Download - Shari Jansen Presentation
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MARKET OVERVIEW AND 2015 FORECAST
By: Skylar Olsen, PhD
Senior Economist
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About Zillow Real Estate Research
VISIT ZILLOW RESEARCH: www.zillow.com/research
In-depth research, monthly reports and interactive visuals
• Home Values
• For-sale Inventory
• Home Sales
• Forecasts
• And much more……
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HOUSING MARKET OVERVIEW
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The housing market is still recovering……..
Peak to trough
Peak to current
Year-over-year
-22.5% -9.6% 6.0%
Zillow Home Value Index – U.S. Median Home Value
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Although the recovery is slowing down to “normal”
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Many metro areas are seeing high appreciation, but at half the rates seen in 2013
5%
11%
2%
6%
9%8%
5%
5%
8%
11%
5%
7%
3%
5%
13%
5%
14%
7%
13%
-1%
12%
11%
7%
7%
3%6% 5%
3%
11%14%
11%
6%
5%6%
5%
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Home values in Seattle still down 11% from peak
2000 2002 2004 2006 2008 2010 2012 2014
$200,000
$220,000
$240,000
$260,000
$280,000
$300,000
$320,000
$340,000
$360,000
$380,000
ZHVI
$379,000
$258,900
$336,400
Peak to trough
Peak to current
Year-over-year
-31.7% -11.2% 6.3%
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The slowdown phenomenon is present in Seattle
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Eastside and South King County saw large gains
City Annual home value change
Seattle 6.1%
Tacoma 5.9%
Renton 7.6%
Bellevue 8.7%
Everett 5.6%
Seattle
Everett
Tacoma
-3% 13%
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HEADWINDS FOR HOMEBUYERS
Three trends affecting the housing market
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1. For-sale inventory has increased nationwide, but remains flat in the Seattle metro
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2. Nationally, new and existing home sales are low
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3. One in six homeowners is underwaterNegative equity remains widespread, 17% nationally
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Nationally, 35% of homeowners lack equity to sell
Washington37%
Tampa38%
Seattle35%
San Francisco16%
San Diego24%
Sacramento32%
Riverside34%
Pittsburgh26%
Phoenix40%
Philadelphia37%
Orlando38%
New York27%
Minneapolis-St Paul36%
Los Angeles21%
Las Vegas45%
Kansas City45%
Houston24%
Detroit36%
Dallas-Fort Worth31%
Cleveland39%
Chicago42%
Boston25%
Baltimore40%St. Louis
44%
San Antonio36%
Portland31%
Miami-Fort Lauderdale32%
Denver27%
Cincinnati41%
Atlanta47%
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Today, underwater homes are less common, but still a problem
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Where are underwater homeowners in Seattle?
0% 42%
City Negative equity
Tacoma 29%
Spanaway 34%
Lakewood 26%
Auburn 24%
Everett 24%
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Most underwater homes are entry level homes, less homes are available for first-time buyers
0% 20% 40%Bottom Value Tier
0% 20% 40%
Middle Value Tier
0% 20% 40%
Top Value Tier
Atlanta
DetroitChicagoSt. Louis
TampaMiami-Fort Lauderdale
BaltimorePhiladelphia
PhoenixWashington
Seattle
United StatesMinneapolis-St Paul
Riverside
New YorkBoston
San DiegoDallas-Fort Worth
Los Angeles
San FranciscoHouston 11%
14%
15%
15%
15%
17%
25%
27%
27%
27%
28%
31%
32%
33%
33%
35%
40%
41%
41%
49%
51%
7%
4%
7%
8%
9%
7%
10%
17%
12%
16%
13%
16%
20%
17%
20%
18%
21%
23%
24%
22%
24%
5%
2%
4%
6%
5%
4%
5%
11%
8%
9%
6%
7%
13%
7%
10%
8%
11%
10%
10%
8%
11%
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AFFORDABILITY AND FUTURE BUYERS
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Currently, interest rates are very low, but expected to rise eventually
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How will rising rate affect affordability?
1990 1995 2000 2005 2010 2015
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
32%
Affordability
30%
22%
20%
17%
15%
Average Rent Affordability
Average Mortgage Affordabilty
Mortgage AffordabilityForecasted at 5% Rates
Forecasted at 6% RatesForecasted at 7% Rates
Rent Affordability
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Low rates = affordability on buyers’ side in Seattle
1990 1995 2000 2005 2010 2015
18%
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
40%
Affordability
32%
29%
26%
22%Average Rent Affordability
Average Mortgage Affordabilty
Mortgage AffordabilityForecasted at 5% Rates
Forecasted at 6% RatesForecasted at 7% Rates
Rent Affordability
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High rents: a barrier to savings?
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Influx of rental demand
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Growth in rental households by structure type
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Coping strategy for expensive rents
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WHO ARE THE FUTURE HOMEBUYERS?
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Young renters optimistic about future ownership
83 percent of millennial renters are “confident” or “somewhat confident” that they will eventually buy a home.
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Millennials want to own homes……..
Owning a home is necessary to bea respected member of society
Owning a home is necessary to liveThe Good Life and The American
Dream
Owning a home is the bestlong-term investment
Owning a home provides a personmore freedom
18-34 35-49 50-64 65+ 18-34 35-49 50-64 65+ 18-34 35-49 50-64 65+ 18-34 35-49 50-64 65+
46%39%
30% 31%
65%
56% 55%62%
65%59% 61%
68%74%
60% 59%63%
Percent of repondents by generational age group
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But aren’t quite ready to start buying right now
Over the next year, millennials will emerge as the majority of new homebuyers, surpassing Generation X.
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Millennials delayed
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Millennials with full-time employment are already homeowners
1980 1985 1990 1995 2000 2005 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%(a) Married
1980 1985 1990 1995 2000 2005 2010
(b) Single
Homeownership Rate of Young Adults (Age 23-34) by Marital Status and Labor Force
1 full-time and 1 part-time worker1 full-time and 1 non-worker2 full-time workersAll young adults age 23-34
Full-time workerNon-workerPart-time workerAll young adults age 23-34
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Labor market for millennials
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WHAT TO EXPECT IN 2015
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Home values forecasted rise, at slower rates in 2015
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One-year forecast for 2015 Seattle metro area
CityAnnual home value change
Seattle 4.8%
Tacoma 4.7%
Renton 5.5%
Bellevue 6.0%
Everett 5.0%
Seattle
Tacoma
Everett
0% 7%
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Bold Housing Predictions for 2015• Homebuyers will have more negotiation power in 2015
– A less frothy housing market means a more balanced market. Slowing appreciation, more inventory and the return of price cuts mean that buyers will have more choices and won’t have to move as fast.
• Millennials will overtake Generation X as the largest group of homebuyers– Millennials have been delaying marriage and having children, but that doesn’t
mean they don’t have a desire to buy.
• Builders will begin constructing more, less expensive homes– Builders will stop concentrating on the upper tier of the market and will begin to
build more entry level homes.
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Bold Housing Predictions for 2015
• Homebuyers will have more negotiation power in 2015– A less frothy housing market means a more balanced market. Slowing
appreciation, more inventory and the return of price cuts mean that buyers will have more choices and won’t have to move as fast.
• Millennials will overtake Generation X as the largest group of homebuyers– Millennials have been delaying marriage and having children, but that doesn’t
mean they don’t have a desire to buy.
• Builders will begin constructing more, less expensive homes– Builders will stop concentrating on the upper tier of the market and will begin to
build more entry level homes.
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Find data for your local area on Zillow.com
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Thanks To For Providing This Presentation
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