RESIDENTIAL MARKET UPDATE 2012 Van Rose, MIRM President, Rose and - - PDF document

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RESIDENTIAL MARKET UPDATE 2012

Van Rose, MIRM President, Rose and Womble New Homes

15 Year Closing New Construction & Resale History

Source:

Hampton Roads Residential Inventory 2007 to 2012

8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2007 2008 2009 2010 2011 2012

Source: Analysis by:

FORECLOSURES GOING DOWN…..

Source: Analysis by:

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 100 200 300 400 500 600 700

Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12

Total Short Sale/ Foreclosure Closings % Market Share

36 642 454

Hampton Roads 2011 Average Closing Price

Source: Analysis by:

Existing Homes: $208,409 ▼ 9.6% New Homes: $309,221 ▼ 3.3%

3/18/2012 2 Hampton Roads Average Closing Price History

$- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 00 01 02 03 04 05 06 07 08 09 10 11

Existing Homes New Construction

Source:

The Return to Detached….

#1

New Construction Closing Mix

Source:

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Detached TH/Plex Condo

Average Size New Construction Single Family Detached

2003 $105 per sq ft 2,559 SF 2007 $154 per sq ft 2,746 SF 2011 $125 per sq ft 2,484 SF

Source:

Existing Home Average Closing Price Versus Standard Appreciation

Source: Analysis by:

Returning to a Balanced Market

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0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Months to Absorb Current Inventory Detached Attached

Returning to a Balanced Market New Construction

Source: Analysis by:

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Months to Absorb Current Inventory Detached Attached

Returning to a Balanced Market Existing Homes

Source: Analysis by: Source: Internal Revenue Service Analysis by:

Hampton Roads Net Migration

Isle of Wight Hampton Norfolk

Hampton Roads

2011 Top 5 Builders

Source:

# 5

79

# 4

104

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# 3

106

# 2

155

# 1

178

10 20 30 40 50 60 70 80 90 100

Consumer Confidence Index

Source: Bloomberg

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10 20 30 40 50 60 70 80 90 100

Builder Confidence Index

Source: Bloomberg

20.8% 13.1% 7.7% 14.4% 17.4% ‐3.0% 15.3% 14.7% 0.5%

‐5% 0% 5% 10% 15% 20% 25%

Gross Profit Margin Operating Expenses Net Profit Margin

2006 2008 2010

Builder Financial Improvements

Source: NAHB

The Housing Cycle has Bottomed

2000 4000 6000 8000 10000 12000 14000 16000

Building Permits 1984‐2011 with 2015 Forecast

Inventory is Going Down

5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 Jan‐07 Apr‐07 Jul‐07 Oct‐07 Jan‐08 Apr‐08 Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 Oct‐09 Jan‐10 Apr‐10 Jul‐10 Oct‐10 Jan‐11 Apr‐11 Jul‐11 Oct‐11 Jan‐12

Source: Analysis by:

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 30‐Yr Fixed Rate

Source: Freddie Mac

Interest Rates are LOW!

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Construction Lending

Short Sales

72% 19% 9%

Existing Homes Current Inventory Regular Listings Short Sale Bank/ Govt

Source: Analysis by:

Ever Changing Buyer Profile

LOCAL MARKET IMPROVEMENT INDICATORS

Resale Inventory 21% New Homes Inventory 14% Price Changes 26% Foreclosure Sales 26% Building Permits 37% Interest Rate 0.25% Home Affordability Index 70% approx Capture Ratio 1:11 (was 1:25)

2012? Cautiously Optimistic