Return on Investment
MSN Money.com, Case Shiller
Pending Home Sales 105
100
95
90
85
80 Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
NAR 11/2012
Pending Home Sales 105
100 = Historically Healthy Level 100
95
October 2011 – October 2012 90
85
October 2010 – October 2011 80 Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
NAR 11/2012
Single Family Sales (year-over-year)
NAR 11/2012
Condo & Co-op Sales (year-over-year)
NAR 11/2012
$1M+ Home Sales (year-over-year)
NAR 11/2012
New Home Sales
Calculated Risk 12/1/2012
New Construction
Calculated Risk 12/1/2012
Household Formations 1,400 1,200
Average Annual Formations in Thousands
1,250 1,150
1,000 800 600
650
400 200 0
During Boom Years
2008-2011
Last 12 Months Census Bureau 11/2012
Mortgage Rates – 30 Year Fixed 5.25
5
4.75
4.5
4.25
4
3.75
3.5
3.25
1/01/2011
Today Federal Reserve
0.00
1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
30 Year Mortgage Rates 18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
Freddie Mac
Month’s Inventory of Homes for Sale 10.0 9.0 8.0 7.0 6.0 5.0 4.0
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
NAR 11/2012
S&P Case-Shiller Home Price Indices
S&P Case Shiller 11/2012
S&P Case-Shiller Home Price Indices 3.6%
4.0%
3.0%
Year-over-Year Change in Prices 2.0%
2.0%
1.1% 0.6%
1.0%
Jan
Feb
Mar
Apr
May
0.0%
-0.5%
-1.0%
Jul
Aug
Sept
-1.7%
-2.0%
-2.5%
-3.0%
-4.0%
Jun
-3.5% -3.9%
-5.0%
S&P Case Shiller 11/2012
Single Family Prices (year-over-year)
NAR 11/2012
Condo & Co-op Prices (year-over-year)
NAR 11/2012
FHFA Regional Home Prices (year-over-year)
FHFA 3Q HPI Report
FHFA State Home Prices (year-over-year)
FHFA 11/2012
Impact of Foreclosures on Prices
Clear Capital 11/8/2012
Percentage of Distressed Property Sales 35%
35% 30%
25%
24% 20%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
NAR 10/2012
Home Prices in the Short Term “The monthly Case-Shiller house price indexes will show month-tomonth declines soon, probably starting with the October report to be released in late December. The CoreLogic Index has already started to decline on a month-to-month basis. This is not a sign of impending doom or another collapse in house prices - it is just the normal seasonal pattern.�
Calculated Risk 12/1/2012
Home Prices in the Short Term “We project a small, short-term price decline for many markets that recently experienced double-digit appreciation.� David Stiff, Chief Economist of Fiserv
Fiserv 11/28/2012
Home Prices in the Short Term 150.00
2010-11 2011-12 2012-13
145.00
140.00
135.00
b Fe
n Ja
ec D
ov N
O ct
pt Se
Au g
Ju ly
n Ju
ay M
Ap ril
M
ar
130.00
S&P Case Shiller 11/2012
Cost vs. Price
‘CFPB’ “Like a neighborhood
cop on the beat, the Consumer Financial Protection Bureau (CFPB) supervises banks, credit unions, and other financial companies, and we will enforce Federal consumer financial laws.”
CFPB Website
The ‘Perfect Storm’ of Regulation The Qualified Mortgage (QM) rule - part of the Dodd-Frank Wall Street Reform Act - gives a borrower the right to sue if they received a loan that courts deemed the borrower did not have the ability to repay. The Qualified Residential Mortgage (QRM) requires lenders to keep a 5 percent capital cushion on certain loans they make so that if a loan goes belly up, a lender has some skin in the game, too. Basel III will mandate how much capital banks have to keep on hand for all their mortgage-related business.
All the uncertainty surrounding the ultimate form these important regulations will take has kept banks hesitant to lend.
US News & World Report 11/7/2012
FHA Mortgages “There are concerns that impending new rules in the mortgage market, dictated by Dodd-Frank financial reform, will make the overall loan market more expensive and drive more borrowers to the FHA.� Diana Olick
CNBC11/16/2012
FHA Mortgages “The FHA is now facing billions of dollars of losses on loans originated between 2007 and 2009. To help bolster its finances, the agency recently announced a series of measures including higher annual insurance premiums and a change to rules that allowed insurance premiums to lapse. Typical borrowers have to pay an up-front insurance premium of 1.75% of the loan amount and, starting in 2013, a higher annual premium of 1.35% of the balance, up from 1.25%, says Keith Gumbinger, vice president at HSH.com.�
Wall Street Journal 11/24/2012
Impact of New Regulations “We find using conservative economic assumptions that the bottom line effects of proposed Dodd-Frank and Basel III regulations may include up to 20 percent fewer loans, resulting in
600,000 fewer home sales.� American Forum 10/2012
Impact of New Regulations “Borrowers who fail to meet the basic criteria for a qualified residential mortgage will have a harder time finding a loan, when compared to borrowers who do meet those criteria. They might end up paying a higher interest rate, as well…Financial analysts from J.P. Morgan Securities have estimated that borrowers might pay up to three percentage points more for loans that are subject to risk-retention.*” *loans that don’t meet the definition of a qualified residential mortgage
QualifiedResidentialMortgage.org 11/2012
Resources Slide
Slide Title
Link
3,4,5,6
Pending Home Sales, Single Family Sales, Condo & Co-op Sales, $1M+ Home Sales
http://www.realtor.org
8,9
New Home Sales, New Construction
www.calculatedriskblog.com
10
Older Households More Likely to Own
PAID SUBSCRIPTION - http://www.economy.com/dismal/pro/article.asp?cid=235444
11
Household Formations
http://online.wsj.com/article/SB10001424052970204707104578095223920995426.html
12
Mortgage Rates
http://www.freddiemac.com/pmms
14
Month’s Inventory of Homes for Sale
http://www.realtor.org
15
S&P Case-Shiller Home Prices Indices
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDTType&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline %3B+filename%3Ddownload.pdf&blobheadername2=ContentDisposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=contenttype&blobwhere=1245342717782&blobheadervalue3=abinary%3B+charset%3DUTF8&blobnocache=true
17
Single Family Prices
www.realtor.org
18
Condo & Co-Op Prices
www.realtor.org
20
FHFA State Home Prices
http://www.fhfa.gov/webfiles/24216/q22012hpi.pdf
KEEPINGCURRENTMATTERS.COM
Resources Slide
Slide Title
Link
21
Impact on Foreclosures on Prices
http://www.clearcapital.com/company/MarketReport.cfm?month=November&year=2012
22
Percentage of Distressed Property Sales
http://www.realtor.org
23
Home Prices in the Short Term
www.calculatedriskblog.com
24
Home Prices in the Short Term
http://investors.fiserv.com/releasedetail.cfm?ReleaseID=723656
25
Home Prices in the Short Term
http://www.standardandpoors.com/indices/sp-case-shiller-home-priceindices/en/us/?indexId=spusa-cashpidff--p-us----
27
CFPB
http://www.consumerfinance.gov
28
The ‘Perfect Storm’ of Regulation
http://www.usnews.com/news/blogs/home-front/2012/11/07/5-housing-issues-hanging-in-thebalance-going-into-obamas-2nd-term
29
FHA Mortgages
http://www.cnbc.com/id/49856477/To_Stem_Losses_FHA_Mortgages_Get_More_Expensive
30
FHA Mortgages
http://online.wsj.com/article/SB10001424127887323353204578128810214676692.html
31
Impact of New Regulations
http://americanactionforum.org/sites/default/files/Regulation_and_Housing.pdf
32
Impact of New Regulations
http://www.qualifiedresidentialmortgage.org/criteria.php
KEEPINGCURRENTMATTERS.COM