Naea 04-14
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Transcript of Naea 04-14
KCM Divided into Three Sections
Are They GoingUp or Down?
Home Sales
100 = Historically Healthy Level
Pending Home Sales
NAR 3/2014
Existing Home Sales
NAR 3/2014
-19.1%
-6%
3.9%
15.2%
19.4%
37.5%
-20%
-10%
0%
10%
20%
30%
40%
$0-100K$100-250K
$250-500K
$500-750K
$750K-1M $1M+
% Sales +/- -19.1% -6% 3.9% 15.2% 19.4% 37.5%
Percentage Change in Sales from a Year Ago by Price Range
NAR 3/2014
-44%
-16%
18%23%
-45%
-35%
-25%
-15%
-5%
5%
15%
25%
Short Sales REOsExisting Home
SalesNew
Construction
%Sales +/- -44% -16% 18% 23%
Percentage Change in
Sales from a Year Ago by Category
Home Sales
CoreLogic 3/2014
“While many fret that existing housing sales have recently been slumping, the angst is misplaced. Since early last year sales have declined 7%, but distressed
sales as a percentage of all sales have fallen from 25% of sales to just 15%…
Thus, the total volume of non-distressed sales is higher than it was a year ago.
Relax.”
Elliot F. Eisenberg Ph.D. GraphsandLaughs, LLC
-24%
-20.8%
-16.8%
-14%-13%
-7.6%
-5%-6.2%
1.8% 0.9%
5%
1.6%
7.3%
5.3%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Jan FebMarc
hApril May June July Aug Sept Oct Nov Dec Jan Feb
% -24% -20.8 -16.8 -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0% 1.6% 7.3% 5.3%
NAR 3/2014
Year-over-Year Inventory Levels
Months Inventory of Homes for Sale
NAR 3/2014
5-6 Months = Normal Market Inventory
HOME PRICES
100.00
120.00
140.00
160.00
180.00
200.00
220.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
United States Home Prices as per Case Shiller Composite 20 City Index
Case Shiller
100.00
120.00
140.00
160.00
180.00
200.00
220.00
2006 2007 2008 2009 2010 2011 2012 2013 2014
United States Home Prices as per Case Shiller Composite 20 City Index
Case Shiller
- CoreLogic 3/2014
“Home prices nationwide remain 16.9% below their peak, which
was set in April 2006.”
MILLENNIALSMILLENNIALS
1.) In 19 of the 20 large metro areas surveyed, more than 5% of all residents indicated they wanted to buy a home in the next year.
2.) Among current renters, homeownership aspirations were particularly strong, with about 10% of all renters nationwide saying they would like to buy within the next 12 months.
3.) The vast majority of these respondents also said they were confident or somewhat confident they could afford homeownership now.
4.) If all renters that indicated they wanted to buy actually did purchase a home in the next year, it would represent more than 4.2 million first-time home sales, more than double the roughly 2.1 million first-time home buyers in 2013.
Are 4.2M First Time Buyers about to Buy?
Zillow 3/2014
31%
30%
30%
9%
Millennials
Gen X
Boomers
Silent Generation
NAR 2014
Percentage of Buyersby Generation
"No other cohort of adults is nearly as confident about their economic future
as the Millennials are right now.
This is definitely a change…
With an increased sense of optimism, this generation is starting to feel as though they
have the resources available to lead the lives they want or expect to in the future."
Jim Zeumer Pulte Group VP Corporate Communications
MILLENNIALS are ready to buy homes…
of Millennials plan to purchase a home in the future
85%increased their interest in purchasing
a home in the past year as the positive attributes of homeownership
resonate with this generation
58%
Pulte Group 2014
Millennials: Associate Owning A Home with…
Pulte Group 2014
Baby Boomersare ready to move!
BH&G 2014
Baby Boomers ready to move…
of Boomers plan to move from the home they currently own
57%Plan to stay in the state they
are currently living in
72%
said they’d likely buy a second home, such as a vacation or beach
house, to use during retirement
25%don’t expect to live with other
generations of their family
83%
“The oldest Baby Boomer turns 68 this year, and the youngest turns 50. They are buying homes in droves as their employment situation, home values, and stock portfolios have almost fully recovered from the Great Recession.
We are seeing strong sales in this same demographic throughout the country.”
John Burns Real Estate Consulting
Boomers are starting to move…
Vacation Home Sales
553K
717K
2012 2013
UP 29.7%
NAR 2014
We Must…
"Certainly, at these levels, mortgage rates should not be a significant deterrent to buying, let alone considered ‘high’ by any stretch of the imagination,
but for some, perhaps they seem so."
HSH.com
FEAR
"One thing seems certain: we are not likely to see average 30-year fixed
mortgage rates return to the historic lows experienced in
2012."
Freddie Mac
Decade Average Rate Payment
1970s 8.86% $1,589
1980s 12.7% $2,166
1990s 8.12% $1,484
2000s 6.29% $1,237
2014 YTD 4.36% $997
The 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 3/2014
Historic Mortgage Rates by Decade
3.25
3.5
3.75
4
4.25
4.5
4.75
2013 - 2014 30 Year Fixed Mortgage Rates
Freddie Mac 3/2014
1/2013 4/2014
4.4
4.74.9
5.15.3
5.55.7
Freddie MacProjected Rates
April 2014 – 2015 4Q
Mortgage Rate Projections
Analyst Projected Rate 2015 4Q
Fannie Mae 5%
Freddie Mac 5.7%
Mortgage Bankers Assoc 5.3%
3/2014
Date Mortgage Interest Rate* P&I**
Today $250,000 4.41% $1,253.38
End of 2015 $270,000 5.7% $1,567.08
*Average Commitment Rate per Freddie Mac **Principal and Interest Payment
Difference in Monthly Payment $313.70
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
S&P Case Shiller 3/2014
Year-over-Year Change in Prices
S&P Case-Shiller Home Price Indices
S&P Case Shiller 3/2014
RETURN ON INVESTMENT
51.1
35.2
8.3
65.7
Dow S&P NASDAQ Real Estate
January 2000 – April 2014
MSN Money.com, Case Shiller
Months Inventory of Homes for Sale
NAR 3/2014
5-6 Months = Normal Market Inventory
Months 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 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
5-6 Months = Normal Market Inventory
NAR 3/2014
NAR 3/2014
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
Percentage of Distressed Property Sales
35%
16%
23%
ResourcesSlide Slide Title Link
5,6,10,11,41,42,43
Pending Home Sales, Existing Home Sales, Year-over-Year Inventory, Months Inventory, Months Inventory Chart, Months Inventory Graph, % Distressed Property Sales
http://www.realtor.org/
7 % Change In Sales by Price Range http://economistsoutlook.blogs.realtor.org/2014/02/23/a-closer-look-at-the-latest-ehs-release/
8 % Change in Sales by Categoryhttp://www.corelogic.com/blog/authors/molly-boesel/2014/03/home-sales-increased-by-8-percent-year-over-year-in-february.aspx#.UzG70WePK74
9 Elliot F. Eisenberg Quote http://econ70.com/2014/03/26/housing-holds/
13, 14 United State Home Prices http://us.spindices.com/index-family/real-estate/sp-case-shiller
15, 50 CoreLogic Quote http://www.corelogic.com/research/hpi/corelogic-hpi-february-2014.pdf
17 First Time Buyers http://zillow.mediaroom.com/index.php?s=159&item=422
18 Percentage of Buyers by Generation http://www.realtor.org/reports/home-buyer-and-seller-generational-trends
19 Population 20-34 Yearshttp://www.calculatedriskblog.com/2014/03/the-favorable-demographics-for.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
20, 21, 22, 51
Jim Zeumer Quote, Millennials are Ready, Millennials Associate Owning A Home with…
http://www.pultegroupinc.com/investors/press-releases/press-release-details/2014/Better-Days-Ahead-Millennials-Think-So/default.aspx
24 Baby Boomers Ready http://www.bhgrealestate.com/Views/MediaCenter/News.aspx?id=3122
25 Boomers are starting to move…http://realestateconsulting.com/blog/lesley-deutch/affluent-second-home-buyers-are-back-droves
KEEPINGCURRENTMATTERS.COM
ResourcesSlide Slide Title Link
26, 53 Vacation Home Sales Uphttp://www.realtor.org/news-releases/2014/04/vacation-home-sales-surge-in-2013-investment-property-declines
28 HSH.com Quote http://www.hsh.com/trends.html#archives
30, 31, 54
Freddie Mac Quote, Historic Mortgage Rateshttp://www.freddiemac.com/blog/research_and_analysis/20140324_dirt_cheap_to_cheap.html
32,33 30 Year Fixed Rate, Projected Rates http://www.freddiemac.com/pmms
34, 35 Mortgage Rate Projectionshttp://fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_011314.pdf http://www.freddiemac.com/finance/docs/Jan_2014_public_outlook.pdf http://www.mortgagebankers.org/files/Bulletin/InternalResource/86783_.pdf
36, 52 Cost of Waiting http://www.freddiemac.com/pmms
38, 39 Year-over-Year Change in Prices, Case Shiller HPIhttps://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/83930_cshomeprice-release-0325.pdf?force_download=true
40 Return on Investmenthttp://www.spindices.com/index-family/real-estate/sp-case-shiller http://money.msn.com/
47-49 Daniel Pink, Seth Godin, & Guy Kawasaki Quotes LeadingRE Conference 2014
KEEPINGCURRENTMATTERS.COM
“I needed a real estate agent in 1997 because I didn’t have
a password to the MLS .”
Daniel PinkBestselling Author of Drive
“The minute real estate listings went online was the minute that it was no
longer sufficient that a real estate broker merely had information
about real estate listings.”
Seth Godin Author, Entrepreneur,
Marketer and Public Speaker
“To provide value, real estate agents must not only provide information but also insights
into that information.”
Guy Kawasaki
Silicon Valley Author, Speaker, Investor and Business Advisor
- CoreLogic 3/2014
“Home prices nationwide remain 16.9% below their peak, which
was set in April 2006.”
Millennials: Associate Owning A Home with…
Pulte Group 2014
Date Mortgage Interest Rate* P&I**
Today $250,000 4.41% $1,253.38
End of 2015 $270,000 5.7% $1,567.08
*Average Commitment Rate per Freddie Mac **Principal and Interest Payment
Difference in Monthly Payment $313.70
Vacation Home Sales
553K
717K
2012 2013
UP 29.7%
NAR 2014
"One thing seems certain: we are not likely to see average 30-year fixed
mortgage rates return to the historic lows experienced in
2012."
Freddie Mac
So you Want to be an Agent