Rocky Mountain District Symposium Homeownership Trends and Data The Brown Palace Hotel - Denver June...
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Transcript of Rocky Mountain District Symposium Homeownership Trends and Data The Brown Palace Hotel - Denver June...
Rocky Mountain District Symposium Homeownership Trends and Data
The Brown Palace Hotel - DenverJune 28 – 30, 2011
2
Critical Homeownership Program Issues
• Economic– Unemployment still high;– Home foreclosures are still affecting market;– Home values still falling or staying flat;
• Regulatory – “Qualified Mortgage”, Risk Retention;– Unclear future of GSE reform;– FHFA very conservative;– IRS 501Q
33
Most Jobs Lost Since Post-WW2 Era
4
Unemployment Rates – May 2011
State Percent
Nevada 12.1
Idaho 9.4
Arizona 9.1
Colorado 8.7
Texas 8.0
Montana 7.6
Utah 7.3
New Mexico 6.9
Wyoming 6.0
National Average 9.1
Source: US Bureau of Labor Statistics
55
Ten States Account for Almost 70% of All U.S. Loans in Foreclosure
State Percent
Florida 14.18
Nevada 10.06
New Jersey 7.28
Illinois 6.53
Arizona 5.67
Maine 5.27
New York 5.21
Ohio 4.93
Indiana 4.75
Hawaii 4.74
United States 4.63
Percent of All Loans in Foreclosure
Top Six States Account for Almost
50% of Loans in Foreclosure as of
4Q 2010
Source: National Delinquency Survey, Mortgage Bankers Association, Fourth Quarter 2010.
6
Rocky Mountain DistrictNational Rank
State Total Mortgage Loans
Percent Past Due (30+)
Percent in Foreclosure Inventory
Percent Past Due 90+
2 Nevada 516,906 12.0 10.06 4.69
5 Arizona 1,104,897 9.53 5.67 7.14
20 Idaho 256,491 6.71 3.57 8.95
22 New Mexico 276,900 7.08 3.46 6.81
27 Utah 433,456 7.76 3.26 6.66
38 Colorado 978,581 5.92 2.53 4.81
45 Montana 134,749 4.73 2.01 5.91
46 Texas 3,044,665 9.22 1.92 5.96
49 Wyoming 69,547 4.95 1.57 6.55
Total United States
43,579,051 8.93 4.63 8.57
Source: National Delinquency Survey, MBA, Fourth Quarter 2010
7
U.S. Home Prices Have Been on a Wild RideS&P/Case-Shiller U.S. National Home Price Index: 1988-2010
Sources: National Association of Realtors, S&P Case-Shiller Index. Data through November 2010
< 0.75%
0.75% to 2%
2% to 5%
> 5%
U.S.= 5%
House Price Correction from Current (2010Q1) to Trough, %
Sources: Fiserv, FHFA, Moody’s Analytics
Home Prices May Still Drop in Some Areas
8
Almost 11 Million Homeowners with Negative Equity as of 3Q. 2010
9
Mortgage Foreclosure Rates
10
Sources: Mortgage Bankers Association, S&P Case-Shiller Index. Data through November 2010
1111
Weak Economy Is Exacerbating Foreclosures for All Loan Types
Source: National Delinquency Survey, Mortgage Bankers Association, Fourth Quarter 2010.
Subprime ARMs
Prime ARMs
FHA
1212
Projected Mortgage Resets through 2012
13
Critical Homeownership Program Issues
– Lending• Credit markets remain very tight;• Many markets are experiencing appraisal issues;• MBS market showing some signs of sub-prime getting
back into the market;
– Core homeownership funding under threat• HUD Housing Counseling Program has been cut;• HOME, CDBG and Rural Development also were cut;• CDFI could take a cut (maybe as much as $183 million);• State and Local governments face budget shortfalls;
Bank Failures from 2008 - 2010
14
According to the its website, the FDIC is often appointed as receiver of failed banks. The FDIC assisted with 340 bank failures between 2008 and Feb. 2011. This compares with three (3) bank failures during the prior three-year period between 2005-2007.
Sources: Thechartstore.com; Federal Deposit Insurance Corporation, February 2011.
The Rising Deficit Will Constrain Federal Budget for Foreseeable Future
-$1,600
-$1,200
-$800
-$400
$0
$400
$800
$1,200
$1,600
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Federal Surplus {+} or Deficit {-} (Bil.$) 12-month MovingTotal
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Federal Government Outlays (12-Month Cumulative Total, Year over Year % Chg)Federal Government Receipts (12-Month Cumulative Total, Year over Year % Chg)
Record Federal Outlays Spending Increase While Receipts Collapse
15
44 States Expecting Serious Budget Shortfalls in 2011-2013
16
Source: Center on Budget and Policy Priorities, February 2011.
Homeownership Rate Declining Since 2005
17Sources: U.S. Census Bureau; Federal Reserve Bank of St. Louis.
2008 2009 2010
20%
23%
30%
39% 38%
42%
28% 27%
37%
District HOCs District Non-HOCs HOCs in Other Districts
FY2008 FY2009 FY2010 HBE HO Clients HBE HO Clients HBE HO Clients
District HOCs 3708 744 4734 1084 3797 1122District Non-HOCs 4149 1606 4290 1623 4155 1762HOCs in Other Districts 24108 6766 26772 7276 20619 7598
Conversion Rates of Consumers Educated to Homeowners Created - Comparison of RMD HomeOwnership Centers
1919
Homebuyers Created by NeighborWorks Network
19961997
19981999
20002001
20022003
20042005
20062007
20082009
20100
2000
4000
6000
8000
10000
12000
14000
16000
18000
1996 - 2000 = 36,117
2001 - 2005 = 59,266
2006 - 2010 = 70,277
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1985
1990
1995
2000
2005
2010
2015
1996 - 2000 = 6,471
2001 - 2005 = 8,963
2006 - 2010 = 10,546
Homebuyers Created in Rocky Mountain District
Native Hawaiian/O
ther P
acific I
slander
American In
dian/Alask
an Native
Asian
Latino
Africa
n American
White
0.6% 1.3%5.5%
22.4% 19.3%
66.2%
0.2% 0.9% 4.8%
16.3% 12.6%
72.4%
NeighborWorks Network 2010 US Census 2010
Who Are Our Homebuyers
Chart Title
1st qtr 2nd qtr 3rd qtr 4th qtr0.0%
5.0%
10.0%
15.0%
20.0%
25.0%FY 10 1st Mtg Delinquency Trends by District
Great LakesMid AtlanticNew EnglandNorth CentralNortheastPacificRocky MountainSouthernNetwork Average
delin
quen
cy ra
te
1st qtr 2nd qtr 3rd qtr 4th qtr0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%FY10 2nd Mtg Delinquency Trends by District
Great LakesMid AtlanticNew EnglandNorth CentralNortheastPacificRocky MountainSouthernNetwork Average
delin
quen
cy ra
te
25
Critical Homeownership Program Issues
• Role of CFPB – Consumer Financial Protection Bureau (www.ConsumerFinance.gov)– Nonbank supervision Program;– Consumer credit, consumer reporting services,
debt collection, debt relief services, pre-paid cards, check-cashing and money transmitting services;
– Agency goes ‘live’ July 21st;
26
Universe of Housing Counseling Providers
• As of 2008, there were 1,800 HUD approved counseling agencies with broad range of missions and services – approximately 27 Intermediaries;
• There was at least one counseling agency in nearly a third of all counties–which account for four-fifths of the national population;
• HUD grants are the first or second largest funding source for nearly half of all counseling agencies—particularly for smaller agencies;
• Homebuyer Education and Counseling has historically been supported by government and philanthropic resources;
27
Counseling Disproportionately Helps Disadvantaged Families and
Individuals
African Amer-ican
Hispanic0%5%
10%15%20%25%30%35%40%45%
Counselees Total US
<50% 50-80% 80-100% >100%0%5%
10%15%20%25%30%35%40%45%50%
Household Income as Percent of Area Median Income
Source: The State of the Housing Counseling Industry, HUD, 2008; Worst Case Housing Needs: 2009 A Report to Congress, HUD 2011; US Census Bureau, Decennial Census 2010.
28
Increasing Affordability Problems Suggest Greater Need for Owner and Renter Counseling
Bottom Lower Middle Upper Middle Top
-500
0
500
1,000
1,500
2,000
2,500
OwnersRenters
Household Income Quartile
Increase in Households Paying More than 50% of Income for Housing 2001-2009 (000s)
Foreclosure Counseling has Proven Impact
Counseling does at least three things to improve sustainability of loans:– Raises the rate of receiving a modification that
cures a serious delinquency or foreclosure;– Larger reduction in monthly mortgage payments
in modified and cured loans; and– Improves the sustainability of modified and cured
loans beyond the impact on monthly payments, presumably through financial counseling and, in some cases, assistance. Source: Urban Institute – NFMC Study
HECM Counseling Provides Critical Resources
– Over 40% of clients are lower-to-middle income families who may not have access to a financial advisors
– Since September 15 2010, 38,650 HECM counseling clients have received a BenefitsCheckUp screening.
• 88% could be eligible for one or more benefits. • Potential value of benefits could be $197 million.• Public-private approach to maintaining independence.
– Counselors address both immediate budget shortfalls and challenges to aging in place.
• Help seniors to think strategically about home equity.• Discuss exit strategies to reduce foreclosure risk.
Source: National Council of Aging
3232
Opportunities Ahead
• Personal savings are up• U.S. households debts are down• Mortgage rates are near 50-year lows• With low rates and low housing prices,
affordability is greatly improved• Household growth has slowed but continues• U.S. population is growing more diverse• First-time homebuyers are driving the market• Technological changes can help reach new
buyers
Technology Spreads
36
According to recent federal study, only 5-10% of Americans do not have access to Broadband Internet services
37
• U.S. population has grown to 311 million and is increasingly diversified
• Household growth has slowed but will continue over the next two decades
• Hispanics accounted for 50% of national growth since 2000 (compared with 14% of Asians, 13% for blacks and 17% for whites)
• Immigrants now comprise 12.6% of the total U.S. population (and 44% of those residents under age 15)
• From 2000-2007, the U.S. foreign-born population grew by 22% to 38 million
• By 2007, 30% of the nation’s foreign-born population were from Mexico and 23% from Latin America
U.S. Demographic Changes: 2000 - 2010
Source: Willam Frey, Recent Demographic Trends in Metropolitan America, Brookings Institution, 2010
Record Numbers of Young Householders by 2025
39Source: The State of the Nation’s Housing Report 2010. Joint Center for Housing Studies
Growing Diversity of the U.S. Population
40Source: The State of the Nation’s Housing Report 2010. Joint Center for Housing Studies
Born 1977-1997
Born 1946-1964
Born 1965-1976
The generations following the Baby Boomers are large and diverse. Over 40% of future first-time buyers will minority buyers
Future Homeownership Markets
Housing will be driven by four demographic groups for next 5 – 10 years:• Older Baby Boomers – who will become seniors,
retiring and/or downsizing• Younger Baby Boomers – many will be unable to sell
their ‘underwater homes’ to move to new jobs and may have older children living in their household
• Generation Y – who will graduate from college with large school loans and who may rent longer than previous generations
• New immigrants and their households
42
43
First-Time vs Repeat Buyers
First-Time Buyer: Repeat Buyer:
30-years-old 48-years-old
$61,600 $88,100
49% married 69% married
25% single females 17% single females
12% single males 8% single males
12% unmarried couples
5% unmarried couples
Source: National Association of Realtors – “2009 Profile of Home Buyers and Sellers”
First-time homebuyers are significantly younger and unmarried than repeat buyers
44
Many First-Time Buyers Are Unmarried
Single Female:
Single Male:
Married Couple:
Unmarried Couple:
41-years-old 39-years-old 39-years-old 30-years-old
$50,500 $59,700 $85,500 $73,600
58% first-time buyers
58% first-time buyers
39% first-time buyers
69% first-time buyers
22% have children under 18
10% have children under 18
49% have children under
18
26% have children under
18
Source: National Association of Realtors – “2009 Profile of Home Buyers and Sellers”
Single females, single males and unmarried couples are significant target markets
45
Age Breakdown of Home Buyers in 2009
18 to 246%
25 to 4456%
45 to 6430%
65 or older8%
Source: National Association of Realtors – “2009 Profile of Home Buyers and Sellers”
46
Home Buyers By Age Cohorts in 2009
18 to 24 25 to 44 45 to 64 65 or older
23-years-old 32-years-old 53-years-old 69-years-old
$48,400 $75,300 $79,600 $56,100
97% first-time buyers
61% first-time buyers
24% first-time buyers
9% first-time buyers
18% have children under
18
49% have children under
18
28% have children under
18
5% have children under
18
Source: National Association of Realtors – “2009 Profile of Home Buyers and Sellers”
First-time homebuyers are skewing younger
47
First Step Taken in Home Search
White/Caucasian:
Black African-
American:
Hispanic/Latino:
Asian/Pacific
Islander:
Looked online for properties for sale 38% 22% 26% 31%
Contacted a real estate agent 18% 17% 23% 13%
Looked online for information about the home buying process 10% 15% 12% 23%
Contacted a bank or mortgage lender 8% 12% 11% 8%
Drove-by homes/neighborhoods 8% 8% 6% 4%
Talked with a friend or relative about home buying process 7% 9% 10% 7%
Visited open houses 4% 3% 3% 3%
Looked in newspapers, magazines, or home buying guides 3% 2% 2% 2%
Contacted builder/visited builder models 2% 3% 2% 2%
Attended a home buying seminar 1% 6% 2% 3%
Source: National Association of Realtors – “2009 Profile of Home Buyers and Sellers”
Classes and counseling efforts are only capturing a tiny share of home buyers
48
Use of Internet in Home Search
White/Caucasian Black/African American Hispanic/Latino Asian/Pacific Islander0
10
20
30
40
50
60
70
80
90
100 90%88% 87%
92%
10% 12% 13% 8%
Used Internet to search Did not use Internet to search
Source: National Association of Realtors – “2009 Profile of Home Buyers and Sellers”
Vast majority of homebuyers use the Internet at home or work to search for homes
What does this mean?• Housing counseling industry must embrace standards such
National Industry Standards—raise the visibility that is this a highly trained group of professionals who are held to rigorous standards;
• Diligent about tracking pipelines and results---through use of sophist acted customer tracking systems---they not just for reporting anymore;
• Become more self examining---as way of illustrating the value proposition;
• Mine success stories of successful customers---have them spread the word to your circles on influence;
• Use internal and external market data to target services –not one-size fits all;
• Leverage technology and innovative partnerships;• Market to a different homebuyer; maybe a new way to deliver
services
Rocky Mountain District Symposium Homeownership Trends and Data
The Brown Palace Hotel - DenverJune 28 – 30, 2011