35,000

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45,000

50,000

Thou

sand

s

Thou

sand

s

Real Estate Web Unique Visitors by Age21-34 35-54 55+ All Traffic (Right Axis)

DEMAND IN 2015 HAS BEEN STRONGTraffic up 15% over November 2014; 21-34 year olds up 24%

19

Source: Realtor.com Analysis of comScore Media Metrix Real Estate Category Unique Visitor Data

30% of 55+, 50% of 35-54, and 56% of 21-34 in November


LOCATIONLOCATIONLOCATION


JOBS NEARLY RECOVEREDUnemployment rate down substantially

21

Source: BLS, Moodys Analytics

0.00

2.00

4.00

6.00

8.00

10.00

12.00

3,600,000

3,800,000

4,000,000

4,200,000

4,400,000

4,600,000

4,800,000

Jan-

90S

ep-9

0M

ay-9

1Ja

n-92

Sep

-92

May

-93

Jan-

94S

ep-9

4M

ay-9

5Ja

n-96

Sep

-96

May

-97

Jan-

98S

ep-9

8M

ay-9

9Ja

n-00

Sep

-00

May

-01

Jan-

02S

ep-0

2M

ay-0

3Ja

n-04

Sep

-04

May

-05

Jan-

06S

ep-0

6M

ay-0

7Ja

n-08

Sep

-08

May

-09

Jan-

10S

ep-1

0M

ay-1

1Ja

n-12

Sep

-12

May

-13

Jan-

14S

ep-1

4M

ay-1

5

Employment and Unemployment Rate in Chicago MSATotal Nonfarm Employment (SA) Unemployment Rate (% SA)


NEW CONSTRUCTION OFF LOWSStarts remain well off peak and far from normal

22

Source: Commerce Department, Moodys Analytics

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan-

90A

ug-9

0M

ar-9

1O

ct-9

1M

ay-9

2D

ec-9

2Ju

l-93

Feb-

94S

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4A

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5N

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5Ju

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Jan-

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Feb-

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Jan-

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Feb-

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ep-0

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Jan-

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ec-1

3Ju

l-14

Feb-

15S

ep-1

5

New Construction Starts in Chicago MSASingle-Family Multi-Family


LIST PRICES KEEP SOME MOMENTUM List prices up 6% Y/Y in Cook County (November 2015)

23

Source: Realtor.com


FOCUS ON CHICAGO AREAHalf of zips seeing 5%+ growth Y/Y (November 2015)

24

Source: Realtor.com


INVENTORY TIGHTENED IN 2015Active listings down 12% Y/Y in Cook County (November 2015)

25

Source: Realtor.com

PresenterPresentation NotesStill down 10% in Tucson, AZ MSA

The jump in September comes from the pending feed realignment.


ACTIVE INVENTORY BY COUNTYSingle family and condo active listings (November 2015)

26

Source: Realtor.com


FOCUS ON CHICAGO AREASingle family and condo active listings (November 2015)

27

Source: Realtor.com


AGE OF INVENTORYInventory moves fastest in Cook County (November 2015)

28


HOTTEST ZIPS LAST FOUR MONTHSBased on supply and demand

29

Source: Realtor.com


MILLENNIAL PROPENSITY25-34 interest relative to other age groups (November 2015)

30

Source: Realtor.com


BOOMER PROPENSITY50-64 interest relative to other age groups (November 2015)

31

Source: Realtor.com

PresenterPresentation NotesFor Sale Propensity Index is based on ldp for sale page views relative to other generations. It is the % of views by that generation out of total views for that zip.


HOTTEST HOMES LAST 60 DAYSTop homes get up to 13 times more views than metro average

32


RENT VS BUYMonthly costs favor buying in all but Lake and DuPage Counties

33

Source: Realtor.com Analysis of Nielsen Pop-Facts Demographics, HUD Fair Market Rents and Realtor.com Data


HOUSEHOLD GROWTH 2015-2020Growth hot spots throughout the region

34

Source: Nielsen Demographics Pop-Facts 2015


ENDING ON A POSITIVE NOTE

1. Location, location, location. Home is about that special refuge. Home is personal. But finding a home in the right neighborhood takes effort and turns out best with the help of an expert local REALTOR.Here by Alessia Cara

2. Rents are rising, its cheaper to buy a home in 77% of the country, and real estate is viewed very positively, especially by young peopleowning is cool again. Welcome to My House!My House by Flo Rida

3. Planning to buy in 2016? Dont mess around. More than 85% of buyers who plan to purchase in 2016 are focused on the spring and summer.Mess Around by Cage the Elephant

4. We all benefit from the occasional Smoke break.Smoke Break by Carrie Underwood

Courtesy of DJ Smokey Smoke


Jonathan SmokeChief Economist

realtor.com

[email protected]@SmokeonHousing703.634.9193

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