naea 07-14
DESCRIPTION
naTRANSCRIPT
KCM Divided into Three Sections
4,000,000
4,500,000
5,000,000
5,500,000
Jan2012
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2013
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2014
Feb Mar Apr May
EXISTING Home Sales
NAR 6/2014
$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+
% Sales +/- -12% -5.1% 0.2% 0.3% 2.4% 5%
-12%
-5.1%
.2% .3% 2.4%
5%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
% Change in Sales From Last Year
by Price Range
NAR 6/13/2014
0%
5%
10%
15%
20%
25%
30%
35%
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 Apr May
Percentage of Distressed
Property Sales
35%
11%
18%
NAR 6/2014
90
95
100
105
110
100 = Historically Healthy Level
NAR 6/2014
PENDING Home Sales
50.6 51.250 50.6
47.8
27.7
19.3
26.2
43.946.1
44.5
0
10
20
30
40
50
July 2013 August2013
Septembet2013
October2013
November2013
December2013
January2014
February2014
March 2014 April 2014 May 2014
Foot Traffic (indicator of future sales)
realtor.org
“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of
their credit scores or in how much they have saved for
their down payment.
It’s that they think they’re not qualified or they think that
they don’t have a big enough down payment.”
Housing Wire Commenting on a Study by Nomura
The DOWN PAYMENT Biggest Misconception about Mortgages
39%
38%
42%
36%
37%
38%
39%
40%
41%
42%
All Respondents 25-29 Year Olds 30-34 Year Olds
Percentage of respondents to Zelman & Assoc survey who believe that you need a minimum of a 15% down payment to purchase a home.
Freddie Mac 6/2014
The DOWN PAYMENT According to Freddie Mac:
•A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”. •Freddie Mac's purchase of mortgages with down payments under 10 percent more than quadrupled between 2009 and 2013.
•More than one in five borrowers who took out conforming, conventional mortgages in 2014 put down 10 percent or less.
Freddie Mac 6/2014
Letting more consumers know how down payments are determined could bring
more qualified borrowers off the sidelines. Depending on their credit history and other
factors, many borrowers can expect to make a down payment of about 5 or 10
percent.
Christina BoyleFreddie Mac VP and Head of Single-Family
Sales & Relationship Management
3.25
3.5
3.75
4
4.25
4.5
4.75
Freddie Mac Actual Rates
January 2013 – July 2014
30 Year Fixed Rate Mortgages
Freddie Mac 6/2014
5.2
4.7
5.1
5.4
Freddie Mac Fannie Mae
MBA NAR
30 Year Fixed Rate Mortgages
Actual Rates January 2013 – June 2014
Projected Rates June 2014 – 2015 4Q
1/2013 6/2014 10/2015
Mortgage Rate Projections
Analyst Projected Rate 2015 3Q
Fannie Mae 4.6%
Freddie Mac 4.8%
Mortgage Bankers Assoc 5.1%
National Assoc of Realtors 5.3%6/2014
1/2013 6/2014
4.2
4.4
4.6
4.8
5
5.2
2014 3Q 2014 4Q 2015 1Q 2015 2Q 2015 3Q 2015 4Q
Freddie MacProjected Rates
June 2014 – 2015 4Q
Freddie Mac 6/2014
30 Year Fixed Rate Mortgages
Freddie Mac Rates January 2013 – June 2014
Date Mortgage Interest Rate* P&I**
Today $250,000 4.17% $1,218.17
July 2015 $260,000 4.8% $1,364.13
*Average Commitment Rate per Freddie Mac **Principal and Interest Payment
$145.42Difference in Monthly Payment
Monthly Annually Over 30 Years
$145.42 $1,745.04 $52,351
Date Mortgage Interest Rate* P&I**
Today $100,000 4.17% $487.27
July 2015 $104,000 4.8% $545.65
*Average Commitment Rate per Freddie Mac **Principal and Interest Payment
$58.38Difference in Monthly Payment
Monthly Annually Over 30 Years
$58.38 $700.56 $21,017
Date Mortgage Interest Rate* P&I**
Today $500,000 4.17% $2,436.34
July 2015 $520,000 4.8% $2,728.26
*Average Commitment Rate per Freddie Mac **Principal and Interest Payment
$291.92Difference in Monthly Payment
Monthly Annually Over 30 Years
$291.92 $3,503.04 $105,091
Date Mortgage Interest Rate* P&I**
Today $1,000,000 4.17% $4,872.68
July 2015 $1,040,000 4.8% $5,456.52
*Average Commitment Rate per Freddie Mac **Principal and Interest Payment
$583.84Difference in Monthly Payment
Monthly Annually Over 30 Years
$583.84 $7,006.08 $210,182
Decade Average Rate Payment
1970s 8.86% $1,589
1980s 12.7% $2,166
1990s 8.12% $1,484
2000s 6.29% $1,237
July 2014 4.17% $975The average 30-year fixed mortgage rates and the approximate payment for a $200,000 mortgage. Payments are principal & interest only, based on a $200,000 fully amortizing mortgage.All terms are assumed to be 30 years.
Freddie Mac 7/2014
Historic Mortgage Rates by Decade
PRICES
S&P Case-Shiller Home Price Indices
S&P Case Shiller 6/2014
Year-Over-Year
PRICECHANGES
CaseShiller
S&P Case Shiller 6/2014
The Impact of Monthly Housing Inventory on Home Prices
LESS THAN 6 MONTHS
BETWEEN6-7 MONTHS
GREATER THAN7 MONTHS
SELLERS MARKETHomes prices will appreciate
NEUTRAL MARKETHomes prices
will only appreciate with
inflation
BUYERS MARKETHomes prices will depreciate
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May
Months Inventory of HOMES FOR SALE
NAR 6/2014
4.0
4.5
5.0
5.5
6.0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May
Months Inventory of HOMES FOR SALE
NAR 6/2014
4.95.0
5.2
5.75.6
4.0
4.5
5.0
5.5
6.0
Jan Feb Mar Apr May
Months Inventory of HOMES FOR SALE
NAR 6/2014
-24%
-20.8%
-16.8%
-14%-13%
-7.6%
-5%-6.2%
1.8% 0.9%
5%
1.6%
7.3%
5.3%
3.2%
6.5% 6%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Jan Feb March April May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May
% -24% -20.8 -16.8 -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0% 1.6% 7.3% 5.3% 3.2% 6.5% 6%
NAR 6/2014
Year-over-Year Inventory Levels
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
New Home Sales2004-2014
Census Bureau 6/2014
Realtor Magazine 6/2014
67%
33%Purchasersbrought to builderby real estateagents
Purchasersbrought by othermeans
NEW HOME Sales
ResourcesSlide Slide Title Link
4,6,7,27,28,29,30
Existing Home Sales, Percentage of Distressed Property Sales, Pending Home Sales, Months Inventory of Homes for Sale, Year-over-Year Inventory Levels
http://www.realtor.org/
5 % Change in Sales from Last Yearhttp://economistsoutlook.blogs.realtor.org/2014/06/13/existing-home-sales-by-price-tier/#sf3291580
8 Foot Traffic https://magic.piktochart.com/output/2155255-foot-traffic-may-2014?sf3290807=1
9 Housing Wire Commentshttp://www.housingwire.com/blogs/1-rewired/post/30441-nomura-fear-is-keeping-demand-pent-up
10,11 The Down Payment, Christina Boyle Quotehttp://www.freddiemac.com/news/blog/christina_boyle/20140616_mortgage_down_payments.html
13 30 Year Fixed Rate Mortgages http://www.freddiemac.com/pmms
14, 1530 Year Fixed Rate Mortgages, Mortgage Rate Predictions
http://www.freddiemac.com/finance/pdf/June_2014_public_outlook.pdf http://www.mortgagebankers.org/files/Bulletin/InternalResource/88467_.pdf http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_062414.pdf http://www.realtor.org/sites/default/files/reports/2014/embargoes/phs-06-30/forecast-07-2014-us-economic-outlook-06-30-2014.pdf
16 30 Year Fixed Mortgage Rates http://www.freddiemac.com/finance/pdf/June_2014_public_outlook.pdf
17 Historic Mortgage Rates by Decade http://www.freddiemac.com/blog/research_and_analysis/20140324_dirt_cheap_to_cheap.html
24,25 S&P Case-Shiller Home Price Indiceshttp://www.housingviews.com/wp-content/uploads/2014/06/CSHomePrice_Release_April2014-results.pdf
31 New Home Sales 2004-2014 http://www.usatoday.com/story/money/business/2014/06/24/may-new-home-sales/11304161/
KEEPINGCURRENTMATTERS.COM
ResourcesSlide Slide Title Link
32 New Home Sales 2013 and 2014 http://www.calculatedriskblog.com/2014/06/comments-on-housing-and-new-home-sales.html
33 New Home Saleshttp://realtormag.realtor.org/daily-news/2014/06/18/builders-turn-agents-in-finding-qualified-buyers#sf3351519
39-61 Reasons to Ownhttp://www.jchs.harvard.edu/research/publications/believing-homeownership-behavioral-drivers-housing-tenure-decisions
62 Seth Godin Quotehttp://sethgodin.typepad.com/seths_blog/2014/06/more-people-saying-less-and-a-few-people-saying-more.html
KEEPINGCURRENTMATTERS.COM
Webinar
LIVE WEBINARThursday, July 24th - 2PM EST
15 ‘MAJOR’ REASONS TO OWN A HOMEas per a survey by the Joint Center for Housing Studies at Harvard University
* the reasons are in no particular order
EXTRA SLIDESAlternate Versions of select “Reasons to Own” Graphics
It's much easier to spend a lot of time making your
microphone louder than it is working on making your
message more compelling.
Seth Godin