Were in a mental recession Its a constant stream of negative - PowerPoint PPT Presentation

“We’re in a mental recession… It’s a constant stream of negative headlines for a couple of months… it wears on you.” Sam Khater Chief Economist at Freddie Mac

What will actually happen to home values (prices) in 2019?

Case Shiller 6.7% 6.7% 6.5% 6.4% 6.3% 6.2% Year-Over-Year PRICE CHANGES 6.0% 20 City Composite 5.7% 5.5% 5.3% 5.2% 4.2% S&P Case Shiller 2/2019

Projected Home Price % Appreciation Going Forward Source 2019 2020 2021 2022 HPES +4.3 +2.8 +2.5 +3.0 Zelman & Assoc. +3.5 +3.2 N/A N/A MBA +4.5 +3 +1.9 N/A Freddie Mac +4.1 +2.8 N/A N/A NAR +2.2 +3.3 N/A N/A Fannie Mae +4.2 +2.8 N/A N/A

Would housing demand (# of sales) soften if mortgage rates rise in the future?

Total Home Sales (in thousands) 6,200 2018 2019 6,100 6,000 5,900 5,800 5,700 5,600 5,500 5,400 MBA Freddie Mac Fannie Mae

We keep hearing of a recession. When might that happen? What will be the impact on the housing market?

Surveys Projecting the next U.S. Recession 1. Wall Street Journal Survey of Economists 2. Pulsenomics Survey of Economists and Market Analysts 3. Duke University Survey of American CFOs 4. National Association for Business Economics Survey of Members

When Will Next U.S. Recession Begin? Wall Street Journal Survey of Economists Pulsenomics survey of Analysts 59% Duke Survey of CFOs National Association of Business Economics Members 48% 47% 42% 33% 24% 25% 24% 22% 14% 12% 10% 10% 10% 9% 8% 2019 2020 2021 After 2021 Pulsenomics, Duke, NABE and WSJ

When Will Next U.S. Recession Begin? 46% 22% 18% 14% 2019 2020 2021 After 2021 Pulsenomics, Duke, NABE and WSJ

6.6% 6.1% 3.5% 1991 2008 1980 1981 2001 -1.9% HOME PRICE CHANGE during Last 5 Recessions -19.7% CoreLogic National Home Price Index

I hear that lending standards are beginning to loosen. Isn’t that what caused the “bubble & burst” ten years ago? Why is it different now?

2006 869 Historic Data for the MORTGAGE CREDIT AVAILABILITY INDEX (a report from the Mortgage Bankers Association) 2004 378 TODAY 2008 180 118 MBA

“With additional ‘skin in the game,’ rising equity reduces the chances of a foreclosure, helping to push the foreclosure rate down to its lowest level since at least 2000.” Frank Nothaft Chief Economist for CoreLogic

Year-Over-Year Foreclosures CoreLogic

Does Homeownership Matter? Is it still part of the American Dream?

Homeownership Rates U.S. Percentage 64.8 64.4 64.3 64.2 64.2 63.9 63.7 63.6 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 Census

Housing Wealth (Equity) Gains as of 2018 for a Typical Single-Family Home Purchased 5, 10, 15, 30 Years Ago $243,740 Price Appreciation Principal Payments $71,440 Total Gains $124,564 $91,081 $79,488 $43,164 $172,300 $26,081 $15,288 $81,400 $64,200 $65,000 5Y 10Y 15Y 30Y NAR

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