Current State and Direction of the Housing and Mortgage Markets From a Micro Market Metric Perspective. Nov. 23, 2009 for UC Berkeley Outlook

Transcription

1 And Current State and Direction of the Housing and Mortgage Markets From a Micro Market Metric Perspective By Norm Miller Ph.D. Burnham Moores Center for Real Estate, University of San Diego and Michael Sklarz Ph.D., CEO Collateral Analytics Nov. 23, 2009 for UC Berkeley Outlook

2 By State MI NV MN Again collateral values matter and not just current values but the outlook as well. Every point here is a state s average change in home values versus REO%. MT, OK, ND, LA Value increases Note: Recent research by A. Ghent and Kudlyak, Fed Bank of Richmond Recourse and Residential Mortgage Default. WP suggests that non recourse states have higher rates of default when facing negative equity.

3 Yes some Zips have over 15% REO Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

4 Los Angeles County 2009 Single Family Median REO % Discount Vs. REO Sales % of Total Sales By Zip Code REO % Discoun nt y = x R² = % 10% 20% 30% 40% 50% 60% 70% 80% REO Sales % of Total Sales Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

5 Using current values, the typical loan made in 2005, 2006 or 2007 has a LTV of nearly 120%. Oi Original i lltvs if you believed the appraisals Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

6 Anyone want to Loan Modify at <105% LTV? MI is at 200% LTV AZ CA FL IL NV OH State LTV s at origination looked fine Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

7 Scale is to 1000% Yes this is over 900% LTV using current values. Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

8 We need to do the analysis of value trends at the localized level: CBSA level analysis is misleading especially with indices that do not distinguish the kind of sale transaction. Some submarkets are dominated by foreclosures, many are not. Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

9 CA - Los Angeles S&P/Case-Shiller Home Price Index vs Zip Index for Pacific Palisades, CA Zip S&P/Case-Shiller Home Price Index CA - Los Angeles Pacific Palisades, CA Zip ,000,000 2,500,000 2,000,000 S&P/Case-Shiller Index Zip Code Index Neighborhoods do not always follow the metro trends. 1,500,000 1,000, , Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

10 San Diego Zip Codes Versus Case Shiller

11 San Diego Single Family Zip Code Past Year Price Percent Change Distribution San Diego Single Family Zip Code 2007Q3 to 2008Q3 Price Percent Change Pe ercent -20 Case Shiller Index Decline -30 All of these zip codes revealed price declines less than that of the CS Index over this time -40 Case Shiller -50 Zip Code

12 In the current environment, REO sales prices need to be tracked separately from regular sales. Case Shiller, OFHEO and NAR to not do this. $700, $600,000 $500,000 San Diego County Regular, REO and Regular with REO Single Family Prices for 3 Bedroom and 2 Bath Homes Regular REO Combined Regular & REO $400,000 $300,000 $200, $100,000 REO discounts in normal markets average 22%. In some of today s more distressed markets, the discounts are running 25% to 50% or more. $

13 We can track and forecast market conditions by Zip code using several criteria, i i.e. Foreclosures as a % of sales Months remaining inventory (MRI) Expired inventory that did not sell (shadow) (h and (Adj Months Remaining Inventory) Volume and price trends Listing Price Trends Versus Sold Price Trends Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

14 1400 Sacramento Single Family Foreclosure and REO Sales 1200 Sacramento Number of Single Family Foreclosure Sales 1000 Sacramento Single Family Number of REO Sales Data: Lewtan Analysis: Collateral Analytics Presented by Norm Miller, USD

15 Miami Single Family REO Discounts

16

17 25 Los Angeles Median Price Annual % Change and Months of Inventory Remaining L.A. MRI L.A. Price % Chg Numbe er of Months % Change Price

18 Let s slice MRI by Price Range We can also slice by size or property type or We can also slice by size or property type or any number of attributes.

19

20

21 The spread between asking prices and sold tends to be narrow in strong markets and wide in soft or declining markets. Here we see it improving but still wide.

22

23 Some sample forecasts

24 Canal Fulton, OH Canton

25 Using Fundamentals and Technical Trends We Can Forecast Home Values By MSA, Zip or for Individual Homes LA Med Home Prices Coeff StdError t value t prob Constant Los Angeles Med $_ Los Angeles Med $_ Los Angeles Emp Los Angeles Emp_ Los Angeles Emp_ LA L.A. Affordable Price L.A. Affordable Price_ L.A. Affordable Price_ RSS sigma R^ Radj^ LogLik AIC HQ SC

26 LA Median Price Forecast thru Dynamic forecasts of Los Angeles Med from 2009(4) to 2015(4) Data Forecast 2*SE

27 LA Median Price Forecast thru 2015 Two StageModel With MRI Added Using Monthly Data 30 Dynamic forecasts of Los Angeles Med % Chg from 2009(4) to 2015(4) Data Forecast 2*SE

28 Summary Foreclosures are highly concentrated by state, by county and by zip code Local market price changes are not well represented by the CaseShiller Index We need to slice the data by price range or size and also micro location. Distressed asset pricing depends on local market conditions and we see a lot of variation by market. We can forecast price trends reasonably well for the next several quarters when using both technical (Broker based MLS Type) and fundamental data.

29 Questions? Or More Infor? Contact Info: or