Presentation: How Real Estate Investors can Leverage the Latest Housing Market Trends to Land Great...

LEVERAGE THE LATEST HOUSING TRENDS TOLAND THE BEST REAL ESTATE DEALS

WELCOME

WHAT WE’LL COVER TODAY

• Latest home sales & price trends• Latest foreclosure trends• Trends in property flipping– Best markets for flipping

• Trends in single family rentals/institutional investors– Best markets for buying rentals

• The problem and opportunity of zombie foreclosures• Leveraging the latest trends– Knowing the markets where you want to invest– Buying short sale, auction, bank owned

REALTYTRAC DATA PRIMER

Economic

Neighborhood & Local

Sales & Loan

Valuation& Prop Details

Foreclosure

REALTYTRAC DATA PRIMER

County-Level Public Documents• Pre-foreclosure, foreclosure auction and REO• Sales & Loan• Valuation and property characteristics

MLS• Listing status, price and other info• Property description and more characteristics

Publicly available datasets• Neighborhood features, amenities, red flags• Macro housing and economic metrics

LATEST HOME PRICE TRENDS

Distressed median prices still flat lining

Overall home prices up annually for 17

straight months. UP 23 percent from bottom, still 26

percent below peak.

Average Annual Pct Change YTD in 2013 is 7 percent for non-

distressed properties

LATEST HOME PRICE & SALES VOLUME TRENDS

Sales volume increasing but low inventory helping to push prices up

STATE LEVEL SALES VOLUME TRENDS

Lack of for-sale inventory may be slowing sales in California and

Arizona

LATEST HOME PRICE TRENDS – LOCAL MARKETS

Cash buyers increasingly winning out in tight

credit market with low inventory of homes for

LATEST HOME PRICE TRENDS: NATIONWIDE

Seriously underwater means mortgage amount is at least 25 percent

higher than estimated market

UNDERWATER DATA BY COUNTY

• County-level interactive heat map• http://

www.realtytrac.com/Content/news-and-opinion/seriously-underwater-homeowners-county-heat-map-7856

HOME EQUITY PROFILES FOR MAJOR METROS

• http://public.tableausoftware.com/shared/HTMMWH5ZG?:display_count=yes

HOME PRICES BUOYING UNDERWATER INVENTORY

4.5 million homes nationwide would transition from short sales to

equity sales with 10 percent increase in home prices; 8.3 million

with a 20 percent rise

LATEST FORECLOSURE MARKET TRENDS

HOW LONG WILL SHORT SALE SURGE LAST?

August foreclosure starts at lowest level

since December 2005

LATEST FORECLOSURE TRENDS – LOCAL MARKETS

Classic U-Shaped Recovery

LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS

More of a V-shaped recovery

but could turn into a W-recovery

Started as U but ending up as a V

Steady plodding

A little less steady plodding

Still flatlining

L-Shaped recovery with clear signs of a

U developing

LEADING THE RECOVERY

LAGGING THE RECOVERY

Arizona time to foreclose less than half the

national average of 526 days

LATEST FORECLOSURE MARKET TRENDS RECAP

• Foreclosure activity is well past its peak nationwide• Some state and local markets are lagging in

recovery because of lingering foreclosures• States that have enacted more aggressive

foreclosure prevention legislation over the past few years are susceptible to a rebound in foreclosure activity

• For investors this means there will still be opportunity to find discounted foreclosures going forward in some markets over the next two years.

WHERE FORECLOSURE STARTS & AUCTIONS ARE REBOUNDING

YoY Pct Increases:• Maryland: 365%• Connecticut: 47%• New York: 36%• New Jersey: 27%• Oregon: 59,200%

YoY Pct Increases:• Florida: 100%• Arkansas: 71%• Illinois: 65%

• Wisconsin: 45%• Washington: 21%

HOW LONG WILL SHORT SALE SURGE LAST?

• Why are foreclosure starts and auctions rebounding?– Pent-up foreclosure activity from robo-signing, national

mortgage settlement and state legislation/court rulings– Rising prices may be helping to motivate foreclosure

• What are implications for real estate investors?– Clock is now ticking on delinquent homeowners– Auctions may be good place to buy in next 6 to 12

months

TRENDS IN PROPERTY FLIPPING

FLIPPING TRENDS

U.S. property flips increased 17 percent from a year ago in the

second quarter

FLIPPING TRENDS

Arizona flips down 35 percent YoY. Gross profit $21K per flip

FLIPPING TRENDS

Phoenix flips down 36 percent YoY. Gross profit $26K per flip

BEST MARKETS FOR FLIPPING

WHAT YOU BUY MATTERS - FLIPS

©RealtyTrac Inc. 2013, Not for Distribution

Metro Number of 2012 Flips Avg Purchase Price Avg Flip Price Gross Profit Gross Return PctLas Vegas 1,525 $124,849 $246,347 $121,498 97%Atlanta 1,396 $91,873 $102,096 $10,223 11%Riverside-San Bernardino, CA 1,004 $185,429 $210,177 $24,748 13%Cape Coral, FL 802 $98,747 $113,979 $15,232 15%Denver 591 $223,323 $230,417 $7,094 3%Sacramento 496 $198,369 $225,917 $27,548 14%Miami 486 $132,476 $177,256 $44,779 34%Orlando 480 $98,122 $205,727 $107,605 110%Sarasota, FL 356 $116,428 $157,443 $41,014 35%Port St. Lucie, FL 273 $89,894 $130,380 $40,486 45%Jacksonville, FL 271 $80,249 $119,345 $39,096 49%Seattle 250 $220,018 $231,263 $11,245 5%

Flipping data for 3-bedroom single family homes built in 1990 or later

WHAT YOU BUY MATTERS - FLIPS

©RealtyTrac Inc. 2013, Not for Distribution

Metro Number of 2012 Flips Avg Purchase Price Avg Flip Price Gross Profit Gross Return PctLos Angeles 981 $247,660 $328,077 $80,417 32%San Francisco 273 $251,091 $317,343 $66,252 26%Denver 249 $149,778 $197,265 $47,487 32%Riverside-San Bernardino, CA 201 $102,571 $131,716 $29,145 28%Sacramento 146 $120,761 $146,443 $25,682 21%Miami 132 $88,442 $125,562 $37,121 42%San Diego 119 $232,261 $310,801 $78,540 34%Seattle 108 $152,905 $203,199 $50,294 33%Cincinnati 107 $46,327 $48,944 $2,616 6%Detroit 102 $57,455 $56,325 ($1,131) -2%Portland 102 $146,713 $199,693 $52,980 36%Atlanta 91 $68,715 $84,178 $15,464 23%

Flipping data for 2-bedroom single family homes built 1920 to 1950

TRENDS IN SINGLE FAMILY RENTALS/INSTITUTIONAL INVESTORS

RENTAL ROI STILL GOOD IN MANY MARKETS

FLIPPING & INSTITUTIONAL INVESTORS

U.S. institutional investor purchases

increased 16 percent from year ago in Q2

FLIPPING & INSTITUTIONAL INVESTORS

Phoenix only metro among top 10 with

decrease in purchases in 2013

HOW SINGLE FAMILY HOMES ARE BEING PURCHASED

TOP 25 HIDDEN GEM SINGLE FAMILY RENTAL MARKETS

TOP SATURATED SINGLE FAMILY RENTAL MARKETS

©RealtyTrac Inc. 2013, Not for Distribution 48

# Metro Area Investor %1 Atlanta-Sandy Springs-Marietta, GA 24%2 Charlotte-Gastonia-Concord, NC-SC 20%3 Macon, GA 18%4 Memphis, TN-MS-AR 18%5 Jacksonville, FL 18%6 Tampa-St. Petersburg-Clearwater, FL 17%7 Winston-Salem, NC 16%8 Las Vegas-Paradise, NV 16%9 Lakeland, FL 16%

10 Orlando-Kissimmee, FL 14%11 Albuquerque, NM 14%12 Palm Bay-Melbourne-Titusville, FL 14%13 Athens-Clarke County, GA 14%14 Greensboro-High Point, NC 13%15 Miami-Fort Lauderdale-Pompano Beach, FL 12%16 Deltona-Daytona Beach-Ormond Beach, FL 12%17 Phoenix-Mesa-Scottsdale, AZ 12%18 Montgomery, AL 12%19 Bakersfield, CA 11%20 Reno-Sparks, NV 11%21 Detroit-Warren-Livonia, MI 11%22 Boise City-Nampa, ID 11%23 Sarasota-Bradenton-Venice, FL 11%24 Vallejo-Fairfield, CA 10%25 Gainesville, GA 10%

THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES

THE PROBLEM AND OPPORTUNITY OF ZOMBIE FORECLOSURES

Nationwide vacant foreclosures account for one

in every five properties in foreclosure

• The problem– More than 150,000 vacant homes nationwide, 20

percent of all homes in the foreclosure process– Homeowners often don’t realize they still own the

property and are responsible for taxes etc.

• The opportunity– Homeowners who have exhibited a desire to let go of

the property– Lenders who don’t want to foreclose

LEVERAGING HOUSING TRENDS: KNOW YOUR MARKET

Recent default, auction and REO trends

Local, state and national

foreclosure rates

LEVERAGING HOUSING TRENDS: FIND MARKETS WITH REBOUNDING FORECLOSURES

Foreclosure Inventory and

Prices

Historical Foreclosure Discounts

3. Know your overall market

LEVERAGING HOUSING TRENDS: FIND-OFF MARKET HOMES

Find pre-foreclosures and scheduled auctions in your

neighborhood

LEVERAGING HOUSING TRENDS: CONTACT HOMEOWNERS

Create mailing lists of distressed homeowners in

default or scheduled for foreclosure auction

LEVERAGING HOUSING TRENDS: TARGET MOTIVATED SELLERS

Identify homeowners who have vacated their homes and get

new mailing addresses

FIND MOTIVATED SELLERS WITH EQUITY

FIND MARKETS/HOMES WITH GOOD POTENTIAL CAP RATES

• Buy for $20K (possibly less at auction)

• Rent for $1000 a month• Est. carrying costs at

$500 a month• Cash flow of $500 a

month• Cap rate of 30%!

FIND MARKETS/HOMES WITH GOOD POTENTIAL CAP RATES

• Buy for $105k (REO)• Rent for $1,284 a month• Est. carrying costs at $514

a month• Cash flow of $770 a month• Cap rate of 9%

FIND HOMES/MARKETS WITH GOOD FLIPPING POTENTIAL

• List price $46,500, Est. After-Repair Market Value: $117,088

• Sold back to bank for $23,600, so they are motivated to sell low

RESOURCES FOR LEVERAGING THE LATEST HOUSING TRENDS

• Real Estate News & Reports (free)• http://www.realtytrac.com/content

• Local Stats & Trends (embeddable)• http://www.realtytrac.com/trendcenter/

• Premier subscription (address-level access)• https://www.realtytrac.com/profile/Registration.aspx• 877-888-8722

• Download data/create lists: http://mega.realtytrac.com

DAREN BLOMQUISTVICE PRESIDENT, REALTYTRACDAREN.BLOMQUIST@REALTYTRAC.COM

THANK YOU!

Presentation: How Real Estate Investors can Leverage the Latest Housing Market Trends to Land Great...

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