february 2019 · 2019. 11. 1. · 4.03 4.33 4.44 4.46 4.58 4.57 4.52 4.55 4.62 4.83 4.86 4.63 4.46...

FEBRUARY 2019

“The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”

Mike FratantoniChief Economist at MBA

HOUSING SUPPLY Year-Over-Year

-9.5%

-8.1%

-7.2%

-6.3% -6.1%

0.5%0.0%

2.7%

1.1%

2.8%

4.2%

6.2%

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

NAR 1/2019

Last 12 Months

Jun Jul Aug Sep Oct Nov Dec

4.03

4.33

4.444.46

4.58 4.57

4.524.55

4.62

4.834.86

4.63

4.46

Jan 2018 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2019

Freddie Mac 1/2019

2018 Mortgage RatesFreddie Mac 30-Year Fixed Rate

“The housing market is obviously very sensitive to mortgage rates. Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today. Now, with mortgage rates lower, some revival in home sales is expected going into spring.”

Lawrence YunChief Economist at NAR

“There are strong reasons to believe that the housing market is more responsive to changes in interest rates than in the past – accelerating when rates drop and slowing when rates rise. Mortgage rates hit seven-year highs in November but then fell back in December. If they remain low during the early months of 2019, the housing market could see a modest reacceleration.”

Aaron TerrazasZillow Senior Economist

“Total home sales are expected to slowly regain momentum, increasing to 6.09 million in 2019 and to 6.14 million in 2020. For 2019, we expect home sales growth to be mostly driven by existing home sales, while new home sales are expected to remain almost flat.”

Freddie Mac

“We believe that the best home price growth is likely in the rearview mirror and the market is likely to skew toward transaction growth, which should ultimately provide a more stable foundation for affordability and the housing market.”

Ivy ZelmanThe Z Report

Source 2019 2020

Home Price Expectation Survey +3.8 +2.5

Zelman & Associates +3.5 +3.3

Mortgage Bankers Association +4.5 +3

Freddie Mac +4.1 +2.7

National Association of Realtors +2.2 +3.2

Fannie Mae +4.2 +2.8

Projected Home Price % Appreciation Going Forward

Housing & Mortgage Market Review

The Probability of Home Prices being Lower in 2 Years

“The biggest challenge is really the availability of supply.”

Mark FlemingFirst American Chief Economist

Q: When do most listingscome on the market?

A: The 2nd Quarter of each Year

1,720,0001,700,000 1,690,000

1,660,000

1,630,000

1,530,000

1,360,000

June July August September October November December

NAR

Number of Single Family Listings

3.4 3.43.5

3.9

4.24.3 4.3 4.3 4.3

4.2

3.9

3.7

January February March April May June July August September October November December

NAR

Inventory Levels Months Supply

“Approximately one-third (32%) of Americans plan to purchase a home in the next five years. Millennials are most likely to have such a purchase in their five-year plan (49%), versus 35% of Generation X and 17% of baby boomers.”

NerdWallet

52%49%

46%43%

32%

20%

Rising Rental Costs Feeling like I’m throwing my money

away

Not building equity Not feeling like it’s truly home

Feeling like I’m paying my landlord’s

mortgage

Not being allowed tohave pets

What Do You Dislike About

Renting?

Convergys Analytics Insights Report

of renters believe you need a

20% down payment to buy a home

Convergys Analytics Insights Report

of renters believe you need a

780-800 credit scoreto be considered for a mortgage

Convergys Analytics Insights Report

0.09% 0.9%

9.1%

18.7%

24.2%

34.0%

13.0%

500-549 550-599 600-649 650-699 700-749 750-799 800+

FICO® Score Distribution

53.0%All Closed Loans as per Ellie Mae

47% 47%

36%34%

26%

Mature/Responsible Like an Adult Independent Established Empowered

How Does Buying A Home Make You Feel?

Convergys Analytics Insights Report

“From our perspective, additional inventory is a good thing... However, homebuyers dislike uncertainty more than most things, and the transition period from inventory being too tight to inventory rising has indeed added uncertainty to the market.”

Ivy ZelmanThe Z Report

“My best guess is the housing market really comes into a soft landing… It depends on whether buyers & sellers start to panic as the market continues to slow, especially given how fresh the memories of the 2008 crash are.

Markets often follow animal spirits or psychology. Sometimes a soft landing is perceived as a crash.”

Ralph McLaughlinCoreLogic’s Deputy Chief Economist

“The content you push out serves as an example of your expertise - something

proving that you know your stuff.

Unless you’re consistently sharing your unique knowledge with potential clients in the form of blogs, real estate videos or

other content types, you’ll never establish yourself as an authority.”

Tonya Eberhart & Michael CarrCo-Founders of BrandFace

“Content Matters!Context Matters!Keeping Current

Matters!”

Steve HarneyFounder of KCM

“I truly believe that the silly, stupid, non contextual, conversational

content agents send clients, whittle down their value over time. Doing what Steve suggests however, will build and maintain value. Tenfold.

The right content matters! ”

Marc DavisonCo-Founder of 1000watt

ResourcesSlide Slide Title Link

3 Mike Fratantoni Quote https://www.cnn.com/2019/01/17/investing/housing-market-mortgage-rates-homebuilders/index.html

4, 14-15 Housing Supply https://www.nar.realtor/topics/existing-home-sales

5 Mortgage Rates by Month http://www.freddiemac.com/pmms

6 Lawrence Yun Quote https://www.nar.realtor/newsroom/existing-home-sales-see-64-percent-drop-in-december

7 Aaron Terrazas Quote http://zillow.mediaroom.com/2019-01-10-Interest-Rates-More-Severely-Impacting-Home-Values-but-Not-First-Time-Buyers-According-to-Experts

8 Freddie Mac Quote http://www.freddiemac.com/research/pdf/January_Forecast_Press_Release.pdf

9, 22 Ivy Zelman Quotehttps://www.zelmanassociates.com/member-portal/z-report-member-site/no-government-data-no-problem-our-updated-take-o (subscription required)

10 Projected Home Price Growthwww.freddiemac.com, www.fanniemae.com, www.nar.realtor/, www.pulsenomics.com, www.mba.org, www.zelmanassociates.com (subscription required)

11 Probability of Prices Going Down https://mi.archcapgroup.com/hammr

12 Mark Fleming Quote https://blog.firstam.com/economics/interview-on-cnbc-discussing-the-2019-housing-market-outlook

16 Nerd Wallet Quote https://www.nerdwallet.com/blog/2018-home-buyer-report/

17-19, 21 Convergys Analytics Report https://info.bankofamerica.com/homebuyers-report/

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

23 Ralph McLaughlin Quote www.wsj.com (subscription required)

24-26 Quotes re: KCMhttps://www.inman.com/2019/01/25/the-7-deadly-sins-of-real-estate-brand-building/https://mobile.twitter.com/1000wattmarc/status/1088489500324519936

KEEPINGCURRENTMATTERS.COM

ResourcesSlide Slide Title Link

31, 52, 62Average Days on Market,Buyer & Seller Traffic Maps

https://www.nar.realtor/reports/realtors-confidence-index

32-33, 42, 44-45, 53-58

Existing Home Sales Report http://nar.realtor/

34-35, 39 Freddie Mac Home Saleshttp://www.census.gov/construction/nrs/pdf/newressales.pdfhttp://nar.realtor/

36-38, 59-60 New Home Sales, Inventory http://www.census.gov/construction/nrs/pdf/newressales.pdf

40-41 Pending Home Sales Report http://nar.realtor/

46-48 Case Shiller Price Index http://us.spindices.com/indices/real-estate/sp-case-shiller-20-city-composite-home-price-index

49 Forecasted Change in Price http://www.corelogic.com/about-us/researchtrends/corelogic-home-price-insights.aspx

50 Appraisal Challengehttps://www.quickenloans.com/press-room/2019/01/08/quicken-loans-study-less-than-half-a-percent-difference-between-owner-and-appraiser-opinions-of-home-values/

63-65 Foot Traffic http://nar.realtor/

67-68, 70-71 Freddie Mac Rates http://www.freddiemac.com/pmms

69 Mortgage Rate Projections

http://www.freddiemac.com/research/forecast/20190129_economic_growth.htmlhttp://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_012219.pdfhttps://www.mba.org/Documents/Research/Mortgage%20Finance%20Forecast%20Jan%202019.pdfhttps://www.nar.realtor/sites/default/files/documents/forecast-01-2019-us-economic-outlook-12-28-2018.pdf

73-74 Mortgage Credit Availability https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index

75-79 Ellie Mae Report https://assets.contentstack.io/v3/assets/blt47a327ac368e22cd/blta8f5841071fa3534/5c475ee5a007329c0f28a139/EM_OIR_DECEMBER2018_180096.pdf

KEEPINGCURRENTMATTERS.COM

Average Days on the Market

NAR

Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018

Since January 2014

EXISTINGHome Sales

NAR 1/2019

-10.3%

-6.8%

-10.5%

-8.7%

-15.0%

U.S. Northeast Midwest South West

Y-O-Y by region

EXISTING Home Sales

NAR 1/2019

Existing Home Sales in thousands

Census & NAR

January February March April May June July August September October November December

2017 2018

Census & NAR

January February March April May June July August September October November December

2017 2018

New Home Sales in thousands

*Data release has been impacted by the Government Shutdown –We will update as the data becomes available

Jun-14 Jan-15 Jan-16 Jan-17 Jan-18

Census

New Home Salesannualized in thousands

*Data release has been impacted by the Government ShutdownWe will update as the data becomes available

6%8%

36%

23%

12%

9%7%

Under $150K $150-$199K $200-299K $300-$399K $400-$499K $500-$749K Over $750KCensus

New Home Sales% of sales by price range

*Data release has been impacted by the Government Shutdown –We will update as the data becomes available

3.23.3

3.2

3.4

3.63.7

3.1

2.92.8

3.13.2 3.2

3.4

3.23.3

3.7

3.93.8

3.7

3.33.2

2.9 2.9

2.7

Nov Dec Jan-17 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-18 Feb Mar Apr May Jun Jul Aug Sep Oct

Census

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

*Data release has been impacted by the Government Shutdown –We will update as the data becomes available

Census & NAR

364 366

516503

612

656

561580

512 507

475 472

361 373

500521

597626

575 585

461

January February March April May June July August September October November December

2017 2018

Total Home Sales in thousands*Data release has been impacted by the Government Shutdown –

We will update as the data becomes available

-9.8%

-2.5%

-7.2%

-13.5%

-10.8%

U.S. Northeast Midwest South West

PENDINGHome SalesYear-Over-Year By Region

NAR 2/2019

Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018

Percentage ofDistressed Property

Sales

35%

January 2012 - Today2%

5%

NAR 1/2019

Home Prices

2.9%

8.2%

0.0%

2.5%

0.2%

U.S. Northeast Midwest South West

Y-O-Y by region

EXISTINGHome Prices

NAR 1/2019

-19.6%

-11.9%

-6.4%

-8.0%

-6.3%

-13.3%

$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+

% -19.6% -11.9% -6.4% -8.0% -6.3% -13.3%

% Change in Salesfrom last year by Price Range

NAR 1/2019

Year-Over-Year

PRICECHANGES

Case Shiller

S&P Case Shiller 2/2019

Jun 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018

Year-Over-Year PRICE CHANGES20 City Composite

S&P Case Shiller 2/2019

Case Shiller

6.3%6.4%

6.3%

6.7% 6.7%

6.5%

6.2%

6.0%

5.7%

5.5%

5.3%5.2%

Dec Jan 2018 Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Year-Over-Year PRICE CHANGES20 City Composite

Case Shiller

S&P Case Shiller 2/2019

CoreLogic

Forecasted Year-Over-Year % Change in Price

-0.60

-0.53

-0.36-0.33 -0.34

-0.25-0.28 -0.28 -0.29 -0.28

-0.36

-0.45

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

% -0.6 -0.53 -0.36 -0.33 -0.34 -0.25 -0.28 -0.28 -0.29 -0.28 -0.36 -0.45

Quicken Loans

Appraiser Home Value Opinions Compared to Homeowner Estimates

Last 12 Months

HOUSINGINVENTORY

NAR

Seller Traffic

January2011

January2012

January2013

January2014

January2015

January2016

January2017

January2018

Months Inventory ofHOMES FOR SALE

2011 - Today

NAR 1/2019

Jan-17 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-18 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Months Inventory of HOMES FOR SALE

last 2 years

NAR 1/2019

3.4 3.4

3.6

4.0

4.1

4.3 4.3 4.3

4.4

4.3

3.9

3.7

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

NAR 1/2019

Months Inventory of HOMES FOR SALELast 12 Months

January 2014 January 2015 January 2016 January 2017 January 2018

% 7.3 5.3 3.2 6.5 6.0 5.5 5.8 4.5 6.0 5.2 5.0 -0. -0. -0. 2.0 -0. 1.8 0.4 -4. -1. -3. -4. -1. -3. -2. -1. -1. -3. -9. -5. -5. -10 -6. -10 -9. -6. -7. -6. -6. -9. -8. -7. -9. -6. -6. -10 -9. -11 -9. -8. -7. -6. -6. 0.5 0.0 2.7 1.1 2.8 4.2 6.2

Year-over-Year Inventory Levels

NAR 1/2019

Jan FebMar Apr MayJun Jul AugSep Oct NovDec Jan FebMar Apr MayJun Jul AugSep Oct NovDec Jan FebMar Apr MayJun Jul AugSep Oct NovDec Jan FebMar Apr MayJun Jul AugSep Oct NovDec Jan FebMar Apr MayJun Jul AugSep Oct NovDec Jan FebMar Apr MayJun Jul AugSep Oct NovDec

% -24 -20 -16 -14 -13 -7. -5% -6. 1.8 0.9 5.0 1.6 7.3 5.3 3.2 6.5 6% 5.5 5.8 4.5 6% 5.2 5% -0. -0. -0. 2.0 -0. 1.8 0.4 -4. -1. -3. -4. -1. -3. -2. -1. -1. -3. -9. -5. -5. -10 -6. -10 -9. -6. -7. -6. -6. -9. -8. -7. -9. -6. -6. -10 -9. -11 -9. -8. -7. -6. -6. 0.5 0.0 2.7 1.1 2.8 4.2 6.2

Year-over-Year Inventory Levels

NAR 1/2019

HOUSING SUPPLY Year-Over-Year

-9.5%

-8.1%

-7.2%

-6.3% -6.1%

0.5%0.0%

2.7%

1.1%

2.8%

4.2%

6.2%

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

NAR 1/2019

Last 12 Months

Jun Jul Aug Sep Oct Nov Dec

5.25.1

5.0

5.4 5.45.3

6.0 6.0

5.3

5.6

4.9

5.55.6

5.45.3

5.75.5

6.06.2

6.46.5

7.4

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

2017

2018

Census

New Home Inventorymonths supply

4.9

5.5 5.65.4 5.3

5.75.5

6.06.2

6.4 6.5

7.4

Nov Dec Jan-18 Feb Mar Apr May Jun Jul Aug Sep Oct

Census

New Home Inventory months supply

Last 12 Months

BUYERDEMAND

Jul 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018

Foot Trafficindicator of future sales

NAR 1/2019

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

Foot Trafficindicator of future sales

Last 12 Months

NAR 1/2019

January February March April May June July August September October November December

2017

2018

Foot Trafficindicator of future sales

NAR 1/2019

NAR

Buyer Traffic

INTERESTRATES

1/4 2/1 3/1 4/5 5/3 6/7 7/5 8/2 9/6 10/4 11/1 12/6 1/3

Freddie Mac 1/2019

Mortgage RatesFreddie Mac 30-Year Fixed Rate

3.95%

4.45%

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/

17 2/2

3/2

3/3

0

4/2

7

5/2

5

6/2

2

7/2

0

8/1

7

9/1

4

10

/12

11/9

12/7

1/4/

18

2/1

3/1

4/5

5/4

6/7

7/5

8/2

9/6

10/4

11/1

12/6

1/3

30-Year FixedRate Mortgages

from Freddie Mac

4.45

3.97

Freddie Mac 1/2019

Mortgage Rate Projections

1/2019

QuarterFreddie

MacFannie Mae

MBA NARAverage

of All Four

2019 2Q 4.8 4.5 4.7 4.7 4.68

2019 3Q 4.8 4.5 4.8 4.8 4.73

2019 4Q 4.8 4.5 4.8 4.9 4.75

2020 1Q 4.8 4.5 4.9 - 4.73

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

Rate 3.7 3.8 4.0 3.9 3.7 3.6 3.5 3.8 4.2 4.0 3.9 3.9 4.3 4.6 4.6 4.8 4.6 4.8 4.8 4.8

Freddie Mac

Mortgage RatesFreddie Mac 30-Year Fixed Rate

- Actual- Projected

2015 2016 2017 2018 2019

4.6

4.8 4.8 4.8

Freddie Mac

2019 Q1

Where Are They Going In 2019?

January – Today Actual Interest Rates

2019 Q2 2019 Q3 2019 Q4

Mortgage RatesFreddie Mac30-Year Fixed Rate

Mortgage Credit Availability

YES NO MAYBE

Apr 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018

MBA

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

Mortgage Credit Availability

0

100

200

300

400

500

600

700

800

900

June 2004 June 2005June 2006 June 2007 June 2008 June 2009 June 2010 June 2011 June 2012 June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 Dec 2018

Historic Data for the MORTGAGE CREDIT AVAILABILITY INDEX

(a report from the Mortgage Bankers Association)

MBA

47

45

43

42

43

44 44

45 45

46

48

47

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

Average Days To Close A Loan

All Closed Loans as per Ellie Mae

Last 12 Months

721 721

722

723

724

726

725

724

727 727 727

726

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

All Closed Loans as per Ellie Mae

FICO® Score RequirementsLast 12 months

0.09% 0.9%

9.1%

18.7%

24.2%

34.0%

13.0%

500-549 550-599 600-649 650-699 700-749 750-799 800+

FICO® Score Distribution

53.0%All Closed Loans as per Ellie Mae

Average FICO® Scorefor Closed Purchase Loans

by Loan Type

All Closed Loans as per Ellie Mae

726751

674

707

All Loans Conventional FHA VA

39 37

44 43

All Loans* Conventional FHA VA

Average Back End DTIfor Closed Purchase Loans by Loan Type

All Closed Loans as per Ellie Mae