National Economic Trends and the Real Estate Professional RE34RC03 Jody OBrien
Jan 29, 2015
National Economic Trends and the Real Estate Professional
RE34RC03
Jody OBrien
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
$
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
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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