U.S. REITs have rebounded strongly Dow Jones Equity REIT Total Return Index

Transcription

1 U.S. REITs have rebounded strongly Dow Jones Equity REIT Total Return Index Index, 2005 = Sources: Bloomberg, Dow Jones.

2 Affordability for first-time buyers dropped off last year First time homebuyer affordability index Note: Higher index value indicates more first time buyers can afford to buy a home. Source: Bloomberg.

3 Affordability still higher than during bubble despite last year s fall Composite homebuyers affordability index Note: Higher index value indicates more households can afford to buy a home. Source: Bloomberg.

4 Growth in construction spending has returned U.S. construction spending year-over-year Percent change year-over-year Sources: Bloomberg, U.S. Census Bureau.

5 Average new home nearly 50% bigger today than 40 years ago New home size in square feet Square feet 2,700 2,500 2,300 2,100 1,900 1,700 Average 2012 average: 2,505 sq. ft Median 1, Source: U.S. Census Bureau.

6 Annual U.S. housing starts Million homes Source: Bloomberg.

7 Growth in residential construction spending has returned U.S. construction spending year-over-year, residential Percent change year-over-year Sources: Bloomberg, U.S. Census Bureau.

8 Effective mortgage rate Percent Source: Bloomberg.

9 Rent-to-sales price ratios return to early 2000 s level Median rent, US$ Median rent (left) Rent to sales price ratio Median rent to sales price 400 (right) Source: Bloomberg.

10 Cap rate spreads falling in recent months Capitalization rates less U.S. Treasury 10-year yield Percent Office Retail 2 1 Multi-family Source: Bloomberg.

11 Foreclosures dropping, though still relatively high Foreclosures as a percentage of total loans, not seasonally adjusted Percent Source: Bloomberg.

12 Purchase mortgage originations dropped to lowest in two years Million homes Source: Bloomberg, Mortgage Bankers Association.

13 Home builder indices stronger, but falling in recent months Index readings above 50 indicate builders consider housing markets good than bad Indices Future sales Traffic of prospective buyers Sources: Bloomberg, National Association of Home Builders.

14 Increasing roles of GSEs in residential mortgages Mortgage debt outstanding US$ trillions Freddie Mac Fannie Mae 1 Ginnie Mae Source: Federal Reserve.

15 Reemergence of CMBS Commercial mortgage-backed securities issuance in the U.S. US$ billions Source: Bloomberg.

16 Low 10-year Treasury yields 10-year Treasury yield, percent year average: 6.6 percent Source: Bloomberg.

17 Trulia Bubble Watch: Home prices now 5% undervalued 50% 40% 39% 30% 20% 10% 0% -10% -20% -15% -5% Source: Trulia.

18 Rising rate expectations have leveled off since last summer 10-year sovereign bonds, 1 year forward rates Percent 3.5 USD GBP EUR Source: Bloomberg.

19 Increasing role of public, non-traded REITs US$ billions $18.6B Investment in public unlisted REITs 10 8 $9.4B REIT IPO capital raised $2.4B $10.4B Sources: Investment Program Association, Robert A. Stanger & Company.

20 Increasing number of agents reporting foreign clients Percent of REALTORS reporting at least one international client purchasing U.S. property Yes 53% No 47% Yes 76% No 24% Source: National Association of REALTORS.

21 Distribution of international purchasers of California residences Asia & Oceania 54% Europe 16% Latin America & Carribean 12% Canada 11% Africa & Middle East 8% Source: National Association of REALTORS.

22 Buying cheapest vs renting in Midwest and South Source: Trulia.

23 Price rebound here, construction boom there Biggest y/y price gains Las Vegas Oakland Riverside-San Bernardino Sacramento Detroit Warren-Troy-Farmington Hills, MI Los Angeles Birmingham, AL Bakersfield Atlanta Most permits vs local norm San Francisco Austin Middlesex County, MA San Jose Oklahoma City Houston New York Boston Fairfield County, CT Orange County, CA Sources: Trulia, U.S. Census Bureau.

24 Metros that build are more affordable Sources: Trulia, U.S. Census Bureau.

25 The kids aren t alright 36% year-olds without jobs or homes 34% 32% 30% 28% 26% 24% 22% not employed living with parents Sources: Trulia, BLS, U.S. Census Bureau.

26 Young adults go back to work -- slowly Percent employed, year-olds Source: Trulia, BLS.

27 Single-family starts lags, but apartment starts boom 2,000 1,800 1,600 1,400 1,200 1, single family (left scale) rental apartments (right scale) Source: Trulia, U.S. Census Bureau.

28 6-month outlook for the housing market remains strong Index (50 = moderate conditions) An index of 50 delineates moderate conditions and indicates a balance of respondents having weak (index=0) and strong (index=100) expectations. Source: National Association of REALTORS REALTORS Confidence Index.

29 First-time buyers have not returned to the market Source: National Association of REALTORS REALTORS Confidence Index.

30 Even as overall household income has risen only 2.5% since 2009, median income of homebuyers has increased significantly more Source: National Association of REALTORS Profile of Home Buyers and Sellers.

31 Saving for downpayment increasingly difficult for first-time buyers percent indicating most difficult step percent indicating expense delayed saving Source: National Association of REALTORS Profile of Home Buyers and Sellers.

32 Distressed sales share trending down percent of existing home sales Source: National Association of REALTORS REALTORS Confidence Index.

33 Investor share may be headed down as home prices rise and inventories remain tight Source: National Association of REALTORS REALTORS Confidence Index.

34 Rising home prices have reduced the percent of properties with negative equity Source: CoreLogic. CoreLogic Equity Report.

35 Zillow Home Value Index: Slowing annual and monthly change Source: Zillow

36 Zillow Home Value Index: Monthly change by price tier Tier Peak to trough Trough to current Peak to current Monthovermonth Bottom -30% 14% -20% 0.4% Middle -24% 13% -15% 0.2% Top -22% 12% -12% 0.2% Source: Zillow

37 Adults per family is high, households are doubled up Source: Current Population Survey

38 Young adults are living at home at high rates Source: Census

39 Renter households are forming faster than owner households Source: Current Population Survey

40 Increased renter household formation is driving rental demand Source: Zillow

41 Negative Equity remains widespread, 19.4% nationally Source: Zillow

42 Affordability issues concentrated on West Coast Source: Zillow

43 Drop in homebuilder confidence early this year National Association of Home Builders Market Index Index Sources: Bloomberg, Barclays, National Association of Homebuilders.

44 Rising second-lien supply Sources: Barclays CIB, S&P LCD.

45 CPI rent vs. Case-Shiller 20 with 19 month lag Percent change year-over-year CPI urban consumers owner equivalent rent Percent change year-over-year S&P/Case-Shiller composite 20-city price index Source: Bloomberg, DoubleLine Capital LP.

46 Where are the first timers? Source: BofA Merrill Lynch Global Research.

47 BAML: Homes for the high end Source: BofA Merrill Lynch Global Research, National Association of Realtors, Census Bureau.

48 Housing starts still well below historic average Seasonally adjusted annual rate, thousands Sources: BofA Merrill Lynch Global Research, Bureau of Economic Analysis, Census Bureau.

49 U.S. household formations Millions Sources: Bloomberg, DoubleLine Capital LP.

50 Multifamily building permits Seasonally adjusted annual rate, thousands, 3-month moving average Sources: U.S. Department of Commerce, REIS Inc., Wells Fargo Securities.

51 American Homes (AMH) US$ Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Sources: Bloomberg, DoubleLine Capital LP.

52 Millions of single-family homes became rentals since recession Net owner-to-renter conversions (millions) Sources: JCHS tabulations of U.S. Department of Housing and Urban Development, American Housing Surveys.

53 Declining incomes and rising rents continue to erode affordability 2012 dollars

54 Bloomberg Housing Surprise Index Index The Bloomberg ECO Surprise Index (ESI) shows the degree to which economic analysts under- or over-estimate the trends in the business cycle. The surprise element is defined as the percentage (or percentage point) difference between analyst forecasts and the published value of economic data releases. Sources: Bloomberg, DoubleLine Capital LP.

55 Homeownership rate Percent Sources: Bloomberg, DoubleLine Capital LP.

56 Lumber vs. Homebuilders Index Index S&P Homebuilders Index Generic lumbar options index Sources: Bloomberg, DoubleLine Capital LP.

57 New home sales last ten years Thousands 1,600 1,400 1,200 1, Sources: Bloomberg, DoubleLine Capital LP.

58 Existing home sales last ten years Millions Sources: Bloomberg, DoubleLine Capital LP.

59 Housing starts last ten years Thousands 2,500 2,000 1,500 1, Sources: Bloomberg, DoubleLine Capital LP.

60 Mortgage Purchase Index last ten years Mortgage applications index Sources: Bloomberg, DoubleLine Capital LP.

61 Household formation still incredibly depressed U.S. household formation, 4 quarter average 4Q 2013: 0.39 Source: ISI.

62 Investors are more cautious in 2014 but still optimistic What is your view on home prices in 2014? Source: J.P. Morgan.