Residential

Economic Issues
& Trends Forum
Pouslng MarkeL and
Lconomlc CuLlook
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u.S. opulauon
0
30
100
130
200
230
300
330
1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
ln mllllons
!obs ln Amerlca - Less SmooLh
0
20000
40000
60000
80000
100000
120000
140000
160000
1
9
6
8

-

!
a
n

1
9
6
9

-

u
e
c

1
9
7
1

-

n
o
v

1
9
7
3

-

C
c
L

1
9
7
3

-

S
e
p

1
9
7
7

-

A
u
g

1
9
7
9

-

!
u
l

1
9
8
1

-

!
u
n

1
9
8
3

-

M
a
y

1
9
8
3

-

A
p
r

1
9
8
7

-

M
a
r

1
9
8
9

-

l
e
b

1
9
9
1

-

!
a
n

1
9
9
2

-

u
e
c

1
9
9
4

-

n
o
v

1
9
9
6

-

C
c
L

1
9
9
8

-

S
e
p

2
0
0
0

-

A
u
g

2
0
0
2

-

!
u
l

2
0
0
4

-

!
u
n

2
0
0
6

-

M
a
y

2
0
0
8

-

A
p
r

2
0
1
0

-

M
a
r

2
0
1
2

-

l
e
b

2
0
1
4

-

!
a
n

!obs Lo opulauon 8auo
(16 years and over)
30
32
34
36
38
60
62
64
66
1
9
6
8

-

!
a
n

1
9
6
9

-

C
c
L

1
9
7
1

-

!
u
l

1
9
7
3

-

A
p
r

1
9
7
3

-

!
a
n

1
9
7
6

-

C
c
L

1
9
7
8

-

!
u
l

1
9
8
0

-

A
p
r

1
9
8
2

-

!
a
n

1
9
8
3

-

C
c
L

1
9
8
3

-

!
u
l

1
9
8
7

-

A
p
r

1
9
8
9

-

!
a
n

1
9
9
0

-

C
c
L

1
9
9
2

-

!
u
l

1
9
9
4

-

A
p
r

1
9
9
6

-

!
a
n

1
9
9
7

-

C
c
L

1
9
9
9

-

!
u
l

2
0
0
1

-

A
p
r

2
0
0
3

-

!
a
n

2
0
0
4

-

C
c
L

2
0
0
6

-

!
u
l

2
0
0
8

-

A
p
r

2
0
1
0

-

!
a
n

2
0
1
1

-

C
c
L

2
0
1
3

-

!
u
l

Slugglsh CrowLh + Cap aer CreaL 8ecesslon
($1.3 Lrllllon gap . $4,700 per person)
0
3,000
10,000
13,000
20,000
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

2
0
1
4

K/, 1& HIIL /4MM"$6
8eal Cu 8eal Cu W/C 8ecesslon
3 CrowLh Llne
2.2 CrowLh Llne
8ecenL ?ear AcuvlLy
Cu ConLracuon ln 2014 C1
-10
-3
0
3
10
2007
- C1
2007
- C3
2008
- C1
2008
- C3
2009
- C1
2009
- C3
2010
- C1
2010
- C3
2011
- C1
2011
- C3
2012
- C1
2012
- C3
2013
- C1
2013
- C3
2014
- C1
K/, 9&&*"M1N%O K$4#7- ?"7%
8uL no lresh 8ecesslon ln SlghL
-6
-4
-2
0
2
4
K/, K$4#7- ?"7% 2$45 4&% E%"$ "C4
Cycllcal Pouslng SecLor:
Slngle-lamlly Lxlsung Pome Sales Cnly
(8esL Lsumauon - could be o by several polnLs)
0
1,000,000
2,000,000
3,000,000
4,000,000
3,000,000
6,000,000
7,000,000
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

2
0
1
4

C
1

Slngle-lamlly Sales Lo opulauon 8auo
(Average = 1.36)
0.0
0.3
1.0
1.3
2.0
2.3
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

2
0
1
4

C
1

P
# of eople per Pouslng unlL
0.00
0.30
1.00
1.30
2.00
2.30
3.00
3.30
1
9
6
8

1
9
7
0

1
9
7
2

1
9
7
4

1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

2
0
1
2

Slngle-lamlly Sales Lo Pousehold 8auo
(Average = 3.66)
2.00
2.30
3.00
3.30
4.00
4.30
3.00
3.30
6.00
1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
MonLhly endlng Sales lndex
(Seasonally Ad[usLed)
70.0
73.0
80.0
83.0
90.0
93.0
100.0
103.0
110.0
113.0
Source: nA8
Lxlsung Pome Sales - Closlngs
3,000,000
3,300,000
4,000,000
4,300,000
3,000,000
3,300,000
2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
r

2
0
1
1

-

M
a
y

2
0
1
1

-

!
u
l

2
0
1
1

-

S
e
p

2
0
1
1

-

n
o
v

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
r

2
0
1
2

-

M
a
y

2
0
1
2

-

!
u
l

2
0
1
2

-

S
e
p

2
0
1
2

-

n
o
v

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
r

2
0
1
3

-

M
a
y

2
0
1
3

-

!
u
l

2
0
1
3

-

S
e
p

2
0
1
3

-

n
o
v

2
0
1
4

-

!
a
n

2
0
1
4

-

M
a
r

Causes of 8ecenL Sales Slowdown
8ad wlnLer
Cnly delayed sales noL cancellauon
Lack of lnvenLory
SLeadlly more lnvenLory comlng Lo markeL
Pome prlces rose Loo fasL
Showlng slgns of slowlng
MorLgage credlL dlmculues
new Cualled MorLgage 8ules
Surely cannoL geL worse!
MorLgage raLes [umped
1rouble !
lnvenLory of Pomes for Sale
0
300,000
1,000,000
1,300,000
2,000,000
2,300,000
3,000,000
3,300,000
4,000,000
4,300,000
2
0
0
7

-

!
a
n

2
0
0
7

-

M
a
y

2
0
0
7

-

S
e
p

2
0
0
8

-

!
a
n

2
0
0
8

-

M
a
y

2
0
0
8

-

S
e
p

2
0
0
9

-

!
a
n

2
0
0
9

-

M
a
y

2
0
0
9

-

S
e
p

2
0
1
0

-

!
a
n

2
0
1
0

-

M
a
y

2
0
1
0

-

S
e
p

2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
y

2
0
1
1

-

S
e
p

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
y

2
0
1
2

-

S
e
p

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
y

2
0
1
3

-

S
e
p

2
0
1
4

-

!
a
n

Change ln lnvenLory
( change from one year ago)
-30
-23
-20
-13
-10
-3
0
3
10
13
20
2
0
0
7

-

!
a
n

2
0
0
7

-

M
a
y

2
0
0
7

-

S
e
p

2
0
0
8

-

!
a
n

2
0
0
8

-

M
a
y

2
0
0
8

-

S
e
p

2
0
0
9

-

!
a
n

2
0
0
9

-

M
a
y

2
0
0
9

-

S
e
p

2
0
1
0

-

!
a
n

2
0
1
0

-

M
a
y

2
0
1
0

-

S
e
p

2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
y

2
0
1
1

-

S
e
p

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
y

2
0
1
2

-

S
e
p

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
y

2
0
1
3

-

S
e
p

2
0
1
4

-

!
a
n

Pome rlce lndex ln hoenlx and SL. Louls
8epeaL-1ransacuon Pome rlce lndex
80
130
180
230
280
330
1
9
9
3

-

C
1

1
9
9
3

-

C
4

1
9
9
6

-

C
3

1
9
9
7

-

C
2

1
9
9
8

-

C
1

1
9
9
8

-

C
4

1
9
9
9

-

C
3

2
0
0
0

-

C
2

2
0
0
1

-

C
1

2
0
0
1

-

C
4

2
0
0
2

-

C
3

2
0
0
3

-

C
2

2
0
0
4

-

C
1

2
0
0
4

-

C
4

2
0
0
3

-

C
3

2
0
0
6

-

C
2

2
0
0
7

-

C
1

2
0
0
7

-

C
4

2
0
0
8

-

C
3

2
0
0
9

-

C
2

2
0
1
0

-

C
1

2
0
1
0

-

C
4

2
0
1
1

-

C
3

2
0
1
2

-

C
2

2
0
1
3

-

C
1

Change ln Pome rlce
( change from one year ago)
-10
-3
0
3
10
13
2
0
1
1

-

!
a
n

2
0
1
1

-

M
a
r

2
0
1
1

-

M
a
y

2
0
1
1

-

!
u
l

2
0
1
1

-

S
e
p

2
0
1
1

-

n
o
v

2
0
1
2

-

!
a
n

2
0
1
2

-

M
a
r

2
0
1
2

-

M
a
y

2
0
1
2

-

!
u
l

2
0
1
2

-

S
e
p

2
0
1
2

-

n
o
v

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
r

2
0
1
3

-

M
a
y

2
0
1
3

-

!
u
l

2
0
1
3

-

S
e
p

2
0
1
3

-

n
o
v

2
0
1
4

-

!
a
n

2
0
1
4

-

M
a
r

nA8 Case-Shlller CoreLoglc
Medlan Pome rlce - 8lslng
($40,000 LqulLy Caln ln 3 years)
$166,100
$176,800
$197,100
$208,200
$130,000
$160,000
$170,000
$180,000
$190,000
$200,000
$210,000
$220,000
2011 2012 2013 2014 forecasL
lnevlLable 8lse ln MorLgage 8aLes wlll furLher
hurL AordablllLy
1/3rd of homeowners have no morLgage
1/3rd have 4.3 raLe or lower
1/3
rd
have hlgher raLe
3
4
3
6
7
8
9
2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
l

2
0
1
4

-

!
a
n


Locked-ln LecL of Low 8aLes?
Pouslng cannoL geL back Lo normal ln a hurry
eople move even ln hlgh lnLeresL raLe envlronmenL
Marrlage, dlvorce, new baby, school dlsLrlcL, new [ob, fed-up
wlLh local governmenL, .
Many unplanned landlords
1ake advanLage of rlslng renLs whlle raLes are low and xed
oLenual fuLure lock from longer holdlng perlod for
caplLal galns Lax excluslon
8lslng 8enLers' and Pomeowners' 8enL CrowLh
(Cn Lhe Way Lo 3)
-1
0
1
2
3
4
3
2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
n

2
0
0
3

-

n
o
v

2
0
0
4

-

A
p
r

2
0
0
4

-

S
e
p

2
0
0
3

-

l
e
b

2
0
0
3

-

!
u
l

2
0
0
3

-

u
e
c

2
0
0
6

-

M
a
y

2
0
0
6

-

C
c
L

2
0
0
7

-

M
a
r

2
0
0
7

-

A
u
g

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
n

2
0
0
8

-

n
o
v

2
0
0
9

-

A
p
r

2
0
0
9

-

S
e
p

2
0
1
0

-

l
e
b

2
0
1
0

-

!
u
l

2
0
1
0

-

u
e
c

2
0
1
1

-

M
a
y

2
0
1
1

-

C
c
L

2
0
1
2

-

M
a
r

2
0
1
2

-

A
u
g

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
n

2
0
1
3

-

n
o
v

Cwners' LqulvalenL 8enL 8enLers' 8enL
8LAL1C8 8enL Survey -
Shows 8enL ressure
0
10
20
30
40
30
60
lalllng 8lslng
lf Lhere ls perslsLenL houslng
shorLage . Lhen Lhe baule beglns

Landlord from Pell
versus
8enL ConLrol

Pouslng SLarLs 8lslng . More lnvenLory
8uL needs Lo 8each 1.3 1.7 mllllon
0
300
1000
1300
2000
2300
2000
- !an
2001
- !an
2002
- !an
2003
- !an
2004
- !an
2003
- !an
2006
- !an
2007
- !an
2008
- !an
2009
- !an
2010
- !an
2011
- !an
2012
- !an
2013
- !an
2014
- !an
mulufamlly slngle-famlly
Thousand units (annualized)
Long-term Average
new Pome Sales
0
200
400
600
800
1000
1200
1400
1600
2000
- !an
2001
- !an
2002
- !an
2003
- !an
2004
- !an
2003
- !an
2006
- !an
2007
- !an
2008
- !an
2009
- !an
2010
- !an
2011
- !an
2012
- !an
2013
- !an
2014
- !an
ln Lhousand unlLs
Slugglsh 8ecovery ln Pouslng SLarLs
CosL of ConsLrucuon 8lslng lasLer Lhan Cl
Labor ShorLage for consLrucuon work
ConsLrucuon loan dlmculLy for small local
homebullders . uodd-lrank nanclal
regulauons?
Lxlsung vs. new Pome rlce
$0
$30,000
$100,000
$130,000
$200,000
$230,000
$300,000
$330,000
2000 -
!an
2002 -
!an
2004 -
!an
2006 -
!an
2008 -
!an
2010 -
!an
2012 -
!an
2014 -
!an
Lxlsung new
Lconomlc CuLlook
MoneLary ollcy
1aperlng Lnds by Lhe year end 2014
led lunds 8aLe . hlke ln 2013 C1
Larller Move Lo 1lghLen because of lnauon
ressure
Long-Lerm SLeady SLaLe 8aLe (2016 onwards) .. 10
year 1reasury aL 3.0 . 230 basls polnLs hlgher
Lhan currenL
04$% ,$1'% ;&Q"A4&R !%66 7-"& HPS
T*7 $46% "7 H.GP "&&*"M1N%O $"7%
UP '-"&C% 2$45 4&% E%"$ "C4V
0.00
0.30
1.00
1.30
2.00
2.30
3.00
3.30
1
9
9
9

-

!
a
n

1
9
9
9

-

!
u
l

2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
l

2
0
1
4

-

!
a
n

All lLems exlcudlng fuel and energy
Cu CrowLh = !ob Creauons
(8 mllllon losL . 8 mllllon galned)
124000
126000
128000
130000
132000
134000
136000
138000
140000
2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

M
a
y

2
0
1
3

-

n
o
v

In thousands
Local MarkeL !ob Comparlsons
>"67 K$4#1&C =7"7%6 FWE%"$ K$4#7- ?"7%
nevada 3.8
norLh uakoLa 3.7
Colorado 3.0
llorlda 3.0
Cregon 2.7
1exas 2.7
uLah 2.6
uelaware 2.4
Callfornla 2.3
Arlzona 1.9
=M4# D4X1&C =7"7%6 FWE%"$ K$4#7- ?"7%
new Mexlco -0.2
kenLucky -0.2
new !ersey 0.0
vlrglnla 0.1
Alaska 0.2
WesL vlrglnla 0.3
ennsylvanla 0.3
Maryland 0.3
u.C. 0.4
Mlsslsslppl 0.3
8uslness Spendlng ln relauon Lo CorporaLe roLs .
Puge oLenual for 8uslness Spendlng lncrease
0
300
1000
1300
2000
2300
1
9
8
0

-

C
1

1
9
8
1

-

C
3

1
9
8
3

-

C
1

1
9
8
4

-

C
3

1
9
8
6

-

C
1

1
9
8
7

-

C
3

1
9
8
9

-

C
1

1
9
9
0

-

C
3

1
9
9
2

-

C
1

1
9
9
3

-

C
3

1
9
9
3

-

C
1

1
9
9
6

-

C
3

1
9
9
8

-

C
1

1
9
9
9

-

C
3

2
0
0
1

-

C
1

2
0
0
2

-

C
3

2
0
0
4

-

C
1

2
0
0
3

-

C
3

2
0
0
7

-

C
1

2
0
0
8

-

C
3

2
0
1
0

-

C
1

2
0
1
1

-

C
3

2
0
1
3

-

C
1

roLs 8uslness Spendlng
Lconomlc lorecasL
HIFY HIFJ
24$%'"67
HIFG
24$%'"67
Cu CrowLh 1.9 2.2 2.9
!ob CrowLh 1.7 1.6 1.9
Cl lnauon 1.4 2.3 3.3
Consumer Condence 73 82 86
10-year 1reasury 2.3 3.0 3.8
Pouslng MarkeL CuLlook
enL up uemand
HIII HIFY
Lxlsung Pome Sales 3.2 m 3.1 m
new Pome Sales 880 k 430 k
MorLgage 8aLes 8.0 4.0
ayroll !obs 132.0 m 136.4 m
opulauon 282 m 316 m
vacauon Pome Sales
-
200
400
600
800
1,000
1,200
2003 2004 2003 2006 2007 2008 2009 2010 2011 2012 2013
ln Lhousands
Pousehold neL WorLh
40000
43000
30000
33000
60000
63000
70000
73000
2
0
0
0

-

C
1

2
0
0
0

-

C
4

2
0
0
1

-

C
3

2
0
0
2

-

C
2

2
0
0
3

-

C
1

2
0
0
3

-

C
4

2
0
0
4

-

C
3

2
0
0
3

-

C
2

2
0
0
6

-

C
1

2
0
0
6

-

C
4

2
0
0
7

-

C
3

2
0
0
8

-

C
2

2
0
0
9

-

C
1

2
0
0
9

-

C
4

2
0
1
0

-

C
3

2
0
1
1

-

C
2

2
0
1
2

-

C
1

2
0
1
2

-

C
4

$ bllllon
Pome CounLrles for lnLernauonal 8uyers
rellmlnary Analysls, Sub[ecL Lo Change
* lncludes eople's 8epubllc of Chlna, 1alwan, and Pong kong
8razll Canada Chlna* Cermany lndla !apan Mexlco 8ussla
unlLed
klngdom
2011 3 23 9 4 7 2 7 1 7
2012 3 24 12 3 6 1 8 2 6
2013 2 23 12 3 3 1 8 2 3
2014 2 18 18 3 4 2 9 1 6
0
3
10
13
20
23
30
ulsLrlbuuon of lnLernauonal Sales by CounLry of Crlgln
Wlll Chlna overLake Lhe u.S. ln Cu?
Pad AnuclpaLed around 2010
0
3000
10000
13000
20000
23000
1
9
2
9

1
9
3
3

1
9
3
7

1
9
4
1

1
9
4
3

1
9
4
9

1
9
3
3

1
9
3
7

1
9
6
1

1
9
6
3

1
9
6
9

1
9
7
3

1
9
7
7

1
9
8
1

1
9
8
3

1
9
8
9

1
9
9
3

1
9
9
7

2
0
0
1

2
0
0
3

2
0
0
9

2
0
1
3

2
0
1
7

2
0
2
1

2
0
2
3

u.S. (growlng 3) Chlna (growlng 8)
Chlnese ?uan vs. u.S. uollar
(?uan per $)
3.00
3.30
6.00
6.30
7.00
7.30
8.00
8.30
2
0
0
0

-

!
a
n

2
0
0
0

-

!
u
l

2
0
0
1

-

!
a
n

2
0
0
1

-

!
u
l

2
0
0
2

-

!
a
n

2
0
0
2

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
4

-

!
a
n

2
0
0
4

-

!
u
l

2
0
0
3

-

!
a
n

2
0
0
3

-

!
u
l

2
0
0
6

-

!
a
n

2
0
0
6

-

!
u
l

2
0
0
7

-

!
a
n

2
0
0
7

-

!
u
l

2
0
0
8

-

!
a
n

2
0
0
8

-

!
u
l

2
0
0
9

-

!
a
n

2
0
0
9

-

!
u
l

2
0
1
0

-

!
a
n

2
0
1
0

-

!
u
l

2
0
1
1

-

!
a
n

2
0
1
1

-

!
u
l

2
0
1
2

-

!
a
n

2
0
1
2

-

!
u
l

2
0
1
3

-

!
a
n

2
0
1
3

-

!
u
l

2
0
1
4

-

!
a
n

Clobal enL-up uemand from 8lslng
World opulauon
0
2
4
6
8
10
1000 1100 1200 1300 1400 1300 1600 1700 1800 1900 2000 2100
ln bllllons
World-Class Clues wlll 8eneL !
8osLon, Chlcago, uallas, Mlaml, new ?ork, San ulego,
San lranclsco, WashlngLon u.C., eLc.
Pouslng lorecasL
HIFY HIFJ
24$%'"67
HIFG
24$%'"67
Pouslng SLarLs 923,000 1.07 mllllon 1.4 mllllon
new Pome Sales 430,000 310,000 710,000
Lxlsung Pome Sales 3.1 mllllon 4.9 mllllon 3.2 mllllon
Medlan rlce $197,000 $209,000 $219,000
30-year 8aLe 4.0 4.7 3.3
uollar volume LsumaLe +21 +3 +11
Pouslng MarkeL
and
Lconomlc CuLlook
!"#$%&'% )*&+ ,-./.
0-1%2 3'4&45167
89:;<89! 9==<0;9:;<8 <> ?39!:<?=
@

,$%6%&7"A4& 1& B"6-1&C74&+ /.0.

D"E FG+ HIFJ


2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Housing Demand
Eric Belsky
May 2014
Washington, DC
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Federal Surveys Providing a Murky Picture on Extent
of Recent Household Growth
0
500
1,000
1,500
2011 2012 2013
Change in Households (Thousands)
Housing Vacancy Survey Current Population Survey American Community Survey
Note: Data for 2013 American Community Survey is not yet available and is not presented on this slide. Household growth for
Housing Vacancy Survey uses revised 2010/12 vintage weights, and the Current Population Survey uses 2010 vintage weights
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Hard to Know Whats Happening With Household
Growth But . . . Long-Run Housing Production Is
WAY Below Narrow Normal Range
0
500
1,000
1,500
2,000
Lagging Ten-Year Annual Average Housing Completions and
Manufactured Home Placements (Thousands)
Median
Source: US Census Bureau
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
WAITING FOR STRONGER
DEMAND REBOUND


50
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Even CPS Suggests Cumulative Household Growth Is
Now 1.5 Million Below Even Modest 1.14M 95 -00 Trend
-4,000
-3,000
-2,000
-1,000
0
1,000
2006 2007 2008 2009 2010 2011 2012
Change in Number of Households (Thousands)
CPS vs 1995-2000 Rate CPS vs. 2000-2005 Rate
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Nearly 3 Million More Adults in Their 20s and Early 30s Lived
with their Parents In 2012 Than 2007
0
500
1,000
1,500
2,000
20-24 25-29 30-34
Age
Change from 2007-2012 in Number of Adult Children Living with Parents
(Thousands)
Source: JCHS tabulations of US Census Bureau, Current Population Survey
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Real Median Incomes for All Young Adult
Households Have Declined Since Great Recession
-15
-10
-5
0
20-24 25-29 30-34 35-39
Age
2007-2012 Change in Real Median Household Incomes (Percent)
Note: Percent change based on dollar values that have adjusted for inflation using the CPI-U for All Items.
Source: JCHS tabulations of US Census Bureau, Current Population Survey.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
A Significant But Lower Fraction of Adult Children Living
with Parents Were Employed Full Time in 12 than 07
0
50
100
20-24 25-29 30-34 35-39
Age
Share of Adult Children Living with Parents Who Have Full-Time
Employment (Percent)
2007 2012
Source: JCHS tabulations of US Census Bureau, Current Population Survey
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Student Default Rates Have Soared,
Hindering Ability to Qualify for a Mortgage
0
2
4
6
8
10
12
14
2
0
0
3
:
Q
1

2
0
0
3
:
Q
3

2
0
0
4
:

Q
1

2
0
0
4
:

Q
3

2
0
0
5
:

Q
1

2
0
0
5
:

Q
3

2
0
0
6
:

Q
1

2
0
0
6
:

Q
3

2
0
0
7
:

Q
1

2
0
0
7
:

Q
3

2
0
0
8
:

Q
1

2
0
0
8
:

Q
3

2
0
0
9
:

Q
1

2
0
0
9
:

Q
3

2
0
1
0
:

Q
1

2
0
1
0
:

Q
3

2
0
1
1
:

Q
1

2
0
1
1
:

Q
3

2
0
1
2
:

Q
1

2
0
1
2
:

Q
3

2
0
1
3
:

Q
1

2
0
1
3
:

Q
3

Share of Seriously Delinquent Student Loans (Percent)
Note: Seriously delinquent student loans are defined as 90-plus days delinquent.
Source: Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
0
10
20
30
40
50
60
70
80
90
100
2004 2010
Payments are 15
percent or greater of
monthly income
Payments are 10 to
14.9 percent of
monthly income
Payments are 5 to
9.9 percent of
monthly income
0
10
20
30
40
50
60
70
80
90
100
2004 2010
Share of Households with Head Aged 20 to 29 (Percent), By Tenure and Year
Student Debt Payments May Pose a Significant Barrier to
Mortgage Borrowing For As Many 1 in 10 Renters in Their 20s
Renters Owners
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
0
10
20
30
40
50
60
70
80
90
100
2004 2010
0
10
20
30
40
50
60
70
80
90
100
2004 2010
Payments are 15 percent
or greater of monthly
income
Payments are 10 to 14.9
percent of monthly
income
Payments are 5 to 9.9
percent of monthly
income
Payments are less than 5
percent of monthly
income
Has student loan debt but
not making payments on it
Has no student loan debt
And Even Smaller Share of Renters in Their 30s Are
Spending 5 Percent+ of Income on Student Debt
Renters
Owners
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances
Share of Households with Head Aged 30 to 39 (Percent), By Tenure and Year
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Household Growth Is Expected to Rival or Top
1995-2000 Annual Average Pace
500
600
700
800
900
1,000
1,100
1,200
1,300
1995-2000
CPS HVS
Source: JCHS Household Projections (for Projected Annual Average Household Growth)
500
600
700
800
900
1,000
1,100
1,200
1,300
2000-2010
Decennial Census
500
600
700
800
900
1,000
1,100
1,200
1,300
JCHS Projections 15-25
Low Projection Middle Projection
High Projection
Average Annual Household Growth (Thousands)
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Minority Households Will Account for 76 Percent
of Household Growth Over the Next Decade
0
20
40
60
80
100
Household Composition
in 2012 ACS
Projected Composition of
Household Growth,
2015-2025
Percent Share of Households, by Race and Ethnicity
Asian/other
Hispanic
Black, non-Hispanic
White, non-Hispanic
Source: JCHS tabulations of US Census Bureau, 2012 American Community Survey; JCHS Household Projections, Middle Series
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
The Greatest Increase in Households Will Be
Among Households 65 and Older
0
2
4
6
8
10
12
14
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+
2015 2025
Projected Households (Millions)
60
Source: JCHS households projections.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
WILL V. WAY

61
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Nearly All People Under Age 45 Expect
to Buy in the Future . . .
0
20
40
60
80
100
Under 25 25 to 34 35 to 44 45 to 54 55 to 64
% Who Expect to Buy a Home at Some Point in the Future

Source: Drew and Herbert, 2012. Based on Fannie Mae National Housing Survey 2010-2012.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
But Underwriting Has Tightened Dramatically
0
20
40
60
80
100
2006 2007 2008 2009 2010 2011 2012
Share of FHA-Insured Mortgages by
Dollar Volume (Percent)
Below 640 640-679
680-850
0
20
40
60
80
100
2001 2011
Share of Freddie Mac and Fannie Mae
Originations (Percent)
Higher Risk Medium Risk Lower Risk
Notes: Higher (lower) risk loans are to borrowers with credits scores under 690 (above 750) and have loan-to-
value ratios above 85% (below 75%). FHA data exclude records with no credit score information.
Sources: Amherst Securities; US Department of Housing and Urban Development.
Credit Score
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
Demanding More Down or Capping Credit Scores
Disproportionately Impacts Minorities
12
38
11
29
60
27
18
49
18
5
23
6
0
10
20
30
40
50
60
70
3% Downpayment 10% Downpayment FICO 660
P
e
r
c
e
n
t

o
f

P
e
r
f
o
r
m
i
n
g

L
o
a
n
s

E
x
c
l
u
d
e
d

Non-Hispanic White African American Latino Asian
64
Percent of performing loans excluded from mortgage market 2004-2008 originations
(1
st
lien, owner occupied, full doc only--excludes IO, neg. am and < 5 year hybrid ARMs)
Source: Roberto Quercia, Lei Ding, and Carolina Reid (2012). Balancing Risk and Access: Underwriting Standards for
Qualified Residential Mortgages, Center for Community Capital Research Report, January 2012.
2012 PRESI DENT AND FELLOWS OF HARVARD COLLEGE
. . . And those with Lower Incomes
25
49
25
22
49
18
13
42
12
7
32
8
0
10
20
30
40
50
60
3% Downpayment 10% Downpayment FICO 660
P
e
r
c
e
n
t

o
f

P
e
r
f
o
r
m
i
n
g

L
o
a
n
s

E
x
c
l
u
d
e
d

Low-Income Moderate-Income Middle-Income Upper-Income
65
Percent of performing loans excluded from mortgage market 2004-2008 originations
(1
st
lien, owner occupied, full doc only--excludes IO, neg. am and < 5 year hybrid ARMs)

Note: Income categories are defined as follows: lowless than 50% of MSA median income; moderate50-79%; middle80-119%; and upper
120%+ of MSA median income.
Source: Roberto Quercia, Lei Ding, and Carolina Reid (2012). Balancing Risk and Access: Underwriting Standards for Qualified Residential
Mortgages, Center for Community Capital Research Report, January 2012.
Dennis McGill
National Association of REALTORS

May 15, 2014
Zelman & Associates
Equity Research
Drivers of New Shelter
! Accelerating Household Formations
! Decoupling of households
! Improving job growth
! Increasing consumer confidence
! Near Record Occupancy Levels in Rental Housing
! Constrained Resale Housing Inventory
! Deficit of Shelter
New Housing Supply
Implied by Decade Analysis
500
1,490
1,090
155
330
260
55
80
70
720
1,925
1,440
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2010-13 2014-19 2010-19
Manufactured Housing
2-4 Unit Multi-Family
5-Plus Multi-Family
Single-Family
New Housing Supply, in Thousands
Annual Average
Source: Census Bureau, Zelman & Associates analysis
CPS Not Perfect But Showed Strongest
Alignment With Decennial Census
9
9
0

1
,
3
9
5

7
4
0

7
0
0

1
,
9
3
5

6
5
5

1
,
4
3
0

1
,
5
5
0

1
,
3
8
0

8
5
5

1
,
8
5
5

1
,
1
0
0

2
,
0
0
0

7
3
0

1
,
3
5
5

1
,
0
5
0

1
,
6
4
5

7
8
0

4
0
0

3
6
0

1
,
1
5
5

1
,
1
5
5

1
,
4
6
5

0
500
1,000
1,500
2,000
2,500
1
Q
9
1
1
Q
9
2
1
Q
9
3
1
Q
9
4
1
Q
9
5
1
Q
9
6
1
Q
9
7
1
Q
9
8
1
Q
9
9
1
Q
0
0
1
Q
0
1
1
Q
0
2
1
Q
0
3
1
Q
0
4
1
Q
0
5
1
Q
0
6
1
Q
0
7
1
Q
0
8
1
Q
0
9
1
Q
1
0
1
Q
1
1
1
Q
1
2
1
Q
1
3
Current Population Survey Change in National Households in Thousands
With Trailing Three-Year Average
Source: Census Bureau, Zelman & Associates analysis
Electric Data Supports Accelerating
Trend in CPS Households
1.4%
1.2%
1.4%
1.4%
1.5%
1.3%
1.6%
1.5% 1.5%
1.7%
1.7%
1.5%
1.1%
1.2%
1.5%
1.4%
1.2%
0.8%
0.2%
0.4%
0.3%
0.5%
0.8%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
Residential Electric Customers % Change CPS Average Households % Chg
Source: Census Bureau, Energy Information Administration, Zelman & Associates analysis
Not Surprisingly, Young Adult
Employment Driving Household Growth
86.0%
87.0%
88.0%
89.0%
90.0%
91.0%
92.0%
93.0%
94.0%
95.0%
96.0%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
% Change Residential Electric Customers - left
20-34 Year Old Employment Rate - right
Source: BLS, Energy Information Administration, Zelman & Associates analysis
High Occupancy Supports
Stable Rent Growth
(10%)
(8%)
(6%)
(4%)
(2%)
0%
2%
4%
6%
8%
10%
91.0%
91.5%
92.0%
92.5%
93.0%
93.5%
94.0%
94.5%
95.0%
95.5%
96.0%
2
Q
9
7
4
Q
9
7
2
Q
9
8
4
Q
9
8
2
Q
9
9
4
Q
9
9
2
Q
0
0
4
Q
0
0
2
Q
0
1
4
Q
0
1
2
Q
0
2
4
Q
0
2
2
Q
0
3
4
Q
0
3
2
Q
0
4
4
Q
0
4
2
Q
0
5
4
Q
0
5
2
Q
0
6
4
Q
0
6
2
Q
0
7
4
Q
0
7
2
Q
0
8
4
Q
0
8
2
Q
0
9
4
Q
0
9
2
Q
1
0
4
Q
1
0
2
Q
1
1
4
Q
1
1
2
Q
1
2
4
Q
1
2
2
Q
1
3
4
Q
1
3
Occupancy Rent Growth
National Rent Growth and Occupancy
Long-Term Average = 94%
Source: Axiometrics, Zelman & Associates analysis
Recession Delayed Move to Single-Family for
Many Married Couples
15.0%
15.6%
16.3%
14.7%
14.2%
15.3%
15.4%
15.6%
15.5%
17.1%
15.3%
16.3%
15.9%
16.2%
15.4%
16.9%
16.2%
17.1%
17.4%
18.6%
18.7%
19.3%
10%
12%
14%
16%
18%
20%
1Q92 1Q93 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13
Percentage of 25-34 Year Old Married Couples that Reside in Traditional Apartments
We believe that majority
of change of late has
been due to recessionary
impacts that should
unwind
Source: Census Bureau, Zelman & Associates analysis
Constrained Single-Family Rental Supply and
Strong Demand Drive Price Inflation
84.0
88.3
86.1
81.7
83.6
86.6
84.8
77.9
79.4
84.8
79.3
80.7
23.5 23.2
32.2
34.7
34.1
35.2
39.7
44.8
42.7
35.0
43.5
40.7
10
20
30
40
50
60
70
80
90
100
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Mar-13 Feb-14 Mar-14
Demand
Supply
Supply Versus Demand of Single-Family Rentals
0-100 Scale
Source: Zelman & Associates Single-Family Rental Survey
Existing Inventory Relative to Households ~30%
Lower Than Last Two Decades
2.8%
2.0%
2.1%
1.4%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1980s 1990s 2000s 1Q14
Existing Home Inventory as Percentage of Households
~30%
discount to
average of
last two
decades
Source: Census Bureau, NAR, Zelman & Associates analysis
Inventories at 30-Year Lows Support
Robust Home Price Outlook
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
1
Q
9
0
3
Q
9
0
1
Q
9
1
3
Q
9
1
1
Q
9
2
3
Q
9
2
1
Q
9
3
3
Q
9
3
1
Q
9
4
3
Q
9
4
1
Q
9
5
3
Q
9
5
1
Q
9
6
3
Q
9
6
1
Q
9
7
3
Q
9
7
1
Q
9
8
3
Q
9
8
1
Q
9
9
3
Q
9
9
1
Q
0
0
3
Q
0
0
1
Q
0
1
3
Q
0
1
1
Q
0
2
3
Q
0
2
1
Q
0
3
3
Q
0
3
1
Q
0
4
3
Q
0
4
1
Q
0
5
3
Q
0
5
1
Q
0
6
3
Q
0
6
1
Q
0
7
3
Q
0
7
1
Q
0
8
3
Q
0
8
1
Q
0
9
3
Q
0
9
1
Q
1
0
3
Q
1
0
1
Q
1
1
3
Q
1
1
1
Q
1
2
3
Q
1
2
1
Q
1
3
3
Q
1
3
1
Q
1
4
Seasonally-Adjusted Single-Family New and Existing Home
Inventory as Percentage of Households
3.5%
4.8%
-5.4%
Average real change in existing home prices
per range of for-sale inventory.
Source: Census Bureau, NAR, Zelman & Associates analysis
Ranking of Local Resale Markets
8
0

7
5

7
3

7
2

7
1

7
1

7
0

7
0

6
8

6
8

6
7

6
6

6
6

6
5

6
5

6
4

6
4

6
3

6
3

6
1

5
8

5
8

5
7

5
7

5
7

5
4

5
1

6
2

40
50
60
70
80
90
H
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Ranking of Local Resale Markets
Trailing Three Month Average
0 = Extreme Buyers' Market, 100 = Extreme Sellers' Market
Source: Zelman & Associates Homebuilding Survey
Distressed Sales Decline Due to Shrinking
Supply While Traditional Sales Remain Healthy
-
3
%
-
3
%
-
1
1
%
-
1
9
%
-
1
8
%
-
1
8
%
-
1
2
%
-
1
4
%
-
1
7
%-
1
4
%
-
1
6
%
-
5
%
3
0
%3
2
%
2
3
%
1
9
%
2
2
%
2
3
%
6
%
1
%
-
1
3
%
-
3
6
%
-
1
4
%
2
3
%
1
1
%
1
5
%
1
5
%
1
3
%
1
8
%
1
5
%
1
9
%
2
3
%
9
%
-45%
-35%
-25%
-15%
-5%
5%
15%
25%
35%
45%
2
Q
1
1
3
Q
1
1
4
Q
1
1
1
Q
1
2
2
Q
1
2
3
Q
1
2
4
Q
1
2
1
Q
1
3
2
Q
1
3
3
Q
1
3
4
Q
1
3
2
Q
1
1
3
Q
1
1
4
Q
1
1
1
Q
1
2
2
Q
1
2
3
Q
1
2
4
Q
1
2
1
Q
1
3
2
Q
1
3
3
Q
1
3
4
Q
1
3
2
Q
1
1
3
Q
1
1
4
Q
1
1
1
Q
1
2
2
Q
1
2
3
Q
1
2
4
Q
1
2
1
Q
1
3
2
Q
1
3
3
Q
1
3
4
Q
1
3
Year-Over-Year Change in Existing Home Sales
REO Sales
Short Sales
Traditional Sales
Source: CoreLogic, Zelman & Associates analysis
Distressed Sales as a Percentage of Total
Existing Home Sales are Declining
3%
3%
3%
4%
6%
6%
7%
11%
17%
19%
22%
30%
35%
29%
26%
26%
30%
25%
29%
30%
34%
28%
26%
27%
29%
24%
22%
24%
24%
19%
17%
18%18%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1
Q
0
6
2
Q
0
6
3
Q
0
6
4
Q
0
6
1
Q
0
7
2
Q
0
7
3
Q
0
7
4
Q
0
7
1
Q
0
8
2
Q
0
8
3
Q
0
8
4
Q
0
8
1
Q
0
9
2
Q
0
9
3
Q
0
9
4
Q
0
9
1
Q
1
0
2
Q
1
0
3
Q
1
0
4
Q
1
0
1
Q
1
1
2
Q
1
1
3
Q
1
1
4
Q
1
1
1
Q
1
2
2
Q
1
2
3
Q
1
2
4
Q
1
2
1
Q
1
3
2
Q
1
3
3
Q
1
3
4
Q
1
3
1
Q
1
4
Distressed Sales as % of Existing Home Sales
Source: CoreLogic, Zelman & Associates analysis
Availability of Distressed Homes Remains
Constrained Across All Channels
36.1
29.6
20.4
33.3
30.7
18.7
34.0
28.9
23.5
38.2
31.7
26.1
10
20
30
40
50
60
70
MLS Trustee / Auction Sales Portfolios
2Q13 3Q13 4Q13 1Q14
Availability of REO For Sale
0 = No Availability 100 = Abundant Availability
Source: Zelman & Associates Single-Family Rental Survey
Relative to Households, 2013 Closings 20%
Lower Than 25-Year Average
5
.
6
%
5
.
9
%
5
.
7
%
5
.
6
%
5
.
0
%
4
.
7
%
4
.
4
%
4
.
8
%
5
.
2
%5
.
4
%
5
.
2
%
5
.
6
%
5
.
7
%
6
.
2
%
6
.
3
%
6
.
1
%
6
.
0
%6
.
2
%
6
.
5
%
7
.
2
%
7
.
6
%
6
.
8
%
5
.
4
%
4
.
3
%
3
.
9
%
3
.
7
%
3
.
6
%
3
.
9
%
4
.
3
%
4
.
1
%
4
.
2
%
4
.
4
%
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%
7.0%
7.5%
8.0%
8.5%
1
9
8
5
1
9
8
6
1
9
8
7
1
9
8
8
1
9
8
9
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
E
2
0
1
5
E
2
0
1
6
E
Home Closings as Percentage of Households
Source: Census Bureau, Company data, CoreLogic, NAR, Zelman & Associates analysis
Resale Days on Market Down Sequentially and
Year Over Year in March
91
62
55
98
66
53
0
20
40
60
80
100
120
Mar-12 Mar-13 Mar-14 Mar-12 Mar-13 Mar-14
Median Number of Days on Market Until Sale
All Existing Home Sales Non-Distressed Homes
Source: NAR, Zelman & Associates analysis
After First Increase Since 2007, Double-Digit Growth
Projected in AD&C Lending in 2014-15
5
4
%
3
4
%
4
%
4
%
-
6
%
-
1
5
%
-
2
3
%
-
2
2
%
-
1
3
%
-
1
%
7
%
1
5
%
9
%
2
2
%
2
1
%
1
4
%
2
2
%
0
%
1
0
%
2
1
%
3
1
%
2
4
%
1
3
%
-
5
%
-
2
3
%
-
2
7
%
-
1
9
%
-
9
%
5
%
1
4
%
1
2
%
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
2,300
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
1
9
8
5
1
9
8
6
1
9
8
7
1
9
8
8
1
9
8
9
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
E
2
0
1
5
E
Change in Outstanding AD&C Loans
Total Housing Starts
Source FDIC, Zelman & Associates analysis
Both High and Low-Income Buyers
at Record Level of Affordability
10%
12%
14%
16%
18%
20%
22%
24%
26%
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
All incomes
Upper-Middle and Upper Income
Lower and Lower-Middle Income
Median Front-End DTI of Purchase Originations Assuming 30-Year Fixed Rate Mortgage
Source: HMDA, Zelman & Associates analysis
Investor Mortgages During Peak Were Highly
Levered and Poorly Underwritten
4%
4%
4%
5%
5%
6%
6%
6% 6%
7%
7%
8%
9%
11%
14%
17%
16%
14%
12%
9%
10%
12% 12%
11%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
Investor Share of Unit Purchase
Mortgage Originations
Note: Investor mortgages accounted
for 53% of growth from 1999-2005,
excluding non owner-occupants that
falsely applied as owners for more
favorable terms
Source: Census Bureau, Company data, CoreLogic, HMDA. NAR, Zelman & Associates analysis
Cash Purchases Higher Across Market
But Mix is Critical Element
14%
13% 13%
14%
15% 14% 14%
15%
18%
20%
23%
25%
24%
22%
65%
43%
49%
43%
46%
47%
54%
65%
74%
79%
76% 76%
73%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
% of Owner-Occupant Purchases Using Cash
% of Investor Purchases Using Cash
Source: Census Bureau, Company data, CoreLogic, HMDA, NAR, Zelman & Associates analysis
Zelman Survey Indicates Underwriting is
Loosening While Credit Quality is Improving
6
8
.
7
7
0
.
7
7
2
.
6
7
4
.
6
7
4
.
8
7
4
.
9
7
5
.
47
6
.
5
7
6
.
7
7
6
.
5
7
6
.
6
7
6
.
1
7
4
.
8
7
3
.
5
7
1
.
7
7
0
.
9
7
0
.
0
6
1
.
3
6
0
.
3
5
9
.
2
5
9
.
6
5
9
.
2
5
8
.
1
5
7
.
9
5
8
.
6
6
0
.
5
6
4
.
4
6
6
.
46
7
.
46
8
.
3
6
8
.
7
6
8
.
0
6
8
.
8
6
9
.
0
50
55
60
65
70
75
80
1
Q
1
0
2
Q
1
0
3
Q
1
0
4
Q
1
0
1
Q
1
1
2
Q
1
1
3
Q
1
1
4
Q
1
1
1
Q
1
2
2
Q
1
2
3
Q
1
2
4
Q
1
2
1
Q
1
3
2
Q
1
3
3
Q
1
3
4
Q
1
3
1
Q
1
4
1
Q
1
0
2
Q
1
0
3
Q
1
0
4
Q
1
0
1
Q
1
1
2
Q
1
1
3
Q
1
1
4
Q
1
1
1
Q
1
2
2
Q
1
2
3
Q
1
2
4
Q
1
2
1
Q
1
3
2
Q
1
3
3
Q
1
3
4
Q
1
3
1
Q
1
4
Internal Underwriting Criteria Index
0 = Extremely Easy 100 = Extremely Tight
Applicant Credit Quality Index
0 = Extremely Weak 100 = Extremely Strong
Source: Zelman & Associates Mortgage Survey
Owner-Occupant Purchases Mortgages Post
Double-Digit Growth in 2013
-3%
6%
1%
5%
3%
2%
-11%
-22%
-26%
-8%
-6%
-9%
15%
15%
0%
12%
8%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
E
2
0
1
5
E
2
0
1
6
E
Year-Over-Year Change in Owner-Occupied
Unit Purchase Mortgage Originations
Source: HMDA, Zelman & Associates analysis
Big Banks Not Representative of Market; Smaller
Institutions Stepping Up
10%
1%
0%
-9%
-16%
-7%
29%
27%
12%
3%
-12%
15%
-20%
-10%
0%
10%
20%
30%
40%
C
r
e
d
it
U
n
io
n
s
R
e
g
io
n
a
l B
a
n
k
s
M
o
r
t
g
a
g
e

C
o
m
p
a
n
ie
s
A
ll
B
a
n
k
s
N
a
t
io
n
a
l
B
a
n
k
s
T
o
ta
l
C
r
e
d
it
U
n
io
n
s
M
o
r
t
g
a
g
e

C
o
m
p
a
n
ie
s
R
e
g
io
n
a
l B
a
n
k
s
A
ll
B
a
n
k
s
N
a
t
io
n
a
l
B
a
n
k
s
T
o
ta
l
Year-Over-Year Growth in Purchase Unit Originations by Institution Type
2011
2012
Source: HMDA, Zelman & Associates analysis
Higher-Quality Borrowers Led Recovery in 2012, But
Entry-Level Credits Joined in 2013
35%
27%
8%
-10%
15%
21%
21%
10%
3%
15%
-20%
-10%
0%
10%
20%
30%
40%
A+ A B C Total
2012 2013
Owner-Occupied Purchase Mortgage Year-Over-Year Growth by Credit Bucket
Source: HMDA, Ellie Mae, Zelman & Associates analysis
Purchase Activity in Younger Age Cohorts Likely
Stronger than Assumed
8%
19%
13%
20%
15%
9%
19%
14%
16%
15%
0%
5%
10%
15%
20%
25%
Under 30 30-39 40-49 50-plus All
2012 2013
Owner-Occupied Purchase Mortgage Year-Over-Year Growth by Age
Source: HMDA, Ellie Mae, Zelman & Associates analysis
Lack of Savings for a Downpayment
Most Cited as Hurdle to Credit!
55%
44%
19%
19%
42%
31%
25%
19%
0%
10%
20%
30%
40%
50%
60%
I do not have
enough savings
for a
downpayment
My monthly
income would
not support the
cost of
ownership
I have bad
credit
I have too much
debt
I do not have
enough savings
for a
downpayment
My monthly
income would
not support the
cost of
ownership
I have bad
credit
I have too much
debt
Reasons Young Adults Do Not Believe They Would Qualify for a Mortgage
Respondents Requested to Select All that Apply - Answers Do Not Sum to 100%
25-29 Year Olds 30-34 Year Olds
Source: Zelman & Associates Consumer Survey
!But Consumers Dont Understand
Actual Downpayment Requirements
9%
11% 11%
16% 15%
18%
12%
14%
13%
30%
28%
32%
27%
37%
24% 38%
24%
29%
30% 29%
19%
16%
10%
16%
13%
12%
19%
17%
22%
24% 31%
26%
21%
23%
31%
25%
14%
10%
14%
10%
12%
21%
13%
19%
15%
0%
20%
40%
60%
80%
100%
120%
18-21 22-24 25-29 30-34 35-39 40-44 45-59 50-Plus Total
Over 20%
16-20%
11-15%
6-10%
0-5%
Perceived Downpayment Requirement for Purchase Mortgage
Note: FHA Downpayment Requirement = 3.5%
Source: FHA, Zelman & Associates Consumer Survey
Surprisingly, Credit Scores Improved During
Downturn for Bottom Quartile of Consumers
606
607
609 609
608
607
608
612
614
616
621
703
706
708
710
712
713 713
712 712
713
712
550
570
590
610
630
650
670
690
710
730
4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13
Bottom Quartile Median
Consumer Credit Scores
Source: Federal Reserve, Zelman & Associates analysis
Nearly a Quarter of Under-35 Age Cohort is Debt
Free, Better than History
20%
19%
17%
19%
17%
20%
16%
22%
24%
14%
11%
0%
5%
10%
15%
20%
25%
1989 1992 1995 1998 2001 2004 2007 2010 Under 35 25-29 30-34
Percentage of Under-35 Age Cohort That is Debt Free
Federal Reserve Survey of Consumer Finances Zelman 2014 Survey
Source: Federal Reserve, Zelman & Associates Consumer Survey
Contrary to Fears, Student Loan Debt
Uncorrelated to Household Formation
17%
23%
20%
14%
13%
13%
16%
18%
17%
0%
5%
10%
15%
20%
25%
With Without Total With Without Total With Without Total
Share of Young Adults Living at Home,
Depending on Student Loan Status
25-29 Year Olds
25-34 Year Olds 30-34 Year Olds
Source: Zelman & Associates Consumer Survey
Important to Differentiate Between Ownership and
Living in a Single-Family Home
27%
26%
47%
62%
34%
46%
62%
77%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Living at Home All Renters Married
Renters
Married Renters
With Children
Living at Home All Renters Married
Renters
Married Renters
With Children
Hypothetical Housing Decisions for 25-34
Renters or Those Living at Home
Purchase if Moved in Next Year
Single-Family if Moved in Next Year
Single-Family
Share Higher than
Purchase Share for
Every Segment
Source: Zelman & Associates Consumer Survey
Historical Drivers of Younger Ownership Rates
Point to Future Gains
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
50%
1
9
8
2
1
9
8
3
1
9
8
4
1
9
8
5
1
9
8
6
1
9
8
7
1
9
8
8
1
9
8
9
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
Homeownership Rate of 25-34 Year Olds
From 2004 to 2012,
initial losses were
driven by falling real
incomes and lower
affordability, while
additional losses
resulted from lower
employment and
incomes, falling
home prices, and
tighter credit.
From 1993 to 2004,
rising real incomes,
lower interest rates
relative to the 1980s and
more lenient
underwriting standards
helped to increase
ownership rates.
Homeownership rates fell
despite the decline in
interest rates as real
income growth stagnated
and affordability remained
elusive.
Source: Census Bureau, Zelman & Associates analysis