5. “The forces pulling the home
ownership rate lower are past
their apex…House prices are
rising, but remain affordable at
21% below peak, even as rents
rise. Some who lost homes early
in the crisis can now qualify again
for mortgage loans.
As housing recovers and
consumers again see prices rising
steadily, perceptions will swing
back to favor home ownership.”
Moody’s Analyitics 8/2013
Celia Chen
Senior Director - Moody's Analytics
A Swing Back
Toward Ownership
6. KCM Blog 8/2013
Boomerang Buyers
“HUD recently announced that people who lost their home
through a foreclosure, short sale or bankruptcy, may be
eligible to finance a home again in as little as 12 months.
This is a reduction from the previously required minimum of
36 months from the date of the “most recent event.”
Released August 15, HUD
provided guidelines under
“Back to Work:
Extenuating
Circumstances”
meant to ease the path for
home ownership for many.”
7. Joint Center for Housing Studies Harvard University 8/2013
“Even after the dramatic loss of equity and
the high foreclosure rates, the early
evidence suggests that people
seem to believe that, over the
long run, owning is still
preferable to renting...
Reexamining the Social Benefits of
Homeownership after the Housing Crisis
The long term cultural
preference for owning
seems to have weathered
the recent housing crisis.”
8. Joint Center for Housing Studies Harvard University 8/2013
“The research on home-buying
expectations supports the conclusion
that very large percentages of
Americans still expect to buy a home
at some time in the future…
Moreover, the finding that younger
renters and owners are more likely
than their older counterparts to expect
to own bodes well for the future of the
housing market.”
Reexamining the Social Benefits of
Homeownership after the Housing Crisis
15. January February March April May June July
% -24% -20.8% -16.8% -14% -13% -7.6% -5%
-24%
-20.8%
-16.8%
-14%
-13%
-7.6%
-5%
-25%
-20%
-15%
-10%
-5%
0%
NAR 8/2013
Year-over-Year Inventory Levels
17. Zillow 8/2013
3.2
million homeowners have been
freed from negative equity in
the last twelve months.
million additional are
expected to be freed in
the next twelve months.1.9
20. Mortgage Rate Projections
Analyst Projected Rate
3Q 2014
Fannie Mae 5.0%
National Assoc. of
Realtors 5.1%
Freddie Mac 5.1%
Mortgage Bankers Assoc 4.9%
8/2013
21. Home Prices Next Year
In the recent Home Price Expectation Survey,
over 100 leading housing analysts called for an
approximate 5% increase in home values over
the next twelve months.
Home Price Expectation Survey 8/2013
23. Comparison – Next Year Current Home Move-Up Home
Current Price $240,000 $360,000
Future Price (+5%) $252,000 $378,000
Future Gain $12,000 $18,000
Total Gain $6,000
The Move-Up Seller
24. Price Rate P&I
Today $360,000 4.5% $1,824.07
End of
Year $378,000 5%
$2,029.19
Monthly Savings $205.12
The Move-Up Seller
27. 90
95
100
105
110
115
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Pending Home Sales
NAR 8/2013
100 = Historically Healthy Level
28. 80
90
100
110
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2012 2011
100 = Historically Healthy Level
Pending Home Sales
NAR 8/2013
29. Months Inventory of Homes for Sale
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul
NAR 8/2013
5-6 Months = Normal Market Inventory
33. Reasons to Hire a
Real Estate Professional5
They help with all disclosures and paperwork necessary in
today’s heavily regulated environment.
They are well educated in and experienced with the
entire sales process.
They act as a ‘buffer’ in negotiations with all parties
throughout the entire transaction.
They help understand today’s real estate values when
setting the price on a listing or on an offer to purchase.
They simply and effectively explain today’s real estate
headlines and decipher what they mean to you.
34. NAR 8/2013
Found sixty eight percent of those
surveyed responded that now is a
good time to buy a home
Found over 50% of renters say that
eventually owning a home is one of
their highest personal priorities
68%
51%
NAR’s 2013
HOUSING
PULSE
Survey
Found eight in 10 Americans
believe buying a home is a good
financial decision
36. 30 Year Fixed Rate
Mortgage History
January 2012 - September 2013
Federal Reserve 9/2013
37. Price
Money
Down
Mortgage
Interest
Rate
Payment
(P&I)
Last Year* $187,800 $37,560 $150,240 3.5% $674.64
This Year* $213,500 $42,700 $170,800 4.5% $865.42
Next Year** $224,175 $44,835 $179,340 5% $962.74
*For the first two examples, we used the NAR’s Existing Home Sales Report to establish
median price and Freddie Mac’s Primary Mortgage Market Survey to establish mortgage rate.
We also assumed a 20% down payment in all examples.
**To establish next year’s pricing, we depended on the over 100 housing experts surveyed for
the Home Price Expectation Survey who called for an approximate appreciation rate of 5%
over the next twelve months. For the interest rate, we took the average of the projections from
the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae.
The Cost of Waiting
38.
39. Resources
KEEPINGCURRENTMATTERS.COM
Slide Slide Title Link
4 Real Estate Recovery http://www.realtor.org
5 A Swing Back Toward Ownership PAID: http://www.economy.com/dismal/pro/article.asp?cid=241831
6 Boomerang Buyers
http://www.kcmblog.com/2013/08/22/boomerang-homebuyers-get-a-shorter-ride-home/
http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee
7, 8 Social Benefits of Homeownership http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/hbtl-04.pdf
9, 10,
11
FHFA Regional Home Prices, FHFA
State Prices
http://www.fhfa.gov/webfiles/25483/2013Q2HPI82213Final.pdf
14 Months Inventory of Home Sales http://www.realtor.org
17 Negative Equity Graphic http://zillow.mediaroom.com/index.php?s=159&item=373
20 Mortgage Rate Projections
http://www.mortgagebankers.org/files/Bulletin/InternalResource/84813_.pdf
http://www.freddiemac.com/news/finance/docs/Jun_2013_public_outlook.pdf
http://www.realtor.org/sites/default/files/reports/2013/embargoes/phs-6-27-hgbfjnv/july-2013-outlook-2
http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_061313.pdf
21 Home Prices Next Year https://pulsenomics.com/Q2_2013_HPE_Survey.php
26 Return on Investment http://www.spindices.com/index-family/real-estate/sp-case-shiller
40. Resources
Slide Slide Title Link
27, 28,
29, 30
Pending Home Sales, Months Inventory
of Homes for Sale, Percentage of
Distressed Property Sales
http://www.realtor.org
31 S&P Case-Shiller Home Price Indices
https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/19529_cshomepric
34 Housing Pulse Survey
http://www.realtor.org/news-releases/2013/07/renters-thinking-more-about-owning-a-home-say-hom
36 30 Year Fixed Rate Mortgage History http://www.freddiemac.com/pmms
34 S&P Case-Shiller Home Price Indices
https://www.spice-indices.com/idpfiles/spice-
assets/resources/public/documents/19529_cshomeprice-release-0730.pdf
41 Stephen Phillips Quote
http://www.businesswire.com/news/home/20130812005934/en/Prudential-Real-Estate-Q2-
Outlook-Survey-Millennials
42 Home Affordability Index
http://www.realtor.org/topics/housing-affordability-index/data
http://www.realtor.org/topics/housing-affordability-index/methodology
43 Family Wealth http://economistsoutlook.blogs.realtor.org/2013/07/30/the-latest-homeownership-rate/
KEEPINGCURRENTMATTERS.COM
41. “Home buyers are more informed than ever with
their Internet searches and ongoing research;
however, there’s a critical need to transform
that information into analysis and advice
that helps consumers make the best home-
buying and selling decisions.”
Stephen Phillips
Chief Operating Officer for HSF Affiliates LLC
42. To interpret the indices, a
value of 100 means that a
family with the median income
has exactly enough income to
qualify for a mortgage on a
median-priced home. An index
above 100 signifies that family
earning the median income
has more than enough income
to qualify for a mortgage loan
on a median-priced home,
assuming a 20 percent down
payment.
Home Affordability Index
127.4
172.2
206.5
155.2
NAR 8/2013
43. “The rise in the renter population
with no net increase in the owner
population at a time of housing
recovery automatically means
greater unequal distribution of
wealth. Housing wealth is rising
because of price increases, but the
wealth is going to the fewer and
fewer households who happen to
be homeowners and those who
own more than one home.”
Lawrence Yun, Chief Economist of the
National Association of Realtors
NAR 8/2013
Family Wealth
