FEBRUARY 2015

Michigan’s Surveys of Consumers Consumer Optimism Hits 11-Year High

December 2013 HOUSEHOLD FORMATIONS

NAR Savings on Reduced FHA Mortgage Insurance Premiums Based on a mortgage of $200,000

“NAR Research estimates that the fee reduction will price in an additional 1.6 million to 2.1 million renters along with many trade-up buyers, resulting in 90,000 to 140,000 additional annual home purchases based on the standard affordability limits at the FHA and conventional market and dynamics in the housing finance market.”

Mortgage Credit Availability

Renters Planning on Buying a Home Freddie Mac in the next 3 years by age group

Renters’ Views on Homeownership Freddie Mac 86% Homeownership provides protection against rent increases 80% Homeownership is an investment opportunity that builds long-term wealth 77% Homeownership provides stability and/or financial security financial aspects

It is something to be proud of91% It can be passed on to your children90% It allows more flexibility to design it the way you want89% It gives you more privacy86% It gives you more independence and control81% It provides a better home life for children76% It is a sign of success76% It makes you feel more like part of a community74% It allows you to live in a better, safer neighborhood60% Freddie Mac Renters’ Views on Homeownership non-financial aspects

#1 Reasons Renters Won’t Buy Freddie Mac

Impact on “Willingness to Pay” The impact on a renter’s “willingness to pay” when buying a house. Federal Reserve Bank of New York

The DOWN PAYMENT Biggest Misconception about Mortgages Percentage of respondents to Zelman & Assoc survey who believe that you need a minimum of a 15% down payment to purchase a home. Freddie Mac

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” Housing Wire commenting on a study by Nomura

Julián Castro, Secretary for HUD “A home is often a primary source of wealth in a family… Having a home is generational way to pass that wealth on. We want people responsible enough to own a home to have that opportunity.”

A Second CHALLENGE

Lawrence Yun, NAR’s Chief Economist “The total inventory of homes available for sale fell for the first time in 16 months… Months supply is already low at 4.4 months. More inventories are needed, not less. Or else, home prices could re-accelerate.”

NAR 1/2015 Year-over-Year Inventory Levels

Historically, number of years home sellers lived in their homes Pent Up Seller Demand Pent Up Seller Demand

Equity Share by State Q3 2014

Foot Traffic (indicator of future sales)

Foot Traffic (indicator of future sales)

Months Inventory of HOMES FOR SALE NAR 1/2015

Q: When do most listings come on the market? A: The 2 nd Quarter of each Year

2014 Available Inventory in millions

% Change in Sales from last year by Price Range

NAR 1/2015 EXISTING Home Sales

100 = Historically Healthy Level NAR 1/2015 PENDING Home Sales

Freddie Mac 1/2015 Freddie Mac Actual Rates January 2013 – February Year Fixed Rate Mortgages

Quarter Fannie Mae Freddie Mac MBANAR Average of all four Q3.9% 3.8%3.88% Q4.0%4.1%4.3%4.0%4.10% Q4.1%4.3%4.7%4.3%4.35% Q4.2%4.5%4.8%4.7%4.55% Mortgage Rate Projections 1/2015

Where Are They Going? 2015 Projections Q1 Q2 Q3 Q4 Where Have They Been This Year? Mortgage Rates Freddie Mac 30 Year Fixed Rate

Months Inventory of HOMES FOR SALE NAR 1/2015

Months Inventory of HOMES FOR SALE NAR 1/2015

Months Inventory of HOMES FOR SALE NAR 1/2015

S&P Case Shiller 1/2015 Year-Over-Year PRICE CHANGES Case Shiller

S&P Case Shiller 1/2015 Year-Over-Year PRICE CHANGES Case Shiller

S&P Case-Shiller Home Price Indices S&P Case Shiller 1/2015

Percentage of Distressed Property Sales 35% 11%14% NAR 1/2015 January Today

KEEPINGCURRENTMATTERS.COM SlideSlide TitleLink 4Consumer Optimismhttp:// 5Household Formationshttps://ycharts.com/indicators/us_household_formation 6FHA Savingshttp://economistsoutlook.blogs.realtor.org/2015/01/08/fha-lowers-pricing-to-reflect-less-risk/ 7NAR Quotehttp://economistsoutlook.blogs.realtor.org/2015/01/08/fha-lowers-pricing-to-reflect-less-risk/ 8Mortgage Credit Availabilityhttp:// Renters Planning on Buying, Views on Homeownership (financial & non financial), #1 Reason Won’t Buy 13Impact on ‘Willingness To Pay’ 14Down Payment Misconceptionhttp:// 15Housing Wire Quotehttp:// 16, 54Julián Castro Quotehttp://portal.hud.gov/hudportal/HUD?src=/press/speeches_remarks_statements/2015/Statement_ Lawrence Yun Quotehttp://economistsoutlook.blogs.realtor.org/2015/01/26/shrinking-inventory/#sf Year-over-Year Inventorywww.realtor.org Resources

KEEPINGCURRENTMATTERS.COM SlideSlide TitleLink 20Pent Up Seller Demandhttp://economistsoutlook.blogs.realtor.org/2015/01/28/pent-up-sellers/#sf Equity Share by Statehttp:// , 24Foot Traffic, Months Inventorywww.realtor.org 25-26Listings Come to Market , 29, 30 Sales by Price Range, Existing Home Sales, Pending Home Sales 31, Year Fixed Rate, Mortgage Rate Freddie Mac Mortgage Rate Projections Months Inventory for Salehttp:// 37, 38, 39Case Shiller YOY & HPIhttp://us.spindices.com/index-family/real-estate/sp-case-shiller 40% of Distressed Propertieshttp:// 52NAR Membershiphttp:// 53Seth Godin Quotehttp://sethgodin.typepad.com/seths_blog/2015/01/you-are-what-you-share.html Resources

JOIN THE KCM MEMBERS FACEBOOK GROUP facebook.com/groups/kcmmembers

NAR Membership in thousands NAR

"The culture we will live in next month is a direct result of what people like us share today. The things we share and don't share determine what happens next." Seth Godin

"Homeownership is still the cornerstone of the American Dream — a fact you can see in the lives of everyday folks. It’s a source of pride. It’s a source of wealth, providing both a nest and a nest egg. And it strengthens communities and fuels growth in the overall economy." Julián Castro, Secretary for HUD

FEBRUARY 2015