July Real Estate Market Update 2016

JULY 2016

“With last month's gain, sales are now up 4.5% from May 2015 and are at their highest annual pace since February 2007.”

- Lawrence Yun NAR’s Chief Economist

“Now in its seventh year, the US economic recovery shows signs of slowing in the face of a strong dollar, a weakening global economy, and low energy prices.

But as household growth continues to gain momentum, the housing sector should be an engine of growth.�

- Joint Center For Housing Studies of Harvard University

“Demand for homes has been especially strong as more Americans find work, wages edge higher and mortgage rates remain historically low. We still have some ground to make up but housing remains a bright spot in the economy.�

- Freddie Mac

4

3.85

3.97 3.92

30 Year Fixed

3.81 3.79

Rate Mortgages from Freddie Mac

3.73 3.71 3.71 3.68 3.66 3.64 3.66 3.65 3.653.64 3.62 3.61 3.6 3.59 3.59 3.58 3.57 3.58 3.5 3.54 3

3.72 3.7

3.55

3.4

1/7 1/14 1/21 1/28 2/4 2/11 2/18 2/25 3/3 3/10 3/17 3/24 3/31 4/7 4/14 4/21 4/28 5/5 5/12 5/19 5/26 6/2 6/9 6/16 6/23 6/30 Freddie Mac 7/2016

Mortgage Rate Projections Quarter

Fannie Mae

Freddie Mac

MBA

NAR

Average of All Four

2016 4Q

3.7

4.1

4.1

4.1

4.00

2017 1Q

3.6

4.2

4.2

4.3

4.08

2017 2Q

3.8

4.4

4.4

4.5

4.28

2017 3Q

3.8

4.6

4.7

N/A

4.37 7/2016

Homeownership is‌ an achievement to be proud of

a dream come true

93%

86% Ipsos

Buying a home is an excellent long-term investment because it is likely to increase in value over time and it is one of the best ways for people to build wealth and assets:

April 2014

April 2015

April 2016 MacArthur Foundation

“The bigger question is whether the housing crash diminished the general appeal of homeownership. The available evidence suggests that it has not.�

- Joint Center For Housing Studies of Harvard University

% of Renters Who Prefer to Own 


Increasing

74.2%

68.5%

2015

2016 Federal Reserve Bank of New York

% of Renters Who Plan to Buy

Increasing

48.9%

43.2%

2015

2016 Federal Reserve Bank of New York

“The more sustainable housing markets should allow for positive feedback loops in local economies, with strengthening job and income gains for residential real

estate agents, mortgage bankers and home improvement workers.�

- David Berson, Nationwide's SVP & Chief Economist

Pending Home Sales

2016

over the last 18 months

2015

2014 January

February

March

April

May

June

July

August

September

October

November

December

Buyer Traffic

By State

NAR

Seller Traffic

By State

NAR

-4.5%

June

-1.9%

-3.8% -1.1% -1.5%

-3.6%

HOUSING SUPPLY Year-Over-Year Last 12 Months -9.6% June

July

August

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Apr

NAR 7/2016 May

“The stock of existing homes for sale declined 1.9 percent last year, to 2.1 million units. Supply stood at 4.8 months, making 2015 the fourth consecutive year that inventories held below the 6.0-month level, the conventional measure of a balanced market.�

- Joint Center For Housing Studies of Harvard University

“Many owners aren’t moving on from their current homes, which is holding back available inventory for both first time and move up buyers.

With values on the rise, this could prove to be an ideal time to sell – especially in the hot markets where owners could get more than they expected.”

- Bob Walters Quicken Loans Chief Economist

“The primary driver in the increase in sales is more homeowners realizing the equity they've accumulated in recent years and finally deciding to trade-up or downsize.�

- Lawrence Yun Chief Economist NAR

Significant Equity

By State

CoreLogic

Positive Equity Share

By State

CoreLogic

“The CoreLogic Home Price Index was up 5.5% year over year through the first quarter.

If home values rise another 5% uniformly across the U.S., the number of underwater borrowers will fall by another one million during the next year.�

- Anand Nallathambi President and CEO of CoreLogic

“Buyers looking for the most expensive homes will find slashed prices, more options and less competition. It's a much different story for entry-level buyers, who will be up against rising prices, low inventory and tough competition, with homes selling over asking price in many of the nation's hottest housing markets.�

- Zillow

Number of Homes for Sale 2016 versus 2012 by category 2012 Q1 2016 Q1

Starter Homes

Trade-Up Homes

Premium Homes Trulia

7.9%

Year-Over-Year PRICE CHANGES by category

5.4% 4.0%

Bottom Tier Homes

Middle Tier Homes

Top Tier Homes Zillow

Thinking about the housing crisis that started in 2008, when many people and families defaulted on their mortgages and lost their homes, I think the housing crisis is pretty much over 36

30

23

17

10

March 2013

April 2014

April 2015

April 2016 MacArthur Foundation

How Many Americans “Don’t Know”?

The Minimum Credit Score Required

The Maximum Back-End DTI Ratio

The Minimum Down Payment Required

54%

59%

40%

????????????

Fannie Mae

Percentage who believe a 20% down payment is required to purchase a home 50%

48%

40%

Total Population

Among African Americans

Among Hispanics Ipsos

“The high median credit scores are due to many millennials believing they won’t qualify with the score they have - and are waiting to apply for a mortgage until they have the score they think they need.”

- Jonas Moe Ellie Mae Senior VP

“Consumers are cautious more than they have been in the past and thus the self-sidelining of cautious/discouraged consumers makes it appear as if credit is tightening. 
 More consumer education such as counseling and financial literacy programs could be as or more successful in raising origination levels than introducing new lending products with lower credit standards.�

CoreLogic MarketPulse Report

The average LTV ratio for those applying for a mortgage loan in the last three months by generation‌

89%

Millennials

81%

Generation X

73%

Baby Boomers

68%

Silent Generation CoreLogic

76.0%

Percentage of loan applications in previous 90-day cycle that have closed

73.5%

71.0%

68.5%

66.0%

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sept-15

Oct-15

Nov-15

Dec-15

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Ellie Mae

Have the market information in visual form and at your fingertips‌

Average Days on the Market

By State

NAR

5,600,000

5,500,000

5,400,000

5,300,000

EXISTING Home Sales

5,200,000

5,100,000

5,000,000

4,900,000

4,800,000

4,700,000

4,600,000

4,500,000

4,400,000

Since January 2014

4,300,000

Jan 2014

Jan 2015

Jan 2016

NAR 7/2016

5,600,000

EXISTING Home Sales

5,066,667

4,533,333

Since January 2012 4,000,000

Jan 2012

Jan 2013

Jan 2014

Jan 2015

Jan 2016

NAR 7/2016

EXISTING Home Sales Y-O-Y by region

West

U.S.

Midwest

South

NAR 7/2016 Northeast

Total Home Sales 577

in thousands

527

542

497 451

320

341

January

340

470

359

February

March

2015

April

2016

May Freddie Mac

Existing Home Sales in thousands 2015

January

February

March

April

May

June

July

August

September

October

2016

November

December

Freddie Mac

New Home Sales in thousands 2015

January

February

March

April

May

June

July

August

September

October

2016

November

December

Freddie Mac

New Home Sales Annualized in thousands

Jun-14

Jul

Aug

Sep

Oct

Nov

Dec Jan-15 Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec Jan-16 Feb

Mar

Apr

May

Census

New Home 
 Sales

33%

% of sales by price range

24%

14% 9%

10% 6%

4% Under $150K

$150-$199K

$200-$299K

$300-$399K

$400-$499K

$500-$749K

Over $750K

Census

New Homes Selling Fast
 (median from completion to sold) 4.0 months 4.0

4.2

4.0

3.9 3.8 3.7

3.7

3.5 3.5 3.3

3.3

3.2

3.2

3.0

3.0 2.9

Dec

Jan-15

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

2.9

Nov

Dec

Jan-16

Feb

Mar

Apr

May

Census

113

PENDING Home Sales

108

since 2012

104

99

100 = Historically Healthy Level

95

90

January 2012

January 2013

January 2014

January 2015

January 2016

NAR 7/2016

114

112

110

PENDING Home Sales since 2014

108

106

104

102

100

100 = Historically Healthy Level 98

96

94

92

90

January 2014

January 2015

January 2016 NAR 7/2016

PENDING Home Sales U.S.

West

Midwest

Year-Over-Year By Region Northeast

South

NAR 7/2016

35%

Percentage of Distressed Property Sales

10%

7%

January 2012 - Today Jan 2012

Jan 2013

Jan 2014

Jan 2015

Jan 2016

NAR 7/2016

Home Prices

EXISTING Home Prices Y-O-Y by region

U.S.

Northeast

West

South

Midwest NAR 7/2016

% Change

in Sales from last year

by Price Range

-1.6% $0-100K

$100-250K

$250-500K

$500-750K

$750K-1M

$1M NAR 7/2016

Case Shiller 14.0%

10.5%

Year-Over-Year

PRICE CHANGES

7.0%

3.5%

0.0%

June 2012

S&P Case Shiller 7/2016

Case Shiller

13.2% 12.9% 12.4%

Year-Over-Year PRICE CHANGES 20 City Composite

10.8%

9.3%

8.1%

6.7% 5.7% 5.7% 5.7%

5.6%

5.4% 5.5% 5.4%

5.0% 4.9% 4.9% 5.0% 5.0% 4.5%

Jan 2014 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2015 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2016 Feb Mar Apr

S&P Case Shiller 7/2016

Forecasted Year-Over-Year % Change in Price 


by State

CoreLogic

Appraiser Home Value Opinions Compared to Homeowner Estimates

-1.4

-2

-1.98

-1.87

-1.8

-1.75 -1.95

-1.99

-1.89

-2.17 -2.33

Last 12 Months

-2.65

Jul

Aug

Sep

Oct

Nov

Dec

Jan-16

Feb

Mar

April

May

Jun

Quicken Loans

HOUSING INVENTORY

Seller Traffic

By State

NAR

Months Inventory of HOMES FOR SALE 2011 - Today

January 2011

January 2012

January 2013

January 2014

January 2015

January 2016 NAR 7/2016

Months Inventory of 
 HOMES FOR SALE 5.1

5.0

Last 12 Months

5.1 4.8

4.8

3.9

Jun

Jul

Aug

Sep

Oct

Nov

Dec

4.4

4.4

Feb

Mar

4.7

4.7

Apr

May

4.0

Jan

NAR 7/2016

Months Inventory of 
 HOMES FOR SALE

6.0

5.6

last 2 years

5.2

4.8

4.3

3.9

3.5

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan-15

Feb

Mar

Apr

May

Jun

July

Aug

Sep

Oct

Nov

Dec

Jan-16

Feb

Mar

Apr

May

NAR 7/2016

-4.5%

June

-1.9%

-3.8% -1.1% -1.5%

-3.6%

HOUSING SUPPLY Year-Over-Year Last 12 Months June

July

August

Sept

-9.6% Oct

Nov

Dec

Jan

Feb

Mar

Apr

NAR 7/2016 May

Year-over-Year Inventory Levels JanFebMarAprMay June JulyAugSeptOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMay NAR 7/2016

New Home Inventory months supply

5.5

5.6

5.5

5.3 5

5

5

5

4.9 5

Jan

Feb

Mar

2015

Apr

2016

May

Census

New Home Inventory months supply

5.8

Last 12 Months

5.6

5.6

5.5

5.5

5.5

5.4 5.3 5.2

5.2

5.2

4.9

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan-16

Feb

Mar

Apr

May Census

BUYER
 DEMAND

Buyer Traffic

By State

NAR

Foot Traffic

Last 12 Months

indicator of future sales

June

July

August

September

October

November

December

January 2016

February

March

April

May

NAR 7/2016

Foot Traffic indicator of future sales

January 2015

February

March

April

May

2015

June

July

August

September

October

November

2016

December

NAR 7/2016

Foot Traffic indicator of future sales

Jul 2013

Jan 2014

Jan 2015

Jan 2016 NAR 7/2016

INTEREST RATES

4

3.85

3.97 3.92

30 Year Fixed

3.81 3.79

Rate Mortgages from Freddie Mac

3.73 3.71 3.71 3.68 3.66 3.64 3.66 3.65 3.653.64 3.62 3.61 3.6 3.59 3.59 3.58 3.57 3.58 3.5 3.54 3

3.72 3.7

3.55

3.4

1/7 1/14 1/21 1/28 2/4 2/11 2/18 2/25 3/3 3/10 3/17 3/24 3/31 4/7 4/14 4/21 4/28 5/5 5/12 5/19 5/26 6/2 6/9 6/16 6/23 6/30 Freddie Mac 7/2016

Mortgage Rate Projections Quarter

Fannie Mae

Freddie Mac

MBA

NAR

Average of All Four

2016 4Q

3.7

4.1

4.1

4.1

4.0

2017 1Q

3.6

4.2

4.2

4.3

4.08

2017 2Q

3.8

4.4

4.4

4.5

4.28

2017 3Q

3.8

4.6

4.7

N/A

4.37 7/2016

Mortgage Rates

2017

Freddie Mac 30 Year Fixed Rate

2016

2015

2015 Q1

2015 Q3

2016 Q1

2016 Q3

- Actual - Projected

2017 Q1

2017 Q3 Freddie Mac

Mortgage Credit Availability YES

NO

MAYBE

Mortgage Credit Availability

Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association Apr 2013

MBA

900

675

Historic Data for the MORTGAGE CREDIT AVAILABILITY INDEX

450

(a report from the Mortgage Bankers Association)

225

0

June 2004 June 2005 June 2006 June 2007 June 2008 June 2009 June 2010 June 2011 June 2012 June 2013 June 2014 June 2015 May 2016

MBA

Average Days To Close A Loan Last 12 Months

49 48

49

50

48 47 46

46

46 45

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

44

44

Mar

Apr

May

All Closed Loans as per Ellie Mae

FICO Score 
 Requirements

727

Last 12 months

725 724

724 723

723 722

722

722

721 720 719

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan-16

Feb

March

April

May

All Closed Loans as per Ellie Mae

FICO Score Distribution

500-549

550-599

600-649

650-699

54.9%

700-749

750-799

800+

All Closed Loans as per Ellie Mae

Average FICO Score for Closed Purchase Loans

by Loan Type

724 707 686 All Loans

Conventional

FHA

VA All Closed Loans as per Ellie Mae

Average Back End DTI for Closed Purchase Loans by Loan Type

40

38

All Loans

Conventional

FHA

VA All Closed Loans as per Ellie Mae

Resources Slide

Slide Title

Link

4

Lawrence Yun Quote

http://www.realtor.org/news-releases/2016/06/existing-home-sales-grow-18-percent-in-may-highest-pace-in-over-nine-years

5,11,19

JCHS Harvard Quote

http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/jchs_2016_state_of_the_nations_housing_lowres.pdf

6

Freddie Mac Quote

http://www.freddiemac.com/blog/research_and_analysis/20160623_ahead_in_may.html

7, 75

30-Year Fixed Rate

http://www.freddiemac.com/pmms

8, 76

Mortgage Rate Projections

http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_062016.pdf 
 http://www.freddiemac.com/finance/pdf/201606-Outlook-06%2028%2016.pdf https://www.mba.org/Documents/Research/Mtg%20Fin%20Forecast%20Jun%202016.pdf 
 http://www.realtor.org/sites/default/files/reports/2016/embargoes/forecast-06-2016-us-economic-outlook-06-29-2016.pdf

9, 30

Ipsos Survey

https://www08.wellsfargomedia.com/assets/pdf/about/press/2016/HomeownershipSurvey06142016.pdf

10,28

Buying A Home is Good Investment, Is Crisis Over?

https://www.macfound.org/media/files/E-How_Housing_Matters_National_Full_Report.pdf

12, 13

New York Fed Survey

https://www.newyorkfed.org/newsevents/news/research/2016/an160602

14

David Berson Quote

http://www.dsnews.com/news/06-28-2016/housing-market-weathering-ongoing-headwinds

15

Pending Home Sales

http://www.realtor.org

16-17, 39, 61,70

Buyer & Seller Traffic, Avg Days on the Market

http://www.realtor.org/reports/realtors-confidence-index

18

Housing Inventory

http://www.realtor.org

20

Bob Walter Quote, Appraisal Gap

http://www.quickenloans.com/press-room/2016/06/14/owners-western-cities-underestimate-value-appraisers-homes/

21

Lawrence Yun Quote

http://www.realtor.org/news-releases/2016/06/existing-home-sales-grow-18-percent-in-may-highest-pace-in-over-nine-years

22-23, 24

CoreLogic Equity Report

http://www.corelogic.com/about-us/researchtrends/homeowner-equity-report.aspx#

25,27

Zillow Quote

http://zillow.mediaroom.com/2016-06-24-Entry-Level-Prices-Continue-to-Soar-while-Top-of-the-Market-Stabilizes

KEEPINGCURRENTMATTERS.COM

Resources Slide

Slide Title

Link

26

Number of Homes For Sale

http://www.trulia.com/blog/trends/inventory-2q2016/

31

Jonas Moe Quote

NAREE 50th Annual Real Estate Journalism Conference

32

CoreLogic MarketPulse

http://www.corelogic.com/about-us/researchtrends/the-marketpulse-report.aspx#

34

CoreLogic LTV by Generation

http://www.corelogic.com/blog/authors/archana-pradhan/2016/06/comparing-mortgage-credit-variables-by-applicantage.aspx

40-42,52, 54-55

Existing Home Sales Report

http://www.realtor.org/

43-45

Freddie Mac Home Sales

http://www.freddiemac.com/blog/research_and_analysis/20160623_ahead_in_may.html

46-48,67-68

New Home Sales, Inventory

http://www.census.gov/construction/nrs/pdf/newressales.pdf

49-51

Pending Home Sales Report

http://www.realtor.org/

56-57

Case Shiller Price Index

https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/367344_cshomeprice-release-0628.pdf

58

Forecasted Price Changes

http://www.corelogic.com/about-us/researchtrends/corelogic-home-price-insights.aspx#

62-66

Housing Inventory

http://www.realtor.org

71-73

Foot Traffic

http://www.realtor.org

77

Freddie Mac Projections

http://www.freddiemac.com/pmms

79-80

Mortgage Credit Availability

https://www.mba.org/news-research-and-resources/forecasts-data-and-reports/single-family-research/mortgage-credit-availability-index

35, 81-85

Ellie Mae Report

http://www.elliemae.com/origination-insight-reports/Ellie_Mae_OIR_MAY2016.pdf

89-90

Ipsos Study Graphics

https://www08.wellsfargomedia.com/assets/pdf/about/press/2016/HomeownershipSurvey06142016.pdf

93

NAHB Graphic

http://www.nahb.org/en/research/housing-economics/housings-economic-impact/impact-of-home-building-and-remodeling-on-the-u-s--economy.aspx

KEEPINGCURRENTMATTERS.COM

93%

of Americans believe that homeownership is an achievement to be proud of

Ipsos

86% of Americans believe that homeownership is a dream come true

Ipsos

DO YOU KNOW? Percentage of Consumers Who The Said They “Don’t Know” Minimum The Minimum Credit Score Required

Down Payment Required

40% 54%

The Maximum Back-End DTI Ratio

59%

Fannie Mae

Fannie Mae Requirements Minimum % Down Payment Required

3% Minimum Credit Score Required

620 Maximum Back-End DTI Ratio

45%

*

*up to 50% with compensating factors

1,759

FULL TIME *

for every 1,000 Single-family Homes Built in the U.S. 367

377 212 56

Construction

Trade, transportation & warehousing

180

24 Real Estate

* Full-time equivalent jobs = enough work to keep one worker employed full-time for a year

Other

National Association of Home Builders

JULY 2016