February 12, 2016 ¡ Federal Reserve Bank of Dallas
Dr. James P. Gaines Chief Economist
Macro Housing Issues • Demographics: growing, shifting • Affordability: workforce priced out of ownership • Capital: more equity • Infrastructure: transportation, education, utilities • Development: Design, Density, Resources and Processes • Regulatory: lending; environmental; land use • Federal • State • Local Growth Controls/Initiatives
National Housing Market
3
2016 National Housing Market • • • •
Mortgage Rates: up ~0.5% over the year (4% 4.5%) Household Formations: ~1.25 million Rental Market: tight, low vacancies, higher rents Owner Market: sales volume and prices up ~5% • Increased first-timers, millennials more active
• Single-family Rental: organized SF rental market with institutional owners • Home Construction: builders focused on design, density, resources and processes • Affordability: prices and rents increasing faster than incomes – eventual constraint on market
7,000
6,500
6,500
6,000
6,000
5,500
5,500
5,000
5,000
4,500
4,500
4,000
4,000
3,500
3,500
3,000
3,000
Existing SF Home Sales
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
Sources: US Census Bureau , NAR, SAAR
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
500 Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jan-02
Jul-01
Jan-01
Jul-00
0
Jul-02
New SF Home Sales
500
0
Home Sales 000s
7,000
Jan-00
Home Sales 000s
New and Existing SF Home Sales U.S.
0 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 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 Jan-15 Jul-15 Jan-16
HMI
100 Housing Market Index
90 1,800
80 1,600
70 1,400
60 1,200
50 1,000
40 800
30 600
20 400
10 200
Source: NAHB, Real Estate Center at Texas A&M University
0
Housing Starts, thousands
NAHB HMI & SF Starts 2,000
Single-Family Starts
New SF Home Starts (000s SAAR)
1,800 1,700
1,716
1963-2002 average per year (1.06 million)
1,610
1,600 1,499
1,500
1,451 1,433
1,400
1,359 1,309
1,303 1,271 1,273 1,231
1,300 1,200 1,100 1,000 900 800 700
1,465
1,151
1,132
1,162
1,194
1,198
1,179 1,146 1,084 1,072 1,067
1,012 970964
1,126
1,081
1,076
1,003
899 844 811813 779
888892 852
1,161 1,134
1,030
1,046
935
895 840
726
705 663
648 618
622
600
535
500
471 445 431
400 200
1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
300
*2015 & 2016 NAHB projections Apr 2015
Source: US Census Bureau; NAHB; Real Estate Center at Texas A&M University
Mortgage and Federal Funds Rate Fed Funds
30-YR FMR Mortgages
Source: Federal Reserve Board; FHLMC; Haver Analytics; Real Estate Center at Texas A&M University
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
Interest Rate %
12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
Mortgage and 10-Year Treasury Rates 11.0 10-Year Treasury
10.0
30-YR FMR Mortgages
9.0 8.0
6.0 5.0 4.0 3.0
Source: Federal Reserve Bank of St. Louis; FHLMC; Real Estate Center at Texas A&M University
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
1.0
Jan-91
2.0 Jan-90
Interest Rate %
7.0
Texas Housing Market
10
Mortgage & Tenure Status of Homes in Texas 2005 & 2014 2005 Number of Homes
Total Housing Units
9,026,011
Total Occupied Units
7,978,095
2014 Percent of Total Units
Number of Homes
Percent of Total Units
10,426,760 88.4%
9,227,197
89.0%
Total Renter-Occupied Housing Units
2,815,491 35.3%
3,602,956
38.8%
Total Owner-Occupied Housing Units
5,162,604 64.7%
5,674,241
61.2%
O-O units with a mortgage
3,237,790
62.7%
3,307,196 58.3%
O-O units without a mortgage
1,924,814
37.3%
2,367,045 41.7%
Source: CensusBureau, Bureau, 2006 CommunityCommunity Survey Source: U.S.U.S. Census 2005American & 2014 American Survey
Annual Texas Home Sales 310,000
$310,000
Sales
290,000
Avg Price
Md Price
295,355
292,805
285,535 276,459
275,584 266,842
270,000
2015 Record Year!!
250,000
241,020
$250,000
238,060
216,147
210,000
$230,000
213,334 205,786 203,637
201,528 196,401 188,738 184,056
190,000
$210,000 $190,000
170,638
170,000
$170,000 146,395 138,123
150,000
$150,000
122,134 116,604 121,823
130,000 110,000
$270,000
232,381
230,000
$290,000
$130,000
107,107 100,047 99,619
$110,000
Source: Real Estate Center at Texas A&M University
2015e
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
$50,000
1994
50,000 1993
$70,000
1992
70,000 1991
$90,000
1990
90,000
Texas Monthly Home Sales & WTI Price/bl January 1986 to Present
34,000
Dec. ’15 1st month < $40 since Feb ‘09
32,000 30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000
1986-1989 1990-1995 1996-1999 2000-2005 2006-2009 2010-2015
14,000 12,000 10,000 8,000 6,000 4,000
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
WTI Spot Price FOB Cushing, OK
Source: EIA; Real Estate Center at Texas A&M University
$120
$130
$140
$150
2015 Home Sales and Median Prices by Metro Areas 8.9%
Austin
3.8% 11.3%
Dallas
5.2% 1.1%
El Paso
10.7% 9.8%
Fort Worth Houston
7.6% 6.7% -2.5% 7.1%
San Antonio
9.1% 7.3%
Texas -4.0%
3.4%
-2.0%
0.0%
2.0%
Median Sales Price
4.0%
6.0%
8.0%
Sales Volume
Source: Real Estate Center at Texas A&M University
10.0%
12.0%
2.0 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16
Texas Monthsâ&#x20AC;&#x2122; Inventory
9.0 Inventory at extremely low level relative to market activity
8.0
7.0
6.0
5.0
4.0
3.0
Source: Real Estate Center at Texas A&M 15
Texas SF Building Permits 180,000 160,000
166,203 163,032
1990-2014 average 94,693/year
151,384 137,493
140,000
122,913
120,000 100,000
83,132 82,228
78,714 67,870 66,161
70,452 70,421 69,964
67,964
81,107
81,926
68,170 68,230 67,254
59,543
59,143 43,975
40,000
107,300 103,045 93,478
84,565
60,000
120,366
111,915 108,782 101,928 99,912
103,252
80,000
2014 +10% 2015 +4%
46,209
38,233 36,658 35,908
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e
20,000
Source: US Census Bureau, Real Estate Center at Texas A&M
Texas SF Permits & WTI Price/bl. Monthly January 1991 to Current
18,000 17,000 16,000 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
1991-1995 1996-1999 2000-2004 2005-2009 2010-2015
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100 $110 $120 $130 $140 $150
Avg. Monthly WTI Spot Price FOB Cushing, Ok
Source: U.S. Census; EIA; Real Estate Center at Texas A&M University
Texas MF Building Permits 70,000
2014 +20% 2015 +1%
1990-2014 average 34,368/year 60,000 50,000
47,271
46,918
40,715
40,245
38,671 37,537 35,791 33,958 33,036
32,521 31,281 30,165
30,000
65,000
54,145 53,615
53,196
51,576
40,000
64,135
30,729 28,381
19,741
20,000
15,837 13,879
Source: US Census Bureau, Real Estate Center at Texas A&M
2015e
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
9,304 8,291 8,273
1990
10,000
40
Source: Real Estate Center at Texas A&M Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
Texas Residential Construction Indexes (Jan. 2000=100)
180
160
140
120
100 United States Coincident Index
80 Texas Coincident Index
60 Texas Leading Index
Texas Housing Affordability Price vs. Income
$70,000 Source: Real Estate Center at Texas A&M University Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
Jul-99
Jan-99
Jul-98
Jan-98
Jul-97
Jan-97
Jul-96
Jan-96
Jul-95
Jan-95
Texas Monthly Median Home Price $230,000
$210,000
Median Price on Trend
$190,000
$170,000
$150,000
$130,000
$110,000
$90,000
Texas Average & Median Home Prices 12-Month Moving Average
$300,000 $280,000 $260,000
Since Jan 2013, average price is up 20.9% & median price is up 26.0%
$240,000 $220,000 $200,000 $180,000
Average Price
$160,000 $140,000 $120,000
Median Price
$80,000
Jan-99 Jul-99 Jan-00 Jul-00 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 Jan-15 Jul-15 Jan-16
$100,000
Source: Real Estate Center at Texas A&M University
22
Texas Median HH Income & Median Home Price Indexed to 1989
Median Home Price
Nominal HH Income
Source: U.S. Census Bureau; Real Estate Center at Texas A&M University
2015e
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Real HH Income 1989
300 290 280 270 260 250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80
300 290 280 270 260 250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90 80
Texas Households by Highest Affordable Price >$750,000
450
4.9%
$500,000-$749,999
538
5.9%
$400,000-$499,999
20% down; 4.15% interest; 35% qualifying ratio; and 5.5% taxes, insurance & utilities
602
6.6%
$300,000-$399,999
1,007
11.1%
$250,000-$299,999
645
7.1%
$200,000-$249,999
893
9.8%
$175,000-$199,999
526
5.8%
$150,000-$174,999
576
6.3%
$125,000-$149,999 $100,000-$124,999
689
7.6%
$70,000-$99,999
~43% of Texas HHs cannot afford home priced > $150,000
644
7.1%
9.4%
<$70,000
858 1,682
18.5%
0
500
1,000
1,500
2,000
Thousands of Households
Source: US Census Bureau 2013 American Community Survey; Real Estate Center at Texas A&M University
Texas Households by Highest Affordable Price >$750,000
443
4.9%
$500,000-$749,999
4.7%
$400,000-$499,999
10% down; 4.15% interest; 35% qualifying ratio; and 5.5% taxes, insurance & utilities
432 519
5.7%
$300,000-$399,999
996
10.9%
$250,000-$299,999
636
7.0%
$200,000-$249,999
886
9.7%
$175,000-$199,999
538
5.9%
$150,000-$174,999
577
6.3%
$125,000-$149,999
671
7.4%
$100,000-$124,999
~45% of Texas HHs cannot afford home priced > $150,000 1,117
12.3%
$70,000-$99,999
5.4%
494
<$70,000
1,802
19.8%
0
500
1,000
1,500
2,000
Thousands of Households
Source: US Census Bureau 2013 American Community Survey; Real Estate Center at Texas A&M University
Texas Households by Highest Affordable Price >$750,000
438
4.9%
$500,000-$749,999
4.7%
$400,000-$499,999
3% down; 4.15% interest; 35% qualifying ratio; and 5.5% taxes, insurance & utilities
385 465
5.7%
$300,000-$399,999
956
10.9%
$250,000-$299,999
660
7.0%
$200,000-$249,999
867
9.7%
$175,000-$199,999
530
5.9%
$150,000-$174,999
589
6.3%
$125,000-$149,999
678
7.4%
$100,000-$124,999
730
12.3%
$70,000-$99,999
~46% of Texas HHs cannot afford home priced > $150,000
927
5.4%
<$70,000
1,885
19.8%
0
500
1,000
1,500
2,000
Thousands of Households
Source: US Census Bureau 2013 American Community Survey; Real Estate Center at Texas A&M University
December Closed Sales Texas MSAs Y/Y Percent Change
Dec. Sales +6% YTD Sales +4%
Source: MetroTex; Texas RealtorÂŽ Data Relevance Project, Real Estate Center at Texas A&M University
December Average Sales Price/Sq.Ft. Y/Y Percent Change
Dec. P/SF +4% YTD P/SF +6% Md. Pr. YTD +7%
Source: MetroTex; Texas RealtorÂŽ Data Relevance Project, Real Estate Center at Texas A&M University
February 12, 2016 ¡ Federal Reserve Bank of Dallas
Dr. James P. Gaines Chief Economist