Housing 2020: What is Shaping the Future of Housing in Virginia

1
Housing 2020 What is Shaping the Future of
Housing in Virginia
2
Problems emanating from the housing market forced
financial institutions to take massive
write-downs on their mortgage portfolios,
igniting a broader banking crisis. Amid fears
about the strength of banks and severe losses of
both housing and stock wealth, consumer
confidence plunged 41 percent below its lowest
previous trough. Households slashed their
spending andfor the first time on recordcut
their net borrowing.State of the Nations
Housing 2009
3

• Where weve been in the last 5 years
• Our housing market has been defined by the
  housing crash over the past 5 years.
• Over 100,000 homes foreclosed in Virginia
• Construction of new homes nearly came to a halt
• Sales of existing homes dipped to record lows
• Nearly 25 of mortgages in Virginia are
  underwater or near underwater
• The homeownership rate began to decline for the
  first time

4
After several false starts, there is reason to
believe that 2012 marks the beginning of a true
housing market recovery. State of the Nations
Housing 2012
5
Were beginning to hear noises that weve reached
a major turning point in the housing market and
that, with interest rates so low, this is a rare
opportunity to buy. But are such observations on
target? It would be comforting if they were. Yet
the unfortunate truth is that the tea leaves
dont clearly suggest any particular path for
prices, either up or down.
Robert Schiller, NYT, January 26, 2013
6
Housing 2020 Why?

• We need to look beyond recovery from the Housing
  Crash
• There are sweeping trends that are re-shaping
  housing in seismic ways.
• Our housing markets and products will be widely
  affected.
• Understanding these trends and their impacts will
  help us prepare our communities.

7
THINK BIG What is shaping the future of housing
in Virginia in the next decade?
8

Demographics
9
Housing 2020
Part 2 Economics
10
Economics

• What does Recovery from the Great Recession
  look like in Virginia?
• The role of the housing industry in recovery
• Job and income growth are keys to housing
• Regional variations exist in economic health
• Student debt has soared, affecting housing choice
  
• Loss of home equity creates challenges

11
Economics

• Christine Chmura at Chmura Economics
• Chris is the President and Chief Economist for
  Chmura Economics Analytics, a quantitative
  research and economic development and workforce
  consulting firm
• Chris is a quoted source on regional and national
  trends in the media throughout the Mid-Atlantic
  and Southeast, as well as national publications
  such as the Wall Street Journal.

12
Prospects for economic growth in Virginia

13
Housing Virginia Video Presentations Economic
Growth in the State by Chris Chmurra


Click to view video - Internet connection is
required.
14
More highly educated workforce keeps VA
unemployment lt U.S.

15
Virginia still off 30,000 jobs from peak

16
Federal Government far outpaced private sector in
VA in job creation

17
Over 170,000 Federal Government employees work in
Virginia in 2011

18
Top ten federal contract recipients by state

Contract Awards Number of Contracts
Virginia 59,460,984,136 254,334
California 52,793,263,218 256,209
Texas 40,368,000,118 146,244
Maryland 25,905,877,078 169,504
Pennsylvania 19,237,808,726 165,548
District of Columbia 19,120,499,364 103,886
Massachusetts 16,690,889,232 96,379
Florida 16,317,630,844 115,951
Arizona 14,439,124,750 52,126
Connecticut 12,886,986,080 35,046
19
Top federal contract recipients by metropolitan
area

Rank Metropolitan Statistical Area Contract Awards Number of Contracts
1 Washington-Arlington-Alexandria, DC-VA-MD-WV 78,563,551,485 338,500
2 Northern Virginia, VA 44,738,513,966 153,546
3 Dallas-Fort Worth-Arlington, TX 23,268,279,292 45,516
4 Los Angeles-Long Beach-Santa Ana, CA 16,239,863,641 90,039
5 Boston-Cambridge-Quincy, MA-NH 14,690,207,829 85,379
6 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 12,217,193,626 127,293
7 New York-Northern New Jersey-Long Island,NY-NJ-PA 11,726,190,979 160,996
8 San Diego-Carlsbad-San Marcos, CA 11,493,944,115 48,847
9 Virginia Beach-Norfolk-Newport News, VA-NC 10,728,828,530 57,198
20
Where will we see growth?

• The crescent

21
Housing and the economy How important is
housing to economic growth in VA?

22
Housing Virginia Video Presentations Housing
Market and the State Economy by Chris Chmurra



Click to view video - Internet connection is
required.
23
SF building permits still well below peak

24
Single-family building permits Percent change
from Sept 2011

25
Housing is NOT Leading Us out of the Great
Recession

26
The future of the housing economy

27
Housing Virginia Video Presentations Future of
the Housing Economy by Chris Chmurra



Click to view video - Internet connection is
required.
28
Where will prices go?

• Virginia Association of REALTORS

29
Are recent price increases sustainable?

30
Housing Virginia Video Presentations Recent Rise
in Home Prices by Chris Chmurra



Click to view video - Internet connection is
required.
31
The decline in home ownership in Virginia will
it be reversed?

32
Housing Virginia Video Presentations Decline in
Home Ownership by Chris Chmurra



Click to view video - Internet connection is
required.
33
Millennials and the economy.

• The unemployment rate for Millennials is 12 -
  over 17 when discouraged workers are included.

34
Impact of the housing crash

• Theyre more risk averse because of this, they
  wont invest as much into the stock market,
  housing or any one job.

35
Growth in student debt is

36
Virginias students are debt burdened from the
start

• While there are variations, generally more than
  half of VA grads have student debt
• Institute for College Access

37
Student debtthe growing burden

38
Housing Virginia Video Presentations Effect of
Student Loan Debt on New Homebuyers by Chris
Chmurra



Click to view video - Internet connection is
required.
39
Student debt levels will affect loan qualification

• Student debt car loan credit card
• New QM rules 43 back end ratio

40
Decline in home values also acts as a brake on
the market.

41
Housing Virginia Video Presentations Impact of
the Decline in Home Value by Chris Chmurra



Click to view video - Internet connection is
required.
42
What can we expect in terms of income growth?

43
Factors driving growth in household income in
Virginia
44
Housing Virginia Video Presentations Factors
Driving Growth of HH Income by Chris Chmurra


Click to view video - Internet connection is
required.
45
Lender response

46
Houses more affordable but credit tougher to get

47
Housing Virginia Video Presentations Recessions
Effect on Bank Underwriting by Chris Chmurra



Click to view video - Internet connection is
required.
48
Prospects for homeownershipIs owning a home
still a goal?

49
Housing Virginia Video Presentations Economic
Growth in the State Part 2 by Chris Chmurra



Click to view video - Internet connection is
required.
50
Takeaways Economics

• Virginias economy is recovering but regional
  variances are large
• Strong dependence on federal spending is a
  concern
• Housing contributes to economic growth / must be
  a part of the recovery
• Student debt is now a major factor in housing
  choice
• Loss of home equity / refi challenges limit trade
  ups and consumer spending
• Millennials are facing employment challenges
• Price recovery / construction will be slow
  uneven

51

• For more information visit
• www.housingvirginia.org

52
Special thanks to our sponsors