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The American Dream and the 2013 Housing OutlookWednesday, December 12, 2012
@jedkolko | #truliapredicts
Agenda
Looking Back at 2012
What Will Consumers Do In 2013?
2013: What’s In, What’s Out 5 predictions about housing Top 10 markets to watch
@jedkolko | #truliapredicts
Asking Home Prices
• .
Construction Starts
Existing Home Sales
Delinquencies + Foreclosures
+42% -10%+11%Despite -23%
Inventory
+3.8%+1.2% in
Judicial States+4.9 in Non-
Judicial States
2012: Better Than Anyone Dared Hope
Against all odds “Even the best possible 2012 won’t get us halfway back toward normal.” Housing market: 47% back to normal
2012 by the numbers
@jedkolko | #truliapredicts
Consumers Bullish About Buying Homes
November 2012
May 2012
January 2011
0% 5% 10% 15% 20% 25% 30% 35%
31%
28%
22%
% Renters Planning to Buy in Next 2 Years
@jedkolko | #truliapredicts
Millennials Shaken, Not Scarred
Is homeownership part of your personal American Dream? 72% of 18-34 year-olds 72% of all adults
“Renter nation” just a myth 43% of Millennials are homeowners 93% of Millennial renters want to buy someday
@jedkolko | #truliapredicts
Young Adults In For Sticker Shock
18-34 35-44 45-54 55+0%
10%
20%
30%
40%
50%
60%
37%
43%
49%
55%
32%
38%41%
49%
Home Prices
Age
% e
xpec
ting
incr
ease
in n
ext
year
@jedkolko | #truliapredicts
Rising Prices Will Unlock Inventory
2002 or earlier
2003 to 2006
2007 to 2009
2010 to 2012
0% 10%20%30%40%
20%
23%
20%
33%
Who Might Sell in 2013
Yea
r o
f H
om
e P
urc
has
e
Tight inventory holding back sales
Rising prices create inventory via: More construction Homeowners wanting to
sell
More likely to sell if: Can make profit Expect price increases Bought recently
@jedkolko | #truliapredicts
2013: What’s Out, What’s In
Will home prices bottom?
Will inventory bottom?
The robo-signing settlement
New mortgage rules
Improving housing affordability
Declining housing affordability
Expanding refinancing to stimulate the
economy
Cutting the mortgage interest deduction to fix the budget
National housing policy “Localized” housing policy
20122013
@jedkolko | #truliapredicts
What Makes A Housing Market Healthy?
Strong fundamentals Job growth Low vacancy rate – but not too low! Little foreclosure inventory
Not necessarily rising prices Big price gains are bounce-backs – “yo-yo dieters” Phoenix: high vacancies Detroit: weak job growth Miami: huge foreclosure inventory
@jedkolko | #truliapredicts
Top 10 Healthiest Housing Markets Going into 2013
NOTE: Among 100 largest metros@jedkolko | #truliapredicts
Wrap Up
2012 for housing was better than anyone dared to hope
Consumers are bullish on buying homes
Millennials are shaken, not scarred, by the housing bust
“Renter Nation” is just a myth
Rising prices should unlock inventory in 2013
What’s in for 2013: new mortgage rules, declining affordability, “localized” housing policy, and more
The healthiest local housing markets are metros with strong fundamentals, not necessarily biggest price gains
@jedkolko | #truliapredicts
