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The Magical Mystery Tour U.S. Residential Real Estate Markets and the Path Ahead. Alex Villacorta, Ph.D. Director, Research & Analytics Clear Capital. Berkeley Real Estate & Economics Symposium 2011. Here Comes the Sun Know Your Sources: Clear Capital. - PowerPoint PPT Presentation
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The Magical Mystery TourU.S. Residential Real Estate Markets
and the Path Ahead
Alex Villacorta, Ph.D.Director, Research & Analytics
Clear Capital
Here Comes the SunKnow Your Sources: Clear Capital
• Premium provider of residential valuation solutions and market data for large financial services companies.
• The Company’s customers include the largest U.S. banks, GSEs, investment firms and other financial organizations.
• Our products and solutions leverage our extensive vendor network and progressive technology to provide residential real estate valuations including:• Appraisal Products• Broker Price Opinion Products• Data Products & Home Pricing Indices• Web-based Platform Services
• Tens of thousands of reports completed every month
Berkeley Real Estate & Economics Symposium 2011
Ticket to RideCurrent Housing Market Vitals
Berkeley Real Estate & Economics Symposium 2011
Decline Since Peak: -39.5%
Dip Double Dip
-2.7%
3.5%
-6.9%
Berkeley Real Estate & Economics Symposium 2011
All Together NowRegional Decline Since Peak of Market (Q2 2006)
West: down 8.3% since 2010
Northeast:unchanged since 2010
Come TogetherCondo Market versus Single Family Residences
Berkeley Real Estate & Economics Symposium 2011
-41.9%
60.7%
-38.6%
42.2%
Can’t Buy Me LoveNational, Top, Mid, and Low Tier
Berkeley Real Estate & Economics Symposium 2011
Low Tier: Nearly double the declinesTop Tier:
Nearly double the $$ declines
YesterdayMajor Home Price Indices Since 1975
Get BackReal Home Price Indices Since 1975
Helter SkelterUnemployment’s Effects on Foreclosure
Berkeley Real Estate & Economics Symposium 2011
20042005200620072008200920102011
Help!REO Saturation and Price Fluctuations 2005-2011
Berkeley Real Estate & Economics Symposium 2011
Berkeley Real Estate & Economics Symposium 2011
I’m Looking Through YouPerforming, REO, and Blended 2005-2011
Phoenix MSA Price-per-Square-Foot
National Two Year Forecast
Sluggish improvement over next two years
Here There and EverywhereForecasting the Market
California Two Year ForecastSan Francisco MSA Two Year ForecastSacramento MSA Two Year ForecastRiverside MSA Two Year ForecastLos Angeles MSA Two Year Forecast
Let It BeChanges on the Horizon
• Potential Game Changers• REO Volume Spikes
• Current inventory dammed up• Significant shadow inventory yet to come down the pike
• Fannie Mae / Freddie Mac Request for Information• Rental Program• Bulk Sales
• Assistance programs for homeowners• Attorney General settlement
• Principal forgiveness • Disruptions to natural process could be high
risk/reward game
We Can Work It OutWhat Lies Ahead
• Are we out of the Woods?• No, but some local markets are• Relative stability since first dip anticipated• All things equal, expect a flat 2012, • Another try at a recovery in Q2 2013• REO volume is a challenge, but opportunity still out there• Uncertainty/pessimism still biggest challenge to recovery• Policy and regulation changes remain in question
• The devil you know is better than the devil you don’t