Gains for Homeownership

Transcription

1 Gains for Homeownership NAHB Meeting of the Members January 10th, 2018 Robert Dietz, Ph.D. NAHB Chief Economist

2 Homeownership Rate 71% Percentage, Quarterly, SA % 69% 68% 67% 66% 69.4% % 64% 63% 62% 61% % Source: U.S. Census Bureau (BOC): Housing Vacancies & Homeownership.

3 90% Homeownership by Age 80% 70% years 65 years and over years 79% 75% 69% 60% years 59% 50% 40% Less than 35 years 36% 30% Source: U.S. Census Bureau (BOC).

4 Household Formation Demand for home ownership strengthening 1,500 Y/Y Change in Household Count, Thousands, NSA Owner-Occupied 1, ,000 2,500 2,000 1,500 1, ,000 Renter-Occupied Source: U.S. Census Bureau (BOC): Housing Vacancies & Homeownership.

5 Geography of Homeownership Homeownership Rates in the U.S. by County Alaska Hawaii Source: U.S. Census Bureau (BOC): American Community Survey (ACS).

6 Determinants of Homeownership NAHB Economic Analysis Important factors for county level analysis: Age Marriage Local home costs Local incomes

7 Determinants of Homeownership Modeling Results Increase average age in county by 5 years Adds 3 percentage points to rate Increase share of married households by 10% Added 5.1 percentage points to rate Increase local incomes by $10,000 Adds 0.6 percentage points to rate Decrease housing costs by $75,000 Adds 4.1 percentage points to rate

8 Policy Implications Economic / Social Policy That Promote Housing Provide affordable housing (rental and owned) for young people so they can develop roots Tax / economic policy that doesn t discourage marriage Income growth is always good Reduce cost of housing Lower regulatory costs (up 29% over last 5 years) Lower building material and other input costs

9 Tax Reform

10 Tax Reform Policy Changes and Impacts Economic impacts GDP Marked up 2018 forecast to 2.6% Dynamic scoring model suggests 0.8% more GDP after 10 years Business investment 1.1% higher after ten years Labor supply and employment 0.6% higher 9 million more workers in labor force Reduced home price growth to a positive 2.9% growth rate in 2018

11 Supply-Side Headwind Update

12 Building Materials Softwood Lumber Since January 2017, softwood lumber increased 14.6% Index 1982=100, NSA Source: U.S. Bureau of Labor Statistics (BLS).

13 Labor Unfilled construction jobs rising 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Job openings rate - Construction 12-month moving average % Source: U.S. Bureau of Labor Statistics (BLS). -

14 Lending AD&C Access Loans growing but at a slower rate Millions $200, unit Residential Construction Loans $180,000 Year-over-Year Growth Rates $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% $ Source: Federal Deposit Insurance Corporation. 0%

15 Forecasts

16 GDP Growth Stronger growth expected post-tax reform 10% 8% 6% Q/Q Percent Change, SAAR Annual Growth LT avg ( 58-07) 3.4% % % 2017 f 2.3% 2018 f 2.6% 2019 f 2.1% 4% 2% 0% f -2% -4% -6% -8% -10% Source: U.S. Bureau of Economic Analysis (BEA).

17 Labor Force Participation Rate Stabilized labor force participation key to future growth 68% 67% 66% 65% 64% 63% 62% 61% 60% 62.4% 63.0% % Source: U.S. Bureau of Labor Statistics (BLS). -

18 30-Year Fixed Rate and 10-Year Treasury Rates will rise due to Fed policy and tight labor markets 12% 12% 10% 30-Year Fixed Rate Mortgage October 31, % 8% 8% 6% 6% 4% 10-Year Treasury 4% 2% Difference 2% 0% % Source: NAHB forecast and Federal Reserve and Freddie Mac data.

19 90 Housing Affordability Affordability declining National Q1_04 Q1_05 Q1_06 Q1_07 Q1_08 Q1_09 Q1_10 Q1_11 Q1_12 Q1_13 Q1_14 Q1_15 Q1_16 Q1_17 Source: NAHB/Wells Fargo Housing Opportunity Index.

20 NAHB/Wells Fargo Housing Market Index Nearly two-decade high for builder confidence Index HMI Thousands, SAAR 74 2,000 1,800 1,600 1, Single-Family Starts 1,200 1, Source: Census Bureau and NAHB/Wells Fargo HMI survey. 0

21 Single-Family Starts Growth ahead 2,000 Thousands of units, SAAR ,343,000 Normal ,000 1, ,000 10% 1, ,000 10% ,000 9% 1,400 1,200 1,000 80% fall ,000 5% ,000 5% 2017Q3: 63% of Normal 2019Q4: 73% of Normal Trough to Current: Mar 09 = 353,000 Nov 17 = 930, % Source: Census Bureau and NAHB forecast.

22 Multifamily Housing Starts Leveling off Thousands of units, SAAR Avg=344, ,000 Normal , ,000 11% ,000-1% ,000-8% ,000-2% ,000-3% % fall Trough to Current: 4 th Q 09 = 82,000 3 rd Q 17 = 324, % 2017Q3: 98% of Normal 2019Q4: 104% of Normal Source: Census Bureau and NAHB forecast

23 Residential Remodeling Strong market conditions Billions, SAAR Year Percent Change % % % % Actual Adjusted Source: Census Bureau and NAHB forecast.

24 Regulatory Costs Rising Up 29% Over Total effect of building codes, land use, environmental and other rules

25 Thank you eyeonhousing.org housingeconomics.com