KCM Divided into Three Sections

Are They GoingUp or Down?

Home Sales

100 = Historically Healthy Level

Pending Home Sales

NAR 3/2014

Existing Home Sales

NAR 3/2014

-19.1%

-6%

3.9%

15.2%

19.4%

37.5%

-20%

-10%

0%

10%

20%

30%

40%

$0-100K$100-250K

$250-500K

$500-750K

$750K-1M $1M+

% Sales +/- -19.1% -6% 3.9% 15.2% 19.4% 37.5%

Percentage Change in Sales from a Year Ago by Price Range

NAR 3/2014

-44%

-16%

18%23%

-45%

-35%

-25%

-15%

-5%

5%

15%

25%

Short Sales REOsExisting Home

SalesNew

Construction

%Sales +/- -44% -16% 18% 23%

Percentage Change in

Sales from a Year Ago by Category

Home Sales

CoreLogic 3/2014

“While many fret that existing housing sales have recently been slumping, the angst is misplaced. Since early last year sales have declined 7%, but distressed

sales as a percentage of all sales have fallen from 25% of sales to just 15%…

Thus, the total volume of non-distressed sales is higher than it was a year ago.

Relax.”

Elliot F. Eisenberg Ph.D. GraphsandLaughs, LLC

-24%

-20.8%

-16.8%

-14%-13%

-7.6%

-5%-6.2%

1.8% 0.9%

5%

1.6%

7.3%

5.3%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Jan FebMarc

hApril May June July Aug Sept Oct Nov Dec Jan Feb

% -24% -20.8 -16.8 -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0% 1.6% 7.3% 5.3%

NAR 3/2014

Year-over-Year Inventory Levels

Months Inventory of Homes for Sale

NAR 3/2014

5-6 Months = Normal Market Inventory

HOME PRICES

100.00

120.00

140.00

160.00

180.00

200.00

220.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

United States Home Prices as per Case Shiller Composite 20 City Index

Case Shiller

100.00

120.00

140.00

160.00

180.00

200.00

220.00

2006 2007 2008 2009 2010 2011 2012 2013 2014

United States Home Prices as per Case Shiller Composite 20 City Index

Case Shiller

- CoreLogic 3/2014

“Home prices nationwide remain 16.9% below their peak, which

was set in April 2006.”

MILLENNIALSMILLENNIALS

1.) In 19 of the 20 large metro areas surveyed, more than 5% of all residents indicated they wanted to buy a home in the next year.

2.) Among current renters, homeownership aspirations were particularly strong, with about 10% of all renters nationwide saying they would like to buy within the next 12 months.

3.) The vast majority of these respondents also said they were confident or somewhat confident they could afford homeownership now.

4.) If all renters that indicated they wanted to buy actually did purchase a home in the next year, it would represent more than 4.2 million first-time home sales, more than double the roughly 2.1 million first-time home buyers in 2013.

Are 4.2M First Time Buyers about to Buy?

Zillow 3/2014

31%

30%

30%

9%

Millennials

Gen X

Boomers

Silent Generation

NAR 2014

Percentage of Buyersby Generation

"No other cohort of adults is nearly as confident about their economic future

as the Millennials are right now.

This is definitely a change…

With an increased sense of optimism, this generation is starting to feel as though they

have the resources available to lead the lives they want or expect to in the future."

Jim Zeumer Pulte Group VP Corporate Communications

MILLENNIALS are ready to buy homes…

of Millennials plan to purchase a home in the future

85%increased their interest in purchasing

a home in the past year as the positive attributes of homeownership

resonate with this generation

58%

Pulte Group 2014

Millennials: Associate Owning A Home with…

Pulte Group 2014

Baby Boomersare ready to move!

BH&G 2014

Baby Boomers ready to move…

of Boomers plan to move from the home they currently own

57%Plan to stay in the state they

are currently living in

72%

said they’d likely buy a second home, such as a vacation or beach

house, to use during retirement

25%don’t expect to live with other

generations of their family

83%

“The oldest Baby Boomer turns 68 this year, and the youngest turns 50. They are buying homes in droves as their employment situation, home values, and stock portfolios have almost fully recovered from the Great Recession.

We are seeing strong sales in this same demographic throughout the country.”

John Burns Real Estate Consulting

Boomers are starting to move…

Vacation Home Sales

553K

717K

2012 2013

UP 29.7%

NAR 2014

We Must…

"Certainly, at these levels, mortgage rates should not be a significant deterrent to buying, let alone considered ‘high’ by any stretch of the imagination,

but for some, perhaps they seem so."

HSH.com

FEAR

"One thing seems certain: we are not likely to see average 30-year fixed

mortgage rates return to the historic lows experienced in

2012."

Freddie Mac

Decade Average Rate Payment

1970s 8.86% $1,589

1980s 12.7% $2,166

1990s 8.12% $1,484

2000s 6.29% $1,237

2014 YTD 4.36% $997

The average 30-year fixed mortgage rates and the approximate payment for a $200,000 mortgage. Payments are principal & interest only, based on a $200,000 fully amortizing mortgage.All terms are assumed to be 30 years.

Freddie Mac 3/2014

Historic Mortgage Rates by Decade

3.25

3.5

3.75

4

4.25

4.5

4.75

2013 - 2014 30 Year Fixed Mortgage Rates

Freddie Mac 3/2014

1/2013 4/2014

4.4

4.74.9

5.15.3

5.55.7

Freddie MacProjected Rates

April 2014 – 2015 4Q

Mortgage Rate Projections

Analyst Projected Rate 2015 4Q

Fannie Mae 5%

Freddie Mac 5.7%

Mortgage Bankers Assoc 5.3%

3/2014

Date Mortgage Interest Rate* P&I**

Today $250,000 4.41% $1,253.38

End of 2015 $270,000 5.7% $1,567.08

*Average Commitment Rate per Freddie Mac **Principal and Interest Payment

Difference in Monthly Payment $313.70

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

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

S&P Case Shiller 3/2014

Year-over-Year Change in Prices

S&P Case-Shiller Home Price Indices

S&P Case Shiller 3/2014

RETURN ON INVESTMENT

51.1

35.2

8.3

65.7

Dow S&P NASDAQ Real Estate

January 2000 – April 2014

MSN Money.com, Case Shiller

Months Inventory of Homes for Sale

NAR 3/2014

5-6 Months = Normal Market Inventory

Months Inventory of Homes for Sale

4.0

5.0

6.0

7.0

8.0

9.0

10.0

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

5-6 Months = Normal Market Inventory

NAR 3/2014

NAR 3/2014

10%

15%

20%

25%

30%

35%

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

Percentage of Distressed Property Sales

35%

16%

23%

ResourcesSlide Slide Title Link

5,6,10,11,41,42,43

Pending Home Sales, Existing Home Sales, Year-over-Year Inventory, Months Inventory, Months Inventory Chart, Months Inventory Graph, % Distressed Property Sales

http://www.realtor.org/

7 % Change In Sales by Price Range http://economistsoutlook.blogs.realtor.org/2014/02/23/a-closer-look-at-the-latest-ehs-release/

8 % Change in Sales by Categoryhttp://www.corelogic.com/blog/authors/molly-boesel/2014/03/home-sales-increased-by-8-percent-year-over-year-in-february.aspx#.UzG70WePK74

9 Elliot F. Eisenberg Quote http://econ70.com/2014/03/26/housing-holds/

13, 14 United State Home Prices http://us.spindices.com/index-family/real-estate/sp-case-shiller

15, 50 CoreLogic Quote http://www.corelogic.com/research/hpi/corelogic-hpi-february-2014.pdf

17 First Time Buyers http://zillow.mediaroom.com/index.php?s=159&item=422

18 Percentage of Buyers by Generation http://www.realtor.org/reports/home-buyer-and-seller-generational-trends

19 Population 20-34 Yearshttp://www.calculatedriskblog.com/2014/03/the-favorable-demographics-for.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

20, 21, 22, 51

Jim Zeumer Quote, Millennials are Ready, Millennials Associate Owning A Home with…

http://www.pultegroupinc.com/investors/press-releases/press-release-details/2014/Better-Days-Ahead-Millennials-Think-So/default.aspx

24 Baby Boomers Ready http://www.bhgrealestate.com/Views/MediaCenter/News.aspx?id=3122

25 Boomers are starting to move…http://realestateconsulting.com/blog/lesley-deutch/affluent-second-home-buyers-are-back-droves

KEEPINGCURRENTMATTERS.COM

ResourcesSlide Slide Title Link

26, 53 Vacation Home Sales Uphttp://www.realtor.org/news-releases/2014/04/vacation-home-sales-surge-in-2013-investment-property-declines

28 HSH.com Quote http://www.hsh.com/trends.html#archives

30, 31, 54

Freddie Mac Quote, Historic Mortgage Rateshttp://www.freddiemac.com/blog/research_and_analysis/20140324_dirt_cheap_to_cheap.html

32,33 30 Year Fixed Rate, Projected Rates http://www.freddiemac.com/pmms

34, 35 Mortgage Rate Projectionshttp://fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_011314.pdf http://www.freddiemac.com/finance/docs/Jan_2014_public_outlook.pdf http://www.mortgagebankers.org/files/Bulletin/InternalResource/86783_.pdf

36, 52 Cost of Waiting http://www.freddiemac.com/pmms

38, 39 Year-over-Year Change in Prices, Case Shiller HPIhttps://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/83930_cshomeprice-release-0325.pdf?force_download=true

40 Return on Investmenthttp://www.spindices.com/index-family/real-estate/sp-case-shiller http://money.msn.com/

47-49 Daniel Pink, Seth Godin, & Guy Kawasaki Quotes LeadingRE Conference 2014

KEEPINGCURRENTMATTERS.COM

“I needed a real estate agent in 1997 because I didn’t have

a password to the MLS .”

Daniel PinkBestselling Author of Drive

“The minute real estate listings went online was the minute that it was no

longer sufficient that a real estate broker merely had information

about real estate listings.”

Seth Godin Author, Entrepreneur,

Marketer and Public Speaker

“To provide value, real estate agents must not only provide information but also insights

into that information.”

Guy Kawasaki

Silicon Valley Author, Speaker, Investor and Business Advisor

- CoreLogic 3/2014

“Home prices nationwide remain 16.9% below their peak, which

was set in April 2006.”

Millennials: Associate Owning A Home with…

Pulte Group 2014

Date Mortgage Interest Rate* P&I**

Today $250,000 4.41% $1,253.38

End of 2015 $270,000 5.7% $1,567.08

*Average Commitment Rate per Freddie Mac **Principal and Interest Payment

Difference in Monthly Payment $313.70

Vacation Home Sales

553K

717K

2012 2013

UP 29.7%

NAR 2014

"One thing seems certain: we are not likely to see average 30-year fixed

mortgage rates return to the historic lows experienced in

2012."

Freddie Mac

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