Sep 09, 2020
FOR CLARITY…
There Are A Lot Of Different Types
If Investors On This Call
TONS OF UNCERTAINTY IN TODAY’S MARKET
• The Capital Markets Have Dried Up For Rentals and Lowered LTV’s For
Rehabbers Which All Puts PRESSURE on Wholesalers…We Are All
Effected.
• BUY BOXES Are Moving Target Right Now…Creating RISK EXPOSURE.
• Showing Houses, Buying Houses, And Rehabbing Houses Haas Gotten
HYPER COMPLICATED With Social Distancing And “Shelter In Place”
Rules
TONS OF UNCERTAINTY IN TODAY’S MARKET
• MARKETING Has Become A Game Of Which Came First…THE
CHICKEN OR THE EGG?
• Rental Income Is GETTING DISRUPTED In Many Markets Around The
Country Which Is The One Thing We All Thought WAS A SURE THING.
• Then We Get To Combine ALL OF THIS With The Fact That We Are All
Going STIR CRAZY.
WE ALL JUST WANT TO GO BACK TO NORMAL
WHEN WILL THAT HAPPEN?
Can You Survive…
THE GAP?
IS THE CORONA VIRUS THE PROBLEM…
Or Is It Revealing The PROBLEM
TOUGH QUESTION…
• Insert Krause and pics of her and Snodgrass
• HAVE MARK LANE POST – WE FELT LIKE BIGGEST PLACE TO MAKE A DENT IS AT
THE CONVERSION LEVEL
Marcus Crigler
What To Do When Your P & L Is In The Green
But Your Bank Account
Is In The RED
TODAY’s AGENDA
• HOW WILL MARKET VALUES BE IMPACTED Across The
Country And For How Long?
• How Long Will It Take For HOUSING TO
RECOVER...After Shelter-At-Home Is Lifted?
• What Is The Overall IMPACT of The "MORTGAGE
PAYMENT HOLIDAY"?
• WHERE IS SAFETY FOUND In The Home Building
Sector?
TODAY’s AGENDA
• How WILL RENTS BE EFFECTED And For How Long?
• Will The Wall Street SECONDARY CAPITAL MARKETS
Return To Main Street And If So...When?
• Have iBUYERS PACKED UP THEIR BAGS...Short Term
Or Long Term?
• Are We Going To Experience a U SHAPED...V
SHAPED...OR L SHAPED RECOVERY?
TODAY’s AGENDA
• Where Will We Be In 6 Months?
NORMAL…RECESSION…DEPRESSION?
• DISPOSITONS During A PANDEMIC… Dispo Is KING
Howard Marks, Oaktree
A World-Renowned Realist
April 15, 2020
What does the U.S. see today:
• One of the greatest pandemics in 102
years
• The greatest economic contraction
since the Great Depression
• The greatest oil-price decline in the
OPEC era (and, probably, ever) and
• The greatest central bank/government
intervention of all time
― Howard Marks, Oaktree
Bill Gates’
timeline
• Phase 1 Health Crisis: 10+ weeks of extreme lock down results in
areas opening up in May and June
• Phase 2 Economic recovery: At least 18 months from now,
when a vaccine becomes widely available, and people
interact normally again
• Phase 3 Home buying: Specifically mentioned as a very long
time until recovery
COVID-19 continues to wreak havoc in Washington.
January 21 – 1st confirmed case in the United States
Rising cases
COVID-19 continues to wreak havoc in Washington.
February 29 – 1st confirmed death
Rising deaths
The worst hot spots are in the East.
37%40%42%
48%27%
57%27%
57%37%39%
0% 20% 40% 60%
San Antonio
Dallas/Ft Worth
Earn < $60K
Without…
TX Workers
Percentage of Texas Workers Who
Can Work Remotely
Source: Federal Reserve Bank of Dallas tabulation of American Community Survey
Remote work favors higher paid employees.
Hardest Hit Industries
The Nevada, Ohio and Michigan economies have likely been hit the hardest.
Searches per capita for “Unemployment” by state.
California searches are 20X the norm!
126138142148149
176180194199210219225
245248248250250
267291293306
388404
438439
473476
768860
992
0 100 200 300 400 500 600 700 800 900 1,000
Boise City, ID
Charleston, SC
Myrtle Beach, SC
Sarasota, FL
Greenville, SC
Baltimore, MD
Sacramento, CA
Portland, OR-WA
Seattle, WA (MDivision)
Las Vegas, NV
Philadelphia, PA-NJ-DE-MD (MSA)
Minneapolis, MN-WI
Riverside-San Bernardino, CA
Fort Worth, TX (MDivision)
Chicago, IL**
Indianapolis, IN
Denver, CO
Orlando, FL
Jacksonville, FL
Nashville, TN
Tampa, FL
Raleigh-Durham, NC
Charlotte, NC-SC
Phoenix, AZ
San Antonio, TX
Washington DC, DC-VA-MD-WV (MSA)
Austin, TX
Atlanta, GA
Dallas, TX (MDivision)
Houston, TX
Number of Actively Selling Communities
Source: John Burns Real Estate Consulting
Supply down 8% or more
Supply up 5% or more
New home supply is generally low, and has risen more in some areas, and declined in
others.
Federally
Elected
Officials
The FedMortgage
Policy
GNMA / FHFA
3 Arms of Federal Government Coming to the Rescue
Massive 2020 Q2 stimulus will expire over time, creating challenges over the next year.
2020 Q2 2020 Q3 2020 Q4 2021 Q1
$105B FFCRA credits
$350B PPP
$250B Unemployment
Student Loan Forbearance
Mortgage Forbearance
Recipients lose $600/week bonus after 4 months
$290B Stimulus Check
Gradually Exit Shelter in Place?
Unemployment to rise again
Rent Forbearance
2021 Q2
12 week leave ends for early applicants
Spending/savings diminishes
Income declines for those still on unemployment
Payments Return
Modify, forgive
or foreclose on
homeownerModify, forgive or
foreclose on landlord
JBREC Housing Industry Demand Survey: Trends
Source: John Burns Real Estate Consulting, LLC, independent survey of ~2,000 weekly responses. Current data captured the week of 4/13/2020.
Demand stabilized a bit this week
10%
10%
11%
36%
39%
43%
55%
51%
46%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2 weeks ago
1 week ago
Current
Increasing The Same Decreasing
Current Goods and Services Demand by Industry: All Responses
Industry capital sources are seeing more demand. Investment
(stock and bond) funds and SF rental most stable.
Source: John Burns Real Estate Consulting, LLC, independent survey of ~2,000 weekly responses. Current data captured the week of 4/13/2020.
Is demand for your goods or services increasing or decreasing compared to last week?
5%
9%
9%
10%
10%
11%
13%
14%
15%
21%
32%
57%
53%
33%
62%
44%
43%
61%
47%
40%
45%
37%
38%
38%
58%
28%
46%
46%
26%
39%
45%
34%
32%
0% 20% 40% 60% 80% 100%
Apartment
Developer
Building products
Single-family rental
Private builder
All
Investment fund
Other
Public builder
Lender
Private equity
Increasing The Same Decreasing
Current Goods and Services Demand by Industry
Source: John Burns Real Estate Consulting, LLC, independent survey of ~2,000 weekly responses. Current data captured the week of 4/13/2020.
Builder and Developer Demand Improved this Week
4%
6%
15%
33%
37%
40%
63%
57%
45%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Public Builder
3%
5%
10%
33%
39%
44%
64%
56%
46%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Private Builder
Goods and Services Demand: DevelopmentIncreasing The same Decreasing
4%
6%
9%
36%
45%
53%
60%
49%
38%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Developer
A number of clients reported improving sales this past weekend as well.
Source: John Burns Real Estate Consulting, LLC, independent survey of ~2,000 weekly responses. Current data captured the week of 4/13/2020.
Private equity opportunities increased, while lenders
and investment funds reported less demand this
week.
21%
26%
21%
31%
38%
45%
48%
36%
34%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Lender
19%
21%
13%
35%
40%
61%
46%
39%
26%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Investment Fund
19%
14%
32%
37%
46%
37%
44%
40%
32%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Private Equity
Goods and Services Demand: CapitalIncreasing The same Decreasing
Source: John Burns Real Estate Consulting, LLC, independent survey of ~2,000 weekly responses. Current data captured the week of 4/13/2020.
Rental demand stabilized this week, with notably less
apartment industry distress.
15%
10%
10%
49%
54%
62%
35%
36%
28%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Single-Family Rental
17%
13%
5%
17%
25%
57%
67%
63%
38%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Apartments
Goods and Services Demand: RentersIncreasing The same Decreasing
Source: John Burns Real Estate Consulting, LLC, independent survey of ~2,000 weekly responses. Current data captured the week of 4/13/2020.
Little change for building product and other demand
this week.
14%
14%
14%
38%
43%
47%
47%
43%
39%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Other
8%
9%
9%
32%
30%
33%
59%
62%
58%
0% 25% 50% 75% 100%
2 Weeks Ago
1 Week Ago
Current
Building Products
Goods and Services DemandIncreasing The same Decreasing
-38%
-3%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
New ListingsActive Listings
ListingsPeak (pre-COVID19 fallout) to Current
Source: Redfin Data Center, 70 Market rollup, 4/15/2020. 'Current' represents data for week ending 4/3/2020.
Listings remain very low. Listings are down 3% more YOY than they were in February (down 19% vs 16%). The number of new listings has plunged 38%.
Searches for housing are down between -17% to -24%, but has improved since last week.
-23%
-24%
-28%
-17%-18%
-24%
New Homes Resale Homes Apartments
Last Week
Current
Google SearchesYear-over-Year %
Source: John Burns Real Estate Consulting (April 16, 2020)
Resale list prices are now down 1% YOY.
$359 K
$370 K$370 K
$357 K
$345,000
$350,000
$355,000
$360,000
$365,000
$370,000
$375,000
4/12/2019 6-Mar 13-Mar Mar-20 27-Mar 3-Apr 10-Apr
Median List Price(115 market areas)
-1% YOY
0.09%
1.7%
2.4%
0.25%
2.7%
3.7%
0.19%
4.3%
5.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
March 2 - March 8 March 23 to March 29 March 30 to April 5
Loans in Forbearance as % Share of Servicing Portfolio
Fannie Mae & Freddie Mac Total Ginnie Mae
Percentage of Loans in Forbearance Rising Rapidly
Source: Mortgage Bankers Association – Forbearance and Call Volume Survey (April 13th, 2020)
Risk Premium on 30 Year Fixed Rate Mortgage is Still Elevated Compared to Norm vs. 10 Year Treasury
Source: Freddie Mac, Federal Reserve (April 15th, 2020)
Normal Spread = 170bps (1.7%)
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Distribution to non-clients is prohibited. © 2019
Apartment defaults were about 7% this month – revised up from 9%.
• Texas and North Carolina had very little distress
• Bringing back an old concept:
– Economic occupancy - % paying
– Physical occupancy - % occupied
We introduced a new Friday email as a great way to
end the week.
www.2020HousingPredictions.com
HOW WILL MARKET VALUES BE IMPACTED
Across The Country And For How Long?
www.2020HousingPredictions.com
How Long Will It Take For HOUSING TO RECOVER...
After Shelter-At-Home Is Lifted?
www.2020HousingPredictions.com
What Is The Overall IMPACT of The
"MORTGAGE PAYMENT HOLIDAY"?
www.2020HousingPredictions.com
WHERE IS SAFETY FOUND
In The Home Building Sector?
www.2020HousingPredictions.com
How WILL RENTS BE EFFECTED
And For How Long?
www.2020HousingPredictions.com
Will The Wall Street SECONDARY CAPITAL MARKETS
Return To Main Street And If So...When?
www.2020HousingPredictions.com
Will The Wall Street SECONDARY CAPITAL MARKETS
Return To Main Street And If So...When?
www.2020HousingPredictions.com
Have iBUYERS PACKED UP THEIR BAGS...
Short Term Or Long Term?
www.2020HousingPredictions.com
Are We Going To Experience a
U SHAPED...V SHAPED...OR L SHAPED RECOVERY?
www.2020HousingPredictions.com
Where Will We Be In 6 Months?
NORMAL…RECESSION…DEPRESSION?
www.2020HousingPredictions.com
DISPOSITONS During A PANDEMIC…
Dispo Is KING
TONS OF UNCERTAINTY IN TODAY’S MARKET
• The Capital Markets Have Dried Up For Rentals and Lowered LTV’s For
Rehabbers Which All Puts PRESSURE on Wholesalers…We Are All
Effected.
• BUY BOXES Are Moving Target Right Now…Creating RISK EXPOSURE.
• Showing Houses, Buying Houses, And Rehabbing Houses Haas Gotten
HYPER COMPLICATED With Social Distancing And “Shelter In Place”
Rules
TONS OF UNCERTAINTY IN TODAY’S MARKET
• MARKETING Has Become A Game Of Which Came First…THE
CHICKEN OR THE EGG?
• Rental Income Is GETTING DISRUPTED In Many Markets Around The
Country Which Is The One Thing We All Thought WAS A SURE THING.
• Then We Get To Combine ALL OF THIS With The Fact That We Are All
Going STIR CRAZY.
IF YOU’D LIKE TO LEARN MORE ABOUT US…
www.LearnMoreAboutCG.com
So Many Investors Struggle With Cash Management
• Things can get complicated
• You’ve got funds coming in from Raising capital
• You’ve got funds going out paying of chunks of debt as well as debt service
• You’ve Got tons of projects going on at once time and each
of them has a thousand line items via the scope of work
• You’re hiring talent that will cost you 3 to 6 months of burnt
wages until they’re dialed in and producing more than their
salary
So Many Investors Struggle With Cash Management
• CASH MANAGEMENT shifts from glancing at your bank
accounts every now and then into studying your P and L,
forecasting pipeline performance, and a necessary skillset for you to elevate to the next level
• Things Can Get Hairy and it can get difficult to know what is
yours and what is not yours….
Things Can Get Hairy and it can get difficult to know…
WHAT’S MINE
&
WHAT’S NOT
5 Different Accounts In My System