Economic Outlook For Residential Real E R l Estate: 2009
Dr. Mark G. Dotzour D M kG D t Real Estate Center Texas A&M University College Station, TX
If Texas Was A Nation
1 2 3 4 5 6 7 United States Japan Germany China United Kingdom France Italy 8 Canada 9 Spain 10 Brazil 11 TEXAS 12 Russia 13 India
Source: World Bank and U.S. Bureau of Economic Analysis
States Ranked by
Economic Size
Percent of US GDP
California Texas New York Florida Illinois Pennsylvania Ohio
13.1% 8.1% 7.8% 5.4% 5 4% 4.5% 3.9% 3.5%
Source: Real Estate Center and U.S. Bureau of Economic Analysis
States Ranked by
Growth of State GDP
1997-2006
Arizona Idaho Nevada Florida Oregon California
61.8% 61 8% 57.4% 54.1% 47.1% 45.7% 45.6% 45 6%
Colorado Washington South Dakota Virginia g Texas
44.1% 44 1% 41.0% 39.1% 38.7% 38.3%
Source: Real Estate Center and U.S. Bureau of Economic Analysis
Texas Metros Ranked by Economic Output
Percent of Texas GDP in 2005
Houston DFW San Antonio Austin
32.0% 31.9% 6.8% 6.7% 6 7%
Combined total of 77.4%
Houston or DFW are bigger economies than Finland or Belgium
Source: Real Estate Center and U.S. Bureau of Economic Analysis
Texas Job Growth in 2008
Leads the Nation from Oct07 to Oct08
Major Metros Job Growth
( Oct07 to Oct08 )
Texas Index of Leading Indicators
Source: Federal Reserve Bank of Dallas
Working Rigs In Texas
Baker Hughes
Job Growth Past 12 Months
Ending October, 2008 October
Source: Texas Workforce Commission
Job Growth Past 12 Months
Ending October, 2008 October
Source: Texas Workforce Commission
Job Growth Past 12 Months
Ending October, 2008 October
Source: Texas Workforce Commission
Sep-08 S
Employment Growth Rates
Jun-08 J Mar-08 M
Sep-07 S Jun-07 J Mar-07 M Dec-06 D Sep-06 S Jun-06 J
Dec-05 D Sep-05 S Jun-05 J Mar-05 M Dec-04 D Sep-04 S Jun-04 J
4 3 2 1 0 -1 -2
U.S. US
Mar-06 M
Texas
Dec-07 D
Single-Family Building Permits
Nov07 to Nov08
5,856 Permits issued in San Antonio from Nov07 to Nov08
Home Price Appreciation
3Q07 to 3Q08 Best States N. Dakota S. Dakota Texas Alabama Oklahoma Okl h 4.0% 3.9% 3.2% 2.8% 2.8% 2 8% Worst States Nevada California Florida Arizona Rhode I l d Rh d Island -20.9% -20.8% -16.0% -13.5% - 8 0% 8.0%
Source: OFHEO
Months Inventory of Homes For Sale
and Median P i for all of Texas d M di Price f ll f T
Aug, 1990 Aug, 1991 Aug, 1992 Aug, 1993
14 12 10 8 6 4 2 0
$70,700
$70,800
$76,700
$79,400
Aug, 1998 Aug, 2003 Aug, 2008
$98,000
$131,200
$151,300
Jan-90 N Nov-90 S Sep-91 Jul-92 M May-93 M Mar-94 Jan-95 N Nov-95 S Sep-96 Jul-97 M May-98 M Mar-99 Jan-00 N Nov-00 S Sep-01 Jul-02 M May-03 M Mar-04 Jan-05 N Nov-05 S Sep-06 Jul-07 M May-08
Source: Real Estate Center
Buying a House for the Long Term
(even in the roughest markets) Price Change g Last 12 Months -15.40% -25.25% -26.78% 26 78% -23.52% -26.78% 26.78% Price Change g Last 5 Years + 48.66% + 29.78% + 25.82% 25 82% + 26.08% + 45.55% City
Orlando, FL Naples, FL Las Vegas, NV Vegas Fresno, CA Los Angeles, CA
Source: OFHEO
Issues t Watch: 2009 I to W t h
May be the lowest mortgage rates in our lifetime M b th l t t t i lif ti Can the government get FRANNIE working again? Housing H i starts bottom at l b lowest level since WWII l l i Home sales volume could decline 5-10% again in 2009 due t high level of uncertainty d to hi h l l f t i t • The economy is likely to hit bottom before the end of the year; a rising stock market will be the signal • Thousands of families will buy homes in 2009 • G Government intervention is quickly becoming a ti t ti i i kl b i problem and not a solution • • • •