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2013 Governor’s Housing Conference
The Future of HomeownershipMaking Homeownership Affordability
September 27, 2013
Daniel Whitehurst ofClark Turner Homes
IntroductionClark Turner Homes (www.clarkturner.com)Small-Mid sized builder headquartered in Harford County Townhomes to Large Luxury CustomsLand Developers General Contractor
Daniel Whitehurst President of Clark Turner CompaniesMount St Mary’s University – BusinessJohns Hopkins University – Masters in Real EstatePresident of HBAM – Harford and Cecil County
Outline
I’ve been asked to talk about:– The Housing Recovery–Who are the buyers today–What do buyers want today–My take on the housing
outlook
The Recovery… Nationally
• Jobs… Jobs… Jobs…
• Mortgage Interest Rates
• Realization of values
• Frugal Fatigue • Stock Market
% of Job Losses during Recession
RECOVERY
# of New Home Sales
RECOVERY
Leading Indicator: Auto Sales
RECO
VERY
RECOVERY
Who are the buyers?
• Who is left to buy?– Move Up Buyers ?
Move ups: Functionally Obsolete
Proceeds form Sale available to payoff mortgage.
Sellers 90% Mortgage
Negative Equity or “Underwater”
Negative Equity or “Underwater” – much better after 6 years of payments
Who are the buyers?
• Who is left to buy?– Move Up Buyers – Many are stuck– Empty Nesters
Rate Locked and Anchored
Move in 1-2 YearsExisting Similar Downsize
Homes Value: $500,000 $500,000 $375,000 Downpayment: $0 $190,000 $196,250 Closing Cost: $35,000 $25,000 $18,750 Mortgage: $250,000 $310,000 $178,750 Mortgage Rate: 3.35% 5.50% 5.50%Payment: $1,102 $1,760 $1,015 Proceeds from Sale: $215,000
Difference: ($658) $87
Why make the move?
Who are the buyers?
• Who is left to buy?– Move Up Buyers – Many are stuck– Empty Nesters – Interest Rate Anchor– Own vs. Rent -
Affordability: Home Price
Decline in Home Value: 22.5%
Affordability: Payment
Decline in Home Payment: 39.7%
Own vs. Rent
$600.00!!
New Local Apartment Complex
Payment: Average 3 Bedroom Townhome Harford County
New Apts = Tough Competition
Monroe Street Apartments - A Bozzuto Project
Who are the buyers?
• Who is left to buy?– Move Up Buyers – Many are stuck– Empty Nesters – Interest Rate Anchor– Own vs. Rent – Very competitive– Relocated Workers ?– First Time Buyers ?
Who are the first time buyers?
• Gen y “Millennials”– Age today: 14-32– In 5 Years: 19-37
A 36 Year old Gen Y was 29 years old in 2006 when market was hot. They are prime candidates to be underwater on their homes.
GEN Y
GEN Z
GEN X
Baby Boomers
Buyers ConsiderationsFinance
Product
Location
Community
Perfect Home
Finance
• Considerations:– Monthly Payments (Price and Interest Rate)
– Property Taxes
– Down payment Requirement
Finance
Product
Location
Community
Perfect Home
Case Schiller Home Price Index
3% Growth
TODA
Y
Median Income & Current Interest Rate Index
TODA
Y
$67,9743.41%
$39,9396.83%
Product
Large lot or
small lot
Finance
Product
Location
Community
Perfect Home
Single Family or
Townhome
Product
Size vs. quality
Finance
Product
Location
Community
Perfect Home
Hot Trend: Living Triangle
Hot Trend: Large Islands
Hot Trend:Drop Zones
Eliminating the Living Room
Hot Trend: Outdoor Living
Hot Trend: Exposed Wood Beams
Hot Trend: Large Showers
Eliminating the Tub
Location & Community
• Urban or Suburban• Location vs Dream House• Schools• Amenities (Walking Trails, Pools, Fitness, etc)• Wine Clubs• Overall Quality of Life
Finance
Product
Location
Community
Perfect Home
The uncertain recovery• Interest Rates• Student Loans
% of Households with Student Debt
Total Student Debt
The uncertain recovery• Interest Rates• Student Loans• New Const. Regulation • Sequestration• Mortgage Tax Deduction
Any Questions?
To end with positive news…• New Car Sales UP!• Stock Market UP!• Home Pricing UP! (slowly)• Unemployment Rate DOWN!
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