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Altos Research - The Catfish Recovery
 

Altos Research - The Catfish Recovery

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From Altos Research, a look at the 2011 housing market using real-time market analytics and leading indicators. The presentation includes a discussion of housing market volatility as normal market ...

From Altos Research, a look at the 2011 housing market using real-time market analytics and leading indicators. The presentation includes a discussion of housing market volatility as normal market conditions for the next 5-10 year period.

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    Altos Research - The Catfish Recovery Altos Research - The Catfish Recovery Presentation Transcript

    • Altos ResearchDouble-Dip or a Catfish?Spring 2011 WebcastJune 2, 2011
      Scott Sambucci
      Vice President, Market Analytics
      scott@altosresearch.com
      (415) 931 7942
    • Why we’re here
      • Today’s 2011 Market, not 3 or 6 months ago
      • Inventory affects price, sometimes
      • “The Catfish Recovery”
      • Volatility = Profit (but only for smart people)
      • Measuring Affordability(sorry, next time…)
      • Today’s once-in-a-lifetime offer
    • Don’t trade based on this presentation. Seriously.
      Disclaimer
    • Our Mandatory Commercial(the marketing team made me do this)
      Altos Research = real-time real estate & housing market analytics
      The only national source of primary data & analytics for the active housing market
      • Listings IntelTM:
      • 2 million active market properties updated weekly;
      • Historical date & portfolio matching, and active comps in 20,000 zip codes, 250+ MSAs/CBSAs.
      • AltosEvaluateTMMortgage Analytics Suite
      • Forward Valuation ModelTM: Zip code-specific forecasting models.
      • MSA Forecasts Models: Market forecasts for the Case-Shiller, RadarLogic, FHFA & other third-party HPIs.
      (Note: Our clients are the smartest people we know)
    • May 31, 2011: “Home prices continue on their downward spiral with no relief in sight.” says David M. Blitzer, Chairman of the Index Committee at S&P Indices.
      (Source: S&P Press release)
    • Today’s Active Market signaling improvements
      Price of New Listings Indicator: Leads transaction prices by 3-6 months. New sellers pricing more confidently.
      Sell into short-term strength
      Buy when the market dips later this year
      Repeat for the next 10 years
    • Price Sensitivity to Inventory Changes
      Jan – Oct ‘08
      Jan – Oct ‘09
      Jan – Oct ‘10
      Jan – May ‘11
    • Location, Location, Location:Altos Research Mid-Cities CompositeTM
      MSAs Included in Altos Research Mid-Cities CompositeTM:
      Dover, DE
      Pittsburgh, PA
      Baltimore, MD
      Durham, NC
      Charleston, SC
      Naples, FL
      Jacksonville, FL
      Orlando, FL
      Nashville, TN
      Memphis, TN
      St. Louis, MO
      Austin-Round Rock, TX
      San Antonio, TX
      Albuquerque, NM
      Reno, NV
      Boulder, CO
      Ventura, CA
      Sacramento, CA
      Boise, ID
      Honolulu, HI
      Mid-Cities CompositeTM exhibited less downside during crash & more seasonal stability .
      More on this later…
    • Altos Research Mid-Cities CompositeTM:Similar market effects with lower volatility
      • Inventory & Price Reductions less volatile
      • Fewer sub-prime mortgages
      • Mix of bubble & non-bubble markets
    • The Catfish Recovery
    • The Catfish Recovery
      Volatility. The “double dip” is only the start of the next housing cycle.
      Your long-term forecast is wrong.
      Traders: Expect sporadic defaults in existing securities, but will moving from 140 to 155 LTVs matter that much?
      Some prepayment risk during upswings as ST activity accelerates.
      Sell high, Buy low. No really.
      Heading into the single best time to make $ in real estate and mortgages. But only for smart people.
      “The housing market never goes down.” –CDO Trader, circa 2006
    • The normal market is volatile.
      2009-10 rebound manufactured by homebuyer tax credit
      Weak macroeconomic fundamentals persist
      Generational demand shifts
      Haphazard supply levels
      We’ve measured up to12% annual volatility in the Altos 20-City Composite and 7% in the Case-Shiller
      Similar volatility from pre-1990s market periods
      “This time is different”
    • The Constant Growth Myth
      Source: http://cafehayek.com/site/wp-content/uploads/2011/04/Case-Shiller-updated1.jpg
    • Remember: Case-Shiller figures reported with 2-month lag. Why wait until September for what you can see today?
    • GOT local?
    • Timing Matters (…should you wish to buy low/sell high)
      Four (4) selected San Jose zips:
      San Jose 95125 by Price Quartile:
      Scottsdale 85252 by Price Quartile:
      :
      Four (4) selected Phoenix cities:
    • Days-on-market by zip code, 5/27/11(Sample size: 7k zip codes)
    • Price Reduction Heat Map: Wichita, KS
      Did we mention location, location, location?
    • Asset-level analysis:
      1008 Pierce Street, West Sacramento, CA
      Case Example
    • 1008 Pierce St., West Sacramento, CA
      (Please note the egregious product placement of our Listings IntelTM application)
    • “Comps” mean “Comp”etition
      Listing History for 821Reuter Drive:
      (… and here)
    • The Catfish Recovery means…
      Volatility means profit with the right information
      Watch housing just like other asset classes (equities, interest rates, currencies, etc.).
      Take your gains, come up for air, then dive back in at each inflection point
    • The Constant Growth Myth
      Source: http://cafehayek.com/site/wp-content/uploads/2011/04/Case-Shiller-updated1.jpg
    • One more time… Remember it’s
      The Catfish Recovery
    • The once-in-a-lifetime offer
      Releasing our initial Mid-Cities Report in two weeks.
      Send an email to: info@altosresearch.com
      Distressed Loan/Mortgage/RMBS:
      Send us a portfolio of 25 loans or RMBS security
      We’ll run thru AltosEvaluate & Listings IntelTM and share the results
    • Altos Research Capital Markets
      Ben Gimpert
      Director of Quantitative Analytics
      ben@altosresearch.com
      Jon Sterling
      Director of Marketing
      jon@altosresearch.com
      Read more about our Housing Market insights at:
      http://blog.altosresearch.com
      Scott Sambucci
      Vice President, Market Analytics
      scott@altosresearch.com
      (415) 931 7942
      Andrew Goei
      Manager, Market Analytics
      andrew.goei@altosresearch.com
      Jeff Eckenhoff
      Manager, Market Analytics
      Jeff.eckenhoff@altosresearch.com
      Website: www.altosresearch.com
    • Appendix: Active Market Supply: CA, TX, FL, NC, AZ, GA
      • Supply affects prices
      • Inventory is generally higher vs. last year, but trending lower. (ST Positive for housing market)
      • Similar trending across markets, but absolute levels are not always similar
      • The Supply Problem, and the “Other” Supply Problem