Compelling AffordabilityMonthly Mortgage to buy a Median Priced Home
QE2 Inconsequential if Too Strict Underwriting Standards?Fannie and Freddie Backed Mortgage Loan Performance Source: Federal Housing Finance Agency
Distressed Loans and Shadow Inventory Bad loans are nearly always made in good times. But recently originated loans are performing very well.
Underwater Homeowners and Short-Sales 11 million underwater homeowners Overestimate by CoreLogic? 75 million total homeowners Short-sales and Foreclosures: about 1/3 of existing home sales…1.5 million per year Assume ½ underwater homeowners stay put by choice (and not go through distressed sale) 5.5 million out of pocket (CoreLogic data) … 7% lower sales 4 million out of pocket (NAR estimate based on Fed data) … 5% lower sales 2010 Existing + New Home Sales are … 21% lower sales versus 2000
Homeowner Vacancy Rate(0.8% point above normal = 600,000 above normal)
Newly Built Home Inventory In thousands
Months Supply of Inventory and Real Price Growth(Historic Avg. = 7.3 months and 0.5% real price anualized growth)
Home Sale to Payroll Jobs 13
Home Price-to-Income Ratio Source: NAR
Home Price and Construction Cost
CPI Housing Rent Inflation
REALTORS’ Home Value Expectation:Survey of Realtors regarding prices in 12 months Increase or Stable Decrease
Baseline Outlook Cont.
Mortgage Rates rising to 5.0% in 2011 and 5.9% in 2012
Home values – no meaningful change in the national price in the next 2 years
Home sales to be choppy but overall improving in line with job growth … 5.2 million in 2011 (up from 4.8 m in 2010, but same as in 2000)
Affordability conditions are too compelling
There maybe a pent-up demand. 30 million additional people from 2000 but same home sales as in 2000.
Commercial Real Estate
Real Estate Price Residential: Case-Shiller Commercial: MIT