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The State of the Industry
The document discusses the current state of the housing market, highlighting significant increases in cash inventories and shifts in investor priorities towards growth over wealth preservation. It notes rising home prices, declining housing inventory, and the increasing impact of hedge funds on the real estate and tax lien markets. Furthermore, it outlines the trends in non-performing loans, short sales, and the growing number of investors entering the market with substantial capital.
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The State of the Industry
- 1. STATE OF THE W.Eddie Speed Founder, NoteSchool President, Colonial Funding Group Manager, Panacea Fund INDUSTRY ©NoteSchool 2013
- 2. Bank Lending Dept Loss Mitigation Dept vs.TodayYesterday
- 3. Reason: Borrowing PowerTriples (2000-2006) 2000 2006
- 4. STOCK MARKETYOUR MONEY (ANXIOUSMONEY) Where is it going? X Market Crash 2008
- 5. Anxious Money • Millionairesnow place a higher priority on growth than wealth preservation — a marked reversal from last year • Over $6 Trillion in cash • 16% of them plan to invest that cash in the next couple of months • 40% plan to invest it over the next two years Source: May 27th 2013 USA Today, US Trust Survey
- 6. Those with $100,000in Disposable Income Source: May 27 2013 USA Today, American Express, Harrison Group $6 Trillion Cash Savings $12 TrillionCash Savings NOW 2014
- 9. Cash Accounts WayUp $9.8 Trillion in Cash Accounts (May 2012) Sources: Fed Reserve 2012, 2013, Investment Company Institute ©NoteSchool 2013 $10.5 Trillion in Cash Accounts (May 2013)
- 10. $9.9 TRILLION isEnough 1 Dollar Bills to Stretch EARTH SUN ©NoteSchool 2012
- 11. 2010 2011 2012 4.19M Homes Sold 34% CASH Approx. 1.4M 4.26 M Homes Sold 38% CASH Approx. 1.6M 4.30 M Homes Sold 30% CASH Approx. 1.29M © NoteSchool 2012
- 12. HOUSING PRICES UP Stateof the Industry ©NoteSchool 2013
- 13. Home Price Increase Last 12months Months of Consecutive Growth10.5 % ©NoteSchool 2013 Sources: CoreLogic HPI Report 3 2013
- 14. 12 Month HousingPrice Index Change ©NoteSchool 2013 Source: CoreLogic HPI Report March 2013
- 15. HOUSING INVENTORY DOWN Stateof the Industry ©NoteSchool 2013
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- 18. As of Sept2012 (latest available) Source: DS News, Office of Inspector General FHFA and HUD 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 HUD Fannie and Freddie REO's Shadow Inventory Shadow Inventory is defined in this study as properties 90 days or more delinquents but not yet in foreclosure
- 19. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 Housing Inventory Jan 2004 HousingInventory Aug 2008 Housing Inventory Aug 2012 Housing Inventory Jan 2013 Housing Inventory in Millions Sources: NAR, HouseTracker, Calculated Risk
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- 21. Sources Reuters andZeroHedge, Bloomberg 2013 Where is all the Inventory? Blackstone 29,000 SFH 13 Metro Areas Carrington 25,000 SFH Colony America 9,931 SFH Silver Bay 5,000 SFH Tricon Capital 4,000 SFH CA, FL, AZ Amer Res Prop 3,600 SFH AZ, IL, CA, IN, NC, GA, FL PLUS Another $8 Billion raised this year to buy SFH foreclosures and REO’s
- 22. Making a Moveinto Tax Liens Insiders estimate hedge funds now control 40% of the tax-lien market, from under 5% five years ago, with regional banks, and individual investors making up the difference. By Lynnley Browning Fortune Magazine May1 2013 Tax Lien Market Today Hedge Funds Banks & Investors Tax Lien Market 2008 Hedge Funds Banks & Investors
- 23. Real Property Investors PayingMore! Sources: National Assoc of Realtors © NoteSchool 2013 • Short sales sold at a 13% discount • Foreclosures sold at a 21% discount According to National Association of Realtors, in August 2012:
- 24. Value$100,000 Cost of Property ShortSale Investor Paid $87,000 Profit ?? ©NoteSchool 2013
- 25. Value$100,000 Foreclosure Investor Paid $79,000 Costof Property Profit ?? ©NoteSchool 2013
- 26. NON PERFORMING NOTE INVENTORY Stateof the Industry ©NoteSchool 2013
- 27. Non Performing 1stMortgages of ALL Loans are 90 Days Delinquent 3.5% of ALL Loans are Delinquent 10.9% 1980-2006 the 90 Day Delinquent Rate was 0.78% ©NoteSchool 2013
- 28. MAJOR SHIFT FROMREO TO SELLING NOTES State of the Industry ©NoteSchool 2013
- 30. Non-Performing Notes Modify Deedin Lieu Foreclosure 40% 40% 20% ©NoteSchool 2013
- 31. Rental Prices up 4.8% in Last12 months 2.1 Million More SFH Renters than in 2006 ©NoteSchool 2013
- 32. 10.63% of AllMortgages are DelinquentSource: LPS Mortgage
- 33. 500,000 REOs Bank Foreclosed Properties Where’sthe Real Opportunity? 10 MILLION DELINQUENT MORTGAGES ©NoteSchool 2013
- 34. 5 Years Only 4½ MillionSold 2008 2013
- 35. What’s the averagevalue of house securing payment of a Delinquent Note ? ©NoteSchool 2013
- 36. What does aDelinquent Note Cost ? Mortgage Note ©NoteSchool 2013
- 37. Value$60,000 Note Investor Paid $9,000 Costof Delinquent Note Profit ?? ©NoteSchool 2013
- 38. What Percentage ofa Loan’s Balance do Loans Cost? $350K - $650K $125K - $350K Under $125K $650K + Price Points ©NoteSchool 2013
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- 40. Trends and Opportunities •Tens of Thousands of Short Sale & REO Specialist Agents
- 41. Trends and Opportunities •Hundreds of Thousands of New Anxious Money Investors (many with IRA’s and other retirement accounts)
- 42. What $30 BillionLooks Like This is $1 billion in $100 dollar bills Specialty Self Directed accounts have about $30 Billion sitting in cash X 30!
- 43. Schedule a Presentationat Your REIA To be placed on our REIA leader list to receive industry statistics please email: [email protected]