Before we get started I did want to let you that what I am about to share with you is not a projection or forecast of future trends in homeownership.
Talking points:Read the slide:Each year, insights about what the mortgage market created by various industry experts. These insights can be helpful to mortgage professionals and may also be helpful in your business as a real estate professional or builder. Today, I would like to show you some trends in the mortgage market. We are hoping that what we present today could be more helpful to you than what you may hear heard from the media.Discussion: What have you been hearing in the media about the housing outlook? What have you been hearing from consumers? Is their confidence positive or negative? How does your market look in the areas listed here?(Invite attendees to ask questions and join in the discussion at any point.)
Talking points: Read this slide. The upward trend in consumer confidence may create opportunities for you to capture those prospective homebuyers that have been waiting to sell their current homes and/or buy their first home because their confidence in the housing market has improved. Please note: Consumer confidence levels may vary from market to market. Discussion: Is this slide accurate with what you are experiencing in your market? If not, what have you heard about consumer confidence? Do you have prospective buyers that held off on making a move or homebuyer purchase decision until recently?
Talking points: Read the slide. Affordability index explanation – what does this mean?An index of 100 means that the person making median income and purchasing a median priced home can afford 100% of the monthly payment. The lower the index, the less affordable the market.With interest rates continuing to be low and home pricing continuing to be affordable, now is a great time for homebuyers. Please note: Housing affordability may vary from market to market. To find out what is relevant in your area, please go to: http://www.realtor.org/reports/local-market-reports Discussion: Do potential consumers understand/realize this current market situation? If not, how can we get the word out? If so, are they taking advantage or what are they waiting for? Is the information listed in this slide applicable in your market? If not, what is the affordability index in your area?
Talking points: Read the slide. Some areas, may be experiencing a shortage of housing inventory, like what is presented above. As a result, these areas may be more of a seller’s market than a buyer’s market. Discussion:What are inventory levels like in your market? Do the national figures reflect what you are seeing in your area? Is your market a seller’s market or buyer’s market? Have you experienced a short fall of housing in your market or some areas in your market? Have you received multiple bids on a single home in 2012?
Talking points: Read the slide. New construction home sales look very positive over the next few years. Now may the time to talk with your local builder to discuss their plans for building homes in the next few years. To find out what is relevant in your area, go to: http://hanleywood.com or http://www.realtor.org/reports/local-market-reports Discussion: Is your market experiencing an increase in sales of new construction homes and/or existing homes?If not, what trends are you seeing in home sales?
Talking points: Read the slide. This slide gives an overview of who (what homebuyer groups: FTHB, current homeowner, investor) is buying homes and their market share.The condition of these properties may drive who purchases the properties. FTHBs are more likely to purchase move-in properties or properties with less damage. Investors are more apt to purchase properties they can add value to thereby increasing the return on their investment. Discussion points: Is this what you are seeing in the local market? What challenges are you seeing with each of these buyers?
Talking points: Now let’s talk a little bit about the first-time homebuyer market. Read the slide. While there is a downward trend in the percentage of first-time homebuyers buying a home, opportunity is still significant for this homebuying group. As discussed in the previous slides, home affordability and low interest rates make this a great time for your FTHB clients to buy their first home. Discussion: What are some challenges your first-time homebuyers are seeing in your market? The next slide discuss options for some of the challenges that you may be having.
Talking points: Read the slide.Market conditions currently favor first-time homebuyers. As mentioned in the previous slides, historically low interest rates, attractive prices, and a variety of products and programs make this an ideal time to purchase a home.For more information about FHA and VA loans, I can set-up a separate meeting to discuss these in detail.
Talking points: Read the slide. Down payment assistance programs may be available to help cover down payment costs. At Wells Fargo, we have a team that manages all approved down payment assistance and community assistance programs available to our customers. This helps our team, as we can readily view any local approved programs that may help your qualified buyer purchase a home. Wells Fargo supports the following assistance programs (called Community Assistance Programs) for our customers & yours: Down Payment Assistance Programs (DAPs) Mortgage Revenue Bonds (MRBs) Mortgage Credit Certificates (MCCs) FHA Section 8 Housing Choice Voucher AssistanceIt important to note that WFHM will not allow use of a community assistance program if it does not meet the best interest of the client. In addition to government loan financing and down payment assistance programs, Wells Fargo Home Mortgage has other programs that may be able to assist homebuyers. If you would like to know more about these options, I would be happy to set-up another meeting discuss these in more detail Community Development Mortgage Program Home Asset Management Account Native American Home Lending Program Home Opportunities Program Easy to Own Guaranteed Rural Housing Program
Talking points: Read the slide.In any market, Wells Fargo Home Mortgage has financing programs that may be able to help your buyer’s find financing options, helping you serve more buyer’s needs.
Mortgage Market OutlookOptimism in the Housing MarketEric HamiltonHome Mortgage ConsultantNMLSR ID 414113
A word about this presentation… The information contained within this presentation statistical information representing trends on a national level and is not a projection or forecast on future trends in homeownership. 1
AgendaMortgage market outlook discussion topics: Consumer confidence Housing affordability and interest rates Home pricing & sales information Housing inventory update Distressed property information First-time homebuyer outlook 2
Consumer confidence on the rise 1 • Consumer confidence has been trending upward since 20091. Center for Market Research and Measurement Economic and Mortgage Market Outlook, Spring 2012. 3
Housing affordability is high,interest rates are low 2 • Housing continues to be affordable as interest rates are at historic lows and affordability is at record highs. • Interest rates are expected to remain low throughout 2012 Please note: These charts 2 reflect a national view. For local information, please see the local market reports on the NAR web site at: http://www.realtor.org/repo rts/local-market-reports 2. Center for Market Research and Measurement Economic and Mortgage Market Outlook, Spring 2012. 4
Increasing home sales, decreasing housinginventory 3 • The charts to the left show that existing and new home sales are increasing What does this mean to you? •As home sales increase, inventory declines, decreasing the supply of homes available for sale 3 • As the supply becomes more closely aligned with demand, home prices should increase3. Data as of January 2012. 5
New construction sales on the rise 4 • Home sales will likely increase in 2012 (average 5.7% for existing and new), 29% 14% with the great majority of this increase is estimated to 5% 1% come from new construction (14%) • The 2nd chart shows that housing starts beyond 2012 are expected to increase dramatically 5 For new construction sales information in your area, go to: http://hanleywood.com or http://www.realtor.org/rep orts/local-market-reports 4. As of Feb 2012. An average of MBA, FNMA, and NAR (FHLMC does not include condos) 5. Data as of February 2012. 6
Home sales estimate • 40-45% of all home sales in 2011 went to current homeowners – a combination of both primary residence and vacation usage 6 30-35% of home sales went to FTHBs 20-25% of home sales went to investors • Investor share may continue to increase somewhat as more REOs enter the market6. Data as of December 2011. • FTHBs are more likely to purchase move-in properties or properties with less damage • Investors are more apt to purchase properties they can add value to thereby increasing the return on their investment 7
First-time homebuyers • Chart shows a significant downward trend in the FTHB share of total home buyers since the FTHB tax credit expired in June 2010 FTHB share of home purchases (not dollars) is expected to be about the same or slightly less than the current rate in 2012 (around 32 - 35%)7. NAR Realtor Confidence Index Survey as of December 2011.8. NAR. Profile of Home Buyers and Sellers, survey of customers who purchased. July 10 – June 11 (Does not include investors). 8
First-time homebuyers have optionsPotential FTHB market share decrease could be also be attributed to changes inmortgage financing: Tighter credit requirements Over half of first time buyers Higher down payment requirements (54%) chose FHA loans, compared to 23% repeat Lack of down payment funds home buyers9But there is hope! Government loans have flexible approval guidelines thatmay help FTHB:FHA loans: VA loans: Low down payment requirements No income restrictions No income restrictions Expanded qualifying ratios No minimum credit score for loans Nontraditional credit histories may under $700,000be accepted10 Expanded qualifying ratios Automatic “Total Scorecard”approval for qualified applicants Nontraditional credit histories may be accepted11Down payment assistance programsavailable to qualified applicants 9. Provided by NAR 2011 Profile of Home Buyers and Sellers report. 10, 11. Homebuyer education required for customers who are approved solely on nontraditional credit histories. 9
First-time homebuyers have optionsWells Fargo Home Mortgage products and programs givehomebuyers financing options: Down payment assistance programs Community Development Mortgage Program Home Asset ManagementSM Account Easy-to-OwnSM Native American Home Loan Home OpportunitiesSM Program Easy-to-OwnSM Guaranteed Rural Housing Program 10
SummaryIn conclusion, several indicators from research compiled shown today showspositive signs for the housing market in 2012, potentially creating moreopportunities for you and your buyers: Housing is expected to remain extremely affordable Interest rates are expected to remain near or at all-time lows Home sales are increasing Homebuyer traffic is increasing with low inventory numbers occurring in some areas Home prices have begun to stabilize FHA & VA loans, along with down payment assistance programs, and other Wells Fargo product and program offerings, may provide additional financing options for first-time homebuyers 11
Why work with Wells Fargo? Wells Fargo Home Mortgage is there for you in all the ways you told us that matter most: We work with you to build business, approve buyers and close deals leveraging our StagecoachPriority® value package including: PriorityBuyer® preapprovals12 Single Source® program Buyer ConnectionsSM capabilities 12. A PriorityBuyer® preapproval is based on our preliminary review of credit information only and is not a commitment to lend. We will be able to offer a loan commitment upon verification of application information, satisfying all underwriting requirements and conditions, and providing an acceptable property, appraisal and title report. Not available on nonconforming products or for certain FHA transactions.For real estate professionals only. 12
Why work with Wells Fargo? StagecoachPriority® value package: Get the most out of the time and effort you spend showing homes with our reliable PriorityBuyer® preapproval letter13, it: Confirms your buyers are credit-checked and have completed the first loan decisioning phase Provides reliable, preapproved financing in clearly specified loan amounts and terms on official Wells Fargo letterhead 13. A PriorityBuyer® preapproval is based on our preliminary review of credit information only and is not a commitment to lend. We will be able to offer a loan commitment upon verification of application information, satisfying all underwriting requirements and conditions, and providing an acceptable property, appraisal and title report. Not available on nonconforming products or for certain FHA transactions.For real estate professionals only. 13
Why work with Wells Fargo? StagecoachPriority® value package: Benefit from one connection to multiple lending solutions. Our Single Source® program offers products that span a variety of customer needs. You have the advantages of a single point of contact backed by an integrated team of product specialists who can lend in all 50 states. Products and programs Property types Conventional loans Single-family Renovation financing Condo & co-op Non-conforming (Jumbo portfolio) loans Investment properties The Relocation Mortgage Program® Vacation/second homes Downpayment assistant programs (DAPs) REO and short sale properties FHA & VA loans New construction financing Home equity financingFor real estate professionals only. 14
Why work with Wells Fargo? StagecoachPriority® value package: Team up for business opportunities! Through our Buyer ConnectionsSM capabilities, we have the ability to identify and introduce buyers and sellers who are not yet working with an agent and recommend those customers to REALTORS® and builders in local markets.For real estate professionals only. 15
Why work with Wells Fargo? Leverage the strength of Wells Fargo We’re committed to being a leader in: Keeping you informed about products, programs and industry changes Sharing best practices from real estate industry experts Leading homebuyer educational resources including My FirstHomeSMonline educational program and My Home RoadmapSM service.14 14. The My Home RoadmapSM service provides up to four sessions (an estimated 2 hours) of free financial coaching with a National Foundation for Credit Counseling (NFCC) certified counselor from a NFCC member organization that will be paid for by Wells Fargo Home Mortgage. At your option, you may purchase additional coaching sessions or services or decide to participate in another NFCC member agency program. Program may change or be discontinued at any time.For real estate professionals only. 16