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The Magical Mystery Tour U.S. Residential Real Estate Markets and the Path Ahead

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.

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The Magical Mystery Tour U.S. Residential Real Estate Markets and the Path Ahead

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  1. The Magical Mystery TourU.S. Residential Real Estate Markets and the Path Ahead Alex Villacorta, Ph.D. Director, Research & Analytics Clear Capital

  2. Berkeley Real Estate & Economics Symposium 2011 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

  3. Berkeley Real Estate & Economics Symposium 2011 Ticket to RideCurrent Housing Market Vitals 3.5% -2.7% -6.9% Double Dip Dip Decline Since Peak: -39.5%

  4. Berkeley Real Estate & Economics Symposium 2011 All Together NowRegional Decline Since Peak of Market (Q2 2006) Northeast:unchanged since 2010 West: down 8.3% since 2010

  5. Berkeley Real Estate & Economics Symposium 2011 Come TogetherCondo Market versus Single Family Residences 60.7% 42.2% -41.9% -38.6%

  6. Berkeley Real Estate & Economics Symposium 2011 Can’t Buy Me LoveNational, Top, Mid, and Low Tier Low Tier: Nearly double the declines Top Tier: Nearly double the $$ declines

  7. YesterdayMajor Home Price Indices Since 1975

  8. Get BackReal Home Price Indices Since 1975

  9. Berkeley Real Estate & Economics Symposium 2011 Helter SkelterUnemployment’s Effects on Foreclosure 2005 2006 2007 2008 2009 2010 2011 2004

  10. Berkeley Real Estate & Economics Symposium 2011 Help!REO Saturation and Price Fluctuations 2005-2011

  11. Berkeley Real Estate & Economics Symposium 2011 I’m Looking Through YouPerforming, REO, and Blended 2005-2011 Phoenix MSA Price-per-Square-Foot

  12. Here There and EverywhereForecasting the Market San Francisco MSA Two Year Forecast Sacramento MSA Two Year Forecast Riverside MSA Two Year Forecast Los Angeles MSA Two Year Forecast National Two Year Forecast California Two Year Forecast Sluggish improvement over next two years

  13. 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

  14. 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

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