APD Solutions, LLC


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A Neighborhood Revitalization Firm specializing in community stablization in the wake of the foreclosure crisis.

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  • For foreclosed houses, we are roughly back to the price to income ratio reached back in 1987 and 2000. While we expect some overshooting on the downside, prices of foreclosed homes are in-line with the median household income. They fell 43% to get to this level.
  • For Non-Foreclosed existing Homes, the price to income ratio remains well above that reached in 1987 and 2000. To reach equilibrium the PTI would have to fall nearly 50%
  • APD Solutions, LLC

    1. 1. Housing Industry Outlook Creating New Opportunities with 21 st Century Solutions Vaughn D. Irons, CEO APD Solutions October 7, 2009
    2. 2. <ul><ul><ul><ul><li>This presentation is a conglomeration of information and details provided by multiple sources including: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>MD Sass/Waterfall Asset Management </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Morgan-Stanley </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Standard & Poors </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Goldman Sachs </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Duetsche Bank </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Brookings Institute </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Pew Center for Social Research </li></ul></ul></ul></ul></ul>Housing Industry Outlook
    3. 3. Who is APD Solutions?
    4. 4. APDS Company Profile <ul><li>Firm Background </li></ul><ul><li>APD Solutions is a National Neighborhood Revitalization Firm created to meet the current housing industry challenges </li></ul><ul><li>Affiliated with APD, Inc. established in 1990 with the help of the FDIC and Resolution Trust Corp. (RTC) </li></ul><ul><li>National reputation in developing redevelopment strategies for low-to-moderate, historic and minority neighborhoods </li></ul><ul><li>Experience </li></ul><ul><li>Over 225 years experience in housing, finance, affordable programs and neighborhood development </li></ul>
    5. 5. For us it isn’t only important what we do… but also why we do it. Our Core Values
    6. 6. Community Development Consulting Acquisition and Asset Management Neighborhood Program Design and Oversight Sub-service Providers* Real Estate & Disposition Strategies Socially Responsible Investing What We Provide Urban & Neighborhood Planning Our Clients
    7. 7. Real Estate Market Performance
    8. 8. <ul><li>Unprecedented Housing Crisis: </li></ul><ul><ul><li>Foreclosures have increased by 71% since last year </li></ul></ul><ul><ul><li>1.2 million REOs by the end of 2008 </li></ul></ul><ul><ul><li>2 million foreclosures in the first 6 months of 2009 </li></ul></ul><ul><ul><li>Only 325,000 modifications </li></ul></ul><ul><li>Enormous Impact on Entire Communities: </li></ul><ul><ul><li>40.6 million homes in neighborhoods surrounding foreclosed homes will suffer price decline </li></ul></ul><ul><ul><li>$352 billion total decline in property values </li></ul></ul><ul><ul><li>Localities will lose $4.5 billion in property taxes and other local tax revenue </li></ul></ul>Recap of the Last Year
    9. 9. “ It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.” Charles Darwin Old Views and Skills Won’t Work in the Future
    10. 10. <ul><li>Real Estate Performance </li></ul><ul><ul><li>Market Recovery Projections </li></ul></ul><ul><ul><li>Foreclosure Focus </li></ul></ul><ul><ul><li>The Impact on Home Price Appreciation </li></ul></ul><ul><li>The Impact of “In” Migration </li></ul><ul><ul><li>The South is the biggest beneficiary </li></ul></ul><ul><ul><li>Georgia is #1 African-American </li></ul></ul><ul><li>Household Growth (11% or 1.2mm HH/yr) </li></ul><ul><ul><li>Childless households </li></ul></ul><ul><ul><li>Racial/ethnic household changes </li></ul></ul><ul><ul><li>Immigrant household growth </li></ul></ul>Presentation Overview: Future Trends
    11. 11. Projections of Market Recovery
    12. 12. Foreclosed Properties Up to 40% of Transactions
    13. 13. 2010-2011 Price Forecast
    14. 14. Focus on Pre-2003 Purchasers
    15. 15. Considering The Shadow Inventory
    16. 16. Foreclosed Properties Create More Affordability Price to Income - Foreclosed
    17. 17. Affordability for Existing Homes Still a Challenge Price to Income - Existing
    18. 18. The Negative Equity Issue
    19. 19. Rising Home Inventory Levels have not been met with Rising Demand, as “Prime” Loan Underwriting Guidelines have tightened, excluding many borrowers from qualifying. Qualified Buyer Pools are Much Smaller Today homebuyers are being asked to qualify with 700 minimum credit scores, 5% down, sufficient reserves, 33/41 debt to income ratios, and stellar credit history. Yesterday homebuyers were being asked to qualify with 580-600 minimum credit scores, 0% down, no reserves, and 45 debt to income ratios.
    20. 20. 2009 Yet the Banks are only finding Buyers for roughly 10% of the unsold home inventory…
    21. 21. New Demographic Shifts Understanding Household Growth
    22. 22. Racial & Ethnic Minorities <ul><li>Racial and ethnic minorities account for large share of household growth </li></ul><ul><li>Minorities will account for 65% of net household growth </li></ul><ul><li>Hispanic and Asian household growth will account for the largest share of the minority increase </li></ul><ul><li>Because they are younger, minorities will constitute large part of first-time homeownership demand </li></ul><ul><li>Minority homeownership rate has dropped due to foreclosures </li></ul>
    23. 23. Household Growth This Decade (2000-2010)
    24. 24. Educational Attainment Impacts Homeownership
    25. 25. Immigration Still an Opportunity <ul><li>11% of U.S. population is foreign-born </li></ul><ul><li>44% of foreign-born have entered the U.S. since 1990 (relative newcomers) </li></ul><ul><li>27% of total household growth in next decade will result from immigration </li></ul><ul><ul><li>Immigration will be concentrated in Gateway Regions </li></ul></ul><ul><li>Hispanic household growth will be largest contributor </li></ul><ul><ul><li>51% of foreign-born are from Latin America </li></ul></ul>
    26. 26. CA Immigrant Growth
    27. 27. The Number vs. Percentage
    28. 28. Changes in Households Beyond 2010 Childless Households Dominate Growth
    29. 29. So What… Now What? How Can APDS Help?
    30. 30. Continuity of Responsibility Acquisition Asset Management Disposition Acquisition Disposition Asset Management Overall Program Design
    31. 31. Property Acquisition Services (BuySmart) Atlanta Sample Map For Waterfall A.M. Pre Portfolio Acquisition 45 units
    32. 32. Sample of APD Mapping and GIS Capabilities
    33. 33. Sample of APD Tracking and Targeting Capabilities (Chattanooga)
    34. 34. Sample of APD Tracking and Targeting Capabilities (Chattanooga)
    35. 35. APDS Property Disposition Principles Community Participation Accountability Socially Responsible Options Targeted Intervention/Clustering 4 3 2 1 Two-Pronged Marketing Approach Aggressive Implementation 7 6 5 Rehabilitate a superior product
    36. 36. The APDS Approach Force Everything to Work Together APDS Housing Programs Galvanized Disposition Typical Housing Programs