FEBRUARY 2015
Consumer Optimism Hits 11-Year High
100
95
90
85
80
75
70
65
60
55
50
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Michigan’s Surveys of Consumers
HOUSEHOLD
FORMATIONS
2.001M
1.147M
973K
December 2013
Long Term Average
December 2012
December 2013
-205K
December 2014
Savings on Reduced FHA
Mortgage Insurance Premiums
Based on a mortgage of $200,000
$18,000
$9,000
$4,800
$83
Initial Month
$990
1 Year
5 Years
10 Years
30 Years
NAR
“NAR Research estimates
that the fee reduction will
price in an additional 1.6
million to 2.1 million renters
along with many trade-up
buyers, resulting in 90,000 to
140,000 additional annual home
purchases based on the standard
affordability limits at the FHA and
conventional market and dynamics
in the housing finance market.”
Mortgage Credit
Availability
April May June July
2013
Aug Sept
Oct
Nov
Dec
Jan Feb March April May June July
2014
Aug Sept
Oct
Nov
Dec
Renters Planning on Buying a Home
in the next 3 years by age group
58%
47%
31%
Age 18-24
Age 25-34
Age 35-44
Freddie Mac
Renters’ Views on Homeownership
financial aspects
86%
80%
77%
Homeownership
provides protection
against rent increases
Homeownership is an
investment opportunity that
builds long-term wealth
Homeownership
provides stability and/or
financial security
Freddie Mac
Renters’ Views on Homeownership
non-financial aspects
It is something to be proud of
91%
It can be passed on to your children
90%
It allows more flexibility to design it the way you want
89%
It gives you more privacy
86%
It gives you more independence and control
81%
It provides a better home life for children
76%
It is a sign of success
76%
It makes you feel more like part of a community
74%
It allows you to live in a better, safer neighborhood
60%
Freddie Mac
#1 Reasons Renters Won’t Buy
62%
58%
Age 25-34
Age 35-44
44%
Age 18-24
Freddie Mac
Impact on “Willingness to Pay”
The impact on a renter’s
“willingness to pay”
when buying a house.
40%
5%
A 2% Change in Mortgage Rate
Change in Down Payment
Federal Reserve Bank of New York
The DOWN PAYMENT
Biggest Misconception about Mortgages
Percentage of respondents to Zelman & Assoc
survey who believe that you need a minimum
of a 15% down payment to purchase a home.
42%
39%
38%
All Respondents
25-29 Year Olds
30-34 Year Olds
Freddie Mac
“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
“A home is often a primary
source of wealth in a family…
Having a home is generational
way to pass that wealth on.
We want people responsible
enough to own a home to have
that opportunity.”
Julián Castro, Secretary for HUD
A Second CHALLENGE
“The total inventory of homes
available for sale fell for the
first time in 16 months…
Months supply is already
low at 4.4 months.
More inventories are needed,
not less. Or else, home prices
could re-accelerate.”
Lawrence Yun, NAR’s Chief Economist
10%
5%
0%
-5%
-10%
-15%
Year-over-Year
Inventory Levels
-20%
-25%
Jan Feb March April May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun
Jul
Aug
% -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% 5.5% 5.8% 4.5%
Sep
Oct
Nov
Dec
6%
5.2%
5%
-0.50
NAR 1/2015
Pent Up Seller Demand
11
Historically, number of years home sellers lived in their homes
10
9
8
7
Pent Up
Seller Demand
6
5
4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Equity Share by State Q3 2014
Foot Traffic
(indicator of future sales)
July 20 13
Aug ust
Sep tembe r October
November December
Januar y
201 4
Februa ry
March
Apr il
May
June
July
Aug ust
Sep tembe r October
November December
Foot Traffic
(indicator of future sales)
December 2013
December 2014
Months Inventory of HOMES FOR SALE
5.7
5.5
5.5
5.5
5.5
5.3
5.1
5.1
4.4
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
NAR 1/2015
Q: When do most listings
come on the market?
A: The
nd
2
Quarter of each Year
2014 Available Inventory
in millions
1.88
1.90
Jan
Feb
2.23
2.25
Apr
May
2.29
2.35
1.96
Mar
Jun
Jul
% Change in Sales from last year
16%
15.7%
10.4%
8.9%
5.2%
by Price Range
-4.4%
%
$0-100K
-4.4%
$100-250K
8.9%
$250-500K
16.0%
$500-750K
15.7%
$750K-1M
10.4%
$1M+
5.2%
5,500,000
EXISTING
Home Sales
5,000,000
4,500,000
4,000,000
Jan Feb Mar Apr May Jun
201 2
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
201 3
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sep t Oct Nov Dec
201 4
NAR 1/2015
110
PENDING
Home Sales
105
100
100 = Historically Healthy Level
95
90
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
NAR 1/2015
30 Year Fixed Rate Mortgages
4.6
4.4
4.2
4
3.8
3.6
Freddie Mac
Actual Rates
January 2013 – February 2015
3.4
3.2
Freddie Mac 1/2015
Mortgage Rate Projections
Quarter
Fannie
Mae
Freddie
Mac
MBA
NAR
2015 1Q
3.9%
3.9%
3.9%
3.8%
3.88%
2015 2Q
4.0%
4.1%
4.3%
4.0%
4.10%
2015 3Q
4.1%
4.3%
4.7%
4.3%
4.35%
2015 4Q
4.2%
4.5%
4.8%
4.7%
4.55%
Average
of all four
1/2015
Mortgage Rates
Freddie Mac
4.5
Q4
4.3
30 Year Fixed Rate
Q3
4.1
Q2
3.9
Q1
Where Have
They Been
This Year?
Where Are They Going?
2015 Projections
10.0
9.0
Months Inventory of
HOMES FOR SALE
8.0
7.0
6.0
5.0
4.0
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 Mar Apr May Jun Jul Aug Sep Oct Nov Dec
NAR 1/2015
6.0
Months Inventory of
HOMES FOR SALE
5.5
5.0
4.5
4.0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
'13
'14
NAR 1/2015
6.0
Months Inventory of
HOMES FOR SALE
5.7
5.5
5.5
5.5
5.5
5.5
5.3
5.2
5.1
5.0
5.1
5.0
4.9
4.5
4.6
4.4
4.0
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
NAR 1/2015
Case Shiller
14.0%
12.0%
10.0%
Year-Over-Year
8.0%
PRICE
6.0%
4.0%
CHANGES
2.0%
0.0%
June 2012
January 2013
January 2014
November
S&P Case Shiller 1/2015
13.2%
Case Shiller
12.9%
12.4%
Year-Over-Year PRICE CHANGES
10.8%
9.3%
8.1%
6.7%
5.6%
4.8%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
4.5%
Oct
4.3%
Nov
S&P Case Shiller 1/2015
S&P Case-Shiller Home Price Indices
S&P Case Shiller 1/2015
35%
Percentage of
Distressed Property
Sales
14%
11%
January 2012 - Today
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
2012
2013
2014
NAR 1/2015
Resources
Slide
Slide Title
Link
4
Consumer Optimism
http://www.sca.isr.umich.edu/tables.html
5
Household Formations
https://ycharts.com/indicators/us_household_formation
6
FHA Savings
http://economistsoutlook.blogs.realtor.org/2015/01/08/fha-lowers-pricing-to-reflect-less-risk/
7
NAR Quote
http://economistsoutlook.blogs.realtor.org/2015/01/08/fha-lowers-pricing-to-reflect-less-risk/
8
Mortgage Credit Availability
http://www.mba.org/ResearchandForecasts/MCAI.htm
9-12
Renters Planning on Buying,
Views on Homeownership
(financial & non financial),
#1 Reason Won’t Buy
http://www.freddiemac.com/multifamily/pdf/mf_renter_profile.pdf
13
Impact on ‘Willingness To Pay’
http://www.newyorkfed.org/research/staff_reports/sr702.pdf
14
Down Payment Misconception
http://www.freddiemac.com/news/blog/christina_boyle/20140616_mortgage_down_payments.html
15
Housing Wire Quote
http://www.housingwire.com/blogs/1-rewired/post/30441-nomura-fear-is-keeping-demand-pent-up
16, 54
Julián Castro Quote
http://portal.hud.gov/hudportal/HUD?src=/press/speeches_remarks_statements/2015/Statement_011315
18
Lawrence Yun Quote
http://economistsoutlook.blogs.realtor.org/2015/01/26/shrinking-inventory/#sf7126105
19
Year-over-Year Inventory
www.realtor.org
KEEPINGCURRENTMATTERS.COM
Resources
Slide
Slide Title
Link
20
Pent Up Seller Demand
http://economistsoutlook.blogs.realtor.org/2015/01/28/pent-up-sellers/#sf7158951
21
Equity Share by State
http://www.corelogic.com/about-us/researchtrends/equity-report.aspx
22-23, 24
Foot Traffic, Months Inventory
www.realtor.org
25-26
Listings Come to Market 2014
http://economistsoutlook.blogs.realtor.org/2015/01/14/ehs-in-2014-by-the-numbers-part-3-popular-listing-dates/
http://www.realtor.org/topics/existing-home-sales/data
28, 29, 30
Sales by Price Range,
Existing Home Sales,
Pending Home Sales
www.realtor.org
31, 33
30-Year Fixed Rate, Mortgage
Rate Freddie Mac 2015
http://www.freddiemac.com/pmms
http://www.freddiemac.com/finance/ehforecast.html
32
Mortgage Rate Projections
http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_012215.pdf
http://www.freddiemac.com/finance/pdf/january_2015_public_outlook.pdf
http://www.mortgagebankers.org/files/Bulletin/InternalResource/90432_.pdf
http://www.realtor.org
34-36
Months Inventory for Sale
http://www.realtor.org/
37, 38, 39
Case Shiller YOY & HPI
http://us.spindices.com/index-family/real-estate/sp-case-shiller
40
% of Distressed Properties
http://www.realtor.org/
52
NAR Membership
http://www.realtor.org/membership/historic-report
53
Seth Godin Quote
http://sethgodin.typepad.com/seths_blog/2015/01/you-are-what-you-share.html
KEEPINGCURRENTMATTERS.COM
JOIN THE KCM MEMBERS FACEBOOK GROUP
facebook.com/groups/kcmmembers
NAR Membership
in thousands
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
NAR
"The culture we will
live in next month
is a direct result of
what people like us
share today.
The things we share
and don't share determine
what happens next."
Seth Godin
"Homeownership is still the
cornerstone of the American
Dream — a fact you can see
in the lives of everyday folks.
It’s a source of pride. It’s a
source of wealth, providing
both a nest and a nest egg.
And it strengthens communities and
fuels growth in the overall economy."
Julián Castro, Secretary for HUD
FEBRUARY 2015