2015 Economic Forecast
Appraisal Institute
Sacramento Sierra Chapter
Presented ByJohn Schleimer, MIRM
President, Market Perspectives
Residential Real Estate
Source: US Census Bureau
Source: Moody’s Analytics
Source: Moody’s Analytics
Source: US Bureau of Labor Statistics
Sources: US Census Bureau, NAHB
Rank Q4 2016Bottom 20%
20% to 40%
40% to 60%
60% to 80%
Top 20%
The Long Road Back to Normal
< 75%
76% - 80%
81% - 93%
94% - 101%
102% <
Relative to Normal
This map shows how the states rank in the return to more normal levels of housing production.By the end of 2016, the top 40% will be back to near normal production levels.The bottom 20% will be below 75% of normal production.
Sacramento RegionNew Home Sales
Source: The Gregory Group New Home Database
Inconsistent Sales:
4Q14 6513Q14 6082Q14 8081Q14 6724Q13 3823Q13 5822Q13 7241Q13 770
2000 = 12,216
2004 = 17,155
2011 = 1,668
2012 = 2,782
2014 = 2,739
Sacramento RegionNew Home Inventory
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
4th-
99
2nd-
00
4th-
00
2nd-
01
4th-
01
2nd-
02
4th-
02
2nd-
03
4th-
03
2nd-
04
4th-
04
2nd-
05
4th-
05
2nd-
06
4th-
06
2nd-
07
4th-
07
2nd-
08
4th-
08
2nd-
09
4th-
09
2nd-
10
4th-
10
2nd-
11
4th-
11
2nd-
12
4th-
12
2nd-
13
4th-
13
2nd-
14
4th-
14
0
50
100
150
200
250
300
350
400
450
500
New-Home Unsold Inventory Number of Projects
Source: The Gregory Group New Home Database
From 375 active projects in 2007 to just over 100 today
Sacramento RegionNew Home Pricing
Source: The Gregory Group New Home Database
2000 median price = $261,900
2005 median price = $459,900 or up 76%
2011 median price = $295,970 or down 36%
2014 median price - $417,880 or up 41% from trough and 10% from 2005 high
Source: MLS, The Gregory Group
NUMBER OF LISTINGS VERSUS NUMBER OF SALESSACRAMENTO REGION
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14Number of Listings Number of Sales
Existing home sales down 6% from 2013 to 2104
Source: MLS, The Gregory Group
MONTHS OF INVENTORYSACRAMENTO REGION
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Months of Inventory
Inventory remaining low means seller’s market
but puts pressure on pricing
Source: MLS, The Gregory Group
REO SALES/SHORT SALES/NON-DISTRESSED SALESSACRAMENTO REGION
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
REO Sales Short Sales Non-Distressed Sales
Distressed property sales trending positively…down half from 2013
Existing home market is affordable alternative to new homes
• National price average between a new home to similar resale is 15%
• Current Sacramento area average difference is 26%
“Drivers” of Housing Markets
• Non-farm job growth
Recent MSA Non-Farm Job Growth
790
800
810
820
830
840
850
860
870
880
890
2011 2012 2013 2014
• 2012 at 18,800• 2013 at 22,600• 2014 estimate at
18,500
“Drivers” of Housing Markets
• Non-farm job growth
• Good paying jobs
“Drivers” of Housing Markets
• Non-farm job growth
• Good paying jobs
• Good consumer confidence
“Drivers” of Housing Markets
• Non-farm job growth
• Good paying jobs
• Good consumer confidence
• Immigrating households
“Drivers” of Housing Markets
• Non-farm job growth
• Good paying jobs
• Good consumer confidence
• Immigrating households
• Housing affordability
Affordability Score Card
• Sacramento = 48%
• Placer = 44%
• San Francisco = 15%
• California = 30%
• United States = 57%
Source: CAR, 3rd quarter 2014
Let’s see what John’s crystal ball
says about the housing market for
2015
2015 Concerns…
• New home sales remain inconsistent at 3,000±
2015 Concerns…
• New home sales remain inconsistent at 3,000±
• Land and lot prices remain too high
2015 Concerns…
• New home sales remain inconsistent at 3,000±
• Land and lot prices remain too high
• Affordability becoming more of an issue – especially for new homes
2015 Concerns…
• New home sales remain inconsistent at 3,000±
• Land and lot prices remain too high
• Affordability becoming more of an issue
• Resale market about the same at 25,000± sales
2015 Concerns…
• When will the Millennials become home buyers?
2015 Concerns…
• When will the Millennials become home buyers?
• Will household incomes start to grow?
2015 Positives…
• Synergism of downtown, the railyard and West Sacramento
2015 Positives…
• Synergism of downtown, the railyard and West Sacramento
• Re-opening of North Natomas
2015 Positives…
• Synergism of downtown, the railyard and West Sacramento
• Re-opening of North Natomas
• Expansion of West Roseville
2015 Positives…
• Synergism of downtown, the railyard and West Sacramento
• Re-opening of North Natomas
• Expansion of West Roseville
• 55+ housing market
Questions?
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