Showing Optimism in the Housing Market. The information contained within this presentation statistical information representing trends on a national level.
2. A word about this presentation…
The information contained within this presentation statistical
information representing trends on a national level and is not
a projection or forecast on future trends in homeownership.
1
3. Agenda
Mortgage market outlook discussion topics:
Consumer confidence
Housing affordability and interest rates
Home pricing & sales information
Housing inventory update
Distressed property information
First-time homebuyer outlook
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4. Consumer confidence on the rise
1
• Consumer
confidence has been
trending upward since
2009
1. Center for Market Research and Measurement Economic and Mortgage Market Outlook, Spring 2012.
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5. Housing affordability is high,
interest rates are low
2
• Housing continues to be
affordable as interest rates are at
historic lows and affordability is at
record highs.
• Interest rates are expected to
remain low throughout 2012
Please note: These charts
2 reflect a national view. For
local information, please see
the local market reports on
the NAR web site at:
http://www.realtor.org/repo
rts/local-market-reports
2. Center for Market Research and Measurement
Economic and Mortgage Market Outlook, Spring 2012.
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6. Increasing home sales, decreasing housing
inventory
3
• The charts to the left show that
existing and new home sales are
increasing
What does this mean to you?
•As home sales increase, inventory
declines, decreasing the supply of
homes available for sale
3
• As the supply becomes more
closely aligned with demand, home
prices should increase
3. Data as of January 2012.
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7. New construction sales on the rise
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• Home sales will likely
increase in 2012 (average
5.7% for existing and new),
29%
14% with the great majority of
this increase is estimated to
5% 1% come from new construction
(14%)
• The 2nd chart shows that
housing starts beyond 2012
are expected to increase
dramatically
5
For new construction sales
information in your area, go
to: http://hanleywood.com
or
http://www.realtor.org/rep
orts/local-market-reports
4. As of Feb 2012. An average of MBA, FNMA, and
NAR (FHLMC does not include condos)
5. Data as of February 2012.
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8. Home sales estimate
• 40-45% of all home sales in 2011
went to current homeowners – a
combination of both primary residence
and vacation usage
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30-35% of home sales went to
FTHBs
20-25% of home sales went to
investors
• Investor share may continue to
increase somewhat as more REOs enter
the market
6. Data as of December 2011. • FTHBs are more likely to purchase
move-in properties or properties with
less damage
• Investors are more apt to purchase
properties they can add value to thereby
increasing the return on their investment
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9. First-time homebuyers
• Chart shows a significant downward
trend in the FTHB share of total
home buyers since the FTHB tax
credit expired in June 2010
FTHB share of home purchases (not
dollars) is expected to be about the
same or slightly less than the
current rate in 2012 (around 32 -
35%)
7. NAR Realtor Confidence Index Survey as of December 2011.
8. NAR. Profile of Home Buyers and Sellers, survey of customers who purchased. July 10 – June 11 (Does not include investors).
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10. First-time homebuyers have options
Potential FTHB market share decrease could be also be attributed to changes in
mortgage financing:
Tighter credit requirements Over half of first time buyers
Higher down payment requirements
(54%) chose FHA loans,
compared to 23% repeat
Lack of down payment funds
home buyers9
But there is hope! Government loans have flexible approval guidelines that
may help FTHB:
FHA loans: VA loans:
Low down payment requirements
No income restrictions No income restrictions
Expanded qualifying ratios No minimum credit score for loans
Nontraditional credit histories may under $700,000
be accepted10
Expanded qualifying ratios
Automatic “Total Scorecard”
approval for qualified applicants Nontraditional credit histories may
be accepted11
Down payment assistance programs
available to qualified applicants
9. Provided by NAR 2011 Profile of Home Buyers and
Sellers report.
10, 11. Homebuyer education required for customers who
are approved solely on nontraditional credit histories. 9
11. First-time homebuyers have options
Wells Fargo Home Mortgage products and programs give
homebuyers financing options:
Down payment assistance programs
Community Development Mortgage Program
Home Asset ManagementSM Account
Easy-to-OwnSM Native American Home Loan
Home OpportunitiesSM Program
Easy-to-OwnSM Guaranteed Rural Housing Program
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12. Summary
In conclusion, several indicators from research compiled shown today shows
positive signs for the housing market in 2012, potentially creating more
opportunities for you and your buyers:
Housing is expected to remain extremely affordable
Interest rates are expected to remain near or at all-time lows
Home sales are increasing
Homebuyer traffic is increasing with low inventory numbers occurring in some
areas
Home prices have begun to stabilize
FHA & VA loans, along with down payment assistance programs, and other Wells
Fargo product and program offerings, may provide additional financing options for
first-time homebuyers
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13. Why work with Wells Fargo?
Wells Fargo Home Mortgage is there for you in
all the ways you told us that matter most:
We work with you to build business, approve buyers and close deals
leveraging our StagecoachPriority® value package including:
PriorityBuyer® preapprovals12
Single Source® program
Buyer ConnectionsSM capabilities
12. A PriorityBuyer® preapproval is based on our preliminary review of credit information only and is not
a commitment to lend. We will be able to offer a loan commitment upon verification of application
information, satisfying all underwriting requirements and conditions, and providing an acceptable property,
appraisal and title report. Not available on nonconforming products or for certain FHA transactions.
For real estate professionals only. 12
14. Why work with Wells Fargo?
StagecoachPriority® value package:
Get the most out of the time and effort you spend showing homes with
our reliable PriorityBuyer® preapproval letter13, it:
Confirms your buyers are credit-checked and have completed
the first loan decisioning phase
Provides reliable, preapproved financing in clearly specified
loan amounts and terms on official Wells Fargo letterhead
13. A PriorityBuyer® preapproval is based on our preliminary review of credit information only and is not
a commitment to lend. We will be able to offer a loan commitment upon verification of application
information, satisfying all underwriting requirements and conditions, and providing an acceptable property,
appraisal and title report. Not available on nonconforming products or for certain FHA transactions.
For real estate professionals only. 13
15. Why work with Wells Fargo?
StagecoachPriority® value package:
Benefit from one connection to multiple lending solutions. Our Single
Source® program offers products that span a variety of customer
needs. You have the advantages of a single point of contact backed by
an integrated team of product specialists who can lend in all 50 states.
Products and programs Property types
Conventional loans Single-family
Renovation financing Condo & co-op
Non-conforming (Jumbo portfolio) loans Investment properties
The Relocation Mortgage Program® Vacation/second homes
Downpayment assistant programs (DAPs) REO and short sale properties
FHA & VA loans
New construction financing
Home equity financing
For real estate professionals only. 14
16. Why work with Wells Fargo?
StagecoachPriority® value package:
Team up for business opportunities! Through our Buyer
ConnectionsSM capabilities, we have the ability to identify and
introduce buyers and sellers who are not yet working with an agent
and recommend those customers to REALTORS® and builders in local
markets.
For real estate professionals only. 15
17. Why work with Wells Fargo?
Leverage the strength of Wells Fargo
We’re committed to being a leader in:
Keeping you informed about products, programs and industry changes
Sharing best practices from real estate industry experts
Leading homebuyer educational resources including My
FirstHomeSMonline educational program and My Home RoadmapSM
service.14
14. The My Home RoadmapSM service provides up to four sessions (an estimated 2 hours) of free
financial coaching with a National Foundation for Credit Counseling (NFCC) certified counselor from a NFCC
member organization that will be paid for by Wells Fargo Home Mortgage. At your option, you may
purchase additional coaching sessions or services or decide to participate in another NFCC member agency
program. Program may change or be discontinued at any time.
For real estate professionals only. 16
Editor's Notes
Before we get started I did want to let you that what I am about to share with you is not a projection or forecast of future trends in homeownership.
Talking points:Read the slide:Each year, insights about what the mortgage market created by various industry experts. These insights can be helpful to mortgage professionals and may also be helpful in your business as a real estate professional or builder. Today, I would like to show you some trends in the mortgage market. We are hoping that what we present today could be more helpful to you than what you may hear heard from the media.Discussion: What have you been hearing in the media about the housing outlook? What have you been hearing from consumers? Is their confidence positive or negative? How does your market look in the areas listed here?(Invite attendees to ask questions and join in the discussion at any point.)
Talking points: Read this slide. The upward trend in consumer confidence may create opportunities for you to capture those prospective homebuyers that have been waiting to sell their current homes and/or buy their first home because their confidence in the housing market has improved. Please note: Consumer confidence levels may vary from market to market. Discussion: Is this slide accurate with what you are experiencing in your market? If not, what have you heard about consumer confidence? Do you have prospective buyers that held off on making a move or homebuyer purchase decision until recently?
Talking points: Read the slide. Affordability index explanation – what does this mean?An index of 100 means that the person making median income and purchasing a median priced home can afford 100% of the monthly payment. The lower the index, the less affordable the market.With interest rates continuing to be low and home pricing continuing to be affordable, now is a great time for homebuyers. Please note: Housing affordability may vary from market to market. To find out what is relevant in your area, please go to: http://www.realtor.org/reports/local-market-reports Discussion: Do potential consumers understand/realize this current market situation? If not, how can we get the word out? If so, are they taking advantage or what are they waiting for? Is the information listed in this slide applicable in your market? If not, what is the affordability index in your area?
Talking points: Read the slide. Some areas, may be experiencing a shortage of housing inventory, like what is presented above. As a result, these areas may be more of a seller’s market than a buyer’s market. Discussion:What are inventory levels like in your market? Do the national figures reflect what you are seeing in your area? Is your market a seller’s market or buyer’s market? Have you experienced a short fall of housing in your market or some areas in your market? Have you received multiple bids on a single home in 2012?
Talking points: Read the slide. New construction home sales look very positive over the next few years. Now may the time to talk with your local builder to discuss their plans for building homes in the next few years. To find out what is relevant in your area, go to: http://hanleywood.com or http://www.realtor.org/reports/local-market-reports Discussion: Is your market experiencing an increase in sales of new construction homes and/or existing homes?If not, what trends are you seeing in home sales?
Talking points: Read the slide. This slide gives an overview of who (what homebuyer groups: FTHB, current homeowner, investor) is buying homes and their market share.The condition of these properties may drive who purchases the properties. FTHBs are more likely to purchase move-in properties or properties with less damage. Investors are more apt to purchase properties they can add value to thereby increasing the return on their investment. Discussion points: Is this what you are seeing in the local market? What challenges are you seeing with each of these buyers?
Talking points: Now let’s talk a little bit about the first-time homebuyer market. Read the slide. While there is a downward trend in the percentage of first-time homebuyers buying a home, opportunity is still significant for this homebuying group. As discussed in the previous slides, home affordability and low interest rates make this a great time for your FTHB clients to buy their first home. Discussion: What are some challenges your first-time homebuyers are seeing in your market? The next slide discuss options for some of the challenges that you may be having.
Talking points: Read the slide.Market conditions currently favor first-time homebuyers. As mentioned in the previous slides, historically low interest rates, attractive prices, and a variety of products and programs make this an ideal time to purchase a home.For more information about FHA and VA loans, I can set-up a separate meeting to discuss these in detail.
Talking points: Read the slide. Down payment assistance programs may be available to help cover down payment costs. At Wells Fargo, we have a team that manages all approved down payment assistance and community assistance programs available to our customers. This helps our team, as we can readily view any local approved programs that may help your qualified buyer purchase a home. Wells Fargo supports the following assistance programs (called Community Assistance Programs) for our customers & yours: Down Payment Assistance Programs (DAPs) Mortgage Revenue Bonds (MRBs) Mortgage Credit Certificates (MCCs) FHA Section 8 Housing Choice Voucher AssistanceIt important to note that WFHM will not allow use of a community assistance program if it does not meet the best interest of the client. In addition to government loan financing and down payment assistance programs, Wells Fargo Home Mortgage has other programs that may be able to assist homebuyers. If you would like to know more about these options, I would be happy to set-up another meeting discuss these in more detail Community Development Mortgage Program Home Asset Management Account Native American Home Lending Program Home Opportunities Program Easy to Own Guaranteed Rural Housing Program
Talking points: Read the slide.In any market, Wells Fargo Home Mortgage has financing programs that may be able to help your buyer’s find financing options, helping you serve more buyer’s needs.