housing finance, affordability, and supply …...home price growth builds equity u.s.: $13,000 per...
TRANSCRIPT
HOUSING FINANCE, AFFORDABILITY, AND SUPPLY IN THE DIGITAL AGE
Fifth Annual Symposium on Housing Finance
#InnovateHousing
WELCOME AND INTRODUCTION
LAURIE GOODMANCODIRECTOR, HOUSING FINANCE POLICY CENTER,
URBAN INSTITUTE
FRANK NOTHAFTSENIOR VICE PRESIDENT AND CHIEF ECONOMIST,
CORELOGIC
#InnovateHousing
SARAH ROSEN WARTELLPRESIDENT,
URBAN INSTITUTE (MODERATOR)
DAVE LOWMANEXECUTIVE VICE PRESIDENT FOR SINGLE-FAMILY BUSINESS,
FREDDIE MAC
INNOVATION IN LOAN ORIGINATION AND SERVICING
PROCESSES: A CONVERSATION WITH THE GSES
ANDREW BON SALLEEXECUTIVE VICE PRESIDENT FOR SINGLE-FAMILY BUSINESS,
FANNIE MAE
#InnovateHousing
HOUSING AND MORTGAGE MARKET OUTLOOK: 2017 AND BEYOND
FRANK NOTHAFTSENIOR VICE PRESIDENT AND CHIEF ECONOMIST,
CORELOGIC
#InnovateHousing
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
Housing & Mortgage
Market Outlook
Frank E. Nothaft
CoreLogic Chief Economist
5
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 6
Short-term Interest Rates Heading Up
Federal funds target as of November 1, 2017: 1.00% to 1.25%
Federal funds target projected for December 31, 2018(based on FOMC member projections):
Federal Funds Target Number of FOMC MembersSame as today 21.50% to 2.00% 3 2.00% to 2.25% 6 2.25% to 2.75% 5FOMC Members projecting 16
Source: Federal Open Market Committee projections released September 20, 2017 (individual FOMC
participant’s judgment of the appropriate level of the target federal funds rate at the end of 2018).
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 7
Short-term Interest Rates Heading Up
Federal funds target as of November 1, 2017: 1.00% to 1.25%
Federal funds target projected for December 31, 2018(based on FOMC member projections):
Federal Funds Target Number of FOMC MembersSame as today 21.50% to 2.00% 3 2.00% to 2.25% 6 Median2.25% to 2.75% 5FOMC Members projecting 16
Source: Federal Open Market Committee projections released Sept. 20, 2017 (individual FOMC
participant’s judgment of the appropriate level of the target federal funds rate at the end of 2018).
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
Mortgage Rates Heading Up
Source: Freddie Mac Primary Mortgage Market Survey®; forecast is an average of MBA, Fannie Mae, Freddie Mac, NAHB, NAR and IHS Markit projections.
3%
4%
5%
6%
7%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
4.7%
Great
Recession
Forecast
Dec.
2018:
April
2011:
5.1%
Interest Rate on 30-Year Fixed-Rate Mortgages (percent)
Rates are still historically low
8
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 9
Effect of Higher Mortgage Rates
Housing market effects:
Affordability lessens
Owner mobility may lessen, for-sale inventory remains lean
Mortgage market effects:
Single-family originations: less refinance, more purchase & HELOC
▪New refi mix: more FHA-to-conventional, cash-out, longer-term
Credit risk: relatively low on debt outstanding
▪New loans: credit box may open up, fraud risk may increase
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
Inflation-Adjusted Monthly P&I Payment (U.S. median sales price, 80% LTV, 30-year FRM)
Last 12 Months: P&I up 13% while Household Income and Rent Rise Slower
10
Jun-06, $1,250
Feb-12, $546
Dec-18, $973
$400
$600
$800
$1,000
$1,200
$1,400
Jan-00 Jan-03 Jan-06 Jan-09 Jan-12 Jan-15 Jan-18
Forecast
Source: CoreLogic’s Real Estate Analytics Suite, Bureau of Labor Statistics, Freddie Mac, and IHS Markit
(for CPI and mortgage rate forecast). Forecast period begins in September 2017.
July 2017 vs July 2016: Prices up 6%, FRM rates up 0.5%, P&I up 13%
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
0%
1%
2%
3%
4%
5%
6%
7%
0 3 6 9 12 15
Number of Years
Percent of home buyers that sell by length of ownership, 1976-2016
Rising Rates A Hurdle for Home Sales
11
Source: CoreLogic
Peak 3-7 Years
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
0%
1%
2%
3%
4%
5%
6%
7%
0 3 6 9 12 15
Number of Years
Rates up 1.5%
Rates down 1.5%
Percent of home buyers that sell by length of ownership, 1976-2016
Rising Rates A Hurdle for Home Sales
12
Source: CoreLogic
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 13
Home Prices: Expect U.S. Index Up 5% in 2018
Nominal index back at 2006 peak, but real (inflation-adjusted) index is 18% below
100
120
140
160
180
200
220
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
49%
Source: CoreLogic Home Price Index (October 3, 2017 release), peak occurred April 2006, trough March 2011
CoreLogic Home Price Index (January 2000 = 100)
Forecast
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 14
Home Price Growth Builds EquityU.S.: $13,000 per home (Average equity gain per homeowner)
State with largest average gain: Washington ($40,000 per home)
States with no change or decline: Alaska (-$1,000), Delaware ($0)
Source: CoreLogic Equity Report for 2017Q2
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
0%
20%
40%
60%
80%
100%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Interest Rate on Mortgage Debt Outstanding In June 2017
Cumulative Share of Active Balance by Interest Rate
10% of Active UPB Has a Rate > 5%
& Is Current ~ $900 Billion
10% of UPB has mortgage rate > 5% & is ‘current’;
average remaining UPB ~ $100,000
Fewer “In the Money” Loans To Refinance
15
Dec. 2018 Forecast +100 bps
Today’s Rate +100 bps
or higher
Source: CoreLogic TrueStandings, Federal Reserve Board Statistical Release Z.1 (Table L.218,
$9,317 billion in first-lien home mortgage debt outstanding as of June 30, 2017).
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
0%
2%
4%
6%
8%
10%
12%
0
10,000
20,000
30,000
40,000
50,000
60,000
2000 2002 2005 2008 2011 2014 2017FHA to Conv. Refinances - Left Axis FHA to Conv. Refinance as a Share of Refinance - Right Axis
More than 200,000 FHA-to-Conventional Refinances expected in 2017
FHA-to-Conventional Refi Volume Up after FHA Dropped MI Cancellation
16
FHA Drops MI
Cancellation
Refinances by Month (number) Share of Refinance
Source: CoreLogic
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 17
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
2010 2011 2012 2013 2014 2015 2016 2017 2018
Single-family Mortgage Originations (Billions of dollars)
Purchase
Refinance
Forecast
Source: 2010-2016 are benchmarked to HMDA. Forecast is an average of the October projections released
by Freddie Mac, Fannie Mae and Mortgage Bankers Association; originations exclude HELOCs.
2017 to 2018:
Total: - 5%
Refi: - 25%
Purch: + 6%
17
More Purchase, Less Refi in 2017 and 2018
Smaller refi share leads to more stable annual originations forecast
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
5% growth projected for 2018
HELOC Volume Projected to Rise
$0
$50
$100
$150
$200
$250
$300
$350
$400
2000 2003 2006 2009 2012 2015 2018
Approved HELOCs (Billions of Dollars)
Forecast
Source: CoreLogic public records, second-lien HELOCs placed more than 60 days after first lien (2017 data through July, annualized).
18
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
ARMs7%
FRM 15 yrs or less19%
FRM 20 yrs6%
FRM 30 yrs68%
Mortgages Outstanding (Count)
by Product Factors that Mitigate Risk:
▪ Hybrid ARMs delay payment
‘shock’ until adjustment date
▪ 25% are shorter-term FRMs,
amortize faster
▪ Mark-to-market loan value lessens, MTM LTV declines
▪ Higher rates correlate with faster
home-price gain
Effect of Higher Interest Rates on Default RiskBy increasing ARM & HELOC payments, higher rates could add to risk
19
Source: CoreLogic TrueStandings Servicing (“FRM 20 yrs” includes terms of 16-25 years; “FRM 30 yrs” includes terms of 26 years or more)
52 Million Loans Outstanding
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary .
715
725
735
745
755
7651
2
3
4
5
6
Jan 2009 Jan 2011 Jan 2013 Jan 2015 Jan 2017
30-Year FRM Rates (percent) Refinance Credit Score (mean) – Inverse Scale
Lower
Credit Score
Higher
Credit Score
Refinance Credit Scores (right)
30 Year Rates (left)
Refi Credit Scores Dip 10 points For Each 0.6% Rise in Mortgage Rates
When Rates Rise, Refi Credit Scores Fall
20
Source: CoreLogic TrueStandings Servicing, Freddie Mac (monthly average 30-year FRM led one month)
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 21
Effect of Higher Mortgage Rates
Housing market effects:
Affordability lessens
Owner mobility may lessen, for-sale inventory remains lean
Mortgage market effects:
Single-family originations: less refinance, more purchase & HELOC
▪New refi mix: more FHA-to-conventional, cash-out, longer-term
Credit risk: relatively low on debt outstanding
▪New loans: credit box may open up, fraud risk may increase
© 2017 CoreLogic, Inc. [NYSE:CLGX] All Rights Reserv ed. Proprietary . 22
Where to find more information
Look for regular updates to our housing forecast,
commentary and data at
http://www.corelogic.com/blog
@CoreLogicEcon
@DrFrankNothaft
The views, opinions, forecasts and estimates herein are those of the CoreLogic Office of the Chief Economist, are subject to change without notice
and do not necessarily reflect the position of CoreLogic or its management. The Office of the Chief Economist makes every effort to provide
accurate and reliable information, however, it does not guarantee accuracy, completeness, timeliness or suitability for any particular purpose.
CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries.
REMOVING OBSTACLES AND BARRIERS TO ACCESS FOR
CREDIT WORTHY CONSUMERS
ALANNA MCCARGOCODIRECTOR, HFPC,
URBAN INSTITUTE (MODERATOR)
ERIN CURRIERDIRECTOR OF FINANCIAL SECURITY AND MOBILITY,
THE PEW CHARITABLE TRUSTS
NIKITRA BAILEYEXECUTIVE VICE PRESIDENT,
CENTER FOR RESPONSIBLE LENDING
TODD BAKERSenior Fellow,
Harvard Kennedy School
MARLA BLOWCHIEF EXECUTIVE OFFICER,
FS CARD INC.
ROB CHRANECHIEF EXECUTIVE OFFICER, DOWNPAYMENT RESOURCE
#InnovateHousing
Down payment assistance eligibility by MSA
MSATotalApplications
% eligible for assistance (weighted)
Averageloan amount
Average income
Average number of programs eligible for
Minimumdown payment assistance
Maximum down payment assistance
Averagedown payment assistance
New York-Newark-Jersey City, NY-NJ-PA
129,799 36% $409,797 $157,742 7.9 $3,718 $22,500 $13,484
Chicago-Naperville-Elgin, IL-IN-WI
106,572 43% $252,890 $110,041 7.5 $4,548 $8,593 $5,647
Dallas-Fort Worth-Arlington, TX
96,635 36% $258,104 $115,889 12.4 $2,394 $3,465 $2,768
Atlanta-Sandy Springs-Roswell, GA
85,728 30% $242,539 $ 99,116 4.1 $4,995 $12,277 $7,899
Washington-Arlington-Alexandria, DC-VA-MD-WV
81,313 39% $399,014 $133,585 12.6 $1,690 $63,451 $13,222
Los Angeles-Long Beach-Anaheim, CA
81,066 38% $543,907 $168,534 10 $6,868 $31,582 $21,151
Houston-The Woodlands-Sugar Land, TX
77,592 52% $253,401 $119,410 9.6 $1,562 $7,287 $3,258
Phoenix-Mesa-Scottsdale, AZ76,888 51% $245,297 $91,592 3.2 $7,119 $13,956 $11,178
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
59,157 46% $250,951 $107,390 8.4 $3,331 $7,204 $5,240
Seattle-Tacoma-Bellevue, WA
58,171 40% $390,432 $124,076 9.1 $13,367 $49,753 $21,435
Total active programs
2144
HFAs/Agencies
1295
$12.68T $12.84T
TOTAL CONSUMER DEBT
Q2 2017Q3 2008
In August 2017 the New York Federal Reserve released household debt information indicating we’re at an all-time high.
200814.26
201712.84
$Trillions
Adjusting for inflation, debt is
still below the peak
If we take a closer look, we find there’s a
lot more to the story
Real debt per capita (total) peaked in
2008 but has since decreased. That
trend holds for the credit card
category as well.
$35,800
$46,700
$39,500
2004
2008
2017
Total per capita real debts
both in $ and as a % of disposable income
2004 2008 2017
$442 $546 $428
12.16% 12.78% 9.91%
If we index real consumer debt to Q1’04, we see student loans are growing much faster than
any other category
1.10 1.06 0.981.18
0.80
3.68
0.60
Total Mortgage HERev
Auto CreditCards
Student Other
SOURCES
1New York Federal Reserve Household Debt and Credit Report, Q2’17 (https://www.newyorkfed.org/microeconomics/hhdc)2FS Card analysis using population data from Federal Reserve Bank of St. Louis Q2’17 (https://fred.stlouisfed.org/series/B230RC0Q173SBEA)3FS Card analysis using Debt Service Payments data from Federal Reserve Bank of St. Louis Q2’17 (https://fred.stlouisfed.org/series/TDSP)
is RISING for auto loans and mortgage
Mortgage
Auto
721731
754
674
698686
2004 2008 2017
www.fscardinc.com
HOW IS TECHNOLOGY CHANGING MORTGAGE
PROCESSES, AND WHAT’S NEXT?
HANS MORRISMANAGING PARTNER, NYCA PARTNERS;
CHAIRMAN OF THE BOARD, LENDING CLUB
#InnovateHousing
Housing Finance, Affordability, and Supply in the Digital Age
November 1, 2017
Hans Morris, Managing Partner at Nyca
Urban Institute and CoreLogic’s 5th Annual Symposium
Agenda
1. What is Nyca and how do we approach financial VC?
2. What are the primary developments in mortgage technology?
3. What are important policy and business issues and how do
key actors productively shape this evolution?
4. What is the best way to create effective partnerships and
engage with technology companies?
35
Nyca’s four areas of focus
36
What’s happening in mortgage technology
• In May 2012, I presented at the first Fannie Mae CIO conference.
Here’s what I talked about:
o The history of legacy mortgage systems and how they were organized
o Impact of the housing crisis on technology and access to credit
o Comparison to other financial services industries and Silicon Valley start ups
o How mortgage origination, servicing, capital markets, and investor reporting
could work
o What role Fannie Mae could play in encouraging a new ecosystem
• In 2012, there were essentially no Silicon Valley start-ups focusing
on mortgage technology.
37
There are now dozens of well-funded start-ups
focusing on mortgages and real estate technology:
Full Stack Mortgage Originators
Capital Markets
Equity Platforms &
Marketplaces
Second Mortgage / HELOC Originators
via Alternative StructuresMortgage Aggregators
Origination Software Providers
Corporate & Shared Housing
Property Management
Rent Payment
Title Insurance
= Nyca portfolio company
Brokerage
38
Achieve
Real estate and mortgage technology themes
we like:
• Digital origination:
• AI Application to underwriting:
• Rethinking servicing: digital borrower advice lender analytics &
response investor insight and analytics:
• Equity marketplace platforms:
• Shared ownership structures:
• Digital construction loan disbursement tool for
lenders/developers/inspectors:
• Elimination of an archaic title process:
39
Achieve
Public benefits and concerns about tech
and housing finance
It is clear that technology can result in
material public benefits:
o Lower fees and better alignment of interests for consumers
o Lower information costs and barriers to inclusion
o Elimination of bad practices (e.g., illegal or
unfair collections activity)
o Improvements to customer experience (e.g., elimination of redundant forms, navigation of complexity, smarter authentication)
o Real time data and reduced settlement risk
can materially reduce systemic risk and lower hedging costs
o Reduction in behavioral biases of both borrower and lenders.
o More efficient assessment of credit and
matching of risk to cost
But there are equally valid risks and concerns:
o Fraud and illicit use of data
o Impact of cyber-attacks and malicious activity
o Will this help or exacerbate financial
inclusion?
o Will selection bias leave small lenders behind (denominator effect)?
o How can existing players be disrupted?
40
What are the mistakes we’ve seen in credit
business models
41
• Underwriting:
• Fraud can kill you, and authentication is rapidly evolving
• Customer selection bias and “advantageous
access”
• Models are wrong
• Limitations of AI in credit
• Data sets
• Proving results over a cycle
• Determining longitudinal variables
and other custom variables is painstaking
• Supply and demand changes the environment: credit stacking, credit
crunches
• Behavior changes happen:
• Psychological commitment: does the loan serve a real need for the customer
• Regulatory and social environments are fluid
• Taxi medallions vs Uber
• Data is complicated:
• Don’t be creepy
• Disparate outcomes
• Mortgage Lending requires lots of
capital:
• Credit, market, liquidity, and operational
risk
• Large loan sizes and long underwriting
feedback cycles
Some areas to focus
• 100% electronic delivery (appraisals, title insurance, filings, signatures, verifications)
• Risk assessment/speed/cost
• Smart servicing tools
• Behavioral insight from financial education tools
• New approaches to authentication and digital IDs
• Continuous, real-time data insight into borrower, debt instruments and collateral
• Efficient mechanisms to share or hedge real estate exposure
• Good processes for technology engagement
42
WHAT IS THE APPROPRIATE ROLE OF
GOVERNMENT IN HOUSING?
MARK CALABRIACHIEF ECONOMIST TO VICE PRESIDENT PENCE
#InnovateHousing
SUPPLY SIDE CHALLENGES: COST, AFFORDABILITY, AND REGULATION
ROLF PENDALLCODIRECTOR, MPC,
URBAN INSTITUTE (MODERATOR)
ANNE MCCULLOCHPRESIDENT & CHIEF EXECUTIVE OFFICER,
HOUSING PARTNERSHIP EQUITY TRUST
SAM KHATERDEPUTY CHIEF ECONOMIST,
CORELOGIC
CARLOS MARTINSENIOR FELLOW, MPC
URBAN INSTITUTE
MICHAEL NEALAVP OF ECONOMICS,
NATIONAL ASSOCIATION OF HOME BUILDERS
STOCKTON WILLIAMSEXECUTIVE DIRECTOR, ULI
TERWILLIGER CENTER FOR HOUSING
#InnovateHousing
© 2017 CoreLogic, Inc. All Rights Reserv ed. Proprietary & Conf idential. CoreLogic
Supply Side
Challenges: Cost,
Affordability and
Regulation
November 1, 2017
45
Urban Institute and
CoreLogic’s 5th
Annual Symposium
© 2017 CoreLogic, Inc. All Rights Reserv ed. Proprietary & Conf idential. CoreLogic
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0-50 50-75 75-100 100-125 125-150 150-175 175-200
Aug-17
Aug-16
Entry Level Supply
Inventory Tighter Than it Appears, Much Lower for Entry-Level BuyersMonths' Supply by Price Tier
Source: CoreLogic
Price Tier (Percent)
Mo
nth
s’
Sup
ply
46
© 2017 CoreLogic, Inc. All Rights Reserv ed. Proprietary & Conf idential. CoreLogic
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
1 2 3 4 5 6 7 8 9 10
San Francisco
Seattle
Miami
Source: CoreLogic
Price Pressures Rapidly Increase As Supply Drops Below 3 Months
Months' Supply
Perc
ent
Diff
ere
nce B
etw
een L
ist P
rice a
nd S
old
Price
San Jose
Atlantic City
47
Dis
co
un
tP
rem
ium
© 2017 CoreLogic, Inc. All Rights Reserv ed. Proprietary & Conf idential. CoreLogic
0%
2%
4%
6%
8%
10%
12%
14%
16%
Low Tier
High Tier
Top 20 Market Year-over-Year Percent Change in Prices, August 2017
48
Low-End or Entry-Level Home Price Growth Outpaces High-End
Note: High tier is for home prices that are 25% or more above the median priced home in that market and low tier are for home prices 75% or less below the median priced home in that market. Source: CoreLogic
© 2017 CoreLogic, Inc. All Rights Reserv ed. Proprietary & Conf idential. CoreLogic
Hom
e P
rices In
dexe
d t
o 1
.0 in J
anuary
1976
49
Lack of Supply Led to Surge in Entry-Level Prices Last Two Decades
Note: Entry-level prices are 25% or more below the median and high end prices are 25% or above the median priced in that market.
Source: CoreLogic
0
2
4
6
8
10
12
14
16
Ja
n-7
6
May-7
7
Se
p-7
8
Ja
n-8
0
May-8
1
Se
p-8
2
Ja
n-8
4
May-8
5
Se
p-8
6
Ja
n-8
8
May-8
9
Se
p-9
0
Ja
n-9
2
May-9
3
Se
p-9
4
Ja
n-9
6
May-9
7
Se
p-9
8
Ja
n-0
0
May-0
1
Se
p-0
2
Ja
n-0
4
May-0
5
Se
p-0
6
Ja
n-0
8
May-0
9
Se
p-1
0
Ja
n-1
2
May-1
3
Se
p-1
4
Ja
n-1
6
May-1
7
Entry-Level Home Prices High-End Home Prices
© 2017 CoreLogic, Inc. All Rights Reserv ed. Proprietary & Conf idential. CoreLogic
Demographic Tailwind Will Propel Entry-Level Demand
Source: CoreLogic and Census
-
5
10
15
20
25
30
35
40
3.9
4.1
4.3
4.5
4.7
4.9
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Population Count - L Purchase Applications Per 1,000 Persons - R
Peak Millennial
Num
be
r o
f P
ers
ons in
Mill
ions,
by A
ge
Co
ho
rt
Peak Purchase Demand
Age
© 2017 CoreLogic, Inc. All Rights Reserv ed. Proprietary & Conf idential. CoreLogic
CoreLogic Insights
CoreLogic/blog
@CoreLogicEcon
@TheSamKhater
51
The views, opinions, forecasts and estimates herein are those of the CoreLogic Office of the Chief Economist, are subject to change without notice and do not necessarily reflect the position of CoreLogic or its management. The Office of the Chief Economist makes every effort to provide accurate and reliable information,
however, it does not guarantee accuracy, completeness, timeliness or suitability for any particular purpose.
CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries.
Residential Construction: An
Overview of Supply Headwinds
Conference on Housing Finance, Affordability, and Supply in the Digital Age
November 1, 2017
Michael NealAssistant Vice President and Senior Economist
Supply-Side Headwind Update
LaborUnfilled construction jobs rising
-
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Job openings rate - Construction
12-month moving average
LotsHousing Starts (Area) and Low/Very Low Lot Supply (bars)
0%
10%
20%
30%
40%
50%
60%
70%
0
300
600
900
1,200
1,500
1,800
2,100
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Starts (Thousands) Low Supply
01/01/14 01/01/15 01/01/16 01/01/17
180
190
200
210
220
230
240
270
290
310
330
350
370
390
410
430
14 15 16 17
Pro
du
ce
r Pric
e In
de
x: S
oftw
oo
d L
um
be
r(m
on
thly
)
Ra
nd
om
Le
ng
ths
Fra
min
g L
um
be
r C
om
po
site
In
de
x
(we
ekly
)
Source: Random Lengths; Bureau of Labor Statistics
Framing Lumber Index
Softwood Lumber PPI
Building Materials – Wood Products
Regulatory Costs Rising – Up 29% Over Last 5 YearsTotal effect of building codes, land use, environmental and other rules
Lending – AD&C Access
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
07 08 09 10 11 12 13 14 15 16 17
1-4 unit Residential Construction Loans
Year-over-Year Growth Rates
Millions
Supply Side Challenges: Housing Construction
Carlos Martín, Urban Institute
November 1, 2017
High Horse Ranch by Kieran Timberlake Architects Photo credit: Kyle Jeffers.
LaborAll Construction, Monthly Total Employee Turnovers (1000s): 2007-2017*Source: Job Openings and Labor Turnover Survey, Bureau of Labor Statistics . * thru August 2017.
LaborAge Distribution of Hispanic Male and Non-Hispanic White Male Construction
Workforce: 2003 & 2016Source: Current Population Survey, Bureau of Labor Statistics
2003 NH White Men
2003 Hispanic Men
2016 NH White Men
2016 Hispanic Men
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
16 to 19 years 20 to 24 years 25 to 54 years 55 years and over
LaborHispanic Worker Share of Select Housing Occupations, Percentage: 2007-2016Source: Current Population Survey, Bureau of Labor Statistics
0%
10%
20%
30%
40%
50%
60%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Employed Population Grounds workers
Carpenters Laborers
Drywall Installers Electricians
Painters Plumbers
Roofers HVAC Installers
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Employed PopulationConstruction ManagersGrounds SupervisorsConstruction SupervisorsBuilding Inspectors
2007 2008 2009 2010 2011 2012 2013 2015 2016
Employed Population
Real Estate Brokers & Agents
Appraisers & Assessors
Loan Counselors & Officers
LaborForeign-Born Worker Share of Major Occupational Groups, Percentage: 2005-2016Source: Current Population Survey, Bureau of Labor Statistics
MaterialsTop 5 U.S. Lumber Import and Export Countries by Net Balance Value, 2016Source: Country and Product Trade Data, US Census
$6.18B$6.75B
Housing Finance, Affordability, and Supply in the Digital Age
OCTOBER 2017
Housing Finance, Affordability, and Supply in the Digital Age
Savanah at Southport Apartments, West Sacramento, CA
OVERVIEW
✓Housing Partnership Equity Trust is a social purpose REIT whose mission is focused on the preservation of affordable and workforce housing throughout the United States
✓HPET was started by the Housing Partnership Network (“HPN”) and 12 nonprofit partners to acquire and preserve multifamily properties serving low and middle income renters
✓The Nonprofit Partners now include 14 of the nation’s largest affordable housing developers and operators who own a combined portfolio of over $8 billion and employ over 3,900 real estate professionals operating in 40 states and the District of Columbia
MISSION
Housing Partnership Equity Trust works collaboratively with our Nonprofit Partners to preserve the stock of affordable and sustainable
rental housing to positively impact the lives of our residents and our communities.
Economic Return
By creating and realizing value from acquiring, improving, operating and, in some cases, selling real estate
Through this mission we provide investors with a triple bottom line return
Mission Return
By preserving affordable and workforce housing
that improves social outcomes
Environmental Return
By purchasing energy efficient properties and
making energy efficiency improvements to older
properties
MARKET CHALLENGE
Rent increases for Class B and C apartments have outpaced increases for Class A properties over the last several years,
putting additional pressure on low- and middle-income households
MARKET CHALLENGE
New supply has been largely luxury, but actual demand is for affordable units. In almost every market the supply of affordable housing has remained stagnant or declined, while demand has increased, leading to historically low vacancy rates for class B/C apartments
HPET PORTFOLIO OVERVIEW
AHCThe Birches
Silver Spring, MD
CPDCDove Landing
Virginia Beach, VA
EDENWoodside Court
Fairfield, CA
AEON Goldenstar
Maplewood, MN
AEONSun Place
Roseville, MN
EDENSavannah at Southport West Sacramento, CA
HISPANIC HOUSINGMallard PointChannahon, IL
HFA/NHTBradford
Hagerstown, MD
MERCY2000 Illinois
Aurora, IL
CPDCWoodmere Trace
Norfolk, VA
AHCDunfield Townhomes
Nottingham, MD
CPLCCourtyards at Encanto
Phoenix, AZ
NEVADA HANDMeadow RidgeLas Vegas, NV
2,765 units with total acquisition value of $253.1 million
MOVING INTO THE DIGITAL AGE: WHAT DOES IT MEAN FOR HOUSING AND HOUSING FINANCE
LAURIE GOODMANCODIRECTOR, HFPC, URBAN INSTITUTE
(MODERATOR)
BRENT CHANDLERFOUNDER & CHIEF EXECUTIVE OFFICER,
FORMFREE
AMY BRANDTPRESIDENT & CHIEF OPERATING OFFICER,
DOCUTECH
NIMA GHAMSARICO-FOUNDER & CHIEF EXECUTIVE OFFICER,
BLEND
BRADLEY THOMPSONEXECUTIVE OFFERING LEAD,
MORTGAGE AND COMPLIANCE-AS-A-SERVICE, ACCENTURE
#InnovateHousing
Moving into the Digital Age• The Power of Dynamic Documents, eSign , eClose
& Customer Communications Management
11/1/2017
Amy Brandt President/COO
Who We Are
Docutech delivers compliant, dynamic, and secure documents and technologies formortgage, home equity and consumerlending.
For over 26 years, Docutech’s document technology andexpertise has been empowering lenders to efficientlyproduce accurate and compliant loan packages.
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Who We Serve
What We Do
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Recognition
Mortgage ProfessionalAmerica’s 2016 Hot 100List Mortgage Banking’s 2014 Tech All-StarsAward Mortgage Technology’s 2011, 2012, and2014 Top 50 Service Providers List Source Media’s Steve Fraser Award in 2012Mortgage Banking’s 2009 eMortgage All-Stars
Financial Services industry including over 200+ Lenders
Docutech Overview
Data Payload
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Docutech Solution Overview
Docutech - Confidential
Commercial LOS
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Introducing Solex™ eClosing
Today – Hybrid eClose
Solex eClose
• ConformX – Tight integration withdocument production
• Solex eSign & eDelivery
• Document Preview with eSigning andread-only option
• MISMO® SMART Doc® eNote, Version 1.02
December Release
eVault integration with MERS® eRegistry
• We are building our own (rather than licensethird-party software) for control, scalabilityand tighter integration. MERS and investor certifications in-process, expected in 4Q
eNotarization & eRecording
• Integration with SimplifileNotarization,eRecording
Copyright 2017 Docutech
CCM is designed to compose, format, personalize and distribute content to support physical and electronic communications, provide consistent branding and improve the customer experience.
We are expanding our product offering to become a CCM service provider.
CUSTOMER COMMUNICATIONSMANAGEMENT (CCM)
PRINT EMAIL
SMS (text) WEB PAGES
DESIGNTOOL
COMPOSITIONENGINE
(ConformX)
Workflow/Rule Logic(ConformX)
Multi-channel Output
(Solex)
Multiple Desktop & Mobile OutputsBased on Customer Preference
Core CCMApplication Components
Copyright 2017 Docutech
Borrowers:• Empowerment• Knowledgeduring mortgage
process• Efficiency & reduced stress• Consistent experience
from start to finish
Lenders:• Happier customers• Streamlined operational
processes – Greater adoption
with consistent experience on allcommunications
• Reduced costs• Improved Compliance
Benefits
Copyright 2017 Docutech
Borrowers & Lenders
Blend is a technology company focused on building an end-to-end platform to empower top lenders to originate loans more efficiently and in compliance with regulatory requirements, while offering borrowers a simple, enjoyable experience.
Overview
Successful Customers
A team with the talent, experience, and direction
Seasoned investors & advisors
Veteran Team
Industry Partnerships
30+
200+
$167 million
Market leading insights into consumer lending
US Market
$1.7 Trillion
Blend Customers $425 Billion
Blend’s customers funded roughly 25% of the US mortgage market in 2016
We have access to the most consumer data and insights to guide our product development
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An engaging experience from shopping to signing
72 6850
30
0
10
20
30
40
50
60
70
80
Apple Blend AmericanExpress
FinServ Avg
Blend NPS vs. Industry Benchmarks
THANK YOU FOR JOINING US!
#InnovateHousing