From Altos Research, a look at the 2011 housing market using real-time market analytics and leading indicators. The presentation includes a discussion of housing market volatility as normal market conditions for the next 5-10 year period.
13. MSA Forecasts Models: Market forecasts for the Case-Shiller, RadarLogic, FHFA & other third-party HPIs.(Note: Our clients are the smartest people we know)
14. If you do these things, you’re our customer: Whole Loan Asset Portfolios RMBS Portfolios REO Disposition Mortgage Origination & Servicing Valuation & Appraisal Equity Researchers Risk Management Homebuilders & Developers Insurance Copyright Altos Research | www.altosresearch.com | 12/09/2010
15. May 31, 2011: “Home prices continue on their downward spiral with no relief in sight.” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. (Source: S&P Press release)
16. Today’s Active Market signaling improvements Price of New Listings Indicator: Leads transaction prices by 3-6 months. New sellers pricing more confidently. Sell into short-term strength Buy when the market dips later this year Repeat for the next 10 years
17. Price Sensitivity to Inventory Changes Jan – Oct ‘08 Jan – Oct ‘09 Jan – Oct ‘10 Jan – May ‘11
18. Location, Location, Location:Altos Research Mid-Cities CompositeTM MSAs Included in Altos Research Mid-Cities CompositeTM: Dover, DE Pittsburgh, PA Baltimore, MD Durham, NC Charleston, SC Naples, FL Jacksonville, FL Orlando, FL Nashville, TN Memphis, TN St. Louis, MO Austin-Round Rock, TX San Antonio, TX Albuquerque, NM Reno, NV Boulder, CO Ventura, CA Sacramento, CA Boise, ID Honolulu, HI Mid-Cities CompositeTM exhibited less downside during crash & more seasonal stability . More on this later…
22. The Catfish Recovery Volatility. The “double dip” is only the start of the next housing cycle. Your long-term forecast is wrong. Traders: Expect sporadic defaults in existing securities, but will moving from 140 to 155 LTVs matter that much? Some prepayment risk during upswings as ST activity accelerates. Sell high, Buy low. No really. Heading into the single best time to make $ in real estate and mortgages. But only for smart people. “The housing market never goes down.” –CDO Trader, circa 2006
23. The normal market is volatile. 2009-10 rebound manufactured by homebuyer tax credit Weak macroeconomic fundamentals persist Generational demand shifts Haphazard supply levels We’ve measured up to12% annual volatility in the Altos 20-City Composite and 7% in the Case-Shiller Similar volatility from pre-1990s market periods “This time is different”
24. The Constant Growth Myth Source: http://cafehayek.com/site/wp-content/uploads/2011/04/Case-Shiller-updated1.jpg
27. Timing Matters (…should you wish to buy low/sell high) Four (4) selected San Jose zips: San Jose 95125 by Price Quartile: Scottsdale 85252 by Price Quartile: : Four (4) selected Phoenix cities:
34. The Catfish Recovery means… Volatility means profit with the right information Watch housing just like other asset classes (equities, interest rates, currencies, etc.). Take your gains, come up for air, then dive back in at each inflection point
35. The Constant Growth Myth Source: http://cafehayek.com/site/wp-content/uploads/2011/04/Case-Shiller-updated1.jpg
37. The once-in-a-lifetime offer Releasing our initial Mid-Cities Report in two weeks. Send an email to: info@altosresearch.com Distressed Loan/Mortgage/RMBS: Send us a portfolio of 25 loans or RMBS security We’ll run thru AltosEvaluate & Listings IntelTM and share the results
38. Altos Research Capital Markets Ben Gimpert Director of Quantitative Analytics ben@altosresearch.com Jon Sterling Director of Marketing jon@altosresearch.com Read more about our Housing Market insights at: http://blog.altosresearch.com Scott Sambucci Vice President, Market Analytics scott@altosresearch.com (415) 931 7942 Andrew Goei Manager, Market Analytics andrew.goei@altosresearch.com Jeff Eckenhoff Manager, Market Analytics Jeff.eckenhoff@altosresearch.com Website: www.altosresearch.com
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40. Inventory is generally higher vs. last year, but trending lower. (ST Positive for housing market)