Overview and Outlook for Housing in the Kansas City Metropolitan Area

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1 Overview and Outlook for Housing in the Kansas City Metropolitan Area Kansas City Mortgage Bankers Association May 16, 2013 Hallbrook Country Club Leawood, KS Kelly D. Edmiston Federal Reserve Bank of Kansas City The views in this presentation are those of the speaker and authors and do not necessarily represent the views of the Federal Reserve Bank of Kansas City or the Federal Reserve System.

2 Home sales are rising strongly and are now less than 20 percent below 2004 levels. Index: Q = 100 Index: Q = US-NAR District Kansas City Source: National Association of Realtors; Kansas City Association of Realtors 0.0 May 16, 2013 K. Edmiston, FRBKC 2

3 Homebuyer traffic is strong, boding well for future sales; Several demand factors will determine near-term strength in traffic and sales Demand Constraints Economy/Financial Security Uncertainty about Market Household Formation Credit Availability Homebuyer Traffic Proprietary Data Removed May 16, 2013 K. Edmiston, FRBKC 3

4 Economic growth will likely be weak in 2013 before picking up in ; longer-run growth will be lower by historical standards 5 Percent Percent March 2013 FOMC Forecast Through 1990 Through 2000 Through LR Sources: Bureau of Economic Analysis; FOMC May 16, 2013 K. Edmiston, FRBKC -4 4

5 Employment growth in the U.S., and especially Kansas City, has been slow; and levels remain well below pre-recession levels 20 Thousands of Jobs (seasonally adjusted) Thousands of Jobs seasonally adjusted) 1, U. S. (right axis) 1yr: 2.2 million (1.6%) 5yr: - 2.4M (-2.6%) [April] Kansas City (left axis) 1yr: 1,700 (0.2%) 5yr: -26.3K (-2.6%) [March] Source: BLS May 16, 2013 K. Edmiston, FRBKC 5

6 Mortgage credit (prime) restrictions are beginning to ease Share of respondents reporting tighter lending standards for prime mortgage loans Source: Federal Reserve Senior Loan Officers Survey May 16, 2013 K. Edmiston, FRBKC 6

7 Mortgage rates are at historically low levels 8.0 Rate (%) Rate (%) Source: Freddie Mac 0.0 May 16, 2013 K. Edmiston, FRBKC 7

8 Delays in property closings are on the decline Proprietary Data Removed May 16, 2013 K. Edmiston, FRBKC 8

9 The months supply of homes is dwindling in the face of increased sales, but the decline largely reflects low inventories, as sales, though increasing at a strong pace, remain relatively low 14 Months Supply Months Supply Source: Kansas City Association of Realtors May 16, 2013 K. Edmiston, FRBKC 9

10 160.0 Permits for new residential construction have stabilized and are poised for a rebound Index (January, 2005 = 100) Index (January, 2005 = 100) KC U.S Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 May 16, 2013 K. Edmiston, FRBKC 10

11 Decreasing shares of property on the market are distressed Proprietary Data Removed May 16, 2013 K. Edmiston, FRBKC 11

12 120.0 Median existing home prices have increased on the combination of higher sales and low inventory levels Index (December, 2004 = 100) Moving Average Source: Kansas City Association of Realtors May 16, 2013 K. Edmiston, FRBKC 12

13 The FHFA repeat sales index shows solid price advances in the U.S. and the 10 th Federal Reserve District, but little in Kansas City 140 Index (2004 Quarter 1 = 100) Kansas City District US Source: FHFA 80 May 16, 2013 K. Edmiston, FRBKC 13

14 Sales-to-list price ratios are increasing, reflecting increased demand in the face of low inventories Proprietary Data Removed May 16, 2013 K. Edmiston, FRBKC 14

15 MORTGAGE DELINQUENCIES May 16, 2013 K. Edmiston, FRBKC 15

16 Mortgage delinquencies are on the decline throughout most of the U.S. including the Plains states Kansas 12% 10% 8% 6% Share of Outstanding Mortgages Past Due Foreclosure Seriously Delinquent 9.6% 8.4% 12% 10% 8% 6% 12% 10% Share of Outstanding Mortgages Past Due Foreclosure Seriously Delinquent Missouri 11.1% 8.9% 12% 10% 4% 4.8% 4.1% 4% 8% 8% 2% 2.0% 1.6% 2% 6% 5.6% 4.1% 6% 4% 4% 0% 0% 2% 1.2% 1.8% 2% 0% 0% Source: Lender Processing Services, Inc. May 16, 2013 K. Edmiston, FRBKC 16

17 Serious Mortgage Delinquency Status KC Metro Jackson Co Johnson Co 30 PD PD PD Total PD In Foreclosure Seriously Delinquent Source: Lender Processing Services, Inc. May 16, 2013 K. Edmiston, FRBKC 17

18 Contact Information: Kelly D. Edmiston Senior Economist Community Development 1 Memorial Drive Kansas City, MO (816) Kelly.edmiston@kc.frb.org May 16, 2013 K. Edmiston, FRBKC 18

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