10K Research presents new NVBR local market statistics packages.

1. THE PROOF IS IN
THE NUMBERS

4. SoHoThMa ?
The Famous Five Questions
According to Whom
Relative to What 2010? 2009? A tax credit? A better
economy? 1967?
For Whom Buyers? Sellers? Renters? Investors? Lenders? REITs?
“Hedgies?”
In Which Segments Single-family? Condo? Foreclosure? Short sale? High-end? New
construction?
Where Three-word real estate mantra

5. “Location, Location,
…is now Data, Data,
Data”
Particularly during times of acute industry transformation
(like now)

6. The Problem: Overly Leveraged
Households
2000
Source: USA Today
analysis of Federal
Financial Institutions
Examination Council
data.
By Brad Heath, Joshua
Hatch and Dave Merrill,

7. The Plot Thickens: Why So Blue?
2007
By 2007, the
national average
was 9% of all
borrowers.
Source: USA Today
analysis of Federal
Financial Institutions
Examination Council
data.
By Brad Heath, Joshua
Hatch and Dave Merrill,

8. Look Familiar?

9. Spatial Correlation
Mortgages 4x+ Greater Than Income Home Price Declines

10. Even More Spatial Correlation
Mortgages 4x+ Greater Than Income Home Price Declines Since Peak
Unemployment Rate, Sept. 2011

11. Still More Spatial Correlation
Mortgages 4x+ Greater Than Income, 2007 Unemployment Rate, 9-2011
Foreclosure Rate, 2011YTD
Home Price Declines Since Peak, 2011YTD

12. You Make $100,000 Per Year? Here’s A
$1,000,000 House!

13. The Rent vs. Own Proposition

14. The Bubble Visualized

15. The Foreclosure Elephant in the room

16. The Foreclosure Elephant still in the
room

18. Reason For Foreclosure

19. New Construction, Anyone?

20. Record Low Mortgage Rates

21. The Sloth in The Room

22. The 400,000 Mark: So Close!

23. Unemployment Rate

24. Number of Households Renting
40
35
30
25
20
1970 - Q1 1974 - Q3 1979 - Q1 1983 - Q3 1988 - Q1 1992 - Q3 1997 - Q1 2001 - Q3 2006 - Q1 2010 - Q3
Source: NAR Research

25. LOCAL DATA!

37. Some Data-y Considerations
1)Law of Averages (deviation from the mean)
• Market-wide metrics are good, but real estate is local and
case-by-case
• Varies with location and segment
2)Small Sample Size
• Smaller areas are prone to greater volatility or more “noise”
• Fewer records from which to draw means less reliable trends
3)Historical Trends Do Not Guarantee Future
Performance
• But, in conjunction with other indicators, they can give us a
pretty good idea
4)Homogenous vs. Heterogeneous Markets
(Compositional Effects)

38. So you have 5
Sales Statistical Measures of Central
Tendency
Prices
Average Sales Price: $621,000
1) $120,000
2) $150,000
3) $160,000
4) $175,000
But we only had 1 out of 5 records or
20% of all units above the average!
That’s why we prefer the median –
it’s more insulated from outlying
activity occurring at either tail end of
the series. 50% sold for more and

39. “The Law of Averages”

40. So How Will This Benefit Me?
1)Prospecting
2)Lead generation/capture
3)Personal marketing
4)Open Houses
5)Listing Presentations
6)Maximizing Seller Returns and Minimizing Buyer
Costs
7)Strategic, informed decision making
8)Value-Added
9)Forecasting and extrapolation !

41. Use Stats To…
• Sound smart, like I know what I’m talking about
• Better capture prospective leads
• Gain third-party verification on occasionally-
extreme numbers
• Support some of my strategies and be sure they’re
rooted in fact
• Better time the market (for both buyers and sellers)
• Maximize the value that I add to the transaction
process
• Don’t just sound smart, be smart
Use Stats!

42. “3D-M”
• Market Timing
When to buy, when to sell and why
• Market Times
Seller patience is a virtue, but motivated sellers need to be priced aggressively
• Negotiating Leverage
Who has it and why, and when could the balance shift
• Pricing Strategies
Is $199,999 really that much better than $200,001
• The $2 difference between a sale and no sale, think search criteria and psychological price thresholds
• Assessing the Competition
Saturated sub-markets vs. multiple offer situations
• Absorption Rates
They can tell you more than you might think (buyers’ markets vs. sellers’ markets vs. balanced
markets)
• Market Segmentation
Not all segments are created equal (SF vs. Condo, New vs. Previously-Owned, Foreclosure vs.
Traditional)
• Maintaining a Rational Perspective
The largest financial transaction of a lifetime comes with strong emotions
• Managing Expectations

43. It’s the Economy, Stupid
• www.BLS.gov - Labor market dynamics
Unemployment rate, initial/continued claims, new job growth
levels
• Unemployed people don’t buy houses
At least not anymore
• New job growth fuels future housing
demand
Historically, it’s been a leading indicator of
purchase demand
• Relationship between layoffs, delinquencies

44. Other Noteworthy Things
That it wouldn’t hurt to know about
• Buyers – not your usual suspects?
Move-up buyers are staying put, first-timers?
International Buyers
• Taking advantage of favorable currency exchange rates
Investment Buyers
• Looking to park capital and preserve wealth in “safe” asset classes
• Nearly 35% of 2011YTD transactions were cash buyers (NAR)
• Inflation
Already seeing it at the gas pump and grocery check-out line, what’s next?
• QRM/MID
WRITE YOUR ELECTED OFFICIALS, this will directly impact our industry
• Robo-Signing
Keep an eye on bank/lender-mediated listing activity, claims of shadow inventory may be overblown
• Underwriting Standards
Frustrating at best, many buyers are willing but unable to purchase
• The Media
Don’t believe the Case-Shiller/double-dip hype, they use a special resale methodology and disregard a
uniquely strong Spring 2010
• Mortgage Rates
Record lows, nowhere to go but up?

45. Q&A
Thank you
for your
time!
David Arbit, Market Analyst
DavidA@10kresearch.com
@10k_David