#vision2016 Has there been an impact of the affordability crunch on the housing market? Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian.
Introducing: Richard Lombardi RealtyTrac #vision2016 Michele Raneri Experian
Objectives Market trends Credit trends Affordability analysis Spotting emerging trends Highlights include the specific geographic regional focus on: AZ, CA, CO, FL, and NY #vision2016 3
#vision2016 Market trends and analysis overview 4
Mortgage originations 600 500 400 300 200 100 4Q15: $472 BN +26% YoY 0 100% Percent Change YoY 2013-2015 Source: Experian IntelliView SM 50% 0% -50% -100% 5
VantageScore Overview and usage VantageScore credit tiers A = Super-prime 781-850 B = Prime 661-780 C =Near Prime 601-660 D = Sub-prime 500-600 F = Deep Sub-prime 300-499 Predicts risk of borrower Likelihood of future serious delinquencies 90 days later or greater) Any type of account 24-month performance window Score range of 300-850 Higher scores represent lower risk #vision2016 6
Average VantageScore Mortgage inquiries and originations Spread between inquiries and originations 68 69 67 56 56 51 56 57 56 800 780 760 Inquiries Originations 56-point spread 680 660 640 620 600 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 7
Thousands Home prices up year-over-year $400 $350 $300 Sales price of existing homes December: $224,100 US West Northeast South Midwest U.S. U.S. +7.6% YoY (Dec) $250 $200 $150 $100 Source: National Association of Realtors 8
Interest rates and home sales 8% 7% Interest rate Recession Millions Mortgage rate 10 9 6% Home sales 8 7 5% 6 4% 5 3% 4 2% 1% December 2015: Mortgage: 3.96% Home sales: 5.46M 3 2 1 0% 0 Source: Realtor.org 9
Mortgage late stage delinquency rates 3.5% 3.0% 2.5% 2.0% Percent balances 60-89 DPD 90-180 DPD 4Q15 Data: 60-89: 0.58% 90-180: 0.74% 1.5% 1.0% 0.5% 0.0% #vision2016 Source: Experian IntelliView SM 10
2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 U.S. unemployment rate and foreclosure 250,000 200,000 Foreclosure Starts Unemployment Rate 12.0 10.0 150,000 100,000 8.0 6.0 4.0 50,000 2.0 0 0.0 11
Analysis overview Data sources RealtyTrac Experian Analysis Home purchase data Consumer-level credit data Mortgage trade-level detail Credit quality Delinquency Affordability Cash purchases #vision2016 12
Analysis design Geographic focal points NY CA CO AZ FL #vision2016 13
Analysis design Data sources and time points RealtyTrac provided single family and condo sales records Pre-recession Post recession Recovery May-July May-July May-July December December December Experian matched for each time point to credit file #vision2016 14
Average Origination VantageScore RealtyTrac mortgage consumers Distribution by year and state 745 735 725 715 705 US 743 732 707 690 680 AZ 714 711 697 690 680 CA 719 701 CO FL NY 690 680 727 729 704 690 680 721 714 684 690 680 723 719 703 #vision2016 15
VantageScore and 90+ delinquency rates Distribution by year and state 745 735 725 715 705 US 731 723 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 AZ 728 718 714 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 CA 741 724 727 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 CO 744 722 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 FL 722 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 NY 736 729 728 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% #vision2016 16
VantageScore and 90+ delinquency rates Distribution by year and state 745 735 725 715 705 US 731 723 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 AZ 728 718 714 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 CA 741 724 727 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 CO 744 722 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 FL 722 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% 690 NY 736 729 728 4.5% 3.5% 2.5% 1.5% 0.5% -0.5% #vision2016 17
Average Origination VantageScore Key MSAs 790 770 US 790 770 CA-SanFrancisco Area 790 770 FL-Miami Area 690 707 743 732 690 726 760 752 690 728 717 670 670 670 684 CA San Francisco Area has highest regional average VantageScore in 2015 FL Miami / Ft. Lauderdale has lowest average VantageScore in 2015 #vision2016 18
Home sales analysis #vision2016 Richard Lombardi 19
Sale price and cash purchases Five geographic focus states Average Sale Price % Purchases Cash $600,000 70% $500,000 60% $400,000 50% $300,000 40% 30% $200,000 20% $100,000 10% $0 AZ CA CO FL NY 0% AZ CA CO FL NY 20
Affordability indices By state 80 60 40 20 0-20 -40-60 US AZ CA CO FL NY 21
Affordability indices Most and least affordable MSAs in 2015 for each state 80 60 40 AZ 40 30 20 10 CA 20 0 0-20 -40-10 -20-30 -40 US Sierra Vista Phoenix US Eureka-Fortuna San Fancisco 80 40 40 60 40 20 0-20 -40 FL 30 20 10 0-10 -20-30 NY 30 20 10 0-10 -20-30 CO -60-40 -40 US Pensacola Tampa-St. Petes. US New York Kingston US Grand Junction Denver 22
#vision2016 Emerging market spot trends 23
Foreign buyers Native language 2005 Cash share 2015 Cash share Percent increase Chinese speakers 14% 46% 229% All buyers 20% 33% 65% Native language 2005 Share of all buyers 2015 Share of all buyers Percent increase Mandarin 1.5% 1.7% 9% Hindi 1.4% 1.5% 3% English 83.8% 86.4% 3% Arabic <1% <1% 1% #vision2016 Sources: RealtyTrac, Ethnic Technologies 24
Eroding affordability Foreign buyer meccas Santa Cruz, CA Marin, CA New York, NY Kings, NY San Francisco, CA -50 0 50 100 2015Q2 2012Q2 2007Q2 25
Foreign buyers lender impact Miami-Dade share of home purchases all cash 69% 57% 17% #vision2016 26
Environmental crisis Porter Ranch, CA 27
Environmental crisis Seller impact Change in home sales Before and after Porter Ranch gas leak* 91326 (5YR Avg) 91326 (Porter Ranch) Northridge Ventura County LA County CA National -16% -17% -18% -32% -25% -25% -44% *Comparing sales in August 2015 to October 2015 period to sales in the November 2015 to January 2016 period. The Leak was discovered October 23, 2015. 28
Environmental crisis Lender impact Change in cash buyer share Before and after Porter Ranch gas leak* 50% 23% 27% 14% 10% 14% 11% 91326 (5YR Avg) 91326 (Porter Ranch) Northridge Ventura County LA County CA National *Comparing sales in August 2015 to October 2015 period to sales in the November 2015 to January 2016 period. The Leak was discovered October 23, 2015. 29
Institutional investors Home sale share 25% 23% 20% 15% 18% 10% 5% 0% 9% 7% 8% 8% 5% 6% 3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 U.S. Memphis Atlanta 30
200501 200504 200507 200510 200601 200604 200607 200610 200701 200704 200707 200 200801 200804 200807 200810 200901 200904 200907 200910 201001 201004 201007 201010 201101 201104 201107 201110 201201 201204 201207 201210 201301 201304 201307 201310 201401 201404 201407 201410 201501 201504 201507 201510 Borrower impacts Median home prices reaching new peaks $250,000 $200,000 $187,500 $150,000 $100,000 $140,000 $50,000 U.S. Atlanta-Sandy Springs-Roswell, GA Memphis, TN-MS-AR $- 31
Lender impacts Cash sale share of institutional investor purchases 86% 95% 86% 90% 93% 87% 87% 65% 67% U.S. Memphis Atlanta #vision2016 32
Best practices Understand the market Know your trends Know the industry Look at micro drivers and events Affordability Look out for emerging trends BE INFORMED 33
For additional information, please contact: #vision2016 Michele.Raneri@experian.com Twitter Handle: MLRaneri Follow us on Twitter: @ExperianVision #vision2016 34
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