1. U.S. Economic and Housing Outlook
September, 2017
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2. National Environment and Market
Economy at Full Employment with Unemployment Rate under 4.5% … Moderate Job & Income Growth … Long Live the Economic Expansion
Mortgage Rates Jumped after the November Election … Moderate Inflation and Growth Support Flat or Gradually-Higher Rates
Baby Boomers and Millennials to Shape the Economy … Housing, Education & Health, Tourism, Business Services Are Growth Industries
Economy
Increased Household Formation & 1st Time Homebuyers Drive Housing Demand … Homeownership Still Affordable, Hinges on Low Mortgage Rates … Attractive Relative to Renting
Home Sales Growth Slowing … Housing Starts Shifting to SF & Owner-Occupied, Expecting Moderate Growth in Volume … Builders Turning to Entry-Level Demand … Housing to Remain a Seller’s Market … Slowdown in HPA Unlikely
Housing Market
Lower Refinance Volume a Challenge for Lenders … Purchase Origination Expected to Drive Market … 1st Time Homebuyers Expected to Expand Low Down Payment Mortgages & Higher Mortgage Debt
Mortgage Credit Box Stable … Credit Quality Remain Pristine … Mortgage Performance Normalized … Agency Market Remains Dominant at ~80% Market
Mortgage Market
Housing and Mortgage Market 2 2

3. A Slow and Steady Recovery
2.1
2.8
3.6
4.3
4.4
4.0
5.1
4.9
5.6
7.6 3
3.5
3.25 2
8.75 3 5 1
7.75 10 5 8
Housing and Mortgage Market

4. Where Are We?
Housing and Mortgage Market

5. Growth Industries 1.9 (16) 4.0 (16) 3.2 (16) 3.0 (16) 0.3 (16)
1.8 (16)
0.9 (16)
2.2 (16)
1.5 (16)
3.1 (16)
0.1 (16)
1.5 (16)
-16.1 (16)
1.2 (16)
Source: Bureau of Labor Statistics
Housing and Mortgage Market

6. What Will Happen to Interest Rates?
Monetary Easing Began QE
Taper Tantrum
Housing and Mortgage Market

7. Three Surprises Housing and Mortgage Market U.S. Election
Chinese economic slowdown
1st Fed Rate Hike
Brexit
Housing and Mortgage Market

8. A Demographic Transformation
Total Population Growth ~4% between 2015 and 2020
Boomers
Millennials
Housing and Mortgage Market

9. Signs of Influence
Housing and Mortgage Market

10. U.S. Housing Market Demographics Cyclical Pent-Up Demand
Large Millennial cohort reaching prime household formation age
Baby Boomers retiring triggering a shift in housing needs
Cyclical Pent-Up Demand
Home ownership rate at multi-decade low
Foreclosure crisis over
Large pool of renters ready to become homeowners
Large number of young people ready to strike out
What Has Not Changed
Desire to become homeowners
Hurdles to Home Ownership
Down payment
Debt
Credit availability
Lack of affordable housing inventory in both new and pre-owned market
We are Optimistic about Housing and Mortgage Market
Housing and Mortgage Market

11. Foreclosure Crisis Over
Housing and Mortgage Market

12. First-Time Homebuyer Market
Housing and Mortgage Market

13. Housing Demand 2MM Millennial Babies 11MM Boomers 3MM More Than Normal
6MM Millennials
Source: Household formation for based on Census Bureau Decennial Census, based on the average of Housing Vacancy Survey and American Community Survey; Lifetime Intentions to Own a Home Among Renters based on Fannie Mae National Housing Survey.
Housing and Mortgage Market

14. Housing Supply
Housing and Mortgage Market

15. Housing Vacancy Levels
Housing and Mortgage Market

16. Home Sales
Housing and Mortgage Market

17. Migration a Key Driver for State Population
Population Growth (2009 – 16) US: 5.3%
Housing and Mortgage Market

18. Population Growth – 2016
US: 2,200K
Housing and Mortgage Market

19. Slower Job Growth Source: Bureau of Labor Statistics
Housing and Mortgage Market

20. Job Growth in Pennsylvania
Source: Bureau of Labor Statistics
Housing and Mortgage Market

21. Job Growth Mixed at Industry Level
Source: Bureau of Labor Statistics
Housing and Mortgage Market

22. Home Ownership Rate Premium Shrinking
Housing and Mortgage Market

23. New Construction Permit (y/y %) YTD: 15% SF: 12% MF: 23%
Source: Census Bureau
Housing and Mortgage Market

24. Want More? Tian.Liu@Genworth.com 919 807.9584 MIBlog.Genworth.com
Housing and Mortgage Market