Brad Hunter 30 Cities In 30 Minutes

Brad Hunter www.twitter.com/bradleyhunter

Lot-Investment Strategies(And Opportunities in Buying Broken Subdivisions)

Brad HunterChief Economist/National Director of Consulting(561) 573-8351Twitter: bradleyhunter


Which Markets Match Your Criteria? (Markets with the Best Investment Potential)

• What is your investment horizon? (5 years, 8 years?)

• Are you IRR-driven?

• These are the characteristics to look for in a target market:

– Strong long-term high-wage job potential– Deep discounts – Finished, vacant to decline– Long-term land/VDL constraints– In-migration (demand) potential


A Crisis is a Terrible thing to Waste

•Finding good lot positions, even in over-lotted submarkets.

•Create TMA boundaries that are CLOSE TO JOBS,

•Then look for the ones that have a sustainable lot MOS.


4

NATIONAL HOUSING MARKET DETACHED SF QUARTERLY VACANT DEVELOPED LOT

DELIVERY & STARTS

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09

Lot Delivery Quarterly Starts


5

NATIONAL HOUSING MARKET DETACHED SF VACANT DEVELOPED LOT INVENTORY &

MONTHS OF SUPPLY

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q082Q09

0.0

20.0

40.0

60.0

80.0

100.0

120.0

VDL Inventory VDL MOS


Demand is Low for Two Reasons

• Demand “Destruction” (relates to ownership rate)

• Pent-Up Demand (my “four Fs”)

– Fear

– Financing

– Falling Home Prices

– Failure to Sell Existing Home


Some Signs of Improving Sales

New home sales up strongly, traffic quality, mortgage rates, confidence, leading indicators, affordability is back, some builders competing ok against REO, some builders raising prices


Mortgage Rates

•Mortgage rates are still very attractive, if you can get approved

•Bernanke: “The FOMC believes that a highly accommodative stance of monetary policy will be appropriate for an extended period.”


Government Data

• Starts in August were "1.5 percent (±7.9%)* above the revised July est of 589,000" …

So, they're 90% sure that starts either rose, or ..not.

• Sales up 11.0% +/- 13.2%• Sales rose in every region except the South (-

5.3%, +/-15.5%)• Traffic quality up; cans down.• Still a historically puny level• Move-ins are down for 2nd Q. Why the

dichotomy? – Cancellations edged back up – Investors buying and not finding tenants– Or, the spike was fleeting, and we’ll be back down

again in the next gov’t release.


Pending Sales

Up

(Tax Credits)

Uptick in June (somewhat

confirmed by our surveys)

…but

down in the South


Move-Ins are Still Sluggish Nationwide

Q Closings Q Closings rin Closings %2Q09 1Q09 1Q09 to 2Q09 Change

Atlanta 2,724 2,815 -91 -3.2%South Florida 391 650 -259 -39.8%Phoenix 3,038 3,695 -657 -17.8%Las Vegas 1,260 1,378 -118 -8.6%SoCal 2,385 2,117 268 12.7%Total Metro Markets 42,849 43,993 -1,144 -2.6%

Other NotablesOrlando only FL market to see increase in quarterly closings 5.9% to 2,292


12

NATIONAL HOUSING MARKET DETACHED SF QUARTERLY STARTS & CLOSINGS

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09

Quarterly Starts Quarterly Closings

Move-Ins(absorption)

Starts


13

NATIONAL HOUSING MARKET DETACHED SF FINISHED VACANT INVENTORY & MONTHS

OF SUPPLY

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Finished Vacant Finished Vacant MOS


14NATIONAL HOUSING MARKET

Detached SF Finished Vacant Inventory & Months of Supply by Market

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Atl

anta

South

Flo

rida

Reno

Tri

ad

Rale

igh

Sara

sota

-Bra

dento

n

Bois

e

Charl

ott

e

Naple

s-Ft.

Mye

rs

Orl

ando

Chic

ago

Nash

ville

Rio

Gra

nde V

alley

Alb

uquerq

ue

San D

iego

Tam

pa

Salt

Lake C

ity

Denver

Phoenix

St.

Georg

e

South

ern

Califo

rnia

Houst

on

Dallas-

Ft.

Wort

h

Tw

in C

itie

s

Las

Vegas

Jack

sonvi

lle

Aust

in

San A

nto

nio

Centr

al Califo

rnia

Nort

hern

Califo

rnia

India

napolis

Nort

hern

Vir

gin

ia

South

ern

Mary

land

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0Finished Vacant Inventory Finished Vacant MOS


We now have more of a DEMAND problem than a supply problem

South Florida Example

The pendulum has swung…


Miami-Dade Detached - Units Under Construction v. Finished Vacant Units

0

500

1,000

1,500

2,000

2,500

3,0002Q

98

2Q

99

2Q

00

2Q

01

2Q

02

2Q

03

2Q

04

2Q

05

2Q

06

2Q

07

2Q

08

2Q

09

U/ C Fin Vac

7.8 MOS Fin Vac

19.0 MOS based upon 2Q


Miami-Dade Quarterly Starts v. Move-Ins of Detached Homes

0

200

400

600

800

1,000

1,200

1,400

1,6002Q

98

2Q

99

2Q

00

2Q

01

2Q

02

2Q

03

2Q

04

2Q

05

2Q

06

2Q

07

2Q

08

2Q

09

Q starts Q move-ins


Palm Beach Detached - Units Under Construction v. Finished Vacant Units

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,0002Q

98

2Q

99

2Q

00

2Q

01

2Q

02

2Q

03

2Q

04

2Q

05

2Q

06

2Q

07

2Q

08

2Q

09

U/ C Fin Vac

3.1 MOS Fin Vac

5.3 MOS based upon 2Q

BETTER than most…


Palm Beach Quarterly Starts v. Move-Ins of Detached Homes

0200400600800

1,0001,2001,4001,6001,8002,0002,2002,4002,600

2Q

98

2Q

99

2Q

00

2Q

01

2Q

02

2Q

03

2Q

04

2Q

05

2Q

06

2Q

07

2Q

08

2Q

09

Q starts Q move-ins


Lot Supplies by Market

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Sub. M

ary

land

Houst

on

San A

nto

nio

Aust

in

Nort

hern

Cal

Nort

hern

VA

Rale

igh -

Durh

am

Dallas

- Ft.

Wort

h

Nash

ville

Tri

ad

San D

iego

Las

Vegas

India

napolis

South

ern

Cal

Charl

ott

e

Centr

al Cal

Phoenix

- T

ucs

on

Tam

pa

Denve

r

Salt

Lake

Bois

e

Centr

al Fla

Alb

uquerq

ue

Jack

sonville

Reno

Tw

in C

itie

s

South

Fla

St.

Georg

e

Chic

ago

Naple

s -

Ft. M

yers

Rio

Gra

nde V

alley

Atl

anta

Sara

sota

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

Vac. Dev. Lots VDL MOS


Conclusions

Brad HunterChief Economist/National Director of Consulting(561) 573-8351Twitter: bradleyhunter


About the Presenter Brad Hunter, Chief Economist/National Director of Consulting

Brad Hunter spearheads Metrostudy’s current work with the investment community and national developer/builder clients. A large part of his work lately has been with private equity funds, hedge funds, and pension fund advisors. He supervises the bulk of the company’s multi-market studies, and has orchestrated hundreds of site-specific or area-specific housing market studies over the past twenty-plus years. Metrostudy is the nation’s premier advisor on local and regional housing market conditions. With 24 years worth of experience in real estate analysis and local market economic forecasting, Mr. Hunter is a Full Member of the Urban Land Institute, has authored numerous articles and book chapters for ULI, including Market Profiles, and serves on the Housing Market Forecast Panel for the Housing Market Report. He is regularly cited in local and national journals, and has recently been featured in the Wall Street Journal and on Bloomberg News (including Bloomberg’s “On the Money” and “On the Economy” radio shows). He graduated in 1985 from the Wharton School of the University of Pennsylvania with a degree in economics and has been a guest lecturer at Harvard University. Hunter is a speaker at conferences on real estate opportunities and investing, as well as at ULI conferences, and is frequently called upon by key regulatory agencies of the U.S. government for his insights on the housing sector. Hunter has tracked and forecast housing markets and demographic/economic trends at the local level for 24 years.

Follow me on Twitter for regular updates of our original research in local housing markets! (www.twitter.com/bradleyhunter)

Brad Hunter 30 Cities In 30 Minutes

Real Estate

Transcript of Brad Hunter 30 Cities In 30 Minutes