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Market Facts

in Uncertain Times

NAR Research

September 2010

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Economic and Market Facts

• Informed consumers make smarter decisions.

•  The economy is soft and consumer confidence remains low.• Housing affordability is at a generational high.

• Home values in many markets have returned to historically justifiabl

• Most economists expect home values to rise in upcoming years, thofast pace.

• Bad loans are nearly always made in good times. But recently originperforming very well.

• Patient homeowners over the long-term do much better than renter wealth.

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Fact 1: The Economy is Growing, though S

GDP annualized % growth rate

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Fact 2: The Private Sector is Finally Crea

Some Jobs(Government jobs were not included since many could be temporary from stimulus

Monthly Net Private Payroll Job Changes in Thousands

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Fact 3: Consumer Confidence Remains

though Clearly Off Bottom

Index by The Conference Board

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Fact 4: The 30-year Mortgage Rate

is at Generational Lows(A very accommodative Federal Reserve monetary policy helping, but for how l

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Fact 5: National Median Home Price Stab(Combination of price change and type of homes that are selling)

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Fact 6: Other Home Price Measuremen

 Also Showing Price Stabilization

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Fact 7: Home Price-to-Income Ratio

Have Returned to Fundamentally Justifiable

Source: NAR

2.02.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

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Fact 8: Economists Expect Price Increas

Upcoming Years

• Macromarkets, a firm associated with Professor Robert Shiller, suabout 100 economists on their outlook on home prices.

•  The consensus forecast as of August 2010 (which can be found aMacromarkets or via news media stories such as the Wall Street Jas follows:

• 0.78% price increase in 2011

• 2.43% price increase in 2012

• 3.20% price increase in 2013

• 3.69% price increase in 2014

• No forecast for 2015 and beyond

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Fact 9: Delinquencies Are High but Recent

Originations Performing Well

• Due to Past Lending Mistakes the Bad Loans are still working through th

• Banker’s Afterthought is nearly always that “Bad Loans are made in Bub Times.”

• However, the Mortgage Delinquency Rate may have peaked. AccordingMortgage Bankers Association, mortgage delinquencies fell to 9.85 percesecond quarter 2010 from 10.1 percent in the first quarter.

•  Various reports suggest good loan performance on recently originated m

(see government reports on loan performance of government backed mo

• One-third of homeowners own their homes free-and-clear. They are noin mortgage delinquency statistics.

• Loan approval is more difficult, which explains better recent loan perform There is a better approval chance if the borrower stays well within

their budget.

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Source:: Federal Reserve

Median Family Net

 Worth

Fact 10: Long-Term Path to Self Reliance may

from Long-Term Housing Wealth Gain(2010 data to be published in 2012 by the Federal Reserve)

Renters Homeowners

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