naea 05-13
TRANSCRIPT
Not a very good strategy!!
The Curse of KnowledgeThe Curse of Knowledge
TotalCommunicationKnowledge
of an Expert
The Curse of KnowledgeThe Curse of Knowledge
The average consumer’s knowledge
We know how much things have changed…
Buyers don’t!
3 Guarantees Just a Year Ago
1.) They would find another home for sure
2.) The home would be cheaper
3.) The mortgage interest rate would be lower
90
95
100
105
110
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Pending Home Sales
NAR 4/2013
100 = Historically Healthy Level
January 2012 – December 2012
January 2011 – December 2011
80
90
100
110
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2012 2011
100 = Historically Healthy Level
Pending Home Sales
NAR 4/2013
Month’s Inventory of Homes for Sale
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
NAR 4/2013
5-6 Months = Normal Market Inventory
Months Market Pricing
1- 5 Sellers Appreciation
5 - 6 Even The Norm
6+ Buyers Depreciation
Months Supply & Impact on Price
S&P Case Shiller 4/2013
S&P Case-Shiller Home Price Indices
-3.9%-3.5%
-2.5%-1.7%
-0.5%
0.6%1.1%
2.0%
3.6%4.3%
5.5%
6.8%
8.1%
9.3%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Jun Jul Aug Sep Oct Nov Dec Jan Feb
Year-over-Year Change in Prices
Jan Feb Mar Apr May
S&P Case Shiller 4/2013
S&P Case-Shiller Home Price Indices
Metropolitan Area Year-over-Year
Atlanta 16.5%
Boston 5.2%
Charlotte 6.2%
Chicago 5.1%
Cleveland 5.3%
Dallas 7.1%
Denver 9.9%
Detroit 15.2%
Las Vegas 17.6%
Los Angeles 14.1%
Metropolitan Area Year-over-Year
Miami 10.4%
Minneapolis 12%
New York 1.9%
Phoenix 23%
Portland 9.4%
San Diego 10.2%
San Francisco 18.9%
Seattle 9.3%
Tampa 10%
Washington 6.9%
S&P Case-Shiller Home Price Indices
S&P Case Shiller 4/2013
Metropolitan Area M-o-M
Atlanta 0%
Boston .1%
Charlotte -.2%
Chicago -.8%
Cleveland -.8%
Dallas .2%
Denver -.2%
Detroit -.6%
Las Vegas 1.6%
Los Angeles 1%
Metropolitan Area M-o-M
Miami .3%
Minneapolis -.9%
New York .4%
Phoenix 1.1%
Portland .7%
San Diego .6%
San Francisco .5%
Seattle -.2%
Tampa .6%
Washington -.5%
S&P Case-Shiller Home Price Indices
S&P Case Shiller 4/2013
Home Prices in the Short Term
130.00
135.00
140.00
145.00
150.00
May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May
2010-11
2011-12
2012-13
S&P Case Shiller 4/2013
PROJECTED?
Case Shiller 4/2013
Home Prices Rising in Every MSA
MSN Money.com, Case Shiller
33.3
14.6
-15.5
46.6
-30
-10
10
30
50
Dow S&P NASDAQ Real Estate
January 2000 – May 2013
Return on Investment
Negative Equity Decreasing
Negative Equity Loan Count (millions of mortgages – left axis) Negative Equity Share (percentage– right axis)
2009 2010 2011 2012
Fannie Mae 4/2013
3.25
3.5
3.75
4
4.25
30 Year Fixed Rate Mortgage History
1/2012 – 5/2013
Federal Reserve 5/2013
3.3
3.35
3.4
3.45
3.5
3.55
3.6
3.65
1/3 1/10 1/17 1/24 1/31 2/7 2/14 2/21 2/28 3/7 3/14 3/21 3/28 4/4 4/11 4/18 4/25 5/2Rate 3.34 3.4 3.38 3.42 3.53 3.53 3.53 3.56 3.51 3.52 3.63 3.53 3.57 3.54 3.43 3.41 3.4 3.35
Recent Rate Movement
Freddie Mac 4/2013
30 Year Fixed Rate Mortgage
2013
Analyst Projected Rate 2013 4Q
Mortgage Bankers Assoc 4.1%
Fannie Mae 4%
National Assoc of Realtors 4%
Mortgage Rate Projections
First Time Buyers as Percentage of Sales
NAR
2008 2009 2010 2011 2012 2013
March 2013: 30%
60%
50%
40%
30%
20%
10%
0%
Generations: Who & How Many
Generation Ages In Millions* % of Population
Greatest 68+ 35.2 11%
Baby Boomers 48-67 80.3 25%
Generation X 38-47 40.9 13%
Millennials 18-37 86 27%
iGen 0-17 74 23%
*U.S. Census Projections for 2013
Barrons 4/2013
Millennials Belief in Homeownership
89%
11%
Already Own or Plan to Buy
Plan to Rent
89% of adults between the ages of 18-29 years old
either already own a home or they plan
to buy one in the next 10 years.
Gallup
$300
$350
$400
$450
$500
$550
$600
$650
$700
$750
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
Median Asking Rent 1988-2012
The Increasing Cost of Renting
Census Bureau 4/2013
The Cost of Renting
Center for Housing Policy 5/2013
More than one in four (26.4%) working renter households spent more than half of their income on housing costs.
Over
50%
“Inventory will remain constrained, rents will rise and demand for rentals will decline as the proposition for renting a property becomes more expensive.”
Rent vs. Buy – Looking Forward
CoreLogic Market Pulse 4/2013
Will Owning Make Sense in 30 Years?
Robert Schiller
NY Times 4/2013
“It’s quite possible that the next decade might bear a resemblance to the 1960s or ’70s... Homeowners did very well if they bought in 1960 or 1970, locked in low fixed-rate mortgages and saw the nominal values of their homes soar while their real mortgage balances declined.
This could be an auspicious time to buy a house…for people who aren’t out to bet on the housing or mortgage markets but are instead focused on settling into a home for the long term.”
Home Price to Income Ratio
S&P Housing Views 4/2013
% of Realtors w/ Appraisal Challenge
NAR
last 90 days
March 2013 – 29%
2010 2011 2012 2013
50%
40%
30%
20%
10%
0%
Contract Cancelled Contract Delayed Negotiated to a Lower Price
20%
25%
30%
35%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Percentage of Distressed Property Sales
35%
21%
NAR 4/2013
U.S. Foreclosure Inventory
RealtyTrac 4/2013
Foreclosure Inventory Non-Judicial
RealtyTrac 4/2013
Foreclosure Inventory Judicial
RealtyTrac 4/2013
Foreclosure Inventory by State
Percentage of mortgages that have been placed in the process of foreclosure.
CoreLogic Foreclosure Report 3/2013
“Americans are as bullish on the housing market as they have been at any time since before the housing bubble burst several years ago. This surely reflects the stabilization of the housing market, and the fact that home prices are generally heading up in most parts of the country.”
Housing is Back!!
Gallup
“Gallup data on homeownership provide strong support for the idea that the American Dream of owning a home continues to be alive and well.
The majority of Americans who own a home plan on
continuing to do so in the future, and most
of those who don't own a home plan
on buying one.”
Gallup
Gallup
Americans Either Own a Home or Plan to Buy One88 out of out of 1010
Top Financial Reasons People Buy a Home
Gallup
1. See owning as an investment
2. The chance to build equity & credit
3. Smarter than paying rent
4. More cost effective than renting
5. Financial security & stability
Top Non-Financial Reasons People Buy a Home
Gallup
1.Belief in homeownership
2.Don’t want to live in a rental
3.Better place for the family
4.Ability to do what they want
5.Pride of ownership
Pew Charitable Trusts
Mortgage Interest Deduction
% of Tax Filers Claiming M-I-D
Average M-I-D Deduction
Pew Charitable Trusts
Mortgage Interest Deduction
Average M-I-D Deduction
Sacramento, CA
Denver, CO
Phoenix,AZ
15 Largest Areas By Hispanic Population
Source: Nielsen
San Francisco, CA
Fresno-Visalia,CA
Los Angeles,CA
San Diego,CA
Chicago, IL
Miami, FL
New York, NY
Washington, DC
Dallas, TX
San Antonio, TX Houston,
TX
Harlingen, TX
15 Fastest Growing Areas Among Hispanics
Minneapolis, MN
+98%
Population 200,000+
Seattle-Tacoma,
WA +108%
Las Vegas, NV
+104%
Salt Lake City,
UT +97%
Kansas City, MO
+97%
Oklahoma City,
OK +119%
Austin, TX
+85%
Washington, DC
+108%
Raleigh, NC
+139%Charlotte, NC
+168%
Atlanta, GA
+127%Orlando, FL
+125%Tampa, FL
+112%
W. Palm Beach,
FL +111%Ft. Myers, FL
+123%Source: Nielsen
Resources
KEEPINGCURRENTMATTERS.COM
Slide Slide Title Link
7 - 9Pending Home Sales, Month’s Inventory of Homes for Sale
http://www.realtor.org
11 - 15S&P Case-Shiller Home Price Indices, Home Prices in the Short Term
http://blogs.wsj.com/economics/2013/03/27/home-prices-seen-making-stronger-gains-in-2013/
16 Home Prices Rising in Every MSA http://www.housingviews.com/2013/04/30/behind-the-numbers-in-the-spcase-shiller-release
18 Negative Equity Decreasing http://www.fanniemae.com/portal/about-us/media/commentary/042413-velz.html
19 - 2030 Year Fixed Rate Mortgage History, Recent Rate Movement
http://www.freddiemac.com/pmms
21 Mortgage Rate Projections
http://www.marketwatch.com/story/mortgage-rates-will-rise-next-year-but-slowly-2012-10-24 http://www.realtor.org/sites/default/files/reports/2013/embargoes/phs-3-37-nbmtwr/april-2013-outlook-2013-03-27.pdf http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_041713.pdf
22 First Time Buyers as Percentage of Sale http://www.realtor.org/reports/realtors-confidence-index
23 Generations: Who & How Many http://online.barrons.com/article_email/SB50001424052748703889404578440972842742076-lMyQjA1MTAzMDIwNzEyNDcyWj.html
24 Millennials Belief in Homeownership http://www.gallup.com/poll/161975/american-dream-owning-home-lives-even-young.aspx
25 Cheaper to Buy than Rent http://www.census.gov/housing/hvs/data/histtabs.html
26 The Cost of Renting http://www.nhcopenhouse.org/2013/05/more-than-quarter-of-working-renter.html
ResourcesSlide Slide Title Link
27 Rent vs. Buying – Looking Forward http://www.corelogic.com/downloadable-docs/marketpulse_2013-april.pdf
28 Will Owning Make Sense in 30 Years?http://www.nytimes.com/2013/04/21/business/before-housing-bubbles-there-was-land-fever.html
29 Home Price to Income Ratio http://www.housingviews.com/2013/04/19/housing-bubble-talk-returns/
30 % of Realtors with Appraisal Challenge http://www.realtor.org/reports/realtors-confidence-index
31 Percentage of Distressed Property Sales http://www.realtor.org
32 - 34U.S. Foreclosure Inventory, Foreclosure Inventory
http://www.realtytrac.com/content/foreclosure-market-report/q1-2013-foreclosure-inventory-analysis-7653
35 Foreclosure Inventory by Statehttp://www.corelogic.com/research/foreclosure-report/national-foreclosure-report-march-2013.pdf
37 Housing is Backhttp://www.gallup.com/poll/161942/americans-optimism-home-prices-surges-this-year.aspx
38 - 39 Gallup Data on Homeownership http://www.gallup.com/poll/161975/american-dream-owning-home-lives-even-young.aspx
40 - 415 Top Financial Reasons People Buy a Home, 5 Top Non-Financial Reasons People Buy a Home
http://www.gallup.com/poll/161966/homeowners-reasons-owning-financial.aspx
42 - 43 Mortgage Interest Deduction http://www.pewstates.org/uploadedFiles/PCS_Assets/2013/MID-report2.pdf
44 - 4515 Largest Areas By Hispanic Population, 15 Fastest Growing Areas Among Hispanics
http://www.nielsen.com/us/en/newswire/2013/latino-populations-are-growing-fastest-where-we-arent-looking.html
People don’t believe what you tell them.
They always believe what they tell themselves.