Market Review
Major Factors Impacting Today’s Real Estate Market •The Economy (Consumer Confidence) •Local Employment •Financing Options/Banking Environment •Interest Rates •Foreclosures/Shadow Inventory
Consumer Sentiment Index 1978 - 2010
http://research.stlouisfed.org/fred2/series/UMCSENT
8.8% MAR. 2011 ALL U.S.
8.5% MAR. 2011 DELAWARE
Website: www.google.com/publicdata/unemploymentrate
Quality Residential Mortgage 1.) A Product-Type qualified residential mortgage is a first-lien mortgage that is for an owner-occupant with fully documented income, fully amortizing with a maturity that does not exceed 30 years and, in the case of adjustable rate-mortgages (ARMs), has an interest rate reset limit of 2 percent annually and a limit of 6 percent over the life of the loan. 2.) A PTI/DTI qualified residential mortgage has a borrower’s ratio of monthly housing debt to monthly gross income that does not exceed 28 percent and a borrower’s total monthly debt to monthly gross income that does not exceed 36 percent. 3.) An LTV ratio qualified residential mortgage must meet a minimum LTV ratio that varies according to the purpose for which the mortgage was originated. For home purchase mortgages the LTV ratio is 80 percent. 4.) A FICO qualified residential mortgage has a borrower’s FICO score greater than or equal to 690 at the origination of the loan.
Mortgage Market Note #11-02 3/31/2011
Watch Rates Closely For each 1% rise in interest rates, cost to buyer increases by 10%.
Mortgage Rates – 30 Year Fixed
APRIL 2011 Steve Harney – Federal Reserve
TODAY
Price is the Same‌ it Just Costs More Date
Loan Amount
Interest Rate
Monthly Payment (P&I)
Today
$100,000
4.86
$528.30
Difference in monthly payments Nov 2010
$100,000
4.17
Difference in Mortgage Payments
$487.27
$41.03
Additional Cost Over 30 Years Monthly
$41.03
Yearly
$492.36
Over 30 Years
$14,770.80
Difference in monthly payments
Home Sales by Month New Castle County
Year 2005 2006 2007 2008 2009 2010 # Homes Sold
8,319
7,739
6,917
4,908
4,861
4,307
2011 Forecast ?? 48% decline in the number of sales since 2005.
Number of Homes Sold – NCC 1996 - 2010 Looking back at the sold housing data for the last 15 years, 2010 has returned to the levels experienced in the early 1990’s.
Data supplied by TReND MLS.
% Change in Sales by Price Range New Castle County (1Q 2011 vs. 2010)
$100-250K
< $100K
$250-500K
$1M+
$500-750K
$750-1M
Area
2011
2010
% Change
Brandywine (901)
$249,900
$250,000
0%
Hockessin/Greenville/Centerville (902)
$414,900
$515,000
-19.4%
Pike Creek/Elsmere/Newport (903)
$185,000
$199,500
-7.3%
New Castle/Red Lion/DE City (904)
$134,950
$164,900
-18.2%
Newark/Glasgow (905)
$195,000
$215,000
-9.3%
Wilmington (906)
$75,700
$129,900
-42.1%
South of Canal (907)
$263,000
$275,100
-4.4%
Area
2011
2010
% Change
Brandywine (901)
143
131
9.2%
Hockessin/Greenville/Centerville (902)
36
46
-21.7%
Pike Creek/Elsmere/Newport (903)
88
109
-19.3%
New Castle/Red Lion/DE City (904)
89
97
-8.2%
Newark/Glasgow (905)
232
237
-2.1%
Wilmington (906)
136
143
-4.9 %
South of Canal (907)
79
83
-4.8%
Median Home Prices to Income Nationally 1965 to 2010
Real Estate Market Cycles New Castle County
Real Estate Market Cycles Kent County
Real Estate Market Cycles Southern Chester County
Real Estate Market Cycles Cecil County
Year
Median Household Income $52,000
Median Home Price $129,000
Home Price/ Income Ration 2.5
2007
$59,000 13.5%
$235,000 82%
4.0
2010
$63,600 7.8%
$212,000 10%
3.3
2011 (1Q)
$63,600
$190,500
3.0
2000
Year
Median Household Income $41,000
Median Home Price $115,000
Home Price/ Income Ration 2.8
2007
$47,000 14.6%
$225,000 95.6%
4.8
2010
$51,000 8.5%
$189,900 15.6%
3.7
2011 (1Q)
$51,000
$171,000
3.3
2000
What role will distressed properties play?
Looking Ahead to Remainder of 2011 Indicators Predict the Future
•What about shadow inventory (delinquencies)?
•How long will it take for the current supply to be absorbed given today’s demand? •What indicators exist today that market stability will soon be achieved?
Value by Sale Category Type of Sale
% of Value
Non-Distressed Sale
100%
Short Sale
81%
Foreclosure Sale
59%
Steve Harney â&#x20AC;&#x201C; Realty Trac Foreclosure Report 12/02/2010
Value by Sale Category Type of Sale
% of Value
Non-Distressed Sale
100%
Short Sale
83%
Foreclosure Sale
78%
NAR â&#x20AC;&#x201C; 3/22/2011
90+ Mortgage Delinquencies
Local View
NPR.org – Interactive Map The Economy Where You Live – Dec. 2010
Monthsâ&#x20AC;&#x2122; Shadow Inventory
NAR 3/21/2011
Share of Distressed Sales
NAR 3/21/2011
Impact of Distressed Properties Active New Castle County (3/31/11)
Impact of Distressed Properties Active Kent County (3/31/11)
Impact of Distressed Properties Closed New Castle County (1Q 2011)
Impact of Distressed Properties Closed Kent County (1Q 2011)
Return on Investment (Nat’l) January 2000 – March 2011
REAL ESTATE DOW
S&P NASDAQ
Steve Harney - MSN Money.com, CaseShiller
Return on Investment (NCC) January 2000 â&#x20AC;&#x201C; March 2011
REAL ESTATE DOW
S&P NASDAQ
Steve Harney - MSN Money.com, CaseShiller
Supply & Demand
Visible and Pending Inventory
Congressional Oversight Panel 3/16/2011
Pending Inventory Detail
CoreLogic Shadow Inventory Report 3/30/2011
Inventory vs. Price
Monthsâ&#x20AC;&#x2122; Supply (Avg. 1Q 2011) New Castle County
11.4
Monthsâ&#x20AC;&#x2122; Supply (Avg. 1Q 2011) Kent County
17.0
Monthsâ&#x20AC;&#x2122; Supply (Avg. 1Q 2011) Southern Chester County
17.4
Monthsâ&#x20AC;&#x2122; Supply (Avg. 1Q 2011) Cecil County
14.5
% Appreciation (Natâ&#x20AC;&#x2122;l) 5 Year Increments
Steve Harney - Brookings Papers 9/08
% Appreciation â&#x20AC;&#x201C; NCC 5 Year Increments
Average List vs. Sale Price New Castle County
Data supplied by TReND MLS.
Average List vs. Sale Price Kent County
Data supplied by TReND MLS.
Average List vs. Sale Price Southern Chester County
Data supplied by TReND MLS.
Average List vs. Sale Price Southern Chester County
Data supplied by TReND MLS.
Prices
Donâ&#x20AC;&#x2122;t Wait to Get It Sold!!
Home Price Expectation Survey
Macro Market Home Price Expectations Survey 03/2011
Home Price Expectation Survey
Macro Market Home Price Expectations Survey 03/2011
Case-Shiller Index The Case-Shiller Index of home prices remains well above the long-term trend.