U.S. Housing Outlook

Presented By:

Stanley F. Duobinis, Ph.D.President

Crystal Ball Economics, Inc.

Real GDP

-4

-2

0

2

4

6

8

1989 1991 1993 1995 1997 1999 2001 2003 2005

Percent Change

U.S. Unemployment Rate

3

4

5

6

7

8

1989 1992 1995 1998 2001 2004

Percent

Total Payroll Employment

-3

-2

-1

0

1

2

3

4

5

1989 1991 1993 1995 1997 1999 2001 2003 2005

Percent Change

Payroll Employment

-12-10-8-6-4-202468

10

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Percent Change

Total

Manufacturing

U.S. Manufacturing Employment

14

15

16

17

18

19

20

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Millions

3.0 Million jobs lost

2.6 Million jobs lost

U.S. Industrial Output

14

15

16

17

18

19

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

60

70

80

90

100

110

120

130

140Index: 1996 = 100

Employment (L)

Output (R)

Millions of Jobs

Manufacturing Output vs. Employment

-20

-15

-10

-5

0

5

10

15

20

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Employment Output

Percent Change – Annual Rate

Manufacturing’s Share of Employment

Percent

17.1 to 22.0 (10)13.4 to 17.0 (14)7.4 to 13.3 (17)0.6 to 7.3 (10)

Total Employment GrowthNovember 2003 to November 2004

Percent Change

2.0 to 4.8 (12)1.2 to 1.9 (15)0.7 to 1.1 (14)-0.9 to 0.6 (10)

Total Employment Growth

-4

-3

-2

-1

0

1

2

3

4

5

6

7

1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

Pct Chg. Year Ago

Consumer Confidence Index

0

20

40

60

80

100

120

140

160

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

1985 = 100

Stock Market Tumbles

September 11th

The War in Iraq

Consumer Confidence Index

020406080

100

120140160180200

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

1985 = 100

Current Situation

Expectations

GDP Inflation

0

1

2

3

4

5

6

1989 1991 1993 1995 1997 1999 2001 2003 2005

Percent Change

Federal Funds Rate Target

0

2

4

6

8

10

12

1989 1991 1993 1995 1997 1999 2001 2003 2005

Percent

Mortgage Rates

0

2

4

6

8

10

12

1989 1991 1993 1995 1997 1999 2001 2003 2005

Percent

Fixed

Adjustable

Single-family Housing Starts

0

200

400

600

800

1000

1200

1400

1600

1800

1989 1992 1995 1998 2001 2004

Thousands

Homeownership Rate

63

64

65

66

67

68

69

70

1989 1991 1993 1995 1997 1999 2001 2003 2005

Percent

Total Employment vs. Total Housing Starts

0

500

1000

1500

2000

2500

3000

1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

-4

-3

-2

-1

0

1

2

3

4

5

6

7Thousands Pct Chg. Year Ago

Employment - R

Housing Starts - L

Total Employment GrowthNovember 2003 to November 2004

Percent Change

2.0 to 4.8 (12)1.2 to 1.9 (15)0.7 to 1.1 (14)-0.9 to 0.6 (10)

Single-family Starts Pct Chg 2003-2004

U.S. = 6.4

Percent Change

11.8 to 20.6 (10)6.4 to 11.7 (20)0 to 6.3 (13)-5.8 to -0.1 (8)

Single-family Starts Pct Chg 2004-2005

U.S. =-2.8

Percent Change

0.0 to 12.6 (10)-2.8 to -0.1 (18)-4.6 to -2.9 (13)-8.5 to -4.7 (10)

Rental Vacancy Rates

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

1989 1991 1993 1995 1997 1999 2001 2003

Percent

Buildings with 5 or More Units

Multifamily Housing Starts

050

100150200250

300350400450500

1989 1992 1995 1998 2001 2004

Thousands

Condo Share Of Multifamily Starts

0

5

10

15

20

25

30

35

40

45

1989 1991 1993 1995 1997 1999 2001 2003

Percent

40.7

Multifamily Housing Starts Pct Chg 2003-2004

U.S. =-0.5

Percent Change

10.3 to 94.5 (11)-0.5 to 10.2 (17)-8.6 to -0.6 (13)-29.2 to -8.7 (10)

Multifamily Housing Starts Pct Chg 2004-2005

U.S. =-5.7

Percent Change

1.8 to 13.6 (10)-5.7 to 1.7 (23)-9.9 to -5.8 (8)-31.0 to -10.0 (10)

Total Housing Starts

0

500

1000

1500

2000

2500

1989 1991 1993 1995 1997 1999 2001 2003 2005

Thousands

Starts Per Capita 2005

U.S. = 6.6

Starts per 1,000 Pop

9.0 to 23.2 (10)6.6 to 8.9 (10)4.2 to 6.5 (21)2.2 to 4.1 (10)

Manufactured Home Shipments

0

50

100

150

200

250

300

350

400

450

1989 1992 1995 1998 2001 2004

Thousands

Existing Home Sales

0

1000

2000

3000

4000

5000

6000

7000

8000

1989 1991 1993 1995 1997 1999 2001 2003 2005

Thousands

Residential Remodeling

020

4060

80100

120140

160180

200

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

ADDS/ALTS MAJOR REPL MAIN/REPAIRS

Billions of 2000 Dollars

Median New Home Size

0

500

1000

1500

2000

2500

1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

Square Feet

Multifamily

Single-family

1375

887

2137

1077

2218

1100

Residential Fixed Investment

200

250

300

350

400

450

500

550

600

1989 1991 1993 1995 1997 1999 2001 2003 2005

Billions of 2000 Dollars

Nonresidential Construction

100

120

140

160

180

200

220

240

260

280

1993 1995 1997 1999 2001 2003 2005

Billions of 2000 Dollars

Nonresidential Construction

0

20

40

60

80

100

120

1993 1995 1997 1999 2001 2003 2005

Billions of 2000 Dollars

Lodging

Manufacturing

Office

Other Commercial

Other