US Home Prices (April 2010)

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Presented by Scott Sambucci from Altos Research at the Opal Real Estate Investor Conference, this presentation reviews the stae of the US housing market and examines leading indicators based on the active market.

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US Home Prices (April 2010)

  1. 1. Altos Research
  2. 2.  Altos Research answers the question “How’s the market, right now?” Our clients are anyone who has an exposure to the real estate market  Financial institutions, investors, and thousands of real estate professionals around the country. The only national source of primary research in the active housing market  Unique statistics and applications for analysis and action
  3. 3. Altos-20 Composite CSI-20 200$420,000 190$410,000 180$400,000 170$390,000 160$380,000 150$370,000 140$360,000 130
  4. 4. Altos-20 Composite CS-20$450,000 200$440,000 190$430,000 180$420,000 170$410,000 160$400,000 150$390,000$380,000 140$370,000 130$360,000 120$350,000 110
  5. 5. 2008 -Default spike exactly correlated with market trough Pre-2007 “normal” 1 markets: defaultscorrelate to FICO, LTV 2 2009 – market conditions stabilized, new defaults decline
  6. 6.  Assumption: “If a borrower is deep underwater, he’ll walk away.” Reality:  CA list prices rose 8% in 1H2009  Inventory dropped by 30%  New defaults fell 24% in Q4  LTV is still lousy on these properties In a rapidly changing market, LTV impact weakens and FICO approaches irrelevancy.
  7. 7. New delinquencies perfectly correlated tomarket conditions
  8. 8.  Real-time, local view Home price stats  Median price, PNL, PLA Home price distribution stats  Min, max, stdev  Price quartiles distribution Supply and demand  Inventory, median DOM, mean DOM, new listings, listings absorbed Housing Market Psychology™ indicators  % relist, %price reduced, Market Action Index
  9. 9.  FICO? LTV? The last 36 months have taught us that external housing market variables are by far the most important variable in determining mortgage default rates Home Price direction, inventory, time to sell  Impact the borrower psychology and drive decisions  Declining market: “I’ll never get out. It’ll never sell.”  Up market: “This is getting better! I see light at the end of the tunnel”
  10. 10.  Must be real-time, local  Lagging Case-Shiller insufficient Ask price trends  price of new listings vs. price of absorbed YOY Inventory Absorption rate vs. inventory (Market Action Index) Relist % DOM
  11. 11. Scott Sambucci, VP Data Analytics M: (415) 596-0804 O: (415) 931 7942 scott@altosresearch.com T: @AltosResearch Bloomberg: ALTO www.altosresearch.com blog.altosresearch.com

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