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.