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  1. 1. Existing Home Sales 12,521 Homes Sell Every Day and 8,715 Buyers Receive a Mortgage NAR 2/2012
  2. 2. Pending Home Sales110.0100.0 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
  3. 3. Month’s Inventory of Homes for Sale10.0 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
  4. 4. Return on Investment MSN Money.com, Case Shiller
  5. 5. Projections for 2012“For 2012, we are expecting betterhousing numbers than in 2011, anda better second half than first.”IHS Global Insights IHS Global Insights 2/13/2012
  6. 6. 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 WireHousing Wire 2/27/2012
  7. 7. 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 economistFreddie Mac 2/22/2012
  8. 8. 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 AnalyticsMoody’s Analytics 2/27/2012
  9. 9. Warren Buffett Speaks OutIs it time to buy real estate?“If I had a way of buying a couple hundred thousand single-family homes Iwould 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-yearmortgage and if it turns out your interest rate’s too high, next week yourefinance lower. And if it turns out it’s too low, the other guy’s stuck with it for30 years. So it’s a very attractive asset class now.” CNBC 2/13/2012
  10. 10. Warren Buffett Speaks OutIs buying your own home better than investing instocks right now?“If I knew where I was going to want to live the next five or 10 years I wouldbuy 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 themat distressed prices and find renters, I think it’s a leveraged way of owning avery cheap asset now and I think that’s probably as an attractive aninvestment as you can make now.” Source: CNBC 2/13/2012
  11. 11. Mortgage Rates – 30 Year Fixed5.25 54.75 4.54.25 43.75 1/01/2011 Today Federal Reserve
  12. 12. The Move-Up BuyerComparison Today Current Home Move-up Home2006 Price $500,000 $750,000Current Price (-20%) $400,000 $600,000Loss/Savings $100,000 $150,000Net Gain formove-up buyer $50,000
  13. 13. The Move-Up BuyerComparison – 5 Years Later Current Home Move-up HomeCurrent Price $400,000 $600,000Future Price (+20%) $480,000 $720,000Future Gain $80,000 $120,000Future difference $40,000Current Gain $50,000Total Gain $90,000
  14. 14. The Move-Up Buyer Price Rate P&ITODAY 600,000 4.40 3,004.57 2016 720,000 6.00 4,316.76 Monthly Savings 1,312.19
  15. 15. Home Rents Will Keep Rising“Paying rent is getting $ 1 , 2 0 0 $ 1 , 1 7 5more painful for renters $ 1 , 1 5 0 $ 1 , 1 2 5across the country in the $ 1 , 1 0 0 $ 1 , 0 7 5face of rising demand $ 1 , 0 5 0 $ 1 , 0 2 5and tight supply… $ 1 , 0 0 0 2009 2010 2011 2012* 2013* 2014*It’s bad timing for people who have been spookedby, or pushed out of, the residential housing marketand have decided to rent instead of buy. Homeownership in the United States is at historic lows,but at the same time rental prices are on the rise.” MSNBC.com 2/6/2012
  16. 16. 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
  17. 17. 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
  18. 18. S&P Case-Shiller Home Price Indices S&P Case Shiller 1/31/2012
  19. 19. Supply & Demand
  20. 20. Months Supply of Shadow Inventory Financial Times 2/17/2012
  21. 21. Explaining Shadow Inventory Shadow InventorySALES
  22. 22. NationalMortgageSettlement.com
  23. 23. Impact of Settlement“The settlement sets forth clear guidelines forlenders and servicers to follow when foreclosing,which should allow them to push through some ofthe delayed foreclosures from last year.”Brandon Moore, Chief Executive of RealtyTrac RealtyTrac 2/16/2012
  24. 24. Impact of Settlement“The settlement helps the housing market in thelong run because it allows banks to proceed withmillions of foreclosures that have been stalled.Many lenders have refrained from foreclosing onhomes as they awaited the settlement.”Mark Vitner, a senior economist at Wells Fargo Securities Washington Post 2/08/2012
  25. 25. Impact of Settlement“I think there’ll be more price weakness, becausewe’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
  26. 26. Price Depreciation“The latest settlement will hastenthe pace of filings and push up thedistress sale share of total salesover the next several quarters,driving nationalhouse prices downanother 3%.”Celia Chen, Moody’s Analytics Moody’s Analytics 2/17/2012
  27. 27. Shadow Inventory1. Houses 90 Days Delinquent on the mortgage• Houses owned by banks but not yet ready for sale• Houses in the foreclosure process
  28. 28. S&P Case Shiller Pricing Index – 10 City195185175165155145135 2006 - 2011125 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
  29. 29. S&P Case Shiller Pricing Index – 10 City200180160140120100 80 60 40 20 1987 – 2011 0 Case Shiller
  30. 30. Percentage of Distressed Property Sales50% 40%40% 37% 35% 31% 31% 32% 30% 29% 30% 29%30% 28%20%10%0% NAR
  31. 31. 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
  32. 32. Short Sales Surging“We continued to see a shift toward pre-foreclosuresales, or short sales, and away from REOs…That trend will likely show up in more localmarkets in 2012 as lenders recognizeshort sales as a better option for manyof their non-performing loans.”RealtyTrac RealtyTrac 2/28/2012
  33. 33. Value by Sale CategoryType of Sale % of ValueNon-Distressed Sale 100%Short Sale 79%Foreclosure Sale 71% RealtyTrac 02/2012
  34. 34. Mortgage Forgiveness Debt Relief 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
  35. 35. ResourcesSlide Slide Title Link Existing Home Sales, Pending Home2,3,4 Sales, Monthly Inventory of Homes for http://www.realtor.org Sales5 Return on Investment www.msnmoney.com6 Projections for 2012 http://www.ihs.com/products/Global-Insight/industry-economic-report.aspx?ID=10659323047 Projections for 2012 http://www.housingwire.com/article/monday-morning-cup-coffee-more-good-housing-news-tap8 Projections for 2012 http://freddiemac.mediaroom.com/index.php?s=12329&item=1223459 Projections for 2012 http://www.economy.com10, 11 Warren Buffet Speaks Out http://www.cnbc.com/id/4654125812 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-keep-rising-an16 House Rents Will Keep Rising Housing Cost Over Next 30 Years, http://www.forbes.com/sites/investor/2011/10/12/buy-that-dream-house-now-or-wait-until-prices-fall-fu17, 18 Retirement Fund Created from Homeowner Equity After 30 Years19 S&P Case-Shiller Home Price Indices http://www.housingviews.com/wp-content/uploads/2012/01/CSHomePrice_Release1.pdf21 Months Supply of Shadow Inventory http://ftalphaville.ft.com/blog/2012/02/17/881581/the-decline-of-us-housing-inventory KEEPINGCURRENTMATTERS.COM
  36. 36. ResourcesSlide Slide Title Link22 Months Supply of Shadow Inventory http://www.realtor.org/wps/wcm/connect/0556a600491cbf9b813bcd2e39654e23/Shadow_Inventory_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-market-re25 Impact of Settlement http://www.washingtonpost.com/business/source-holdout-states-to-sign-mortgage-settlement-with-ba26 Impact of Settlement http://www.businessweek.com/news/2012-02-14/foreclosure-deal-to-spur-u-s-home-seizures-help-hea27 Impact of Settlement28 Price Depreciation http://www.economy.com/dismal30 Foreclosures in Process by State http://www.corelogic.com/about-us/researchtrends/asset_upload_file693_14120.pdf33 Percentage of Distressed Property Sales http://www.realtor.org34 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-foreclosure-s35 Short Sale Surging http://www.dsnews.com/articles/obama-proposes-extending-tax-waiver-on-mortgage-debt-forgiveness37 Mortgage Forgiveness Debt Relief Act KEEPINGCURRENTMATTERS.COM
  37. 37. Where Are the Opportunities?

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