patterson-schwartz market review

Market Review

Major Factors Impacting

Today’s Real Estate Market

•The Economy (Consumer Confidence)

•Local Employment

•Financing Options/Banking Environment

•Interest Rates

•Foreclosures/Shadow Inventory

Consumer Sentiment Index1978 - 2010

http://research.stlouisfed.org/fred2/series/UMCSENT

8.5% MAR. 2011

DELAWARE

8.8% MAR. 2011

ALL U.S.

Website:

www.google.com/publicdata/unemploymentrate

Quality Residential Mortgage

1.) A Product-Type qualified residential mortgage is a first-lien mortgage

that is for an owner-occupant with fully documented income, fully amortizing

with a maturity that does not exceed 30 years and, in the case of adjustable

rate-mortgages (ARMs), has an interest rate reset limit of 2 percent annually

and a limit of 6 percent over the life of the loan.

2.) A PTI/DTI qualified residential mortgage has a borrower’s ratio of

monthly housing debt to monthly gross income that does not exceed 28

percent and a borrower’s total monthly debt to monthly gross income that

does not exceed 36 percent.

3.) An LTV ratio qualified residential mortgage must meet a minimum LTV

ratio that varies according to the purpose for which the mortgage was

originated. For home purchase mortgages the LTV ratio is 80 percent.

4.) A FICO qualified residential mortgage has a borrower’s FICO score

greater than or equal to 690 at the origination of the loan.

Mortgage Market Note #11-02 3/31/2011

Watch Rates Closely For each 1% rise in interest rates,

cost to buyer increases by 10%.

Mortgage Rates – 30 Year Fixed

Steve Harney – Federal Reserve

APRIL 2011 TODAY

Difference in monthly payments

Price is the Same…

it Just Costs More

DateLoan

AmountInterest

Rate

MonthlyPayment

(P&I)

Today $100,000 4.86 $528.30

Nov 2010 $100,000 4.17 $487.27

Difference in Mortgage Payments $41.03

Difference in monthly payments

Additional Cost Over 30 Years

Monthly $41.03

Yearly $492.36

Over 30 Years $14,770.80

Home Sales by MonthNew Castle County

Year 2005 2006 2007 2008 2009 2010

# Homes

Sold8,319 7,739 6,917 4,908 4,861 4,307

48% decline in the number

of sales since 2005.

2011 Forecast

??

Number of Homes Sold – NCC1996 - 2010Looking back at the sold housing data for the last 15 years, 2010

has returned to the levels experienced in the early 1990’s.

Data supplied by TReND MLS.

< $100K

$100-250K $250-500K

$500-750K $750-1M

$1M+

% Change in Sales by Price RangeNew Castle County (1Q 2011 vs. 2010)

Area 2011 2010 % ChangeBrandywine (901) $249,900 $250,000 0%

Hockessin/Greenville/Centerville (902) $414,900 $515,000 -19.4%

Pike Creek/Elsmere/Newport (903) $185,000 $199,500 -7.3%

New Castle/Red Lion/DE City (904) $134,950 $164,900 -18.2%

Newark/Glasgow (905) $195,000 $215,000 -9.3%

Wilmington (906) $75,700 $129,900 -42.1%

South of Canal (907) $263,000 $275,100 -4.4%

Area 2011 2010 % ChangeBrandywine (901) 143 131 9.2%

Hockessin/Greenville/Centerville (902) 36 46 -21.7%

Pike Creek/Elsmere/Newport (903) 88 109 -19.3%

New Castle/Red Lion/DE City (904) 89 97 -8.2%

Newark/Glasgow (905) 232 237 -2.1%

Wilmington (906) 136 143 -4.9 %

South of Canal (907) 79 83 -4.8%

Median Home Prices to IncomeNationally 1965 to 2010

Real Estate Market CyclesNew Castle County

Real Estate Market CyclesKent County

Real Estate Market CyclesSouthern Chester County

Real Estate Market CyclesCecil County

Year Median Household

Income

Median Home Price

Home Price/ Income Ration

2000 $52,000 $129,000 2.5

2007 $59,000 13.5%

$235,00082%

4.0

2010 $63,6007.8%

$212,00010%

3.3

2011 (1Q) $63,600 $190,500 3.0

Year Median Household

Income

Median Home Price

Home Price/ Income Ration

2000 $41,000 $115,000 2.8

2007 $47,000 14.6%

$225,00095.6%

4.8

2010 $51,0008.5%

$189,90015.6%

3.7

2011 (1Q) $51,000 $171,000 3.3

What role will distressed

properties play?

Looking Ahead to Remainder of 2011Indicators Predict the Future

•What about shadow inventory (delinquencies)?

•How long will it take for the current supply to be

absorbed given today’s demand?

•What indicators exist today that market stability

will soon be achieved?

Type of Sale % of Value

Non-Distressed Sale 100%

Short Sale 81%

Foreclosure Sale 59%

Value by Sale Category

Steve Harney – Realty Trac Foreclosure Report 12/02/2010

Type of Sale % of Value

Non-Distressed Sale 100%

Short Sale 83%

Foreclosure Sale 78%

Value by Sale Category

NAR – 3/22/2011

90+ Mortgage Delinquencies

NPR.org – Interactive Map

The Economy Where You Live – Dec. 2010

Local View

Months’ Shadow Inventory

NAR 3/21/2011

Share of Distressed Sales

NAR 3/21/2011

Impact of Distressed Properties Active New Castle County (3/31/11)

Impact of Distressed Properties Active Kent County (3/31/11)

Impact of Distressed Properties Closed New Castle County (1Q 2011)

Impact of Distressed Properties Closed Kent County (1Q 2011)

Steve Harney - MSN Money.com, CaseShiller

Return on Investment (Nat’l)January 2000 – March 2011

DOW

S&P

NASDAQ

REAL ESTATE

Steve Harney - MSN Money.com, CaseShiller

Return on Investment (NCC)January 2000 – March 2011

DOW

S&P

NASDAQ

REAL ESTATE

Supply & Demand

Congressional Oversight Panel 3/16/2011

Visible and Pending Inventory

Pending Inventory Detail

CoreLogic Shadow Inventory Report 3/30/2011

Inventory vs. Price

Months’ Supply (Avg. 1Q 2011)New Castle County

11.4

Months’ Supply (Avg. 1Q 2011)Kent County

17.0

Months’ Supply (Avg. 1Q 2011)Southern Chester County

17.4

Months’ Supply (Avg. 1Q 2011)Cecil County

14.5

% Appreciation (Nat’l)5 Year Increments

Steve Harney - Brookings Papers 9/08

% Appreciation – NCC5 Year Increments

Average List vs. Sale PriceNew Castle County

Data supplied by TReND MLS.

Average List vs. Sale PriceKent County

Data supplied by TReND MLS.

Average List vs. Sale PriceSouthern Chester County

Data supplied by TReND MLS.

Average List vs. Sale PriceSouthern Chester County

Data supplied by TReND MLS.

Prices

Don’t Wait to Get It Sold!!

Macro Market Home Price Expectations Survey 03/2011

Home Price Expectation Survey

Macro Market Home Price Expectations Survey 03/2011

Home Price Expectation Survey

Case-Shiller Index

The Case-Shiller Index of home prices remains well above the long-term trend.