AFFORDABILITY2015
0 likes289 views
This document summarizes key metrics that drive the US real estate market. It discusses 2014 trends and data for: 1) Home sales saw a slight decline from 2013 but picked up in the summer months. 2) Home prices increased 5.8% in 2014, nearing the long-term average annual growth rate. 3) Inventory levels loosened, helping ease price growth. 4) Mortgage rates averaged 4.17% in 2014, up slightly from the previous year. 5) Housing affordability increased modestly due to lower rates and slower home price growth, but remains below historical averages.
AFFORDABILITY2015
- 1. Copyright © 2015 Keller Williams Realty, Inc.
- 2. Copyright © 2015 Keller Williams Realty, Inc. The Numbers That Drive U.S. Real Estate 1. Home Sales 2. Home Price 3. Months Supply of Inventory 4. Mortgage Rates 5. Affordability
- 3. Copyright © 2015 Keller Williams Realty, Inc. 3 The Numbers That Drive U.S. Real Estate 1. Home Sales - Annual 4.93M homes sold in 2014—a slight drop from last year. This can be attributed to the slow start in the first quarter, as well as the drop in distressed sales and investor activity. ‘89 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05 ‘07 ‘09 ‘11 '13 '14 4.95.1 4.7 4.34.3 4.64.4 4.9 5.7 6.26.0 5.4 5.04.74.64.74.5 4.03.8 3.53.53.4 3.2 2.92.93.0 Total Annual Single-Family Home Sales (in Millions) Source: NAR 4.9 2014 Sales
- 4. Copyright © 2015 Keller Williams Realty, Inc. 4 The Numbers That Drive U.S. Real Estate 1. Home Sales - Monthly The year started slow but returned to a healthy trend once we moved out of the first quarter and into the summer. Jan '13 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan '14 Feb Mar Apr May Jun Jul Aug Sep Oct NovDec '14 5 4.9 5.3 5.2 5.15.1 5 4.9 4.7 4.64.64.6 4.9 4.8 5.1 5.3 5.45.4 5.1 5.2 555 4.9 Seasonally Adjusted Annual Rate of Home Sales Source: NAR
- 5. Copyright © 2015 Keller Williams Realty, Inc. 5 The Numbers That Drive U.S. Real Estate 2. Home Price - Annual Median price for 2014 was $208,500, an increase of 5.8%. We appear to be nearing the end of the bounce-back effect on home prices and are moving back to a long-term growth path. ‘89 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 '13 '14 '15 '16 '17 '18 '19 '20 Long-term Average = 4% Trend Reset Line Annual Median Home Price (in Thousands) $225 $222 $179 $198 $95 Source: NAR $166 $250 $208.5 17% $264 $317
- 6. Copyright © 2015 Keller Williams Realty, Inc. ‘89 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05 ‘07 ‘09 ‘11 '13 '14 5.8% 11.5% 6.3% -2.7% 0.6% -12.5% -9.8% -1.8% 1.3% 12.2% 8.3% 7.5%7.0%6.3% 4.3%3.8% 5.4%5.2%4.8% 3.1% 4.0%3.4%2.7% 5.5% 2.9% 5.9% Annual Median Home Price Appreciation 1989-2000 3.39% 2001-2006 8.9% 2007-2011 - 4.6% 6 The Numbers That Drive U.S. Real Estate 2. Home Price - Annual Appreciation On an annual basis home prices appreciated 5.8% for 2014, returning close to the long- term average as we predicted last year. Source: NAR
- 7. Copyright © 2015 Keller Williams Realty, Inc. 7 The Numbers That Drive U.S. Real Estate ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 '13 '14 Balanced = 6 months Annual Months Supply of Inventory 5.24.9 5.9 8.3 9.4 8.8 10.4 8.9 6.5 4.54.34.74.74.64.54.8 3. Months Supply of Inventory - Annual Inventory loosened in 2014, helping ease price growth back to sustainable levels. Buyer’sMktSeller’sMkt Source: NAR Balanced
- 8. Copyright © 2015 Keller Williams Realty, Inc. '72 '75 '80 '85 '90 '95 '00 '05 '10 '14 Annual Mortgage Rate (%) Historical Average from '72 - '14 Historical Average from '90 - '14 8 The Numbers That Drive U.S. Real Estate 4. Mortgage Rates - Annual Mortgage rates averaged 4.17% in 2014, up 19 basis points from last year’s average. Source: Freddie Mac 7.4 16.6 7.3 8.1 8.5 6.6 4.2
- 9. Copyright © 2015 Keller Williams Realty, Inc. 9 The Numbers That Drive U.S. Real Estate 4. Mortgage Rates - Monthly Jan '11 Jan '12 Nov '12 Dec '13 Jan '15 Monthly Mortgage Rate 3.9% 4.5% 4.8% 3.35% Source: Freddie Mac Rates balked most economist predictions and trended downward for most of 2014. 4.5% 4.2% 3.7%
- 10. Copyright © 2015 Keller Williams Realty, Inc. 15.0% 85.0% Everything Else Principal and Interest Payment 10 The Numbers That Drive U.S. Real Estate 14.2% 85.8% 5. Affordability - Percentage of Income The percentage of a typical family’s income increased only slightly in 2014, helped by the fall in interest rates and the slower growth in home prices. 21.6% 78.4% Historically 2014 Source: NAR 2013
- 11. Copyright © 2015 Keller Williams Realty, Inc. 11 The Numbers That Drive U.S. Real Estate 5. Affordability - Annual Despite the small increase in 2014, affordability remains well below the historical average due to low interest rates. Source: NAR 0 10 20 30 40 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 1514 13131415 18 22 2322 2019202021 19192020202019 21 232324 222223 26 28 30 3636 31 26 22 21202019 17161717 Affordability Historic Average 21.6
- 12. Copyright © 2015 Keller Williams Realty, Inc. 12 The Numbers That Drive U.S. Real Estate 5. Affordability in Perspective - House Payment Median Home Price: $94,000 (Adj. $179,461) Mortgage Rate: 10% Monthly P&I Payment: $825 (Adj. $1,572) Median Income: $28,906 (Adj. $54,305) Median Home Price: $208,500 Mortgage Rate: 4% Monthly P&I Payment: $995 Median Income: $52,250 1989 2014