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July2012
• 125,000 Homes Sold In 2006. 60,000 Homes Sold in 2010. • SmartNumbers Predicts Normal Market Should Be 80,000 – 85,000 Sales.• Expect To See 75,000 Homes Sold In 2012. Moving Back To Normal.
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Metro Atlanta Homes Sold
Listed Inventory July 2010 – July 2012Metro Atlanta
• Inventory Levels Down 36.8% from July 2011, 48.7% from July 2010
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Listing Inventory Back To 2001 Levels.Cycling Back Toward Sellers Market In Some Areas.
Resales & New Homes Now Outpacing Bank Sales!Pre-Foreclosures & Foreclosures Slowing… For Now.
Pre-Foreclosures Foreclosures Market Sales Bank-Owned Sales
Date Activity Average Amount Activity Average Amount Activity Average Amount Activity Average Amount
11-Jun 4,320 $186,128 2,127 $129,765 2,893 $251,752 2,652 $93,441 11-Jul 4,846 $186,903 1,852 $129,966 2,404 $228,846 1,810 $91,187
11-Aug 5,269 $409,437 2,282 $126,478 3,039 $227,667 2,681 $87,419 11-Sep 3,529 $188,255 2,577 $123,272 2,751 $211,323 2,596 $82,374 11-Oct 4,244 $270,864 1,789 $128,945 2,393 $202,614 2,358 $81,212 11-Nov 5,011 $191,640 1,840 $134,479 2,260 $201,704 2,051 $85,881 11-Dec 3,261 $184,594 2,314 $120,100 2,499 $198,988 2,386 $88,807 12-Jan 3,760 $186,728 1,449 $123,117 1,880 $195,835 2,060 $88,582 12-Feb 2,830 $184,358 1,377 $115,995 2,057 $185,806 2,180 $85,969 12-Mar 2,797 $198,937 845 $120,405 2,493 $198,197 2,143 $94,890 12-Apr 2,213 $195,562 609 $135,277 2,303 $204,184 1,715 $93,334 12-May 2,659 $194,827 174 $165,979 1,477 $201,430 1,080 $91,052 12-June 2,435 $193,765 180 $172,890 1,350 $203,339 980 92,487
47,174 $213,231 19,415 $132,821 29,799 $208,591 26,692 $88,972
• 55% of Closings Under $125,000 In 2011. •July 2012 – 22% of closings under $125,000. Market Swinging Back To More Normal Distribution Where 10-15% of Sales Under $125,000/
<125 126-150
151-175
176-200
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226-250
251-275
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Metro Atlanta Price Distribution
•Average Sales Price Trending Higher In 2012
$150 $153$169
$177$187
$199 $199
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Metro Atlanta Average Sale Price Trend
Trendgraphix & RealValuator Report That PGR Is#1 In Homes Sold - 2009, 2010, 2011 & YTD 2012.
Information Provided By Trendgraphix.
4439
3205 3112 3047 2968
2067
807
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YTD Transactions – July 2012 FMLS Counties + Southside
Information Provided By Trendgraphix.
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15891503
1373 1354
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426
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YTD Listing Sales – July 2012FMLS Counties + Southside
Information Provided By Trendgraphix.
Current Listing Inventory – July 2012FMLS Counties + Southside
2307
1793
14041330
1133
762666
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Information Provided By Trendgraphix.
Buyer Sales – July 2012FMLS Counties + Southside
2108
18511674 1623
1465
1143
381
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PGR MB KW AP HNR CB SS AFH
•Average Sales Price Dropped Due To Higher Low End Mix And Lower Overall Home Values
$241$253 $261 $268
$209$189 $190
$176 $174
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Metro Atlanta Average Sale Price Trend
•Average Sales Price Trending Higher In 2012
$150 $153$169
$177$188
$206
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We Now Compete In A Global Economy… What Happens In Other Places Matters!
What The Heck Is QE1 & QE2?
Quantitative Easing!Otherwise Know As Printing Money
Operation TWIST Renewed June 2012
Focus On Long-Term Rates
July 2012
U.S. Debt Ceiling $16.4 Trillion
$15, 978, 356,988,656
Average Rates Around 8%
4.9 4.9
4.7
3.8
54.9
4.4 4.4
4.84.7
4.3
43.9
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4.2
4.44.5
4.64.7
4.34.2
4.1
3.9
4.34.44.4
5.0
4.73.8
3.94
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2012 Freddie Mac & Mortgage Bankers 30-Year Fixed Rate Forecast
2010 – 2013 Quarterly Averages
2010 2011 2012 2013
Housing Demand
2011 & Beyond
Atlanta MSA Job Change
Source: BLS
Construction Was Most Impacted Industry In Our Market
•Georgia Lost 325,000 Jobs In Last 3 Years. Construction and Banks Were The Largest Categories of Unemployment. •2012 Restarts Positive Job Growth Trend!
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2009 2010 2011 2012
Georgia Employment Trends(Terry College of Business – University of Georgia)
Long-Term Employment Forecast Growth: 20-County Area: Plan 2040
Businesses And People Are Moving To Metro
Atlanta!
Rustbelt To Sunbelt
Forecast Population Growth20-County Forecast Area
Share of Population by Ethnicity 1990-204020-County Forecast Area
Source: ARC Plan2040 Forecasts
Population Age Dynamics – Top 27 Metros
Source :Census Bureau
Total Population
Share of Population Rank of Share
Under 20 20-64 65+ 25-39 45-59 Under 20 20-64 65+ 25-39 45-59
Dallas 6,144,489 30.5% 61.3% 8.2% 23.8% 19.1% 3 9 25 1 24 Atlanta 5,271,550 29.6% 62.4% 8.1% 23.2% 20.4% 5 6 27 2 19 Phoenix 4,179,427 29.7% 59.0% 11.3% 23.1% 18.0% 4 24 15 3 26 Denver 2,466,591 27.8% 62.7% 9.5% 23.0% 21.6% 11 5 24 4 12 Riverside 4,081,371 32.0% 58.2% 9.8% 22.8% 17.0% 1 27 22 5 27 Houston 5,629,127 31.0% 60.9% 8.1% 22.8% 19.9% 2 10 26 6 21 Portland 2,174,631 26.7% 63.0% 10.4% 22.6% 22.0% 19 4 19 7 7 Seattle 3,309,347 25.6% 64.0% 10.4% 22.0% 22.5% 22 1 20 8 3 Sacramento 2,091,120 27.7% 60.8% 11.5% 21.9% 20.0% 12 13 14 9 20 Washington 5,306,125 27.2% 63.0% 9.7% 21.8% 21.6% 14 3 23 10 11 Los Angeles 12,875,587 29.1% 60.4% 10.6% 21.8% 19.4% 6 17 18 11 23 San Diego 2,974,859 28.2% 60.7% 11.1% 21.7% 19.0% 8 14 16 12 25 San Francisco 4,203,898 24.1% 63.5% 12.4% 21.5% 22.4% 26 2 10 13 4 Orlando 2,032,496 26.8% 60.4% 12.8% 21.3% 19.9% 18 15 8 14 22 Minneapolis 3,208,212 28.0% 62.1% 9.9% 21.3% 22.0% 10 7 21 15 6 Chicago 9,522,879 28.7% 60.4% 10.9% 21.2% 20.5% 7 16 17 16 18 New York 18,815,988 26.2% 60.9% 12.9% 20.6% 20.9% 21 12 6 17 15 Boston 4,482,857 25.3% 62.1% 12.6% 20.4% 21.7% 23 8 9 18 10 Cincinnati 2,134,864 28.0% 60.1% 11.9% 19.8% 21.3% 9 19 13 19 14 Baltimore 2,668,056 26.9% 60.9% 12.1% 19.7% 21.7% 17 11 11 20 9 Detroit 4,467,592 27.6% 60.3% 12.1% 19.2% 22.3% 13 18 12 21 5 Philadelphia 5,827,962 27.2% 59.8% 13.0% 18.9% 21.4% 16 21 5 22 13 St. Louis 2,802,282 27.2% 60.0% 12.8% 18.9% 21.8% 15 20 7 23 8 Miami 5,413,212 25.2% 58.6% 16.2% 18.8% 20.7% 24 26 3 24 17 Tampa 2,723,949 24.2% 58.6% 17.2% 18.7% 20.8% 25 25 1 25 16 Cleveland 2,096,471 26.4% 59.1% 14.6% 17.9% 22.8% 20 23 4 26 2
Pittsburgh 2,355,712 23.6% 59.4% 17.1% 17.1% 23.4% 27 22 2 27 1
Metro Atlanta Has The:
•#2 Population Age 25-39•#5 Population Under 20
•New Household Formation Dropped From 1.1 Mil In 2006 To 300,000 In 2008 – Then Back To 1 Mil In 2011. •4 Million Students Per Year Graduate From College For Next 10 Years. Signals Big Increase In Household Formation!
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U.S. Household Formation Trends
•Chart Shows Index Results January 2010 Through May 2012 (as reported in July 2012)
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Case-Shiller Index For Metro Atlanta
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Case-Shiller Home Values For Metro Atlanta
• Peak was July 2007. • Current Home Values Below The Normal Trend Line
2007 2010 2011 2012 2013 2014 2015 2020
Future Home Values
Assumptions:• 2011 values down 25% from peak of 2007• 2011 and 2012 values flat (with normal seasonal changes)•2013, 2014, 2015 values increase due to under-supply and foreclosures returning to more normal levels• 2016 and beyond back to normal +4% appreciation• New homes returns to 20,000 starts by 2017/ 2018
Back To Peak2017 - 2018
Key Indicators To Watch:•The pace of mortgage delinquencies and pre-foreclosures (predict short sales & foreclosures) •The pace of short sales & foreclosures entering the market •The short sale & foreclosure “shadow inventory” waiting to enter the market •The overall supply of “for sale” properties•The mix of new homes, resales, short sales & foreclosures in the inventory and sold transactions•The price mix of sold transactions (when will we see a more normal mix versus the heavy concentration on the lower end of the market) •Rental trends versus buy trends•New home starts•Mortgage rates•Employment trends•Migration trends/ relocation
Assumptions:1.Bought $500,000 in 2007. Home has dropped 25% in value to $375,000. If you waited to sell for 5-7 years, you would recover value to $500,000.2.Desired new home costs $300,000 today. 3.Incremental carrying costs of current property are estimated to be $500 / month.4.Incremental maintenance items cost $2000 per year. 5.Mortgage rates are expected to rise to the 6-7% range in future. A $300,000 home with a 15-year mortgage at 4.5% with $60,000 down payment is $1835 per month. If you wait 5-7 years and the property now costs $375,000 and mortgage rates are now 6.5%, the payment would be $2743. That amounts to $908 more per month and $163,440 over the next 15 years.
Sell Now/ Buy Now
Wait 5-7 Years Variance
Current Home (1) $375,000 $500,000 + $125,000
New Home (2) $300,000 $375,000 - $75,000
Incremental Carrying Costs (3) $36,000 - $36,000
Incremental Maintenance Costs (4) $12,000 - $12,000
Higher Mortgage Costs (5) $163,440 - $163,440
Cost of Waiting $161,440