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Today's First-Time Homebuyers

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					       Today’s First-Time
       Homebuyers
       Who are they, where are they,
       and what do they think of homeownership?




Presented by:   Vance Edwards
                MGIC Senior Marketing Program Manager
The information presented in this presentation is for general information only, and
is based on guidelines and practices generally accepted within the mortgage
finance industry and is not intended to be all-inclusive. MGIC makes no
representations or warranties of any kind with respect to the accuracy,
completeness or suitability for any purpose of the information contained in this
presentation. MGIC expressly disclaims any and all warranties, express or implied,
including without limitation warranties of merchantability and fitness for a
particular purpose regarding these materials and this presentation. In no event will
MGIC be liable for any direct, indirect, incidental, punitive or consequential damages
of any kind with respect the presentation or materials provided. All examples are
hypothetical and are for illustrative purposes only. This presentation is not
intended and should not be interpreted or relied upon as legal advice. We
encourage you to seek advice from a qualified professional.
FTHB Agenda

 Why focus on FTHBs

 Who are today’s FTHBs

 What do they really think about homeownership
Ripped from the headlines

  More Americans plan to rent in the future – 8/9/2011

  First-time homebuyers bought 32% of all homes in 3Q,
  down from 35% in 2Q – 11/9/2011

  Tight Credit Strangles First-Time Buyers - 8/11/11
Homeownership Rates


         Wisconsin homeownership rate for 3Q11 = 68.5%




                                               1% decrease = 1 million renters




Source: Census Bureau; 3Q Homeownership Rates 1965-2011
Homeownership Rates

  74%
  73%
  72%
  71%
  70%
  69%
  68%
  67%
  66%
  65%
  64%




              US   Wisconsin
   More people renting




Source: Calculate Risk Blog; Oct 6, 2011
         Supply and demand


                   133,000 multifamily residences will be built

                   275,000 estimate needed




Source: National Association of Home Builders
 Rents are rising
“…Rising rents make housing less affordable.”
        will rise 5.9% this year.”
“…rents have been rising steadily since the end of 2010.”
                                                USAToday,
                                                 NY Times,        22, 2011
                                                                  19,
                     Apartment-research firm, Axiometrics – Sept. 15, 2012
But what about all the stories?

    Trevan’s favorite word is



     “Yeahbut”
Ripped from the headlines
– Part 2
 More Americans plan to rent in the future


 Yeah, But…
                                74%
                                of renters
                                say owning a
                                home makes
                                more sense
                                than renting.


Source: KeepingCurrentMatters
Source: KeepingCurrentMatters
Harvard University

“Renters have only a fraction of the
net wealth of owners. Near the peak
of the housing bubble in
2007, the median net wealth
of homeowners was $234,600 —
about 46 times the $5,100 median
for renters. Even if homeowner
wealth fell back to 1995 levels, it
would still be 27.5 times the median
for renters.”

                        The Joint Center for Housing Studies at Harvard University 4/2011
(January 1, 2000 – November 1, 2011)
Gold standard
         If you purchased an ounce of gold and a house in January 1980
         and sold both in October 2010:

          House                                   Gold
               252% gain                           95.5% gain
                (not counting transaction          (not counting transaction fees,
               fees, holding cost or inflation)    holding cost or inflation)

               Adjust for inflation =              Adjust for inflation =
               18.6% gain on your                  lost a third of your
               investment                          investment




Source: LA Times 1/2/2011
Ripped from the headlines – Part 2

  Tight Credit Strangles First-Time Buyers

  Yeah, but..

  Nonretail and Retail – Unrestricted Markets
  • Min FICO = 660
  • Max LTV = 97% (Min FICO 700); 95% others
  • Max DTI = 45% (Min FICO 740); 41% others
  • Max loan = $625,500 or FHFA (Max LTV 95%; min FICO 700)
  • Condos = Max 95% LTV
 Good credit is out there




Source: American Reporting Company
                            FICO® Score Distribution

                            25.0%
                                                                  2011
                            20.0%
    Percent of population




                            15.0%

                            10.0%

                             5.0%

                             0.0%
                                    300-499 500-549 550-599 600-649 650-699 700-749 750-799 800-850




Source: Banking Analytics Blog; posted 9/19/2011
                            FICO® Score Distribution

                            25.0%
                                         2005   2007    2009   2011
                            20.0%
    Percent of population




                            15.0%

                            10.0%

                             5.0%

                             0.0%
                                    300-499 500-549 550-599 600-649 650-699 700-749 750-799 800-850

                                     53.2% of population has scores of 700 or higher

Source: Banking Analytics Blog; posted 9/19/2011
  Ripped from the headlines – Part 2

                   First-time homebuyers bought 32% of all
                   homes in 3Q, down from 35% in 2Q

                   Yeah, But…




                % of FHA purchase loans went to FTHB in September 2011
Source: FHA Single-Family Outlook October 2011
                                FTHB as a percent of all Home Buyers
60%

50%

40%

30%

20%

10%

0%
        1989            1993            1997   2001   2004   2006      2008   2010


  Source: National Association of Realtors
  Profile of first-time homebuyer
                                                          • % of Market
                                                             – 1981 = 10%
                                                             – 1995 = 15%
                                                             % of market23%
                                                             – 2010 =            50%

                                                              Avg. condos over single-
                                                          • Preferage             30
                                                            family detached homes
                                                          • Single female
                                                            Central cities       23%

                                                          • 2-bedroom
                                                             Single male         15%
                                                          • Less likely to buy new
                                                            construction


Source: National Association of Realtors’ 2010 Profile of Home Buyers
Marketing ideas
 Brochures/flyers
 Dedicated page on website
 Homebuying seminars specifically for women
Ladies’ night home tour
What’s in a name?
     5 million
 Generation Y or GenYers
 Millennials
more members
 Next Generation
        than
 Net Generation
Baby Boomers
 Echo Boomers
 Boomerang Generation
      in 70s!
 Peter Pan Generation
Percent of demographic married
by age 28:

   Baby Boomers        42%

     GenXers           29%

    Millennials        21%
                                   Minorities projected = 7 out of 10 net new
                                            households in 2010-20



Source: US Census Bureau; Pew Research
 So, where do we find them
and how do we reach them?
   Always Connected




                                   80%
                                   62%
                                   27%
                                    20
                                    50
                                   43%
                                   88%
        eMarketerStudy 2010
        ComScore 2010
Source: Pew Research Center 2010
    Social networking use

                                                            Visit…
                                                  Several        About once a
                              Created profile
                                                times/day            day
     All Millennials               75%            29%                26%
            Ages 18-24             81%            31%                27%
            Ages 25-29             66%            25%                23%


            Men                    72%            24%                28%
            Women                  77%            33%                23%




Source: Pew Research Center
   Millennials & Brands




                   80%
                    __________ feel once they find a company
                    they like they will stick with that company.




Source: 8095 Group of Edelman Digital Global Survey; US respondents
   Millennials & Brands




                    90%
                    __________ will share their brand
                    preference online.




Source: 8095 Group of Edelman Digital Global Survey; US respondents
 Millennials & Brands
                    44% of those age 18-29 try to protect their
                    personal information online

                    Compared to:
                           33% for age 30-49
                           25% for age 50-64



                  64%
                __________ willing to share more personal
                  information with trusted brands.

Source: 8095 Group of Edelman Digital Global Survey; US respondents
   Millennials & Brands
       Millennials & Brands


                     77% of Millennials seek family
                     __________
                     input in major decisions.




Source: 8095 Group of Edelman Digital Global Survey; US respondents
Social media “Ah-ha”
Content is everywhere
Are things getting worse?


Measure                                       Sept 2010   Sept 2011
Dow Jones                                      10,788      11,614
S&P 500                                         1,141       1,219
NASDAQ                                          2,369       2,579
Median House Price*                           $171,400    $174,000
30 Yr Mortgage                                 4.44%       4.22%
Unemployment                                    9.7%        9.1%




* NAR - July is most current data available
Now is a great time to buy!

   Interest rates are low
   Homes more affordable than ever
   Don’t just tell…show them
When are you better off buying?

       On the way down?                      Or on the way up?



 On the way down you have:            On the way up you have:
• Motivated sellers               • Sellers know $ moving in their favor
• Fewer buyers as competition     • More buyers who have waited
• More inventory to choose from   • Inventory shrinking
Prices Back to 2003 1Q Prices
200


180


160


140


120


100


                                Case Shiller 9/2011
Same Price, Major Difference in Cost

  Month     Price    Rate*                      P&I**

  2003     200,000    5.84                  1,178.61

 TODAY     200,000    4.01                    955.98

            Monthly Savings                   222.63



                      * Freddie Mac 30 Year Rate **Principal and Interest
Not price, but cost




• $150,000 home purchase today with 5% down at 4.0% interest rate
• $142,500 home purchase next year with 5% down at higher interest rates
“It’s supposed to be hard. If it wasn’t hard, everyone
“It’s supposed to be hard. If it wasn’t hard, everyone
    would do it. The hard is what makes it great.”
    would do it. The hard is what makes it great.”
            Strong long-term demographics

                  • ~1.2 - 1.4 million households projected to be formed
                    annually between 2010 – 2020

                  • Expected to be 11.8 million - 13.8 million households
                    created between 2010 and 2020

                  • Millennials (born 1979 - 1994) will account for majority of
                    growth




Source: 2011 The State of the Nation’s Housing from Joint Center for Housing Studies of Harvard University ,
                                                                                                               50
Where the growth will come from

                                              Home Ownership Rates
90
                                                                                  81.7 81.9 79.3
                                                                   74.6 77.5 81.1
80
                                               68.3 71.4
70
                                      61.7
60
                            51.8
50
                   37.0
40

30
        22.3
20
10

  0
            <


                      25


                               30


                                         35


                                                   40


                                                             45


                                                                      50


                                                                                55


                                                                                          60


                                                                                                    65


                                                                                                             70


                                                                                                                    75
              25



                        -2


                                  -3


                                            -3


                                                      -4


                                                               -4


                                                                         -5


                                                                                   -5


                                                                                             -6


                                                                                                      -6


                                                                                                              -7


                                                                                                                     >
                          9


                                    4


                                              9


                                                        4


                                                                 9


                                                                           4


                                                                                     9


                                                                                               4


                                                                                                        9


                                                                                                                4
Source: 2011 The State of the Nation’s Housing from Joint Center for Housing Studies of Harvard University               51
Investment?
National Housing Survey
The financial benefits of homeownership, such as its value as an
investment (especially compared to paying rent), its value as a
way to build up wealth for retirement or to pass on to your family,
and the tax benefit.

                                      The broader security and lifestyle
                                          benefits of homeownership,
                                         such as providing a good and
       31%
                                          secure place for your family,
                                        where you have the control to
                                66%    make renovations and updates
                                      if you want, and in a place that’s
                                         in a community and location
                                                that you prefer.
Source: KeepingCurrentMatters
             96%
              of homeowners …including 93% of those
              underwater …say homeownership has been
              a positive experience.




Source: KeepingCurrentMatters
88%
of Americans Say Home Ownership Is an
Important Part of the American Dream.
   Source: New York Times and CBS News Survey
National Housing Survey


Major Reasons for Buying                                 %
Having a good place to raise children and provide a
                                                         80
good education
Having a physical structure where you and your
                                                         76
family feel safe
It allows you to have more space for your family         73
It gives you control over what you do with your living
                                                         71
space



Source: KeepingCurrentMatters
National Housing Survey
Major Reason for Buying           Millennials Gen X   Boomers Greatest
Having a good place to
raise children and
provide a good
education
                                    84        81 78             74
Having a physical
structure where you
and your family feel
safe
                                    77        79 76             74
It allows you to have
more space for your
family                              76        77 73             62
It gives you control
over what you do with
your living space                   68        74 73             66
  Source: KeepingCurrentMatters
Thank you!
Vance Edwards
MGIC Senior Marketing Program Manager
vance_edwards@mgic.com
414-347-6378

				
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