Prudential Real Estate Q1 2013 Outlook Survey

1 © Copyright 2012 Daniel J Edelman Inc.

Prudential Real Estate Q1 Consumer Outlook Survey

April 9, 2013


METHODOLOGY

WHO HOW MANY WHEN WHERE

? Targeted sample of Americans in the market for

buying or selling a home:

• 1,000 “Recent Transactors” – Bought/sold

home within the last year

• 1,000 “Likely Transactors” – Indicated they

are likely to buy/sell home within the next

year

• 500 “Contemplators” – Considered but did not

buy/sell within the past year

Total: n=2,500

(Margin of Error = +/-2.0%)

Recent Transactors n=1000


Likely Transactors n=1000


Contemplators n=500

(Margin of Error =+/-4.4%)

Data Collection Occurred

February 2013

Online Custom Survey

3

SEGMENTATIONS CONTEMPLATORS

AGE

INCOME

GENDER

EDUCATION

EMPLOYMENT

MARITAL STATUS

PARENTS

FAMILY

REGION

ETHNICITY TRACKING DATA


MARKET ON THE MEND

77% of consumers feel confident about

market and property value recovery

A 4% point increase from end-of-

year and 7% points from one year

ago

Owning a home is CONSISTENTLY

important to over 96% of Americans

Owning a home is especially

important to women as well as

Generations X and Y

The time to buy is still now, with 87%

saying Americans should buy homes while

rates and home prices are low

KEY FINDINGS CONTEMPLATORS REMAIN

IN THE GAME

Contemplator confidence in the real

estate market and property values rose

12 points from mid-2012

Contemplator favorability of the real

estate market is also up 10 percentage

points from Q2 2012

Contemplators are still waiting for the

right opportunity

SPRING BUYING SEASON: BUYERS

AND SELLERS ARE MOTIVATED

Rising optimism adds an additional

dimension to the spring buying season

BUYERS:

are most inspired by a good deal

will consider alternatives if they

don’t find the home of their

dreams this season

Believe home buying will be

easier this spring because

homeowners want to sell

SELLERS:

are determined to sell this spring

season and will continue to try

and sell their home if they don’t

sell

need to find the right home first

© Copyright 2012 Daniel J Edelman Inc.

Market on the Mend


People feel that the real estate market and property values will recover

Q13. Considering the US economy’s ongoing recovery from the “Great Recession,” how confident do you feel that the real estate market and property

values will at least begin to recover in the next year or two? Top 3 Box, 5-point scale (Very confident, Confident, Somewhat Confident, Not Very

Confident, Not At All Confident)

70% 72% 73%

77%

Very Confident/Confident/Somewhat Confident

Q1 2012 Q2 2012 EOY Q3/4 2012 Q1 2013

80% 79% 75% 73%

25-34 35-44 45-54 55-64

Younger generations are

more confident that the real

estate market will begin to

recover

81% 79% 76%

72%

S W NE MW


Favorability perception of the real estate market has increased

64%

37%

63%

37%

65%

34%

Favorable Unfavorable

Overall Perception of U.S. Real Estate Market

Total Q2 2012 Total EOY Q3/Q4 2012 Total EOY Q1 2013

Q12. Based on your personal experience and/or what you know about the process of buying and selling homes, what is your overall perception of the

residential real estate market in the United States?

71% 73%

62% 56%

25-34 35-44 45-54 55-64

Younger generations have a

more favorable perception of

the real estate market

Favorable + Somewhat Favorable


While confident, Americans are also cautious about the recovery

42%

20%

12% 10% 9% 6%

It will be slow A legitimateuptick in home

buying

There is nohousing recovery

Homes boughtout by large

financialinstitutions, like

banks and privateequity companies

A bidding warbetween buyers

and sellers

Another HousingBubble

Thoughts on “projected” housing recovery

Q35w2. What are your thoughts on the projected housing recovery?

39% 40% 44% 47%

25-34 35-44 45-54 55-64

Younger respondents and

those in the South are less

likely to say that the housing

recovery will be slow

35% 42% 45% 47%

S W MW NE


78%

70%

Women Men

Very Important

Ultimately, owning a home remains important to 96% of Americans

Q21. How important is owning a home to you? Select one response

78%

20%

2% 1%

75%

21%

3% 1%

74%

22%

3% 1%

Very Important Somewhat Important Not Very Important Not At All Important

Importance of Owning a Home

Total Q2 2012 Total EOY Q3/4 2012 Total Q1 2013

96% 97% 98% 96% 95%

25-34 35-44 45-54 55-64

All age groups believe that owning a

home is important. Women are more

likely than men to say it is Very

Important

Very Important + Somewhat Important


And Americans are aware of market opportunities

Q27. Which of the following is closer to your view?

Q25. How strongly do you agree or disagree with the following statements? NET Agree, Top 2 Box

Strongly Agree, Agree, Somewhat Agree, Somewhat Disagree, Disagree

87%

13%

Americans should buy homes while mortgage rates and average home prices are low

Rates and prices may decline further so people should wait to buy

Q27

74% “With interest rates at historically

low levels, now is a great time for

me to buy a home” Q25


The Spring Buying Season: Buyers and Sellers Are Motivated


Buyers want good deals and job stability before purchasing a home this spring season

80%

59% 56%

40% 35%

25%

4%

A good deal Job stability An abundance ofhomes on the

market

Wanting to havea place withoutside living

space

A goodBroker/Agent

Good weather inthe Spring

Season

other

Top factors most important for home purchasing this upcoming Spring season

Q28W2. Please choose the top three factors you believe to be the most important for home purchasing this upcoming Spring season.

77% 83%

WITH Children WITHOUTChildren

Consumers WITHOUT children are

significantly more likely to look for a

good deal compared to those WITH

children

Want a “GOOD DEAL”


Consumers who feel it will be easier to buy a home this spring season feel it because homeowners want to sell and a belief that there is a large inventory

69% 64% 63% 61%

38%

5%

Homeowners wantto sell

Home prices arelow because oflarge inventory

Economy isimproving

Home prices arelower thanexpected

Homebuyers willbe able to spend

less than originallyintended

Other

Easier to buy because …

Q33W2. Why might it be easier to buy a home this Spring season? Base = respondents who chose easier


Consumers are motivated to find a home

48%

26%

10% 7% 9%

I plan to continue to shop around and would

consider alternative areas in which I wouldn’t

normally

I plan to wait until nextseason

No matter what it takes, Iam determined to buy a

home this season

I plan to build my ownhome

Other

If you don’t find the home of your dreams this spring season what are you most likely to do

Q36W2. If you don't find the home you dreamed of this Spring, what are you most likely to do?


87%

67% 62%

36% 33%

15%

Continue to try to sell myhome

Consult with my broker/agenton how to better market my

home

Make repairs to orredecorate my home

Use my home as a downpayment or leverage for

another purchase

Rent all or part of my home Other

If you don’t sell your home this spring season, what do you plan to do with the home?

Q41AW2. If you cannot sell your home this Spring season, please choose the top three options for what you plan to do with your current home?

Base = sellers

Sellers are determined to sell this spring season


46% 43%

30% 27%

25%

17% 15% 14% 13%

8%

20%

I need to findthe right house

to buy first

I have to makea profit

I need to feelright about

generaleconomicconditions

I need to makesure I won'thave anyfinancingtroubles

I need to get atleast what Ipaid for my

home

An all cash sale Prices need togo up for me tosell, to covermy mortgage

I need to knowhow prices

might increaseover the next 5

years

Mybroker/agent

must make meaware of all my

options

Other None of theabove

What would it actually take to sell your home?

Q39W2. What will it take for you to sell your home this Spring season?

Q38AW2 : What would motivate you to sell your home this Spring season?

In order to sell, sellers want to find the right house to buy, and to make a profit

23% 22%

Relocation Buy a betterhome

Top Reasons for Selling:


Contemplators Remain in the Game


Contemplator confidence is up 12 percentage points from Q2 2012

Q13. Considering the US economy’s ongoing recovery from the “Great Recession,” how confident do you feel that the real estate market and property

values will at least begin to recover in the next year or two? Top 3 Box, 5-point scale (Very confident, Confident, Somewhat Confident, Not Very

Confident, Not At All Confident)

64% 57%

67% 69%

Very Confident/Confident/Somewhat Confident

Q1 2012 Q2 2012 EOY Q3/4 2012 Q1 2013


Similarly, Contemplator NET favorability jumped 10 percentage points from Q2 2012

42% 50% 52%

NET Favorable + Somewhat Favorable Perception of Real Estate Market

Total Q2 2012 Total EOY Q4 2012 Total Q1 2013

Q12. Based on your personal experience and/or what you know about the process of buying and selling homes, what is your overall perception of the

residential real estate market in the United States?


41%

31%

29%

30%

27%

29%

19%

44%

32%

32%

31%

25%

24%

18%

Waiting for right opportunity

I just haven’t found the home I want yet

Trying to save more money

Instability of U.S. economy

Not sure about finances

I’m worried I won’t be able to sell my current home

I’m not confident I can set the right price for my home

Contemplators EOY Q3/4

Contemplators Q1 2013

Consistent with end-of-year findings, waiting for the right opportunity is the reason for Contemplators’ not buying or selling

Q16. Earlier in the survey, you indicated that you’ve been considering buying or selling a home for the past year. For what reasons, if any, have you not yet bought or sold a

home? Select all that apply.

Not Included: I’m worried that home values haven’t stopped dropping, I’m worried about my job/employment, I’m nervous about having a new mortgage, Lack of focus/time,

Lack of knowledge/overwhelmed by process, Attachment/Memories associated with current home, I’m not confident I can bid the right price for a new home, Other

Reasons for Not Buying/Selling


Prudential Real Estate Q1 Consumer Outlook Survey