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What Will a Trump Presidency Mean
to the Long Island Housing Market?
Long Island KCM Meeting
January 2017
“Consumer confidence jumped
to the highest level since 2004,
extending a surge in Americans’
optimism for their finances and
the U.S. economy.The University of
Michigan said that its final index of
sentiment rose to 98.2 from 93.8.”
Patricia Laya
Bloomberg News
The CNBC All-America Economic
Survey for the fourth quarter found
that the percentage of Americans
who believe the economy will get
better in the 2017 jumped to 42% - an
unprecedented 17 points.
“We're looking at America moving into a
more positive era with regard to economic
expectations.”
CNBC
Consumer confidence climbed in
December to the highest level since
August 2001 as Americans were more
upbeat about the outlook than at any
time in the last 13 years, according to the
New York-based Conference Board.
American households are expecting a Donald
Trump administration to deliver. They are more
upbeat about the prospects for the economy,
labor market and their incomes.
Bloomberg News
The National Federation of
Independent Businesses' Small
Business Optimism Index jumped
to 98.4 from 94.9 - its sharpest
surge since 1980.
“We haven’t seen numbers like this in a long
time. Small business is ready for a breakout,
and that can only mean very good things for
the U.S. economy. Business owners are
feeling better about taking risks and making
investments.”
NFIB
Phil Okun
Long Island Commercial Market-2017
“Main Street” Investment Properties- Strong
Office Space for Lease-Challenged =
Retail space for Lease-Strong =
Industrial Property-Lease or Sale-Strong =
Availability of Financing-Strong =
Today, we will answer the following questions:
1. How high will mortgage rates go and what impact
will that have on home values and house sales?
2. Will the mortgage industry see a loosening of
regulations and, if so, what will that mean to
potential buyers?
3. Will the marked increase in consumer confidence
result in a surge of listings coming to the market?
4. With stock prices skyrocketing, will homeownership
be seen as a less desirable investment?
…and make a surprise announcement!!
Today, we will answer the following questions:
1. How high will mortgage rates go and what impact
will that have on home values and house sales?
2. Will the mortgage industry see a loosening of
regulations and, if so, what will that mean to
potential buyers?
3. Will the marked increase in consumer confidence
result in a surge of listings coming to the market?
4. With stock prices skyrocketing, will homeownership
be seen as a less desirable investment?
4.20
30 Year Fixed
Rate Mortgages
from Freddie Mac
3.97
1/7
2/4
3/3
4/7
5/5
6/2
7/7
8/4
9/1
10/6
11/3
12/1
1/5
Freddie Mac 1/2017
“We think that conforming 30-year fixed rates probably make it
into the 4.625 percent to 4.75 percent range at some point
during 2017 as a peak” - HSH
“I wouldn’t be surprised if the 30-year fixed mortgage rate hits
4.75 percent.”
- Svenja Gudell, Zillow’s Chief Economist
“[I see] mortgage rates getting much closer to 5 percent at the
end of next year.” - Mark Fleming, the Chief Economist at First American
“Our forecast is saying we expect
mortgage rates to hit 4.5 percent.”
- Jonathan Smoke, Chief Economist at realtor.com
“By this time next year, expect the 30year fixed rate to likely be in the
4.5 percent to 5 percent range.”
- Lawrence Yun, NAR Chief Economist
Dramatic Mortgage Rate Increases
14.67
11.26
9.20
8.52
July 1984
Oct 1987
Dec 1994
May 2000
12.63
9.04
6.83
6.92
May 1983
Mar 1987
Oct 1993
Apr 1999
Home Price Change During that Period
+6.6%
+5.2%
+1.2%
+10.9%
Calculated Risk
“Mortgage rates would
have to be a lot higher
before they really crimp a
buyers’ ability to afford a home Trulia chief economist Ralph
McLaughlin estimates between 7%
and 10% for many metros.”
MarketWatch.com
“Despite the recent jump in
mortgage rates since the
election, the annual average
for the 30-year fixed-rate
mortgage was 3.65 percent in
2016, the lowest annual average
ever recorded by Freddie Mac
going back to 1971.”
Freddie Mac
Historic Mortgage Rates by Decade
Decade
Average Rate
1970s
8.86%
1980s
12.7%
1990s
8.12%
2000s
6.29%
Freddie Mac
Housing Affordability Index
“The Housing Affordability Index measures whether or
not a typical family earns enough income to qualify for a
mortgage loan on a typical home at the national level
based on the most recent price and income data.”
Basically a value of 100 means a family
earning the median income earns enough
to qualify for a mortgage on a median
priced home at the time. Anything
above 100 means the family has
more than enough to qualify.
The higher the score the easier it is.
NAR
220
Housing Affordability Index
200
197
186
180
160
2009 to Today
169
176
172
170
164
164
2014
2015
140
120
100
2009
2010
2011
2012
2013
Today
NAR
220
Housing Affordability Index
1990 to Today
200
197
186
180
176
172
170
169
164
160
164
140
138
133
131
128
125
120
122
126
131
131
128
127
122
126
124
115
113
108
110
108
100
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 Today
NAR
850
800
750
700
650
600
Median Asking
RENT
since 1988
550
500
450
400
350
300
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
Census
“Renters paid a
cumulative $478.5
billion in 2016, a 3.8
percent increase
from 2015.”
Zillow
Today, we will answer the following questions:
1. How high will mortgage rates go and what impact
will that have on home values and house sales?
2. Will the mortgage industry see a loosening of
regulations and, if so, what will that mean to
potential buyers?
3. Will the marked increase in consumer confidence
result in a surge of listings coming to the market?
4. With stock prices skyrocketing, will homeownership
be seen as a less desirable investment?
Mortgage Credit
Availability
Mortgage Credit Availability Index (MCAI), a
report from the Mortgage Bankers Association
Apr 2013
Jan 2014
Jan 2015
Jan 2016
MBA
Consumer
Financial
Protection
Bureau
Homeownership Rates
62.9
USA
68.4
Canada
INTEREST
RATES
Today, we will answer the following questions:
1. How high will mortgage rates go and what impact
will that have on home values and house sales?
2. Will the mortgage industry see a loosening of
regulations and, if so, what will that mean to
potential buyers?
3. Will the marked increase in consumer confidence
result in a surge of listings coming to the market?
4. With stock prices skyrocketing, will homeownership
be seen as a less desirable investment?
Median Seller Tenure in Home since 1985
12
10
10
9 9 9
9
8
8
7
6 6 6 6 6
6
7
6 6 6 6 6 6 6
5
4
Pent-Up Seller Demand
2
0
1985 1987 1989 1991 1993 1995 1997 2000 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
“For most adults near traditional
retirement age, a home is their most
valuable asset — dwarfing retirement
accounts, other financial assets, and
other nonfinancial assets. Although relatively
few retirees tap into their home equity, having it
provides financial security.
In fact, many retirement security experts argue that
the conventional three-legged stool of retirement
resources - Social Security, pensions, and savings
- is incomplete because it ignores the home.”
Fannie Mae
reporting on recent Urban Institute study
Actual Year-Over-Year % Change in Price
by State
CoreLogic
“Price appreciation is the main
Ingredient for home equity wealth
creation, and home prices rose 5.8%
according to the CoreLogic Price Index.
Pay down of principal is the second key
component of equity building. Many
homeowners have refinanced into shorter-term
loans and by doing so, they have significantly
fewer mortgage payments and are able to build
equity wealth faster.”
Anand Nallathambi
President and CEO of CoreLogic
% of Homes with Positive Equity
By State
CoreLogic
% of Homes with Significant Equity (> 20%)
By State
CoreLogic
Significant
87.7%
Equity (>20%)
Perceived/Actual
37%
% who believe they have > than 20% equity
% in NY who actually have > 20% equity
Fannie Mae & CoreLogic
“Some would-be sellers may be
reluctant to move up or trade
down - especially if they've
refinanced in recent years.”
- Lawrence Yun
“But higher mortgage rates have
secondary effects, as well. Consider
homeowners who bought their homes
in the past few years, or who’ve enjoyed
a refinance as rates hovered closer to 3%.
Unless a move is absolutely necessary, those owners
are likely to balk at having to sell their home and then
borrow at higher rates for a new one.
‘Interest rate lock matters,’ says Mark Zandi, chief
economist for Moody’s Analytics.”
MarketWatch.com
“Zandi cautioned that he doesn’t
think ‘rate lock’ kicks in until
rates are well over 5%, however.
He calculates that a one percentage
point increase in rates will increase the
tenure of a typical American homeowners
by just over six months - also not helpful in
a market starved for activity.”
MarketWatch.com
Today, we will answer the following questions:
1. How high will mortgage rates go and what impact
will that have on home values and house sales?
2. Will the mortgage industry see a loosening of
regulations and, if so, what will that mean to
potential buyers?
3. Will the marked increase in consumer confidence
result in a surge of listings coming to the market?
4. With stock prices skyrocketing, will homeownership
be seen as a less desirable investment?
4 Major Ways a Rising Stock Market
Impacts Residential Real Estate
1.) Increases consumer confidence
2.) Increases potential down payment funds
3.) Requires a second look at diversification
4.) Requires a hedge against inflation
Monday, January 23, 2017
Upsky Hotel
110 Vanderbilt Motor Parkway
Hauppauge, NY
9:30am to 5:00pm
www.ListingWorkshop.com