Real Estate By The Numbers

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stats from Gary Keller's 2014 KW Vision Speech

stats from Gary Keller's 2014 KW Vision Speech

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  • 1. The Numbers That Drive U.S. Real Estate Home Sales Home Price Inventory Mortgage Affordability
  • 2. Home Price - Annual Median home price for 2013 was $197,100 and is 11.5% above where it was in 2012, but it is still below the long-term trend. $241 $222 $198 $179 $197 $177 $166 $95 ‘89 ‘91 Source: NAR 5 The Numbers That Drive U.S. Real Estate ‘93 ‘95 ‘97 Long-term Average = 4% ‘99 ‘01 ‘03 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 '13 Annual Median Home Price (in Thousands)
  • 3. Home Price - Annual Appreciation Median home price appreciation was 11.5% according to NAR, making it the second-highest year of price gains since NAR began collecting data. 1989-2000 
 3.39% 5.9% 5.5% 2.9% 3.4% 4.0% 3.1% 2.7% 2001-2006 
 12.2% 8.9% 4.8% 5.2% 5.4% 7.0% 7.5% 6.3% 2007-2011 
 - 4.6% 11.5% 8.3% 6.3% 3.8% 4.3% 1.3% 0.6% -1.8% -2.7% -9.8% -12.5% ‘89 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 Source: NAR Annual Median Home Price Appreciation 6 The Numbers That Drive U.S. Real Estate ‘05 ‘07 ‘09 ‘11 '13
  • 4. Months Supply of Inventory - Annual 10.4 8.9 8.8 9.4 8.3 6.5 4.5 ‘99 ‘00 4.6 4.7 4.7 ‘01 ‘02 ‘03 4.3 4.5 ‘04 ‘05 4.9 Seller’s Mkt 4.8 5.9 Balanced Buyer’s Mkt Inventory has been persistently tight this year. We have seen a return of high housing demand, which has not yet been met with an equal response in supply. Balanced = 6 months Source: NAR 7 The Numbers That Drive U.S. Real Estate ‘06 ‘07 ‘08 ‘09 Annual Months of Inventory ‘10 ‘11 ‘12 '13
  • 5. Mortgage Rates - Annual Mortgage rates averaged 4% in 2013, up 30 basis points from 2012. 16.6 7.4 8.1 7.3 4.0 '72 '75 '80 '85 '90 '95 Annual Mortgage Rate (%) Source: NAR 9 The Numbers That Drive U.S. Real Estate '00 '05 '10 '13
  • 6. Mortgage Rates - Monthly Mortgage rates have begun to increase and are likely to slowly rise toward more historically normal rates. 4.5% 4.8% 4.5% 4.2% 3.9% 3.35% Jan '11 Source: Freddie Mac 10 The Numbers That Drive U.S. Real Estate Jan '12 Nov '12 Monthly Mortgage Rate Sep '13 Dec '13
  • 7. Affordability - Percentage of Income The percentage of a typical family’s income it takes to own a home has increased 1.5% in the last year due to a combination of slowly rising interest rates and the rapid growth of home prices in 2013. 14.2% 12.7% 21.6% 78.4% 87.3% Historically 2012 2013 Source: NAR 11 The Numbers That Drive U.S. Real Estate Everything Else 85.8% Principal and Interest Payment
  • 8. Affordability in Perspective Car Adjusted for Inflation 1989 2013 $15,350 $31,252 $28,851 Source: BEA 12 The Numbers That Drive U.S. Real Estate Gas 1989 2013 $0.97 $3.60 Adjusted for Inflation $1.82 Bread Adjusted for Inflation 1989 2013 $0.67 $1.40 $1.26
  • 9. Affordability in Perspective - House Payment 1989 Median Home Price: $94,000 Mortgage Rate: 2013 (Adj. $176,596) 10% Median Home Price: $197,100 Mortgage Rate: 4.0% Monthly P&I Payment: $825 Monthly P&I Payment: $941 Median Income: 13 (Adj. $1,551) (Adj. $51,681) Median Income: The Numbers That Drive U.S. Real Estate $28,906 $51,107
  • 10. Sides Per Agent Sides per agent rose in 2013 as the agent population remained close to 1 million and home sales increased from 4.7 million to 5.1 million. 14.2M 13.8 13.8 10.2M 9.8 823,000 7.9 8.7M 7.0 6.7M 1,042,000 9.9M 9.9 10.3 1,358,000 6.9 6.4M 486,000 4.4M ‘76 ‘80 Sides Per Agent Source: NAR 32 U.S. Events ‘85 ‘90 Agents (in Thousands) ‘95 ‘00 Available Sides (in Millions) ‘05 10.3 Historical Average ‘10 '13
  • 11. Distressed Sales In 2013 the percentage of sales made up of distressed properties dropped drastically thanks to the increase in home prices and in conventional sales. Based on NAR’s estimates, the percentage of sales composed of distressed properties was only 14% in November 2013 and down from 24% at the end of last year. 49% 40% 38% 35% 34% 24% 14% 5% 9% Oct '08 Source: NAR 34 U.S. Events Jan '10 Jan '11 Foreclosures Jan '12 Short Sales Jan '13 Dec '13
  • 12. Underwater Homes As home prices rise, the number of buyers in negative equity situations has rapidly decreased, freeing up more people to sell homes. 25.1% 24.7% 25.4% 25% 24.8% 24.4% 25.2% 23.7% 22.3% 22% 21.7% 19.7% 14.5% Q2 '10 Q4 '10 Sources: Core Logic, Harvard Joint Center for Housing Studies 35 U.S. Events Q2 '11 Q4 '11 Q2 '12 Underwater Homes (% of Mortgaged Homes) Q4 '12 Q2 '13 13%
  • 13. Qualified Mortgages On January 10, 2014, new mortgage regulations that create “qualified mortgages” and new standards for assessing borrower’s ability to repay went into effect. These new regulations may make credit tighter and slower at the beginning of the year as financial institutions adjust to the new regulations.
 
 Regulations include: Lender may be liable for up to 3 years of finance charges plus legal fees if it’s determined in court that a lender did not act in good faith. No negative amortization, interest only, balloon payments, or terms longer than 30 years. 38 U.S. Events Points and fees may not exceed 3%. Consumer debt-to-income ratio must 
 be less than 43%, down from 45%.
  • 14. New Home Construction 2013 was the best year for new home construction since 2008. 1,082 1,046 622 445 Historical '07 '08 471 '09 '10 New Homes (in Thousands) 40 U.S. Events 535 618 430 '11 '12 '13
  • 15. Months Supply of Inventory Months Supply 39.4 22.9 14.5 8.4 12.9 5.6 19.2 11.6 8.2 6.7 11.3 7.8 6 10.9 6.3 3.9 Dec '08 Dec '09 Luxury Source: BrokerMetrics 55 Luxury Dec '10 Move-Up Dec '11 Starter Dec '12 Balanced (6 Months) 10.9 6.2 4.1 Dec '13
  • 16. Days on Market 164 143 126 109 121 89 144 123 112 110 92 98 90 93 82 97 72 71 Dec '08 Dec '09 Luxury Source: BrokerMetrics 56 Luxury Dec '10 Dec '11 Move-Up Dec '12 Starter Dec '13
  • 17. Technology Enables the Agent, Not Replaces Them Agents must move their value propositions from information provider to information interpreter. 95% 92% 88% rnet Inte 88% 81% Agent 75% 74% 71% 67% '01 '03 '04 '05 '06 Purchased through Agent *There is no 2002 data. No data for Internet for 2001. 65 Industry '07 '08 '09 '10 Used Internet '11 '12 '13
  • 18. Syndication and Aggregation Online syndication sites like Zillow and Trulia are using huge consumer advertising budgets combined with agents’ desire for lead generation to change the competitive landscape. They are selling our own leads back to us. They are enabling low-lead generation agents to set the agenda. Consumers are attracted to the search experience and ease of use. 67 Industry No evidence to show that syndication sells a home faster or for more money. The big question is: Why do we allow them to exist?
  • 19. First-time Home Buyers 50% 47% 40% 41% 42% 42% 42% 42% 40% 40% 40% 39% 37% 36% '93 '95 '97 '99 '01 '03 '04 '05 '06 '07 First-time Home Buyers 74 41% National Association of Realtors '08 '09 '10 '11 39% 38% '12 '13
  • 20. First Step in Buying Process 2012 2013 41% 42% Contacted a real estate agent 18 17 Looked online for information about the buying process 11 14 Drove by homes/neighborhoods 8 7 Contacted a bank or mortgage lender 6 6 Talked with a friend or relative about buying process 6 5 Visited open houses 3 3 Contacted a builder/visited builder models 1 2 Looked in newspapers, magazines, or home-buying guides 1 1 Contacted a home seller directly * 1 Looked online for properties for sale 78 National Association of Realtors
  • 21. Where Buyers Found 
 The Home They Purchased ‘01 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 '13 Internet 8% 11% 15% 24% 24% 29% 32% 36% 37% 40% 42% 43% Real estate agent 48 41 38 36 36 34 34 36 38 35 33 33 Yard sign/Open house sign 15 16 16 15 15 14 15 12 11 11 9 9 Friend, relative, or neighbor 8 7 7 7 8 8 7 6 6 6 5 6 Home builder or their agent 3 7 7 7 8 8 7 5 4 5 4 5 Directly from sellers/knew the sellers 4 4 5 3 3 3 2 2 2 2 1 2 Print newspaper advertisement 7 7 5 5 5 3 3 2 2 2 1 1 Home book or magazine 2 1 2 1 1 1 1 * * * * 1 Other 3 6 4 -- -- -- -- -- -- -- -- -- *There is no data for 2002. 81 National Association of Realtors
  • 22. Weeks in Home Search 12 12 12 12 12 '09 '10 '11 '12 '13 10 8 8 8 8 8 '03 '04 '05 '06 '07 7 '01 *There is no data for 2002. 79 National Association of Realtors '08 Number of Weeks
  • 23. Method of Home Purchase Just because buyers are using the Internet more doesn’t mean they’re not relying on you. In fact, the number of buyers using an agent remains essentially at a ten-year high. To keep it that way, understand your value proposition and be able to communicate it. 69% 75% 77% 77% 77% 79% 81% 77% 83% 89% 89% 88% '01 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 *There is no data for 2002. 83 National Association of Realtors Agent or Broker Builder or Builder's Agent Previous Owner