KCM and DPR Realty November 2020 National Housing Market Update

NOVEMBER 2020

APRIL 2020 MONTHLY MARKET REPORT

What we said in April…

What actually happened…

“News stories often describe the coronavirus-induced global economic downturn as the worst since the Great Depression… Yet for many, the comparison does more to terrify than

clarify.”

Josh Zumbrun

National Economics Correspondent at WSJ

Average U.S. FICO Score 715 710 705

706

706

706

April 2019

July 2019

October 2019

708

711

700 695 690 685 680

April 2020

July 2020 Wall Street Journal

Households Used Most of Their Stimulus Checks to

Pay Down Debt and Save 35%

Paid Down Debt

29%

Spent the Money

36%

Saved the Money

New York Fed

Business Applications in the United States 1600000

1400000

1200000

1000000

800000

600000

400000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

FRED

Change in Consumer Spending Since 1/1/20

Opportunity Insights

BLS Weekly Unemployment Filings in millions

6.9 6.6

5.2

4.4 3.8 3.3

3.2 2.9 2.4 2.1

1.9 1.6

3/21 3/28

4/4

4/11 4/18 4/25

5/2

5/9

5/16 5/23 5/30

6/6

1.5 1.5

1.4

6/13 6/20 6/27

1.3 1.3

7/4

1.4 1.4

7/11 7/18 7/25

1.2

8/1

1

8/8

1.1

1

0.9 0.9 0.9 0.9

8/15 8/22 8/29

9/5

0.8 0.8

0.9

0.79 0.76 0.75

9/12 9/19 9/26 10/3 10/10 10/17 10/24 10/31

Bureau of Labor Statistics

Currently Receiving Unemployment Insurance 24.9 in millions

7.3

A decrease of 538,000

3.1

March

April

May

June

July

August

September

October

Department of Labor

“Data from the Survey of Business Uncertainty (SBU) suggest that the road forward is going to be a tough slog. Businesses hold tepid expectations for year-ahead employment and sales growth. Expectations are, in fact, so tepid that, based on the latest average projection, it will take firms more than four-and-a-half years to recover their pre-Covid employment levels.�

Federal Reserve Bank

4.76 4.73

4.66

4.6

4.68

4.58

The number of mortgages in active forbearance decreased dramatically 4.14 4.12 4.12 4.1

4

in millions 3.93 3.93 3.93 3.8

3.72 3.69

3.59 3.62

2.97 2.99 2.97 3.01

5/29 6/5 6/12 6/19 6/26 7/3 7/10 7/17 7/24 7/31 8/7 8/14 8/21 8/28 9/4 9/11 9/18 9/25 10/2 10/8 10/15 10/22 10/29

McDash Flash Forbearance Tracker

Percentage of Overall Forbearances Decreasing 8.47%

8.39%

7.74%

7.2%

6.87% 5.83%

May

June

July

August

September

October MBA

Percentage of Forbearances Decreasing 13%

Total

Fannie/Freddie

GinnieMae

Private Label

12% 11% 10% 9% 8% 7% 6% 5% 4% 3%

May

June

July

August

September October MBA

2,397,000

Of the 5,760,000 families granted forbearance, this is what happened 2,302,000 upon the expiration of the plan‌

as of October 20th 500,000

481,000 80,000

Forbearance Extended

Removed While Performing

44%

Paid Mortgage Off

Expired/Delinquent in loss mitigation

Expired/Delinquent

Black Knight

“The likelihood of us having a foreclosure crisis again is about zero percent.�

Ivy Zelman

Founder of Zelman & Associates

Months Inventory of HOMES FOR SALE Last 12 Months

4.8

4.0

3.9

3.9

3.7 3.4 3.0

3.1

3.1

3.0

3.0 2.7

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept NAR

Year-Over-Year Change in Listings 10% 5% 0% -5%

Total Listings Early 5/30 6/6 6/13 6/20 6/27 7/4 7/11 7/18 7/25 8/1 March

New Listings

8/8 8/15 8/22 8/29 9/5 9/12 9/19 9/26 10/3 10/10 10/17

-10% -15% -20% -25% -30% -35% -40% -45% move.com

Top Three Reasons Homeowners Are NOT Putting Their House on the Market

31%

financial uncertainty

Zillow Report

34%

life is too uncertain right now

25%

COVID-19 health concerns

“Homeowners who feel life is uncertain right now may think they can still get a strong price if they delay selling until they have more clarity. The catch is that waiting to sell may raise the cost of a trade-up. This fall's record low mortgage rates, which make a trade-up more affordable on a monthly basis, are not guaranteed to last.�

Jeff Tucker

Senior Economist at Zillow

Projections on Home Prices Appreciation

7% 5.9%

5.5% 4.7% 3.7% 3.1%

0.2% Zillow

Zelman

Freddie Mac

NAR

HPES

MBA

CoreLogic

MBA Forecast for 2021: Prepare for Rising Mortgage Rates “At its Annual event… Mortgage Bankers Association Chief Economist Mike Fratantoni forecast that mortgage rates could rise in the year to come, but that they will remain near all-time lows.”

3.9%

3.7%

3.6% 3.3% 3.0%

2019

2020

2021

2022

2023 Housing Wire

197

Housing Affordability Index 1990 to Today

186

176 169

172 164

166 167 162 158

159

148

138 131

133 128

122

108

1990

131

127 125 126

128

126

124

122

115

113

110

1991

Years when distressed properties dominated the market

131

108

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019 Today

NAR

“The good news is that affordability remains significantly higher than one year ago, mostly due to falling rates. One month does not make a trend, but this month’s decline in affordability signals that the current dynamics producing faster house price appreciation may begin to erode the affordability gains of recent years.�

Mark Fleming

Chief Economist at First American

Winter Buyer & Seller Guides

Coming December 4th

Resources Slide

Slide Title

Link

3

V-Shaped Recovery

https://www.bea.gov/news/2020/gross-domestic-product-third-quarter-2020-advanceestimate

4

Zumbrun Quote

https://www.wsj.com/articles/coronavirus-slump-is-worst-since-great-depression-will-it-beas-painful-11589115601 (subscription necessary)

5

Average U.S. FICO Score

https://www.wsj.com/articles/coronavirus-tanked-the-economy-then-credit-scores-went-up11603013402

6

Use of Stimulus Checks

https://libertystreeteconomics.newyorkfed.org/2020/10/how-have-households-usedtheir-stimulus-payments-and-how-would-they-spend-the-next.html

7

Business Applications in the U.S.

https://fred.stlouisfed.org/series/BUSAPPSAUS

8

Change in Consumer Spending

https://www.tracktherecovery.org/

9, 10

Unemployment Filings & Insurance

https://www.dol.gov/ui/data.pdf

11

Federal Reserve Bank Quote

www.frbatlanta.org/blogs/macroblog/2020/10/01/post-covid-recovery-not-so-fast-my-friend

12

Number of Active Forbearances

https://www.blackknightinc.com/blog-posts/forbearance-volumes-continue-modestimprovement-from-pandemic-related-peak/

13, 14

Percentage of Forbearances

https://www.mba.org/news-research-and-resources/newsroom

Resources Slide

Slide Title

Link

15

When Forbearances Expire

https://www.blackknightinc.com/wp-content/uploads/2020/10/BKI_MM_Sept2020_Report.pdf

16

Zelman Quote

https://www.tomferry.com/podcast/experience-91/

17

Months Inventory of Homes for Sale

nar.realtor https://www.nar.realtor/topics/existing-home-sales https://cdn.nar.realtor/sites/default/files/documents/ehs-09-2020-overview-2020-10-22.pdf

18

YOY Change in Listings

https://www.realtor.com/research/weekly-housing-trends-view-data-week-oct-17-2020/

19, 20

Sellers Not Listing & Tucker Quote

http://zillow.mediaroom.com/2020-10-27-COVID-19-is-Driving-the-Housing-Inventory-Crisis-inUnexpected-Ways

21

Home Price Projections

http://www.freddiemac.com/research/forecast/20201014_quarterly_economic_forecast.page? https://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_071420.pdf https://www.nar.realtor/sites/default/files/documents/forecast-Q2-2020-us-economic-outlook-06-292020.pdf https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary www.zelmanassociates.com (subscription required) https://www.corelogic.com/insights-download/home-price-index.aspx http://zillow.mediaroom.com/2020-10-16-Home-Values-are-Growing-at-a-Pace-Not-Seen-Since-theRecovery-From-the-Great-Recession

22

Mortgage Rate Projections

https://www-housingwire-com.cdn.ampproject.org/c/s/www.housingwire.com/articles/mba-forecast-for2021-prepare-for-rising-mortgage-interest-rates/amp/

23

Housing Affordability Index

https://www.nar.realtor/blogs/economists-outlook/housing-affordability-weakens-in-august-2020-ashome-prices-rose-faster-than-median-family-incomes

24

Fleming Quote

https://blog.firstam.com/economics/has-the-affordability-boost-from-falling-mortgage-rates-run-itscourse

Resources Slide

Slide Title

Link

32, 52, 64

Confidence Index

https://www.nar.realtor/research-and-statistics/research-reports/realtors-confidenceindex

33-35, 43, 5257

Existing Home Sales

https://www.nar.realtor/topics/existing-home-sales

36-39

New Home Sales

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

40

Total Home Sales

http://www.census.gov/construction/nrs/pdf/newressales.pdf https://www.nar.realtor/topics/existing-home-sales

41,42

Pending Home Sales

https://www.nar.realtor/research-and-statistics/housing-statistics/pending-homesales

47-49

Case Shiller

https://www.spglobal.com/spdji/en/indices/indicators/sp-corelogic-case-shiller-20city-composite-home-price-nsa-index/#news-research

50

CoreLogic Forecasted YOY % Change in Price

https://www.corelogic.com/insights-download/home-price-index.aspx

53-59

Inventory

https://www.nar.realtor/topics/existing-home-sales http://www.census.gov/construction/nrs/pdf/newressales.pdf

Resources Slide

Slide Title

Link

61-63

Foot Traffic

http://nar.realtor/infographics/foot-traffic

66,67, 69,70

Mortgage Rates

http://www.freddiemac.com/pmms http://www.freddiemac.com/pmms/pmms_archives.html

68

Mortgage Rate Projections

http://www.freddiemac.com/research/forecast/ http://www.fanniemae.com/portal/research-insights/forecast.html https://www.mba.org/news-research-and-resources/research-andeconomics/forecasts-and-commentary https://www.nar.realtor/research-and-statistics

72,73

Mortgage Credit Availability

https://www.mba.org/news-research-and-resources/newsroom https://www.mba.org/news-research-and-resources/research-and-economics/singlefamily-research/mortgage-credit-availability-index

74-78

Days To Close, FICO Scores, DTI

http://www.elliemae.com/resources/origination-insight-reports

Average Days on the Market

NAR

EXISTING Home Sales

Since January 2014 Jan 2014

Jan 2015

Jan 2016

Jan 2017

Jan 2018

Jan 2019

Jan 2020

NAR

EXISTING Home Sales Y-O-Y by region

25.4% 22.8%

21.8%

U.S.

20.2%

Northeast

Midwest

19.6%

South

West NAR

Existing Home Sales in thousands

January

February

March

April

May

June

2018

July

2019

August

September October November December

2020 Census & NAR

New Home Sales in thousands

January

February

March

April

May

June

2018

July

2019

August

2020

September

October

November December

Census & NAR

New Home Sales annualized in thousands

jun-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan 2020

Census

New Home Sales % of sales by price range

27% 21%

9% 1% Under $150K

8%

4% $150-$199K

$200-299K

$300-$399K

$400-$499K

$500-$749K

6% Over $750K Census

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

4.2 3.9 3.7

4.3

4.2 4.0

3.8

3.7

3.6 3.6 3.4

3.3

3.3

3.5

3.6 3.4

3.2 3.2

3.1

3.2

3.4 3.4 3.4 3.1

3.0

2.9 2.9

3.6

3.5 3.2

3.3

3.0

2.7

Jan-18 Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec Jan-19 Feb

Mar

Apr

May

Jun

Jul

Aug

sep

Oct

Nov

Dec 20-Jan Feb

Mar

Apr

May

Jun

Jul

Aug

Census

Sep

Total Home Sales in thousands 681 642 598

594 586

595

589

520

506

468 475 376 334

January

368

426

398

February

March

635

April

454

436

May

517

June 2019

July

August

483

September October November December

2020 Census & NAR

PENDING Home Sales since 2014

100 = Historically Healthy Level

NAR

27.7%

Pending Home Sales Year-Over-Year By Region

20.5% 18.5%

U.S

Northeast

Midwest

19.6%

19.3%

South

West

NAR

35%

Percentage of Distressed Property Sales Distressed sales – foreclosures and short sales – represented less than 1% of sales in September

4%

January 2012 - Today Jan 2012

Jan 2013

Jan 2014

Jan 2015

Jan 2016

Jan 2017

Jan 2018

Jan 2019

1% Jan 2020

NAR

Home Prices

EXISTING Home Prices Y-O-Y by region

17.8% 14.8%

U.S.

17.1% 14.8%

Northeast

Midwest

13.0%

South

West NAR

% Change in Sales from last year by Price Range

106.5% 85.5% 66.6%

36.2% 4.3% -16.3%

%

$0-100K -16.3%

$100-250K 4.3%

$250-500K 36.2%

$500-750K 66.6%

$750K-1M 85.5%

$1M+ 106.5% NAR

Case Shiller

Year-Over-Year

PRICE

CHANGES

Jun 2012

Jan 2013

Jan 2014

Jan 2015

Jan 2016

Jan 2017

Jan 2018

Jan 2019

Jan 2020

S&P Case Shiller

Jan 2014 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2015 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2016 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2017 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2018 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2019 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2020 Feb Mar Apr May Jun Jul Aug

Case Shiller Year-Over-Year PRICE CHANGES 20 City Composite

S&P Case Shiller

Case Shiller

Year-Over-Year PRICE CHANGES 20 City Composite 5.2%

3.9% 4.0% 3.5% 2.6%

2.8%

4.1% 3.6% 3.5%

3.1%

2.2% 2.1% 2.0%

Aug

Sept

Oct

Nov

Dec

Jan 2020

Feb

Mar

Apr

May

Jun

Jul

Aug S&P Case Shiller

Year-Over-Year % Change in Price

6.7%

0.2% Current

Forecast CoreLogic

HOUSING INVENTORY

Seller Traffic Index

NAR

Months Inventory of HOMES FOR SALE 2011 - Today

Januar y 2011

Januar y 2012

Januar y 2013

Januar y 2014

Januar y 2015

Januar y 2016

Januar y 2017

Januar y 2018

Januar y 2019

Januar y 2020

NAR

Months Inventory of HOMES FOR SALE last 2 years

4.2

4.3 4.3 4.3

4.4

4.3

4.2

4.3 4.3

4.2

4.0

4.0 4.0 3.8 3.6

4.8

3.8

4.0

3.9

3.9

3.7

3.6

3.4

3.0

3.1

3.1

3.0

3.0 2.7

May-18 Jun

Jul

Aug

Sep

Oct

Nov

Dec Jan-19 Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec Jan-20 Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

NAR

Months Inventory of HOMES FOR SALE Last 12 Months

4.8

4.0

3.9

3.9

3.7 3.4 3.0

3.1

3.1

3.0

3.0 2.7

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept NAR

Year-over-Year Inventory Levels January 2014

January 2015

January 2016

January 2017

January 2018

January 2019

January 2020

% 7. 5. 3. 6. 6. 5. 5. 4. 6. 5. 5. -0 -0 -0 2. -0 1. 0. -4 -1 -3 -4 -1 -3 -2 -1 -1 -3 -9 -5 -5 -1 -6 -1 -9 -6 -7 -6 -6 -9 -8 -7 -9 -6 -6 -1 -9 -1 -9 -8 -7 -6 -6 0. 0. 2. 1. 2. 4. 6. 4. 2. 2. 1. 2. 0. -1 -2 -2 -4 -5 -9 -1 -9 -1 -1 -1 -1 -2 -1 -1

NAR

HOUSING SUPPLY Year-Over-Year

Oct -4.3%

Nov

Dec

Jan 2020

Feb

Mar

-9.8%

-10.20%

Apr

May

June

Jul

Aug

Sept

-5.2% -9.0% -11.3%

Last 12 Months

-19.70%

-18.8%

-18.2%

-18.6%

-19.2%

-21.1%

NAR

New Home Inventory months supply Last 12 Months

6.8 6.5

5.5

5.6

5.5

5.3

5.3

5.0 4.3 3.6 Oct

Nov

Dec

20-Jan

Feb

Mar

Apr

May

Jun

Jul

3.4 Aug

3.6 Sept Census

New Home Inventory months supply

2019 6.8

6.5

6.5 6.1

6.7

6.1

5.9

5.8 5.5

2020

5.7 5.3

5.3

5.0

5.5

5.6 5.3

5.0

4.3

3.6

Jan

Feb

Mar

Apr

May

Jun

Jul

3.4 Aug

3.6

Sept

Oct

Nov

Dec Census

BUYER DEMAND

Foot Traffic indicator of future sales

Jul 2013 Jan 2014

Jan 2015

Jan 2016

Jan 2017

Jan 2018

Jan 2019

Jan-20

NAR

Foot Traffic Last 12 Months Indicator of future sales

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept NAR

Foot Traffic indicator of future sales

2019 2020

January

February

March

April

May

June

July

August

September

October

November December

NAR

Buyer Traffic Index

NAR

INTEREST RATES

11/5

10/1

9/3

8/6

7/2

6/4

5/7

4/2

3/5

2/6

1/2

12/5

11/7

10/3

9/5

8/1

7/3

6/6

5/2

4/4

3/7

1/31

1/3

12/6

11/1

10/4

9/6

8/2

7/5

6/7

5/3

4/5

3/1

2/1

1/4

Mortgage Rates Freddie Mac 30-Year Fixed Rate

3.95%

2.78%

Freddie Mac

1/7/16 2/4 3/3 4/7 5/5 6/2 7/7 8/4 9/1 10/6 11/3 12/1 1/5/2017 2/2 3/2 3/30 4/27 5/25 6/22 7/20 8/17 9/14 10/12 11/9 12/7 1/4/2018 2/1 3/1 4/5 5/4 6/7 7/5 8/2 9/6 10/4 11/1 12/6 1/3/2019 1/31 3/7 4/4 5/2 6/6 7/3 8/1 9/5 10/3 11/7 12/5 1/2/2020 2/6 3/5 4/2 5/7 6/4 7/2 8/6 9/3 10/1 11/5

30-Year Fixed Rate Mortgages from Freddie Mac

3.97%

2.78%

Freddie Mac

Mortgage Rate Projections Quarter

Freddie Mac

Fannie Mae

MBA

NAR

Average of All Four

2020 4Q

3.0

2.9

3.0

2.9

2.95%

2021 1Q

3.0

2.8

3.1

3.1

3.00%

2021 2Q

3.0

2.8

3.1

3.1

3.00%

2021 3Q

3.0

2.8

3.2

3.2

3.05%

Mortgage Rates Freddie Mac 30-Year Fixed Rate

2019

2018

- Actual - Projected

2017 2020

2016

2021 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Rate 3.7

3.6

3.5

3.8

4.2

4.0

3.9

3.9

4.3

4.5

4.6

4.8

4.4

4

3.7

3.7

3.5

3.2

3.0

3.0

3.0

3.0

3.0

3.0

Freddie Mac

Mortgage Rates

Freddie Mac 30-Year Fixed Rate

Where Are They Going?

11/5

8/6 9/3 10/1

5/7 6/4 7/2

2/6 3/5 4/2

11/7 12/5 1/2

9/5 10/3

6/6 7/3 8/1

3/7 4/4 5/2

12/6 1/3 1/31

9/6 10/4 11/1

6/7 7/5 8/2

4/5 5/3

1/4 2/1 3/1

January 2018 – Today Actual Interest Rates

3.0

3.0

3.0

3.0

2020 Q4

2021 Q1

2021 Q2

2021 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

Jan 2014

Jan 2015

Jan 2016

Jan 2017

Jan 2018

Jan 2019

Jan 2020

MBA

900

800

Historic Data for the

700

MORTGAGE CREDIT AVAILABILITY INDEX

600

500

(a report from the Mortgage Bankers Association) 400

300

200

100

0

June 2004

June 2006

June 2008

June 2010

June 2012

June 2014

June 2016

June 2018

June 2020

MBA

Average Days To Close A Loan

Last 12 Months

51 49

48 48 44

47 47

45

45 43

42 40

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept

All Closed Loans as per Ellie Mae

® FICO

Score Requirements

Last 12 months

752 753 751 750 749 750 738 738 737 736 735

Oct

Nov

Dec

Jan

Feb

742

Mar

Apr

May

Jun

Jul

Aug

Sept

All Closed Loans as per Ellie Mae

® FICO

Score

37.15%

Distribution

22.90% 17.24%

16.95%

5.52% 0.01%

0.21%

500-549

550-599

600-649

45.88%

650-699

700-749

750-799

800+

All Closed Loans as per Ellie Mae

Average 753

759

® FICO

Score

for Closed Purchase Loans

by Loan Type

725 684

All Loans

Conventional

FHA

VA All Closed Loans as per Ellie Mae

Average Back End DTI for Closed Purchase Loans by Loan Type

43 34

35

All Loans*

Conventional

FHA

41

VA All Closed Loans as per Ellie Mae

CONTACT US TO DISCUSS YOUR LOCAL ARIZONA REAL ESTATE MARKET

Peter Shambreskis, REALTOR®, ABR, CRS, GRI, SFR 480-229-6468 Corinne Howard, REALTOR®, ePRO, GRI, SFR, SRS 480-229-6467 info@ShambreskisAndHoward.com www.ShowScottsdaleHomes.com DPR Realty, LLC