Where are the Missing Households and When Will They Show Up? April 29 2014 Calvin Schnure Senior Economist and Vice President, Research and Industry Information National Association of Real Estate Investment Trusts REITs: Building Dividends & Diversification 1875 I St, NW Suite 600, Washington, DC 20006 202-739-9400
Analysis of Household Formation: Fundamentals and History Household formation is driven by three forces: Demographics Business cycles Pent-up demand All three forces would normally be supporting household formation right now but there s no sign of acceleration. There are as many as 3 million missing households. Where are they? When will they show up? Charts on historical and geographic patterns of household formation I have more questions than answers! 1
Household formation remains far below population trends 3 Percent change over year ago Household Formation: Recent Data and Long-Term Trends 2 1 Shaded areas indicate recessions Source: U.S. Census Bureau, Haver Analytics, NAREIT 0 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2
Headship rates fell most sharply among the young 1 0.5 Change in headship rate, 2007-11 Percentage points 0 18-24 25-34 35-44 45-54 55-64 65+ -0.5-1 -1.5-2 -2.5-3 Source: U.S. Census Bureau, American Community Survey 3
Employment changes show a similar pattern across age groups 3 2 1 Percentage points Change in employment/population, 2007-11 0-1 18-19 20-24 25-34 35-44 45-54 55+ -2-3 -4-5 -6-7 -8-9 Source: U.S. Bureau of Labor Statistics, Haver Analytics 4
but the past two years show some improvement in the prime age groups for household formation 3 2 1 Percentage points Change in employment/population, 2007-11 and 11-13 0-1 18-19 20-24 25-34 35-44 45-54 55+ -2-3 -4-5 -6 2007-2011 2011-2013 -7-8 -9 Source: U.S. Bureau of Labor Statistics, Haver Analytics 5
Models of household formation that used to fit well just don t. 3.5 3.0 2.5 2.0 Percent change over year ago Household Formation Household Formation Fitted REG output REG2 output 1.5 1.0 0.5 0.0 Source: U.S. Bureau of Labor Statistics, Haver Analytics 6
Many of the missing households are concentrated in a few cities 200,000 150,000 Change in households 2007-2010, by metro areas, Sorted by change in Single Family Owner Occupied 100,000 50,000 - (50,000) (100,000) (150,000) Phantom hhlds dshared dmfr dsfr dmfo dsfo (200,000) Source: U.S. Census Bureau, American Community Survey 7
Where are the unusual changes in household patterns? The usual suspects. Rank by Change in SFO Level Change in SFO ('000) Level Change in SFR ('000) Level Change in MFO ('000) Level Change in MFR ('000) Level Change in Shared ('000) Level Change in Phantom ('000) Metro Area 1 Detroit, MI -71 35 0 12 10 87 2 Atlanta, GA -44 37-9 25 21 57 3 Los Angeles-Long Beach, -41 42-16 36 98 101 4 Chicago-Gary-Lake, IL -39 44-50 50 49 112 5 Phoenix, AZ -28 51-11 33 36 5 6 Miami-Hialeah, FL -26 4-13 14 16 52 7 Fort Lauderdale-Hollywoo -22 9-19 29 14 28 8 Minneapolis-St. Paul, MN -21 7 2 33 8 24 9 Tampa-St. Petersburg-Cle -21 23-13 17 15 37 10 Oakland, CA -19 22-11 27 21 15 11 Orlando, FL -18 5-3 5 8 40 12 Portland-Vancouver, OR -16 21 3 14 11 7 13 Jacksonville, FL -15 2 1 8 9 24 14 Orange County, CA -15 15-14 23 26 28 15 Seattle-Everett, WA -14 22 1 25 20 5 16 Pittsburgh-Beaver Valley, -14 14-6 5 5 36 17 Birmingham, AL -13 5 0 1 0 20 18 San Jose, CA -13 5 3 22 30 5 19 Norfolk-VA Beach-Newp -13 0 3 6 15 28 20 Fort Myers-Cape Coral, F -11 3-6 0-1 23 Source: U.S. Census Bureau, American Community Survey 8
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Mortgage Bankers Association Multifamily Lending Overview April 23, 2014 Presented by Jamie Woodwell Vice President, Commercial Real Estate Research Mortgage Bankers Association
Multifamily Lending, 2012 41,106 multifamily loans closed $146.06 billion Average Loan Size $3.6 million 2,803 multifamily lenders Average of 15 loans per lender 2
Multifamily Lending in 2012, By Lender Average Loan Size Number of lenders, by lender average loan size Number of loans by lender average loan size $millions of loans, by lender average loan size 50 136 4,556 6,200 69,794 648 10,799 6,364 34,218 1969 19,387 35,842 Lender Avg Loan > $10 million Lender Avg Loan $3 - $10 million Lender Avg Loan $1 - $3 million Lender Avg Loan <= $1 million Source: Mortgage Bankers Association, Annual Report on Multifamily Lending 3
Largest and (almost) Smallest Multifamily Lenders in 2012, by dollar volume Source: Mortgage Bankers Association, Annual Report on Multifamily Lending 4
Multifamily Lending, 2012 Number of Loans Dollar Volume ($millions) 25,000 $160,000 20,000 15,000 $140,000 $120,000 $100,000 $80,000 10,000 $60,000 5,000 $40,000 $20,000 0 $500,000 or less $500,000 to $1 million > $ 1 million $0 $500,000 or less $500,000 to $1 million > $ 1 million Loan Size Loan Size Source: Mortgage Bankers Association, Annual Origination Summation and Annual Report on Multifamily Housing 5
MBA Estimate of Total Multifamily Mortgage Originations by Investor Group ($millions) 2005 2006 2007 2008 2009 2010 2011 2012 $160,000 $140,000 $120,000 Bank Other CMBS Life companies FHA GSEs $100,000 $80,000 $60,000 $40,000 $20,000 $0 Source: Mortgage Bankers Association, JP Morgan Securities, ACLI, HMDA 6
Multifamily Lending Volumes and Loan Size, by Investor Group 60,000 50,000 40,000 30,000 20,000 10,000 $25 $20 $15 $10 $5 0 Life Cos Freddie Mac CMBS FHA Fannie Mae Banks $0 $Amount 2012 (millions) Number 2012 Average Loan Size 2012 ($millions, right) Source: Mortgage Bankers Association 7
Total and Institutional Multifamily Lending ($Millions) $160,000 Total multifamily lending Institutional multifamily lending $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Mortgage Bankers Association, Annual Origination Summation and Annual Report on Multifamily Housing 8
Multifamily Properties, by Number of Units and Presence of Mortgage 1,000s of Median Purchase Properties 300 250 258 Unmortgaged Mortgaged Median Purchase Price $4,000,000 Price $4,500,000 $4,000,000 $3,500,000 200 150 100 50 0 180 $1,200,000 71 45 $201,000 13 10 5-24 units 25-49 units 50+ units $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Source: HUD, US Rental Housing Finance Survey 9
Multifamily Properties, by Number of Units by Term of Mortgage Share of Properties 45% 40% 40% 38% 35% 32% 34% 30% 25% 22% 26% 25% 20% 17% 18% 15% 12% 12% 13% 10% 5% 0% 1% 7% 5% 5 to 24 Units 25 to 49 Units 50+ Units < 5 years 5-10 years 10-15 years 15-29 years 30+ years Source: HUD, US Rental Housing Finance Survey 10
Multifamily Mortgage Debt Outstanding ($millions) 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 $450,000 $400,000 $350,000 $300,000 Agency and GSE portfolios and MBS Bank and Thrift - adj Bank and Thrift - unadj. CMBS, CDO and other ABS issues State and local government Life insurance companies $250,000 $200,000 $150,000 $100,000 $50,000 $0 Source: Mortgage Bankers Association, Quarterly Analysis of Commercial/Multifamily Mortgage Debt Outstanding 11
Contact Information & MBA Resources Jamie Woodwell Vice President Commercial Real Estate Research jwoodwell@mba.org 202-557-2936 Mortgage Bankers Association 1919 M Street NW, 5 th Floor Washington, DC 20036 MBA research page: www.mba.org/research Research Institute for Housing America: http://www.housingamerica.org MBA Newslink: http://www.mortgagebankers.org/newsandmedia/mbanewslink 12