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California and Northern San Diego Housing Update

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Presentation to Northern San Diego CAR Group April 23, 2012

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California and Northern San Diego Housing Update

  1. 1. California and San DiegoMarket UpdatePresented byMadeline SchnappDirector of Economic Research, ForeclosureRadarHow 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 lows02468101214161820MonthsofUnsoldInventoryCalifornia Unsold Inventory IndexMonths of Available Inventory - January 1990 to February 2013Source: California Association of Realtors – CAR.org
  4. 4. Prices up sharply in 2012Source: California Association of Realtors – www.car.org$150,000$250,000$350,000$450,000$550,000$650,000MedianHomePrices($)Median Home Prices - California and San Diego CountyJanuary 1990 through January 2013CaliforniaSan DiegoPrices Begin to Rise
  5. 5. Government intervention
  6. 6. 010,00020,00030,00040,00050,00060,000NumberofNoticesorSalesCalifornia Foreclosure ActivitySeptember 2006 through March 2013Notice of DefaultNotice of Trustee SaleForeclosure SalesSource: ForeclosureRadar – www.foreclosureradar.comForeclosure activity slowing…
  7. 7. 7Foreclosure activity slowing…05001,0001,5002,0002,5003,0003,5004,0004,500No.ofNoticesorSalesForeclosure Activity - San Diego CountySeptember 2006 through March 2013Notice of DefaultNotice of Trustee SaleForeclosure Sales
  8. 8. Number of days to foreclose explodes
  9. 9. Lack of REO InventoryIn 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 Homes6.3 Million Mortgages1.7 Million Underwater380,000 Delinquent95,000 in Foreclosure58,000 Bank Owned15,000 Distressed Sales533k / 15,000=~36 Months
  11. 11. Shadow inventory real but no wave~10 Million Homes6.3 Million Mortgages1.7 Million Underwater380,000 Delinquent95,000 in Foreclosure58,000 Bank Owned15,000 Distressed Sales~ 1.75M /15,000=~ 10 Years
  12. 12. Housing Market Recovery?
  13. 13. Housing Recovery Dependenton Jobs and IncomeRising EmploymentRising Incomes
  14. 14. California employment on the rise
  15. 15. San Diego County Employment(40,000)(30,000)(20,000)(10,000)-10,00020,00030,00040,000NumberofJobsSan Diego County Employment GrowthMarch 2005 through March 2013
  16. 16. California personal incomegaining ground$120,000$130,000$140,000$150,000$160,000$170,000$180,000Income(Millionsof$)California Personal Income (Millions of Dollars)Q1 2000 through Q3 2012
  17. 17. What does a housing recoverylook like?Rising Prices Increase in Market ActivityIncrease in Building Activity
  18. 18. Market Activity Slows…010,00020,00030,00040,00050,00060,000SalesVolumeMonthly Trend of California Real Estate SalesDistressed vs. Equity SalesJanuary 2006 through March 2013Distressed SalesNon-Distressed SalesQ1 2013 sales
  19. 19. Distressed Property SalesDecline in Q1 201335%40%45%50%55%60%65%70%Distressed Property Sales - % of Total SalesJanuary 2012 to March 2013
  20. 20. Market Activity Slows020,00040,00060,00080,000100,000120,000140,000SalesVolumeCalifornia Real Estate SalesNon-Distressed v. Distressed (Short Sales and Bank REOResales)Short SaleBank REO ResaleNon-Distressed Sale
  21. 21. ….But Not in San Diego County3,0003,7504,5005,2506,0006,7507,5008,2509,00040,00050,00060,00070,00080,00090,000100,000110,000120,000SalesVolumeSalesVolumeTotal Q1 Sales Comparison - California, San Diego CountyQ1 2002 to Q1 2013Total California SalesTotal San Diego Sales
  22. 22. Cash Sales Now 30% of Total Sales0%5%10%15%20%25%30%35%020,00040,00060,00080,000100,000120,000140,0002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013%ofTotalSalesSalesVolumeCash Sales, Volume and % of Total Sales2001 through 2013 YTDCash SalesCash Sales as % of Total SalesCash salesthroughMarch 2013
  23. 23. California home building permitson the rise
  24. 24. Negative Equity on the DeclineHomeowner equity criticalto housing recovery
  25. 25. Home equity slowly improving35%45%55%65%MortgageDebt-to-ValueRatio(%)Annual Trends of Mortgage Debt-to-Value Ratio (%)1995 to 2012
  26. 26. Negative equity on the declineSource: CoreLogic – www.corelogic.com24%28%32%36%NegativeEquityShare(%)California Negative Equity (%)Q4 2009 to Q4 2012
  27. 27. Negative Equity-2004006008001,0001,2001,400NumberofHomeowners(inThousands)EquityCalifornia Homeowner Equity, March 20135.3 millionhomeowners have5% or more equityin their properties
  28. 28. Negative Equity02004006008001,0005% 10% 15% 20% 25%NumberofCaliforniaHomeowners(inThousands)Increase In California Home PricesNumber of California Homeownersthat Exit Negative Equity Positions ifHome 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 thanhouse payments• Early foreclosure “victims” may nowqualify again for a mortgage andchoose to buy
  31. 31. Supply will remain tight• Government intervention will continueto slow foreclosures, ie. CAHomeowner’s Bill of Rights• Homeowners with equity not moving up• 2 million underwater homeowners can’tbuy 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 demandwill 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 rentersthan homeowners through short salesand foreclosures• Trustee sale investors will continue tosee strong competition, thoughinstitutional investors will exit asrental ROI’s decline, leaving moreopportunity for flippers
  34. 34. Putting your head in the sand isnot 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 ClientExpertise at yourFingertips!
  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 SearchAccess to over 100Search Criteria!
  48. 48. Farm For Near NegativeEquity Homeowners that haveLived in their Homes for 8 orMore 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 saleopportunities– Locate and mail to renterswho may eventually becomebuyersOther 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 Reporthttp://www.foreclosureradar.com/reportsSign Up for NSDCAR’s PropertyRadar Training 9 AMJune 24th to learn how to find listingshttp://www.nsdcar.com/events-cal/Get ahead of the competition!
  66. 66. Thank You!FREE 3-Day Trialwww.ForeclosureRadar.comBasic Subscription Price: $49.95/Mo.CAR Members receive a 10% DiscountWill Also Get You Access to PropertyRadarMonth-to-Month AgreementEmail: Support@Foreclosureradar.com

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