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© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Real Estate Update National Multifamily Housing Council Research Forum
April 2015
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Summary and Outline
2
• Home price growth stabilizing
• Home sales and purchase originations up modestly
• Mortgage performance and negative equity improving
• Supply of mortgage credit modestly tight
• Demand for mortgage credit is very weak
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Home Price Deceleration Moderates Percent Change from a Year Ago
3
Source: CoreLogic, January 2015
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Jan-
90
Sep
-90
May
-91
Jan-
92
Sep
-92
May
-93
Jan-
94
Sep
-94
May
-95
Jan-
96
Sep
-96
May
-97
Jan-
98
Sep
-98
May
-99
Jan-
00
Sep
-00
May
-01
Jan-
02
Sep
-02
May
-03
Jan-
04
Sep
-04
May
-05
Jan-
06
Sep
-06
May
-07
Jan-
08
Sep
-08
May
-09
Jan-
10
Sep
-10
May
-11
Jan-
12
Sep
-12
May
-13
Jan-
14
Sep
-14
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Texas Top the List Percent Change from Year Ago
4
Source: CoreLogic, January 2015
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Home Sales Improving Sales Helped by Lower Rates During the Latter Half of 2014
5
Source: CoreLogic, January 2015
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0
2
4
6
8
10
12
JAN
-200
1 M
AY-2
001
SE
P-2
001
JAN
-200
2 M
AY-2
002
SE
P-2
002
JAN
-200
3 M
AY-2
003
SE
P-2
003
JAN
-200
4 M
AY-2
004
SE
P-2
004
JAN
-200
5 M
AY-2
005
SE
P-2
005
JAN
-200
6 M
AY-2
006
SE
P-2
006
JAN
-200
7 M
AY-2
007
SE
P-2
007
JAN
-200
8 M
AY-2
008
SE
P-2
008
JAN
-200
9 M
AY-2
009
SE
P-2
009
JAN
-201
0 M
AY-2
010
SE
P-2
010
JAN
-201
1 M
AY-2
011
SE
P-2
011
JAN
-201
2 M
AY-2
012
SE
P-2
012
JAN
-201
3 M
AY-2
013
SE
P-2
013
JAN
-201
4 M
AY-2
014
SE
P-2
014
JAN
-201
5
Mill
ions
Home Sales Percent Change in Sales from Year Earlier - Right Axis
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Distressed Sales Clearing Out
REO and Short Sale Share
6
Source: CoreLogic, December 2014
Cash Sale Share
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Purchase Mortgage Originations Below Level in 2001
7
Source: CoreLogic, December 2014
Number of 1st Lien Residential Mortgage Originations, 12 Month Sum Percent Change in 1st Lien Residential Mortgage Originations
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Purchase Demand is Much More Sensitive to Mortgage Rate Increases
8
Source: MBA, Freddie Mac and CoreLogic
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Mortgage Market Segments
9
Source: CoreLogic, November 2014
Jumbo Share of Purchase Originations VA Share of Purchase Originations
0%
1%
2%
3%
4%
5%
6%
7%
8%
Jan-
00
Mar
-01
May
-02
Jul-0
3 S
ep-0
4 N
ov-0
5 Ja
n-07
M
ar-0
8 M
ay-0
9 Ju
l-10
Sep
-11
Nov
-12
Jan-
14
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Jan-
00
Feb-
01
Mar
-02
Apr
-03
May
-04
Jun-
05
Jul-0
6 A
ug-0
7 S
ep-0
8 O
ct-0
9 N
ov-1
0 D
ec-1
1 Ja
n-13
Fe
b-14
FHA Share of Purchase Originations
0%
2%
4%
6%
8%
10%
12%
14%
Jan-
00
Feb-
01
Mar
-02
Apr
-03
May
-04
Jun-
05
Jul-0
6 A
ug-0
7 S
ep-0
8 O
ct-0
9 N
ov-1
0 D
ec-1
1 Ja
n-13
Fe
b-14
Jumbo-Conforming Non-Conforming
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Performance and Negative Equity Decline
10
Source: CoreLogic, January 2015
90+ Delinquency Rate
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
JAN
-200
0 A
UG
-200
0 M
AR
-200
1 O
CT-
2001
M
AY-2
002
DE
C-2
002
JUL-
2003
FE
B-2
004
SE
P-2
004
AP
R-2
005
NO
V-20
05
JUN
-200
6 JA
N-2
007
AU
G-2
007
MA
R-2
008
OC
T-20
08
MAY
-200
9 D
EC
-200
9 JU
L-20
10
FEB
-201
1 S
EP
-201
1 A
PR
-201
2 N
OV-
2012
JU
N-2
013
JAN
-201
4 A
UG
-201
4
3.0%
8.0%
13.0%
18.0%
23.0%
28.0%
SE
P-2
009
DE
C-2
009
MA
R-2
010
JUN
-201
0 S
EP
-201
0 D
EC
-201
0 M
AR
-201
1 JU
N-2
011
SE
P-2
011
DE
C-2
011
MA
R-2
012
JUN
-201
2 S
EP
-201
2 D
EC
-201
2 M
AR
-201
3 JU
N-2
013
SE
P-2
013
DE
C-2
013
MA
R-2
014
JUN
-201
4 S
EP
-201
4 D
EC
-201
4
Negative Equity Share
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 11
The Supply vs Demand for Mortgage Credit
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 12
Purchase Credit Box Visualization
< 55
55+
- 60
60+
- 65
65+
- 70
70+
- 75
75+
- 80
80+
- 85
85+
- 90
90+
- 95
95+
- 100
100+
- 10
5
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
<500
52
0 - 5
39
560
- 579
60
0 - 6
19
640
- 659
68
0 - 6
99
720
- 739
76
0 - 7
79
800+
2000 Purchase Credit Box
LTV
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 13
Purchase Credit Box Visualization
< 55
55+
- 60
60+
- 65
65+
- 70
70+
- 75
75+
- 80
80+
- 85
85+
- 90
90+
- 95
95+
- 100
100+
- 10
5
0.0%
2.0%
4.0%
6.0% <5
00
520
- 539
56
0 - 5
79
600
- 619
64
0 - 6
59
680
- 699
72
0 - 7
39
760
- 779
80
0+
2005 Purchase Credit Box
LTV
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 14
< 55
55+
- 60
60+
- 65
65+
- 70
70+
- 75
75+
- 80
80+
- 85
85+
- 90
90+
- 95
95+
- 100
100+
- 10
5
0.0%
2.0%
4.0%
6.0% <5
00
520
- 539
56
0 - 5
79
600
- 619
64
0 - 6
59
680
- 699
72
0 - 7
39
760
- 779
80
0+
2010 Purchase Credit Box
LTV
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 15
55+
- 60
60+
- 65
65+
- 70
70+
- 75
75+
- 80
80+
- 85
85+
- 90
90+
- 95
95+
- 100
100+
- 10
5
0.0%
2.0%
4.0%
6.0% <5
00
520
- 539
56
0 - 5
79
600
- 619
64
0 - 6
59
680
- 699
72
0 - 7
39
760
- 779
80
0+
2014 Purchase Credit Box
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Is Purchase Underwriting Loosening?
16
10th Percentile Credit Score for Purchase Loans
Source: CoreLogic, December 2014, 30-year fixed-rate purchase mortgages only
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Housing Credit Index (HCI)
17 Source: CoreLogic, December 2014
• Credit Score • Loan-to-Value Ratio (LTV) • Debt to Income Ratio (DTI) • Broker Share • Adjustable Rate Mortgage Share • Documentation Type
HCI Factors
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Housing Credit Index
18
by Loan Purpose
Source: CoreLogic, December 2014
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Housing Credit Index
19
Purchase Index by Census Region
Source: CoreLogic, December 2014
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Demand for Credit is Weak
20
Source: Federal Reserve
1st Lien Purchase Mortgage Applications at Same Level as 20 Years Ago
0
2
4
6
8
10
12
14
Mill
ions
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 21
Source: Census
Real Median Income at Same Level as Late 1980s
$40,000
$42,000
$44,000
$46,000
$48,000
$50,000
$52,000
$54,000
$56,000
$58,000 19
75
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Demand for Credit is Weak
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Housing is Unaffordable Price to Rent Ratio
22
Source: CoreLogic, BLS January 2015
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Low End Prices Up Twice as Much as Upper End
23
Source: CoreLogic, BLS December 2014
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Leverage Driving Up Low End Prices and Foreclosures
24
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
1950s 1960s 1970s 1980s 1990s 2000s 2010s
FHA
Conventional
Foreclosure Rates Consistently Rise Since 1980s
Source: MBA, FHA, FDIC, CoreLogic
0.00
1.00
2.00
3.00
4.00
5.00
6.00
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
1959
19
61
1963
19
65
1967
19
69
1971
19
73
1975
19
77
1979
19
81
1983
19
85
1987
19
89
1991
19
93
1995
19
97
1999
20
01
2003
20
05
2007
20
09
2011
20
13
LTV Ratio Conventional Foreclosure Rate - Right Axis
Leverage Drives Foreclosure Rates LTV Ratio Foreclosure Rate, Percent
Source: MBA, FHA, FDIC, CoreLogic, Census
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Buyers Active in Market Have Much Higher Incomes
25
Source: CoreLogic, BLS December 2014
Purchase Owner-Occupied Homebuyer Income Index
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential
Key Oil Markets Much Less Overvalued Than Prior Cycles
26
Source: CoreLogic, December 2014
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Jan-
81
Feb-
82
Mar
-83
Apr
-84
May
-85
Jun-
86
Jul-8
7 A
ug-8
8 S
ep-8
9 O
ct-9
0 N
ov-9
1 D
ec-9
2 Ja
n-94
Fe
b-95
M
ar-9
6 A
pr-9
7 M
ay-9
8 Ju
n-99
Ju
l-00
Aug
-01
Sep
-02
Oct
-03
Nov
-04
Dec
-05
Jan-
07
Feb-
08
Mar
-09
Apr
-10
May
-11
Jun-
12
Jul-1
3 A
ug-1
4
Deviation of Prices from Fundamentals
Houston, TX New Orleans, LA Oklahoma City, OK
© 2015 CoreLogic, Inc. All rights reserved. Proprietary & Confidential © 2015 CoreLogic, Inc. All rights reserved.
CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries. 27
The views, opinions, forecasts and estimates herein are those of the CoreLogic Office of the Chief Economist, are subject to change without notice and do not necessarily reflect the position of CoreLogic or its management. The Office of the Chief Economist makes every effort to provide accurate and reliable information, however, it does not guarantee accuracy, completeness, timeliness or suitability for any particular purpose.
Thank You!
www.corelogic.com/blog/
@CoreLogicEcon @Telegram__Sam
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