Shore Builders Association Bulletin Board Magazine 2017 Volume 1

Economic Forecast Continued

Q3: What will interest rates (and mortgage rates) do in 2017? Answer: Interest rates are still near 30-year lows. Recent increase, but still very low by historical standards. Only possible direction is: UP! But: how much and when? Outlook: labor market and financial market ended year on high notes, new administration is pro-growth, expectations of continued economic traction. All indicators point towards increases…but how much and when? Q4: What will housing starts do in 2017? Answer: Starts are trending upward, but multi family has exhibited more growth than single-family. Post-recession shift towards renting and urban locations. The ~1.16m starts in 2016 will still be 13th lowest year since 1959. Historic average is 1.5m per year. Outlook: demographics (i.e. millennials) and economics (growth) favor continued recovery, but will be offset at least partially by higher i-rates and decreased land supply.

Q7: What Will Happen With House Prices in 2017?

of 1 in every 59 7 homes. Is a holdover— hangover? —from the housing bubble: NJ has the longest foreclosure process of any State in the US! Outlook: Will improve, but will also remain areal obstacle to a full recovery.

Answer: House prices are recovering, but at a sluggish rate. Pre-recession: 5-7% Post-recession: 3-5% Is 4% the new 6%? NJ is under performing both US and other large metro areas in post-recession period. Outlook: Low inventory and below-average starts favors further upward pressure on prices, but other fundamentals favor a softening in 2017.

Q6: What Will Happen With Inventories in 2017?

Answer: Inventory down 9.1% YoY and MSI is currently at 4 months. 5-7 MSI is onsidered a “balanced” market. We are currently in a Seller’s Market: Demand> Supply Why? : 1) Conversion of owner- occupied homes to rentals; 2) Many boomers are aging in place and not moving Outlook: Demographics are against improvement, but market forces favor increase.

Q8: What Will New Home Sales Do in 2017?

Answer: New home sales trending upward, but still below historic levels. Outlook: demographics (i.e. millennials) and momentum favor continued recovery, but face challenges from higher i-rates and decreased land supply.

Q5: What Will Happen With Foreclosures in 2017?

Answer: New Jersey’s foreclosure rate continues to remain the highest in the country, and has recently trended up. Of the top five counties in NJ with the highest foreclosure rate, four of them are located in South Jersey, with an average foreclosure rate of 1 in every 339 homes. This is well above the statewide average

Bulletin Board | 9 | www.shorebuilders.org

Bulletin Board | 10 | www.shorebuilders.org