Keeping Current Matters - June 2012

7/31/2019 Keeping Current Matters - June 2012

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Recent conflicting housing

data has confused consumers

and economists alikeWithso much fluctuating data, howcan home buyers possiblyfigure out whether it's the right

time to buy or sell?

2012 will be a very confusing

year for consumers,says

Stan Humphries, chiefeconomist of real estatewebsite Zillow Inc.

Reuters 5/31/2012


5/26

Reuters

Q: Mostly, people are trying to figure out if the markethas hit bottom and is now in recovery. How can theyfigure that out based on the numbers?

A: People get the impression that the bottom is a discrete

period of time. But the bottom economists talk about is aprocess. Economically, you see a trough in home sales,and then they start to rise. After that, you see long-horizonbuyers (investors, second-home buyers and retirees) re-

enter the market. Then you see mainstream buyers getback in. Then you see pockets of metros recover, then themetros overall, then the national index.

Reuters 5/31/2012


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Reuters

Q: Is there any way to makes sense of the system as awhole?

A: The best advice is to use a set of numbers to triangulatea trend. If you look at a whole bunch of numbers, you find

a pretty positive picture

But what tends to get emphasized instead is somethinglike pending home sales are down from last month-butthat's a little bit of noise factor. What you need to ask is:

Are they up from last year? Of course, confidence will behigher once all those numbers move in lockstep.

Reuters 5/31/2012


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Pending Home Sales

70.0

80.0

90.0

100.0

110.0

Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

NAR 5/2012


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Existing Home Sales

12,658 HomesSell Every Day

and 8,987 BuyersReceive a Mortgage

NAR 5/2012


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Return on Investment

MSN Money.com, Case Shiller

10.8

-8.3

-30.3

34.1

-50

-30

-10

10

30

50

Dow S&P NASDAQ Real Estate

January 2000

June 2012


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Source 2012 2013 2014

Home PriceExpectation Survey -.72 1.39 2.55

Urban Land

Institute Flat 2.0 3.5Demand Institute

Study 1.0 1.75 2.5

Projected Annual % Change in Home Prices


12/26

3.75

4

4.25

4.5

4.75

5

5.25

Mortgage Rates 30 Year Fixed

Federal Reserve

1/01/2011 Today


13/26

In the chart, the red lineshows the mortgagepayment youd have to

make if you took out astandard 30-year mortgage

for the median askingsales price for vacant saleunits That number is

now lower than the mediannational rental price. This

is the first time thatshappened since 1988, andprobably for quite sometime before that, too.

Rent vs. Buy

Reuters-Felix Salmon 5/8/2012


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A Home Buyer Pollreleased recently by TDBank revealed aspirationsof homeownership arestill very much alive.

The majority (84%) oftoday's younger renting

generation (ages 18-34)responded that theyintend to buy a home.

Young Renters Plan to Buy a Home

84%

16%

Young Renters

Plan to Buy Don't

TD Bank 5/21/2012


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Non-Financial Value of Homeownership

Were seeing a psychological shift.

Instead of looking at homes throughthe eyes of an economist, were

realizing that a home doesnt solely

equate to a financial returnInstead

the home is the emotional center ofour lives, and it remains a criticalcomponent of who we areThe

feeling you get when you step

through your front door or pull intoyour driveway is indescribable andpriceless and the same holds truefor our children who crave stability.

- Psychotherapist Dr. Robi Ludwig DS News 5/31/2012


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Supply & Demand


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Months Inventory of Homes for Sale

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

NAR


18/26

As long as distressed homes remain a significant portion of

homes for sale, prices for non-distressed homes will beunder pressure to converge with distressed prices.Considering the significant price discounts in distressedsales relative to non-distressed sales, non-distressed prices

could have quite a bit further to fall.

Continued Pressure on Prices

Radar Logic 5/31/2012


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20%

25%

30%

35%

40%

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

% Distressed Property Sales

NAR 5/2012


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35% 34%

29% 28%

0%

10%

20%

30%

40%

Jan Feb Mar Apr

% Distressed Property Sales

NAR 5/2012


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LPS 5/2012


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Judicial and Non-Judicial States


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The inventory of homes in foreclosure in judicialforeclosure states is growing, but this increase isbeing more than offset by declining inventories innon-judicial states where the processing timelines

to clear a foreclosure are shorter. Nationally theinventory of homes in foreclosure decreased 0.1

percent from what it was a year ago at this time.

- Anand Nallathambi, CEO of CoreLogic


CoreLogic Foreclosure Report 5/30/2012


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Calculated Risk 5/7/2012

Although our servicers haveresumed the foreclosure process inmost areas, we believe the volumeof our single-family REO

acquisitions during the first quarterof 2012 was less than it otherwisewould have been due to delays inthe foreclosure process,

particularly in states that requirea judicial foreclosure process.

Freddie Mac



25/26

As lenders begin processing their distressedinventories and releasing them for sale at the locallevel, we look to themto move carefully and

monitor conditions sorecently gained homevalues aren't diminished.

- Move.com

Impact of Coming Foreclosures

Move, Inc. 5/30/2012


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Foreclosure-related sales picked up in the first quarter,particularly pre-foreclosure sales where a distressedhomeowner is selling to avoid foreclosure - typically via shortsale. Those pre-foreclosure sales hit a three-year high in the

first quarter (up 25%). Lenders are approving moreaggressively priced short sales,which in turn is resulting in moresuccessful short sales.

- Brandon Moore, CEO of RealtyTrac

Short Sales Skyrocketing

RealtyTrac 5/29/2012

Documents

Keeping Current Matters - June 2012