2019 state of the real estate investment industry · 2019. 2. 21. · nar’s 2017 profile of home...
TRANSCRIPT
2019 STATE OF THE REAL ESTATE INVESTMENT INDUSTRY
There are really 3 kinds of lies…
The National Real Estate Investors Association is a non-profit association that exists in large part to help spread the “gospel” of real estate investment
through its local affiliates.
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U.S. Households- Renters & Owners
Type of Household Units % of U.S. Total
Renter-Occupied 42,835,169 36.3%Owner-Occupied 74,881,068 63.6%Total 117,716,237 100%
Source: US Census Bureau, American Fact Finder website, 2016 update
What Type of Structure Do Renter Households Live In?
Structure Type Units Percent
Single-Family 14,906,638.8 34.8%2 Units 3,255,472.84 7.6%
3 to 4 Units 4,454,857.6 10.4%
5 or More Units 18,247,782 42.6%Mobile Homes & Other 1,970,417.8 4.6%
Source: Source: US Census Bureau 2016 update, American Fact Finder website current interactive
Understanding the Depth and Segmentation of the Market
Portfolio Size Investors Units Average AVM
Average Portfolio
Market Share
Average Portfolio Value
Aggregate Value
1 10,822,734 10,822,734 $201,486 1.00 48.2% $201,486 $2,180,628,718,829
2-5 2,951,843 7,449,178 $213,939 2.52 33.1% $539,890 $1,593,670,057,555
6-10 218,429 1,595,086 $177,434 7.30 7.1% $1,295,717 $283,022,179,251
11-25 78,448 1,185,082 $150,849 15.11 5.3% $2,278,820 $178,768,846,877
26-50 14,659 503,861 $146,888 34.37 2.2% $5,048,849 $74,011,077,579
51-100 4,707 319,814 $162,687 67.94 1.4% $11,053,631 $52,029,439,301
101-250 1,843 275,638 $171,718 149.56 1.2% $25,682,040 $47,332,000,401
251-500 365 121,630 $172,862 333.23 0.5% $57,603,260 $21,025,189,731
501-1000 74 47,898 $189,821 647.27 0.2% $122,865,507 $9,092,047,553
1,000+ 23 152,239 $176,920 6,619.09 0.7% $1,171,048,864 $26,934,123,880
TOTAL 14,093,125 22,473,160 $198,749 1.59 100.0% $316,928.55 $4,466,513,680,957
6Source: Investability; FirstKey Lending (December 2015)
We represent over $3,000,000,000,000
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Economic Data Points
Current Unemployment
Unemployment at 49 Year Low
13
Dow Stays High
16
18
19
10 YR Treasury
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Interest Rates Since the 70s
68 Year View of Mortgage Rates
2018
Industry Snapshot
Source: Federal Housing Administration, January 2017
Most Millennials still plan to Buy
1/2015
LIBOR (3-mo)
30%
17%
13%
0%
10%
20%
30%
40%
50%
60%
70%
% with plans to buy
Living at home, planning to move out andrentAll living at home, and planning to move out
• Student Loan Debt
1/2015
LIBOR (3-mo)
Source: studentloanhero.com 2018
$1.48 Trillion in Student Loan Debt
44.2 Million Borrowers
11.2% Student Loan Delinquency Rate –90+days
63 Percent of Millennials Have More Than $10,000 in Student Debt. They'll Be Paying for Decades.Source: Inc.com Jan 11, 2017
Home Purchases
Rise of the Real Estate Investor
US Home Ownership Rate
Decrease in Existing Home Sales
The Big Picture Remains Strong
All cash sales were 20% of transactions in August, unchanged from 20% in July and from a year ago.
Source: US Census Bureau
Bloomberg reported in 2016 that more and more single women are “skipping the spouse and buying the house.”• In 2017 Single women accounted for 18% of U.S. home buyers versus only
7% for single men. *• They also find that single women
• buy at a slightly older age then single men • pay about $17k less and • had a slightly higher foreclosure rate then single men.
Women as an industry disrupter
*May 9, 2018 Washington Post
• First time buyers were 31% of sales in August, which is down from last month (32%), but the same as 31% a year ago. NAR’s 2017 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 34%
National Price Averages
• Properties typically stayed on the market for 29 days in August, up from 27 days in July but down from 30 days a year ago. 52% of homes sold in August were on the market for less than a month!
August, 2016
Rents and Occupancies
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SUPPLY & DEMAND ISSUES PREVAIL
Supply Suppression• Low Building Permits• Low Inventory• Minimal Distress
Demand Drivers• Strong Job Growth• Household Growth• Relative Affordability
Unique Market Conditions
Tight Credit Markets
Low Savings Rate
Student Loan Debt
Psychological Shift
Income Stagnation
Rental Options
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GROWTH: RENTERS VS. OWNERS
Source: Census Bureau, Bureau of Labor Statistics
+8.6MM Households from 2009 to 2016
+7.2MM New Renters from 2009 to 2016
The Rent vs. Buy Analysis
Cheaper to Rent or Buy (By County)
2012 2015
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Source: RealtyTrac
June 2018
Rise of the Real Estate Investor
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SFR RENT APPRECIATION BY MSA ( O c t . ‘ 1 4 v s . O c t . ‘ 1 7 )
Source: Investability Solutions
30.1%+15.1% to 30.0%0.1% to 15.0%-10.0% to 0.0%
Los Angeles 24.4%
Dallas 24.7%
Wichita 16.2%
Columbus 20.3%Minneapolis 17.4%
Naples 40.9%
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SFR PRICE APPRECIATION BY MSA ( O c t . ‘ 1 4 v s . O c t . ‘ 1 7 )
Source: HouseCanary
Rents - How High Can We Go?
Rents as a Percentage of Median Income
12Source: John Burns Real Estate Consulting LLC; RealFacts; REIS (April 2015)
How much did rents climb from September 2009 to 2016?
1/2015
LIBOR (3-mo)
Source: Axiometrics Q3 2016
0.0% 20.0% 40.0% 60.0% 80.0%
San FranciscoSan Jose
DenverPortland
SeattleSacramento
NashvilleAustin
AtlantaCharlotte
DallasMiami
PhoenixRiversideOrlandoRaleighBoston
Los AngelesSan Diego
TampaDetroit
NationalChicago
CincinnatiMinneapolis
HoustonNew York City
JacksonvilleBaltimore
PhiladelphiaD.C.
Las Vegas
• On average, rents were in 2016 30% higher than 2009 (peak U.S. rent prior to downturn).
• SF Bay Area, Denver and Portland show the largest increases and continue to lead the market.
What are renters paying where you live?
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SFR RENTAL VACANCY BY MSA ( Oc t ob e r 20 1 7 )
Source: Investability Solutions
0.0% to 3.0%3.1% to 6.0%6.1% to 9.0%9.1% to 12.0%12.1%+
Development
US Housing Starts
US Housing Starts
66
Housing Starts: Single-Family vs. Multi-Family (in thousands)
5Source: Data: U.S. Department of Commerce - July 19, 2018
INVESTOR SEGMENTATION
& ACTIVITY
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OUT-OF STATE INVESTORS BY MSA
Source: Investability Solutions
5.120.0%+10.1% to 19.9%5.1% to 10.0%0.1% to 5.0%
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October 2017
1. New Jersey
2. Delaware
3. Maryland
4. Illinois
5. Connecticut
6. Florida
7. South Carolina
8. Ohio
9. Nevada
10. New Mexico
1.Nevada: 1 in 91 homes
2.California: 1 in 130 homes
3.Arizona: 1 in 182 homes
4.Florida: 1 in 194 homes
5.Michigan: 1 in 332 homes
6.Georgia: 1 in 422 homes
7.Ohio: 1 in 444 homes
8.Colorado: 1 in 452 homes
9.Illinois: 1 in 483 homes
10.Indiana: 1 in 522 homes
Sept 2008
1. Florida
2. Nevada
3. New Jersey
4. Illinois
5. New York
6. Connecticut
7. Maine
8. Maryland
9. Hawaii
10. Arizona
Top Foreclosure States
Current 2008 - 2016
Source: Corelogic Foreclosure Report Published March 2017, Attom May 2018,
Source: Corelogic Foreclosure Report
Source: Corelogic Foreclosure Report/Attom/RealtyTrac
Real Estate Investment Cycle: Plateau not a Peak?
Source: CBRE Midwest Market report February 2018
Point of Maximum Financial Opportunity
Optimism
Optimism
Excitement
Thrill
EuphoriaAnxiety
Denial
Fear
Desperation
Panic
Capitulation
Despondency
Hope
Potential Plateau?
Depression
Relief
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