2. Existing Home Sales
12,521 Homes
Sell Every Day
and 8,715 Buyers
Receive a Mortgage
NAR 2/2012

3. Pending Home Sales
110.0
100.0
90.0
80.0
70.0
Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
NAR 2/2012

4. Month’s Inventory of Homes for Sale
10.0
9.0
8.0
7.0
6.0
5.0
4.0
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
NAR 2/2012

5. Return on Investment
MSN Money.com, Case Shiller

6. Projections for 2012
“For 2012, we are expecting better
housing numbers than in 2011, and
a better second half than first.”
IHS Global Insights
IHS Global Insights 2/13/2012

7. Projections for 2012
“A lot of housing and
macroeconomic data came in
higher than expected so far in
2012…while jobless claims
have fallen steadily this year
and indications on consumer
sentiment show Americans
may be ready to begin buying
properties again.”
Jason Philyaw, Editor, Housing Wire
Housing Wire 2/27/2012

8. Projections for 2012
“The US economy continues to build on the momentum
from the end of last year. Our outlook anticipates gradual,
but steady, improvement in the economy and the housing
market, supported by low interest rates and brightening
job market prospects.”
Frank Nothaft. Freddie Mac VP and chief economist
Freddie Mac 2/22/2012

9. Projections for 2012
“The improved tone of housing data
buoys hopes that the market may be on
the verge of its long-awaited recovery.
..Increases in new- and existing-home
sales over the last three months follow
stronger job creation and improved
affordability, including the overall drop
last month in conventional mortgage
rates to below 4%.”
Moody’s Analytics
Moody’s Analytics 2/27/2012

10. Warren Buffett Speaks Out
Is it time to buy real estate?
“If I had a way of buying a couple hundred thousand single-family homes I
would load up on them.”
Why invest in real estate now?
“It’s a way, in effect, to short the dollar because you can take a 30-year
mortgage and if it turns out your interest rate’s too high, next week you
refinance lower. And if it turns out it’s too low, the other guy’s stuck with it for
30 years. So it’s a very attractive asset class now.”
CNBC 2/13/2012

11. Warren Buffett Speaks Out
Is buying your own home better than investing in
stocks right now?
“If I knew where I was going to want to live the next five or 10 years I would
buy a home and I’d finance it with a 30-year mortgage… It’s a terrific deal.”
Should we buy multiple houses?
“If I was an investor that was a handy type and I could buy a couple of them
at distressed prices and find renters, I think it’s a leveraged way of owning a
very cheap asset now and I think that’s probably as an attractive an
investment as you can make now.”
Source: CNBC 2/13/2012

12. Mortgage Rates – 30 Year Fixed
5.25
5
4.75
4.5
4.25
4
3.75
1/01/2011 Today
Federal Reserve

13. The Move-Up Buyer
Comparison Today Current Home Move-up Home
2006 Price $500,000 $750,000
Current Price (-20%) $400,000 $600,000
Loss/Savings $100,000 $150,000
Net Gain for
move-up buyer $50,000

14. The Move-Up Buyer
Comparison – 5 Years Later Current Home Move-up Home
Current Price $400,000 $600,000
Future Price (+20%) $480,000 $720,000
Future Gain $80,000 $120,000
Future difference $40,000
Current Gain $50,000
Total Gain $90,000

15. The Move-Up Buyer
Price Rate P&I
TODAY 600,000 4.40 3,004.57
2016 720,000 6.00 4,316.76
Monthly Savings 1,312.19

16. Home Rents Will Keep Rising
“Paying rent is getting
$ 1 , 2 0 0
$ 1 , 1 7 5
more painful for renters
$ 1 , 1 5 0
$ 1 , 1 2 5
across the country in the
$ 1 , 1 0 0
$ 1 , 0 7 5
face of rising demand
$ 1 , 0 5 0
$ 1 , 0 2 5
and tight supply… $ 1 , 0 0 0
2009 2010 2011 2012* 2013* 2014*
It’s bad timing for people who have been spooked
by, or pushed out of, the residential housing market
and have decided to rent instead of buy. Home
ownership in the United States is at historic lows,
but at the same time rental prices are on the rise.”
MSNBC.com 2/6/2012

17. Buy Rent
Housing Cost Over
Next 30 Years*
$900K
$540K
Owners Renters
* Assuming payment of $1,500 for both rent and mortgage; a fixed
rate mortgage and an annual rent increase of 3.2% for inflation.
Forbes.com 10/13/2011

18. Buy Rent
Retirement Fund
Created from
Homeowner Equity
After 30 Years*
$400K
$0
Owners Renters
* Assuming $300,000 current value with a 1% annual appreciation
rate for residential property.
Forbes.com 10/13/2011

19. S&P Case-Shiller Home Price Indices
S&P Case Shiller 1/31/2012

20. Supply & Demand

21. Months Supply of Shadow Inventory
Financial Times 2/17/2012

23. Explaining Shadow Inventory
Shadow
Inventory
S
A
L
E
S

24. NationalMortgageSettlement.com

25. Impact of Settlement
“The settlement sets forth clear guidelines for
lenders and servicers to follow when foreclosing,
which should allow them to push through some of
the delayed foreclosures from last year.”
Brandon Moore, Chief Executive of RealtyTrac
RealtyTrac 2/16/2012

26. Impact of Settlement
“The settlement helps the housing market in the
long run because it allows banks to proceed with
millions of foreclosures that have been stalled.
Many lenders have refrained from foreclosing on
homes as they awaited the settlement.”
Mark Vitner, a senior economist at Wells Fargo Securities
Washington Post 2/08/2012

27. Impact of Settlement
“I think there’ll be more price weakness, because
we’ll see the number of distressed sales pick up.
But I think the price declines will be modest.”
Mark Zandi, Chief Economist Moody’s Analytics
BusinessWeek 2/18/2012

28. Price Depreciation
“The latest settlement will hasten
the pace of filings and push up the
distress sale share of total sales
over the next several quarters,
driving national
house prices down
another 3%.”
Celia Chen, Moody’s Analytics
Moody’s Analytics 2/17/2012

29. Shadow Inventory
1. Houses 90 Days Delinquent on
the mortgage
• Houses owned by banks but not
yet ready for sale
• Houses in the foreclosure
process

31. S&P Case Shiller Pricing Index – 10 City
195
185
175
165
155
145
135
2006 - 2011
125 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011
Case Shiller

32. S&P Case Shiller Pricing Index – 10 City
200
180
160
140
120
100
80
60
40
20
1987 – 2011
0
Case Shiller

33. Percentage of Distressed Property Sales
50%
40%
40% 37%
35%
31% 31% 32%
30% 29% 30% 29%
30% 28%
20%
10%
0%
NAR

34. Short Sales Surging
450 Short Sales in Thousands
397
400
354
350
300 274
250
200
150
103
100
50
0
2008 2009 2010 2011
Calculated Risk 2/15/2012

35. Short Sales Surging
“We continued to see a shift toward pre-foreclosure
sales, or short sales, and away from REOs…
That trend will likely show up in more local
markets in 2012 as lenders recognize
short sales as a better option for many
of their non-performing loans.”
RealtyTrac
RealtyTrac 2/28/2012

36. Value by Sale Category
Type of Sale % of Value
Non-Distressed Sale 100%
Short Sale 79%
Foreclosure Sale 71%
RealtyTrac 02/2012

37. Mortgage Forgiveness Debt Relief Act
Obama’s 2013 budget proposal
includes an extension of the
Mortgage Forgiveness Debt Relief
Act of 2007.
Without the Mortgage Forgiveness
Debt Relief Act, debt reduced
through mortgage modifications or
short sales qualifies as income to
the borrower and is taxable. The
administration’s extension would
apply to any amounts forgiven
before January 1, 2015.
DS News 2/15/2012

38. Resources
Slide Slide Title Link
Existing Home Sales, Pending Home
2,3,4 Sales, Monthly Inventory of Homes for http://www.realtor.org
Sales
5 Return on Investment www.msnmoney.com
6 Projections for 2012 http://www.ihs.com/products/Global-Insight/industry-economic-report.aspx?ID=1065932304
7 Projections for 2012 http://www.housingwire.com/article/monday-morning-cup-coffee-more-good-housing-news-tap
8 Projections for 2012 http://freddiemac.mediaroom.com/index.php?s=12329&item=122345
9 Projections for 2012 http://www.economy.com
10, 11 Warren Buffet Speaks Out http://www.cnbc.com/id/46541258
12 Mortgage Rates - 30 Year Fixed http://www.freddiemac.com/pmms
http://bottomline.msnbc.msn.com/_news/2012/02/06/10332224-office-and-home-rent-will-keep-rising-an
16 House Rents Will Keep Rising
Housing Cost Over Next 30 Years,
http://www.forbes.com/sites/investor/2011/10/12/buy-that-dream-house-now-or-wait-until-prices-fall-fu
17, 18 Retirement Fund Created from
Homeowner Equity After 30 Years
19 S&P Case-Shiller Home Price Indices http://www.housingviews.com/wp-content/uploads/2012/01/CSHomePrice_Release1.pdf
21 Months Supply of Shadow Inventory http://ftalphaville.ft.com/blog/2012/02/17/881581/the-decline-of-us-housing-inventory
KEEPINGCURRENTMATTERS.COM

39. Resources
Slide Slide Title Link
22 Months Supply of Shadow Inventory http://www.realtor.org/wps/wcm/connect/0556a600491cbf9b813bcd2e39654e23/Shadow_Inventory_
21 S&P Case-Shiller Home Price Indices www.housingviews.com/wp-content/uploads/2012/01/CSHomePrice_Release1.pdf
http://www.realtytrac.com/content/foreclosure-market-report/january-2012-us-foreclosure-market-re
25 Impact of Settlement
http://www.washingtonpost.com/business/source-holdout-states-to-sign-mortgage-settlement-with-ba
26 Impact of Settlement
http://www.businessweek.com/news/2012-02-14/foreclosure-deal-to-spur-u-s-home-seizures-help-hea
27 Impact of Settlement
28 Price Depreciation http://www.economy.com/dismal
30 Foreclosures in Process by State http://www.corelogic.com/about-us/researchtrends/asset_upload_file693_14120.pdf
33 Percentage of Distressed Property Sales http://www.realtor.org
34 Short Sale Surging http://www.calculatedriskblog.com/2012/02/lawler-short-sales-increased.html
http://www.realtytrac.com/content/foreclosure-market-report/q4-and-year-end-2011-us-foreclosure-s
35 Short Sale Surging
http://www.dsnews.com/articles/obama-proposes-extending-tax-waiver-on-mortgage-debt-forgiveness
37 Mortgage Forgiveness Debt Relief Act
KEEPINGCURRENTMATTERS.COM

40. Where Are the Opportunities?