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KCM Divided into Three Sections. 2014 PROJECTIONS. The Year of…. The ECONOMY. Calculated Risk 12/2013. Coincident indexes constructed from state employment data. From the Federal Reserve Bank of Philadelphia:. - PowerPoint PPT Presentation
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KCM Divided KCM Divided intointo Three SectionsThree Sections
2014PROJECTIONS
2012 - Recovery
2013 - Stabilization
2014 - Growth!
The Year of…
The ECONOMY
Calculated Risk 12/2013
“The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average).
The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.”
Coincident indexes constructed from state employment data. From the Federal Reserve Bank of Philadelphia:
Calculated Risk 12/2013
2014 will be the year of the repeat homebuyer
- Trulia
“Demand for housing units increases as new immigrants enter the economy and form households,
accelerating the current housing recovery and fueling growth in this
sector of the economy.”
Projected annual increase in spending on residential construction
Bipartisan Policy Center 12/2013
Impact of Immigration Reform
$68B
HOUSEHOLDSin the U.S.*
2014-2017121M
Current Households in the United States
3.7%Projected Growth over
the Next 3 Years
*Urban Land Institute’s 2014
Emerging Trends in Real Estate
4.48MAdditional Households
to be Formed
Affordability is still good compared to any time over the last 50 years.
“Well, I think it’s a basic question of supply and demand. When you have that many more
renters coming into the market looking for housing, and the supply of housing isn’t
responding as quickly as it might, that’s going to push rents up, even if incomes are low.”
Christopher Herbert Research Director at the Joint Center
Affordability is still good compared to any time over the last 50 years.
"We are in the midst of the worst rental affordability crisis that this
country has known."
Shaun Donovan Secretary of Housing & Urban Development.
Federal Reserve
OVER 30X greaterthan renters
Homeowners Net Worth…
$174,500
$5,100
Homeowner Renter
An American Family’s
Net Worth
Federal Reserve
4,000,000
4,500,000
5,000,000
5,500,000
Existing Home Sales
S&P Case Shiller 12/2013
WEST
Down 10.1%
MIDWEST
Unchanged
SOUTH
Up 1%
NORTHEAST
Up 6.6%
NAR’s Existing Homes Sales Report 12.2013
Year-Over-Year % Change in House Sales
NAR 12/2013
100 = Historically Healthy Level
Pending Home Sales
Impact of Increasing
INTEREST RATES
ta·perˈtāpər/Verb – to diminish or reduce
$151.08
Affordability is still good compared to any time over the last 50 years.
“I think it is very likely that QE3 will be completed by the end of 2014. There are 8 meetings during the year, and I expect the Fed to reduce the pace of asset purchases at about $10 billion per meeting.
It appears they will only slow the taper if inflation declines sharply - or if the economy stalls
(I think both are unlikely).”
Bill McBride Calculated Risk
2013 30 Year Fixed Mortgage Rates
Federal Reserve 12/2013
Mortgage Rate Projections
Analyst Projected Rate 1Q 2015
National Assoc of Realtors 5.4%
Mortgage Bankers Assoc 5.3%
Calculated Risk 7/2013
70%63%
55%
35%
4.4% 5% 6% 7%
Percent of the country remaining affordable at different 30 year mortgage rates
Freddie Mac
13.6% 13.3% 13.6%
44.3%
8%
4.5 - 5% 5 - 5.5% 5.5 - 6% 6 - 6.5% > 6.5%
Rate deemed SIGNIFICANT threat*
*on the 30-Year fixed rate mortgage Pulsenomics
6.00 $ 1,079 $ 1,109 $ 1,139 $ 1,169 $ 1,199
5.75 $ 1,050 $ 1,080 $ 1,109 $ 1,138 $ 1,167
5.50 $ 1,022 $ 1,050 $ 1,079 $ 1,107 $ 1,136
5.25 $ 994 $ 1,022 $ 1,049 $ 1,077 $ 1,104
5.00 $ 966 $ 993 $ 1,020 $ 1,047 $ 1,074
4.75 $ 939 $ 965 $ 991 $ 1,017 $ 1,043
4.50 $ 912 $ 937 $ 963 $ 988 $ 1,013
$ 180,000 $ 185,000 $ 190,000 $ 195,000 $ 200,000
-10% -7.5% -5% -2.5%
Buyer’s Purchasing PowerR
AT
E
Principal and Interest Payments rounded to the nearest dollar amount.
6.00 $ 2,158 $ 2,218 $ 2,278 $ 2,338 $ 2,398
5.75 $ 2,100 $ 2,160 $ 2,218 $ 2,276 $ 2,334
5.50 $ 2,044 $ 2,100 $ 2,158 $ 2,214 $ 2,272
5.25 $ 1,988 $ 2,044 $ 2,098 $ 2,154 $ 2,208
5.00 $ 1,932 $ 1,986 $ 2,040 $ 2,094 $ 2,148
4.75 $ 1,878 $ 1,930 $ 1,982 $ 2,034 $ 2,086
4.50 $ 1,824 $ 1,874 $ 1,926 $ 1,976 $ 2,026
$ 360,000 $ 370,000 $ 380,000 $ 390,000 $ 400,000
-10% -7.5% -5% -2.5%
RA
TE
Principal and Interest Payments rounded to the nearest dollar amount.
Buyer’s Purchasing Power
6.00 $ 3,237 $ 3,328 $ 3,417 $ 3,507 $ 3,597
5.75 $ 3,151 $ 3,239 $ 3,326 $ 3,414 $ 3,501
5.50 $ 3,066 $ 3,151 $ 3,236 $ 3,322 $ 3,407
5.25 $ 2,982 $ 3,065 $ 3,148 $ 3,230 $ 3,313
5.00 $ 2,899 $ 2,979 $ 3,060 $ 3,140 $ 3,221
4.75 $ 2,817 $ 2,895 $ 2,973 $ 3,052 $ 3,130
4.50 $ 2,736 $ 2,812 $ 2,888 $ 2,964 $ 3,040
$ 540,000 $ 555,000 $ 570,000 $ 585,000 $ 600,000
-10% -7.5% -5% -2.5%
RA
TE
Principal and Interest Payments rounded to the nearest dollar amount.
Buyer’s Purchasing Power
6.00 $ 4,317 $ 4,437 $ 4,557 $ 4,676 $ 4,796
5.75 $ 4,201 $ 4,318 $ 4,435 $ 4,552 $ 4,669
5.50 $ 4,088 $ 4,202 $ 4,315 $ 4,429 $ 4,542
5.25 $ 3,976 $ 4,086 $ 4,197 $ 4,307 $ 4,418
5.00 $ 3,865 $ 3,972 $ 4,080 $ 4,187 $ 4,295
4.75 $ 3,756 $ 3,860 $ 3,965 $ 4,069 $ 4,173
4.50 $ 3,648 $ 3,749 $ 3,851 $ 3,952 $ 4,053
$ 720,000 $ 740,000 $ 760,000 $ 780,000 $ 800,000
-10% -7.5% -5% -2.5%
RA
TE
Principal and Interest Payments rounded to the nearest dollar amount.
Buyer’s Purchasing Power
6.00 $ 5,396 $ 5,546 $ 5,696 $ 5,846 $ 5,996
5.75 $ 5,252 $ 5,398 $ 5,544 $ 5,690 $ 5,836
5.50 $ 5,110 $ 5,252 $ 5,394 $ 5,536 $ 5,678
5.25 $ 4,970 $ 5,108 $ 5,246 $ 5,384 $ 5,522
5.00 $ 4,831 $ 4,966 $ 5,100 $ 5,234 $ 5,368
4.75 $ 4,695 $ 4,825 $ 4,956 $ 5,086 $ 5,216
4.50 $ 4,560 $ 4,687 $ 4,814 $ 4,940 $ 5,067
$ 900,000 $ 925,000 $ 950,000 $ 975,000 $ 1,000,000
-10% -7.5% -5% -2.5%
RA
TE
Principal and Interest Payments rounded to the nearest dollar amount.
Buyer’s Purchasing Power
Home Prices
12/2013
S&P Case Shiller 12/2013
Year-over-Year Change in Prices
12/2013
Month-Over-Month Price Changes
4.0
4.3
4.5
4.8
5.0
5.3
Jan Feb Mar Apr May Jun Jul August Sept Oct Nov
Months Inventory of Homes for Sale
NAR 12/2013
5-6 Months = Normal Market Inventory
-24%
-20.8%
-16.8%
-14%-13%
-7.6%
-5%-6.2%
1.8% 0.9%
5%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Jan Feb March April May June July Aug Sept Oct Nov
% -24% -20.8% -16.8% -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0%
Year-over-Year Inventory Levels
NAR 12/2013
RETURN ON INVESTMENT
51.5
32.5
6
65.9
Dow S&P NASDAQ Real Estate
January 2000 – December 2013
MSN Money.com, Case Shiller
S&P Case-Shiller Home Price Indices
S&P Case Shiller 12/2013
Months Inventory of Homes for Sale
5-6 Months = Normal Market Inventory
NAR 12/2013
Percentage of Distressed Property SalesPercentage of Distressed Property Sales
35%
14%
NAR 12/2013
Nail Down the Nail Down the
TRUST TRUST FACTORFACTOR
“One of the main ways that companies are establishing authority and gaining trust with consumers is by consistently creating valuable content through a variety of channels.
This typically involves relevant industry information that provides insight to an audience. Doing so allows a company to steadily build rapport with its demographic and develop a loyal following.”
Jayson DeMers in Forbes
Content Marketing Will Be Bigger Than Ever
“As consumers are hit with an increasing number of advertisements, it’s becoming more important to make content easily and quickly digestible. If you look at the social media sites that are on the rise, three of the four have a common characteristic…
Jayson DeMers in ForbesImage-Centric Content Will Rule
they place an emphasis
on images.”
Placester
of businesses use some form of content marketing
60%
of Chief Marketing Officers believe custom content is the future of marketing
78%
Marketing Tech Blog
of consumers prefer getting to know a company via articles
rather than ads
of consumers believe that organizations providing custom
content are interested in building good relationships with them
Content Marketing
as many leads per dollar produced by content marketing
(versus paid search)
78% 70%
3X
$184K
$230K
By FSBO By AGENT
*The ‘typical’ price is actually the average price in the survey. However, studies have shown that people are more likely to FSBO in markets with lower price points.
Typical Sold Price*FSBO vs. Agent
6.00 $ 2,158 $ 2,218 $ 2,278 $ 2,338 $ 2,398
5.75 $ 2,100 $ 2,160 $ 2,218 $ 2,276 $ 2,334
5.50 $ 2,044 $ 2,100 $ 2,158 $ 2,214 $ 2,272
5.25 $ 1,988 $ 2,044 $ 2,098 $ 2,154 $ 2,208
5.00 $ 1,932 $ 1,986 $ 2,040 $ 2,094 $ 2,148
4.75 $ 1,878 $ 1,930 $ 1,982 $ 2,034 $ 2,086
4.50 $ 1,824 $ 1,874 $ 1,926 $ 1,976 $ 2,026
$ 360,000 $ 370,000 $ 380,000 $ 390,000 $ 400,000
-10% -7.5% -5% -2.5%
RA
TE
Principal and Interest Payments rounded to the nearest dollar amount.
Buyer’s Purchasing Power
Financial Reasons to Buy
Joint Center for Housing Studies, Harvard University12/2013
Reason Quote from Harvard Report
Housing is the one leveraged investment
available
“Homeownership allows households to amplify any appreciation on the value of their
homes by a leverage factor.”
You're paying for housing whether you own or rent
“Homeowners pay debt service to pay down their own principal while households that rent
pay down the principal of a landlord.”
Owning is usually a form of “forced savings”
“Having to make a housing payment one way or the other, owning a home can overcome
people’s tendency to defer savings.”
There are substantial tax benefits to owning
“Homeowners are able to deduct mortgage interest and property taxes from income.”
Owning is a hedge against inflation
“Housing costs and rents have tended over most time periods to go up at or higher than
the rate of inflation, making owning an attractive proposition.”
5
ResourcesSlide Slide Title Link
6, 7 November 2013 State Coincident Indexeshttp://www.calculatedriskblog.com/2013/12/philly-fed-state-coincident-indexes.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
8 2014 will be the year of the repeat homebuyer http://info.trulia.com/2014-housing-predictions
9 Impact of Immigration Reform http://bipartisanpolicy.org/library/report/immigration-reform-implications-growth-budgets-and-housing
11 Households in the U.S. 2014-2017 http://www.uli.org/wp-content/uploads/ULI-Documents/Emerging-Trends-in-Real-Estate-Americas-2014.pdf
12 Christopher Herbert Quote http://onpoint.wbur.org/2013/12/16/chris-herbert-explains-why-rents-are-headed-skyward
13 Shaun Donovan Quote http://www.cnbc.com/id/101258649
14, 15 An American Family’s Net Worth http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf
17, 19, 41, 42, 45, 46
Existing Home Sales, Pending Home Sales, Months Inventory, Year-Over-Year Inventory, Months Inventory of Homes, Distressed Property
www.realtor.org/
18 Year Over Year % Changehttp://www.realtor.org/news-releases/2013/12/existing-home-sales-decline-in-november-but-strong-price-gains-continue
23 Bill McBride Quotehttp://www.calculatedriskblog.com/2013/11/will-fed-taper-in-december-inflation-is.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
24 2013 30 Year Fixed Mortgage Rates http://www.freddiemac.com/pmms
25 Mortgage Rate Projections
http://www.mortgagebankers.org/files/Bulletin/InternalResource/84813_.pdf http://www.freddiemac.com/news/finance/docs/Jun_2013_public_outlook.pdf http://www.realtor.org/sites/default/files/reports/2013/embargoes/phs-6-27-hgbfjnv/july-2013-outlook-2013-6-27.pdf http://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_061313.pdf
ResourcesSlide Slide Title Link
26 Dramatic Mortgage Rate Increaseshttp://www.calculatedriskblog.com/2013/07/house-prices-and-mortgage-rates.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
27 Percent of the Country Affordability http://freddiemac.mwnewsroom.com/press-releases/diverging-homebuyer-affordability-otcqb-fmcc-1077388
35 CNN Money & LA Timeshttp://money.cnn.com/2013/12/31/news/economy/home-prices-jump/index.html?hpt=hp_t3 http://www.latimes.com/business/money/la-fi-mo-case-shiller-home-prices-20131231,0,1684377.story#axzz2pkbDZg00
36 Today’s Prices Compared to 2005-07 Peak http://www.corelogic.com/research/hpi/corelogic_hpi_october_2013.pdf
37 Year-Over-Year Change in Prices http://www.housingviews.com/wp-content/uploads/2013/11/CSHomePrice_Release_Sept-Results.pdf
38 Month-Over-Month Price Changeshttp://www.corelogic.com/about-us/researchtrends/home-price-index-report.aspx?WT.mc_id=crlg_131203_UE1r7&elq=1042de5a31114a1baa015fbd2be2235f
39 State Median Price Expectation http://www.realtor.org/reports/realtors-confidence-index
43 Return on Investment http://www.spindices.com/index-family/real-estate/sp-case-shiller
44 S&P Case-Shiller Home Price Indiceshttps://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/19529_cshomeprice-release-0730.pdf?force_download=true
49, 50 Jayson DeMers in Forbes http://www.forbes.com/sites/jaysondemers/2013/09/17/the-top-7-online-marketing-trends-that-will-dominate-2014/
51 Placester Datahttps://placester.com/real-estate-marketing-academy/infographic-real-estate-professionals-guide-online-marketing-in-2014/2014-online-marketing-guide-for-real-estate-infographic-full-4/
52 Marketing Tech Blog http://www.marketingtechblog.com/infographic-content-marketing-real-estate/
53 FSBO vs. Agent http://economistsoutlook.blogs.realtor.org/2013/12/04/2013hbs-twitter-chat-recap/#more-14199
55 5 Financial Reasons to Buy http://www.jchs.harvard.edu/research/publications/dream-lives-future-homeownership-america