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Lawrence Yun, Ph.D.
Chief Economist
NATIONAL ASSOCIATION OF REALTORS
Presentation at NAR Annual Conference
Commercial Real Estate & Economic Trends Forum
San Francisco, CA
November 8, 2013
-2
-3
-4
-5
140000
138000
2000 - Jan
2000 - Jul
2001 - Jan
2001 - Jul
2002 - Jan
2002 - Jul
2003 - Jan
2003 - Jul
2004 - Jan
2004 - Jul
2005 - Jan
2005 - Jul
2006 - Jan
2006 - Jul
2007 - Jan
2007 - Jul
2008 - Jan
2008 - Jul
2009 - Jan
2009 - Jul
2010 - Jan
2010 - Jul
2011 - Jan
2011 - Jul
2012 - Jan
2012 - Jul
2013 - Jan
2013 - May
In thousands
136000
134000
132000
130000
128000
126000
124000
State
North Dakota
Utah
Idaho
Texas
Colorado
Minnesota
Georgia
Washington
Arizona
New Jersey
2000 - Jan
2000 - Jul
2001 - Jan
2001 - Jul
2002 - Jan
2002 - Jul
2003 - Jan
2003 - Jul
2004 - Jan
2004 - Jul
2005 - Jan
2005 - Jul
2006 - Jan
2006 - Jul
2007 - Jan
2007 - Jul
2008 - Jan
2008 - Jul
2009 - Jan
2009 - Jul
2010 - Jan
2010 - Jul
2011 - Jan
2011 - Jul
2012 - Jan
2012 - Jul
2013 - Jan
2013 - Jul
Unemployment Rate
12
10
2000 - Jan
2000 - Jul
2001 - Jan
2001 - Jul
2002 - Jan
2002 - Jul
2003 - Jan
2003 - Jul
2004 - Jan
2004 - Jul
2005 - Jan
2005 - Jul
2006 - Jan
2006 - Jul
2007 - Jan
2007 - Jul
2008 - Jan
2008 - Jul
2009 - Jan
2009 - Jul
2010 - Jan
2010 - Jul
2011 - Jan
2011 - Jul
2012 - Jan
2012 - Jul
2013 - Jan
2013 - Jul
Employment Rate
66
64
62
60
58
56
54
2012 - Jan
2010 - Jan
2008 - Jan
2006 - Jan
2004 - Jan
2002 - Jan
2000 - Jan
1998 - Jan
1996 - Jan
Women
1994 - Jan
1992 - Jan
1990 - Jan
1988 - Jan
1986 - Jan
1984 - Jan
1982 - Jan
1980 - Jan
1978 - Jan
1976 - Jan
1974 - Jan
1972 - Jan
1970 - Jan
90
85
80
75
70
65
60
55
50
45
40
150
140
130
120
110
100
90
80
70
60
-2
-4
1980 - Q1
1981 - Q2
1982 - Q3
1983 - Q4
1985 - Q1
1986 - Q2
1987 - Q3
1988 - Q4
1990 - Q1
1991 - Q2
1992 - Q3
1993 - Q4
1995 - Q1
1996 - Q2
1997 - Q3
1998 - Q4
2000 - Q1
2001 - Q2
2002 - Q3
2003 - Q4
2005 - Q1
2006 - Q2
2007 - Q3
2008 - Q4
2010 - Q1
2011 - Q2
2012 - Q3
-5
-10
-15
-20
1980 - Q1
1981 - Q3
1983 - Q1
1984 - Q3
1986 - Q1
1987 - Q3
1989 - Q1
1990 - Q3
1992 - Q1
1993 - Q3
1995 - Q1
1996 - Q3
1998 - Q1
1999 - Q3
2001 - Q1
2002 - Q3
2004 - Q1
2005 - Q3
2007 - Q1
2008 - Q3
2010 - Q1
2011 - Q3
2013 - Q1
25
20
15
10
Fed Funds
6
5
4
3
2
1
0
2005
2006
2007
2008
2009
2010
2011
2012
2013 2014
forecast forecast
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
2005 - Jan
2005 - Jun
2005 - Nov
2006 - Apr
2006 - Sep
2007 - Feb
2007 - Jul
2007 - Dec
2008 - May
2008 - Oct
2009 - Mar
2009 - Aug
2010 - Jan
2010 - Jun
2010 - Nov
2011 - Apr
2011 - Sep
2012 - Feb
2012 - Jul
2012 - Dec
2013 - May
$ million
6
5
4
3
2
1
0
-1
-2
-3
2013 - Jul
2013 - Jan
2012 - Jul
2012 - Jan
2011 - Jul
2011 - Jan
2010 - Jul
2010 - Jan
2009 - Jul
2009 - Jan
Core
2008 - Jul
2008 - Jan
2007 - Jul
2007 - Jan
2006 - Jul
2006 - Jan
2005 - Jul
2005 - Jan
2004 - Jul
2004 - Jan
2003 - Jul
2003 - Jan
Overall
-1
2003 - Jan
2003 - Jun
2003 - Nov
2004 - Apr
2004 - Sep
2005 - Feb
2005 - Jul
2005 - Dec
2006 - May
2006 - Oct
2007 - Mar
2007 - Aug
2008 - Jan
2008 - Jun
2008 - Nov
2009 - Apr
2009 - Sep
2010 - Feb
2010 - Jul
2010 - Dec
2011 - May
2011 - Oct
2012 - Mar
2012 - Aug
2013 - Jan
2013 - Jun
2012 - Q4
2012 - Q1
2011 - Q2
2010 - Q3
2009 - Q4
2009 - Q1
2008 - Q2
2007 - Q3
2006 - Q4
2006 - Q1
2005 - Q2
2004 - Q3
2003 - Q4
2003 - Q1
2002 - Q2
2001 - Q3
75000
2000 - Q4
2000 - Q1
$ billion
70000
65000
60000
55000
50000
45000
40000
2013 - May
2012 - Dec
2012 - Jul
2012 - Feb
2011 - Sep
2011 - Apr
2010 - Nov
2010 - Jun
2010 - Jan
2009 - Aug
2009 - Mar
2008 - Oct
2008 - May
2007 - Dec
2007 - Jul
2007 - Feb
2006 - Sep
2006 - Apr
2005 - Nov
2005 - Jun
3.80
3.60
3.40
3.20
3.00
2.80
2.60
2.40
2.20
2.00
2005 - Jan
$ trillion
-1600
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
4.0
1992 - Jan
1993 - Jan
1994 - Jan
1995 - Jan
1996 - Jan
1997 - Jan
1998 - Jan
1999 - Jan
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
$ trillion
3.5
3.0
2.5
2.0
1.5
Tax Revenue
1.0
Govt Spending
0.5
0.0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
80
70
60
50
40
30
20
10
Germany
Too High Trade Surplus
No Stimulus
Budget Surplus in 2013 (though still has high
debt from prior deficits)
Blame Germany for holding back the World
Economy?
Or Emulate Germanys Economic Reforms?
Japan
0.6%
Switzerland
1.1%
Germany
1.7%
France
2.3%
Canada
2.4%
U.S.
2.5%
Britain
2.6%
China
4.0%
Spain
4.1%
Italy
4.2%
Russia
7.5%
India
8.6%
Greece
8.7%
Brazil
11.6%
2000 - Jan
2000 - Aug
2001 - Mar
2001 - Oct
2002 - May
2002 - Dec
2003 - Jul
2004 - Feb
2004 - Sep
2005 - Apr
2005 - Nov
2006 - Jun
2007 - Jan
2007 - Aug
2008 - Mar
2008 - Oct
2009 - May
2009 - Dec
2010 - Jul
2011 - Feb
2011 - Sep
2012 - Apr
2012 - Nov
2013 - Jun
Consumer Confidence
Now and About Future
Expectations
Present
200
180
160
140
120
100
80
60
40
20
0
1%
72 years
U.S. today?
2%
36 years
3%
24 years
1970 to 2007
(pre-financial
market crash)
U.S. post-war to
1970
5%
14 years
Asian Tigers
GDP Forecast
5.0
4.5
4.0
CBO
3.5
White House
Blue Chip Consensus
3.0
2.5
2.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Individual
$180
Portfolio
Entity
$160
$140
$120
$100
$80
$60
$40
$20
$0
'06
'07
'08
'09
'10
'11
'12
'13
'11
'12
'13
200%
100%
0%
-100%
'06
'07
'08
'09
'10
Apartment
CBD-Office
175
Retail
125
Sub - Office
Industrial
75
'07
'08
'09
'10
'11
'12
'13
Cap Rate
Spread (bps)
10%
700
9%
600
8%
500
7%
6%
400
5%
300
4%
3%
200
2%
100
1%
0%
0
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
> $10,000,000
$5,000,000 - $10,000,000
$2,000,000 - $5,000,000
$1,000,000 - $2,000,000
2%
1%
12%
17%
$500,000 - $1,000,000
$250,000 - $500,000
< $250,000
Source: NAR
26%
22%
21%
200%
150%
100%
50%
0%
-50%
-100%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
1%
8%
11%
Regional banks
Local banks
17%
Credit unions
Life insurance companies
REITs
18%
Private investors
Public companies
Small Business Administration
4%
25%
6%
7%
Source: NAR
Northeast
Midwest
South
West
140.0
120.0
100.0
80.0
60.0
40.0
20.0
Source: SIOR, NAR
Apartment Fundamentals
U.S. Apartment Fundamentals
300,000
Completions
Net Absorption
Vac %
9.0
8.0
250,000
7.0
200,000
6.0
150,000
5.0
100,000
4.0
3.0
50,000
2.0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-50,000
2013 2014
1.0
0.0
Apartment Rents
Asking Rent $
$1,400
10.0
$1,200
8.0
$1,000
6.0
$800
4.0
$600
2.0
$400
0.0
$200
-2.0
$0
-4.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: Reis
Apartment Investments
Billions
$ Volume
$40.0
$30.0
$20.0
$10.0
$'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'08
'09
'10
'11
'12
'13
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
'01
'02
'03
'04
'05
'06
'07
41,000
39,000
1980 - Q1
1981 - Q1
1982 - Q1
1983 - Q1
1984 - Q1
1985 - Q1
1986 - Q1
1987 - Q1
1988 - Q1
1989 - Q1
1990 - Q1
1991 - Q1
1992 - Q1
1993 - Q1
1994 - Q1
1995 - Q1
1996 - Q1
1997 - Q1
1998 - Q1
1999 - Q1
2000 - Q1
2001 - Q1
2002 - Q1
2003 - Q1
2004 - Q1
2005 - Q1
2006 - Q1
2007 - Q1
2008 - Q1
2009 - Q1
2010 - Q1
2011 - Q1
2012 - Q1
2013 - Q1
Renter Households
In thousands
37,000
35,000
33,000
31,000
29,000
27,000
25,000
80,000
1980 - Q1
1981 - Q1
1982 - Q1
1983 - Q1
1984 - Q1
1985 - Q1
1986 - Q1
1987 - Q1
1988 - Q1
1989 - Q1
1990 - Q1
1991 - Q1
1992 - Q1
1993 - Q1
1994 - Q1
1995 - Q1
1996 - Q1
1997 - Q1
1998 - Q1
1999 - Q1
2000 - Q1
2001 - Q1
2002 - Q1
2003 - Q1
2004 - Q1
2005 - Q1
2006 - Q1
2007 - Q1
2008 - Q1
2009 - Q1
2010 - Q1
2011 - Q1
2012 - Q1
2013 - Q1
75,000
70,000
65,000
60,000
55,000
50,000
Office Fundamentals
U.S. Office Fundamentals
Completions
Net Absorption
Vac %
150,000,000
20.0
18.0
100,000,000
16.0
14.0
Square Feet
50,000,000
12.0
0
10.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-50,000,000
-100,000,000
2.0
-150,000,000
0.0
Office Rents
Asking Rent $
$35.00
14.0
12.0
$30.00
10.0
$25.00
8.0
6.0
$20.00
4.0
$15.00
2.0
0.0
$10.00
-2.0
$5.00
-4.0
$0.00
-6.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2013 2014
Source: Reis
0.0
Office Investments
Billions
$ Volume
$100.0
$80.0
$60.0
$40.0
$20.0
$'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'08
'09
'10
'11
'12
'13
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
'01
'02
'03
'04
'05
'06
'07
In millions
26.5
26.0
25.5
25.0
24.5
24.0
23.5
23.0
2000 - 2001 - 2002 - 2003 - 2004 - 2005 - 2006 - 2007 - 2008 - 2009 - 2010 - 2011 - 2012 - 2013 Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Retail Fundamentals
U.S. Retail Fundamentals
Completions
Net Absorption
Vac %
50,000,000
12.0
40,000,000
10.0
30,000,000
8.0
Square Feet
20,000,000
10,000,000
6.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2013 2014
4.0
-10,000,000
-20,000,000
-30,000,000
2.0
0.0
Source: NAR, Reis
Retail Rents
Asking Rent $
$25.00
5.0
4.0
$20.00
3.0
2.0
$15.00
1.0
$10.00
0.0
-1.0
$5.00
-2.0
$0.00
-3.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2013 2014
Source: Reis
Retail Investments
Billions
$ Volume
$35.0
$30.0
$25.0
$20.0
$15.0
$10.0
$5.0
$'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'08
'09
'10
'11
'12
'13
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
'01
'02
'03
'04
'05
'06
'07
In millions
2000 - 2001 - 2002 - 2003 - 2004 - 2005 - 2006 - 2007 - 2008 - 2009 - 2010 - 2011 - 2012 - 2013 Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
$220,000
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Industrial Fundamentals
U.S. Industrial Fundamentals
Completions
Net Absorption
Vac %
150,000,000
14.0
12.0
100,000,000
Square Feet
10.0
50,000,000
8.0
6.0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2013 2014
4.0
-50,000,000
2.0
-100,000,000
0.0
Source: NAR, Reis
Industrial Rents
Asking Rent $
$5.00
6.0
$4.90
4.0
$4.80
2.0
$4.70
0.0
$4.60
-2.0
$4.50
$4.40
-4.0
$4.30
-6.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2013 2014
Source: Reis
Industrial Investments
Billions
$ Volume
$20.0
$15.0
$10.0
$5.0
$'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'08
'09
'10
'11
'12
'13
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
'01
'02
'03
'04
'05
'06
'07
In millions
2000 - 2001 - 2002 - 2003 - 2004 - 2005 - 2006 - 2007 - 2008 - 2009 - 2010 - 2011 - 2012 - 2013 Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
1992 - Jan
1992 - Dec
1993 - Nov
1994 - Oct
1995 - Sep
1996 - Aug
1997 - Jul
1998 - Jun
1999 - May
2000 - Apr
2001 - Mar
2002 - Feb
2003 - Jan
2003 - Dec
2004 - Nov
2005 - Oct
2006 - Sep
2007 - Aug
2008 - Jul
2009 - Jun
2010 - May
2011 - Apr
2012 - Mar
2013 - Feb
250000
200000
150000
100000
50000
Imports
250000
200000
150000
100000
50000
0
2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013
- Jan - Jul - Jan - Jul - Jan - Jul - Jan - Jul - Jan - Jul - Jan - Jul - Jan - Jul
International Dimension
United Kingdom
Argentina
Australia
Brazil
Venezuela
3%
3%
2%
2%
2%
2%
2%
2%
2%
5%
5%
8%
12%
23%
23%
California
17%
Arizona
9%
Texas
9%
New York
3%
Virginia
3%
Nevada
2%
Hawaii
2%
Illinois
2%
Michigan
2%
Georgia
2%
2000 - Jan
2000 - Aug
2001 - Mar
2001 - Oct
2002 - May
2002 - Dec
2003 - Jul
2004 - Feb
2004 - Sep
2005 - Apr
2005 - Nov
2006 - Jun
2007 - Jan
2007 - Aug
2008 - Mar
2008 - Oct
2009 - May
2009 - Dec
2010 - Jul
2011 - Feb
2011 - Sep
2012 - Apr
2012 - Nov
2013 - Jun
8.5
8
7.5
7
6.5
6
5.5
5
2000 - Jan
2000 - Aug
2001 - Mar
2001 - Oct
2002 - May
2002 - Dec
2003 - Jul
2004 - Feb
2004 - Sep
2005 - Apr
2005 - Nov
2006 - Jun
2007 - Jan
2007 - Aug
2008 - Mar
2008 - Oct
2009 - May
2009 - Dec
2010 - Jul
2011 - Feb
2011 - Sep
2012 - Apr
2012 - Nov
2013 - Jun
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1
0.9
0.8
2000 - Jan
2000 - Aug
2001 - Mar
2001 - Oct
2002 - May
2002 - Dec
2003 - Jul
2004 - Feb
2004 - Sep
2005 - Apr
2005 - Nov
2006 - Jun
2007 - Jan
2007 - Aug
2008 - Mar
2008 - Oct
2009 - May
2009 - Dec
2010 - Jul
2011 - Feb
2011 - Sep
2012 - Apr
2012 - Nov
2013 - Jun
140
130
120
110
100
90
80