July 2012

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FEATURE ANALYTICS Want?T N Tracking today's consumer can be tricky, but a new report from the Demand Institute minimizes the guesswork in evaluating borrower behavior. By Abby Gregory mortgage industry profession- als. "The worst is over for the U.S. housing market," reads the introductory sentence of the group's May report, "The Shift- ing Nature of U.S. Housing Demand." The inaugural survey from he opening line of the Demand Institute's first major publication promises hope for the nonprofit organization is a broad, ambitious project that examines both macro and micro components of consumer behavior. Within its findings, the Demand Institute sheds light on the finite aspects of borrow- ers' spending, sentiments, and savings, while crafting a six-year forecast for the housing industry and the economy. While the Demand Institute delivers numerous analytical insights, MReport is delving into the near future of the mortgage industry by taking a closer look at the report's hous- ing market data. Multifamily Starts Setting the Pace in the macroeconomic pic- ture, the Demand Institute's results point to the 54 percent increase in multifamily starts between 2010 and 2011 as a harbinger of residential housing recovery. Addressing the cor- relating rise in rental rates that oting the role that starts have historically played has accompanied the uptick in multifamily development, the group stated, "It is this demand for rental properties that will help drive the initial phase of the housing market recovery, during which the current oversupply of existing homes will gradually clear. In the second phase, from 2015 to 2017, increases in GDP growth, employment, and consumer credit availability will pave the way for more house sales." Inconsistent Patterns of Progress E create an inconsistent, regional recovery process nationwide, the Demand Institute cited the importance of tangible factors like a location's acces- sibility and urban amenities as central to the area's rate of advancement. Specifically, the group referenced key catalysts including population size, walkability, availability of pub- lic transportation, severity of home pricing decline, afford- ability relative to the national average, unemployment within the nearest metropolitan area, proportion of foreclosure inventory relative to total in- ventory at the state level, and the judiciousness of the state's foreclosure policy as the driv- ing forces behind unpredict- able patterns in the country's housing market. mphasizing the geographi- cal variables that will THE M REPORT | 65 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

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