MA CEU National Economic Trends and the Real Estate Professional - RE34RC03

National Economic Trends and the Real Estate Professional

RE34RC03

Jody OBrien

CEU Outline

Legacy from 2005 and beyond

Mortgage Interest DeductionA 2010 paper from the Tax Policy Center analyzed the potential effects of different tax proposals on housing prices. Among its findings:

Taken in isolation, the proposal to limit the value of the mortgage interest deduction to 28 percent would reduce metropolitan housing values by 6.9 to 15.0 percent.

In Boston, a typical single family home worth $300,000 would be reduced to $255,000 - $279,000

New MA Foreclosure Law Eaton Affadavit Loan modifications 150 day wait Must Activly persue loan modification Certain Mortgage Loans (CML) A 3 Year (or less) ARM. Interest only feature (equity lines excluded). Negative amortization feature. Did not require full documentation of income or assets. Contains prepayment fees. LTV >=90 and DTI > 38%. CLTV >95%.

Pre qualification versus Pre Approval Metro Brokers Blog - Does Your Buyer’s Pre-Qualification

Hold Water? by Judy Jones

Interest Rates

Interest Rates

Below 6% for five years Hoover around 6% for over a decade Interest rates will rise

All Cash Buyers

Average

Unemployment/underemployment

US Employment

Good news: the unemployment rate is 6.7 percent, which is a meaningful improvement over the past four years.

Bad news: the employment rate – how many of the adult population have jobs –stood at 58.8 percent, which is no improvement over the past five years.

NAR February 2014 Employment report

Good news: the number of people who are unemployed for more than 6 months is falling.

Bad news: the number of people with part-time jobs due to lack of full-time work remains high with no measurable declines.

NAR February 2014 Employment report

Massachusetts Housing Market

VOLUME

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Housing Affordability

Current Unemployment rate 6.5% Unemployment lags behind economic recovery Does not take into account the “underemployed”

Homeownership

Homeownership Rate Homeownership Rates Have Fallen Across the Board, But

More Sharply Among the Young

Homeownership Rates Are Close to Historic Lows for Most Age Groups,

Continued High Ownership Among Seniors Will Buoy Overall Rate

Effects of Rental Market

• Household growth is heavily skewed toward renters

Homeownership/ Boomers

51% of Boomers said they are ready to sell 47% will stay in same area

Second Homes/Investment Real Estate

Largest amount of real estate equity 25% own second piece of real estate 5% own a vacation home 39% say they intend to make their seasonal home their

primary residence

U.S. homeownership rate dropped to 65 percent in the first quarter of 2013, its lowest point since 1995 - It peaked at 69.2 percent in the second quarter of 2004

The rate was highest for people 65 and older, at 80.4 percent, and lowest for people under 35 years, at 36.8 percent.

U.S. Census Bureau

New Home Starts

Household Demographics U.S. population 2006 282 Million 2050 420 Million Need to add 90 Million housing units Home sales of existing homes will rise from 7 million to

12 million in 2050

Household Demographics - MA

Second highest personal income Below average in new housing units 47th in building permits 1980 - 9% of the workforce was immigrants 2004 - 17% of the workforce was immigrants

The Baby Boom Important Influence on the Shape of Housing Demand

Projected Household Growth 2010-2020 (Thousands)

Source: JCHS Working Paper W10-9.

Home Price Trend Supply v Demand

Source: National Association of REALTORS®

Age of Repeat Home Buyers HasSteadily Increased Nationally…

Aggregate Months Supply

Visible Existing Home Inventory(6-year lows)

Buyers and Sellers need: Regain confidence Hear a positive message Be educated Fiscally responsible Hold the key to economic recovery

Jody O’BrienThe RE/Education Company

Committed to Professionalism in Real Estate through Education

Blogwww.reeducator.wordpress.com Presentation www.slideshare.net/ReEducationCompanySocial Mediawww.twitter.com/reeducatorwww.youtube.com/msreeducatorwww.facebook.com/reeducatorwww.linkedin.com/in/reeductor

Thank you for Attending

Thank you for Attending

CEU certificates will be issued by Century 21 Commonwealth

Verification of attendance for 2 hours must be confirmed through gotowebinar’s reports

Questions may be directed to training@commonmoves.com

A copy of the presentation can be downloaded at www.slideshare.net/ReEducationCompany

Jody O’BrienThe RE/Education Company

Committed to Professionalism in Real Estate through Education

Blogwww.reeducator.wordpress.comPresentationwww.slideshare.net/ReEducationCompanySocial Mediawww.twitter.com/reeducatorwww.youtube.com/msreeducatorwww.facebook.com/reeducatorwww.linkedin.com/in/reeducator

Thank you for Attending