Market Outlook

Week of May 18 to 23

Lawrence YunChief EconomistNational Association of REALTORS®

GDP Collapse in 2020 after a decade of growth

-3

-2

-1

0

1

2

3

4

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

???

GDP Details in 2020 Q1

2020 Q1 % change annualized rate

GDP -4.8%

Consumer Spending -8%

Business Spending -9%

Residential Investment(Home building, home sales, remodeling)

+21%

Commercial Structure Completion -7%

Federal and State Government Spending on Investment

Modestly Positive

Personal Income +2%

Personal Savings +152%

20.5 M jobs lost in April 2020; one in three jobs lost were in leisure/hospitality

-3.3-50

-254-262

-362.8-584.1-975-980

-1267-1330

-2106.9-2128

-2544-7653

UtilitiesMining and Logging EmploymentInformationFinancial ActivitiesWholesale TradeTransportation and WarehousingConstructionGovernmentOther ServicesManufacturingRetail TradeProfessional and Business ServicesEducation and HealthLeisure and Hospitality

Nonfarm Payroll Jobs Lost in April 2020 (‘000)

ce: BLS

Total Jobs in Nassau-Suffolk Counties … before Pandemic

1050

1100

1150

1200

1250

1300

1350

1400

2000

- Ja

n20

00 -

Aug

2001

- M

ar20

01 -

Oct

2002

- M

ay20

02 -

Dec

2003

- Ju

l20

04 -

Feb

2004

- Se

p20

05 -

Apr

2005

- N

ov20

06 -

Jun

2007

- Ja

n20

07 -

Aug

2008

- M

ar20

08 -

Oct

2009

- M

ay20

09 -

Dec

2010

- Ju

l20

11 -

Feb

2011

- Se

p20

12 -

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2012

- N

ov20

13 -

Jun

2014

- Ja

n20

14 -

Aug

2015

- M

ar20

15 -

Oct

2016

- M

ay20

16 -

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2017

- Ju

l20

18 -

Feb

2018

- Se

p20

19 -

Apr

2019

- N

ov

Wisconsin: New Cases of Unemployment Relief in Nassau-Suffolk

0

10000

20000

30000

40000

50000

60000

70000

Jan 42020

Jan 112020

Jan 182020

Jan 252020

Feb 12020

Feb 82020

Feb 152020

Feb 222020

Feb 292020

Mar 72020

Mar14

2020

Mar21

2020

Mar28

2020

Apr 42020

Apr 112020

Apr 182020

Apr 252020

May 22020

May 92020

Unemployment insurance benefits don’t fully replace wages in some states

Local Disaster Events: Katrina and 9-11Unemployment Rates

0

2

4

6

8

10

12

14

16

18

2000

- Ja

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01 -

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03 -

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05 -

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2006

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n20

07 -

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n20

09 -

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n20

11 -

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2012

- Ja

n20

13 -

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2014

- Ja

n20

15 -

Jan

2016

- Ja

n20

17 -

Jan

2018

- Ja

n20

19 -

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2020

- Ja

n

New Orleans

0

2

4

6

8

10

12

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n20

01 -

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2002

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03 -

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05 -

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07 -

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2008

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2012

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2014

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2016

- Ja

n20

17 -

Jan

2018

- Ja

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19 -

Jan

2020

- Ja

n

NYC Metro

Federal Reserve All-InQuantitative Easing including buying Corporate Debts

0

1

2

3

4

5

6

7

2000

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2001

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03 -

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05 -

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07 -

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2008

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08 -

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2010

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10 -

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2011

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2013

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14 -

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15 -

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2019

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Jun

2019

- De

c20

20 -

Jun

Fed Funds Rate

30-Year Mortgage Rate can fall Further …Because of Super-low 10-year Treasury Yields …But Jumbo Loans not Working

0.01.02.03.04.05.06.07.08.09.0

2000

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n20

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2001

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01 -

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2002

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02 -

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2003

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2011

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2020

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n

InventoryLow Pre-Pandemic … Lower During Pandemic

$0$500,000

$1,000,000$1,500,000$2,000,000$2,500,000$3,000,000$3,500,000$4,000,000$4,500,000

2000

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n20

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2001

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2002

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02 -

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2003

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05 -

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2006

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06 -

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2007

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2008

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08 -

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2009

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09 -

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2010

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10 -

Jul

2011

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11 -

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2012

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2013

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13 -

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2014

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14 -

Jul

2015

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15 -

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2016

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16 -

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2017

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n20

17 -

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2018

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2019

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19 -

Jul

2020

- Ja

n

Home Sales Strong Pre-Pandemic

4000

4500

5000

5500

6000

6500

7000

7500

8000

8500

9000

2000 -Jan

2001 -Jan

2002 -Jan

2003 -Jan

2004 -Jan

2005 -Jan

2006 -Jan

2007 -Jan

2008 -Jan

2009 -Jan

2010 -Jan

2011 -Jan

2012 -Jan

2013 -Jan

2014 -Jan

2015 -Jan

2016 -Jan

2017 -Jan

2018 -Jan

2019 -Jan

2020 -Jan

60% of Buyers and 90% of Sellers believe Stable Price

Pending Contracts … March Pandemic Impact shaves 20%

0

20

40

60

80

100

120

2019 -Jan

2019 -Feb

2019 -Mar

2019 -Apr

2019 -May

2019 -Jun

2019 -Jul

2019 -Aug

2019 -Sep

2019 -Oct

2019 -Nov

2019 -Dec

2020 -Jan

2020 -Feb

2020 -Mar

Mortgage Application to Buy a Home… Worst is Over?

-40

-30

-20

-10

0

10

20

30

Jan 32020

Jan 102020

Jan 172020

Jan 242020

Jan 312020

Feb 72020

Feb 142020

Feb 212020

Feb 282020

Mar 62020

Mar13

2020

Mar20

2020

Mar27

2020

Apr 32020

Apr 102020

Apr 172020

Apr 242020

May 12020

May 82020

Housing Shortage …Falling Below Normal Again during Pandemic

0

500

1000

1500

2000

2500

2000 -Jan

2001 -Jan

2002 -Jan

2003 -Jan

2004 -Jan

2005 -Jan

2006 -Jan

2007 -Jan

2008 -Jan

2009 -Jan

2010 -Jan

2011 -Jan

2012 -Jan

2013 -Jan

2014 -Jan

2015 -Jan

2016 -Jan

2017 -Jan

2018 -Jan

2019 -Jan

2020 -Jan

In thousand units

Federal Budget Deficit … $4 trillion in 2020 … Who will buy U.S. debt?

-4500000

-4000000

-3500000

-3000000

-2500000

-2000000

-1500000

-1000000

-500000

0

500000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

OUTLOOK 2020-2021

2020 Quarterly Forecast

Annualized Rate Year over year change

2018 5.34 million

2019 5.34 million

2020 Q1 actual 5.48 million +5%

2020 Q2 3.2 million -39%

2020 Q3 4.7 million -13%

2020 Q4 5.1 million -6%

Annual Forecast

2019 2020Forecast

2021Forecast

GDP Growth 2.3% -4.5% +3%

Job Gains 2.2 million - 4 million + 2 million

Home Prices 4.8% 0% to 2% 1% to 3%

Home Sales 0% -10% to -15% +13 to +18%

Permanent Changes after PandemicEnd of Open-Houses ??

Virtual Office Meetings

More Remote Working

Less Traffic near City Centers

Move Further Out

Larger House