texas mortgage bankers association
DESCRIPTION
Presented to the TMBA on 2/11/09 on the state of the Texas and US housing marketsTRANSCRIPT
The Current Status and Outlook for the U.S. The Current Status and Outlook for the U.S. and state of Texasand state of Texas
Economies, Housing, and Mortgage MarketsEconomies, Housing, and Mortgage Markets
Specially Prepared for:
The Texas Mortgage Bankers The Texas Mortgage Bankers AssociationAssociation
Southwest Secondary Marketing Southwest Secondary Marketing ConferenceConference
Presented by:LaVaughn M. Henry, Ph.D.
Director, U.S. Economic AnalysisThe PMI Group, Inc.
February 11, 2009
The General EconomyThe General Economy
The Housing MarketsThe Housing Markets
The Mortgage MarketsThe Mortgage Markets
ConclusionConclusion
Source: Bureau of Economic Analysis
Source: U.S. Census Bureau
Source: U.S. Conference Board
Thousands Percent
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Source: Federal Reserve Bank of Dallas
Current Status and Outlook
Source: NAR / U.S. Census Bureau
U.S. Single Family Home Sales
Source: NAR / U.S. Census Bureau
Source: First American CoreLogic, LoanPerformance
Proprietary econometric model developed by The PMI Group, Inc. that estimates the probability that prices will fall in each of the nation’s 381 MSAs by the end of the next two years.
Based on OFHEO’s quarterly house price index for conventional, conforming loans.
Considers factors including price movement, housing affordability, local employment conditions, housing supply and foreclosures.
• Utilizes more than 30,000+ observations of MSAs and quarterly combinations
• All of the Model’s Primary Econometric Determinants are Statistically Significant at the 99% level or greater
What is the U.S. Market Risk Index Saying What is the U.S. Market Risk Index Saying about Future Price Movements?about Future Price Movements?
0.0 to 10.0 10.0 to 30.0 30.0 to 50.0 50.0 to 70.070.0 to 100.0
Historical Accuracy Rate of the PMI Risk IndexSample Period: 1st Quarter 1985 – 3rd Quarter 2006
1.7%
17.5%
25.6%
33.8%
44.7%
53.3%
66.8%
82.1%
88.2% 87.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0-10% 10-20%
20-30%
30-40%
40-50%
50-60%
60-70%
70-80%
80-90%
90-100%
Assessed Risk Score
% o
f M
SA
s E
xper
ien
cin
g P
rice
Dec
lin
es
Source: The PMI Group, Inc.
RateMSA 3rd Qtr '08 2nd Qtr '08 Volatility 3rd Qtr '08 3rd Qtr '07 Difference 3rd Qtr '08 2nd Qtr '08 Difference 3rd Qtr '08 3rd Qtr '08 2nd Qtr '08Abilene TX 1.6 1.0 5.2 0.38 6.74 -6.36 139.23 140.53 -1.31 4.17 -0.71 -1.27Amarillo TX <1 <1 2.2 2.60 3.75 -1.15 121.95 124.89 -2.94 3.83 -0.60 -1.19Austin-Round Rock TX 5.4 2.3 7.1 5.81 9.88 -4.06 107.29 110.62 -3.33 4.53 -0.91 -1.53Beaumont-Port Arthur TX <1 <1 4.3 2.64 8.72 -6.08 124.54 124.37 0.17 6.80 -1.39 -2.09Brownsville-Harlingen TX <1 <1 2.8 -0.60 5.93 -6.52 134.71 133.94 0.77 7.33 -1.26 -2.47College Station-Bryan TX <1 <1 2.1 6.71 4.47 2.24 136.43 141.13 -4.70 4.33 -0.43 -0.93Corpus Christi TX <1 <1 2.7 -0.62 6.18 -6.80 134.94 134.98 -0.04 5.13 -1.16 -1.77Dallas-Plano-Irving TX <1 <1 1.0 2.95 3.44 -0.49 129.85 132.16 -2.31 5.20 -0.86 -1.56El Paso TX <1 <1 8.2 1.90 8.29 -6.39 129.58 131.82 -2.23 6.43 -1.45 -2.21Fort Worth-Arlington TX <1 <1 1.2 1.44 4.11 -2.67 132.60 134.02 -1.42 5.00 -0.66 -1.19Houston-Sugar Land-Baytown TX <1 <1 1.7 5.07 4.55 0.52 130.14 133.98 -3.84 5.00 -1.14 -1.62Killeen-Temple-Fort Hood TX <1 <1 2.2 1.87 9.01 -7.14 151.34 157.72 -6.38 5.27 -0.50 -1.05Laredo TX <1 <1 3.9 2.19 1.52 0.67 143.87 147.98 -4.11 5.77 -0.94 -1.97Longview TX <1 <1 4.3 4.04 8.14 -4.10 136.07 133.06 3.01 4.43 -1.66 -2.18Lubbock TX <1 <1 1.4 3.19 1.79 1.41 132.00 134.60 -2.60 4.13 -0.52 -0.93McAllen-Edinburg-Mission TX <1 <1 1.8 2.99 4.90 -1.91 145.29 148.36 -3.07 7.83 -1.50 -2.92Midland TX 11.6 6.4 14.0 2.75 18.93 -16.19 123.91 123.86 0.05 3.13 -1.29 -1.64Odessa TX 9.4 3.8 13.7 7.98 18.04 -10.06 120.61 126.37 -5.76 3.73 -2.03 -2.62San Angelo TX 2.4 1.0 5.1 1.91 11.31 -9.40 122.32 123.89 -1.57 4.30 -0.38 -1.01San Antonio TX 1.0 <1 3.6 2.16 8.13 -5.98 120.62 122.51 -1.90 4.93 -0.71 -1.34Sherman-Denison TX 1.0 <1 3.7 8.56 1.17 7.39 118.87 120.82 -1.95 5.30 -1.01 -1.47Texarkana TX-Texarkana AR <1 <1 2.2 -1.59 7.82 -9.41 144.16 146.87 -2.70 4.73 -0.91 -1.25Tyler TX <1 <1 2.4 -0.56 5.42 -5.98 132.02 130.28 1.75 5.03 -0.50 -0.94Victoria TX <1 <1 4.2 8.34 7.53 0.81 135.37 141.19 -5.82 4.30 -1.20 -1.87Waco TX <1 <1 2.2 2.43 3.90 -1.47 129.68 132.51 -2.83 4.80 -0.92 -1.51Wichita Falls TX <1 <1 2.3 -3.02 5.36 -8.37 146.56 145.07 1.49 4.90 -0.37 -1.14
RISK INDEX PRICE APPRECIATION AFFORDABILITY INDEXUNEMPLOYMENT
Demeaned Rate
Source: The PMI Group, Inc.
012345678
Dallas Texas
-505
101520
El Paso Texas
02468
10
Houston Texas
02468
1012
San Antonio Texas
Source: First American CoreLogic, LoanPerformance
Index of Excess Housing Supply
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
Source: The PMI Group, Inc.
Dallas
-0.6-0.4-0.20.00.20.40.60.81.0
2000Q1
2001Q2
2002Q3
2003Q4
2005Q1
2006Q2
2007Q3
El Paso
-0.50
0.00
0.50
1.00
1.50
Houston
-0.5
0
0.5
1
1.5
2
San Antonio
-0.8-0.6-0.4-0.2
00.20.40.6
Source: The PMI Group, Inc.
Source: Mortgage Bankers Association
Dallas
-2-101234
El Paso
-5
-4-3
-2-1
0
Houston
-2
-10
12
3San Antonio
-2
-10
12
3
Source: BLS / The PMI Group, Inc.
Current Status and Outlook
Source: Federal Reserve Board
Consumer Installment Credit
PrimeLoans
Source: Federal Reserve Board
Nontraditional Loans
Subprime Loans
Senior Loan Officer Survey on Bank Lending Practices
Source: Mortgage Bankers Association
Source: Freddie Mac
Source: Freddie Mac
Source: Freddie Mac
The national economy remains at substantial risk of going deeper into recession
The Texas economy is likely to get weaker in the short run, but is unlikely to feel the full brunt of the national downturn
The housing market remains oversupplied and thus any substantial price recovery is unlikely in 2009
The residential mortgage market has shown some recent signs of life, but remains at risk of getting worse if foreclosure issue remains unaddressed and credit remains tight.
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