real estate update · every effort to provide accurate and reliable information, however, it does...

© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential

Real Estate Update National Multifamily Housing Council Research Forum

April 2015


Summary and Outline

2

•  Home price growth stabilizing

•  Home sales and purchase originations up modestly

•  Mortgage performance and negative equity improving

•  Supply of mortgage credit modestly tight

•  Demand for mortgage credit is very weak


Home Price Deceleration Moderates Percent Change from a Year Ago

3

Source: CoreLogic, January 2015

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

Jan-

90

Sep

-90

May

-91

Jan-

92

Sep

-92

May

-93

Jan-

94

Sep

-94

May

-95

Jan-

96

Sep

-96

May

-97

Jan-

98

Sep

-98

May

-99

Jan-

00

Sep

-00

May

-01

Jan-

02

Sep

-02

May

-03

Jan-

04

Sep

-04

May

-05

Jan-

06

Sep

-06

May

-07

Jan-

08

Sep

-08

May

-09

Jan-

10

Sep

-10

May

-11

Jan-

12

Sep

-12

May

-13

Jan-

14

Sep

-14


Texas Top the List Percent Change from Year Ago

4


-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%


Home Sales Improving Sales Helped by Lower Rates During the Latter Half of 2014

5


-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0

2

4

6

8

10

12

JAN

-200

1 M

AY-2

001

SE

P-2

001

JAN

-200

2 M

AY-2

002

SE

P-2

002

JAN

-200

3 M

AY-2

003

SE

P-2

003

JAN

-200

4 M

AY-2

004

SE

P-2

004

JAN

-200

5 M

AY-2

005

SE

P-2

005

JAN

-200

6 M

AY-2

006

SE

P-2

006

JAN

-200

7 M

AY-2

007

SE

P-2

007

JAN

-200

8 M

AY-2

008

SE

P-2

008

JAN

-200

9 M

AY-2

009

SE

P-2

009

JAN

-201

0 M

AY-2

010

SE

P-2

010

JAN

-201

1 M

AY-2

011

SE

P-2

011

JAN

-201

2 M

AY-2

012

SE

P-2

012

JAN

-201

3 M

AY-2

013

SE

P-2

013

JAN

-201

4 M

AY-2

014

SE

P-2

014

JAN

-201

5

Mill

ions

Home Sales Percent Change in Sales from Year Earlier - Right Axis


Distressed Sales Clearing Out

REO and Short Sale Share

6

Source: CoreLogic, December 2014

Cash Sale Share


Purchase Mortgage Originations Below Level in 2001

7


Number of 1st Lien Residential Mortgage Originations, 12 Month Sum Percent Change in 1st Lien Residential Mortgage Originations


Purchase Demand is Much More Sensitive to Mortgage Rate Increases

8

Source: MBA, Freddie Mac and CoreLogic


Mortgage Market Segments

9

Source: CoreLogic, November 2014

Jumbo Share of Purchase Originations VA Share of Purchase Originations

0%

1%

2%

3%

4%

5%

6%

7%

8%

Jan-

00

Mar

-01

May

-02

Jul-0

3 S

ep-0

4 N

ov-0

5 Ja

n-07

M

ar-0

8 M

ay-0

9 Ju

l-10

Sep

-11

Nov

-12

Jan-

14

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Jan-

00

Feb-

01

Mar

-02

Apr

-03

May

-04

Jun-

05

Jul-0

6 A

ug-0

7 S

ep-0

8 O

ct-0

9 N

ov-1

0 D

ec-1

1 Ja

n-13

Fe

b-14

FHA Share of Purchase Originations

0%

2%

4%

6%

8%

10%

12%

14%

Jan-

00

Feb-

01

Mar

-02

Apr

-03

May

-04

Jun-

05

Jul-0

6 A

ug-0

7 S

ep-0

8 O

ct-0

9 N

ov-1

0 D

ec-1

1 Ja

n-13

Fe

b-14

Jumbo-Conforming Non-Conforming


Performance and Negative Equity Decline

10


90+ Delinquency Rate

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

JAN

-200

0 A

UG

-200

0 M

AR

-200

1 O

CT-

2001

M

AY-2

002

DE

C-2

002

JUL-

2003

FE

B-2

004

SE

P-2

004

AP

R-2

005

NO

V-20

05

JUN

-200

6 JA

N-2

007

AU

G-2

007

MA

R-2

008

OC

T-20

08

MAY

-200

9 D

EC

-200

9 JU

L-20

10

FEB

-201

1 S

EP

-201

1 A

PR

-201

2 N

OV-

2012

JU

N-2

013

JAN

-201

4 A

UG

-201

4

3.0%

8.0%

13.0%

18.0%

23.0%

28.0%

SE

P-2

009

DE

C-2

009

MA

R-2

010

JUN

-201

0 S

EP

-201

0 D

EC

-201

0 M

AR

-201

1 JU

N-2

011

SE

P-2

011

DE

C-2

011

MA

R-2

012

JUN

-201

2 S

EP

-201

2 D

EC

-201

2 M

AR

-201

3 JU

N-2

013

SE

P-2

013

DE

C-2

013

MA

R-2

014

JUN

-201

4 S

EP

-201

4 D

EC

-201

4

Negative Equity Share

© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 11

The Supply vs Demand for Mortgage Credit


Purchase Credit Box Visualization

< 55

55+

- 60

60+

- 65

65+

- 70

70+

- 75

75+

- 80

80+

- 85

85+

- 90

90+

- 95

95+

- 100

100+

- 10

5

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

<500

52

0 - 5

39

560

- 579

60

0 - 6

19

640

- 659

68

0 - 6

99

720

- 739

76

0 - 7

79

800+

2000 Purchase Credit Box

LTV


Purchase Credit Box Visualization

< 55

55+

- 60

60+

- 65

65+

- 70

70+

- 75

75+

- 80

80+

- 85

85+

- 90

90+

- 95

95+

- 100

100+

- 10

5

0.0%

2.0%

4.0%

6.0% <5

00

520

- 539

56

0 - 5

79

600

- 619

64

0 - 6

59

680

- 699

72

0 - 7

39

760

- 779

80

0+


LTV


< 55

55+

- 60

60+

- 65

65+

- 70

70+

- 75

75+

- 80

80+

- 85

85+

- 90

90+

- 95

95+

- 100

100+

- 10

5

0.0%

2.0%

4.0%

6.0% <5

00

520

- 539

56

0 - 5

79

600

- 619

64

0 - 6

59

680

- 699

72

0 - 7

39

760

- 779

80

0+


LTV


55+

- 60

60+

- 65

65+

- 70

70+

- 75

75+

- 80

80+

- 85

85+

- 90

90+

- 95

95+

- 100

100+

- 10

5

0.0%

2.0%

4.0%

6.0% <5

00

520

- 539

56

0 - 5

79

600

- 619

64

0 - 6

59

680

- 699

72

0 - 7

39

760

- 779

80

0+



Is Purchase Underwriting Loosening?

16

10th Percentile Credit Score for Purchase Loans

Source: CoreLogic, December 2014, 30-year fixed-rate purchase mortgages only


Housing Credit Index (HCI)

17 Source: CoreLogic, December 2014

•  Credit Score •  Loan-to-Value Ratio (LTV) •  Debt to Income Ratio (DTI) •  Broker Share •  Adjustable Rate Mortgage Share •  Documentation Type

HCI Factors


Housing Credit Index

18

by Loan Purpose



Housing Credit Index

19

Purchase Index by Census Region



Demand for Credit is Weak

20

Source: Federal Reserve

1st Lien Purchase Mortgage Applications at Same Level as 20 Years Ago

0

2

4

6

8

10

12

14

Mill

ions


Source: Census

Real Median Income at Same Level as Late 1980s

$40,000

$42,000

$44,000

$46,000

$48,000

$50,000

$52,000

$54,000

$56,000

$58,000 19

75

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

Demand for Credit is Weak


Housing is Unaffordable Price to Rent Ratio

22

Source: CoreLogic, BLS January 2015


Low End Prices Up Twice as Much as Upper End

23

Source: CoreLogic, BLS December 2014


Leverage Driving Up Low End Prices and Foreclosures

24

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1950s 1960s 1970s 1980s 1990s 2000s 2010s

FHA

Conventional

Foreclosure Rates Consistently Rise Since 1980s

Source: MBA, FHA, FDIC, CoreLogic

0.00

1.00

2.00

3.00

4.00

5.00

6.00

25.0

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

1959

19

61

1963

19

65

1967

19

69

1971

19

73

1975

19

77

1979

19

81

1983

19

85

1987

19

89

1991

19

93

1995

19

97

1999

20

01

2003

20

05

2007

20

09

2011

20

13

LTV Ratio Conventional Foreclosure Rate - Right Axis

Leverage Drives Foreclosure Rates LTV Ratio Foreclosure Rate, Percent

Source: MBA, FHA, FDIC, CoreLogic, Census


Buyers Active in Market Have Much Higher Incomes

25

Source: CoreLogic, BLS December 2014

Purchase Owner-Occupied Homebuyer Income Index


Key Oil Markets Much Less Overvalued Than Prior Cycles

26


-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Jan-

81

Feb-

82

Mar

-83

Apr

-84

May

-85

Jun-

86

Jul-8

7 A

ug-8

8 S

ep-8

9 O

ct-9

0 N

ov-9

1 D

ec-9

2 Ja

n-94

Fe

b-95

M

ar-9

6 A

pr-9

7 M

ay-9

8 Ju

n-99

Ju

l-00

Aug

-01

Sep

-02

Oct

-03

Nov

-04

Dec

-05

Jan-

07

Feb-

08

Mar

-09

Apr

-10

May

-11

Jun-

12

Jul-1

3 A

ug-1

4

Deviation of Prices from Fundamentals

Houston, TX New Orleans, LA Oklahoma City, OK

© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential © 2015 CoreLogic, Inc. All rights reserved.

CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries. 27

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.

Thank You!

www.corelogic.com/blog/

@CoreLogicEcon @Telegram__Sam

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