Everyone is Now Saying It
Return on Investment January 2000 – April 2013
46.1
50
33.3 30
12.5 10
-10
-17.1 -30
Dow
S&P
NASDAQ
Real Estate MSN Money.com, Case Shiller
Pending Home Sales 110
105
100 = Historically Healthy Level
100
95
90 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
NAR 3/2013
Pending Home Sales 110 2013
2012
100 = Historically Healthy Level
2011
January 2012 – December 2012
100
90
January 2011 – December 2011 80
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec NAR 3/2013
Future Price Projections Analyst
New
Previous
Bank of America
8%
4.7%
Capital Economics
8%
5%
Deutsche Bank
7%
2.5%
Freddie Mac
4.5%
2%
John Burns Consulting
9.1%
5.3%
J.P. Morgan
7%
3%
Morgan Stanley
7%
5%
NAR
7%
4%
Zelman & Associates
7%
5.5%
4.2%
2.9%
Zillow
Wall Street Journal 3/2013
S&P Case Shiller National Pricing Index 200
190 180 170 160 150 140 130
2006 – 2012
120 KCM 3/2013
Case Shiller
S&P Case Shiller National Pricing Index 200 180 160 140 120 100
80 60 40 20 0
KCM 3/2013
1987 – 2012 Case Shiller
S&P Case Shiller National Pricing Index 140
130
2010 – 2012 120
2010
KCM 3/2013
2010
2011
2011
2011
2011
2012
2012
2012
2012
Case Shiller
Home Price Expectation Survey
Projected Home Prices - 2013 Home Price Expectation Survey The nationwide panel of 118 economists, real estate experts and investment and market strategists expects home values to end 2013 up an average of 4.6 percent according to the first quarter Home Price Expectations Survey. Home Price Expectation Survey 3/2013
Average Annual Appreciation 12.0%
10.0% 8.0%
10.4%
6.0% 5.1%
4.0% 2.0%
3.6%
4.1%
0.0%
-2.0% -4.0% -6.0%
-5.8% Pre-Bubble (1987-1999)
Bubble Bust Recovery to Date (Jan '00-Apr '07) (May '07-Oct '11) (Nov '11-Jan '13 )
Expectations (2013-2017)
Home Price Expectation Survey 3/2013
Home Price Expectation Survey 6
5
Projected Percentage Increase 4.6
4.2
4
3.8
3.8
3.7
2015
2016
2017
3
2
1
0
2013
2014
Home Price Expectation Survey 3/2013
Cumulative Appreciation by 2017 40.0%
34.2% 30.0%
22.0%
22.0%
20.0%
11.7% 10.0%
0.0%
Pre-Bubble Trend
Bulls
All Projections
Bears
Home Price Expectation Survey 3/2013
Percentage Appreciation by Survey 6
3 Years Ago
2 Years Ago
1 Year Ago
Now
5.5 5
4.6
4.5 4
3.5 3
3.9
3.6
3.2
2.7
2.6
2.5
2 1.5
4.2
1.4
1 0.5 0 2013
2014 Home Price Expectation Survey 3/2013
S&P Case-Shiller Home Price Indices 10.0%
Year-over-Year Change in Prices
8.1%
8.0%
6.8% 5.5%
6.0%
3.6%
4.0%
2.0%
0.0%
Jan
Feb
Mar
Apr
May
0.6%
-0.5% Jun -2.0%
-2.5% -4.0%
-3.9%
1.1%
Jul
4.3%
2.0%
Aug
Sep
Oct
Nov
Dec
Jan
-1.7%
-3.5%
-6.0%
S&P Case Shiller 3/2013
S&P Case-Shiller Home Price Indices Metropolitan Area
Year-over-Year
Atlanta
13.4%
Boston
Metropolitan Area
Year-over-Year
Miami
10.8%
4%
Minneapolis
12.1%
Charlotte
6%
New York
.6%
Chicago
3.3%
Phoenix
23.2%
Cleveland
4.8%
Portland
8.3%
San Diego
9.8%
Dallas
7%
Denver
9.2%
San Francisco
17.5%
Detroit
13.8%
Seattle
8.7%
Las Vegas
15.3%
Tampa
8.9%
Los Angeles
12.1%
Washington
5.9% S&P Case Shiller 3/2013
Home Prices in the Short Term 150.00
2010-11 2011-12
PROJECTED?
2012-13
145.00
140.00
135.00
130.00
May
June
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
S&P Case Shiller 3/2013
30 Year Fixed Rate Mortgage History 4.25
1/2012 – 4/2013 4
3.75
3.5
3.25 Federal Reserve 4/2013
Mortgage Rates Moving Forward
The MBA projects 30 year mortgage rates will hit 4.3% by the end of the year‌
MBA 3/2013
and, they have already started to inch upward‌
Recent Rate Movement 3.65 3.6
30 Year Fixed Rate Mortgage
3.55 3.5 3.45 3.4 3.35
2013
3.3 1/3 Rate 3.34
1/10 3.4
1/17 3.38
1/24 3.42
1/31 3.53
2/7 3.53
2/14 3.53
2/21 3.56
2/28 3.51
3/7 3.52
3/14 3.63
3/21 3.53
3/28 3.57
4/4 3.54
Freddie Mac 4/2013
The Move-Up Seller
Price
Rate
P&I
2006
$400,000
6.5
$2,528.27
Today
$300,000
3.5
$1,347.13
Monthly Savings $1,181.14
The Move-Up Seller
Price Over 12 Months Over 30 Year Mortgage
P&I $14,173.68 $425,210.40
Opportunity Still Exists - For Now “Although buying a home is still cheaper than renting, the gap is closing. In 2013, home prices should rise faster than rents, and mortgage rates are likely to rise in the next year as the economy improves. …People who didn’t buy a home last year may have missed the bottom of the market, but they haven’t completely missed the boat. Buying remains cheaper than renting in all 100 large metros.” Jed Kolko, Trulia’s Chief Economist Trulia 3/2013
Month’s Inventory of Homes for Sale 10.0 9.0 8.0 7.0
6.0
5-6 Months = Normal Market Inventory
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
NAR 3/2013
Completed Foreclosures 200,000
160,000
120,000
80,000
40,000
0
4Q 2009
1Q 2010
2Q 2010
3Q 2010
4Q 2010
1Q 2011
2Q 2011
3Q 2011
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
OCC Mortgage Metrics Report 3/2013
Foreclosures in Process 1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
4Q 1Q 2Q 3Q 4Q 1Q 2009 2010 2010 2010 2010 2011
in millions
2Q 2011
3Q 2011
4Q 2011
1Q 2Q 3Q 4Q 2012 2012 2012 2012
OCC and OTS Mortgage Metrics Report 3/2013
Cheaper to Buy than Rent “Today’s it is 44% cheaper to buy versus rent. In fact, homeownership is cheaper than renting in all of America’s 100 largest metros. That’s because falling mortgage rates have kept buying almost as affordable, relative to renting, as it was last year.”
Trulia 3/2013
Cheaper to Buy than Rent
http://trends.truliablog.com/vis/rentvsbuy-winter-2013
Trulia 3/2013
Percentage of Distressed Property Sales 35%
35% 30%
25%
25% 20%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
NAR 3/2013
Everyone is Now Saying It
Projected Home Prices - 2013 Bank of America “Home prices continue to show momentum amid shrinking inventory and record high affordability, prompting us to revise up our original forecast (4.7%) for home prices this year.
We now expect national home prices to increase 8% this year.� Bank of America 3/2013
Projected Home Prices - 2013 Capital Economics “Strong demand and tight inventory have brought existing home sales back to ‘normal’ levels, and further gains are possible… These conditions, combined with broader economic indicators, lead Capital Economics to revise its previous forecast of a 5 percent price gain this year up to 8 percent.”
DSNews 3/2013
Projected Home Prices - 2013 Morgan Stanley “Strong momentum in home prices as well as housing activity gave Morgan Stanley analysts enough confidence to upgrade their home price appreciation projections to roughly 7% (from 5%) for 2013.
HousingWire 3/2013
30 Year Fixed Rate Mortgage History 4.25
1/2012 – 4/2013 4
3.75
The Bottom? 3.5
3.25
Federal Reserve 4/2013
Recent Rate Movement 3.65
3.6
30 Year Fixed Rate Mortgage
3.55
3.5
3.45
3.4
3.35
This Year
3.3
Freddie Mac 4/2013
S&P Case-Shiller Home Price Indices Metropolitan Area
Year-over-Year
Atlanta
13.4%
Boston
Metropolitan Area
Year-over-Year
Miami
10.8%
4%
Minneapolis
12.1%
Charlotte
6%
New York
.6%
Chicago
3.3%
Phoenix
23.2%
Cleveland
4.8%
Portland
8.3%
San Diego
9.8%
Dallas
7%
Denver
9.2%
San Francisco
17.5%
Detroit
13.8%
Seattle
8.7%
Las Vegas
15.3%
Tampa
8.9%
Los Angeles
12.1%
Washington
5.9% S&P Case Shiller 3/2013
S&P Case-Shiller Home Price Indices Metropolitan Area
M-o-M
Atlanta
1.0%
Boston
Metropolitan Area
M-o-M
Miami
.8%
0%
Minneapolis
-.5%
Charlotte
.2%
New York
.1%
Chicago
-.9%
Phoenix
1.1%
Cleveland
-.5%
Portland
-.4%
Dallas
0%
San Diego
-.6%
Denver
0%
San Francisco
0.1%
Detroit
-.9%
Seattle
-.3%
Las Vegas
1.6%
Tampa
.9%
Los Angeles
.9%
Washington
-.7% S&P Case Shiller 3/2013
Resources Slide
Slide Title
Link
4,5
Pending Home Sales
http://www.realtor.org
6
Future Price Projections
http://blogs.wsj.com/economics/2013/03/27/home-prices-seen-making-stronger-gains-in-2013/
11,12, 13,14, 15
Projected Home Prices – 2013, Average Annual Appreciation, Home Price Expectation Survey, Cumulative Appreciation by 2017, Percentage Appreciation by Survey
https://www.pulsenomics.com/uploads/Q12013_ZHPES_Press_Release_Final.pdf
16,17, 18, 19, 20
S&P Case-Chiller Home Price Indices, Home Prices in the Short Term
http://www.standardandpoors.com/indices/articles/en/us/?articleType=PDF&assetID=1245349348126
21, 23
30 Year Fixed Rate Mortgage History, Recent Rate Movement
http://www.freddiemac.com/pmms
22
Mortgage Rates Moving Forward
http://www.marketwatch.com/story/mortgage-rates-will-rise-next-year-but-slowly-2012-10-24
26
Opportunity Still Exists – For Now
http://info.trulia.com/rentvsbuy-winter2013
27
Month’s Inventory of Homes for Sale
http://www.realtor.org
28,29
Completed Foreclosures, Foreclosures in Progress
http://www.occ.gov/publications/publications-by-type/other-publications-reports/mortgagemetrics-2012/mortgage-metrics-q2-2012.pdf
30,31
Cheaper to Buy than Rent
http://trends.truliablog.com/2013/03/rent-vs-buy-winter-2013
KEEPINGCURRENTMATTERS.COM
Resources Slide
Slide Title
Link
33
Percentage of Distressed Property Sales
http://www.realtor.org
36
Projected Home Prices - 2013
http://www.dsnews.com/articles/capital-economics-revises-home-price-forecast-upward2013-03-08
37
Projected Home Prices – 2013
http://www.housingwire.com/news/2013/03/20/housing-track-improve-hurdles-remainmorgan-stanley
38,39
30 Year Fixed Rate Mortgage History, Recent Rate Movement
http://www.freddiemac.com/pmms
40,41
S&P Case-Chiller Home Price Indices
http://www.standardandpoors.com/indices/articles/en/us/?articleType=PDF&assetID=1245 349348126
KEEPINGCURRENTMATTERS.COM