Leveraging the Latest Housing Market Trends

LEVERAGING THE LATEST HOUSING MARKET TRENDS
© 2013 Renwood RealtyTrac LLC
WELCOME

WHAT WE’LL COVER TODAY
• A brief bit on RealtyTrac
• How long will the short sale surge last?
• The problem and opportunity of zombie
foreclosures
• The incredible disappearing REOs
• Flipping and institutional investors
• Home prices buoying underwater inventory
• Boomerang buyers boomeranging more quickly

REALTYTRAC DATA PRIMER
Economic
Neighborhood
& Local
MLS
Sales &
Loan
Valuation
& Prop
Details
Foreclosure

REALTYTRAC DATA PRIMER
County-Level Public Documents
• Pre-foreclosure, foreclosure auction and REO
• Sales & Loan
• Valuation and property characteristics
MLS
• Listing status, price and other info
• Property description and more characteristics
Publicly available datasets
• Neighborhood features, amenities, red flags
• Macro housing and economic metrics

HOW LONG WITH THE SHORT SALE SURGE LAST?
© 2013 Renwood RealtyTrac

HOW LONG WILL SHORT SALE SURGE LAST?
June foreclosure
starts at lowest level
since December
2005

Seriously
underwater means
mortgage amount is
at least 25 percent
higher than
estimated market
value

HOW LONG WILL THE SHORT SALE SURGE LAST?
1.5 million fewer
underwater in last year

Distressed median
prices still flat lining

Average Annual Pct Change YTD in
2013 is 7 percent – will take 3.5
more years at minimum to get all
seriously underwater borrowers
back with positive equity

Up 53 percent
compared to year
ago in Q2 2013
At pace of 700,000 short sales a year
it would still take more than 15 years
to sell off all of the 11.3 million
seriously underwater homes

• Other considerations that could slow short sales
– Rising home prices give lenders hope to hold out for REO
– Rising home prices give homeowners hope to hold on
• But these homeowners could be future equity sales
– Top 5 lenders less motivated to do short sales as they fulfill
requirements under the national mortgage settlement
– Expiration of Mortgage Forgiveness Debt Relief Act

LEVERAGING DISTRESSED TRENDS TIP NO. 1
Foreclosure
Inventory and
Prices
Historical
Foreclosure
Discounts
1. Know your market

Local, state
and national
foreclosure
rates
Recent default, auction
and REO trends

WHERE FORECLOSURE STARTS & AUCTIONS ARE REBOUNDING

YoY Pct Increases:
• Maryland: 365%
• Connecticut: 47%
• New York: 36%
• New Jersey: 27%
• Oregon: 59,200%

YoY Pct Increases:
• Florida: 100%
• Arkansas: 71%
• Illinois: 65%
• Wisconsin: 45%
• Washington: 21%

• Why are foreclosure starts and auctions rebounding?
– Pent-up foreclosure activity from robo-signing, national
mortgage settlement and state legislation/court rulings
– Rising prices may be helping to motivate foreclosure
• What are implications for real estate agents?
– Clock is now ticking on delinquent homeowners
– Auctions another source of finding distressed
buyers/sellers in the form of investors

LEVERAGING DISTRESSED MARKET TRENDS TIP NO. 2
©RealtyTrac Inc. 2013, Not for Distribution
Filter by property
value and
characteristics
Filter by property
type
Filter by equity/LTV
Filter by lender name
and auction date
Filter by listing status
and bankruptcy status
Target potential short sale
listings with advanced search
filters

Create mailing lists of
distressed homeowners in
default or scheduled for
foreclosure auction

THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES

THE PROBLEM AND OPPORTUNITY OF ZOMBIE FORECLOSURES

THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES
• The problem
– More than 167,000 vacant homes nationwide, 20
percent of all homes in the foreclosure process
– Homeowners often don’t realize they still own the
property and are responsible for taxes etc.
• The opportunity
– Homeowners who have exhibited a desire to let go of
the property
– Lenders who don’t want to foreclose

Identify homeowners who have
vacated their homes and get
new mailing addresses

THE INCREDIBLE DISAPPEARING REOS

U.S. REOs dropped
to a 72-month low in
April 2013

THE SHIFT IS ON

Nationwide Deeds in
Lieu of Foreclosure
increased 39 percent in
2012 from 2011

• REOs are down but not out
– Recent rise in foreclosure starts and scheduled
foreclosure auctions in some markets will translate into
bank repossessions in the next 6 to 12 months
– Rising home prices mean banks may be willing to tackle
the increasingly costly and complex REO process to get
a higher price out of a property down the road

Find unlisted bank-owned
homes

FLIPPING & INSTITUTIONAL INVESTORS

U.S. property flips
increased 17 percent
from a year ago in the
second quarter

U.S. institutional
investor purchases
increased 16 percent
from year ago in Q2

Find repeat investor clients by attending
foreclosure auctions and order lists of the most
active institutional investors in your market.

Find repeat investor clients and other buyers by
showing up as the local expert when they are
searching for auctions or other properties.

HOME PRICES BUOYING UNDERWATER INVENTORY

HOME PRICES BUOYING UNDERWATER INVENTORY
4.5 million homes nationwide
would transition from short sales to
equity sales with 10 percent
increase in home prices; 8.3 million
with a 20 percent rise

Annualized residential sales above
5 million for nine consecutive
months ending in June

LEVERAGING DISTRESSED TRENDS BONUS TIP
Establishing a relationship with a distressed
homeowner may not always lead to a distressed sale
today; in today’s market it could very likely lead to a
non-distressed sale tomorrow.

BOOMERANG BUYERS

BOOMERANG BUYERS BOOMERANGING MORE QUICKLY
• The News
– HUD just recently changed its guidelines to allow some
homeowners who have gone through foreclosure, short sale
or bankruptcy to qualify for FHA financing.
– Now these homeowners can qualify for FHA financing as soon
as 12 months after the “last event”
– This is down from a minimum of 36 months
• The Opportunity
– Reach out to your list of homeowners who have sold via short
sale in the last year-plus to see if they are interested in
buying.
– Get lists of homeowners who have lost their home to
foreclosure in your area in the last year-plus

BOOMERANG BUYERS BOOMERANGING MORE QUICKLY
4.6 million completed foreclosures
and short sales from 2007 to 2010.
Additional 2.4 million completed
foreclosures and short sales in 2011
and 2012

Leveraging the Latest Housing Market Trends

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Editor's Notes