Lawrence Yun’s Presentation at Macroeconomic Advisers


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  • This graph shows the number of distressed loans by category. The bottom category is the foreclosure inventory, which as you can has been steadily rising but the increase over the last 2 quarters of 2009 tempered off some. The green group are foreclosures started which have also decreased in the last quarter of 2009. this is, as I will talk about it more later on, due to pressure on mortgage companies to modify distressed loans and minimize the numbers going into foreclosure. Many states have also put moratorium on foreclosures towards the end of the year. The pink group are mortgages 90+ days past due which have also leveled out at the end of 2009. finally is the orange group, which are newly delinquent loans and that is the most positive news, showing that loans entering delinquent status are decreasing and possibly indicating that the foreclosure crisis in 2010 might not be as bad as was in 2009.
  • Lawrence Yun’s Presentation at Macroeconomic Advisers

    1. 1. Return to Normalcy<br />Lawrence Yun, Ph.D.<br />Chief Economist<br />NATIONAL ASSOCIATION OF REALTORS®<br />Presentation at Macroeconomic Advisers Meeting <br />Washington, D.C.<br />December 8, 2010<br />
    2. 2. Existing Home Sales (Closings)<br />Tax Credit Impact<br />
    3. 3. Pending Home Sales Index<br />
    4. 4. Pre-Boom vs. Post-Boom<br />
    5. 5. Housing Affordability Index(assumes constant underwriting standards)<br />
    6. 6. Compelling AffordabilityMonthly Mortgage to buy a Median Priced Home<br />
    7. 7. QE2 Inconsequential if Too Strict Underwriting Standards?Fannie and Freddie Backed Mortgage Loan Performance<br />Source: Federal Housing Finance Agency <br />
    8. 8. Distressed Loans and Shadow Inventory<br />Bad loans are nearly always made in good times. But recently originated loans are performing very well.<br />
    9. 9. Underwater Homeowners and Short-Sales<br />11 million underwater homeowners <br />Overestimate by CoreLogic?<br />75 million total homeowners <br />Short-sales and Foreclosures: about 1/3 of existing home sales…1.5 million per year<br />Assume ½ underwater homeowners stay put by choice (and not go through distressed sale)<br />5.5 million out of pocket (CoreLogic data) … 7% lower sales<br />4 million out of pocket (NAR estimate based on Fed data) … 5% lower sales<br />2010 Existing + New Home Sales are … 21% lower sales versus 2000<br />
    10. 10. Homeowner Vacancy Rate(0.8% point above normal = 600,000 above normal)<br />
    11. 11. Newly Built Home Inventory<br />In thousands<br />
    12. 12. Months Supply of Inventory and Real Price Growth(Historic Avg. = 7.3 months and 0.5% real price anualized growth)<br />
    13. 13. Home Sale to Payroll Jobs<br />13<br />
    14. 14. Home Price-to-Income Ratio <br />Source: NAR<br />
    15. 15. Home Price and Construction Cost<br />
    16. 16. CPI Housing Rent Inflation<br />
    17. 17. REALTORS’ Home Value Expectation:Survey of Realtors regarding prices in 12 months<br />Increase or Stable<br />Decrease<br />
    18. 18. Baseline Outlook Cont.<br /><ul><li>Mortgage Rates rising to 5.0% in 2011 and 5.9% in 2012
    19. 19. Home values – no meaningful change in the national price in the next 2 years
    20. 20. 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)
    21. 21. Affordability conditions are too compelling
    22. 22. There maybe a pent-up demand. 30 million additional people from 2000 but same home sales as in 2000.</li></li></ul><li>Commercial Real Estate<br />
    23. 23. Real Estate Price<br />Residential: Case-Shiller<br />Commercial: MIT<br />