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Presented by Scott Sambucci from Altos Research at the Opal Real Estate Investor Conference, this presentation reviews the stae of the US housing market and examines leading indicators based on the active market.
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Altos Research
Altos Research answers the question “How’s the market, right now?”
Our clients are anyone who has an exposure to the real estate market Financial institutions, investors, and thousands of
real estate professionals around the country. The only national source of primary research
in the active housing market Unique statistics and applications for analysis and
action
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Pre-2007 “normal” markets: defaults
correlate to FICO, LTV
2009 – market conditions stabilized, new defaults
decline
1
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2008 -Default spike exactly correlated with
market trough
Assumption: “If a borrower is deep underwater, he’ll walk away.”
Reality:
CA list prices rose 8% in 1H2009
Inventory dropped by 30%
New defaults fell 24% in Q4
LTV is still lousy on these properties
In a rapidly changing market, LTV impact weakens and FICO approaches irrelevancy.
New delinquencies perfectly
correlated to market conditions
Real-time, local view Home price stats Median price, PNL, PLA
Home price distribution stats Min, max, stdev
Price quartiles distribution Supply and demand Inventory, median DOM, mean DOM, new listings, listings
absorbed Housing Market Psychology™ indicators % relist, %price reduced, Market Action Index
FICO? LTV? The last 36 months have taught us that external
housing market variables are by far the most important variable in determining mortgage default rates
Home Price direction, inventory, time to sell Impact the borrower psychology and drive decisions
Declining market: “I’ll never get out. It’ll never sell.”
Up market: “This is getting better! I see light at the end of the tunnel”
Must be real-time, local
Lagging Case-Shiller insufficient
Ask price trends
price of new listings vs. price of absorbed
YOY Inventory Absorption rate vs. inventory (Market Action
Index) Relist % DOM
Scott Sambucci, VP Data AnalyticsM: (415) 596-0804O: (415) 931 7942
[email protected]: @AltosResearchBloomberg: ALTO
www.altosresearch.comblog.altosresearch.com
