patterson-schwartz market review
DESCRIPTION
April 2011TRANSCRIPT
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.