Fairway Madison Presentation 5.09

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Real Estate Trends & Stats

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Fairway Madison Presentation 5.09

  1. 1. Wisconsin Real Estate in the 2 nd half of 2009
  2. 2. Source: Seeking Alpha 4/09/09 “ Many analysts believe that if the world economy is going to rebound, the recovery will begin with U.S. housing.” - Don Miller, Associate Editor Money Morning
  3. 3. The stampede has begun!!
  4. 4. CBS Early Show money maven Ray Martin “ Yes, there's really never been a better time to go shopping for real estate.” CBS Early Show Source: CBS.com 3/14/09 IS THIS A GOOD TIME TO INVEST IN REAL ESTATE?
  5. 5. “ With prices down and interest rates at record lows, it’s a great time to buy a real estate investment.”  - Barbara Corcoran Source: NBC TODAYShow.com 3/12/09 NBC Today Show
  6. 6. “ It's a good time to snag a bargain if you're confident in your job prospects and you don't plan to sell for at least five years.” Kiplinger's Personal Finance Source: Kiplinger's Personal Finance 3/09
  7. 7. “ At the top of the list: housing. This may be the best time in a generation to buy a home.” Ten Things To Buy Before The Economy Improves Forbes.com Source: Forbes.com 3/31/09
  8. 8. 75 percent said it was a good or very good time to buy a home. Pew Research Center Survey Source: Pew Research Center 3/16/09
  9. 9. “ On a month-over-month basis, the total transaction count increased 21%, its largest increase since 2004.” Source: Radar Logic 4/23/09 RPX Monthly Housing Report
  10. 10. Where are you in the line of dominoes?
  11. 11. How do maximize this opportunity?
  12. 12. Sorry, I’m waiting for the bottom?
  13. 13. Is this really the right time to buy real estate?
  14. 14. Return on Investment Dow S&P Nasdaq Real Estate Jan 1, 2000 – Dec 31, 2008 -35.2 -59.9 69.8 -19.8 Source: MSN Money.com, Case Shiller
  15. 15. $8,000
  16. 16. Don't Hunt for the Bottom “ Pinpointing a bottom in home prices is very difficult, akin to picking the bottom in the stock market. But data and research indicate we're getting close." Wall Street Journal Source: Wall Street Journal 4/18/09
  17. 17. Source: Westcourt Funds Optimism Excitement Euphoria Denial Fear Panic Despondency Depression Hope Optimism Point of maximum risk in investment Point of maximum opportunity
  18. 18. Cost vs. Price
  19. 19. What is going to happen with interest rates in the near future?
  20. 20. Mortgage Rates – 30 year fixed Source: Federal Reserve $500 billion bailout pledge Fannie & Freddie Bailout January 2008 January 2009
  21. 21. Mortgage Rates – 30 year fixed Source: Federal Reserve 1/1/2009 Asset Purchases Begin Asset Purchase Announcement
  22. 22. Mortgage Rates – 30 year fixed Source: Federal Reserve 2003 2008
  23. 23. My property is special. I am not going to lower the price?
  24. 24. What will happen to house values in the 2 nd half of 2009?
  25. 25. Pricing? 100 pencils 3 buyers 100 pencils 6 buyers
  26. 26. We must realize the depth of the challenge.
  27. 27. % Appreciation in 5 Year Increments Source: Brookings Papers 9/08 25% 27% 25% 29% 89%
  28. 28. What is the only way to catch it?
  29. 29. Whitney is known both for her bearish calls, and thus far, for being largely correct. Which makes her predictions worth paying attention to. Source: Housing Wire 4/07/09 Analyst Meredith Whitney, well-known for her work at Oppenheimer & Co. and now at her own firm, told cable television news outlet CNBC that she expects home prices to fall another 30%.
  30. 30. Conclusion We still expect that national home prices will fall further because of the large number of homes for sale. The worst national price drops are probably behind us, however, and by 2010 national prices should begin to stabilize. Source: PMI Report April 2009
  31. 31. Source: Global Insight 2008 4 th Quarter Report 4/09 House Price Appreciation: 4 th Quarter, 2008
  32. 32. Inventory vs. Price Months Supply Pricing 1-2 Double digit appreciation 3-4 Single digit appreciation 5-6 The Norm 7-8 Single digit depreciation 9+ Double digit depreciation
  33. 33. How big a role will foreclosures play in the Wisconsin market ?
  34. 34. Foreclosures
  35. 35. Some of the top U.S. lenders own as many as 700,000 foreclosed homes they have yet to offer for sale, said Rick Sharga, executive vice president for marketing for RealtyTrac. Source: Bloomberg 3/12/09 Shadow Inventory?
  36. 36. Wednesday, April 15 th , 2009
  37. 37. A total of 803,489 properties entered some stage of foreclosure during the first quarter, and a growing number of these properties are more expensive homes. Source: Realty Trac 4/09
  38. 38. Office of the Comptroller of the Currency and the Office of Thrift Supervision April 2009
  39. 39. The biggest percentage jump was in prime mortgages, more than double the percent recorded at the end of March 2008. Prime Foreclosures Source: OCC and OTS Mortgage Metrics Report 4/3/09
  40. 40. Source: OCC and OTS Mortgage Metrics Report 4/3/09
  41. 41. Source: OCC and OTS Mortgage Metrics Report 4/3/09
  42. 42. Source: OCC and OTS Mortgage Metrics Report 4/3/09 Modifications?
  43. 43. Source: OCC and OTS Mortgage Metrics Report 4/3/09 “ Re-default rates were consistently lower for modifications that resulted in lower monthly payments.”
  44. 44. “ The single most important trigger event for delinquencies is unemployment.” Source: Market Watch 1/20/09 - Frank Nothaft, chief economist for Freddie Mac. Unemployment
  45. 45. Jobless Rate Source: Wall Street Journal 4/18/09
  46. 46. Source: Federal Reserve Bank of Boston 4/13/09 Probability of a 90-day-delinquency Situation Impact Higher payment 7-11% 1% increase in unemployment 10-20% 10% fall in house prices > 50%
  47. 47. Shouldn’t I just wait if a want to sell my home?
  48. 49. Source: Wall Street Journal 2/06/09 Moody’s Economy Area Final % off peak Naples-Marco Island 70% Miami 66% Riverside-San Bernardino 63% Phoenix 58% Las Vegas 56% Los Angeles 53%
  49. 50. Source: CME Group 1/02/09 November 2010 Today’s Price Projected Bottom
  50. 51. USA Today Wisconsin 2012 or later!!
  51. 52. On a $250,000 house, a family loses $480.76 per week! Assuming a 10% fall in prices…
  52. 53. Hi Steve: This morning in the sales meeting we announced we are at $985,000 in price reductions. This covered about 22 listings.  Thanks, Barbara Wallace
  53. 54. Things you must do NOW ! <ul><li>Close every buyer who wants to buy. </li></ul><ul><li>Extend every listing until the end of the year. </li></ul><ul><li>Re-position listings to reflect current market. </li></ul><ul><li>Work diligently on expireds through the year. </li></ul>
  54. 55. A Calling

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