Altos Research - The Catfish Recovery


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From Altos Research, a look at the 2011 housing market using real-time market analytics and leading indicators. The presentation includes a discussion of housing market volatility as normal market conditions for the next 5-10 year period.

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Altos Research - The Catfish Recovery

  1. 1. Altos ResearchDouble-Dip or a Catfish?Spring 2011 WebcastJune 2, 2011<br />Scott Sambucci<br />Vice President, Market Analytics<br /><br />(415) 931 7942<br />
  2. 2. Why we’re here<br /><ul><li>Today’s 2011 Market, not 3 or 6 months ago
  3. 3. Inventory affects price, sometimes
  4. 4. “The Catfish Recovery”
  5. 5. Volatility = Profit (but only for smart people)
  6. 6. Measuring Affordability(sorry, next time…)
  7. 7. Today’s once-in-a-lifetime offer</li></li></ul><li>Don’t trade based on this presentation. Seriously.<br />Disclaimer<br />
  8. 8. Our Mandatory Commercial(the marketing team made me do this)<br />Altos Research = real-time real estate & housing market analytics<br />The only national source of primary data & analytics for the active housing market<br /><ul><li>Listings IntelTM:
  9. 9. 2 million active market properties updated weekly;
  10. 10. Historical date & portfolio matching, and active comps in 20,000 zip codes, 250+ MSAs/CBSAs.
  11. 11. AltosEvaluateTMMortgage Analytics Suite
  12. 12. Forward Valuation ModelTM: Zip code-specific forecasting models.
  13. 13. MSA Forecasts Models: Market forecasts for the Case-Shiller, RadarLogic, FHFA & other third-party HPIs.</li></ul>(Note: Our clients are the smartest people we know)<br />
  14. 14. May 31, 2011: “Home prices continue on their downward spiral with no relief in sight.” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. <br />(Source: S&P Press release)<br />
  15. 15. Today’s Active Market signaling improvements<br />Price of New Listings Indicator: Leads transaction prices by 3-6 months. New sellers pricing more confidently.<br />Sell into short-term strength<br />Buy when the market dips later this year<br />Repeat for the next 10 years<br />
  16. 16. Price Sensitivity to Inventory Changes<br />Jan – Oct ‘08<br />Jan – Oct ‘09<br />Jan – Oct ‘10<br />Jan – May ‘11<br />
  17. 17. Location, Location, Location:Altos Research Mid-Cities CompositeTM<br />MSAs Included in Altos Research Mid-Cities CompositeTM:<br />Dover, DE<br />Pittsburgh, PA<br />Baltimore, MD<br />Durham, NC<br />Charleston, SC<br />Naples, FL <br />Jacksonville, FL <br />Orlando, FL <br />Nashville, TN<br />Memphis, TN<br />St. Louis, MO<br />Austin-Round Rock, TX<br />San Antonio, TX<br />Albuquerque, NM <br />Reno, NV <br />Boulder, CO <br />Ventura, CA<br />Sacramento, CA<br />Boise, ID<br />Honolulu, HI<br />Mid-Cities CompositeTM exhibited less downside during crash & more seasonal stability .<br />More on this later…<br />
  18. 18. Altos Research Mid-Cities CompositeTM:Similar market effects with lower volatility<br /><ul><li>Inventory & Price Reductions less volatile
  19. 19. Fewer sub-prime mortgages
  20. 20. Mix of bubble & non-bubble markets </li></li></ul><li>The Catfish Recovery<br />
  21. 21. The Catfish Recovery<br />Volatility. The “double dip” is only the start of the next housing cycle. <br />Your long-term forecast is wrong.<br />Traders: Expect sporadic defaults in existing securities, but will moving from 140 to 155 LTVs matter that much?<br />Some prepayment risk during upswings as ST activity accelerates.<br />Sell high, Buy low. No really.<br />Heading into the single best time to make $ in real estate and mortgages. But only for smart people. <br />“The housing market never goes down.” –CDO Trader, circa 2006<br />
  22. 22. The normal market is volatile.<br />2009-10 rebound manufactured by homebuyer tax credit<br />Weak macroeconomic fundamentals persist<br />Generational demand shifts<br />Haphazard supply levels<br />We’ve measured up to12% annual volatility in the Altos 20-City Composite and 7% in the Case-Shiller<br />Similar volatility from pre-1990s market periods<br />“This time is different”<br />
  23. 23. The Constant Growth Myth<br />Source:<br />
  24. 24. Remember: Case-Shiller figures reported with 2-month lag. Why wait until September for what you can see today?<br />
  25. 25. GOT local?<br />
  26. 26. Timing Matters (…should you wish to buy low/sell high)<br />Four (4) selected San Jose zips:<br />San Jose 95125 by Price Quartile:<br />Scottsdale 85252 by Price Quartile:<br />:<br />Four (4) selected Phoenix cities:<br />
  27. 27. Days-on-market by zip code, 5/27/11(Sample size: 7k zip codes)<br />
  28. 28. Price Reduction Heat Map: Wichita, KS<br />Did we mention location, location, location?<br />
  29. 29. Asset-level analysis: <br />1008 Pierce Street, West Sacramento, CA<br />Case Example<br />
  30. 30.
  31. 31. 1008 Pierce St., West Sacramento, CA<br />(Please note the egregious product placement of our Listings IntelTM application)<br />
  32. 32. “Comps” mean “Comp”etition<br />Listing History for 821Reuter Drive:<br />(… and here)<br />
  33. 33. The Catfish Recovery means…<br />Volatility means profit with the right information<br />Watch housing just like other asset classes (equities, interest rates, currencies, etc.).<br />Take your gains, come up for air, then dive back in at each inflection point<br />
  34. 34. The Constant Growth Myth<br />Source:<br />
  35. 35. One more time… Remember it’s<br />The Catfish Recovery<br />
  36. 36. The once-in-a-lifetime offer<br />Releasing our initial Mid-Cities Report in two weeks.<br />Send an email to:<br />Distressed Loan/Mortgage/RMBS:<br />Send us a portfolio of 25 loans or RMBS security<br />We’ll run thru AltosEvaluate & Listings IntelTM and share the results <br />
  37. 37. Altos Research Capital Markets<br />Ben Gimpert<br />Director of Quantitative Analytics<br /><br />Jon Sterling<br />Director of Marketing<br /><br />Read more about our Housing Market insights at:<br /><br />Scott Sambucci<br />Vice President, Market Analytics<br /><br />(415) 931 7942<br />Andrew Goei<br />Manager, Market Analytics<br /><br />Jeff Eckenhoff<br />Manager, Market Analytics<br /><br />Website:<br />
  38. 38. Appendix: Active Market Supply: CA, TX, FL, NC, AZ, GA<br /><ul><li>Supply affects prices
  39. 39. Inventory is generally higher vs. last year, but trending lower. (ST Positive for housing market)
  40. 40. Similar trending across markets, but absolute levels are not always similar
  41. 41. The Supply Problem, and the “Other” Supply Problem</li>