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8 Navigation Tips for 2018 K.C. Conway, MAI, CRE ACRE Director of Research & Corporate Engagement CCIM Chief Economist January 25, 2018
K.C. Conway, MAI, CRE Dir. of Research – ACRE R.E. Center CCIM Chief Economist [email protected]
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Disclaimer: CCIM – Southern AZ Tucson, AZ – February 13, 2018
Neither CCIM nor CCIM Southern AZ Chapter make any representations or warranties about the accuracy or suitability of any information in this presentation. Neither the University of Alabama nor CCIM Institute guarantee, warrant, or endorse the advice or services of K.C. Conway, but we do hang out and pontificate over the economy and real estate☺ Furthermore, I did not consult with Trump Administration, Russian Authorities, Robert Mueller, Alexa or Siri in preparation of this presentation. However, I may make reference to some or all of the aforementined Saturday Night Live Amazon HQ2 pick https://www.youtube.com/watch?v=Xop8ug07KS8&sns=em
This presentation consists of materials prepared exclusively by K.C. Conway, MAI, CRE, and is provided during this event solely for informational purposes of attendees. This presentation is not intended to constitute legal, investment or financial advice or the rendering of legal, consulting, or other professional services of any kind. 3
KC Conway, CCIM Chief Economist believes the economy deserves an “R” rating for resilient. A year ago, I rated the economy “E” for “Erratic.” Maybe I need to go back to “E” after the past 2 weeks? We have come a long way since January 2008 and 2017 was the year we have waited a decade for. 2018 will perform well with 2.5%-3% GDP and 200k+ monthly job growth barring a “Black Swan” event (North Korea, Russia, Cyber Terrorism, etc.).
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ACRE / KC's Economic Score-Board
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[email protected] 4
The Economy has come a LONG way! 2007 – 2009 Period
2016 – 2018 Period Economy: ➢ GDP: 2017 had 2 back-to-back Qtrs >3% ➢ GDP: Contracted >8% at trough ➢ Jobs: Recovered 22million civilian from ➢ Jobs: Lost 8.7mm Vs 2.8mm 1981-82 (r) 2009 low (138mm to 160mm empl) ➢ Longest Recession post 1945 (18 mos.) ➢ 3rd longest recovery post WWII (102 mos) Housing: Housing: ➢ Builder HMI @ 74: Highest since 12/1998 ➢ Builder HMI all-time low of 8 in Jan 2009 ➢ Subprime Mtg - Foreclosures & Short Sale ➢ Shortage of Housing Inventory ➢ SF Starts recovered to just shy of 900k ➢ SF Starts plummet to 6% / Housing Affordability ? ➢ Homes Decline in Value 25%-45% ➢ Homeownership is rising – Now above 64% (64.2% ➢ Homeownership drops to 62.9% Banking: Banking: ➢ Dodd-Frank; Stress Tests & >500 failures ➢ Record Profits / Regulatory Relief ahead ➢ TARP, TALF & CFPB the new acronyms ➢ HVCRE, Risk Retention & CECL new terms ➢ 300 Bank Failures in 2009-2010 period ➢ Just 5 Bank Failures in 2016 & 8 in 2017 CRE Conditions: CRE Conditions: ➢ CMBS shuts down 2009/Wall of Maturities ➢ CMBS DQT drops from >10% 2012 to
K.C. Conway, MAI, CRE Dir. of Research – ACRE R.E. Center CCIM Chief Economist [email protected]
2
Disclaimer: CCIM – Southern AZ Tucson, AZ – February 13, 2018
Neither CCIM nor CCIM Southern AZ Chapter make any representations or warranties about the accuracy or suitability of any information in this presentation. Neither the University of Alabama nor CCIM Institute guarantee, warrant, or endorse the advice or services of K.C. Conway, but we do hang out and pontificate over the economy and real estate☺ Furthermore, I did not consult with Trump Administration, Russian Authorities, Robert Mueller, Alexa or Siri in preparation of this presentation. However, I may make reference to some or all of the aforementined Saturday Night Live Amazon HQ2 pick https://www.youtube.com/watch?v=Xop8ug07KS8&sns=em
This presentation consists of materials prepared exclusively by K.C. Conway, MAI, CRE, and is provided during this event solely for informational purposes of attendees. This presentation is not intended to constitute legal, investment or financial advice or the rendering of legal, consulting, or other professional services of any kind. 3
KC Conway, CCIM Chief Economist believes the economy deserves an “R” rating for resilient. A year ago, I rated the economy “E” for “Erratic.” Maybe I need to go back to “E” after the past 2 weeks? We have come a long way since January 2008 and 2017 was the year we have waited a decade for. 2018 will perform well with 2.5%-3% GDP and 200k+ monthly job growth barring a “Black Swan” event (North Korea, Russia, Cyber Terrorism, etc.).
S C O R E
ACRE / KC's Economic Score-Board
YTD
19
12
January
19
12
Prior Wk Current Week
5
2
4
4
[email protected] 4
The Economy has come a LONG way! 2007 – 2009 Period
2016 – 2018 Period Economy: ➢ GDP: 2017 had 2 back-to-back Qtrs >3% ➢ GDP: Contracted >8% at trough ➢ Jobs: Recovered 22million civilian from ➢ Jobs: Lost 8.7mm Vs 2.8mm 1981-82 (r) 2009 low (138mm to 160mm empl) ➢ Longest Recession post 1945 (18 mos.) ➢ 3rd longest recovery post WWII (102 mos) Housing: Housing: ➢ Builder HMI @ 74: Highest since 12/1998 ➢ Builder HMI all-time low of 8 in Jan 2009 ➢ Subprime Mtg - Foreclosures & Short Sale ➢ Shortage of Housing Inventory ➢ SF Starts recovered to just shy of 900k ➢ SF Starts plummet to 6% / Housing Affordability ? ➢ Homes Decline in Value 25%-45% ➢ Homeownership is rising – Now above 64% (64.2% ➢ Homeownership drops to 62.9% Banking: Banking: ➢ Dodd-Frank; Stress Tests & >500 failures ➢ Record Profits / Regulatory Relief ahead ➢ TARP, TALF & CFPB the new acronyms ➢ HVCRE, Risk Retention & CECL new terms ➢ 300 Bank Failures in 2009-2010 period ➢ Just 5 Bank Failures in 2016 & 8 in 2017 CRE Conditions: CRE Conditions: ➢ CMBS shuts down 2009/Wall of Maturities ➢ CMBS DQT drops from >10% 2012 to
