How Real Estate Investors Can Leverage the Latest Housing Market Trends

LEVERAGING THE LATEST HOUSING MARKET TRENDS

WELCOME

WHAT WE’LL COVER TODAY

• A brief bit on RealtyTrac• Latest foreclosure trends (midyear report)• Latest home sales & price trends• Flipping and institutional investors• The problem and opportunity of zombie

foreclosures• Tips on leveraging all these trends to help build

your business

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 FORECLOSURE MARKET TRENDS

June foreclosure starts at lowest level

since December 2005

LATEST FORECLOSURE TRENDS

June foreclosure starts at lowest level

since July 2006

June foreclosure activity down

annually for 19th consecutive month

State MSA City Zip Code % of HU NTS REO Total %∆ from May-13

%∆ from Jun-12

Arizona Phoenix-Mesa-Scottsdale, AZ Glendale 85308 0.17 31 14 45 32.35 -56.31

Arizona Phoenix-Mesa-Scottsdale, AZ Laveen 85339 0.36 24 18 42 2.44 -58.42

Arizona Phoenix-Mesa-Scottsdale, AZ Buckeye 85326 0.26 22 19 41 -25.45 -72.11

Arizona Phoenix-Mesa-Scottsdale, AZ Goodyear 85338 0.26 19 19 38 -26.92 -62.00

Arizona Phoenix-Mesa-Scottsdale, AZ Phoenix 85041 0.22 19 18 37 -13.95 -63.73

Arizona Phoenix-Mesa-Scottsdale, AZ Avondale 85323 0.28 17 18 35 -12.50 -56.25

Arizona Phoenix-Mesa-Scottsdale, AZ El Mirage 85335 0.35 21 13 34 30.77 -55.84

Arizona Phoenix-Mesa-Scottsdale, AZ Phoenix 85051 0.20 21 13 34 3.03 -27.66

Arizona Phoenix-Mesa-Scottsdale, AZ Peoria 85345 0.15 25 9 34 -32.00 -65.66

Arizona Phoenix-Mesa-Scottsdale, AZ Surprise 85379 0.25 20 13 33 -13.16 -60.71

Arizona Phoenix-Mesa-Scottsdale, AZ Sun City 85351 0.15 12 21 33 -21.43 -23.26

Arizona Phoenix-Mesa-Scottsdale, AZ Mesa 85204 0.13 16 13 29 -35.56 -59.15

Arizona Phoenix-Mesa-Scottsdale, AZ Chandler 85224 0.15 19 9 28 3.70 -51.72

Arizona Phoenix-Mesa-Scottsdale, AZ Gilbert 85296 0.20 14 12 26 4.00 -59.38

Arizona Phoenix-Mesa-Scottsdale, AZ Mesa 85201 0.12 16 10 26 -21.21 -63.38

Arizona Phoenix-Mesa-Scottsdale, AZ Tolleson 85353 0.27 18 7 25 4.17 -72.53

Arizona Phoenix-Mesa-Scottsdale, AZ Phoenix 85009 0.17 14 11 25 56.25 -46.81

Arizona Phoenix-Mesa-Scottsdale, AZ Mesa 85208 0.14 15 10 25 0.00 -66.67

Arizona Phoenix-Mesa-Scottsdale, AZ Surprise 85374 0.10 13 11 24 -25.00 -72.41

Arizona Phoenix-Mesa-Scottsdale, AZ Chandler 85225 0.09 14 10 24 -51.02 -78.38

Arizona Phoenix-Mesa-Scottsdale, AZ Peoria 85383 0.17 15 7 22 -12.00 -61.40

Arizona time to foreclose less than half the

national average of 526 days

• Arizona and Phoenix leading the way out of foreclosure crisis– State foreclosure rate ranked No. 10 in June– Metro foreclosure rate ranked No. 57 out of 209

metro areas nationwide– Shorter foreclosure process with no legislative

intervention means no backlog built up threatening another wave of delayed foreclosures

– Rapidly rising home prices will help lift underwater homeowners to positive equity more quickly than other markets

LEVERAGING LATEST MARKET TRENDS TIP NO. 1

Recent default, auction and REO trends

Local, state and national

foreclosure rates

1. Know your distressed market

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%

Judicial foreclosure

auctions up 34 percent from

year ago in June

• 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

LEVERAGING DISTRESSED TRENDS TIP NO. 2

Find pre-foreclosures and scheduled auctions in your

neighborhood

LEVERAGING LATEST MAREKT TRENDS TIP NO. 3

Create mailing lists of distressed homeowners in

default or scheduled for foreclosure auction

LATEST HOME PRICE TRENDS

Distressed median prices still flat lining

Phoenix home prices up 23 percent from year ago but still 33 percent below peak

in July 2006

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

distressed properties

Distressed median prices actually rising

at a slightly faster pace than non-

distressed prices

City Median Sales May 2012 Median Sales May 2013 % Change (Median)Paradise Valley $837,000 $1,160,000 38.59 %Carefree $469,000 $535,000 14.07 %Scottsdale $329,540 $377,445 14.54 %Rio Verde $260,000 $360,000 38.46 %Cave Creek $154,950 $340,000 119.43 %Fountain Hills $243,000 $310,000 27.57 %New River $223,700 $265,000 18.46 %Gilbert $188,911 $228,400 20.90 %Chandler $189,817 $227,617 19.91 %Litchfield Park $167,000 $209,700 25.57 %

City Median Sales May 2012 Median Sales May 2013 % Change (Median)Arizona City $64,250 $29,476 -54.12 %San Manuel $29,699 $33,150 11.62 %Casa Grande $109,742 $44,610 -59.35 %Tonopah $46,000 $85,993 86.94 %Coolidge $60,750 $89,125 46.71 %Youngtown $59,000 $90,000 52.54 %Florence $86,700 $102,877 18.66 %El Mirage $82,000 $112,000 36.59 %Sun City $94,475 $113,275 19.90 %Morristown $51,000 $122,500 140.20 %

10 highest-priced cities in Phoenix

10 lowest-priced cities in Phoenix

LATEST HOME PRICE TRENDS: NATIONWIDE

Seriously underwater means mortgage amount is at least 25 percent

higher than estimated market

LATEST HOME PRICE TRENDS: ARIZONA

LATEST HOME PRICE TRENDS: NATIONAL

1.5 million fewer underwater in last year

LATEST HOME PRICE TRENDS: ARIZONA

242,000 fewer Arizona homes underwater.

Underwater percentage dropped

from 46% to 32%

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

LEVERAGING LATEST MARKET TRENDS TIP NO. 4

Foreclosure Inventory and

Prices

Historical Foreclosure Discounts

3. Know your overall market

FLIPPING & INSTITUTIONAL INVESTORS

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

second quarter

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

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

Zip Code 2013 Property Flips Avg Purchase PriceAvg Flipped Price Gross Profit Gross Profit Percent85032 104 155,499$ 195,168$ 39,669$ 26%85143 101 180,396$ 176,518$ (3,878)$ -2%85243 96 911,687$ 157,030$ (754,657)$ -83%85308 89 172,213$ 206,130$ 33,916$ 20%85326 87 278,588$ 134,435$ (144,152)$ -52%85379 87 169,323$ 184,097$ 14,775$ 9%85339 84 162,528$ 178,037$ 15,510$ 10%85041 80 304,436$ 126,807$ (177,629)$ -58%85086 78 249,657$ 273,634$ 23,977$ 10%85037 76 384,604$ 110,903$ (273,701)$ -71%85225 76 160,040$ 186,085$ 26,045$ 16%85204 72 112,263$ 154,575$ 42,312$ 38%85238 72 259,134$ 168,828$ (90,306)$ -35%85345 72 176,692$ 136,321$ (40,371)$ -23%85242 70 756,617$ 253,807$ (502,810)$ -66%85388 70 285,002$ 181,831$ (103,171)$ -36%85338 69 168,376$ 180,271$ 11,895$ 7%85240 67 572,232$ 134,342$ (437,891)$ -77%85029 66 101,666$ 149,787$ 48,121$ 47%85254 65 319,689$ 400,087$ 80,398$ 25%85374 65 137,086$ 152,057$ 14,971$ 11%85033 64 518,210$ 84,841$ (433,369)$ -84%85296 63 261,069$ 271,054$ 9,985$ 4%85140 62 195,616$ 163,445$ (32,171)$ -16%85323 62 234,859$ 167,037$ (67,822)$ -29%

U.S. institutional investor purchases

increased 16 percent from year ago in Q2

Phoenix only metro among top 10 with

decrease in purchases in 2013

Zip Institutional Investor Purchases AvgSalePrice Avg Discount Below Market Value85143 96 185,250$ 19,975$ 85243 82 123,008$ 18,271$ 85037 78 309,974$ 10,899$ 85041 71 171,086$ 13,325$ 85308 71 187,826$ 17,402$ 85339 70 201,171$ 8,584$ 85345 66 228,072$ 15,650$ 85033 65 460,387$ 10,414$ 85338 63 163,730$ 17,807$ 85323 62 138,820$ 15,549$ 85225 61 157,507$ 17,458$ 85379 60 161,150$ 18,804$ 85326 53 107,505$ 17,342$ 85353 49 151,672$ 16,487$ 85029 48 270,941$ 17,893$ 85138 48 121,825$ 14,525$ 85335 47 131,608$ 8,637$ 85238 46 116,017$ 12,410$ 85234 45 201,086$ 20,474$ 85295 44 200,435$ 19,471$ 85240 43 137,123$ 18,599$ 85296 43 198,093$ 15,332$ 85051 42 319,936$ 17,684$ 85392 40 155,986$ 12,371$

THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES

THE PROBLEM AND OPPORTUNITY OF ZOMBIE FORECLOSURES

• The problem– More than 167,000 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 DISTRESSED TRENDS TIP NO. 5

Identify homeowners who have vacated their homes and get

new mailing addresses

RESOURCES FOR LEVERAGING THE LATEST MARKET 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)• http://www.realtytrac.com/profile/promotionselect.aspx

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

How Real Estate Investors Can Leverage the Latest Housing Market Trends

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