The US Housing Market - It's worse than you think
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This presentation includes a look at both national and regional US housing market trends. Scott Sambucci examines several real-time and leading indicators. A look at the Case-Shiller Home Price Index and the effects of the 2009-10 US Housing Stimulus program is also included. This presentation was part of a recording webcast. A video recording of the webcast is available at: https://www1.gotomeeting.com/register/178950865 (Registration required)
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The US Housing Market - It's worse than you think
- 1. Presented by: Scott Sambucci Vice President, Data Analytics Altos Research It’s worse than you think: The Housing Market in a post-stimulus world Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 2. What we’ll cover today Yep, we’ve blown the punch line already, but… Look at real-time effects of 2009-2010 housing stimulus All markets are created equal, but some are more equal than others Recovery rates vary and micro-markets matter Finding business opportunities despite current conditions, if you know how to look for them. Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 3. About the Altos Research Housing Market Platform 150+ Metropolitan Statistical Areas (and growing every month) covering 17,000 zip codes 2 million active listings updated every week Market Analytics & Leading Indicators available by zip code, city, county, metro, and National Composites All data & market analytics for each geography (zip, city, metro) independently calculated Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 4. Leading Indicators & Forecasting 0-12 month Forecasting Median Price Price of New Listings Price of Listings Absorbed Market Action Index List-to-Sale Ratios 6-18 month forecasting Percent Price Decreased/Increase Magnitude Price Decreased/Increase Inventory Percent Relisted Days-on-market (mean and median) Tic/Trend/Peakiness/Troughiness 12-24 month forecasting Year-over-Year Price Year-over-Year Inventory Year-over-Year Percent Price Decreased Year-over-Year Days-on-Market This list in a partial list of market stats published weekly, with over 400 coincidental & leading indicators available Altos Research also provides market analytics based on Property Characteristics: Square Footage # Beds/Baths Lot Size & Age Price per Bedroom/Bathroom Price per Square Foot (mean & median) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 5. Applications & Clients Whole Loan Asset Portfolios RMBS Portfolios REO Disposition Mortgage Origination & Servicing Valuation & Appraisal Equity Researchers Risk Management Homebuilders & Developers Insurance Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 6. Altos 10-City Composite (March 2010) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 7. The Supply Effect (90-day RA) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 8. The Supply Effect (weekly) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 9. New Sellers vs. Existing Sellers Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 10. Inventory up, Transactions down Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 11. Cash for Clunkers, er, The Housing Stimulus Couldn’t get out – moved into foreclosure process Last of the Housing Bubble Initial stimulus effects Limited effect of stimulus extension. Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 12. ECON 101: More supply Lower prices… Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 13. … but this year at a faster rate Weekly Rate of Change Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 14. And for those that still don’t quite get it… Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 15. Typical Inventory Trends Inventory now steadily climbing in 2010 after negative growth from mid-2008 through early 2010. Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 16. Florida Inventory Trends SFH Inventory remains flat in Tampa, Orlando & Miami Miami Condo Inventory still falling, coincided with price declines Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 17. Stable/Low Beta markets Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 18. Local Trends Matter Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 19. Homeownership Rates “Home Vacancies Rise as U.S. Ownership Falls to Lowest in Decade” Kathleen Howley, Bloomberg (July 27) “Apartment Rentals Surge in U.S. on Foreclosures, Jobs” PrashantGopal, Bloomberg (July 27) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 20. Homeownership Rates & Demand MAI measures demand at given inventory levels. Moving sharply negative post-stimulus Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 21. S&P/Case-Shiller Home Price Index April & May 2010 were higher. Expect this trend to continue into June & July Smoothing and heading lower by early Fall Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 22. Active Market Price Reductions(lower is better) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 23. YoY Active Market Price Reductions(lower is better) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 24. New Sellers vs. Existing Sellers(higher is better) Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 25. The Cliff Notes Version A little more stable: San Francisco-Oakland-Fremont Las-Vegas-Paradise Washington DC metro A little less stable: Minneapolis-St. Paul Denver metro Chicago-Naperville-Joliet Phoenix-Mesa-Scottsdale Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 26. So now what? Despite general bearishness, selected markets showing resiliency to climbing inventory levels Recovery period dependent on inventory The more local you get, the more volatile Vital to get local b/c if you generalize (ie use County or MSA data), you’re going to be wrong. You know that the trend matters, but are you using lagging data for forecasting analysis? Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 27. Do you really know where the market is going? BPO based on June comps $184,000 Altos real-time market data Phoenix 85057 Home Prices Altos Forecast Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 28. For Webcast Attendees Free Portfolio analysis Data for up to 25 zips including 1-year historical. Contact Scott Sambucci directly for submission formatting. Presentation slides available upon request: scott@altosresearch.com (415) 931 7942 Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 29. Whole Loan & RMBS Portfolio Data Requests Submit list of loans, property addresses or underlying asset zip codes to Altos Research Altos Research Housing Market Data Platform yields real-time market analytics and leading indicators for each zip code submitted. Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 30. Altos Research Data Output Files All data files available for download as .CSV file for easy integration into any spreadsheet model or database application. Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 31. Data Visualization Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 32. Real-time Market Trend Reports Copyright Altos Research | www.altosresearch.com | 7/29/2010
- 33. Copyright Altos Research | www.altosresearch.com | 7/29/2010
Editor's Notes
- “All markets are created equal…” – All markets have been affected by the housing market situation, however certain structural factors cause varied market betas.“Recovery Rates” - You should over-generalized a state, metro, or even a county’s market at your own peril. When you generalize, you’re going to be wrong.Opportunities – It’s not that you can always see good markets, but it’s discerning which are less bad, or which the appear stable are deteriorating quickly.
- “independently calculated” – VERY IMPT. This means that we do not apply county or regional data to a set of underlying zip codes. All of our indicators are calculated and published based on the activity of the listings comprising that zip code.
- If you have exposure to the housing market, our data and analytics matter to you.
- If you joined up in the Spring for our “Early 2010 Indicators” webcast, we expressed caution going into the Spring season b/c prices remained stagnant through April 2010 compared to the sharp price increases we saw in 2009 at the introduction of the stimulus and declining inventory rates. Now…
- Black line is National Inventory. Orange Line is median price.YoY Inventory is the same levels – 2010 vs. 2009, but headed in the wrong direction. Prices already hit their seasonal peak and did not reach last year’s peak. With seasonal effects and higher inventory, the start of 2011 is looking gloomy.
- Price measures typically have momentum. In 2009, prices moved sharply higher quickly. In 2010, the weekly price index is moving lower faster with the peak at the stimulus expiration. This by itself is the most impressively bearish viewpoint on the market as of today.
- A baseline leading indicator for us is the Price of New Listings. New sellers hitting the market price their homes based on local market activity. If homes are selling quickly and fetching good prices, new sellers will price a little higher. If their neighborhood activity is weak, they’ll price lower. Converged sharply this Spring by the newly-listed-to-currently-listed ratios didn’t reach the same percentages as Spring 2009, Spring 2008.Remember that 2010 prices were already lower than 2009, and this year’s new sellers entering market, are choosing to price more aggressively than in a normal Spring season. This forecasts lower future transaction prices.
- So onto the Inventory story. Historically, Active Inventory CORR with the # of listings absorbed Generally sales rates go up with inventory rises. Until end of stimulus. We seeing a rapid divergence post-stimulus. Means more inventory is coming on to the market with fewer leaving. This is going to leave a larger and larger inventory overhang each month leading into 2011.
- I’ve mentioned the stimulus a bit – so how do we measure it’s affects? Looking at the number
- Big up slope here, moving higher sharply, even more so that in 2008More stable mkt = 25-33% is more common,; when <25%, then healthy; when >35%-40% (fragile), then we’re heading to troubled timesAnd we saw the impact on price stabilization starting early 2009.
- This is a bad thing. Prices move lower, when supply rises. But at least it
- While the lowinvnetorymight imply good news in the short run, we’d be better off letting it hit the market. You can see the effects of judicial states and long foreclsoure process. Price recovery is going to be longer term.And miami condos – worse of the worst – declining prices coinciding with lower inventory.
- Rentals Who lives there? The same people who defaulted on their mortgage. Investor buys and rents back. Demand and inventory rates, and here’s how we measure…. Next slide
- MAI measures Demand relative to inventory: 2009 levels – moved higher, stayed higher, but in 2010, end of stimulus = falls off a cliff
- As the lagging data catches up to the real-time market
- Despite overall bearishness, there are some markets that have been resilient to inventory climbs, are in different stages of recovery, showed price buoyancy.The more local you get, the more volatileVital to get local b/c if you generalize (ie use Cty or MSA data), you’re going to be wrong.You know that trend matters, but are you using lagging data to trend or leading data
- Modeling re-org good opp to take a look at why’s missing in your model. Probably don’t have active inventory, you don’t % price reductions. These matter.I think everyone is expecting increased Bond/Whole Loan portfolios.Banks are dripping assets, visible with inventory rising (no one is selling b/c they’re happy with today’s prices). Short sale rules are mellowing, process improvements