2019 STATE OF THE REAL ESTATE INVESTMENT INDUSTRY · 2019. 2. 21. · NAR’s 2017 Profile of Home...

2019 STATE OF THE REAL ESTATE INVESTMENT INDUSTRY

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U.S. Households- Renters & Owners

Type of Household Units % of U.S. Total

Renter-Occupied 42,835,169 36.3%Owner-Occupied 74,881,068 63.6%Total 117,716,237 100%

Source: US Census Bureau, American Fact Finder website, 2016 update

What Type of Structure Do Renter Households Live In?

Structure Type Units Percent

Single-Family 14,906,638.8 34.8%2 Units 3,255,472.84 7.6%

3 to 4 Units 4,454,857.6 10.4%

5 or More Units 18,247,782 42.6%Mobile Homes & Other 1,970,417.8 4.6%

Source: Source: US Census Bureau 2016 update, American Fact Finder website current interactive

Understanding the Depth and Segmentation of the Market

Portfolio Size Investors Units Average AVM

Average Portfolio

Market Share

Average Portfolio Value

Aggregate Value

1 10,822,734 10,822,734 $201,486 1.00 48.2% $201,486 $2,180,628,718,829

2-5 2,951,843 7,449,178 $213,939 2.52 33.1% $539,890 $1,593,670,057,555

6-10 218,429 1,595,086 $177,434 7.30 7.1% $1,295,717 $283,022,179,251

11-25 78,448 1,185,082 $150,849 15.11 5.3% $2,278,820 $178,768,846,877

26-50 14,659 503,861 $146,888 34.37 2.2% $5,048,849 $74,011,077,579

51-100 4,707 319,814 $162,687 67.94 1.4% $11,053,631 $52,029,439,301

101-250 1,843 275,638 $171,718 149.56 1.2% $25,682,040 $47,332,000,401

251-500 365 121,630 $172,862 333.23 0.5% $57,603,260 $21,025,189,731

501-1000 74 47,898 $189,821 647.27 0.2% $122,865,507 $9,092,047,553

1,000+ 23 152,239 $176,920 6,619.09 0.7% $1,171,048,864 $26,934,123,880

TOTAL 14,093,125 22,473,160 $198,749 1.59 100.0% $316,928.55 $4,466,513,680,957

6Source: Investability; FirstKey Lending (December 2015)

We represent over $3,000,000,000,000

9

Economic Data Points

Current Unemployment

Unemployment at 49 Year Low

13

Dow Stays High

16

18

19

10 YR Treasury

20

Interest Rates Since the 70s

68 Year View of Mortgage Rates

2018

Industry Snapshot

Source: Federal Housing Administration, January 2017

Most Millennials still plan to Buy

1/2015

LIBOR (3-mo)

30%

17%

13%

0%

10%

20%

30%

40%

50%

60%

70%

% with plans to buy

Living at home, planning to move out andrentAll living at home, and planning to move out

• Student Loan Debt

1/2015

LIBOR (3-mo)

Source: studentloanhero.com 2018

$1.48 Trillion in Student Loan Debt

44.2 Million Borrowers

11.2% Student Loan Delinquency Rate –90+days

63 Percent of Millennials Have More Than $10,000 in Student Debt. They'll Be Paying for Decades.Source: Inc.com Jan 11, 2017

Home Purchases

Rise of the Real Estate Investor

US Home Ownership Rate

Decrease in Existing Home Sales

The Big Picture Remains Strong

All cash sales were 20% of transactions in August, unchanged from 20% in July and from a year ago.

Source: US Census Bureau

Bloomberg reported in 2016 that more and more single women are “skipping the spouse and buying the house.”• In 2017 Single women accounted for 18% of U.S. home buyers versus only

7% for single men. *• They also find that single women

• buy at a slightly older age then single men • pay about $17k less and • had a slightly higher foreclosure rate then single men.

Women as an industry disrupter

*May 9, 2018 Washington Post

• First time buyers were 31% of sales in August, which is down from last month (32%), but the same as 31% a year ago. NAR’s 2017 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 34%

National Price Averages

• Properties typically stayed on the market for 29 days in August, up from 27 days in July but down from 30 days a year ago. 52% of homes sold in August were on the market for less than a month!

August, 2016

Rents and Occupancies

3

SUPPLY & DEMAND ISSUES PREVAIL

Supply Suppression• Low Building Permits• Low Inventory• Minimal Distress

Demand Drivers• Strong Job Growth• Household Growth• Relative Affordability

Unique Market Conditions

Tight Credit Markets

Low Savings Rate

Student Loan Debt

Psychological Shift

Income Stagnation

Rental Options

5

GROWTH: RENTERS VS. OWNERS

Source: Census Bureau, Bureau of Labor Statistics

+8.6MM Households from 2009 to 2016

+7.2MM New Renters from 2009 to 2016

The Rent vs. Buy Analysis

Cheaper to Rent or Buy (By County)

2012 2015

11

Source: RealtyTrac

June 2018

Rise of the Real Estate Investor

56

13

SFR RENT APPRECIATION BY MSA ( O c t . ‘ 1 4 v s . O c t . ‘ 1 7 )

Source: Investability Solutions

30.1%+15.1% to 30.0%0.1% to 15.0%-10.0% to 0.0%

Los Angeles 24.4%

Dallas 24.7%

Wichita 16.2%

Columbus 20.3%Minneapolis 17.4%

Naples 40.9%

12

SFR PRICE APPRECIATION BY MSA ( O c t . ‘ 1 4 v s . O c t . ‘ 1 7 )

Source: HouseCanary

Rents - How High Can We Go?

Rents as a Percentage of Median Income

12Source: John Burns Real Estate Consulting LLC; RealFacts; REIS (April 2015)

How much did rents climb from September 2009 to 2016?

1/2015

LIBOR (3-mo)

Source: Axiometrics Q3 2016

0.0% 20.0% 40.0% 60.0% 80.0%

San FranciscoSan Jose

DenverPortland

SeattleSacramento

NashvilleAustin

AtlantaCharlotte

DallasMiami

PhoenixRiversideOrlandoRaleighBoston

Los AngelesSan Diego

TampaDetroit

NationalChicago

CincinnatiMinneapolis

HoustonNew York City

JacksonvilleBaltimore

PhiladelphiaD.C.

Las Vegas

• On average, rents were in 2016 30% higher than 2009 (peak U.S. rent prior to downturn).

• SF Bay Area, Denver and Portland show the largest increases and continue to lead the market.

What are renters paying where you live?

14

SFR RENTAL VACANCY BY MSA ( Oc t ob e r 20 1 7 )

Source: Investability Solutions

0.0% to 3.0%3.1% to 6.0%6.1% to 9.0%9.1% to 12.0%12.1%+

Development

US Housing Starts

US Housing Starts

66

Housing Starts: Single-Family vs. Multi-Family (in thousands)

5Source: Data: U.S. Department of Commerce - July 19, 2018

INVESTOR SEGMENTATION

& ACTIVITY

24

OUT-OF STATE INVESTORS BY MSA

Source: Investability Solutions

5.120.0%+10.1% to 19.9%5.1% to 10.0%0.1% to 5.0%

70

71

72

October 2017

1. New Jersey

2. Delaware

3. Maryland

4. Illinois

5. Connecticut

6. Florida

7. South Carolina

8. Ohio

9. Nevada

10. New Mexico

1.Nevada: 1 in 91 homes

2.California: 1 in 130 homes

3.Arizona: 1 in 182 homes

4.Florida: 1 in 194 homes

5.Michigan: 1 in 332 homes

6.Georgia: 1 in 422 homes

7.Ohio: 1 in 444 homes

8.Colorado: 1 in 452 homes

9.Illinois: 1 in 483 homes

10.Indiana: 1 in 522 homes

Sept 2008

1. Florida

2. Nevada

3. New Jersey

4. Illinois

5. New York

6. Connecticut

7. Maine

8. Maryland

9. Hawaii

10. Arizona

Top Foreclosure States

Current 2008 - 2016

Source: Corelogic Foreclosure Report Published March 2017, Attom May 2018,

Source: Corelogic Foreclosure Report

Source: Corelogic Foreclosure Report/Attom/RealtyTrac

Real Estate Investment Cycle: Plateau not a Peak?

Source: CBRE Midwest Market report February 2018

Point of Maximum Financial Opportunity

Optimism

Optimism

Excitement

Thrill

EuphoriaAnxiety

Denial

Fear

Desperation

Panic

Capitulation

Despondency

Hope

Potential Plateau?

Depression

Relief

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