KCM Divided into Three Sections NAR 8/2013 Real Estate Recovery Sales Started Sustained Recovery...
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Transcript of KCM Divided into Three Sections NAR 8/2013 Real Estate Recovery Sales Started Sustained Recovery...
KCM Divided into Three Sections
NAR 8/2013
Rea
l Est
ate
Rec
ove
ry SalesStarted Sustained Recovery
September 2011
Prices Started Sustained Recovery
June 2012
Inventory Started Sustained Recovery
January 2013
“The forces pulling the home ownership rate lower are past their apex…House prices are rising, but remain affordable at 21% below peak, even as rents rise. Some who lost homes early in the crisis can now qualify again for mortgage loans.
As housing recovers and consumers again see prices rising steadily, perceptions will swing back to favor home ownership.”
Moody’s Analyitics 8/2013
Celia ChenSenior Director - Moody's Analytics
A Swing Back Toward Ownership
KCM Blog 8/2013
Boomerang Buyers“HUD recently announced that people who lost their home through a foreclosure, short sale or bankruptcy, may be eligible to finance a home again in as little as 12 months. This is a reduction from the previously required minimum of 36 months from the date of the “most recent event.”
Released August 15, HUD provided guidelines under
“Back to Work: Extenuating
Circumstances” meant to ease the path for home ownership for many.”
Joint Center for Housing Studies Harvard University 8/2013
“Even after the dramatic loss of equity and the high foreclosure rates, the early evidence suggests that people seem to believe that, over the long run, owning is still preferable to renting...
Reexamining the Social Benefits of Homeownership after the Housing Crisis
The long term cultural preference for owning seems to have weathered the recent housing crisis.”
Joint Center for Housing Studies Harvard University 8/2013
“The research on home-buying expectations supports the conclusion that very large percentages of Americans still expect to buy a home at some time in the future…
Moreover, the finding that younger renters and owners are more likely than their older counterparts to expect to own bodes well for the future of the housing market.”
Reexamining the Social Benefits of Homeownership after the Housing Crisis
FHFA Regional Home Prices (year-over-year)
FHFA 2013 2Q HPI Report
2012 3Q 2012 4Q
2013 1Q 2013 2Q
FHFA State Home Prices (year-over-year)
FHFA 2013 2Q HPI Report
35% Loss in Price, then 35% Gain
Still 12% off Peak
Months Market Pricing
1- 5 Sellers Appreciation
5 - 6 Even The Norm
6+ Buyers Depreciation
Months Supply & Impact on Price
4.0
4.3
4.5
4.8
5.0
5.3
Jan Feb Mar Apr May Jun Jul
Months Inventory of Homes for Sale
NAR 8/2013
5-6 Months = Normal Market Inventory
January February March April May June July
% -24% -20.8% -16.8% -14% -13% -7.6% -5%
-24%
-20.8%
-16.8%
-14%-13%
-7.6%
-5%
-25%
-20%
-15%
-10%
-5%
0%
NAR 8/2013
Year-over-Year Inventory Levels
0.6%1.1%
2.0%
3.6%
4.3%
5.5%
6.8%
8.1%
9.3%
10.2%
12.1% 12.2% 12.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
S&P Case Shiller 8/2013
Year-over-Year Change in Prices
Zillow 8/2013
3.2 million homeowners have been freed from negative equity in the last twelve months.
million additional are expected to be freed in
the next twelve months.1.9
Cost vs. Cost vs. PricePrice
Mortgage Rate Projections
Analyst Projected Rate 3Q 2014
Fannie Mae 5.0%
National Assoc. of Realtors 5.1%
Freddie Mac 5.1%
Mortgage Bankers Assoc 4.9%
8/2013
Home Prices Next YearIn the recent Home Price Expectation Survey, over 100 leading housing analysts called for an approximate 5% increase in home values over the next twelve months.
Home Price Expectation Survey 8/2013
Thinking about moving up to the home of your dreams?
Comparison – Next Year Current Home Move-Up Home
Current Price $240,000 $360,000
Future Price (+5%) $252,000 $378,000
Future Gain $12,000 $18,000
Total Gain $6,000
The Move-Up Seller
Price Rate P&I
Today $360,000 4.5% $1,824.07
End of Year $378,000 5%
$2,029.19
Monthly Savings $205.12
The Move-Up Seller
35.4
17.1
-8.9
59.5
-30
0
30
60
Dow S&P NASDAQ Real Estate
January 2000 – August 2013
MSN Money, Case Shiller
Return on Investment
90
95
100
105
110
115
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Pending Home Sales
NAR 8/2013
100 = Historically Healthy Level
80
90
100
110
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2012 2011
100 = Historically Healthy Level
Pending Home Sales
NAR 8/2013
Months Inventory of Homes for Sale
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
NAR 8/2013
5-6 Months = Normal Market Inventory
NAR 8/2013
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
Percentage of Distressed Property Sales
35%
15%
S&P Case-Shiller Home Price Indices
S&P Case Shiller 8/2013
Reasons to Hire a Real Estate Professional5
They help with all disclosures and paperwork necessary in today’s heavily regulated environment.
They are well educated in and experienced with the
entire sales process.
They act as a ‘buffer’ in negotiations with all parties
throughout the entire transaction.
They help understand today’s real estate values when
setting the price on a listing or on an offer to purchase.
They simply and effectively explain today’s real estate
headlines and decipher what they mean to you.
NAR 8/2013
Found sixty eight percent of those surveyed responded that now is a good time to buy a home
Found over 50% of renters say that eventually owning a home is one of their highest personal priorities
68% 51%
NAR’s 2013
HOUSING PULSE
Survey
Found eight in 10 Americans believe buying a home is a good financial decision
8.1%
9.3%
10.2%
12.1% 12.2% 12.1%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
Jan Feb Mar Apr May Jun
Year-over-Year Change in Prices
S&P Case Shiller 8/2013
30 Year Fixed Rate Mortgage HistoryJanuary 2012 - September 2013
Federal Reserve 9/2013
PriceMoney Down
MortgageInterest
RatePayment
(P&I)
Last Year* $187,800 $37,560 $150,240 3.5% $674.64
This Year* $213,500 $42,700 $170,800 4.5% $865.42
Next Year** $224,175 $44,835 $179,340 5% $962.74
*For the first two examples, we used the NAR’s Existing Home Sales Report to establish median price and Freddie Mac’s Primary Mortgage Market Survey to establish mortgage rate. We also assumed a 20% down payment in all examples.
**To establish next year’s pricing, we depended on the over 100 housing experts surveyed for the Home Price Expectation Survey who called for an approximate appreciation rate of 5% over the next twelve months. For the interest rate, we took the average of the projections from the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae.
The Cost of Waiting
Resources
KEEPINGCURRENTMATTERS.COM
Slide Slide Title Link
4 Real Estate Recovery http://www.realtor.org
5 A Swing Back Toward Ownership PAID: http://www.economy.com/dismal/pro/article.asp?cid=241831
6 Boomerang Buyershttp://www.kcmblog.com/2013/08/22/boomerang-homebuyers-get-a-shorter-ride-home/ http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee
7, 8 Social Benefits of Homeownership http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/hbtl-04.pdf
9, 10, 11
FHFA Regional Home Prices, FHFA State Prices
http://www.fhfa.gov/webfiles/25483/2013Q2HPI82213Final.pdf
14 Months Inventory of Home Sales http://www.realtor.org
17 Negative Equity Graphic http://zillow.mediaroom.com/index.php?s=159&item=373
20 Mortgage Rate Projections
http://www.mortgagebankers.org/files/Bulletin/InternalResource/84813_.pdf http://www.freddiemac.com/news/finance/docs/Jun_2013_public_outlook.pdf http://www.realtor.org/sites/default/files/reports/2013/embargoes/phs-6-27-hgbfjnv/july-2013-outlook-2013-6-27.pdf http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_061313.pdf
21 Home Prices Next Year https://pulsenomics.com/Q2_2013_HPE_Survey.php
26 Return on Investment http://www.spindices.com/index-family/real-estate/sp-case-shiller
Resources
Slide Slide Title Link
27, 28, 29, 30
Pending Home Sales, Months Inventory of Homes for Sale, Percentage of Distressed Property Sales
http://www.realtor.org
31 S&P Case-Shiller Home Price Indices https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/19529_cshomeprice-release-0730.pdf
34 Housing Pulse Surveyhttp://www.realtor.org/news-releases/2013/07/renters-thinking-more-about-owning-a-home-say-homeownership-is-a-top-priority
36 30 Year Fixed Rate Mortgage History http://www.freddiemac.com/pmms
34 S&P Case-Shiller Home Price Indiceshttps://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/19529_cshomeprice-release-0730.pdf
41 Stephen Phillips Quotehttp://www.businesswire.com/news/home/20130812005934/en/Prudential-Real-Estate-Q2-Outlook-Survey-Millennials
42 Home Affordability Indexhttp://www.realtor.org/topics/housing-affordability-index/data http://www.realtor.org/topics/housing-affordability-index/methodology
43 Family Wealth http://economistsoutlook.blogs.realtor.org/2013/07/30/the-latest-homeownership-rate/
KEEPINGCURRENTMATTERS.COM
“Home buyers are more informed than ever with their Internet searches and ongoing research; however, there’s a critical need to transform that information into analysis and advice that helps consumers make the best home-buying and selling decisions.”
Stephen Phillips Chief Operating Officer for HSF Affiliates LLC
To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.
Home Affordability Index
127.4
172.2
206.5
155.2
NAR 8/2013
“The rise in the renter population with no net increase in the owner population at a time of housing recovery automatically means greater unequal distribution of wealth. Housing wealth is rising because of price increases, but the wealth is going to the fewer and fewer households who happen to be homeowners and those who own more than one home.”
Lawrence Yun, Chief Economist of the National Association of Realtors
NAR 8/2013
Family Wealth