U.S. Housing Markets: Looking Back, Looking Forward Dr. Raphael Bostic Assistant Secretary, Office of Policy Development and Research U.S. Department of Housing and Urban Development Special Thanks Ed Szymanoski, Kevin Kane, and Randall Goodnight VCU Real Estate Trends Conference Richmond, VA October 12, 2010
Percentage Change Nonfarm Payrolls Annual Percentage Change (12-month avg.) 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0-5.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Percent $ Trillions Trends in Unemployment Rate and Real Gross Domestic Product Unemployment Rate (left axis) Real GDP (right axis) 12 13.5 10 13.0 8 6 4 12.5 12.0 2 11.5 0 11.0 Year and Quarter Source: IHS Global Insight
Broader Market Overview Summary Sales market conditions remain soft in much of the country but continue to improve in many areas Data on home sales prices indicate improvement Home sales, previously supported by the homebuyer tax credit, have leveled off Inventories of new and existing homes for sale are down from a year ago and coming closer to balance Rental market conditions are mixed throughout the country Significant declines in multifamily permits have continued
Regional Conditions 2Q 2010 Sales Markets Rental Markets Region I (New England) Balanced Balanced Region II (NY/NJ) Slightly Soft Balanced (NYC Tight) Region III (Mid-Atlantic) Slightly Soft Mixed Region IV (SE-Caribbean) Soft Soft Region V (Midwest Soft Mixed (soft/balanced) Region VI (Southwest) Slightly Soft Soft Region VII (Great Plains) Balanced (Soft in MO) Soft Region VIII (Rocky Mtns.) Soft Mixed Region IX (Pacific) Soft Mixed Region X (Northwest) Soft Balanced
$ Thousands Commonly Cited Home Price Indices Showing Signs of Stability Trend Lines Starting From Median Home Price of $167,000 in January 2003 270 250 S&P Case-Shiller Index 230 210 190 170 FHFA Monthly Index 150 Sources: Standard and Poor's Case-Shiller 20-Metro Composite Index (not seasonally adjusted), Federal Housing Finance Agency Monthly Purchase Only Index for the US (seasonally adjusted), and National Association of Realtors: Median Price of Existing Homes S old.
Percent of Loans Serviced Subprime Delinquencies Rose Prior to the Recession: Percent of Total Loans Past Due By Product Type 30 25 20 Subprime 15 10 FHA 5 All Loans 0 Prime Source: Mortgage Bankers Association, National Delinquency Survey. Data are seasonally adjusted. Year and Quarter
Foreclosure Starts and Completions Remain Elevated Monthly Foreclosure Actions (Thousands) 160.0 Cumulative foreclosure completions since April 2009: 1.42 million (Includes investor, second home, and jumbo properties) Foreclosure Starts 120.0 80.0 Foreclosure Completions 40.0 Source: Realty Trac.
Existing and New Home Sales Monthly Sales (Thousands) 800 600 Existing Home Sales (left axis) 120 100 80 400 60 200 0 New Home Sales (right axis) 40 20 0 Seasonally Adjusted Source: National Association of Realtors, Census Bureau, and HUD.
Existing Homes on the Market Below Peak, But Number of Units Held Off the Market Has Increased Existing Homes Available for Sale (End of Period) and Total Vacant Housing Units (Year Round) Off Market (Millions) 5 4 Existing Homes on Market 3 Units Held Off Market 2 Sources: National Association of Realtors and Census Bureau.
Percent Millions of Units 12 Quarterly Rental and Owner Vacancy Rates and Vacant Units Held Off the Market for U.S. 4.5 10 Rental Vacancy Rate (Left Axis) 4.0 8 3.5 6 Vacant Units Held Off Market (Right Axis) 3.0 2.5 4 2 Owner Vacancy Rate (Left Axis) 2.0 1.5 0 1.0 Year and Quarter Note: Vacancy rates are calculated as vacant units for rent (sale) as a percent of the sum of occupied and vacant rental (owner) un its. Vacant units held off the market are not included in vacancy rate calculations. Foreclosures can affect all categories of vacancies, but a re especially affecting units held off market. Source: Commerce Department, Bureau of the Census
20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Percentage Change in SF Activity 12 Months Ending 6/09 to 6/10
The Federal Response Federal Reserve purchases of GSE MBS Treasury backstop on GSEs Home Affordable Mortgage Program Housing Counseling Housing Finance Agency initiatives First-Time Homebuyer Tax Credit Low-income Housing Tax Credit program changes Neighborhood Stabilization program
9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Mortgage Rates Fall to Record Low and Affordability Index Remains High Percentage Rates (left axis) and Index Values 30-Yr Fixed Mortgage Rate (left axis) Housing Affordability Index (right axis) 190 180 170 160 150 140 130 120 110 100 90 80 Sources: Freddie Mac and National Association of Realtors.
7.1 Million Homeowners Have Refinanced Since April 1, 2009 Quarterly Refinance Mortgage Originations (Thousands) 6,000 5,000 4,000 3,000 2,000 1,000 0 Sources: Mortgage Bankers Association and HUD.
20 Homeowners Save From Reduced Mortgage Payments Annualized Savings from Payment Reductions ($ Billions) 15 10 5 0 2009 Q4 2010 Q1 2010 Q2 All Refinances HAMP Modifications Aggregate annual reduction in mortgage payments on refinances and loan modifications since April 1, 2009. Sources: MBA, Treasury, Freddie Mac, and HUD.
16 Home Equity Up More than $1 Trillion Since First Quarter 2009 Owners Equity in Household Real Estate at End of Period ($ Trillions) 14 12 10 8 6 4 2 0 Source: Federal Reserve Board.
Mortgage Aid Has Been Extended More Than 3 Million Times, Outpacing Foreclosures Cumulative Mortgages Offered Aid or Foreclosed Since April 1, 2009 (Millions) Mortgage modifications initiated since April 1, 2009: 3.35 million 4 3 2 1 0 FHA Loss Mitigation Hope Now Modifications HAMP Modifications Foreclosure Completions Sources: HUD, Dept. of Treasury, Hope Now Alliance, and Realty Trac.
FHA Supports Mortgage Lending During Crisis FHA as Share of Quarterly Mortgage Originations by Type (Percent) 35 30 25 20 15 10 5 0 Purchase Refinance Combined Sources: MBA and HUD..
Housing Counselors Serve Millions of Families Cumulative Households Counseled Since Apr 1, 2009 (Thousands) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 Source: HUD.
Expectations on House Prices Have Shifted Up from 2009 S&P/Case-Shiller, House Price Futures Index (Jan 2000 = 100) 225 200 175 House Price Futures Sep 2010 (dashed line) 150 125 S&P/Case-Shiller Index, NSA (solid line) 100 75 House Price Futures Jan 2009 (dashed line) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: Standard and Poor's and Radar Logic.
Additional New Programs NSP III First Look FHA Short Sale program Hardest Hit Fund Emergency Homeowner Loan Program Rental Policies
THANK YOU Key Web Links Dept. of Housing and Urban Development: www.hud.gov HUD Data and Research: www.huduser.org Housing Scorecard: www.hud.gov/scorecard