Presented to Membership of the Lake Gaston Association. Christine Thompson. June 10, 2014

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1 Presented to Membership of the Lake Gaston Association Christine Thompson June 10, 2014

2 About your speaker Christine Thompson Real Estate Sales & Service at Lake Gaston for 13+ years Advanced training & certifications as Accredited Buyers Rep Resort & Second Home Property Specialist Short Sale & Foreclosure Resource Member of National Association of Realtors (NAR)& Roanoke Valley/Lake Gaston Board of Realtors (RVLG) Licensed as Associate Broker -NC, Salesperson -VA Past Volunteer Service as Director, Lake Gaston/Roanoke Valley Board of Realtors Secretary/Treasurer & Chair for the MLS of the RVLG Board Director, Webmaster & Chair of the Communications and Membership Committees of the Lake Gaston Association

3 REAL ESTATE WHERE IT HAS BEEN

4 Housing Bubble and Correction The national housing bubblewas characterized by the valuations of real estate that increased so rapidly until the values reached unsustainable levels. The housing boom ended August This was followed by a market correction in July 2006 in which home prices began to decline.

5 What Happened? Affordability conditions deteriorated Mortgage rates rose (by 1%) Speculative investors pulled out Homebuyer confidence plunged Resort & trade-up buyers went to sidelines First-time buyers priced out of market NAR s Chief Economist s Explanation (in 2006)

6 Lake Gaston Sales History 6-Year Difference in Median Sales Prices: Property Type % Change House: Waterfront $503,950 $369, % House: Off-water $110,000 $ 84, % Lot: Waterfront $310,000 $195, % Lot: Off-water $ 31,000 $ 15, % Sales data was obtained from the Roanoke Valley Lake Gaston Board of Realtors Multiple Listing Service (MLS).

7 In our Wake?

8 Distressed Properties In the past 2 years, Foreclosures droppedsignificantly, but they are still high about 20% Short Sales spikedsignificantly Short sales cost less than foreclosures for banks

9 Then and Now: Waterfront HOMES YEAR AVERAGE SELLING PRICE % CHANGE MEDIAN SELLING PRICE % CHANGE 2013 $396,347 0% $369,500-3% 2012 $394,712-15% $382,500-11% 2011 $463,674 0% $430,000 0% 2010 $462,512 4% $431,600 3% 2009 $444,379-17% $420,000-17% 2008 $536,116-7% $503,950-5% 2007 $577,239 9% $530,000 7%

10 Then and Now: Off-water HOMES YEAR AVERAGE SELLING PRICE % CHANGE MEDIAN SELLING PRICE % CHANGE 2013 $99,050-11% $84,000-16% 2012 $111,501 15% $100,000 26% 2011 $96,948-14% $79,375-28% 2010 $112,582-5% $110,000 26% 2009 $118,341-6% $87,350-21% 2008 $125,376 5% $110,000 11% 2007 $119,730-4% $99,000-11%

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12 Then and Now: Waterfront LOTS YEAR AVERAGE SELLING PRICE % CHANGE MEDIAN SELLING PRICE % CHANGE 2013 $252,161 33% $195,000 8% 2012 $189,729 2% $180,000-3% 2011 $185,250 3% $185,000 42% 2010 $180,685 5% $130,000-7% 2009 $172,400-43% $139,500-55% 2008 $303,891 1% $310,000 3% 2007 $301,899 13% $300,000 18%

13 Then and Now: Off-water LOTS YEAR AVERAGE SELLING PRICE % CHANGE MEDIAN SELLING PRICE % CHANGE 2013 $27,427 43% $15,000-8% 2012 $19,126-33% $16,250-34% 2011 $28,696 17% $24,500 18% 2010 $24,599-30% $20,700 18% 2009 $35,101-11% $17,500-44% 2008 $39,650 26% $31,000 35% 2007 $31,474 14% $22,950 15%

14 Commercial Sales No reported sales in our MLS for 2013 or 2014

15 National vs. Lake Gaston Average Sales Price Comparison Year National vs. Lake Gaston Difference 2013 $214,000 $285, % 2012 $225,400 $300, % 2011 $214,000 $341, % 2010 $218,700 $309, % 2009 $216,900 $286, % 2008 $242,700 $351, % 2007 $266,000 $346, %

16 Investment & Vacation Sales: 2013 Investment Property Sales Decline Investment-home sales fell 8.5% in 2013 Median Investment-home price up 13% from 2012 Vacation Home Sales Surge Jumped 29.7%, spurred by a strong stock market Still about 33% below peak activity seen in % of vacation homes were distressed sales

17 SALES HISTORY: # OF TRANSACTIONS YEAR WATERFRONT HOUSES % CHANGE OFF-WATER HOUSES % CHANGE % 99 36% % 73 26% % 58-23% % 75-9% % 82-15% % 96-32% % %

18 SALES HISTORY: # OF TRANSACTIONS YEAR WATERFRONT LOTS % CHANGE OFF-WATER LOTS % CHANGE % 37 32% % 28 22% % 23-38% % 37 0% % 37-21% % 47-74% % %

19 REAL ESTATE WHERE IT IS NOW

20 National Home Sales Snapshot Source: DataQuick

21 2014 SALES TRENDS First 5 Months * Only the Sales % Change is compared to SAME PERIOD last year January 1 May 31, 2014 # SALES * % CHANGE AVERAG E SELLING PRICE % CHANGE MEDIAN SELLING PRICE % CHANGE Waterfront 42 $393,094-1% $362,500-2% Houses -31% Off-water Houses Waterfront Lots Off-water Lots 40 60% 6-67% 13-41% $105,980 7% $97,500 16% $200,950-20% $212,500 9% $24,038-12% $12,000-20%

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23 More Buyers are paying in Cash Share of all-cash purchases has risen to highest on record: (29% in 2012, 31% in 2013, 33% 1Q) Baby boomers make up a large bulk of these all-cash deals

24 Boomers Baby boomers are expected to remain a strong presence in the housing market 47% between now and They are projected to be buying and selling well into their 80s because their lifestyles are more active and healthier longer than their parents Meanwhile, multi-generational housing is trending up. Kids are moving back in with parents as cost saving Elders is moving in with kids (assisted living $7-10K/mo)

25 Luxury Returns to Housing The housing market is being driven by the move-up buyer, the luxury buyer July homes costing more than $1 million rose 46.6% percent from the previous July. Top sellers nowadays are homes with largest kitchens and most expansive master suites Square Footage increased to a new peak in 2012 = 2,384 SF 41 % of new homes had 4+ bedrooms

26 Housing Starts Nationally, new home starts have been down for past 6 years, and are still down The sluggish recovery in housing starts is impacted by construction costs rising faster than inflation labor shortages in the building trades difficulty for small local home builders to obtain construction loans.

27 Several of the Local Builders say Approx 50% increase in new home starts past couple years More than half the homes on lots previously owned vs. a newly purchased lot. Replacing old houses and manufactured homes with new site-built Much larger homes being built Average SF is close to 3,500 But several monster sized houses with 7,000+ SF, Costing well over $1M Higher-end & larger homes being built include more amenities such as media rooms, game rooms, outdoor kitchens

28 Home Types: (based on 2014 Sales Jan-May) Construction Waterfront Off-water Site Built 67% 35% Modular (on & off) 10% 5% Manufactured: Double 12% 25% Manufactured: Single 5% 13% Townhomes/ Condos 7% RVs & Other 23% Site Built Homes Average Heated SF 2,376 SF 1,393 SF With Basement 55% (80% finished) 5% With Garage 71% (mostly 2-car) 30%

29 REAL ESTATE WHERE IT MAY GO

30 Experts Predict 2014 NATIONAL Housing Market - Realtor.com 3/9/14 The real estate market made a robust comeback 2013 as the combination of low inventories and historically low-interest ratescaused home prices to rise Increasing home values are expected to continue into 2014, but mortgage rates are expected to rise and could put a damper on buyers' abilities to afford new homes.

31 And Others Buying a home is no longer a no-brainer, whether you are buying as an investment or to live in it says the WSJ "Price growth has been very strong, but it's unsustainably strong " says Moody s We re seeing a lot of metros return to their peak levels a sign for how robust the recovery is...but some markets are definitely in danger of overheating again. says Zillow

32 Local Mortgage Lending Typical Lake Gaston borrower hasn t had a problem Interest rates low Jumbo loans ($417+) available again Max limits have increased Some lenders have better jumbo rates than conventional Loans are mainly for purchases, Refi s have eased 720 is typical credit score (half of borrowers are 740+) FHA Use to be best loan, now last resort because PMI a lot more expensive & attaches for life of FHA loan

33 Appraisal process still tough With more stringent appraisal practices Lenders required to hire appraisers through 3 rd party Some not familiar with uniqueness of lake properties Lack of good comps causes failed loans

34 Programs & Laws to watch How Fracking may affect home sales Immigration Reform? Would add more home buyers to the market Tax Reform? Limitations on mortgage interest deductions Capital Gains brackets Rescission of state & local tax deductions All serve to reduce tax benefits of homeownership

35 Summary Outlook for 2014 Slow, steady recovery Mortgage rates projected to be 5 5.5% by mid 2015 Housing prices up approximately 4% this year, and similar appreciation in years following Existing home sales will slow and take longer to sell Boomer generation will still be strong in the market Housing starts continue to improve, but still far below the norm

36 Questions? FOR UPDATED STATISTICS, I INVITE YOU TO VISIT THE MARKET LINK AT: