Opportunities in 2012


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Opportunities in 2012

  1. 1. Where Are the Opportunities?
  2. 2. Existing Home Sales 12,521 Homes Sell Every Day and 8,715 Buyers Receive a Mortgage NAR 2/2012
  3. 3. Pending Home Sales110.0100.0 90.0 80.0 70.0 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan NAR 2/2012
  4. 4. Month’s Inventory of Homes for Sale10.0 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 NAR 2/2012
  5. 5. Return on Investment MSN Money.com, Case Shiller
  6. 6. Projections for 2012“For 2012, we are expecting betterhousing numbers than in 2011, anda better second half than first.”IHS Global Insights IHS Global Insights 2/13/2012
  7. 7. Projections for 2012 “A lot of housing and macroeconomic data came in higher than expected so far in 2012…while jobless claims have fallen steadily this year and indications on consumer sentiment show Americans may be ready to begin buying properties again.” Jason Philyaw, Editor, Housing WireHousing Wire 2/27/2012
  8. 8. Projections for 2012 “The US economy continues to build on the momentum from the end of last year. Our outlook anticipates gradual, but steady, improvement in the economy and the housing market, supported by low interest rates and brightening job market prospects.” Frank Nothaft. Freddie Mac VP and chief economistFreddie Mac 2/22/2012
  9. 9. Projections for 2012 “The improved tone of housing data buoys hopes that the market may be on the verge of its long-awaited recovery. ..Increases in new- and existing-home sales over the last three months follow stronger job creation and improved affordability, including the overall drop last month in conventional mortgage rates to below 4%.” Moody’s AnalyticsMoody’s Analytics 2/27/2012
  10. 10. Warren Buffett Speaks OutIs it time to buy real estate?“If I had a way of buying a couple hundred thousand single-family homes Iwould load up on them.”Why invest in real estate now?“It’s a way, in effect, to short the dollar because you can take a 30-yearmortgage and if it turns out your interest rate’s too high, next week yourefinance lower. And if it turns out it’s too low, the other guy’s stuck with it for30 years. So it’s a very attractive asset class now.” CNBC 2/13/2012
  11. 11. Warren Buffett Speaks OutIs buying your own home better than investing instocks right now?“If I knew where I was going to want to live the next five or 10 years I wouldbuy a home and I’d finance it with a 30-year mortgage… It’s a terrific deal.”Should we buy multiple houses?“If I was an investor that was a handy type and I could buy a couple of themat distressed prices and find renters, I think it’s a leveraged way of owning avery cheap asset now and I think that’s probably as an attractive aninvestment as you can make now.” Source: CNBC 2/13/2012
  12. 12. Mortgage Rates – 30 Year Fixed5.25 54.75 4.54.25 43.75 1/01/2011 Today Federal Reserve
  13. 13. Home Rents Will Keep Rising“Paying rent is getting $ 1 , 2 0 0 $ 1 , 1 7 5more painful for renters $ 1 , 1 5 0 $ 1 , 1 2 5across the country in the $ 1 , 1 0 0 $ 1 , 0 7 5face of rising demand $ 1 , 0 5 0 $ 1 , 0 2 5and tight supply… $ 1 , 0 0 0 2009 2010 2011 2012* 2013* 2014*It’s bad timing for people who have been spookedby, or pushed out of, the residential housing marketand have decided to rent instead of buy. Homeownership in the United States is at historic lows,but at the same time rental prices are on the rise.” MSNBC.com 2/6/2012
  14. 14. Buy Rent Housing Cost Over Next 30 Years* $900K $540K Owners Renters * Assuming payment of $1,500 for both rent and mortgage; a fixed rate mortgage and an annual rent increase of 3.2% for inflation. Forbes.com 10/13/2011
  15. 15. Buy Rent Retirement Fund Created from Homeowner Equity After 30 Years* $400K $0 Owners Renters * Assuming $300,000 current value with a 1% annual appreciation rate for residential property. Forbes.com 10/13/2011