realtytrac presentation at los angeles real estate investors club october 2013

LEVERAGE THE LATEST HOUSING TRENDS TOLAND THE BEST REAL ESTATE DEALS

© 2013 Renwood RealtyTrac LLC

WELCOME

WHAT WE’LL COVER TODAY

• Latest home sales & price trends• Latest foreclosure trends• Trends in property flipping

– Best markets for flipping• Trends in single family rentals/institutional investors

– Best markets for buying rentals• Monsters of the housing markets: zombies & vampires• Leveraging the latest trends

– Knowing the markets where you want to invest– Buying short sale, auction, bank owned


REALTYTRAC DATA PRIMER

100 Million+ U.S. Properties20 Economic & Neighborhood characteristics: schools,

crime rates, rents, unemployment, incomes, hazards etc.

Estimated Values: 2.2 billion current & historical

120 million+ current & historical loan records

82 million+ Sales/Deed Records back to 2000

Listing data for 1 million+ active listings

20 million current & historical foreclosure records


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 HOME PRICE TRENDS




Distressed median prices still flat lining

Overall home prices up annually for 17

straight months. UP 23 percent from bottom, still 26

percent below peak.



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

distressed properties

LATEST HOME PRICE & SALES VOLUME TRENDS


Sales volume increasing but low inventory helping to push prices up

STATE LEVEL SALES VOLUME TRENDS


Lack of for-sale inventory may be slowing sales in California and

Arizona

SO CAL HOME PRICES


COUNTIES AND ZIPS WITH MOST APPRECIATION


ZIP 2012 2013 Pct Change91502 $237,500 $415,000 75%90021 $335,000 $580,000 73%90716 $168,000 $271,000 61%90031 $225,000 $361,000 60%90007 $308,500 $458,220 49%91601 $315,000 $467,000 48%91020 $367,500 $542,500 48%90404 $511,250 $750,000 47%91316 $345,000 $504,000 46%93532 $123,500 $180,000 46%90502 $243,500 $352,500 45%91001 $423,000 $610,000 44%90020 $250,000 $357,500 43%90028 $455,000 $650,000 43%90038 $516,250 $734,500 42%90755 $272,500 $387,000 42%91204 $263,250 $370,000 41%91406 $300,000 $420,000 40%91411 $370,500 $517,500 40%91768 $194,500 $271,500 40%

LATEST HOME PRICE TRENDS – LOCAL MARKETS


Cash buyers increasingly winning out in tight

credit market with low inventory of homes for

sale

LATEST HOME PRICE TRENDS: NATIONWIDE


Seriously underwater means mortgage amount is at least 25 percent

higher than estimated market

value

UNDERWATER DATA BY COUNTY

• County-level interactive heat map• http://

www.realtytrac.com/Content/news-and-opinion/seriously-underwater-homeowners-county-heat-map-7856


http://www.realtytrac.com/Content/news-and-opinion/seriously-underwater-homeowners-county-heat-map-7856



HOME EQUITY PROFILES FOR MAJOR METROS


• http://public.tableausoftware.com/shared/HTMMWH5ZG?:display_count=yes

http://public.tableausoftware.com/shared/HTMMWH5ZG?:display_count=yes

http://public.tableausoftware.com/shared/HTMMWH5ZG?:display_count=yes

LOCAL UNDERWATER DATA


LOCAL EQUITY DATA


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

LATEST FORECLOSURE MARKET TRENDS


HOW LONG WILL SHORT SALE SURGE LAST?


August foreclosure starts at lowest level

since December 2005

LATEST FORECLOSURE MARKET TRENDS – METRO MARKETS


L-Shaped recovery with clear signs of a

U developing

LATEST FORECLOSURE TRENDS – LOCAL MARKETS


Classic U-Shaped Recovery



Steady plodding



Still flatlining

LEADING THE RECOVERY


LAGGING THE RECOVERY


LATEST FORECLOSURE MARKET TRENDS


California time to foreclose now more than 450

days

LATEST FORECLOSURE MARKET TRENDS RECAP

• Foreclosure activity is well past its peak nationwide• Some state and local markets are lagging in

recovery because of lingering foreclosures• States that have enacted more aggressive

foreclosure prevention legislation over the past few years are susceptible to a rebound in foreclosure activity

• For investors this means there will still be opportunity to find discounted foreclosures going forward in some markets over the next two years.


WHERE FORECLOSURE ACTIVITY IS REBOUNDING


WHERE FORECLOSURE STARTS & AUCTIONS ARE REBOUNDING

SO CAL ZIP CODES WITH INCREASING FORECLOSURE ACTIVITY


Zip City State County NOD LIS NTS NFS REO

Total Props w/ Filings

1/Every X HU

% ∆ from Q2 13

% ∆ from Q3 12

91390 Santa Clarita California Los Angeles 21 0 13 0 4 38 177 58.33 -49.33

92377 Rialto California San Bernardino 37 0 15 0 6 58 94 56.76 -55.04

92627 Costa Mesa California Orange 17 0 8 0 7 32 734 52.38 -69.52

91324 Northridge California Los Angeles 14 0 12 0 7 33 283 50.00 -49.23

92082 Valley Center California San Diego 14 0 16 0 3 33 211 50.00 -51.47

92236 Coachella California Riverside 27 0 16 0 10 53 182 47.22 -57.60

90066 Los Angeles California Los Angeles 10 0 12 0 3 25 1,013 47.06 -44.44

92131 San Diego California San Diego 17 0 7 0 3 27 449 42.11 -65.38

90025 Los Angeles California Los Angeles 16 0 7 0 2 25 915 38.89 -16.67

92808 Anaheim California Orange 12 0 9 0 4 25 306 38.89 -53.70

92807 Anaheim California Orange 23 0 16 0 8 47 283 38.24 -48.91

91914 Chula Vista California San Diego 20 0 12 0 2 34 148 36.00 -64.58

91791 West Covina California Los Angeles 23 0 11 0 4 38 279 35.71 -55.29

92122 San Diego California San Diego 15 0 9 0 7 31 682 34.78 -60.26

90008 Los Angeles California Los Angeles 32 0 20 0 8 60 263 33.33 -25.00

90621 Buena Park California Orange 15 0 6 0 7 28 373 33.33 -56.25

92071 Santee California San Diego 29 0 18 0 10 57 338 32.56 -61.22

92879 Corona California Riverside 40 0 26 0 8 74 194 32.14 -63.55

91770 Rosemead California Los Angeles 21 0 9 0 3 33 530 32.00 -35.29

91746 La Puente California Los Angeles 16 0 10 0 3 29 245 31.82 -61.33

SO CAL ZIPS WITH HIGHEST FORECLOSURE RATES


Zip City State County NOD LIS NTS NFS REO

Total Props w / Filings

1/Every X HU

% ∆ from Q2 13

% ∆ from Q3 12

92530 Lake Elsinore California Riverside 46 0 34 0 141 221 72 0.00 -19.64

92548 Homeland California Riverside 11 0 12 0 7 30 86 25.00 3.45

92301 Adelanto California San Bernardino 44 0 35 0 20 99 90 -2.94 -60.56

92377 Rialto California San Bernardino 37 0 15 0 6 58 94 56.76 -55.04

92582 San Jacinto California Riverside 23 0 10 0 9 42 105 -20.75 -68.66

92344 HESPERIA California SAN BERNARDINO 21 0 22 0 13 56 109 7.69 -62.91

92337 Fontana California San Bernardino 40 1 32 0 15 88 109 10.00 -60.89

92392 Victorville California San Bernardino 81 0 45 0 27 153 110 -2.55 -67.10

92532 Lake Elsinore California Riverside 28 0 16 0 4 48 113 -18.64 -69.03

92585 Sun City California Riverside 17 0 19 0 14 50 115 2.04 -58.68

92371 Phelan California San Bernardino 19 1 12 0 18 50 116 -9.09 -51.92

92571 Perris California Riverside 57 0 35 0 19 111 117 5.71 -64.76

92883 Corona California Riverside 45 0 30 0 10 85 117 30.77 -59.72

92284 Yucca Valley California San Bernardino 43 0 24 0 31 98 120 1.03 -51.96

92345 Hesperia California San Bernardino 92 2 65 0 45 204 120 0.00 -54.77

93552 Palmdale California Los Angeles 31 0 36 0 16 83 122 -25.89 -72.79

92394 Victorville California San Bernardino 30 0 24 0 17 71 122 -10.13 -70.42

92551 Moreno Valley California Riverside 32 0 23 0 11 66 122 -7.04 -68.12

93543 Littlerock California Los Angeles 12 1 9 0 10 32 128 -28.89 -57.89

92325 Crestline California San Bernardino 23 0 13 0 15 51 132 0.00 -62.22

HOW LONG WILL SHORT SALE SURGE LAST?



• 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


TRENDS IN PROPERTY FLIPPING


FLIPPING TRENDS

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

second quarter

FLIPPING TRENDS


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

FLIPPING TRENDS


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

BEST MARKETS FOR FLIPPING


WHAT YOU BUY MATTERS - FLIPS

©RealtyTrac Inc. 2013, Not for Distribution

Metro Number of 2012 Flips Avg Purchase Price Avg Flip Price Gross Profit Gross Return PctLas Vegas 1,525 $124,849 $246,347 $121,498 97%Atlanta 1,396 $91,873 $102,096 $10,223 11%Riverside-San Bernardino, CA 1,004 $185,429 $210,177 $24,748 13%Cape Coral, FL 802 $98,747 $113,979 $15,232 15%Denver 591 $223,323 $230,417 $7,094 3%Sacramento 496 $198,369 $225,917 $27,548 14%Miami 486 $132,476 $177,256 $44,779 34%Orlando 480 $98,122 $205,727 $107,605 110%Sarasota, FL 356 $116,428 $157,443 $41,014 35%Port St. Lucie, FL 273 $89,894 $130,380 $40,486 45%Jacksonville, FL 271 $80,249 $119,345 $39,096 49%Seattle 250 $220,018 $231,263 $11,245 5%

Flipping data for 3-bedroom single family homes built in 1990 or later

WHAT YOU BUY MATTERS - FLIPS

©RealtyTrac Inc. 2013, Not for Distribution

Metro Number of 2012 Flips Avg Purchase Price Avg Flip Price Gross Profit Gross Return PctLos Angeles 981 $247,660 $328,077 $80,417 32%San Francisco 273 $251,091 $317,343 $66,252 26%Denver 249 $149,778 $197,265 $47,487 32%Riverside-San Bernardino, CA 201 $102,571 $131,716 $29,145 28%Sacramento 146 $120,761 $146,443 $25,682 21%Miami 132 $88,442 $125,562 $37,121 42%San Diego 119 $232,261 $310,801 $78,540 34%Seattle 108 $152,905 $203,199 $50,294 33%Cincinnati 107 $46,327 $48,944 $2,616 6%Detroit 102 $57,455 $56,325 ($1,131) -2%Portland 102 $146,713 $199,693 $52,980 36%Atlanta 91 $68,715 $84,178 $15,464 23%

Flipping data for 2-bedroom single family homes built 1920 to 1950

TRENDS IN SINGLE FAMILY RENTALS/INSTITUTIONAL INVESTORS


RENTAL ROI STILL GOOD IN MANY MARKETS


FLIPPING & INSTITUTIONAL INVESTORS


U.S. institutional investor purchases accounted for

10 percent of all residential sales in August

FLIPPING & INSTITUTIONAL INVESTORS


Institutional investors only

accounted for 4 percent of all

residential sales in LA County in August, down

from 6 percent a year ago.

HOW SINGLE FAMILY HOMES ARE BEING PURCHASED


TOP 25 HIDDEN GEM SINGLE FAMILY RENTAL MARKETS


TOP SATURATED SINGLE FAMILY RENTAL MARKETS

©RealtyTrac Inc. 2013, Not for Distribution 50

# Metro Area Investor %1 Atlanta-Sandy Springs-Marietta, GA 24%2 Charlotte-Gastonia-Concord, NC-SC 20%3 Macon, GA 18%4 Memphis, TN-MS-AR 18%5 Jacksonville, FL 18%6 Tampa-St. Petersburg-Clearwater, FL 17%7 Winston-Salem, NC 16%8 Las Vegas-Paradise, NV 16%9 Lakeland, FL 16%

10 Orlando-Kissimmee, FL 14%11 Albuquerque, NM 14%12 Palm Bay-Melbourne-Titusville, FL 14%13 Athens-Clarke County, GA 14%14 Greensboro-High Point, NC 13%15 Miami-Fort Lauderdale-Pompano Beach, FL 12%16 Deltona-Daytona Beach-Ormond Beach, FL 12%17 Phoenix-Mesa-Scottsdale, AZ 12%18 Montgomery, AL 12%19 Bakersfield, CA 11%20 Reno-Sparks, NV 11%21 Detroit-Warren-Livonia, MI 11%22 Boise City-Nampa, ID 11%23 Sarasota-Bradenton-Venice, FL 11%24 Vallejo-Fairfield, CA 10%25 Gainesville, GA 10%

THE MONSTERS OF THE HOUSING MARKET: ZOMBIES & VAMPIRES


THE PROBLEM AND OPPORTUNITY OF ZOMBIE FORECLOSURES


Nationwide vacant foreclosures account for one

in every five properties in foreclosure

THE PROBLEM & OPPORTUNITY OF ZOMBIE FORECLOSURES



• The problem– More than 150,000 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


VAMPIRE REOS


LOCAL VAMPIRE REOS


ZIP State County City Pct REO Occupied90044 California Los Angeles Los Angeles 81%90003 California Los Angeles Los Angeles 78%91335 California Los Angeles Reseda 73%90047 California Los Angeles Los Angeles 70%91331 California Los Angeles Pacoima 69%92410 California San Bernardino San Bernardino 64%92346 California San Bernardino Highland 64%92324 California San Bernardino Colton 61%93552 California Los Angeles Palmdale 59%92545 California Riverside Hemet 59%92405 California San Bernardino San Bernardino 57%92335 California San Bernardino Fontana 57%91342 California Los Angeles Sylmar 57%92234 California Riverside Cathedral City 57%90650 California Los Angeles Norwalk 55%92201 California Riverside Indio 55%92376 California San Bernardino Rialto 55%92307 California San Bernardino Apple Valley 54%93550 California Los Angeles Palmdale 54%

LEVERAGING HOUSING TRENDS: KNOW YOUR MARKET


Recent default, auction and REO trends

Local, state and national

foreclosure rates

LEVERAGING HOUSING TRENDS: FIND MARKETS WITH REBOUNDING FORECLOSURES


Foreclosure Inventory and

Prices

Historical Foreclosure Discounts

3. Know your overall market

LEVERAGING HOUSING TRENDS: FIND-OFF MARKET HOMES


Find pre-foreclosures and scheduled auctions in your

neighborhood

LEVERAGING HOUSING TRENDS: CONTACT HOMEOWNERS


Create mailing lists of distressed homeowners in

default or scheduled for foreclosure auction

LEVERAGING HOUSING TRENDS: TARGET MOTIVATED SELLERS


Identify homeowners who have vacated their homes and get

new mailing addresses

FIND MOTIVATED SELLERS WITH EQUITY


FIND MARKETS/HOMES WITH GOOD POTENTIAL CAP RATES


• Buy for $20K (possibly less at auction)

• Rent for $1000 a month• Est. carrying costs at

$500 a month• Cash flow of $500 a

month• Cap rate of 30%!

FIND MARKETS/HOMES WITH GOOD POTENTIAL CAP RATES


• Buy for $105k (REO)• Rent for $1,284 a month• Est. carrying costs at $514

a month• Cash flow of $770 a month• Cap rate of 9%

FIND HOMES/MARKETS WITH GOOD FLIPPING POTENTIAL


• List price $46,500, Est. After-Repair Market Value: $117,088

• Sold back to bank for $23,600, so they are motivated to sell low

realtytrac presentation at los angeles real estate investors club october 2013

Real Estate

latest trends

latest housing trends

foreclosure auction

cal home prices

home equity profiles

equity sales

short sales

local underwater data