December 2011
Real Estate Market
Statistics
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December 2011 Real Estate Market Statistics
Many thanks to our friends at John Burns Consulting for sharing their in-depth stats every month.
Enjoy
- Trevor
Trevor Mauch
StrategicInvestorInsider.com
Skyrocketing Student Loan Debt Will Delay Homeownership
Student loan debt now totals $865 billion, which is greater than all credit card debt outstanding, as well as all other
types of household debt except for mortgages! College graduates have debt averaging $25,000. Even more
troubling is the rise in debts associated with for-profit college and trade schools, whose revenues come primarily
from debt available through Federal government programs. The debt load is so high, and the job outlook so bleak,
that student loan default rates have almost doubled. With the economy little improved since 2009 (two-year lag on
data), default rates are bound to rise further.
Student loans are going to be yet another hurdle for the housing market to overcome. Faced with mounting student
loan debt, poor job prospects and stagnant wages, an increasing amount of 25 to 34 year olds (a prized
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demographic for the housing sector) have moved back in with their parents. Almost 6 million 25 to 34 year olds now
live with mom and dad, up 26% from when the recession started in 2007. Today's 36.8% homeownership rate for
25 to 29 year olds is at its lowest level since 1999, and homeownership for 30 to 34 year olds is at its lowest rate in
17 years.
The good news is that this pent-up demand will ultimately provide a much needed boost to the housing sector. The
bad news is that the boost will be heavily skewed to the rental market as it will take longer than ever for young
people to qualify for a mortgage, especially if more and more graduates are hit with credit blemishes from unpaid
student debt.
To help struggling graduates, the Obama Administration recently announced a program to help those with student
debt reduce their payments down to 10% of their income. However, with student loans at 10% of income, how will
these people be able to qualify for a home?
All of this analysis contributes to our belief that the lion's share of housing demand will end up in the rental market.
Look at the tremendous growth we expect in rentals in comparison to the last decade.
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U.S. Housing Market Statistics
Economic Growth............................................................................C-
The U.S. economy continues to steadily improve, albeit at a rate far below past recoveries. Notably, 3Q11 GDP
growth is at 2.0%, the job picture is slowly improving, and businesses are beginning to expand capacity.
Leading Indicators...........................................................................C-
Global economic uncertainty hit the stock market in November, with almost all major indices witnessing sequential
losses in November. Were it not for the end of month rally (largest daily advance since March 2009), the losses
would have been much worse.
Affordability......................................................................................C+
Ridiculously low mortgage rates coupled with growth in median household incomes (still low by historical
standards) helped push our JBREC Affordability Index to an A+ grade this month. Negative equity, however,
continues to weight on this subset of indicators, leading to an overall affordability grade of C+.
Consumer Behavior..........................................................................D+
Two of the three major consumer psyche gauges improved in November, helping our overall consumer behavior
grade improve from a D to D+ this month. In addition, most consumer credit default indices improved, as did
personal savings.
Existing Home Market.......................................................................D
Aside from NAR October resale prices, all of our existing home market indicators improved this month, though still
not enough to boost this subsection of the economy’s grading from a D.
New Home Market..............................................................................C-
The overwhelming majority of new home indicators improved this month, helping boost our overall grade for this
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subsection of the economy from a D+ to C-.
Repairs and Remodeling....................................................................C-
Only two of the eight residential repairs and remodeling indicators we track reported new data this month (BuildFax
Residential Remodeling Index and private residential construction), both of which turned in positive results.
Nevertheless, our overall grade for this subsection of the economy remains unchanged at a C-.
Housing Supply...................................................................................F
Single-family starts and permits rose from last month, though not enough to improve our overall housing supply
indicator grade of F. The multifamily space continues to ramp up supply in an attempt to capitalize on demand for
rentals.
U.S. HOUSING MARKET STATISTICS
Data Current Through December 5, 2011
Grade*
Overall Grade D+
Statistic Grade
Economic Growth C-
These are the best indicators of how the economy is currently performing.
Real GDP (annual rate) 2.0% C
Employment Growth (1-year Change)
- Non-ag Payroll, NSA 1,588,000 C
Employment Growth Rate
- Non-ag Payroll, NSA 1.2% C
Unemployment Rate 8.6% D
Average Length of
40.9
Unemployment (Weeks)
Median Length of
21.6
Unemployment (Weeks)
% of Labor Force
Unemployed (27 weeks and 3.7%
over)
U.S. Initial Jobless Claims 352,300
Mass Layoff Events, SA
-12.2% B-
(YOY % Change)
Productivity 2.3% C
Retail Sales 5.9% C+
Capacity Utilization 77.8% C-
Inflation
Core CPI 2.1% B
Full CPI 3.5% C
Personal Income Growth,
3.9% C-
nominal
Federal Deficit (last 12
-$1,314,253 F
mos., $mil curr.)
U.S. Immigration as a % of
0.3%
Total Population
Total Population Growth 1.1%
Total Households 113,550,000
- Growth Rate 1.5% C
Owned Households 75,250,000
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- Growth Rate 0.5% D+
Rented Households 38,299,000
- Growth Rate 3.4% B
Statistic Grade
Leading Indicators C-
These have all proven to be predictable early indicators of the direction of
economic growth.
Leading Econ. Index (Ann.
6.1% C+
Growth Rate Last 6 Mos.)
ECRI Leading Index -7.3% D+
Manpower Net Employment
7% D
Outlook
U.S. Vistage CEO
8350%
Confidence Index
CEO Economic Outlook
7760%
Survey
U.S. Average Hours Worked
33.6
per Week
Temporary Employed
7.8% C+
Workers (YOY % Change)
Corporate Profit Growth
7.9% C
(pre-tax)
Corporate Bond Spread
153.0%
(Corp Bond vs. 10-Yr Tres.)
Capital Goods New Orders 9.2% B-
Money Supply - M2 6.2% B
Interest Rate Spread
10-year Treasury 1.94%
2-year Treasury 0.27%
Interest Rate Spread 1.67% B-
3-month LIBOR 0.50%
3-month Treasury 0.02%
TED Spread 0.48% C
Stock Market (Return over last 12 months)
Dow Jones 9% C
S&P 500 6% C
NASDAQ 5% C
Wilshire 5000 5% C
S&P Super Homebuilding 6% C
Tougher Standards on
Business Loans - Large -6% B
Firms
- Small Firms -6% B
Crude Oil Price (Current $) $100.19 D-
ISM Manufacturing Index 52.7 C
ISM Non-Manufacturing
56.2 C
Business Activity Index
Statistic Grade
Affordability C+
These statistics are probably the most important indicators of short-term
housing market performance.
Conforming Mortgage Rates (contract rate; an additional 0.6 - 1.0 points are
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also paid up front by the borrower)
JBREC Affordability Index 0.0 A+
US Median Home Payment /
22.1%
Income Ratio
US Median Home Price /
2.9 B+
Income Ratio
Mortgage Rates, Fixed 3.98% A+
Mortgage Rates, Adjustable 2.79% A+
Fixed/Adjustable Spread 1.19% D+
Fixed/10-year Spread 2.04% C
Fed Funds Rate 0.15%
Percentage of Adjust. Loans 5.8% B+
Equity/Owned Home
$84,256 F
(Current $)
Avg. Debt % in Home (LTV)
84.4% F
- Homes with Mortgages
Median Household Income $56,281
- Growth Rate, nominal 2.0% D+
Statistic Grade
Consumer Behavior D+
Consumer attitudes correlate well with short-term housing sales
performance. Consumer income growth, debt levels and job prospects
affect the long-term outlook for housing sales.
Consumer Confidence Index 56.0 D
Consumer Sentiment Index 64.1 D-
Consumer Comfort Index -50.6 F
Revolving Cons. Credit per
Household (inflation $6,954
adjusted)
- Growth Rate -3.4% B
Personal Savings Rate 3.5% D+
U.S. Net Worth Growth Rate 8.4% C
Financial Obligation Ratio 16.1% B+
Misery Index
12.53 C-
(Unemployment + Inflation)
Statistic Grade
Existing Home Market D
Sales volumes correlate well with the Housing Cycle calculations, and boost
the trade up New Home sales market.
S&P/Case-Shiller® U.S.
Price Index (YOY % -3.9% D+
Change)
NAR Single-Family Median
$161,600
Home Price
NAR Single-Family Annual
-5.8% D
Price Appreciation
Freddie Mac Annual Price
-4.3% D
Appreciation
Annual Sales Volume, SA 4,970,000 B-
Existing Home Inventory for
3,330,000 D+
Sale, SA
Months Supply of Unsold 8.0 C
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Homes, SA
Purchase Mort. App. Index,
192.1 D+
SA
Pending Home Sales Index,
93.3 D+
SA
Homeownership Rate 66.3% C+
Statistic Grade
New Home Market C-
High appreciation and low inventory would mean an excellent short-term
outlook for the new home industry.
Housing Market Index 20 F
Multifamily Condo Market
28 C-
Index
Median Price, NSA $212,300
Annual Appreciation Rate 4.0% C
Constant Quality Price Index
-1.3% D
(YOY % Change)
Sales Volume, SA 307,000 F
New Home Inventory for
162,000 A+
Sale, NSA
Months Supply of Unsold
6.3 C
Homes, SA
Months of Homes
2.3 C
Completed, SA
Months of Homes Under
2.9 B
Const., SA
Months of Homes Not
1.1 C
Started, SA
Statistic Grade
Repairs and Remodeling C-
High remodeling levels are good for the economy and are closely tied to
consumer confidence.
Homeowner Improvement
3.5% C
Activity (YOY % Change)
NAHB Remodeling Market
43.0 C-
Index - Current
NAHB Remodeling Market
40.4 C-
Index - Future Expectations
Private Residential
Construction (YOY % 1.7% C
Change)
Residential Investment as %
2.2% F
of GDP
Statistic Grade
Housing Supply F
High construction levels are good for the economy. However, if new supply
exceeds demand, prices could fall.
New Housing Units
584,000 F
Completed, SA
Single-Family Starts, SA 430,000 F
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Multifamily Starts, SA 198,000 D-
Total Starts, SA 628,000 F
Single-Family Permits, SA 434,000 F
Multifamily Permits, SA 219,000 D-
Total Permits, SA 653,000 F
Manuf. Housing
41,000 F
Placements, SA
Total Supply, SA 694,000 F
Total Housing Stock 132,353,000
Excess Vacancy 105330119.6% D
SA stands for Seasonally Adjusted Annual Rate. NSA stands for Not
Seasonally Adjusted.
* The best 15% ever are "A" scores, the average is a "C", and the worst
15% ever are "F" scores, with distributions throughout.
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Savvy Investors ONLY:
Strategic Investors Make More
Money. Work Less. Have More
Fun. And Stress Less. Period.
There’s two types of real estate investors. Investors who
work hard and hardly make any money (95% of “investors” fit this
category)… mostly because they spend 95% of their time “learning”
rather than “doing”... and working on the wrong things in their
business.
…And Investors who work strategic have learned to focus on all
3 facets of living a legendary life and running a profitable real estate
business: 1) Mindset and lifestyle optimization: 2) Business building
skills: 3) Real estate tactics and strategy.
Which group do you fall in? Sometimes the truth hurts.
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In Real Estate?
The key to making more in real estate is to learn what you need
to learn RIGHT NOW to take the NEXT step toward being
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out to learn ANYTHING ELSE.
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at the same time…
Learn More About How To Become A Strategic
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they’re doing.
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