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California Community College Real Estate Educators' Conference, Los Angeles, CA. 2013 Real Estate Economic Forecast presented by Sara Sutachan, Senior Research Fellow, California Association of …

California Community College Real Estate Educators' Conference, Los Angeles, CA. 2013 Real Estate Economic Forecast presented by Sara Sutachan, Senior Research Fellow, California Association of Realtors.

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  • Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield fallsLast year at this time, the 30-year rate averaged 4.51 percent."Even with the overall economy slowing," Wells Fargo Securities economists said, cautiously, in a note to clients, "the budding recovery in the housing market appears to be gradually gaining momentum."Economists aren't always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don't. (The full results of the Journal's July survey will be released at 2pm ET) The bad news: Retail sales fell 0.5 percent in June from May, the Census Bureau says. It's the third straight month that sales have been down from the month before.But, Census adds that June sales were 3.8 percent above the pace of June 2011. And, "sales for the April through June 2012 period were up 4.7 percent ... from the same period a year ago."Bloomberg News says the June drop is "a sign limited employment gains are taking a toll on the biggest part of the economy." The consensus among economists before the report's release was that sales most likely went up about 0.2 percent last month.
  • EA_09/12/2012
  • Source: http://www.labormarketinfo.edd.ca.gov/Content.asp?pageid=166
  • Source: http://www.labormarketinfo.edd.ca.gov/Content.asp?pageid=166
  • Source: http://www.labormarketinfo.edd.ca.gov/Content.asp?pageid=166
  • Up 9 points in September
  • “Core Inflation” is All Items Less Food and EnergyThe CPI data is seasonally adjusted.SOURCE:Go to http://www.economy.com/freelunch/fl_dictionary.asp?m=34174038-A1EF-4C70-9374-59144B50A3F5&h=H0022000400040002&f=0&c=undefinedFirst choose "All Items." "Monthly" and "Yr/Yr%" series. Then find "All items less food and energy" towards the bottom of the CPI list. Do the same as above.
  • - Low interest rates, combined with low home prices, result in more affordable homes in the market.
  • “The Federal Reserve took an important step when it announced an expansion of its Maturity Extension Program on September 13. Referred to in the media as “QE3” -- the third round of Quantitative Easing – the Federal Reserve stated that it would increase its purchases of agency mortgage-backed securities (MBS) by $40 billion per month and continue the ‘term extension’ of its portfolio; taken together, its holdings of longer-term securities will increase by about $85 billion per month through year-end. Its stated goal is to encourage lower long-term interest rates, especially on fixed-rate mortgages, and spark a further pick-up in housing activity. With QE3 in motion we have revisited our economic and housing market projections for the remainder of this year and for 2013.” Freddie MacRead more: http://www.businessinsider.com/freddie-mac-qe3-is-working-were-boosting-our-housing-market-outlook-2012-10#ixzz2AFAZAQdT
  • Peak:624,957 units in 2005Valley:189,345 units in 19822011 annual sales up 1.1% from 20102010 annual sales down 10.0% from 20092009 annual sales up 23.8% from 20082008 annual sales up 27.3% from 20072007 annual sales down 27.3% from 20062006 annual sales down 23.6% from 20052005 annual sales up 0.03% from 20042004 annual sales up 3.8% from 20032003 annual sales up 5.1% from 20022002 annual sales up 13.6% from 2001 2001 annual sales down 5.9% from 2000 YTD2000 annual sales down 0.4 from 19991999 sales up 6.4% over 199810/93: 41.0Consumer Confidence01/00: 148.603/03: 63.05/07: 128.42/09: 23.9
  • Now up 8.7% from trough in Feb-09Peak: $560,270 in 2007Valley: $177,270 in 1996High: May 2007: $594,5302000 annual median price up 11.0% over 19992001 annual median price up 8.7% from 20002002 annual median price up 20.5% from 20012003 annual median price up 17.5% from 20022004 annual median price up 21.3% from 20032005 annual median price up 16.0% from 20042006 annual median price up 6.5% from 20052007 annual median price up 0.7% from 20062008 annual median price down 37.8% from 20072009 annual median price down 21.1% from 20082010 annual median price up 10.2% from 20092011 annual median price down 6.2% from 2010
  • Based on Housing Market Index by NAHB/Wells FargoFor every question with 5 responses:[(Most positive+positive)-(negative+most negative)+100)]/2For questions with 3 responses:(positive-negative+100)/2The value used is the true percentage value, not the percentage in decimal formFor each year, average together all values.Index will have a base year of 2010 and will then be compared to each previous year as more data is added.Positive growth is measured by an increase in the index. Data from Lender Satisfaction Survey July 2012 – Includes ALL Transactions (not specific to Short Sales)
  • 2012 excludes other.
  • Total percentage over 100% because respondents could select any answer that applied to their most recent transaction.
  • NOTE: Dec-2010 survey asked slightly different:Q: Did your most recent short sale transaction close?Recent Short Sale Closed56%Recent Short Sale Did Not Close44%
  • Nearly 2/3 of all sales are equity salesDistressed properties are less expensive/better value = More competition in the distressed marketShort sales continue to take a much longer time to get off the shelf as the approval process remains a drag
  • The market competitiveness is evident in the increase in the sales-to-list price ratio, the jump in the percent of sales with multiple offers, and the drop in the days on market.
  • With REO properties being the best bargain in the market, the market competition is most intense in the REO market. More than seven of ten REO sales receive multiple offers. In general, there is no discount off the list price of an REO property and the time on market is much shorter in comparison to that of last year. More all cash buyers than in 2011
  • The short sale market is not as competitive as the REO market, but nevertheless nearly two thirds of the sales receive multiple offers. Short sale buyers are also getting a much smaller discount off the list price as compared to last year. The time it takes to approve a short sale has improved from previous years, but remained a drag to the home buying process.
  • After six years of decline, the share of home sellers planning to repurchase rose for the second consecutive year.
  • Red line represents approximate number of new households per year (estimated range: 220 to 250 thousand per year)
  • Assumptions:The PITI is based on the prevailing median price in the 2nd Quarter 2012.The PITI is calculated based on an underlying effective FRM interest rate of 3.92%, a 20% downpayment, and corresponding loan amount. The monthly rent is derived from RealFacts Q2 2012estimates for a 3bd 2ba average asking rent for "All Classes" in California- P:\\R&E\\CEPPOWER\\Data for CEP update\\RealFacts\\2012 Q2
  • Transcript

    • 1. 2013 HOUSINGMARKET FORECASTFall 2012 Real Estate Educator’s ConferenceSara Sutachan, Senior Research AnalystOctober 26, 2012
    • 2. Recent Housing Headlines – Good News1. NAR Aug 4.82M +9.3% YTY +7.8% MTM2. US Aug new home sales: 372K, +25.3% YTY3. Housing Prices on the rise4. Mortgage rates at historic lows5. Fed Initiates QE3 – Buying $40B/month in MBS for as long as it takes6. “Bakersfield shows signs of boomtown again” (LA Times 9-9-12)
    • 3. THE ECONOMY`
    • 4. Gross Domestic Product: Growth is Stalling 2011: 1.7%; 2012 Q2: 1.3%, Q3: 2.0% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ 8% 7% ANNUAL QTRLY 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% 2009 Largest Annual Drop since 1938 (-3.4%) -7% -8% Q1-10 Q3-10 Q1-12 2005 2007 2009 Q1-11 Q3-11 2011SOURCE: US Dept of Commerce, Bureau of Economic Analysis
    • 5. Unemployment: Cyclical & Structural Heading Down: At 3 year lows 14% CA US 12% 10% 8% 6% 4% 2% 0% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: CA Employment Development Division
    • 6. CA Added ~300k Jobs in Aug-11 to Aug-12 Recession Job Losses: 1.3 million Since Jan 2010: + 485,000 90000 40000 -10000 -60000 -110000 -160000 Oct-11 Oct-08 Oct-09 Oct-10 Jul-11 Jan-12 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-12 Apr-11 Apr-08 Apr-09 Apr-10 Apr-12SOURCE: CA Employment Development Division Month-to-Month Changes
    • 7. Job Trends by California Metro Area Annual Percentage Change in Nonfarm Jobs July 2012: CA +2.6%, +365.1 thousand Jobs Stockton 6.3% San Francisco 4.4% San Jose 3.5% Fresno 3.1% San Diego 2.9% Sacramento 2.8% Riverside 2.3% Oakland 2.1% Bakersfield 2.1% Orange County 2.0% Los Angeles 1.6% Modesto 1.3% Ventura -0.4% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%Source: CA EDD, Labor Market Information Division, LAEDC
    • 8. Professional & Business Services Leading Sector 8% Professional & Business Services 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: CA Employment Development Department
    • 9. Construction Is Making a Comeback 15% Construction 10% 5% 0% -5% -10% -15% -20% -25% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: CA Employment Development Department
    • 10. Manufacturing Stumbling but Worst is Over 2% Manufacturing 0% -2% -4% -6% -8% -10% -12% -14% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: CA Employment Development Department
    • 11. Consumer Confidence – Uneven But Things Are Getting Better September 2012: 70.3 INDEX, 100=1985 120 100 80 60 40 20 0SOURCE: The Conference Board
    • 12. CPI – Subdued for Now August 2012: All Items +1.7% YTY; Core +1.9% YTY PERCENT CHANGE FROM A YEAR AGO 10% All Items Core 8% 6% 4% 2% 0% -2% -4% Jan-05 Jan-07 Jan-09 Jan-11SOURCE: U.S. Bureau of Labor Statistics
    • 13. CA Negative - Equity Mortgages Negative Equity Share in CA Near Negative Equity Share in CA 40% 35% 30% 29.0% 25% 20% 15% 10% 4.4% 5% 0% Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011 Q3-2011 Q4-2011 Q1-2012 Q2-2012SOURCE: CoreLogic
    • 14. California Borrowers: 29% Underwater 15.6% of CA mortgages over 125% LTV US CA 10% 9% 8% 7.3% 7.1% 7% 6% 5% 4% 3.6% 3.0% 2.6% 3% 2.3% 2.0% 2% 1.2% 1% 0% 125 to 149% 225%+ 110% to 114% 115% to 119% 100% to 104% 105% to 109% 120% to 124% 150% to 224% Loan-To-ValueSOURCE: CoreLogic
    • 15. THE LENDINGENVIRONMENT
    • 16. CA Housing Affordability at Record Highs but Still Trails U.S. % OF HOUSEHOLDS THAT CAN BUY 80% CA US 70% 60% 50% 40% 30% 20% 10% 0% Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2012 Q1 2011 Q3 2011SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 17. Mortgage Rates at 50 Year Lows But Credit is Tight: “Defensive Lending” 8% FRM 7% ARM 6% Federal Funds 5% 4% 3% 2% 1% 0% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: Federal Home Loan Mortgage Corporation
    • 18. Average Credit Score Increased 26 points since 2005 For Purchase Loans AVERAGE FICO PURCHASE LOANS 745 740 735 730 725 720 715 710 705 700 2005 2006 2007 2008 2009 2010 2011 2012*SOURCE: CoreLogic *2012 through Feb
    • 19. Fannie & Freddie are the MarketSource: LPS CoreLogic
    • 20. THE “G” FORCES
    • 21. Caution: Fiscal Cliff Ahead
    • 22. State & Local Government Finances
    • 23. Future of Fannie and Freddie?
    • 24. U.S. Economic OutlookIndicator 2008 2009 2010 2011 2012p 2013fUS GDP -0.30% -3.50% 3.00% 1.70% 2.00% 2.30%Nonfarm Job Growth -0.60% -4.40% -0.70% 1.20% 1.40% 1.60%Unemployment 5.80% 9.30% 9.60% 9.00% 8.20% 8.00%CPI 3.80% -0.40% 1.60% 3.20% 2.00% 2.10%Real DisposableIncome, % Change 0.50% 0.90% 1.80% 1.30% 1.60% 1.60%
    • 25. California Economic OutlookIndicator 2008 2009 2010 2011 2012p 2013fNonfarm Job Growth -1.3% -6.0% -1.1% 0.9% 1.6% 1.6%Unemployment Rate 7.2% 11.3% 12.4% 11.7% 10.7% 9.9%Population Growth 0.8% 0.6% 0.7% 0.7% 0.8% 0.9%Real DisposableIncome, % Change 1.0% -3.1% 1.8% 1.5% 0.3% 1.0%
    • 26. THE CALIFORNIA RESIDENTIAL REAL ESTATE MARKET
    • 27. C.A.R. Membership Off 50,000+ From Peak 1970-2011 THOUSANDS Home Sales Membership 700,000 250,000 600,000 200,000 500,000 150,000 400,000 300,000 100,000 200,000 50,000 100,000 0 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
    • 28. Dollar Volume of Sales Slowly Improving Up 16.5% in 2012, Up 7.0% in 2013 $ in Billion % Change $400 20% $ Volume of Sales Percent Change $350 15% $327 -54% 10% $300 $266 5% $250 0% $194 $200 $178 -5% $166 $154 $150 $150 $150 $142 -10% -15% $100 -20% $50 -25% $0 -30% 2005 2006 2007 2008 2009 2010 2011 2012p 2013fSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 29. CA Sales of Existing Detached Homes September 2012 Sales: 484,240 Units, Up 5.6% YTD, - 1.2% YTY UNITS Sales 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®*Sales are seasonally adjusted and annualized
    • 30. Share of Distressed Sales to Total Sales(California) Sep-12 REOs, 12.3% Short Sales, 24.3% Equity Sales, 63.0% Other Distressed Sales (Not Specified), 0.4%SOURCE: California Association of REALTORS®
    • 31. Share of Equity Sales Has BeenTrending Upward Since Early 2012 Equity Sales Short Sale REO 70% 63.0% 60% 50% 40% 30% 24.3% 20% 10% 12.3% 0% Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12SOURCE: California Association of REALTORS®
    • 32. REO & Short Sales: Bay Area (Percent of Total Sales)100% Sep 2012 80% Short Sales REO Sales 60% 40% 42% 20% 18% 18% 26% 16% 10% 24% 10% 13% 18% 0% 8% 11% 7% 17% Alameda Contra 4% 13% Marin Costa Napa San Mateo Santa Clara Solano SonomaSOURCE: California Association of REALTORS®
    • 33. REO & Short Sales: Southern California (Percent of Total Sales)100% Sep 2012 80% Short Sales REO Sales 60% 40% 26% 34% 24% 20% 19% 10% 6% 14% 21% 0% 8% 7% Los Angeles Orange Riverside San Bernardino San Diego SOURCE: California Association of REALTORS®
    • 34. REO & Short Sales: Central Valley100% (Percent of Total Sales) Sep 2012 80% Short Sales REOs 60% 40% 29% 27% 17% 35% 23% 20% 32% 34% 32% 33% 36% 23% 18% 30% 17% 0% 13% 10% 15% 20% 20% 20%SOURCE: California Association of REALTORS®
    • 35. CA Median Price of Existing Detached Homes September 2012: $345,000, Up 19.5% YTY $700,000 P: May-07 $594,530 $600,000 $500,000 T: Feb-09 $400,000 $245,230 -59% from peak $300,000 $200,000 $100,000 $- Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 36. CA Unsold Inventory: Nearing Record Lows September 2012: 3.7 Months MONTHS 18 16 14 12 10 8 6 4 2 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question.SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 37. Unsold Inventory Index Months of Supply Price Range (Thousand) Sep-11 Aug-12 Sep-12 $1,000K+ 9.9 6.1 7.7 $750-1000K 6.1 4.0 4.7 $500-750K 6.0 3.1 3.6 $300-500K 5.4 3.0 3.3 $0-300K 4.6 2.8 3.2 Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question.SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 38. Tight Supply of Inventory, Especially for REO Sales (California) Sep-12 Unsold Inventory Index 3.9 (Months) 3.8 4 3 2.2 2 1 0 Equity Sales REO Sales Short Sales SOURCE: California Association of REALTORS®
    • 39. Extremely Low Levels of Active Listings at the State Level Sep-12Unsold Inventory Index –Active Listing Only(Months) 3 2.4 2 1.1 1.1 1 0 Equity Sales REO Sales Short Sales SOURCE: California Association of REALTORS®
    • 40. Equity Sales and Short Sales Continued to Improved, While REO Sales Dropped (% Change in Sales – Year to Year) 14.1% 20% 3.6% 0% -20% -40% -60% -59.0% Equity Sales Short Sales REO SalesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 41. Inventory Remained in Short Supply Unsold Inventory Equity Sales REO Short Sales Index (Months) 9 8 7 6 5 4 3 2 1 0 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 42. Low Inventory Pushing Prices Upward inREOs & Equity Sales Equity Sales Short Sale REO 20% 15% 10% 5% 0% -5% -10% -15% -20% Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 SOURCE: California Association of REALTORS®
    • 43. Shadow Inventory
    • 44. How do you define “Shadow Inventory”?• Everyone defines it differently • Bank owned? • In foreclosure? • Not making payments? • Underwater?• Urban Myth: There will be a flood of foreclosures after the election
    • 45. The CA Foreclosure Funnel:8.6 Million Homes6.8 Million Mortgages2.07 Million Underwater .com/CAR
    • 46. 18,000/684,000 = 38 months of Inventory 434,000 Delinquent 180,000 in Foreclosure 70,000 Bank Owned 18,000 Distressed Sales .com/CAR
    • 47. California Foreclosure Filings, Sep. 2012 • NTS: 16,947, -21.0% YTD • NOD: 14,478, -18.6% YTD Notice of Trustee Sale - Counts Notice of Defaults - Counts 70,000 60,000 6 Month Average: NTSs: 16,669 50,000 NODs: 19,046 40,000 30,000 20,000 10,000 0 Oct-11 Oct-07 Oct-08 Oct-09 Oct-10 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-11 Jan-12 Jul-07 Jul-08 Jul-09 Jul-10 Jul-12 Apr-11 Apr-07 Apr-08 Apr-09 Apr-10 Apr-12SOURCE: ForeclosureRadar.com
    • 48. California Foreclosure Outcomes, Sep. 2012 • REO: -51.4% YTD • 3rd Party: -2.0% YTD • Cancel: -24.8% YTD REOs Sold to 3rd Party Cancellations 6 Month Average: 30,000 REO: 4,761 25,000 3rd Party: 3,305 Cancelled: 9,868 20,000 15,000 10,000 5,000 0 Jul-11 Jul-07 Jul-08 Jul-09 Jul-10 Jul-12 Oct-11 Oct-07 Oct-08 Oct-09 Oct-10 Jan-11 Jan-07 Jan-08 Jan-09 Jan-10 Jan-12 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12SOURCE: ForeclosureRadar.com
    • 49. California Foreclosure Inventories, Sep. 2012 • Preforeclosure: -20.3% YTD • Schedule for Sale: -21.0% YTD • • Bank Owned: -28.4% YTD Preforeclosure Scheduled for Sale Bank Owned 180,000 160,000 140,000 120,000 100,000 80,000 6 Month Average: 60,000 Preforeclosure: 91,014 40,000 Schedule for Sale: 85,022 20,000 Bank Owned: 68,690 0 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Oct-11 Oct-07 Oct-08 Oct-09 Oct-10 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Apr-11 Apr-12 Apr-07 Apr-08 Apr-09 Apr-10SOURCE: ForeclosureRadar.com
    • 50. Los Angeles County Preforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235Source: ForeclosureRadar.com as of 10/12/12.
    • 51. Los Angeles County Preforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235Source: ForeclosureRadar.com as of 10/12/12.
    • 52. Los Angeles County Preforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235Source: ForeclosureRadar.com as of 10/12/12.
    • 53. Los Angeles County Preforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235Source: ForeclosureRadar.com as of 10/12/12.
    • 54. LENDER SATISFACTION SURVEY
    • 55. Overall Lender Performance Index Improving25 232015 17 1610 5 0 2010 2011 2012SOURCE: California Association of REALTORS®
    • 56. Majority of REALTORS® in California Dealt with Bank of America in Most Recent Short Sale Transaction Other , 14% Citi Bank, 4% Bank of America, 50% JP Morgan Chase, 14% Wells Fargo, 18%Please indicate which lender/servicer you dealt with in your mostrecent transaction.
    • 57. Difficulty in Closing Improved 4% Extremely 1 7% Easy 7% 2 12% 12% 2011 3 17% 2012 21% 4 30% 56%Extremely 5 34%Difficult 0% 10% 20% 30% 40% 50% 60%Please rate the level of ease or difficulty you had in closing thistransaction. 5 is extremely difficult, 1 is extremely easy. N=495
    • 58. Satisfaction Levels Slightly Improved in All Categories 1.9 Your overall satisfaction with this lender 2.5 Expectations of financial contrivuations 2.4 from the seller at or after closing 3.0 Length of time to obtain 1.8 2011 approval/disapproval of the short sale… 2.2 2012 Knowledge/professionalism of the 2.4 representative you worked with 2.9 The timeliness of responses to your 2.1 inquiries 2.5 1 2 3 4 5 Very Dissatisfied Very SatisfiedWith respect to your most recent transaction, please rate your satisfactionlevel with the lender/servicer in the following categories.
    • 59. Overall Satisfaction With Lender During Short Sale Better Than a Year Ago 2012 2011 54% 60% 50% 40% 21% 30% 36% 9% 20% 9% 7% 10% 23% 0% 14% 16% 2011 Not at all 12% Not 2012 Satisfied Neutral Satisfied Satisfied Extremely SatisfiedWith respect to your most recent transaction, please rate your satisfaction level with thelender/servicer - Your overall satisfaction with this lender
    • 60. Communications with Lenders Improving… 1.1% Instantly 1.2% 4.1% Within 1 Hour 6.5% 14.5% Within 1 business day 19.4% 14.7% Within 2 business days 16.1% 2011 12.8% Within 3 business days 14.3% 2012 4.6% Within 4 business days 4.9% 5.2% Within 5 business days 7.3% 43.0% More than 5 business days 30.4% 0% 10% 20% 30% 40% 50%On average, what was the actual time it required for the lenders representative to n=510return any form of communication to you?
    • 61. …But Communication Problems with Lender Remain Obstacles to the Transaction 2011 2012 Lenders response time to the short sale package 67% Poor communications with lender representative 55% Repeated requests for documentation 50% Buyer backed out of the transaction/Long negotiations 32% Problem with the second lien holder(s) in the short sale 23% Problem with the appraisal 12% Seller in the short sale transaction not responsive 11% Lender foreclosed before the transaction completed 8% Problems qualifying the buyer 4% Other 17% 0% 10% 20% 30% 40% 50% 60% 70%What were the obstacles you faced with this transaction?(Check all that apply)
    • 62. More REALTORS® Likely to Refer Lender to Future Buyers than in 2011 2011 2012 7% Very likely 11% 7% Likely 16% 18% Not likely 23% 60% Not at all likely 42% 7% Unsure 8% 0% 20% 40% 60% 80% 100%How likely are you to refer buyers to this lender for financing on a future n=557home purchase?
    • 63. Still, Nearly 2/3rds Not Happy With Lender50%45%40% 44%35%30%25%20% 21%15%10% 15% 5% 11% 8% 0% Very Unhappy Unhappy Neutral Happy Very Happy N=492Overall, how did working with this lender make you feel?
    • 64. 2012 ANNUAL HOUSING MARKET SURVEY
    • 65. Equity Sales vs. REO vs. Short Sales(2012) Equity Sales REO Sales Short SalesShare of Total Sales 64.7% 12.3% 21.7%Median Home Price $448,000 $185,000 $235,000Square Footage 1,750 1,500 1,600Price / SF $243 $116 $154Sales-to-List Price Ratio 97.3% 100.0% 99.9%% of Sales With Multiple Offers 50.9% 70.8% 66.1%Avg. Number of Offers 4.0 4.2 4.3% of All Cash Sales 27.3 43.1% 26.7%Days on MLS 32 30 90Days in Escrow 35 45 50
    • 66. Equity Sales (2011 vs. 2012) 2012 2011Share of Total Sales 64.7% 58.7%Median Home Price $448,000 $431,000Square Footage 1,750 1,783Price / SF $243 $250Sales-to-List Price Ratio 97.3% 95.9%% of Sales With Multiple Offers 50.9% 35.2%Avg. Number of Offers 4.0 3.0% of All Cash Sales 27.3% 25.5%Days on MLS 32 67Days in Escrow 35 35
    • 67. REO Sales (2011 vs. 2012) 2012 2011 Share of Total Sales 12.3% 19.7% Median Home Price $185,000 $240,000 Square Footage 1,500 1,500 Price / SF $116 $112 Sales-to-List Price Ratio 100.0% 98.0% % of Sales With Multiple Offers 70.8% 58.3% Avg. Number of Offers 4.2 4.3 % of All Cash Sales 43.1% 34.0% Days on MLS 30 50 Days in Escrow 45 35
    • 68. Short Sales (2011 vs. 2012) 2012 2011 Share of Total Sales 21.7% 20.2% Median Home Price $235,000 $287,000 Square Footage 1,600 1,600 Price / SF $154 $175 Sales-to-List Price Ratio 99.9% 95.9% % of Sales With Multiple Offers 66.1% 57.5% Avg. Number of Offers 4.3 3.6 % of All Cash Sales 26.7% 23.3% Days on MLS 90 141 Days in Escrow 50 45
    • 69. Demand for Investment & Second/ Vacation Homes Dips Slightly, But Remains Strong Investment/Rental Property Vacation/Second Home25%20% 7%15%10%5%0% 16%
    • 70. For Those Who Purchasedan Investment Property: Investment to Flip Rental Property
    • 71. Share of International Buyers 9% 8% 7.8% 7% 6.0% 6% 5.7% 5.8% 5.3% 5% 4% 3% 2% 1% 0% 2008 2009 2010 2011 2012Q. Was the buyer an international buyer – a person who was a citizen of another country whowished to purchase residential real estate in the U.S.?
    • 72. More Sellers Are Planning to Buy Another Home As the Market Slowly Recovers 80% 70% 60% 50% 40% 40% 30% 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012Q. Is the seller planning on purchasing another home?
    • 73. For Those Who Do Not Plan to Repurchase, HereAre Their Top 5 Reasons: 2012 2011 0% 5% 10% 15% 20% 25% 15.3% Seller is a lender/bank 19.8% Seller prefers to have less financial 14.4% obligation 11.4% 8.8% Poor credit background 10.9% 8.6% Lack of cash for down payment 5.7% 8.1% Decide to live with family/friends 4.7%
    • 74. CALIFORNIA HOUSING MARKET FORECAST
    • 75. Forecast Report Card 2011 Projected 2012 Forecasted 2012 September 2011 2011 Actual September 2011 ProjectedSFH Resales(000s) 491.1 497.9 496.2 523.3% Change -0.1% 1.1% 1.0% 5.1%Median Price($000s) $291.0 $286.0 $296.0 $317.0% Change -4.0% -6.2% 1.7% 10.9%Forecast Date: October 2012 vs. September 2011Source: CALIFORNIA ASSOCIATION OF REALTORS®
    • 76. California Housing Market OutlookIndicator 2008 2009 2010 2011 2012p 2013fSFH Resales (000s) 441.81 546.86 492.29 497.86 523.25 530% Change 27.3% 23.8% -10.0% 1.1% 5.1% 1.3%Median Price($000s) $ 348.5 $ 275.0 $ 305.0 $ 286.0 $ 317.0 $ 335.0% Change -37.8% -21.1% 10.9% -6.2% 10.9% 5.7%30-Yr FRM 6.0% 5.1% 4.7% 4.5% 3.8% 4.0%1-Yr ARM 5.2% 4.7% 3.5% 3.0% 2.8% 2.8%
    • 77. Recovery Will Continue in 2013, with Both Sales and the Median Price Up Sales of Existing Detached Homes Median Price Units Price(Thousand) (Thousand) 700 $600 600 523.3530.0 $500 500 $400 $335 400 $300 300 $317 $200 200 $100 100 0 $0 2005 2007 2009 2011 2013f 2005 2007 2009 2011 2013f SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
    • 78. CLOSING THOUGHTS
    • 79. Housing Permits Improving…Slowly 2012(p): 52,000 units, Up 10.4% from 2011 Single Family Multi-Family 250,000 Household Growth: 220,000-250,000/yr 200,000 150,000 100,000 50,000 0 2005 2006 2007 2008 2009 2010 2011 2012PSOURCE: Construction Industry Research Board
    • 80. First-time Buyers: Rent v. Buy? Do the Math! Buying Renting Monthly Savings Annual Savings $5,000 $4,680 $4,000 $3,000 $2,000 $1,949 $1,000 $1,560 $390 $0 Total Monthly Housing Costs
    • 81. For more information:http://www.facebook.com/CARResearchgroup
    • 82. THANK YOU!www.car.org/marketdatasaras@car.org @sarasutachan