the magical mystery tour u.s. residential real estate markets and the path ahead

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The Magical Mystery Tour U.S. Residential Real Estate Markets and the Path Ahead Alex Villacorta, Ph.D. Director, Research & Analytics Clear Capital

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The Magical Mystery Tour U.S. Residential Real Estate Markets and the Path Ahead. Alex Villacorta, Ph.D. Director, Research & Analytics Clear Capital. Berkeley Real Estate & Economics Symposium 2011. Here Comes the Sun Know Your Sources: Clear Capital. - PowerPoint PPT Presentation

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Page 1: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

The Magical Mystery TourU.S. Residential Real Estate Markets

and the Path Ahead

Alex Villacorta, Ph.D.Director, Research & Analytics

Clear Capital

Page 2: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Here Comes the SunKnow Your Sources: Clear Capital

• Premium provider of residential valuation solutions and market data for large financial services companies.

• The Company’s customers include the largest U.S. banks, GSEs, investment firms and other financial organizations.

• Our products and solutions leverage our extensive vendor network and progressive technology to provide residential real estate valuations including:• Appraisal Products• Broker Price Opinion Products• Data Products & Home Pricing Indices• Web-based Platform Services

• Tens of thousands of reports completed every month

Berkeley Real Estate & Economics Symposium 2011

Page 3: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Ticket to RideCurrent Housing Market Vitals

Berkeley Real Estate & Economics Symposium 2011

Decline Since Peak: -39.5%

Dip Double Dip

-2.7%

3.5%

-6.9%

Page 4: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Berkeley Real Estate & Economics Symposium 2011

All Together NowRegional Decline Since Peak of Market (Q2 2006)

West: down 8.3% since 2010

Northeast:unchanged since 2010

Page 5: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Come TogetherCondo Market versus Single Family Residences

Berkeley Real Estate & Economics Symposium 2011

-41.9%

60.7%

-38.6%

42.2%

Page 6: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Can’t Buy Me LoveNational, Top, Mid, and Low Tier

Berkeley Real Estate & Economics Symposium 2011

Low Tier: Nearly double the declinesTop Tier:

Nearly double the $$ declines

Page 7: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

YesterdayMajor Home Price Indices Since 1975

Page 8: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Get BackReal Home Price Indices Since 1975

Page 9: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Helter SkelterUnemployment’s Effects on Foreclosure

Berkeley Real Estate & Economics Symposium 2011

20042005200620072008200920102011

Page 10: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Help!REO Saturation and Price Fluctuations 2005-2011

Berkeley Real Estate & Economics Symposium 2011

Page 11: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Berkeley Real Estate & Economics Symposium 2011

I’m Looking Through YouPerforming, REO, and Blended 2005-2011

Phoenix MSA Price-per-Square-Foot

Page 12: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

National Two Year Forecast

Sluggish improvement over next two years

Here There and EverywhereForecasting the Market

California Two Year ForecastSan Francisco MSA Two Year ForecastSacramento MSA Two Year ForecastRiverside MSA Two Year ForecastLos Angeles MSA Two Year Forecast

Page 13: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

Let It BeChanges on the Horizon

• Potential Game Changers• REO Volume Spikes

• Current inventory dammed up• Significant shadow inventory yet to come down the pike

• Fannie Mae / Freddie Mac Request for Information• Rental Program• Bulk Sales

• Assistance programs for homeowners• Attorney General settlement

• Principal forgiveness • Disruptions to natural process could be high

risk/reward game

Page 14: The Magical Mystery Tour U.S. Residential Real Estate Markets  and the Path Ahead

We Can Work It OutWhat Lies Ahead

• Are we out of the Woods?• No, but some local markets are• Relative stability since first dip anticipated• All things equal, expect a flat 2012, • Another try at a recovery in Q2 2013• REO volume is a challenge, but opportunity still out there• Uncertainty/pessimism still biggest challenge to recovery• Policy and regulation changes remain in question

• The devil you know is better than the devil you don’t