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Presentation give at the Equity Trust Networking Conference on Sept. 22, 2013, in Orlando, Fla., on the latest housing market trends and how those can be leveraged by real estate investors to identify homeowners motivated to sell, with problems that real estate investors can solve.
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LEVERAGE THE LATEST HOUSING TRENDS TOLAND THE BEST REAL ESTATE DEALS
© 2013 Renwood RealtyTrac LLC
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
© 2013 Renwood RealtyTrac LLC
REALTYTRAC DATA PRIMER
Economic
Neighborhood & Local
MLS
Sales & Loan
Valuation& Prop Details
Foreclosure
© 2013 Renwood RealtyTrac LLC
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
© 2013 Renwood RealtyTrac LLC
LATEST HOME PRICE TRENDS
© 2013 Renwood RealtyTrac LLC
LATEST HOME PRICE TRENDS
© 2013 Renwood RealtyTrac LLC
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.
LATEST HOME PRICE TRENDS
© 2013 Renwood RealtyTrac LLC
Average Annual Pct Change YTD in 2013 is 7 percent for non-
distressed properties
LATEST HOME PRICE & SALES VOLUME TRENDS
© 2013 Renwood RealtyTrac LLC
Sales volume increasing but low inventory helping to push prices up
STATE LEVEL SALES VOLUME TRENDS
© 2013 Renwood RealtyTrac LLC
Lack of for-sale inventory may be slowing sales in California and
Arizona
LATEST HOME PRICE TRENDS – LOCAL MARKETS
© 2013 Renwood RealtyTrac LLC
Cash buyers increasingly winning out in tight
credit market with low inventory of homes for
sale
LATEST HOME PRICE TRENDS: NATIONWIDE
© 2013 Renwood RealtyTrac LLC
Seriously underwater means mortgage amount is at least 25 percent
higher than estimated market
value
UNDERWATER DATA BY COUNTY
• County-level interactive heat map• http://
www.realtytrac.com/Content/news-and-opinion/seriously-underwater-homeowners-county-heat-map-7856
© 2013 Renwood RealtyTrac LLC
HOME EQUITY PROFILES FOR MAJOR METROS
© 2013 Renwood RealtyTrac LLC
• 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
© 2013 Renwood RealtyTrac LLC
HOW LONG WILL SHORT SALE SURGE LAST?
© 2013 Renwood RealtyTrac LLC
August foreclosure starts at lowest level
since December 2005
LATEST FORECLOSURE TRENDS – LOCAL MARKETS
© 2013 Renwood RealtyTrac LLC
Classic U-Shaped Recovery
LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS
© 2013 Renwood RealtyTrac LLC
More of a V-shaped recovery
but could turn into a W-recovery
LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS
© 2013 Renwood RealtyTrac LLC
Started as U but ending up as a V
LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS
© 2013 Renwood RealtyTrac LLC
Steady plodding
LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS
© 2013 Renwood RealtyTrac LLC
A little less steady plodding
LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS
© 2013 Renwood RealtyTrac LLC
Still flatlining
LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS
© 2013 Renwood RealtyTrac LLC
L-Shaped recovery with clear signs of a
U developing
LEADING THE RECOVERY
© 2013 Renwood RealtyTrac LLC
LAGGING THE RECOVERY
© 2013 Renwood RealtyTrac LLC
LATEST FORECLOSURE MARKET TRENDS
© 2013 Renwood RealtyTrac LLC
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.
© 2013 Renwood RealtyTrac LLC
WHERE FORECLOSURE STARTS & AUCTIONS ARE REBOUNDING
© 2013 Renwood RealtyTrac LLC
WHERE FORECLOSURE STARTS & AUCTIONS ARE REBOUNDING
YoY Pct Increases:• Maryland: 365%• Connecticut: 47%• New York: 36%• New Jersey: 27%• Oregon: 59,200%
WHERE FORECLOSURE STARTS & AUCTIONS ARE REBOUNDING
© 2013 Renwood RealtyTrac LLC
YoY Pct Increases:• Florida: 100%• Arkansas: 71%• Illinois: 65%
• Wisconsin: 45%• Washington: 21%
LATEST FORECLOSURE MARKET TRENDS
© 2013 Renwood RealtyTrac LLC
LATEST FORECLOSURE MARKET TRENDS
© 2013 Renwood RealtyTrac LLC
HOW LONG WILL SHORT SALE SURGE LAST?
© 2013 Renwood RealtyTrac LLC
WHERE FORECLOSURE STARTS & AUCTIONS ARE REBOUNDING
• 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
© 2013 Renwood RealtyTrac LLC
TRENDS IN PROPERTY FLIPPING
© 2013 Renwood RealtyTrac LLC
FLIPPING TRENDS
U.S. property flips increased 17 percent from a year ago in the
second quarter
FLIPPING TRENDS
© 2013 Renwood RealtyTrac LLC
Arizona flips down 35 percent YoY. Gross profit $21K per flip
FLIPPING TRENDS
© 2013 Renwood RealtyTrac LLC
Phoenix flips down 36 percent YoY. Gross profit $26K per flip
BEST MARKETS FOR FLIPPING
© 2013 Renwood RealtyTrac LLC
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
© 2013 Renwood RealtyTrac LLC
RENTAL ROI STILL GOOD IN MANY MARKETS
© 2013 Renwood RealtyTrac LLC
FLIPPING & INSTITUTIONAL INVESTORS
© 2013 Renwood RealtyTrac LLC
U.S. institutional investor purchases
increased 16 percent from year ago in Q2
FLIPPING & INSTITUTIONAL INVESTORS
© 2013 Renwood RealtyTrac LLC
Phoenix only metro among top 10 with
decrease in purchases in 2013
HOW SINGLE FAMILY HOMES ARE BEING PURCHASED
© 2013 Renwood RealtyTrac LLC
TOP 25 HIDDEN GEM SINGLE FAMILY RENTAL MARKETS
© 2013 Renwood RealtyTrac LLC
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
© 2013 Renwood RealtyTrac LLC
THE PROBLEM AND OPPORTUNITY OF ZOMBIE FORECLOSURES
© 2013 Renwood RealtyTrac LLC
Nationwide vacant foreclosures account for one
in every five properties in foreclosure
THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES
© 2013 Renwood RealtyTrac LLC
THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES
• 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
© 2013 Renwood RealtyTrac LLC
THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES
© 2013 Renwood RealtyTrac LLC
LEVERAGING HOUSING TRENDS: KNOW YOUR MARKET
© 2013 Renwood RealtyTrac LLC
Recent default, auction and REO trends
Local, state and national
foreclosure rates
LEVERAGING HOUSING TRENDS: FIND MARKETS WITH REBOUNDING FORECLOSURES
© 2013 Renwood RealtyTrac LLC
Foreclosure Inventory and
Prices
Historical Foreclosure Discounts
3. Know your overall market
LEVERAGING HOUSING TRENDS: FIND-OFF MARKET HOMES
© 2013 Renwood RealtyTrac LLC
Find pre-foreclosures and scheduled auctions in your
neighborhood
LEVERAGING HOUSING TRENDS: CONTACT HOMEOWNERS
© 2013 Renwood RealtyTrac LLC
Create mailing lists of distressed homeowners in
default or scheduled for foreclosure auction
LEVERAGING HOUSING TRENDS: TARGET MOTIVATED SELLERS
© 2013 Renwood RealtyTrac LLC
Identify homeowners who have vacated their homes and get
new mailing addresses
FIND MOTIVATED SELLERS WITH EQUITY
© 2013 Renwood RealtyTrac LLC
FIND MARKETS/HOMES WITH GOOD POTENTIAL CAP RATES
© 2013 Renwood RealtyTrac LLC
• 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
© 2013 Renwood RealtyTrac LLC
• 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
© 2013 Renwood RealtyTrac LLC
• 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
© 2013 Renwood RealtyTrac LLC
DAREN BLOMQUISTVICE PRESIDENT, REALTYTRACDAREN.BLOMQUIST@REALTYTRAC.COM
© 2013 Renwood RealtyTrac LLC
THANK YOU!
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