MARCH 2014
KCM Divided into
Three Sections
Be their ‘Expert’ This is a person to whom
people will turn for advice
on difficult or complex
real estate decisions.
90
95
100
105
110
115
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
100 = Historically Healthy Level
Pending Home Sales
NAR 2/2014
Existing Home Sales
NAR 2/2014
WEST
- 8.1%
MIDWEST
+2.0%
SOUTH +3.6%
NORTHEAST
+7.1%
U.S. + .8%
Year-over-Year as per
NAR’s 2013 4Q Report
% Change in House Sales
NAR 2/2014
10%
15%
20%
25%
30%
35%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Percentage of Distressed Property Sales
35%
15%
23%
Date Sales % Non-Distressed Total Non-distressed
Jan ’13 4.87M 77% 3.75M
Jan ‘14 4.62M 85% 3.93M
Non-Distressed Sales Still Up
-19.1%
-6%
3.9%
15.2%
19.4%
37.5%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+
% Sales +/- -19.1% -6% 3.9% 15.2% 19.4% 37.5%
Percentage Change
in Sales from a Year
Ago by Price Range
Bill McBride Calculated Risk Finance & Economics
The bottom line is the housing
weakness should be temporary. There
should be more inventory this year,
price increases should slow, and sales
volumes increase.
8.2% 7.9%
5.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
January 2013 December 2013 January 2014
Institutional Investor Sales
RealtyTrac 2/2014
WHO ARE THEY?
HOUSEHOLD TYPE
FIRST TIME HOMEBUYERS
NAR’s 2013 Profile of Home Buyers & Sellers
WHAT ARE SOURCES OF DOWNPAYMENT?
Savings
Gift from
Relative or Friend
Sale of Stocks or Bonds
401k/Pension Fund
Loan from
Relative or Friend
Inheritance
IRA
78%
27%
9%
8%
7%
4%
3%
FIRST TIME HOMEBUYERS
NAR’s 2013 Profile of Home Buyers & Sellers
Cut Spending
on Luxury Items
Cut Spending
on Entertainment
Cut Spending
on Clothes
Cancelled
Vacation Plans
Income from
a 2nd Job
Sold/Didn’t
Buy a Car
33%
27%
13%
9%
5%
40%
WHAT SACRIFICES DO THEY MAKE TO PURCHASE?
FIRST TIME HOMEBUYERS
NAR’s 2013 Profile of Home Buyers & Sellers
FINANCING
95%
5%0%
25%
50%
75%
100%
Mortgage Cash
FIRST TIME HOMEBUYERS
NAR’s 2013 Profile of Home Buyers & Sellers
3.25
3.5
3.75
4
4.25
4.5
4.75
2013 - 2014 30 Year Fixed Mortgage Rates
Freddie Mac 2/2014
Mortgage Rate
Projections
Analyst Projected Rate
1Q 2015
Fannie Mae 4.9%
National Assoc of Realtors 5.5%
Freddie Mac 5.1%
Mortgage Bankers Assoc 5.1%
2/2014
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-14 1Q 2015 P
Freddie Mac 2/2014
2003 - 2013 30 Year Fixed
Mortgage Rates
Buying is CHEAPER than
renting in ALL of the 100
largest metros by
an average of… 38 %
Trulia 2/2014
$300
$350
$400
$450
$500
$550
$600
$650
$700
$750
The Increasing Cost of Renting
Median Asking Rent
1988-2013
Census Bureau 2014
MILLENNIALS
3.8%
6.6%
Bachelor's Degree or More U.S.
Unemployment Rate: Millennials Ages 25-32 with
a Bachelor’s Degree vs. U.S. Rate
Bureau of Labor Statistics & Pew Research 2/2014
$45,500
$40,872
Bachelor's Degree or More U.S.
Median Annual Full Time Wage: Millennials
Ages 25-32 with Bachelor’s Degree vs. U.S. Rate
Bureau of Labor Statistics & Pew Research 2/2014
29% Have no student debt
$29.4K Average Student Debt
$335.33 Typical Payment
The Project on
Student Debt
Median HOUSEHOLD Income of Young Adults
(25-32 years old) Living in their Parents’ Home?
Pew Research 2/2014
$113,181
Millennials Belief in Real Estate and its Agents
Optimistic About
Real Estate In 2014 70%
Look To An Agent
For Sound Guidance 62%
Think A Good Agent Can
Maximize The Investment 70%
74%
4% 2%0%
10%
20%
30%
40%
50%
60%
70%
80%
Email Social Media Text
Method Used by
18-29 Year Olds to Download Information
Home
Prices
Year-over-Year Price Change by Region
FHFA 2013 4Q
Year-over-Year Price Change by State
FHFA 2013 4Q
Home Price
Expectation
Survey
A nationwide panel
of over one hundred
economists, real
estate experts and
investment & market
strategists.
Home Price Expectation Survey 2014 1Q
Average Annual %
APPRECIATION
4.54.0
3.7 3.7 3.8
2014 2015 2016 2017 2018
PROJECTED
Percentage Appreciation
Home Price Expectation Survey 2014 1Q
Home Price Expectation Survey 2014 1Q
Cumulative House Appreciation by 2018
19.4%
28.4%
19.7%
10.9%
Pre-Bubble
Trend Bulls All
Projections Bears
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
S&P Case Shiller 2/2014
Year-over-Year Change in Prices
RETURN ON INVESTMENT
49.2
33.3
9.3
65.7
Dow S&P NASDAQ Real Estate
January 2000 – February 2014
MSN Money.com, Case Shiller
S&P Case-Shiller Home Price Indices
S&P Case Shiller 2/2014
-24%
-20.8%
-16.8%
-14%-13%
-7.6%
-5%-6.2%
1.8% 0.9%
5%
1.6%
7.3%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Jan Feb March April May June July Aug Sept Oct Nov Dec Jan
% -24% -20.8 -16.8 -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0% 1.6% 7.3%
NAR 2/2014
Year-over-Year Inventory Levels
4.0
4.3
4.5
4.8
5.0
5.3
Jan Feb Mar Apr May Jun Jul August Sept Oct Nov Dec Jan
Months Inventory of Homes for Sale
5-6 Months =
Normal Market Inventory
NAR 2/2014
Months Inventory of Homes for Sale
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
5-6 Months = Normal Market Inventory
NAR 2/2014
Resources Slide Slide Title Link
6, 7, 9,
42, 43, 44
Pending Home Sales, Existing Home Sales,
% Distressed Property Sales, Year-over-Year
Inventory, Months Inventory Homes for Sale
http://www.realtor.org/
8 % Change in House Sales http://www.realtor.org/news-releases/2013/12/existing-home-sales-decline-in-
november-but-strong-price-gains-continue
10 Non-Distressed Sales Still Up http://www.realtor.org/news-releases/2014/02/existing-home-sales-drop-in-january-
while-prices-continue-to-grow
11 Percentage Change in Sales from a Year Ago
by Price Range
http://economistsoutlook.blogs.realtor.org/2014/02/23/a-closer-look-at-the-latest-ehs-
release/
12 Bill McBride Quote
http://www.calculatedriskblog.com/2014/02/housing-weakness-temporary-or-
enduring.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3
A+CalculatedRisk+%28Calculated+Risk%29
13 Institutional Investor Sales http://www.realtytrac.com/content/foreclosure-market-report
14-17 First Time Homebuyers http://www.realtor.org/ - NAR’s 2013 Profile of Home Buyers & Sellers
18, 20 30 Year Fixed Mortgage Rates http://www.freddiemac.com/pmms
19 Mortgage Rate Projections
http://fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_011314.pdf
http://www.freddiemac.com/finance/docs/Jan_2014_public_outlook.pdf
http://www.mortgagebankers.org/files/Bulletin/InternalResource/86783_.pdf
http://www.realtor.org/sites/default/files/reports/2013/embargoes/phs-12-30-
illtratatb/forecast-1-2014-us-economic-outlook-12-30-2013.pdf
22 Buying is Cheaper http://trends.truliablog.com/category/rent-vs-buy-index/
23 Increasing Cost of Renting http://www.census.gov/housing/hvs/data/histtabs.html
Resources Slide Slide Title Link
25, 26 Millennials: Unemployment & Income http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/
http://www.bls.gov/
27 Project on Student Debt http://projectonstudentdebt.org/
28 Median Household Income of Millennials Living at
Home
http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-
college/6/#appendix-c-young-adult-living-arrangements-and-household-incomes
29 Millennials Belief in Real Estate & It’s Agents https://www.prudentialrealestate.com/Portals/0/Documents/Prudential%20Q4%20Co
nsumer%20Outlook%20Infographic.jpg
30 Methods Used to Download http://www.mediabistro.com/alltwitter/files/2012/08/email-vs-social-media-
marketing.jpeg
32, 33 Year-Over-Year Price Changes Regional & State www.fhfa.gov
35, 36,
37
Avg. Annual % Appreciation, Projected %
Appreciation, Cumulative Appreciation https://www.pulsenomics.com/Q4_2013_HPE_Survey.php
39 Year-over-Year Change in Price http://www.spindices.com/index-family/real-estate/sp-case-shiller
40 Return on Investment http://www.spindices.com/index-family/real-estate/sp-case-shiller
http://money.msn.com/
41 Case-Shiller Home Price Index https://www.spice-indices.com/idpfiles/spice-
assets/resources/public/documents/79678_cshomeprice-release-0225.pdf
48, 51 The Power of Using Visuals http://www.macrovu.com/VTVCInterEffectiveness.html
49, 50 The Power of Using Visuals https://www.osha.gov/doc/outreachtraining/htmlfiles/traintec.html
The Power of Using Visuals
Percentage Making a Decision
Immediately after Presentation
Percentage Increase Seeing
Presenter as More Convincing
64% 34%
24%
MacroVU
Visual
Learning
Compared Identical
Presentations
With and Without
Visuals
Amount of Time the
Presentation was Reduced By
The Power of Using Visuals
83%
11%3.5% 1.5% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Visual Sound Smell Touch Taste
Studies by Educational
Researchers Suggest that
Human Learning Occurs by Approximately
these Percentages
OSHA
The Power of Using Visuals
10%
35%
65%
0%
10%
20%
30%
40%
50%
60%
70%
Oral Presentation Visual Presentation Oral & Visual Presentation
Studies suggest that three days after a
presentation, people retain these
percentages of what they heard
OSHA
MacroVU
Visual Learning
The Power of Using Visuals
Presenters using visuals were perceived as more effective.
People said such things as…
More
Interesting
More
Concise
More
Professional More
Credible
Better
Prepared