Real Estate Market Facts - Sept 2010


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10 facts about todays real estate market.

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Real Estate Market Facts - Sept 2010

  1. 1. Market Facts in Uncertain Times<br />NAR Research<br />September 2010<br />
  2. 2. Economic and Market Facts<br />Informed consumers make smarter decisions.<br />The economy is soft and consumer confidence remains low.<br />Housing affordability is at generational high.<br />Home values in many markets have returned to historically justifiable levels. <br />Most economists expect home values to rise in upcoming years, though not at a fast pace.<br />Bad loans are nearly always made in good times. But recently originated loans are performing very well.<br />Patient homeowners over the long-term do much better than renters in attaining wealth.<br />
  3. 3. Fact 1: The Economy is Growing, though Slowly<br />GDP annualized % growth rate<br />
  4. 4. Fact 2: Private Sector Finally Creating Some Jobs (Government jobs were not included since many could be temporary from stimulus measures)<br />Monthly Net Private Payroll Job Changes in Thousands<br />
  5. 5. Fact 3: Consumer Confidence Remains Low, though Clearly Off Bottom <br />Index by The Conference Board<br />
  6. 6. Fact 4: The 30-year Mortgage Rate at Generational Lows(Very accommodative Federal Reserve monetary policy helping, but for how long?)<br />
  7. 7. Fact 5: National Median Home Price Stabilizing(Combination of price change and type of homes that are selling)<br />
  8. 8. Fact 6: Other Home Price Measurements also Showing Price Stabilization<br />
  9. 9. Fact 7: Home Price-to-Income Ratio Have Returned to Fundamentally Justifiable Levels<br />Source: NAR<br />
  10. 10. Fact 8: Economists Expect Price Increases in Upcoming Years<br />Macromarkets, a firm associated with Professor Robert Shiller, surveys about 100 economists about home price outlook.<br />The consensus forecast as of August 2010 (which can be found from Macromarkets or from news media stories such as Wall Street Journal) are for<br />0.78% price increase in 2011<br />2.43% price increase in 2012<br />3.20% price increase in 2013<br />3.69% price increase in 2014<br />No forecast for 2015 and beyond<br />
  11. 11. Fact 9: Delinquencies Are High but Recent Loan Originations Performing Well <br />Due to Past Lending Mistakes the Bad Loans are still working through the system<br />Banker’s Afterthought is nearly always that “Bad Loans are made in Bubble Times.”<br />But Mortgage Delinquency Rate may have peaked. According to Mortgage Bankers Association, mortgage delinquencies fell to 9.85 percent in second quarter 2010 from 10.1 percent in the first quarter.<br />Various reports suggest good loan performance on recently originated mortgages (see government reports on loan performance of government backed mortgages).<br />One-third of homeowners own their homes free-and-clear. They are not included in mortgage delinquency statistics. <br />Loan approval is more difficult, which explains for better recent loan performance. There is a better approval chance if the borrower stays well within budget. <br />
  12. 12. Fact 10: Long-Term Path to Self Reliance may be Helped from Long-Term Housing Wealth Gains <br />(2010 data to be published in 2012 by the Federal Reserve) <br />Median Family Net Worth<br />Source: Federal Reserve<br />