Economic Forecast 2012

Housing and the Economy: Impacts and Forecasts Geoffrey J.D. Hewings, Ph.D. Director Regional Economics Applications Laboratory (REAL) University of Illinois Institute of Government and Public Affairs 217.333.4740 217.244.9339 (fax) [email_address] www.real.illinois.edu Illinois Association of REALTORS® January 2012 Public Policy Meetings

Regional Economics Applications Laboratory - University of Illinois ,[object Object],[object Object],[object Object]

REAL – Sample Projects ,[object Object],[object Object],[object Object],[object Object],[object Object]

State of Illinois Economies ,[object Object],[object Object],[object Object],[object Object],[object Object]

State of Illinois Economies ,[object Object],[object Object],[object Object]

RECOVERY SCENARIOS Jobs recovered Since December 2009 TIME GROWTH NEEDED RATE 5 years 102,200 jobs / year 8 years 63,900 jobs / year 10 years 51,100 jobs / year 15 years 34,100 jobs / year Note: Best year since 1980 – Illinois added 60,000 jobs

RECOVERY: History Is Not Encouraging ,[object Object],[object Object],[object Object],But in 2011, Illinois ’ employment growth matched that of the U.S. and exceeded that for the Rest of the Midwest (IA, WI, IN, OH, MI, MO)

Sources of Growth – Illinois and Chicago ,[object Object],[object Object],[object Object],[object Object],40% of domestic exports and imports are with Midwest neighbors – WI, IN, OH, MI, MO, IA

Sources of Growth – Illinois and Chicago ,[object Object],[object Object],Recovery of Chicago and Illinois tied in with U.S. recovery but especially Midwest recovery

Where is the growth/decline taking place? ,[object Object],[object Object],[object Object],[object Object]

Where is the growth/decline taking place? ,[object Object],[object Object],[object Object],[object Object],[object Object]

Illinois & National Economy Since early 1990s, Illinois ’ growth rate has fallen behind the U.S. and Rest of the Midwest, but converging with the latter through October 2011, Illinois had added jobs at 40% U.S. rate since 1990 US ILLINOIS

Illinois & National Economy Differences between Illinois and U.S. are trivial

Impacts of Migration & Job Losses ,[object Object],[object Object]

Challenge loss of jobs loss of people loss of expenditure loss of business expansion

Housing Market ,[object Object],[object Object],[object Object],[object Object],Sources of Demand for Housing Market

Housing Market: Incentive Programs ,[object Object],[object Object],[object Object]

Housing Market: Turnover ,[object Object],[object Object],Turnover generating fewer sales as consumers become more risk adverse

Housing Market: Turnover ,[object Object],[object Object]

Unsold Inventory by Price Range - Illinois

Housing Market: Job Relocation/Migration ,[object Object],[object Object],Job relocation still important source of demand but fewer people changing jobs

Housing Market: Job Relocation/Migration ,[object Object],[object Object]

Housing Market: Retirement/Migration ,[object Object],[object Object]

Housing Market: Retirement/Migration ,[object Object],[object Object],Is net effect positive or negative for state?

Housing Market: Turnover generates impacts ,[object Object],[object Object],[object Object]

Housing Market: Turnover generates impacts ,[object Object],[object Object],[object Object],[object Object]

The Foreclosure Overhang….. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],The Foreclosure Overhang…..

[object Object],[object Object],[object Object],The Foreclosure Overhang…..

Start of recession The Foreclosure Overhang…..

Inventory Accumulation Start of recession

REO: Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most foreclosure auctions equal the outstanding loan amount, the accrued interest and any fees associated with the foreclosure sale.

Market Disturbances ,[object Object],[object Object],[object Object]

Market Disturbances ,[object Object],[object Object],[object Object],[object Object]

Housing Market: Current Situation ,[object Object],[object Object]

Illinois Housing Market: 2011 in Perspective ,[object Object],[object Object]

Chicago PMSA Market: 2011 in Perspective ,[object Object],[object Object]

Housing Market: Next 12 Months ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Housing Market: Next 12 Months ,[object Object],[object Object]

Housing Market: Next 12 Months ,[object Object],[object Object],[object Object],[object Object],[object Object]

How well did we forecast last year? ,[object Object],[object Object],[object Object],[object Object],[object Object]

Final Concerns ,[object Object],[object Object],[object Object],[object Object]

More Final Concerns ,[object Object],[object Object],[object Object]

L L Monthly index of leading indicators for Chicago Monthly Employment analysis for state and Metro areas Illinois Economic Review (monthly) with employment forecasts for next 12 months

For More Information www.real.illinois.edu www.illinoisrelator.org/marketstats

Economic Forecast 2012

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Economic Forecast 2012