Upload
auctioncom
View
1.332
Download
2
Tags:
Embed Size (px)
Citation preview
WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
2015 Housing
Market Outlook
Still on the road to recovery
December 2014
© Auction.com | Confidential & Proprietary
What We’ll Cover Today
• The Story of 2014: Housing Market in Recovery
• The Role of the Investor in the Housing Market
• The Distressed Market: Is the Crisis Finally Over?
• Trouble Ahead? Potential Headwinds
• 2015 Outlook for Housing: Groundhog Day?
• Questions & Answers
WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
The Story of 2014:
Housing Market in
Recovery
© Auction.com | Confidential & Proprietary
2014 Existing Home Sales
© Auction.com | Confidential & Proprietary
2014 New Home Sales
© Auction.com | Confidential & Proprietary
New & Existing Home Sales: Another View
© Auction.com | Confidential & Proprietary
2014 Existing Home Inventory Still Very Low
© Auction.com | Confidential & Proprietary
And 2014 New Home Inventory Even Lower
© Auction.com | Confidential & Proprietary
Prospects for New Inventory Bleak
© Auction.com | Confidential & Proprietary
Low Inventory Contributes to Home Price Appreciation
WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
The Role of the
Investor in the
Housing Market
© Auction.com | Confidential & Proprietary
Investors are Driving the Market Recovery
22% 23%23% 24%
25% 25%
24% 24%
23%21%
24%25%
28%
32%
0%
5%
10%
15%
20%
25%
30%
35%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Non-Owner Occupant Share of Single Family and Condo Purchases
© Auction.com | Confidential & Proprietary
Top 10 States: Investor Type by State
2-4 Units 5-10 Units 11-25 Untis 26-100 Units 100+ Units
California 173,220 15,893 3,397 966 86
Texas 165,680 17,311 3,799 879 81
Florida 110,740 9,056 1,815 456 108
Georgia 75,423 7,237 1,735 633 119
North Carolina 60,452 4,812 1,099 307 56
Ohio 55,713 5,132 1,063 241 50
Arizona 50,771 3,469 598 170 46
Indiana 48,438 3,926 907 251 41
Michigan 43,685 4,886 1,189 393 109
Illinois 44,722 3,633 899 246 72
Majority of Activity is from Small Investors
© Auction.com | Confidential & Proprietary
But Sales to Institutional Investors Still Higher than Usual
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
Q1 2
001
Q2 2
001
Q3 2
001
Q4 2
001
Q1 2
002
Q2 2
002
Q3 2
002
Q4 2
002
Q1 2
003
Q2 2
003
Q3 2
003
Q4 2
003
Q1 2
004
Q2 2
004
Q3 2
004
Q4 2
004
Q1 2
005
Q2 2
005
Q3 2
005
Q4 2
005
Q1 2
006
Q2 2
006
Q3 2
006
Q4 2
006
Q1 2
007
Q2 2
007
Q3 2
007
Q4 2
007
Q1 2
008
Q2 2
008
Q3 2
008
Q4 2
008
Q1 2
009
Q2 2
009
Q3 2
009
Q4 2
009
Q1 2
010
Q2 2
010
Q3 2
010
Q4 2
010
Q1 2
011
Q2 2
011
Q3 2
011
Q4 2
011
Q1 2
012
Q2 2
012
Q3 2
012
Q4 2
012
Q1 2
013
Q2 2
013
Q3 2
013
Q4 2
013
Q1 2
014
Q2 2
014
Q3 2
014
Investors Percent of Total U.S. Residential Sales (Owning 10+ Units)
© Auction.com | Confidential & Proprietary
Single Family Rentals a Growing Asset Class
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
197
3
197
4
197
5
197
6
197
7
197
8
197
9
198
0
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
201
1
201
3
Total Single Family Rentals Single Family Rentals as % of Total Occupied Housing Stock
© Auction.com | Confidential & Proprietary
Number of Renter Households Continues to Grow…
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
20
04
-1Q
20
04
-2Q
20
04
-3Q
20
04
-4Q
20
05
-1Q
20
05
-2Q
20
05
-3Q
20
05
-4Q
20
06
-1Q
20
06
-2Q
20
06
-3Q
20
06
-4Q
20
07
-1Q
20
07
-2Q
20
07
-3Q
20
07
-4Q
20
08
-1Q
20
08
-2Q
20
08
-3Q
20
08
-4Q
20
09
-1Q
20
09
-2Q
20
09
-3Q
20
09
-4Q
20
10
-1Q
20
10
-2Q
20
10
-3Q
20
10
-4Q
20
11
-1Q
20
11
-2Q
20
11
-3Q
20
11
-4Q
20
12
-1Q
20
12
-2Q
20
12
-3Q
20
12
-4Q
20
13
-1Q
20
13
-2Q
20
13
-3Q
20
13
-4Q
20
14
-1Q
20
14
-2Q
20
14
-3Q
Millio
ns
Total Household Growth (YOY Change)
Renter Household Growth = 1,239,314 Owner Household Growth = -683,239
Source: Census Bureau; John Burns Real Estate Consulting, LLC (Data: 2014 Q3, Pub: Dec-14)
© Auction.com | Confidential & Proprietary
…And Conditions Point Towards the Trend Continuing
Mortgage Rates
Credit Standards
Home Prices
Rental Options
Student Loan Debt
Household Formations-to-Building Permits
Desire for to Own a Home
Personal Savings Rate
Income Growth
Distressed Sales
© Auction.com | Confidential & Proprietary
Flipping Has Declined from 2012 Peak…
© Auction.com | Confidential & Proprietary
…But is Still Profitable for Investors
WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
The Distressed
Market: Is the Crisis
Finally Over?
© Auction.com | Confidential & Proprietary
2014 – The End of the Foreclosure Crisis
© Auction.com | Confidential & Proprietary
78% of Foreclosures from 2008 or Earlier
© Auction.com | Confidential & Proprietary
2014 Distressed Property Sales Falling
© Auction.com | Confidential & Proprietary
Short Sales Back to Pre-Crisis Levels…and Falling
© Auction.com | Confidential & Proprietary
REO Sales Falling, but More Slowly
© Auction.com | Confidential & Proprietary
Foreclosure Auctions Starting to Come Back
© Auction.com | Confidential & Proprietary
And Foreclosure Auction Homes Can Be the Best Deals
WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
Trouble Ahead?
Potential
Headwinds
© Auction.com | Confidential & Proprietary
Unemployment Rates Not as Good as They Look
© Auction.com | Confidential & Proprietary
Labor Force Participation Rate Historically Low
© Auction.com | Confidential & Proprietary
And Millennial Employment is Lagging Behind
© Auction.com | Confidential & Proprietary
Home Ownership Rates Continue to Fall
© Auction.com | Confidential & Proprietary
1st Time Homebuyers Absent from Recovery
© Auction.com | Confidential & Proprietary
Mortgage Application Rates Weak – Especially for Purchase
© Auction.com | Confidential & Proprietary
What Can We Expect in 2015?
• Déjà vu…all over again
» Home price appreciation will moderate significantly
─ Price growth will be more in line with historical averages of 3-4%
─ Lack of distressed inventory will actually slow down price increases
─ Affordability becoming a problem in some markets
» Existing home sales between 4.9-5.1 million
─ Weak demand + low inventory = flat sales
» New home sales between 450-500 thousand
─ Housing starts/permits remain low
─ Most new inventory will be at the high end of the market
• Homeownership rates continue to decline
» Household formations increase, but with more renters
─ Financial, lifestyle and psychological reasons for delayed market entry
© Auction.com | Confidential & Proprietary
What Can We Expect in 2015?
• Credit may loosen, but only a little, and only over time
» Fannie/Freddie 3% down payment loans more of a PR effort than a market solution
» Less than 5% of all loans are non-QM (and that’s the highest percentage all year)
─ Virtually all of the non-QM loans are jumbo loans to high net worth individuals
» Uncertainty about regulatory environment
─ Fannie/Freddie fate far from certain
o Tasked with reducing their books of business, but control 90% of lending
─ Buy back rules need to be established
» No secondary market beyond government entities
• Interest rates are likely to go up
» Most estimates call for rates to end the year between 4.5-5.0%
─ Higher rates could impact affordability, price appreciation
• Bottom line: 2015 most likely to be another “Goldilocks” year
© Auction.com | Confidential & Proprietary
Thank You!
Questions? Comments?
Rick Sharga, Executive Vice President, Auction.com
(949) 951-2281
Connect with me on LinkedIn or follow me on Twitter (@ricksharga)