John Dolan's contact Info provided at the end of the podcast.

Back in July, Redfin paid $610,000 for a two-bedroom single family home in Las Vegas and a few weeks later put it back on the market for $674,900.  However, Las Vegas quickly went into a home price correction and the property currently remains unsold with a list price of $499,900, 18% below the acquisition price.

As a result of the nationwide decline in values, Redfin recently announced its shutting down its algorithm-run iBuyer business. 

As the market changes direction, how can real estate related investors protect or hedge the downside of their portfolio?

Joining the podcast to discuss hedging real estate is John Dolan with HomePriceFutures.com.

The housing slump is the economy’s biggest casualty so far from a series of Federal Reserve rate hikes designed to tame inflation.

Lobbyists are scrambling to get help from Washington as housing the market demand tanks in response to rising interest rates and falling home prices.

What do investors think?  Futures contracts on the Case Shiller Home Price 20 city Index which trades on the Chicago Mercantile Exchange are trading almost 20 points down from the peak of 327 a couple of months ago to 268 for January 2024 contracts.  This is slightly lower than what the index was pre-covid.

Joining the podcast to discuss home values is Daren Blomquist, Vice President of Market Economics at Auction.com

Recently a nonprofit came under fire via an article published by a local NPR office in the California bay area, KQED.  Southside Community Development and Housing Corporation (SCDHC), a 501(c)(3) with operates its asset management business out of Encinitas CA to use the tools granted by SB 1079 to promote its mission of homeownership.

This podcast will provide context and clarity to the outcomes in which the article tried to paint in a poor light for political purposes.

As the nation struggles to get back to some type normalcy, the reality is that we will see further shutdowns as we head into the winter months.   It’s impossible to forecast the full economic and financial impact of the pandemic, but we do know that many people are unlikely to return to normal work and economic consumption patterns anytime soon.  It’s also anticipated that  household and business defaults will likely increase and negatively affect the financial sector.  

Joining the podcast to explain the federal government’s response and potential future intervention is Angela Vossmeyer, Assistant Professor of Economics at Claremont McKenna College and a Faculty Research Fellow at the National Bureau of Economic Research.  Dr. Vossmeyer’s research interests include econometrics, simulation-based inference, financial economics, financial crises, and economic history.

In the past few months millions of people have lost their jobs and we have seen the most rapid spike in unemployment in history.  This is not your typical unemployment event and the way the government reports the unemployment rate may not have caught up with the new economy.

Welcome to Capital Markets Today.  I am producing a series of podcasts that demonstrate to investors why distressed debt, specifically, distressed real estate or (REO) and mortgage loans (NPL) may be a good investment to include in your investment portfolio.  Today I will focus on the unemployment rate that is being publish compared to the amount of people who are actually not working.

Welcome to Capital Markets Today.  I will be producing a series of podcasts that help explain to potential investors why distressed debt, specifically, distressed real estate or (REO) and mortgage loans (NPL) may be a good investment to include in your investment portfolio.  There are many issues brewing that could trigger increased REO and NPL opportunities besides the obvious Covid related problems being discussed in the news daily.  Today I will focus on one issue that could cause problems for decades to come.

Currently, most of us are focused on the immediate impact of the Covid crisis, the shut down, unemployment, interest rates and government stimulus.  All these issues have caused the immediate scenario that we are operating in today, but what is the long-term impact?  And does this long-term impact create a long-term opportunity for NPL and REO buyers?

As most of the news talks about enforcing mandatory lockdowns and handing out money to citizens, there has been a problem that has been rapidly expanding in the background.  In fact, this problem might create a crisis that will not just be felt in the next week, the next month, or even the next year, but it might be felt for several decades to come. 

The latest long-term mortgage default projections from many analyst is now hovering around 7%.   This number will be bifurcated by loan product with FHA loans seeing the bulk of the defaults.  However, this number is pure projection and the long term number will depend on

• Expiration of the supplemental unemployment benefits due to occur at the end of July
• A further increase in the unemployment rates and continuing jobless claims.
• And Potential decline in home values

Joining the podcast today to discuss the NPL market and its outlook is myself.  I was recently invited on an IMN podcast where I discuss the market and the launching of our shinning new Reg D distressed asset fund.  We are putting on the final touches on the fund and it should be ready to launch within the month. 

I am CEO and Founder of PEMCO Capital Management and our firm has been providing platform for institutional investor to gain exposure in niche sectors within the distressed residential mortgage and real estate markets.  With our Reg D, we are now providing our institutional platform to accredited retail investors as well.

In April, the unemployment rate increased from 4.4% to 14.7%, the largest one month increase in history.  It is likely that the unemployment rate hits 20% in May and some forecast a 25% unemployment matching that of the Great Depression rate.

However, the more concerning percentage is the estimate by many economists that 40% of the jobs lost will be permanent.  No matter how the numbers turn out, there will be a significant impact to mortgage defaults, especially on modified and FHA mortgage loans. 

Joining the podcast today to discuss the outlook for real estate note investing is Cody Faller, Founder and Chief Investment Officer of Faller Financial.  Faller financial works with investors across the country from large banks and hedge funds to individual note buyers.

The COVID-19 crisis, like the subprime mortgage crisis a decade ago, has sparked major public interventions to stabilize the financial markets. But the Fed isn’t stepping in to bail out the real estate sector — and the big losers are set to be ordinary households.

This is the intro to an article title “Another Real Estate Crash Is Coming” written by Shehryar Qazi, a doctoral student and researcher in political economy at the University of London

We are fortunate to have Shehryar on the podcast today to discuss the article and obtain his thoughts on how the real estate market will play out over the next 18-24 months.  Shehryar is a PhD Candidate in the department of economics at the University of London and is the coordinator for the universities “Political Economy of the COVID-19 Crisis” project.

For distressed debt buyers, it could be the calm before the storm.  Some deals are floating about with investors pricing them as a sort of reconnaissance exercise to determine the bid/ask levels.

The first wave to hit was leveraged lenders, but most expect a sharp increase in deal flow by the 3rd or 4th quarter once participants on both the buy and sell side have more transparency on how the Covid-19 issue will play out.

Joining the podcast to discuss the approaching NPL opportunity is David LeBlanc, Managing Director at DebtX.  David covers banks, investment banks, opportunity funds, hedge funds and other institutional investors active in the secondary market. David previously ran DebtX's trading desk for 10 years, including during the great financial crisis. He has traded over $30B in distressed and performing commercial and residential real estate and corporate debt in the secondary market.