1. The American Dream and
the 2013 Housing Outlook
Wednesday, December 12, 2012
@jedkolko | #truliapredicts

2. Agenda
 Looking Back at 2012
 What Will Consumers Do In 2013?
 2013: What’s In, What’s Out
 5 predictions about housing
 Top 10 markets to watch
@jedkolko | #truliapredicts

3. 2012: Better Than Anyone Dared Hope
 Against all odds
 “Even the best possible 2012 won’t get us halfway back toward normal.”
 Housing market: 47% back to normal
 2012 by the numbers
Asking Home Construction Existing Home Delinquencies
Prices Starts Sales + Foreclosures
+3.8% +42% +11% -10%
+1.2% in Despite -23%
Judicial States Inventory
+4.9 in Non-
• . Judicial States
@jedkolko | #truliapredicts

4. Consumers Bullish About Buying Homes
% Renters Planning to Buy in Next 2 Years
January 2011 22%
May 2012 28%
November 2012 31%
0% 10% 20% 30% 40%
@jedkolko | #truliapredicts

5. Millennials Shaken, Not Scarred
 Is homeownership part of your
personal American Dream?
 72% of 18-34 year-olds
 72% of all adults
 “Renter nation” just a myth
 43% of Millennials are homeowners
 93% of Millennial renters want to buy someday
@jedkolko | #truliapredicts

6. Young Adults In For Sticker Shock
Home Prices Mortgage Rates
% expecting increase in next year
60% 55%
49% 49%
50%
43%
41%
40% 37% 38%
32%
30%
20%
10%
0%
18-34 35-44 45-54 55+
Age
@jedkolko | #truliapredicts

7. Rising Prices Will Unlock Inventory
Who Might Sell in 2013  Tight inventory holding
back sales
2010 to 2012 33%
Year of Home Purchase
 Rising prices create
2007 to 2009 20% inventory via:
 More construction
 Homeowners wanting to
2003 to 2006 23% sell
2002 or earlier 20%  More likely to sell if:
 Can make profit
0% 20% 40%  Expect price increases
 Bought recently
@jedkolko | #truliapredicts

8. 2013: What’s Out, What’s In
2012
2013
Will home prices bottom? Will inventory bottom?
The robo-signing New mortgage rules
settlement
Improving housing Declining housing
affordability affordability
Expanding refinancing to Cutting the mortgage
stimulate the economy interest deduction
to fix the budget
National housing policy “Localized” housing policy
@jedkolko | #truliapredicts

9. What Makes A Housing Market Healthy?
 Strong fundamentals
 Job growth
 Low vacancy rate – but not too low!
 Little foreclosure inventory
 Not necessarily rising prices
 Big price gains are bounce-backs – “yo-yo dieters”
 Phoenix: high vacancies
 Detroit: weak job growth
 Miami: huge foreclosure inventory
@jedkolko | #truliapredicts

10. Top 10 Healthiest Housing Markets Going into 2013
NOTE: Among 100 largest metros
@jedkolko | #truliapredicts

11. Wrap Up
 2012 for housing was better than anyone dared to hope
 Consumers are bullish on buying homes
 Millennials are shaken, not scarred, by the housing bust
 “Renter Nation” is just a myth
 Rising prices should unlock inventory in 2013
 What’s in for 2013: new mortgage rules, declining
affordability, “localized” housing policy, and more
 The healthiest local housing markets are metros with
strong fundamentals, not necessarily biggest price gains
@jedkolko | #truliapredicts