Presented by Scott Sambucci from Altos Research at the Opal Real Estate Investor Conference, this presentation reviews the stae of the US housing market and examines leading indicators based on the active market.

1. Altos Research

2.  Altos Research answers the question “How’s
the market, right now?”
 Our clients are anyone who has an exposure
to the real estate market
 Financial institutions, investors, and thousands of
real estate professionals around the country.
 The only national source of primary research
in the active housing market
 Unique statistics and applications for analysis and
action

6. Altos-20 Composite CSI-20
200
$420,000
190
$410,000
180
$400,000
170
$390,000
160
$380,000
150
$370,000 140
$360,000 130

7. Altos-20 Composite CS-20
$450,000
200
$440,000
190
$430,000
180
$420,000
170
$410,000
160
$400,000
150
$390,000
$380,000 140
$370,000 130
$360,000 120
$350,000 110

10. 2008 -Default spike
exactly correlated with
market trough
Pre-2007 “normal”
1
markets: defaults
correlate to FICO, LTV
2
2009 – market conditions
stabilized, new defaults
decline

11.  Assumption: “If a borrower is deep
underwater, he’ll walk away.”
 Reality:
 CA list prices rose 8% in 1H2009
 Inventory dropped by 30%
 New defaults fell 24% in Q4
 LTV is still lousy on these properties
 In a rapidly changing market, LTV impact
weakens and FICO approaches irrelevancy.

12. New delinquencies
perfectly
correlated to
market conditions

13.  Real-time, local view
 Home price stats
 Median price, PNL, PLA
 Home price distribution stats
 Min, max, stdev
 Price quartiles distribution
 Supply and demand
 Inventory, median DOM, mean DOM, new listings, listings
absorbed
 Housing Market Psychology™ indicators
 % relist, %price reduced, Market Action Index

14.  FICO? LTV?
 The last 36 months have taught us that external
housing market variables are by far the most
important variable in determining mortgage
default rates
 Home Price direction, inventory, time to sell
 Impact the borrower psychology and drive decisions
 Declining market: “I’ll never get out. It’ll never sell.”
 Up market: “This is getting better! I see light at the
end of the tunnel”

15.  Must be real-time, local
 Lagging Case-Shiller insufficient
 Ask price trends
 price of new listings vs. price of absorbed
 YOY Inventory
 Absorption rate vs. inventory (Market Action
Index)
 Relist %
 DOM

16. Scott Sambucci, VP Data Analytics
M: (415) 596-0804
O: (415) 931 7942
scott@altosresearch.com
T: @AltosResearch
Bloomberg: ALTO
www.altosresearch.com
blog.altosresearch.com