Capita per inventoryThe other way to think about housing affordability
Capita Per Inventory: National Picture600500400300200100 -
Capita Per Inventory Altos Research "Capita per Inventory" vs. Active Market Prices Median Price Linear (Median Price)$1,200,000 Stamfo$1,000,000 rd, CT $800,000 $600,000 $400,000 McAllen, T $200,000 X $- - 50 100 150 200 250 300 350 400 450 500
So what? 2011 Median Unemployment Wells Fargo Family Income Change Rate: Sept 11 HOI Rank (000s) Median Price Pop 00 to 10 BLS CORREL Capita per Inventory 53.8% 31.2% 56.7% -4.6% -6.6%CORREL Wells Fargo HOI Rank 44.5% 75.7% 13.8% -14.2%
Capita per Inventory: Bay Area cities PALO ALTO SAN MATEO LOS ALTOS DUBLIN OAKLAND SAN JOSE SACRAMENTO BAKERSFIELD1600140012001000 800 600 400 200 0 10/7/2011
Homeownership Rates & The Rental Market What does this mean for investors?
Millennials not looking for Gen Y home ownership: A dreamMcMansions (unless they have to deferred?move back in with the parents) http://www.cbsnews.com/8301-505143_162-57324851/gen-y- home-ownership-a-dream-deferred/http://grist.org/cities/2011-01-14-millennials-not-looking-for-mcmansions-unless-they-have-to-live/
Owner occupied Renter occupied90%80%70%60%50%40%30%20%10%0% Total Households Native Naturalized US Citizen Non-US Citizens
Several factors other than demographic changes may explain the broad-based increases in homeownership rates. Unfortunately, however, there is little research available to quantify their effects; therefore, the ideas in this section are more speculative than the demographic analysis. With that said, it seems plausible that one of the more important factors explaining the broad-based increase in homeownership from 1994 to 2004 could be the myriad of innovations in the mortgage finance industry that occurred during that time… Several innovations helped propel the rise of the subprime market during the 1990s and into the 2000s. Although definitions of subprime mortgages vary, in essence they are loans given to households with lower credit quality, and they entail higher than average interest rates.FRBSF Economic Letter - November 3, 2006“The Rise in Homeownership”http://www.frbsf.org/publications/economics/letter/2006/el2006-30.html
Are REOs really a good deal? What does this mean for investors?
The Foreclosure Discount: Myth or Reality? John P. Harding (University of Connecticut, Center for Real Estate and Urban Economic Studies), Eric Rosenblatt (Fannie Mae), Vincent W. Yao“Using a large sample of REO purchases, we identify a controlsample of non-distressed property purchases that closelymatch the REOs in terms of property characteristics, locationand time of sale and find that with the exception of a smallnumber of extraordinary returns from short-term investing inREOs, typical REO buyers earn approximately 1.4%/year abovethe return from price appreciation associated with the purchaseof a non-distressed property and that the original pricediscount needed to generate that excess return is less thantypical transaction costs.”
Programs. Lots of Programs REO Rental Initiative (Freddie Mac) National Real Estate Owned (REO) Rental Policy (Fannie Mae) Deed-for-Lease (Fannie Mae) Department of Housing & Urban Development Neighborhood Stabilization Program REO-to-Rental (US Federal Reserve) Federal Housing Finance Agency REO Initiative US Election HAMP, HARP, HARP II, HAFA Tax Credit