Pending Home Sales 115
110
105 100 = Historically Healthy Level
100
95
90 Jan Feb Mar Apr
May Jun
Jul Aug
Sep Oct Nov Dec Jan Feb Mar Apr May NAR 6/2013
Pending Home Sales 120
2013
2012
2011
110
January 2012 – December 2012
100 100 = Historically Healthy Level
90
80 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
NAR 6/2013
6200
6000
Home Sales in thousands
5800
5600
5400
5200
Actual
Projected
5000 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 NAR 6/2013
Year-Over-Year Sales by Price Point Region
$0-100K
$100250K
$250500K
$500750K
$750K-1M
$1M+
$269,600
Northeast
-2.7%
3.8%
17.6%
23.9%
36.3%
24.8%
$159,800
Midwest
1.5%
19.7%
35.7%
36.2%
53.8%
48%
$183,300
South
-6.3%
23.2%
36.5%
34.2%
40.6%
24.9%
$276,400
West
-47%
.5%
23.6%
38.1%
63.9%
49.8%
$208,000
U.S.
-9.3%
14.3%
28.2%
32.8%
49.8%
36.9%
Median
WEST
MIDWEST
NORTHEAST
SOUTH NAR 6/2013
Median Days on Market by Type
NAR, RCI Survey 6/2013
Price Changes as per Case Shiller Last 12 Months
Since Peak
30 20 10 0 -10 -20 -30 -40 -50 -60
Case Chiller
Are Properties Overvalued? “Inventories of existing homes are as low as they were in 2000. New-home inventories have barely budged from a 50-year low. As a consequence, there are only 5 months of inventory for existing homes and 4 months for new homes, compared with 6 months when market conditions are normal… Moreover, housing is at least fairly valued, if not undervalued. The boom and bust in housing left house price gains far behind income and rent gains.” Celia Chen Senior Director of the Moody's Analytics Research Staff Moody’s Economy
Gains as Measured Between the First Quarters of 2004 and 2013 30%
25%
28%
26%
20%
15%
10%
5%
0%
0%
Income
Rent
House Prices Moody’s Economy
http://www.economist.com/blogs/graphicdetail/2013/06/us-house-prices
Where are mortgage rates headed?
Mortgage Rate Projections
Analyst
Projected Rate 3Q 2014
Mortgage Bankers Assoc
4.6%
Fannie Mae
4.6%
National Assoc of Realtors
4.8%
Freddie Mac
4.6%
7/2013
30 Year Fixed Rate Mortgage History 1/2012 – 7/2013
Federal Reserve 7/2013
The Cost of Waiting a Year Date
Price
Interest Rate
Last Year
$200,000
3.5%
$898.09
This Year
$220,000
4.5%
$1,114.71
Difference in Payment
P&I
- $216.62
Over 12 Months Over 30 Year Mortgage
- $2,599.44 - $77,983.20
Recent Rate Movement 4.75
4.5
4.25
30 Year Fixed Rate Mortgage 4
3.75
3.5
3.25
3 1/3 1/10 1/17 1/24 1/31 2/7 2/14 2/21 2/28 3/7 3/14 3/21 3/28 4/4 4/11 4/18 4/25 Rate 3.34 3.4 3.38 3.42 3.53 3.53 3.53 3.56 3.51 3.52 3.63 3.53 3.57 3.54 3.43 3.41 3.4
5/2 5/9 5/16 5/23 5/30 6/6 6/13 6/20 6/27 3.35 3.42 3.51 3.59 3.81 3.91 3.98 4.1 4.6
“I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.” Doug Duncan Chief Economist for Fannie Mae
Inman News
"As the economy continues to improve, we expect to see continued upward movement in long-term interest rates… At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.” Frank Nothaft Freddie Mac VP and Chief Economist
Freddie Mac
Mortgage Amount Rate
$100,000
$200,000
$300,000 $400,000 $500,000
6.00
599.55
1,199.10
1,798.65
2,398.20
2,997.75
5.75
583.57
1,167.15
1,750.72
2,334.29
2,917.86
5.50
567.79
1,135.58
1,703.37
2,271.16
2,838.95
5.25
552.20
1,104.41
1,656.61
2,208.81
2,761.02
5.00
536.82
1,073.64
1,610.46
2,147.29
2,684.11
4.75
521.65
1,043.29
1,564.94
2,086.59
2,608.24
4.50
506.69
1,013.37
1,520.06
2,026.74
2,533.43
Percentage of Distressed Property Sales 35% 35%
30%
25%
18% 20%
15% Jan Feb Mar
Apr May Jun
Jul
Aug Sep
Oct Nov Dec Jan Feb Mar
Apr May NAR 6/2013
Breakdown of Today’s Purchasers 50.0%
43.8% 40.0%
36%
30.0%
20.2% 20.0%
10.0%
0.0%
Current Homeowners
First Time Buyers
Investors
Campbell/Inside Mortgage Finance HousingPulse Tracking Survey 6/2013
Agents Who Specialize‌ in a small geographic area compared to agents who list homes in a large area:
1. Were 4% more likely to sell the home 2. Sell homes for 1.21% more 3. Sell homes above the median price for 1.71% more 4. Sell the home in 5.5 fewer days WSJ 6/2013
Return on Investment 60
January 2000 – July 2013
52.4
37.1 30
16
0
-12.8 -30
Dow
S&P
NASDAQ
Real Estate MSN Money.com, Case Shiller
Months 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
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
NAR 6/2013
S&P Case-Shiller Home Price Indices 14.0%
Year-over-Year Change in Prices
12.1%
12.0%
10.2% 10.0%
9.3% 8.1%
8.0%
6.8% 5.5%
6.0%
4.3% 3.6%
4.0%
2.0%
2.0% Jan
Feb
Mar
Apr
May
0.6%
1.1%
0.0%
-0.5% -2.0%
-1.7% -2.5%
-4.0%
-6.0%
-3.9%
-3.5%
S&P Case Shiller 6/2013
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
S&P Case-Shiller Home Price Indices Metropolitan Area
Year-over-Year
Metropolitan Area
Year-over-Year
Atlanta
20.8%
Miami
13.0%
Boston
8.1%
Minneapolis
14.8%
Charlotte
7.3%
New York
3.2%
Chicago
9.3%
Phoenix
21.5%
Cleveland
4.8%
Portland
12.9%
Dallas
7.4%
San Diego
14.7%
Denver
9.9%
San Francisco
23.9%
Detroit
19.8%
Seattle
11.4%
Las Vegas
22.3%
Tampa
11.3%
Los Angeles
18.8%
Washington
7.2% S&P Case Shiller 5/2013
%
HOME MORTGAGE INTEREST RATES (30 YEAR FIXED)
HISTORICALLY
8.69
Average Mortgage % Rate 1972-2012
$3,761.52
CURRENTLY
4.29
In the FUTURE?
Today’s Mortgage % Rate
The annual difference in mortgage payment (P&I) on a $250,000 home loan if rates go from 4.5 to 6.5%.
“I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.” - Doug Duncan, chief economist at Fannie Mae 6/2013
Freddie Mac Rates
6.06 Average
4.78 Average
before the financial crisis
after the financial crisis
KCM
Mortgage Amount Rate
$100,000
$200,000
$300,000 $400,000 $500,000
6.00
599.55
1,199.10
1,798.65
2,398.20
2,997.75
5.75
583.57
1,167.15
1,750.72
2,334.29
2,917.86
5.50
567.79
1,135.58
1,703.37
2,271.16
2,838.95
5.25
552.20
1,104.41
1,656.61
2,208.81
2,761.02
5.00
536.82
1,073.64
1,610.46
2,147.29
2,684.11
4.75
521.65
1,043.29
1,564.94
2,086.59
2,608.24
4.50
506.69
1,013.37
1,520.06
2,026.74
2,533.43
Single Family Residential
UP 15.8%
Year-Over-Year change from NAR June 2013
UP 12.7% z
Condominiums & Co-ops
UP 11.8%
UP 13.7%
% Year-Over-Year Sales Increases by Price Point
Current % Price Change:
4 REASONS to USE an AGENT who SPECIALIZES in YOUR AREA HOMES ARE MORE LIKELY TO SELL HOMES SELL FOR 1.21% MORE
HOMES OVER MEDIAN PRICE SELL FOR 1.71% MORE HOMES SELL QUICKER Source: WSJ 6/2013