HAR Chair Vicki Fullerton - Greater NW Presentation

Vicki FullertonHouston Association of REALTORS®

2009 Chair of the Board

What is HAR?• HAR is the largest individual membership association in Houston

with about 23,000 members.• It is also the second largest local REALTOR® association in the

country (behind the Long Island Board of REALTORS®)—But we are

catching up—only about 350 REALTORS® fewer• Its Web site, HAR.com, generates an average of about 1.5 billion

hits from more than one million unique visitors every month.• It is the only Web site that is local in scope that regularly ranks

among the top 25 real estate Web sites in the country.

What Does HAR Do?• HAR educates the public about the real estate market and

promotes the value of using the services of a REALTOR® in a

property transaction.• HAR also advocates on behalf of property owners and REALTOR®

members by representing their interests when communicating

with our elected officials.• It also develops new tools and services that our members may

use to help them be more efficient and effective in their jobs.

What Does HAR Not Do?• HAR does not “spin” the numbers to make the market look better

than it is.• An interview last year with the former chief economist for the National

Association of REALTORS® was printed in quite a few publications.

In the interview, he stated that he was pressured to paint a rosier

picture than he truly believed. HAR has credibility with the media and

consumers and has the responsibility to provide accurate and reliable

data and information, and that is what we do. No spin.• The good thing is that you can know when we say something, it is

what we honestly believe based on the statistics and activity in the field.

Headlines were very varied in 20082008 proved tough for area home sales

HOME SALES, PRICES DROP SHARPLY HERE

Mortgage applications hit five-year high

Houston housing gets a vote of confidence

Existing home sales sink in South

Recession carves away at real estate jobs

Another non-traditional player jumps into the MLS

game

Housing Market Failures Not Preventing Property

Investments

Officials Say Virtual Home Tours Could Attract Robbers

Ike takes wind out of area property sales

Houston Home Sales Have Declined

Sales Began Dropping in Early 2007

But Months Inventory isShowing Signs of Improvement

And Active Listings are Decreasing

Prices Have Held Up But are Tapering Off

Content

Condos/Townhomes Are A Good Leading Indicator…So We Hope For a Bounce

New Homes Sold Through the MLS Have Skyrocketed

New Homes Sold Through MLS

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Permits Show Depressed New Construction Market

The Haves and Have Nots in 2007…2007 Sales by Price Ranges

-15%

-10%

-5%

0%

5%

10%

15%

20%

$0-$80 $80-$150 $150$-250 $250-$500 $500+

Became More of the Have Nots in 2008

2008 Sales by Price Ranges

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

$0-$80 $80-$150 $150-$250 $250-$500 $500+

For All the Talk About Foreclosures… Less Than Half the 1980s

More mortgage workouts

What is in the American Recovery and Reinvestment Act (aka Stimulus Package)?• $8,000 tax credit for first-time• First-time homebuyer is defined as someone who has not owned a

home in the previous three years• Any unused amount of tax credit will be refunded to purchaser.• Full amount of credit available for individuals with adjusted gross

income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).

• No repayment for purchases on or after January 1, 2009 and before December 1, 2009

• If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.

What do we think about the stimulus package?

• It was a moderately good start to the problem.• It also raised the conforming loan limits back to 2008 levels, which is

important in high cost areas like California, New York and Florida. It doesn’t have an impact locally, other than to help strengthen the national housing market as a whole.

• The combination of the $8,000 tax credit and record low mortgage rates make for an attractive combination for first-time home buyers to get into the market.

• At the same time, many people continue to suffer from the “crisis of confidence”

• Until the overall economy stabilizes and people have less fears of losing their jobs, then we will likely continue to have a rough market

Making Home Affordable Program

• Here are the key elements of the Obama plan:

• The Home Affordable Refinance Program.  Under this program, eligible borrowers may refinance loans that Fannie Mae or Freddie Mac (the government sponsored enterprises, or GSEs) own or guarantee.  The program can help homeowner-occupants who are current in making loan payments and have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent.  Cash out refinancings are not permitted.  The program ends in June 2010.

Making Home Affordable Program

• Here are the key elements of the Obama plan:

• The Home Affordable Modification Program.  This is a $75 billion program with lender, servicer, investor, and borrower incentives to make it work.  The program is limited to homeowner-occupants who are at risk of default or already in default and who have loans at or below the maximum Government Sponsored Enterprise conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties).  Loan modifications under the program may be made until December 31, 2012.

Making Home Affordable Program

• Here are the key elements of the Obama plan:

• More Support for the Government Sponsored Enterprises (GSE).  President Obama also announced more support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth.  The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.

What do we think of the Obama plan?

• We are pleased that there is finally a focus on the root of the problem for the economy, which was the real estate industry.

• The real estate industry will also be what leads the economy back to healthier times though.

• We are generally supportive of the plan, but we do worry about helping to prop up those homeowners who have gotten themselves in trouble, rather than helping those who seem more able to make the payments.

• Any help for the real estate industry and homeowners is welcome though.

Troubling Times

• When there are times of trouble, many people take advantage of those who have less experience or knowledge about the real estate market.

• Recently, many scams have been targeting people who are among our most vulnerable citizens.

• Some have called and claimed to reduce their mortgage interest rate to absurdly low levels if they will send some amount of money. The person will send it thinking they are saving themselves from foreclosure, but it is a scam. Now the people are not only still in danger of foreclosure—but also lost a good amount of their savings

• There have also been many reports of scams utilizing Craigslist.com and other such sites

Positive Signs are Out There• President Obama has announced that he hopes millions of Americans will

take advantage of the historically low mortgage rates.

• Prices nationally have shown strength in recent months

• Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market

• Some recent consumer confidence surveys have shown increases since the beginning of the year—and this is necessary before the economy will be able to turn around

• Banks aided under the TARP plan have begun to pay back their debt to the country, signaling possible stabilization of the financial industry, which is critical

• The recent uptick in mortgage rates should spur some to “get off the fence,” but highlights longer-term questions

U.S. National Forecast• For all of 2008 there were 4,912,000 existing-home sales, which

was 13.1 percent below the 5,652,000 transactions recorded in 2007. This was the lowest volume since 1997 when there were 4,371,000 sales.

• Existing home sales for 2009 are projected at 4.98 million (a 1.4 percent increase), but are then seen to rise another 6.0 percent to 5.28 million in 2009

• New-home sales declined 37.5 percent to 485,000 in 2008 before an expected decline of another 33.2 percent to 324,000 in 2009

• Following national declines of 10 percent in 2008, home prices are projected to decline another 7.1 percent in 2009 and then rise by about 4 percent in 2010.

U.S. National Forecast• According to Freddie Mac, the national average commitment rate for

a 30-year, conventional, fixed-rate mortgage fell to a record low 4.81 percent in April from 5.00 percent in March; the rate was 5.92 percent in April 2008; data collection began in 1971.

• Last week, the 30-year fixed rate jumped to an average 5.32 percent this week, up from 4.91 percent the previous week, according to Freddie Mac.

• This uptick in mortgage interest rates may help spur some buyers who had been sitting on the sidelines to enter “before it’s too late.” We are still near historical lows though so it should help bolster the market when more stability returns.

• NAR predicts the 30-year fixed-rate mortgage should average 5.2 percent this year, before rising to 5.5 percent as an average for next year.

Where is Houston going?• We have seen steady double-digit increases in the number of leases

completed through the MLS, which are typically single-family homes. • Those renters are likely people who wanted to purchase but have been

caught by more stringent lending standards.• They are expected to enter the market in a year or more, as they have

saved more for a down payment and have corrected credit problems.• Also, despite declining energy prices which took away some of the

cushion we enjoyed, Houston is still cited in numerous reports as being one of the best real estate markets in the country and is expected to rebound earlier than most others. Houston added more than 42,000 jobs last year, through November, and it is still considered a stronger economy.

• The Association of Foreign Investors in Real Estate recently ranked Houston as the 8th best investment market in the world!

• Real estate will follow through on the economic conditions…as they improve, real estate will also.

What can we do together?• Contact your legislators to encourage them to OPPOSE the

mortgage interest deduction reduction, as currently proposed.

• Contact your legislators and ask them to get the Federal Reserve to

help restore liquidity for the jumbo mortgage market by buying these

loans under the TALF program.

• Call your legislators and thank them for passing a permanent ban

on banks in real estate. This was part of the omnibus

appropriations bill that President Obama signed earlier this year and

finally removes a huge potential market entrant threat for all of us.

What can we do together?• Stick together because that is what will sustain us as an industry.

• Try to remain positive. In the spring, HAR hosted two sessions called

“Generating Positive Buzz for Real Estate,” which had the goal of helping

to communicate the positive aspects of the real estate market and

homeownership.

• While times might continue to be a little bumpy during the first part of the

summer, we will come out of the other side, leaner and more efficient—

and ready to handle the certain influx of buyers who are just waiting for

the economy to turn around.

• Your HAR family will be there with you!

Thank [email protected]

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