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California and Northern San Diego Housing Update

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California and Northern San Diego Housing Update

  1. 1. California and San Diego Market Update Presented by Madeline Schnapp Director of Economic Research, ForeclosureRadar How to Understand (and leverage) Market Conditions Today
  2. 2. Agenda • California and San Diego Market Update • Housing Market Recovery? • 2013 Forecast • Introducing PropertyRadar
  3. 3. Inventory at or near record lows 0 2 4 6 8 10 12 14 16 18 20 MonthsofUnsoldInventory California Unsold Inventory Index Months of Available Inventory - January 1990 to February 2013 Source: California Association of Realtors – CAR.org
  4. 4. Prices up sharply in 2012 Source: California Association of Realtors – www.car.org $150,000 $250,000 $350,000 $450,000 $550,000 $650,000 MedianHomePrices($) Median Home Prices - California and San Diego County January 1990 through January 2013 California San Diego Prices Begin to Rise
  5. 5. Government intervention
  6. 6. 0 10,000 20,000 30,000 40,000 50,000 60,000 NumberofNoticesorSales California Foreclosure Activity September 2006 through March 2013 Notice of Default Notice of Trustee Sale Foreclosure Sales Source: ForeclosureRadar – www.foreclosureradar.com Foreclosure activity slowing…
  7. 7. 7 Foreclosure activity slowing… 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 No.ofNoticesorSales Foreclosure Activity - San Diego County September 2006 through March 2013 Notice of Default Notice of Trustee Sale Foreclosure Sales
  8. 8. Number of days to foreclose explodes
  9. 9. Lack of REO Inventory In March 2013, REO’s 14% of home sales down from 62% in March 2009 – 1,794 homes taken back in March 2013 in CA • Down 94% from peak of 27,980 in July 2008 • Down 83% from average of 10,467/mo in 2011 • 101 in San Diego County, down 84% from 2011 monthly avg. of 638 – California’s current REO Inventory is 52,776 • About 4 months worth of inventory • Takes banks 9 months to resell on average • No excess inventory of bank owned homes!!! • 2,899 REOs in San Diego County
  10. 10. Foreclosures will be with us for awhile ~10 Million Homes 6.3 Million Mortgages 1.7 Million Underwater 380,000 Delinquent 95,000 in Foreclosure 58,000 Bank Owned 15,000 Distressed Sales 533k / 15,000 = ~36 Months
  11. 11. Shadow inventory real but no wave ~10 Million Homes 6.3 Million Mortgages 1.7 Million Underwater 380,000 Delinquent 95,000 in Foreclosure 58,000 Bank Owned 15,000 Distressed Sales ~ 1.75M /15,000 = ~ 10 Years
  12. 12. Housing Market Recovery?
  13. 13. Housing Recovery Dependent on Jobs and Income Rising Employment Rising Incomes
  14. 14. California employment on the rise
  15. 15. San Diego County Employment (40,000) (30,000) (20,000) (10,000) - 10,000 20,000 30,000 40,000 NumberofJobs San Diego County Employment Growth March 2005 through March 2013
  16. 16. California personal income gaining ground $120,000 $130,000 $140,000 $150,000 $160,000 $170,000 $180,000 Income(Millionsof$) California Personal Income (Millions of Dollars) Q1 2000 through Q3 2012
  17. 17. What does a housing recovery look like? Rising Prices Increase in Market Activity Increase in Building Activity
  18. 18. Market Activity Slows… 0 10,000 20,000 30,000 40,000 50,000 60,000 SalesVolume Monthly Trend of California Real Estate Sales Distressed vs. Equity Sales January 2006 through March 2013 Distressed Sales Non-Distressed Sales Q1 2013 sales
  19. 19. Distressed Property Sales Decline in Q1 2013 35% 40% 45% 50% 55% 60% 65% 70% Distressed Property Sales - % of Total Sales January 2012 to March 2013
  20. 20. Market Activity Slows 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 SalesVolume California Real Estate Sales Non-Distressed v. Distressed (Short Sales and Bank REO Resales) Short Sale Bank REO Resale Non-Distressed Sale
  21. 21. ….But Not in San Diego County 3,000 3,750 4,500 5,250 6,000 6,750 7,500 8,250 9,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 SalesVolume SalesVolume Total Q1 Sales Comparison - California, San Diego County Q1 2002 to Q1 2013 Total California Sales Total San Diego Sales
  22. 22. Cash Sales Now 30% of Total Sales 0% 5% 10% 15% 20% 25% 30% 35% 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 %ofTotalSales SalesVolume Cash Sales, Volume and % of Total Sales 2001 through 2013 YTD Cash Sales Cash Sales as % of Total Sales Cash sales through March 2013
  23. 23. California home building permits on the rise
  24. 24. Negative Equity on the Decline Homeowner equity critical to housing recovery
  25. 25. Home equity slowly improving 35% 45% 55% 65% MortgageDebt-to-ValueRatio(%) Annual Trends of Mortgage Debt-to-Value Ratio (%) 1995 to 2012
  26. 26. Negative equity on the decline Source: CoreLogic – www.corelogic.com 24% 28% 32% 36% NegativeEquityShare(%) California Negative Equity (%) Q4 2009 to Q4 2012
  27. 27. Negative Equity - 200 400 600 800 1,000 1,200 1,400 NumberofHomeowners(inThousands) Equity California Homeowner Equity, March 2013 5.3 million homeowners have 5% or more equity in their properties
  28. 28. Negative Equity 0 200 400 600 800 1,000 5% 10% 15% 20% 25% NumberofCaliforniaHomeowners (inThousands) Increase In California Home Prices Number of California Homeowners that Exit Negative Equity Positions if Home Prices Increase by Certain Amounts
  29. 29. 2013 Forecast
  30. 30. Demand will remain strong • QE ∞ will keep interest rates low • In many parts of CA rents higher than house payments • Early foreclosure “victims” may now qualify again for a mortgage and choose to buy
  31. 31. Supply will remain tight • Government intervention will continue to slow foreclosures, ie. CA Homeowner’s Bill of Rights • Homeowners with equity not moving up • 2 million underwater homeowners can’t buy or sell (except short) • New home supply lagging demand • Lack of REO inventory • Short sales will likely increase
  32. 32. Home prices will rise • Lack of supply, and continued demand will put upward pressure on prices • But increases will be constrained: – By Credit Terms – By Appraisals – By Affordability and ROI
  33. 33. Other factors • More households will become renters than homeowners through short sales and foreclosures • Trustee sale investors will continue to see strong competition, though institutional investors will exit as rental ROI’s decline, leaving more opportunity for flippers
  34. 34. Putting your head in the sand is not going to find you inventory
  35. 35. Farming for Inventory – A Story
  36. 36. PropertyRadar Introduction • Expanding beyond foreclosures to ALL properties • All the functionality from ForeclosureRadar and more • New modern HTML 5 user interface • Same functionality on both computers and tablets • No more FLASH • Powerful new search and analysis tools • Expanded search criteria • New mapping tools • Filter buttons • And much more
  37. 37. Driving a Neighborhood with a Client Expertise at your Fingertips!
  38. 38. Driving with a client, they are interested in this home
  39. 39. Explore Mode
  40. 40. Property Details $550.000
  41. 41. Get a Broader View of Neighborhood
  42. 42. Are Many People Underwater?
  43. 43. Explore Mode
  44. 44. Are there Lots of Foreclosures?
  45. 45. How Stable is the Neighborhood?
  46. 46. Show the Aerial View, Property Type, Est. Value, and much more!
  47. 47. Property Search Access to over 100 Search Criteria!
  48. 48. Farm For Near Negative Equity Homeowners that have Lived in their Homes for 8 or More Years.
  49. 49. Pick Your Geography
  50. 50. Single Family Home
  51. 51. 3 Bedrooms
  52. 52. With the Value You Want
  53. 53. Find Near Negative Equity Properties
  54. 54. That are not the Primary Residence
  55. 55. Search Results
  56. 56. Search Out the Owner $550,000
  57. 57. Owner in Linked in
  58. 58. – Farm for short sale opportunities – Locate and mail to renters who may eventually become buyers Other opportunities to find inventory
  59. 59. San Diego County Comeback
  60. 60. Commercial Property Opportunities
  61. 61. Commercial Property Opportunities
  62. 62. Commercial Property Opportunities
  63. 63. Commercial Property Opportunities
  64. 64. Commercial Property Opportunities
  65. 65. Sign Up for our free monthly Property Report http://www.foreclosureradar.com/reports Sign Up for NSDCAR’s PropertyRadar Training 9 AM June 24th to learn how to find listings http://www.nsdcar.com/events-cal/ Get ahead of the competition!
  66. 66. Thank You! FREE 3-Day Trial www.ForeclosureRadar.com Basic Subscription Price: $49.95/Mo. CAR Members receive a 10% Discount Will Also Get You Access to PropertyRadar Month-to-Month Agreement Email: Support@Foreclosureradar.com

Editor's Notes

  • Starts peaked at almost 60k, now 10k (1/6)Sales peaked at almost 30k, now 6k (1/5)
  • Starts peaked at almost 60k, now 10k (1/6)Sales peaked at almost 30k, now 6k (1/5)
  • If we just listen to the fear in the headlines and bury our heads in the sand, we lose out on a good 2 to maybe 3 year runway.
  • Constraining Demand:Homeowners with equity not moving up, instead hunkering downNearly a quarter of all homeowners underwater, condemned to a prison of debt.Mortgage lending standards remain tight.
  • If we just listen to the fear in the headlines and bury our heads in the sand, we lose out on a good 2 to maybe 3 year runway.
  • If we just listen to the fear in the headlines and bury our heads in the sand, we lose out on a good 2 to maybe 3 year runway.
  • Love your long-term vision intro that you did last week! Tie to it with the importance of using data to find the right opportunities now.
  • You know this case study! A client is interested in 1,700 sq. foot single story ranch style home. You drive by this home and wonder about its status…..
  • Highlight multipolygon
  • 350k -650k
  • -20 to 5
  • Let’s further narrow down by looking at properties that are not claimed as primary residences on the owners taxes. We could have a greater chance of these owners selling since they are most likely a rental or a second home.

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