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Why is housing important? JOBS.


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Based on recent improvements to housing, this document summarizes a few reasons why housing will continue to improve the US economy.

Published in: Business, Real Estate
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Why is housing important? JOBS.

  1. 1. Why is housing important? JOBS. 1
  2. 2. Three segments of economic growth that benefit froma stable housing market Home Building & 1 Improvement 2 Transaction Economy Finance, Origination & 3 Servicing 2
  3. 3. “About half of the jobs created by building new homes are in1 Home Building construction. They include framers, electricians, plumbers, finish carpenters … “ - National Association of Home Builders New Single-Family Housing Starts (in thsds of units) 1,600 800 Source: NAHB/Wells Fargo Housing Starts 1985 1989 1993 1997 2001 2005 2009 2013 NAHB analysis of the broad impact of new construction shows that building 100 average single-family homes generates: §  305 jobs §  $23 mn in wage & business income §  $9 mn in taxes and revenue for state, local & federal governments 3
  4. 4. 1 Home Improvement National Association of Realtors 2013 Profile of Buyer’s Home Feature Preferences Of buyers that undertook a home improvement project… §  Within 3 months of a home purchase, 53% of buyers undertook a home kitchen improvement 47% improvement project. §  The typical buyer spent $4,550 on various projects. bathroom improvement 44% A added or replaced lighting 41% added or replaced appliances 37% “… homeowners still said they would like more or larger closets and storage space. In addition, nearly half of recent buyers would prefer a larger kitchen...” - Paul Bishop, NAR VP Research Demand for home improvement drives commerce & enterprise 4
  5. 5. 2 Transaction Economy The ecosystem of housing, provides a substantial living to many professionals -  Architects & engineers -  Attorneys -  Appraisers -  Agents & brokers -  Movers -  Escrow, insurance & title -  Suppliers of wood & concrete products 5
  6. 6. 2 Transaction Economy 90% of consumers start their real estate journey online (NAR)-  The ecosystem is evolving, as a function of the consumer’s desire for mobile & online platforms-  Innovation is providing a new ecosystem to the transaction economy-  Job growth in online real estate companiesFree: Buy or sell:-  Instant AVM -  Houses-  Search listings -  Land-  Find rentals -  Notes-  Market comps -  Condos -  CRE -  US & abroad 6
  7. 7. Finance, Origination & The refinance boom has sustained tens of thousands of jobs with3 Servicing GSEs, banks, originators and servicers Total RMBS issuance $2.2T $2.0T $1.9T $1.8T $1.7T $1.4T $1.2T $1.2T As of 4Q12, the refi-to-purchase ratio is 3:1 2005 2006 2007 2008 2009 2010 2011 2012 Pending refi “cliff” or “taper”? | Estimates suggest refinance share could drop to as low as 40% by 4Q13 Redwood Trust is notable for their private-label MBS issuances; however, as of 4Q12, 99% of the MBS issuance were gov’t-backed High concentration remains | Top-5 originators: WFC, JPM, USB, BAC, & Quicken Loans comprised 53% of all originations in 3Q12 Source: Inside Mortgage Finance (Dec 2012) 7
  8. 8. Finance, Origination &3 Servicing 50.8 million First-lien mortgages Delinquency rates dropped substantially YoY in 4Q12, due to improved credit quality & stronger$17 Trn Approximate performance of recent origination vintages value of housing stock in the U.S.1 Source: OCC Mortgage Market Metrics 4Q12Mortgage debt in relation to the housing stock The housing finance industry requires professionals across the value chain Finance & Capital Markets Total US Mtg -  Note sales & MSR trades $7.7T -  Securitization debt $9.5T 2 Net Equity -  Basel III RWA Origination -  CFPB/QM compliance -  MLOs, Ops/fulfillment -  due diligence & underwritingNegative equity is still prevalent, estimates varyhow much and how long this will remain Servicing -  Workouts, HAMP/HAFAServicers continue to improve workout -  Specialty, Master & Sub-servicingcapabilities and are working through the backlog Source: Fed Flow of Funds Accounts, Table B.100 (Dec 2012) 8