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Joe's march presentation
This document discusses several projections and analyses related to the US housing market in 2012: 1) Several analysts predict the housing market will improve in 2012 compared to 2011, with a stronger second half, citing higher than expected economic data and indicators of increased consumer sentiment. 2) Warren Buffett states that buying single family homes is an attractive investment due to low interest rates and the ability to refinance, and that buying one's own home is a good option if staying in the same place for 5-10 years. 3) The national mortgage settlement will allow banks to proceed with millions of delayed foreclosures, pushing home prices down another 3% but helping the market in the long run by reducing the
Joe's march presentation
- 1. Bridge Builders MasterMind Joe New 817-329-2900 817.329.2900
- 2. Existing Home Sales 12,521 Homes Sell Every Day and 8,715 Buyers Receive a Mortgage NAR 2/2012
- 3. Pending Home Sales 110.0 100.0 90.0 80.0 70.0 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan NAR 2/2012
- 4. Month’s Inventory ofHomes for Sale 10.0 9.0 8.0 7.0 6.0 5.0 4.0 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan NAR 2/2012
- 5. Return on Investment MSN Money.com, Case Shiller
- 6. Projections for 2012 “For2012, we are expecting better housing numbers than in 2011, and a better second half than first.” IHS Global Insights IHS Global Insights 2/13/2012
- 7. Projections for 2012 “A lot of housing and macroeconomic data came in higher than expected so far in 2012…while jobless claims have fallen steadily this year and indications on consumer sentiment show Americans may be ready to begin buying properties again.” Jason Philyaw, Editor, Housing Wire Housing Wire 2/27/2012
- 8. Projections for 2012 “The US economy continues to build on the momentum from the end of last year. Our outlook anticipates gradual, but steady, improvement in the economy and the housing market, supported by low interest rates and brightening job market prospects.” Frank Nothaft. Freddie Mac VP and chief economist Freddie Mac 2/22/2012
- 9. Projections for 2012 “The improved tone of housing data buoys hopes that the market may be on the verge of its long-awaited recovery. ..Increases in new- and existing-home sales over the last three months follow stronger job creation and improved affordability, including the overall drop last month in conventional mortgage rates to below 4%.” Moody’s Analytics Moody’s Analytics 2/27/2012
- 10. Warren Buffett SpeaksOut Is it time to buy real estate? “If I had a way of buying a couple hundred thousand single-family homes I would load up on them.” Why invest in real estate now? “It’s a way, in effect, to short the dollar because you can take a 30-year mortgage and if it turns out your interest rate’s too high, next week you refinance lower. And if it turns out it’s too low, the other guy’s stuck with it for 30 years. So it’s a very attractive asset class now.” CNBC 2/13/2012
- 11. Warren Buffett SpeaksOut Is buying your own home better than investing in stocks right now? “If I knew where I was going to want to live the next five or 10 years I would buy a home and I’d finance it with a 30-year mortgage… It’s a terrific deal.” Should we buy multiple houses? “If I was an investor that was a handy type and I could buy a couple of them at distressed prices and find renters, I think it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.” Source: CNBC 2/13/2012
- 12. Mortgage Rates –30 Year Fixed 5.25 5 4.75 4.5 4.25 4 3.75 1/01/2011 Today Federal Reserve
- 13. The Move-Up Buyer ComparisonToday Current Home Move-up Home 2006 Price $500,000 $750,000 Current Price (-20%) $400,000 $600,000 Loss/Savings $100,000 $150,000 Net Gain for move-up buyer $50,000
- 14. The Move-Up Buyer Comparison– 5 Years Later Current Home Move-up Home Current Price $400,000 $600,000 Future Price (+20%) $480,000 $720,000 Future Gain $80,000 $120,000 Future difference $40,000 Current Gain $50,000 Total Gain $90,000
- 15. The Move-Up Buyer Price Rate P&I TODAY 600,000 4.40 3,004.57 2016 720,000 6.00 4,316.76 Monthly Savings 1,312.19
- 16. Home Rents WillKeep Rising “Paying rent is getting $1, 200 $1, 175 more painful for renters $1, 150 $1, 125 across the country in the $1, 100 $1, 075 face of rising demand $1, 050 $1, 025 and tight supply… $1, 000 2009 2010 2011 2012* 2013* 2014* It’s bad timing for people who have been spooked by, or pushed out of, the residential housing market and have decided to rent instead of buy. Home ownership in the United States is at historic lows, but at the same time rental prices are on the rise.” MSNBC.com 2/6/2012
- 17. Buy Rent Housing Cost Over Next 30 Years* $900K $540K Owners Renters * Assuming payment of $1,500 for both rent and mortgage; a fixed rate mortgage and an annual rent increase of 3.2% for inflation. Forbes.com 10/13/2011
- 18. Buy Rent Retirement Fund Created from Homeowner Equity After 30 Years* $400K $0 Owners Renters * Assuming $300,000 current value with a 1% annual appreciation rate for residential property. Forbes.com 10/13/2011
- 19. S&P Case-Shiller HomePrice Indices S&P Case Shiller 1/31/2012
- 20.
- 21. Months Supply ofShadow Inventory Financial Times 2/17/2012
- 23. Explaining Shadow Inventory Shadow Inventory S A L E S
- 24.
- 25. Impact of Settlement “Thesettlement sets forth clear guidelines for lenders and servicers to follow when foreclosing, which should allow them to push through some of the delayed foreclosures from last year.” Brandon Moore, Chief Executive of RealtyTrac RealtyTrac 2/16/2012
- 26. Impact of Settlement “Thesettlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled. Many lenders have refrained from foreclosing on homes as they awaited the settlement.” Mark Vitner, a senior economist at Wells Fargo Securities Washington Post 2/08/2012
- 27. Impact of Settlement “Ithink there’ll be more price weakness, because we’ll see the number of distressed sales pick up. But I think the price declines will be modest.” Mark Zandi, Chief Economist Moody’s Analytics BusinessWeek 2/18/2012
- 28. Price Depreciation “The latestsettlement will hasten the pace of filings and push up the distress sale share of total sales over the next several quarters, driving national house prices down another 3%.” Celia Chen, Moody’s Analytics Moody’s Analytics 2/17/2012
- 29. Shadow Inventory 1. Houses90 Days Delinquent on the mortgage 2. Houses owned by banks but not yet ready for sale 3. Houses in the foreclosure process
- 31. S&P Case ShillerPricing Index – 10 City 195 185 175 165 155 145 135 2006 - 2011 125 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 Case Shiller
- 32. S&P Case ShillerPricing Index – 10 City 200 180 160 140 120 100 80 60 40 20 1987 – 2011 0 Case Shiller
- 33. Percentage of DistressedProperty Sales 50% 40% 40% 37% 35% 31% 31% 32% 30% 29% 30% 29% 30% 28% 20% 10% 0% NAR
- 34. Short Sales Surging 450 Short Sales in Thousands 397 400 354 350 300 274 250 200 150 103 100 50 0 2008 2009 2010 2011 Calculated Risk 2/15/2012
- 35. Short Sales Surging “Wecontinued to see a shift toward pre-foreclosure sales, or short sales, and away from REOs… That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans.” RealtyTrac RealtyTrac 2/28/2012
- 36. Value by SaleCategory Type of Sale % of Value Non-Distressed Sale 100% Short Sale 79% Foreclosure Sale 71% RealtyTrac 02/2012
- 37. Mortgage Forgiveness DebtRelief Act Obama’s 2013 budget proposal includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007. Without the Mortgage Forgiveness Debt Relief Act, debt reduced through mortgage modifications or short sales qualifies as income to the borrower and is taxable. The administration’s extension would apply to any amounts forgiven before January 1, 2015. DS News 2/15/2012
- 38. Resources Slide Slide Title Link Existing Home Sales, Pending Home 2,3,4 Sales, Monthly Inventory of Homes for http://www.realtor.org Sales 5 Return on Investment www.msnmoney.com 6 Projections for 2012 http://www.ihs.com/products/Global-Insight/industry-economic-report.aspx?ID=1065932304 7 Projections for 2012 http://www.housingwire.com/article/monday-morning-cup-coffee-more-good-housing-news-tap 8 Projections for 2012 http://freddiemac.mediaroom.com/index.php?s=12329&item=122345 9 Projections for 2012 http://www.economy.com 10, 11 Warren Buffet Speaks Out http://www.cnbc.com/id/46541258 12 Mortgage Rates - 30 Year Fixed http://www.freddiemac.com/pmms http://bottomline.msnbc.msn.com/_news/2012/02/06/10332224-office-and-home-rent-will- 16 House Rents Will Keep Rising keep-rising-and-rising Housing Cost Over Next 30 Years, http://www.forbes.com/sites/investor/2011/10/12/buy-that-dream-house-now-or-wait-until- 17, 18 Retirement Fund Created from prices-fall-further Homeowner Equity After 30 Years 19 S&P Case-Shiller Home Price Indices http://www.housingviews.com/wp-content/uploads/2012/01/CSHomePrice_Release1.pdf 21 Months Supply of Shadow Inventory http://ftalphaville.ft.com/blog/2012/02/17/881581/the-decline-of-us-housing-inventory KEEPINGCURRENTMATTERS.COM
- 39. Resources Slide Slide Title Link http://www.realtor.org/wps/wcm/connect/0556a600491cbf9b813bcd2e39654e23/Shadow_I 22 Months Supply of Shadow Inventory nventory_Annual_2011_for_website.pdf?MOD=AJPERES&CACHEID=0556a600491cbf9b813bcd 2e39654e23 21 S&P Case-Shiller Home Price Indices www.housingviews.com/wp-content/uploads/2012/01/CSHomePrice_Release1.pdf http://www.realtytrac.com/content/foreclosure-market-report/january-2012-us-foreclosure- 25 Impact of Settlement market-report-7022 http://www.washingtonpost.com/business/source-holdout-states-to-sign-mortgage- 26 Impact of Settlement settlement-with-banks-over-foreclosure-abuses/2012/02/08/gIQA7uIvzQ_story.html http://www.businessweek.com/news/2012-02-14/foreclosure-deal-to-spur-u-s-home-seizures- 27 Impact of Settlement help-heal-market.html 28 Price Depreciation http://www.economy.com/dismal 30 Foreclosures in Process by State http://www.corelogic.com/about-us/researchtrends/asset_upload_file693_14120.pdf 33 Percentage of Distressed Property Sales http://www.realtor.org 34 Short Sale Surging http://www.calculatedriskblog.com/2012/02/lawler-short-sales-increased.html http://www.realtytrac.com/content/foreclosure-market-report/q4-and-year-end-2011-us- 35 Short Sale Surging foreclosure-sales-report-7060 http://www.dsnews.com/articles/obama-proposes-extending-tax-waiver-on-mortgage-debt- 37 Mortgage Forgiveness Debt Relief Act forgiveness-2012-02-15 KEEPINGCURRENTMATTERS.COM
- 40. Where Are theOpportunities?
- 41. Bridge Builders MasterMind Joe New 817-329-2900 817.329.2900