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MARCH 2014

KCM Divided into

Three Sections

Be their ‘Expert’ This is a person to whom

people will turn for advice

on difficult or complex

real estate decisions.

90

95

100

105

110

115

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

100 = Historically Healthy Level

Pending Home Sales

NAR 2/2014

Existing Home Sales

NAR 2/2014

WEST

- 8.1%

MIDWEST

+2.0%

SOUTH +3.6%

NORTHEAST

+7.1%

U.S. + .8%

Year-over-Year as per

NAR’s 2013 4Q Report

% Change in House Sales

NAR 2/2014

10%

15%

20%

25%

30%

35%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Percentage of Distressed Property Sales

35%

15%

23%

Date Sales % Non-Distressed Total Non-distressed

Jan ’13 4.87M 77% 3.75M

Jan ‘14 4.62M 85% 3.93M

Non-Distressed Sales Still Up

-19.1%

-6%

3.9%

15.2%

19.4%

37.5%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+

% Sales +/- -19.1% -6% 3.9% 15.2% 19.4% 37.5%

Percentage Change

in Sales from a Year

Ago by Price Range

Bill McBride Calculated Risk Finance & Economics

The bottom line is the housing

weakness should be temporary. There

should be more inventory this year,

price increases should slow, and sales

volumes increase.

8.2% 7.9%

5.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

January 2013 December 2013 January 2014

Institutional Investor Sales

RealtyTrac 2/2014

WHO ARE THEY?

HOUSEHOLD TYPE

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

WHAT ARE SOURCES OF DOWNPAYMENT?

Savings

Gift from

Relative or Friend

Sale of Stocks or Bonds

401k/Pension Fund

Loan from

Relative or Friend

Inheritance

IRA

78%

27%

9%

8%

7%

4%

3%

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

Cut Spending

on Luxury Items

Cut Spending

on Entertainment

Cut Spending

on Clothes

Cancelled

Vacation Plans

Income from

a 2nd Job

Sold/Didn’t

Buy a Car

33%

27%

13%

9%

5%

40%

WHAT SACRIFICES DO THEY MAKE TO PURCHASE?

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

FINANCING

95%

5%0%

25%

50%

75%

100%

Mortgage Cash

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

3.25

3.5

3.75

4

4.25

4.5

4.75

2013 - 2014 30 Year Fixed Mortgage Rates

Freddie Mac 2/2014

Mortgage Rate

Projections

Analyst Projected Rate

1Q 2015

Fannie Mae 4.9%

National Assoc of Realtors 5.5%

Freddie Mac 5.1%

Mortgage Bankers Assoc 5.1%

2/2014

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-14 1Q 2015 P

Freddie Mac 2/2014

2003 - 2013 30 Year Fixed

Mortgage Rates

Buying is CHEAPER than

renting in ALL of the 100

largest metros by

an average of… 38 %

Trulia 2/2014

$300

$350

$400

$450

$500

$550

$600

$650

$700

$750

The Increasing Cost of Renting

Median Asking Rent

1988-2013

Census Bureau 2014

MILLENNIALS

3.8%

6.6%

Bachelor's Degree or More U.S.

Unemployment Rate: Millennials Ages 25-32 with

a Bachelor’s Degree vs. U.S. Rate

Bureau of Labor Statistics & Pew Research 2/2014

$45,500

$40,872

Bachelor's Degree or More U.S.

Median Annual Full Time Wage: Millennials

Ages 25-32 with Bachelor’s Degree vs. U.S. Rate

Bureau of Labor Statistics & Pew Research 2/2014

29% Have no student debt

$29.4K Average Student Debt

$335.33 Typical Payment

The Project on

Student Debt

Median HOUSEHOLD Income of Young Adults

(25-32 years old) Living in their Parents’ Home?

Pew Research 2/2014

$113,181

Millennials Belief in Real Estate and its Agents

Optimistic About

Real Estate In 2014 70%

Look To An Agent

For Sound Guidance 62%

Think A Good Agent Can

Maximize The Investment 70%

74%

4% 2%0%

10%

20%

30%

40%

50%

60%

70%

80%

Email Social Media Text

Method Used by

18-29 Year Olds to Download Information

Home

Prices

Year-over-Year Price Change by Region

FHFA 2013 4Q

Year-over-Year Price Change by State

FHFA 2013 4Q

Home Price

Expectation

Survey

A nationwide panel

of over one hundred

economists, real

estate experts and

investment & market

strategists.

Home Price Expectation Survey 2014 1Q

Average Annual %

APPRECIATION

4.54.0

3.7 3.7 3.8

2014 2015 2016 2017 2018

PROJECTED

Percentage Appreciation

Home Price Expectation Survey 2014 1Q

Home Price Expectation Survey 2014 1Q

Cumulative House Appreciation by 2018

19.4%

28.4%

19.7%

10.9%

Pre-Bubble

Trend Bulls All

Projections Bears

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

S&P Case Shiller 2/2014

Year-over-Year Change in Prices

RETURN ON INVESTMENT

49.2

33.3

9.3

65.7

Dow S&P NASDAQ Real Estate

January 2000 – February 2014

MSN Money.com, Case Shiller

S&P Case-Shiller Home Price Indices

S&P Case Shiller 2/2014

-24%

-20.8%

-16.8%

-14%-13%

-7.6%

-5%-6.2%

1.8% 0.9%

5%

1.6%

7.3%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Jan Feb March April May June July Aug Sept Oct Nov Dec Jan

% -24% -20.8 -16.8 -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0% 1.6% 7.3%

NAR 2/2014

Year-over-Year Inventory Levels

4.0

4.3

4.5

4.8

5.0

5.3

Jan Feb Mar Apr May Jun Jul August Sept Oct Nov Dec Jan

Months Inventory of Homes for Sale

5-6 Months =

Normal Market Inventory

NAR 2/2014

Months Inventory of Homes for Sale

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

5-6 Months = Normal Market Inventory

NAR 2/2014

Resources Slide Slide Title Link

6, 7, 9,

42, 43, 44

Pending Home Sales, Existing Home Sales,

% Distressed Property Sales, Year-over-Year

Inventory, Months Inventory Homes for Sale

http://www.realtor.org/

8 % Change in House Sales http://www.realtor.org/news-releases/2013/12/existing-home-sales-decline-in-

november-but-strong-price-gains-continue

10 Non-Distressed Sales Still Up http://www.realtor.org/news-releases/2014/02/existing-home-sales-drop-in-january-

while-prices-continue-to-grow

11 Percentage Change in Sales from a Year Ago

by Price Range

http://economistsoutlook.blogs.realtor.org/2014/02/23/a-closer-look-at-the-latest-ehs-

release/

12 Bill McBride Quote

http://www.calculatedriskblog.com/2014/02/housing-weakness-temporary-or-

enduring.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3

A+CalculatedRisk+%28Calculated+Risk%29

13 Institutional Investor Sales http://www.realtytrac.com/content/foreclosure-market-report

14-17 First Time Homebuyers http://www.realtor.org/ - NAR’s 2013 Profile of Home Buyers & Sellers

18, 20 30 Year Fixed Mortgage Rates http://www.freddiemac.com/pmms

19 Mortgage Rate Projections

http://fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_011314.pdf

http://www.freddiemac.com/finance/docs/Jan_2014_public_outlook.pdf

http://www.mortgagebankers.org/files/Bulletin/InternalResource/86783_.pdf

http://www.realtor.org/sites/default/files/reports/2013/embargoes/phs-12-30-

illtratatb/forecast-1-2014-us-economic-outlook-12-30-2013.pdf

22 Buying is Cheaper http://trends.truliablog.com/category/rent-vs-buy-index/

23 Increasing Cost of Renting http://www.census.gov/housing/hvs/data/histtabs.html

Resources Slide Slide Title Link

25, 26 Millennials: Unemployment & Income http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/

http://www.bls.gov/

27 Project on Student Debt http://projectonstudentdebt.org/

28 Median Household Income of Millennials Living at

Home

http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-

college/6/#appendix-c-young-adult-living-arrangements-and-household-incomes

29 Millennials Belief in Real Estate & It’s Agents https://www.prudentialrealestate.com/Portals/0/Documents/Prudential%20Q4%20Co

nsumer%20Outlook%20Infographic.jpg

30 Methods Used to Download http://www.mediabistro.com/alltwitter/files/2012/08/email-vs-social-media-

marketing.jpeg

32, 33 Year-Over-Year Price Changes Regional & State www.fhfa.gov

35, 36,

37

Avg. Annual % Appreciation, Projected %

Appreciation, Cumulative Appreciation https://www.pulsenomics.com/Q4_2013_HPE_Survey.php

39 Year-over-Year Change in Price http://www.spindices.com/index-family/real-estate/sp-case-shiller

40 Return on Investment http://www.spindices.com/index-family/real-estate/sp-case-shiller

http://money.msn.com/

41 Case-Shiller Home Price Index https://www.spice-indices.com/idpfiles/spice-

assets/resources/public/documents/79678_cshomeprice-release-0225.pdf

48, 51 The Power of Using Visuals http://www.macrovu.com/VTVCInterEffectiveness.html

49, 50 The Power of Using Visuals https://www.osha.gov/doc/outreachtraining/htmlfiles/traintec.html

The Power of Using Visuals

Percentage Making a Decision

Immediately after Presentation

Percentage Increase Seeing

Presenter as More Convincing

64% 34%

24%

MacroVU

Visual

Learning

Compared Identical

Presentations

With and Without

Visuals

Amount of Time the

Presentation was Reduced By

The Power of Using Visuals

83%

11%3.5% 1.5% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Visual Sound Smell Touch Taste

Studies by Educational

Researchers Suggest that

Human Learning Occurs by Approximately

these Percentages

OSHA

The Power of Using Visuals

10%

35%

65%

0%

10%

20%

30%

40%

50%

60%

70%

Oral Presentation Visual Presentation Oral & Visual Presentation

Studies suggest that three days after a

presentation, people retain these

percentages of what they heard

OSHA

MacroVU

Visual Learning

The Power of Using Visuals

Presenters using visuals were perceived as more effective.

People said such things as…

More

Interesting

More

Concise

More

Professional More

Credible

Better

Prepared