Post on 17-Oct-2020
APRIL 2020
The Top Five Questions We Must Be Able to Answer
Be smart…be patient…but most of all – stay safe.
1.) When is the economy going to recover?
2.) Are we going into a recession?
3.) Is this going to be like 2008?
4.) What about all those job losses?
5.) What should I do right now?
Be smart…be patient…but most of all – stay safe.
When is the economy going to recover?
Be smart…be patient…but most of all – stay safe.
The ‘pause button’ has been hit on the American economy.
Goldman Sachs JP Morgan Morgan Stanley
Quarter 2Quarter 1
As of 4/1/2020Subject to Change
Quarter 3
Major Financial Institutions Calling for a Rapid ‘V’ Type Recovery
2020 GDP
0% GDP Growth
“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”
John Burns Consulting
Harvard Business Review
“It’s worth looking back at history to place the potential impact path of Covid-19 empirically. In fact, V-shapes monopolize the empirical landscape of prior shocks, including epidemics such as SARS, the 1968 H3N2 (“Hong Kong”) flu, 1958 H2N2 (“Asian”) flu, and 1918 Spanish flu.”
Are we going into a recession?
Be smart…be patient…but most of all – stay safe.
Recession DOES NOT Equal Housing Crisis
“With the exception of two recessions, the Great Recession from 2007-2009, & the Gulf War recession from 1990-1991, no other recessions have impacted the U.S. housing market, according to Freddie Mac Home Price Index data collected from 1975 to 2018.”
Doug BrienCEO of Mynd Property Management
6.1%3.5%
-1.9%
6.6%
-19.7%
1980 1981 2001
HOME PRICE CHANGE During Last 5 Recessions
1991 2008
CoreLogic
Is this going to be like 2008?
Be smart…be patient…but most of all – stay safe.
Mark FlemingChief Economist at First American
“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”
-51%
-4.6%-10%
-4.1%S&P 500
Annual Home Price DEPRECIATION
Housing & Mortgage Crash
2007 2008 2009
Black Knight & S&P 500
Correction
10/2007 to 3/2009
“What 9/11 has in common with what is happening today is that this shock has also generated fear, angst and anxiety among the general public. People avoided crowds then as they believed another terrorist attack was coming and are acting the same today to avoid getting sick. The same parts of the economy are under pressure ─ airlines, leisure, hospitality, restaurants, entertainment ─ consumer discretionary services in general.”
David Rosenberg Chief Economist ofGluskin Sheff + Associates Inc.
-45%
8.6% 6.6% 8.5%
2000 2001 2002
S&P 500 Correction
9/2000 to 10/2002
Annual Home Price APPRECIATION
Dot.com & 9/11 Crash
Black Knight & S&P 500
8.6%
6.5%
8.5% 8.7%
12.5%
11.4%
2000 2001 2002 2003 2004 2005
4.4%5.2% 5.5%
6.4%
4.8% 4.7%
2014 2015 2016 2017 2018 2019
The 6 years leading up to the housing crash
The last 6 years
Annual Home Price Appreciation
Black Knight
0
100
200
300
400
500
600
700
800
900
June2004
June2005
June2006
June2007
June2008
June2009
June2010
June2011
June2012
June2013
June2014
June2015
June2016
June2017
June2018
June2019
Today
MORTGAGE CREDIT AVAILABILITY INDEX
The taller the graph, the easier it is to get a loan
Housing Bubble 2006: 868.7
Today:181.3
MBA
Months Inventory of Homes for Sale
8.2
3.1
2007 TodayNAR
Total Home Equity Cashed Out by Refinance in Billions
Year Dollars
2005 $263B
2006 $321B
2007 $240B
Total $824B
Year Dollars
2017 $71B
2018 $87B
2019 $74B*
Total $232B
Then… Now…
*Using the first 3 quarter estimates from Freddie Mac and estimating $20B for the 4th quarter
Freddie Mac
37%of all homes are owned
‘free and clear’
26.7% of the mortgaged homes have at least 50% equity
ATTOM Data
of all homes in America have at least 50% equity
Americans are sitting on tremendous equity.
Bloomberg
53.8%
25.4%
14.8%
2006 TODAY
Percent of Median Income Needed to Purchase a Median-Priced Home
Zillow & NAR
What about all those job losses?
Be smart…be patient…but most of all – stay safe.
59.5%
4.1%
6.1%
2.7%
7.1%
6.6%
4.1%
9.8%
Food Services and Drinking Places
(Servers and Bartenders)
Other
Accommodation Industry
Health Care Office Workers
Child Day Care Workers
Temporary Help Services
Retail Trade (Stores)
Construction Workers
Breakdown of U.S. Bureau of Labor StatisticsApril 3, 2020 Unemployment Report
Goldman Sachs JP Morgan Morgan Stanley
Quarter 2Quarter 1
As of 4/1/2020Subject to Change
Quarter 3
Major Financial Institutions Calling for a Rapid ‘V’ Type Recovery
2020 GDP
0% GDP Growth
15%
6-8%
5%4%
2020 2021 2022 2023
Goldman Sachs’Unemployment Rate
Projections
Steve Rattner
U.S. Bureau of Labor Statistics, NAR
7.5%
6%
9.6%
0
2
4
6
8
10
12
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
1989 1995 2000 2005 2010 2015 2019
Unemployment Rates and Home Sales Do Not Have a Direct Relationship
Exis
tin
g H
om
e Sa
les
(Bar
s)U
nem
plo
ymen
t Rate (Lin
e)
1
2
3
4
Year Rate
1930 8.7%
1931 15.9%
1932 23.6%
1933 24.9%
1934 21.7%
1935 20.1%
Year Rate*
2020 15%
2021 6-8%
2022 5%
2023 4%
2024
2025
Year Rate
2008 7.3%
2009 9.9%
2010 9.3%
2011 8.5%
2012 7.9%
2013 6.7%
Great Depression Great Recession Current Crisis
Current Unemployment Rates compared to past financial crises
*Goldman Sachs Projections,which are subject to change
N/A
What should I do right now?
Be smart…be patient…but most of all – stay safe.
Homeownership is an important source of wealth creation, enabling current
homeowners and succeeding generations to move up the economic ladder.
1. Prospect for leads
2. Nurture those leads
3. Close those leads
“My results do suggest that, in the absence of the panic, the declines in employment, consumption and output in the early stages of the Great Recession would have been significantly less severe.”
Ben Bernanke
ResourcesSlide Slide Title Link
6 Rapid ‘V-Type’ Recovery
https://www.calculatedriskblog.com/2020/03/the-economic-outlook.htmlhttps://markets.businessinsider.com/news/stocks/us-recession-coronavirus-gdp-plunge-2q-forecast-economy-morgan-stanley-2020-3-1029023137https://www.foxbusiness.com/markets/coronavirus-gdp-impact-bigger-than-financial-crisis-j-p-morgan
7 John Burns Consulting Quote https://www.realestateconsulting.com/march-19-2020-housing-survival-to-date/
8 Harvard Business Review Quote https://hbr.org/2020/03/what-coronavirus-could-mean-for-the-global-economy
11 Doug Brien Quotehttps://www.nreionline.com/investment/investors-turn-safe-haven-us-real-estate-wake-coronavirus
12 Home Price Change - 5 Recessions https://www.corelogic.com/blog/2019/03/housing-recessions-and-recoveries.aspx
14 Mark Fleming Quotehttps://blog.firstam.com/economics/why-the-housing-market-may-weather-coronavirus-impact-better-than-the-great-recession
15, 17-18 Crashes & Pricing https://www.blackknightinc.com/black-knights-december-2019-mortgage-monitor-2/
16 David Rosenberghttps://business.financialpost.com/investing/david-rosenberg-stop-looking-to-2008-this-crisis-is-more-like-9-11
19 Mortgage Credit Availability Indexhttps://www.mba.org/news-research-and-resources/newsroomhttps://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index
20 Months Inventory of Homes for Sale nar.realtor
21 Total Home Equity Cashed Out http://www.freddiemac.com/research/datasets/refinance-stats/index.page
22 Americans Are Sitting on
https://www.bloomberg.com/news/articles/2019-07-17/close-to-40-of-u-s-homes-are-free-and-clear-of-a-mortgagehttps://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-2019-year-end-home-equity-and-underwater-report/
ResourcesSlide Slide Title Link
23 Median Income for a Median Home
http://zillow.mediaroom.com/2018-09-06-Mortgage-Burden-Exceeds-Historic-Levels-in-10-of-the-Largest-U-S-Marketshttps://www.nar.realtor/sites/default/files/documents/hai-01-2020-housing-affordability-index-2020-03-13.pdfhttps://www.zillow.com/research/affordability/
25 U.S. Posts Record Layoffshttps://www.marketwatch.com/story/jobless-claims-leap-record-66-million-at-end-of-march-as-coronavirus-triggers-mass-layoffs-2020-04-02
26 U.S. Labor Statistics Report https://www.bls.gov/news.release/empsit.nr0.htm
27 V-Type Recovery
https://www.calculatedriskblog.com/2020/03/the-economic-outlook.htmlhttps://markets.businessinsider.com/news/stocks/us-recession-coronavirus-gdp-plunge-2q-forecast-economy-morgan-stanley-2020-3-1029023137https://www.foxbusiness.com/markets/coronavirus-gdp-impact-bigger-than-financial-crisis-j-p-morgan
28 Unemployment Rate Projections Steve Rattner’s Twitter Account @SteveRattner
29 Unemployment Rates & Home Sales
https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-saleshttps://data.bls.gov/timeseries/LNU04000000?years_option=all_years&periods_option=specific_periods&periods=Annual+Datahttps://data.bls.gov/timeseries/LNS14000000
30 Current Unemployment Rates https://www.thebalance.com/unemployment-rate-by-year-3305506
32 Homeownership Quotehttps://www.nar.realtor/research-and-statistics/research-reports/home-price-gains-by-years-of-tenure
34 Ben Bernanke Quote https://www.brookings.edu/bpea-articles/the-real-effects-of-the-financial-crisis/
35 Housing Wire Quote Housingwire.com | Premium (subscription required)
36 Mark Davison Quote Marc Davison’s Twitter Account @marcLdavison
“How can you differentiate yourself during a pandemic? By creating educational content that keeps your clients and prospects informed during these dark times.”
Housing Wire
Marc Davison
CHIEF CREATIVE OFFICER
1000watt
ResourcesSlide Slide Title Link
43, 63, 75 Confidence Indexhttps://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index
44-46,54, 56,57 Existing Home Sales https://www.nar.realtor/topics/existing-home-sales
48-50 New Home Saleshttp://www.census.gov/construction/nrs/pdf/newressales.pdfhttp://www.census.gov/newhomesaleshttp://www.census.gov/construction/nrs/pdf/newressales.pdf
51 Total Home Saleshttp://www.census.gov/construction/nrs/pdf/newressales.pdfhttps://www.nar.realtor/topics/existing-home-sales
52,53 Pending Home Saleshttps://www.nar.realtor/research-and-statistics/housing-statistics/pending-home-sales
58-60 Case Shillerhttp://us.spindices.com/indices/real-estate/sp-case-shiller-20-city-composite-home-price-index
61CoreLogic Forecasted YOY % Change in Price
https://www.corelogic.com/downloadable-docs/marketpulse/17-mktplse-0320-00-the-marketpulse-vol-9-issue-3-march-2020-screen-032420.pdf
64-70 Inventoryhttps://www.nar.realtor/topics/existing-home-saleshttp://www.census.gov/construction/nrs/pdf/newressales.pdf
Slide Slide Title Link
72 -74 Foot Traffic http://nar.realtor/infographics/foot-traffic
77, 78, 80, 81
Mortgage Rateshttp://www.freddiemac.com/pmms/pmms_archives.htmlhttp://www.freddiemac.com/research/forecast/20191220_optimism_heading_into_2020.page?
79 Mortgage Rate Projections
http://www.freddiemac.com/research/forecast/http://www.fanniemae.com/portal/research-insights/forecast.htmlhttps://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentaryhttps://www.nar.realtor/research-and-statistics
83, 84 Mortgage Credit Availabilityhttps://www.mba.org/news-research-and-resources/newsroomhttps://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index
85-89Days To Close, FICO Scores, DTI
http://www.elliemae.com/resources/origination-insight-reportshttps://static.elliemae.com/pdf/origination-insight-reports/EM_OIR_FEBRUARY2020.pdf
Resources
Average Days on the Market
NAR
Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020
Since January 2014
EXISTINGHome Sales
NAR
7.2%
2.9%
4.0%
8.2%
11.5%
U.S. Northeast Midwest South West
Y-O-Y by regionEXISTING Home Sales
NAR
enero febrero marzo abril mayo junio julio agosto septiembre octubre noviembre diciembre
2018 2019 2020
Census & NAR
Ventas de casas existentesen miles
enero febrero marzo abril mayo junio julio agosto septiembre octubre noviembre diciembre
2018 2019 2020Census & NAR
Ventas de casas nuevas en miles
jun-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan 2020
Census
New Home Salesannualized in thousands
2%6%
18% 18%
11%9%
4%
Under $150K $150-$199K $200-299K $300-$399K $400-$499K $500-$749K Over $750K
New Home Sales% of sales by price range
Census
3.3
3.7
3.93.8
3.7
3.3
3.1
2.9 2.9
2.7
3.0
3.2 3.2
3.6 3.6
3.43.5
3.6
3.4
3.2
3.5
3.1 3.13.0
3.3 3.3
New Homes Selling Fast(median months from completion to sold)
Census
Census & NAR
334
368
468
520
598 594 595 589
506 517
456481
378403
enero febrero marzo abril mayo junio julio agosto septiembre octubre noviembre diciembre
2019 2020
Total de las ventas de las casas en miles
100 = Historically Healthy Level
PENDING Home Salessince 2014
NAR
9.4%
5.9%
14.9%
7.1%
10.8%
U.S Northeast Midwest South West
Pending Home SalesYear-Over-Year By Region
NAR
Northeast
South
Jan2012
Jan2013
Jan2014
Jan2015
Jan2016
Jan2017
Jan2018
Jan2019
Jan2020
Percentage ofDistressed Property Sales
35%
January 2012 - Today 2%
4%
NAR
Home Prices
8.0%
8.2%
7.9%
8.2%
8.1%
U.S. Northeast Midwest South West
Y-O-Y by region
EXISTING Home Prices
NAR
-9.8%
0.0%
17.2%19.5%
21.9%
16.7%
$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+
% -9.8% 0.0% 17.2% 19.5% 21.9% 16.7%
% Change in Salesfrom last year by Price Range
NAR
Year-Over-Year
PRICECHANGES
Case Shiller
S&P Case Shiller
Jun 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020
Jan
201
4
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
t
Oct
No
v
Dec
Jan
201
5
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
t
Oct
No
v
Dec
Jan
201
6
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
t
Oct
No
v
Dec
Jan
201
7
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
t
Oct
No
v
Dec
Jan
201
8
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
t
Oct
No
v
Dec
Jan
201
9
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
t
Oct
No
v
Dec
Jan
202
0
S&P Case Shiller
Year-Over-Year PRICE CHANGES20 City Composite
Case Shiller
3.0%
2.6% 2.5% 2.4%2.2%
2.0% 2.0% 2.1% 2.2%
2.6%2.8%
3.1%
Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2020
Year-Over-Year PRICE CHANGES20 City Composite
Case Shiller
S&P Case Shiller
CoreLogic
Forecasted Year-Over-Year % Change in Price
HOUSINGINVENTORY
Seller Traffic Index
NAR
January2011
January2012
January2013
January2014
January2015
January2016
January2017
January2018
January2019
January2020
Months Inventory ofHOMES FOR SALE
2011 - Today
NAR
Jan-18 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-19 Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan-20 Feb
Months Inventory of HOMES FOR SALE
last 2 years
NAR
3.8
4.1
4.3 4.34.2
4.0 4.03.9
3.7
3.03.1 3.1
Mar Apr May June July Ago Sep Oct Nov Dec Jan Feb
Months Inventory of HOMES FOR SALELast 12 Months
NAR
January 2014 January 2015 January 2016 January 2017 January 2018 January 2019 January 2020
% 7. 5. 3. 6. 6. 5. 5. 4. 6. 5. 5. -0 -0 -0 2. -0 1. 0. -4 -1 -3 -4 -1 -3 -2 -1 -1 -3 -9 -5 -5 -1 -6 -1 -9 -6 -7 -6 -6 -9 -8 -7 -9 -6 -6 -1 -9 -1 -9 -8 -7 -6 -6 0. 0. 2. 1. 2. 4. 6. 4. 2. 2. 1. 2. 0. -1 -2 -2 -4 -5 -9 -1 -9
Year-over-Year Inventory Levels
NAR
HOUSING SUPPLY Year-Over-Year
2.4%1.7%
2.7%
0.0%
-1.6%
-2.6% -2.7%
-4.3%
-5.2%
-9.0%
-11.3%
-9.8%
Mar Apr May June Jul Aug Sep Oct Nov Dec Jan 2020 Feb
Last 12 Months
JunMar Apr May
NAR
5.8
6.1
6.7
5.4
6.0
5.55.3 5.4 5.5 5.5
5.1 5.0
Mar Apr May Jun Jul Aug Sep Oct Nov Dec 20-Jan
New Home Inventory Last 12 Months
Census
months supply
6.5
6.1
5.8
6.1
6.7
5.4
6.0
5.55.3
5.45.5 5.5
5.15.0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
2019 2020
New Home Inventorymonths supply
Census
BUYERDEMAND
Jul 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan-20
Foot Trafficindicator of future sales
NAR
Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb
Foot Trafficindicator of future sales
Last 12 Months
NAR
January February March April May June July August September October November December
2019
2020
Foot Trafficindicator of future sales
NAR
Buyer Traffic Index
NAR
INTERESTRATES
2/1 3/1 4/5 5/3 6/7 7/5 8/2 9/6 10/411/1 12/6 1/3 1/31 3/7 4/4 5/2 6/6 7/3 8/1 9/5 10/3 11/712/5 1/2 2/6 3/5 4/2Freddie Mac
Mortgage RatesFreddie Mac 30-Year Fixed Rate
3.95%
3.33%
1/7
/16
2/4
3/3
4/7
5/5
6/2
7/7
8/4
9/1
10
/6
11
/3
12
/1
1/5
/20
17
2/2
3/2
3/3
0
4/2
7
5/2
5
6/2
2
7/2
0
8/1
7
9/1
4
10
/12
11
/9
12
/7
1/4
/20
18
2/1
3/1
4/5
5/4
6/7
7/5
8/2
9/6
10
/4
11
/1
12
/6
1/3
/20
19
1/3
1
3/7
4/4
5/2
6/6
7/3
8/1
9/5
10
/3
11
/7
12
/5
1/2
/20
20
2/6
3/5
4/2
30-Year FixedRate Mortgages
from Freddie Mac
3.97
Freddie Mac
3.33%
Mortgage Rate Projections
QuarterFreddie
MacFannie Mae
MBA NARAverage
of All Four
2020 2Q 3.8 3.3 3.3 3.7 3.52%
2020 3Q 3.8 3.2 3.3 3.8 3.52%
2020 4Q 3.8 3.2 3.4 3.9 3.57%
2021 1Q 3.8 3.1 3.6 4.0 3.47%
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
2019Q1
2019Q2
2019Q3
2019Q4
2020Q1
2020Q2
2020Q3
2020Q4
Rate 3.7 3.6 3.5 3.8 4.2 4.0 3.9 3.9 4.3 4.5 4.6 4.8 4.4 4 3.7 3.7 3.8 3.8 3.8 3.8
Freddie Mac
Mortgage RatesFreddie Mac 30-Year Fixed Rate
- Actual- Projected
2016
2017 20182019
2020
3.8 3.8 3.8 3.8
2020 Q1 2020 Q2 2020 Q3 2020 Q4Freddie Mac
1/4
2/1
3/1
4/5
5/3
6/7
7/5
8/2
9/6
10
/4
11
/1
12
/6
1/3
1/3
1
3/7
4/4
5/2
6/6
7/3
8/1
9/5
10
/3
11
/7
12
/5
1/2
2/6
3/5
4/2
January 2018 – Today Actual Interest Rates
Mortgage RatesFreddie Mac
30-Year Fixed Rate
2020
Q2 Q3 Q4
Where Are They Going?
Q1
Mortgage Credit Availability
YES NO MAYBE
Apr2013
Jan2014
Jan2015
Jan2016
Jan2017
Jan2018
Jan2019
Jan2020MBA
Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association
Mortgage Credit Availability
0
100
200
300
400
500
600
700
800
900
June2004
June2005
June2006
June2007
June2008
June2009
June2010
June2011
June2012
June2013
June2014
June2015
June2016
June2017
June2018
June2019
February2020
Historic Data for the MORTGAGE CREDIT AVAILABILITY INDEX
(a report from the Mortgage Bankers Association)
MBA
45
4344
45
43
4546
47 47
51
48
43
Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb
Average Days To Close A Loan
All Closed Loans as per Ellie Mae
Last 12 Months
726728 728
731 731
734
737 737 736 735
738 738
Mar Apr May Jun Jul Aug Sept Oct Nov Dec ene Feb
All Closed Loans as per Ellie Mae
FICO® Score RequirementsLast 12 months
0.04% 0.58%
8.11%
17.24%
23.50%
36.97%
13.56%
500-549 550-599 600-649 650-699 700-749 750-799 800+
FICO® Score Distribution
49.47% All Closed Loans as per Ellie Mae
Average FICO® Scorefor Closed Purchase Loans
by Loan Type
All Closed Loans as per Ellie Mae
738 755
678
711
All Loans Conventional FHA VA
37 36
44 42
All Loans* Conventional FHA VA
Average Back End DTIfor Closed Purchase Loans by Loan Type
All Closed Loans as per Ellie Mae