October  22, 2009 California Desert AOR Leslie Appleton-Young   C.A.R. Vice President and Chief Economist 2010 California ...
California Real Estate Market
California’s Housing Cycles and Membership 1970-2009 THOUSANDS
Sales Hit Bottom in 2007, Up in 2008 & 2009 <ul><li>California Sales of Existing Homes and Median Price </li></ul>UNITS/ME...
California vs U.S. Median Prices 1970-2009 <ul><li>1970: CA $24,640  US $23,000 </li></ul><ul><li>2009: CA $271,000  US $1...
Dollar Volume of Sales Peaked in ’05 Down 55% Thru ‘09 % Change $ in Billion SOURCE: California Association of REALTORS® -...
Sales of Existing Detached Homes and Pacific West Consumer Confidence <ul><li>California, August 2009 Sales: 526,970 Units...
Median Price of Existing Detached Homes <ul><li>California, August 2009: $292,960, Down 16.9% YTY </li></ul>SOURCE: Califo...
Sales By Price Range October 2004 – present SOURCE: Mortgage Bankers Association, C.A.R. Credit Freeze:  8/2007
Peak vs Current Price - August 2009 SOURCE: California Association of REALTORS®
Unsold Inventory Index <ul><li>California, August 2009: 4.3 Months </li></ul>SOURCE: California Association of REALTORS® M...
Unsold Inventory Index (Months) SOURCE: California Association of REALTORS®
Unsold Inventory Index: Over & Under $500K SOURCE: California Association of REALTORS® SOURCE: California Association of R...
California – A Tale of Two Markets
Distressed Sales to Total Sales Ratio (Aug 2009) SOURCE: California Association of REALTORS®
Distressed Sales to Total Sales Ratio SOURCE: California Association of REALTORS®
Distressed Sales vs. Non Distressed Sales Source: C.A.R. 2009 Housing Market Survey
Year-to-Year Percent Change in Sales <ul><li>By Price Interval </li></ul>SOURCE: Mortgage Bankers Association, C.A.R. SOUR...
Year-to-Year Percent Change in Median Price <ul><li>Within Price Interval </li></ul>SOURCE: Mortgage Bankers Association, ...
Regional Markets
Home Sales in Southern California Regions SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes <ul><li>Southern California Regions </li></ul>SOURCE: California Association of RE...
Riverside County Economic Profile
Riverside County Profile 977,980  26,565 7,207 31.5 $ 58,145 $ 24,885 4.5% 6.3% 40.3% 46.7% 76.48% 32.0% 2,061,597 Statist...
Sales of Existing Detached Homes and Pacific West Consumer Confidence <ul><li>Riverside County, August 2009: 1,645 Units, ...
Sales of Existing Detached Homes <ul><li>Riverside County, 2008: 17,271 Units, Up 91.4% YTY  </li></ul>SOURCE: California ...
Median Price of Existing Detached Homes <ul><li>Riverside County, August 2009: $173,510, Down 24.4% YTY </li></ul>SOURCE: ...
Median Price Annual Comparison <ul><li>Riverside County, 2008: $ 238,984 , Down 39.7% YTY </li></ul>SOURCE: California Ass...
Median Home Sales Price <ul><li>Riverside County </li></ul>SOURCE: C.A.R.; DataQuick Information Systems. The price statis...
Median Home Sales Price <ul><li>Riverside County </li></ul>SOURCE: C.A.R.; DataQuick Information Systems. The price statis...
Unsold Inventory Index <ul><li>Riverside and San Bernardino Counties,  August 2009 : 2.7 Months </li></ul>SOURCE: Californ...
Median Time on the Market <ul><li>Single-Family Homes – Riverside, August 2009: 28.9 Days </li></ul>SOURCE: California Ass...
New Housing Permits <ul><li>Riverside County, August 2009: 370 Units, Down 38.9% YTD </li></ul>SOURCE: Construction Indust...
Median Price for New Homes <ul><li>Riverside County 2Q09 Detached: $299,900, Attached: $242,990 </li></ul>SOURCE: Californ...
Foreclosures <ul><li>Riverside County </li></ul>SOURCE: Real Estate Research Council
Riverside: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
Riverside: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
Palm Springs: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
Palm Springs: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
Desert Hot Springs: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
Indio: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
Desert Hot Springs: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
Indio: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
2009 Housing Market Survey
Median Price Discount And  Weeks On Market Q. What was the original list sales price of the property?  What was the final ...
Percent with Price Discount Selling price below listing price Long Run Average = 68% Q. What was the original list sales p...
Median Net Cash To Sellers 2005: $220K  2009: $50K Q. What was the net cash gain or net loss to the seller as a result of ...
Sellers Reporting a Net Cash Loss Percent of All Sellers Q. What was the net cash gain or net loss to the seller as a resu...
Proportion of Home Sellers  Planning to Repurchase Q. Is the seller planning on purchasing another home?
Proportion of First-Time Homebuyers California Q. Was the buyer a first-time buyer?
FHA and VA Mortgages (First Mortgage) Q. Please indicate the type of mortgage
FHA Loans in CA <ul><li># of Total Loans in CA & US </li></ul>CA Tops All States with a 10% Market Share of all FHA Lendin...
FHA vs. Conventional (New First Mortgages )
Multiple Offers: Over 1/2 homes sold 2009 had multiple offers
Percent of Buyers with Zero Down Payment First-Time Buyers vs. Repeat Buyers 5.0% 3.7% 2.8%
Percent of All Cash Sales
Buyer Use of Property (All Homes)
Signs of Distress in 2008-2009 Sellers Are Reacting to Financial Stress The Role of Market Conditions  In the Decision to ...
While Buyers See Opportunities … The Role Of Market Conditions In The Decision To  Buy SOURCE: C.A.R. 2009 Survey of Home ...
The Bottom Line:  Great Time to be a First Time Buyer
First-time Buyer Housing Affordability Index <ul><li>California Vs. U.S. 2000-2009 </li></ul>% OF HOUSEHOLDS THAT CAN BUY ...
Federal First-Time Buyer Tax Credit <ul><li>Legislation Passed February 2009 </li></ul><ul><li>Retroactive to January 1, 2...
Bought Home Regardless of Federal First-Time Home Buyer Tax Credit? Q. Would you have bought a home if there were not a Fe...
Mean = 8.1  Median = 9 Scale: “1” = very easy, “10” = very difficult Level of Difficulty to Obtain Financing (All Buyers) ...
Buyers Who Know the Terms of Their Loan Q. Do you know the term of your loan?
CA Mortgage Foreclosure & Delinquency Rates <ul><li>California: Q2-2009, NSA </li></ul>SOURCE: Mortgage Bankers Associatio...
California Foreclosure Activity  09/06 - Present SOURCE: ForeclosureRadar.com
<ul><li>California Foreclosure Activity 2008 - present </li></ul>Government Intervention September 2008: CA SB 1137 Takes ...
US and California  Economic Conditions
Historic Fiscal Stimulus <ul><li>Fiscal Policy:  “Spend Now – Worry Later” </li></ul><ul><li>  To date: $3 trillion in gov...
Gross Domestic Product <ul><li>2008: +0.4%;  2009P -2.6%;  Q2: -0.7% </li></ul>ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ ...
Personal Consumption <ul><li>2009 Q2: -0.87% </li></ul>QUARTERLY PERCENT CHANGE   SOURCE:  US  Dept of Commerce,  Bureau o...
U.S. Savings Rate: 1960 – 2009 Is increase Permanent or Temporary? SOURCES: BEA S&P 500
Consumer Behavior: Permanent Change or Temporary Hiatus From Spending? <ul><li>“ Credit impaired lower income consumers ca...
Consumer Price Index <ul><li>August 2009: All Items -1.4% YTY; Core 1.5% YTY </li></ul>PERCENT CHANGE FROM A YEAR AGO, 100...
Historic Monetary Stimulus
Mortgage Rates and Monetary Policy “Whatever it Takes ” SOURCE: Federal Home Loan Mortgage Corporation
30-Year FRM vs. 10-Year T-Bond  <ul><li>Above-Average Risk Premiums Associated With Mortgage Loans </li></ul>SOURCE: Feder...
Distressed Commercial RE Growing billions Distressed properties include those that are in bankruptcy, foreclosures, those ...
Commercial Debt Crisis Ahead billions
Commercial MBS Market billions
Consumer Confidence Index: Better…Sort Of <ul><li>August 2009: 54.5  September 2009: 53.1 </li></ul>INDEX, 100=1985
Dow Jones Stock Price and Consumer Confidence <ul><li>30 Industrial Index vs. Consumer Confidence Index 1987-2009 </li></u...
Unemployment Rate <ul><li>California (8/09 12.2%) vs. United States (9/09 9.8%) </li></ul>SOURCE: CA Employment Developmen...
Employment Growth, California vs. U.S.  8/09 CA: -4.9% YTY  9/09 US: -4.2% YTY YEAR TO YEAR % CHANGE SOURCE: CA Employment...
Nonfarm Employment By Region SOURCE: CA Employment Development Division
Nonfarm Employment <ul><li>Riverside/San Bernardino Metropolitan Area, August 2009: Down 6.0% YTY </li></ul>SOURCE: CA  Em...
Unemployment Rate <ul><li>Riverside County, August 2009: 15.0% </li></ul>SOURCE: CA  Employment  Development  Division
Employment by Sector <ul><li>YTY % Changes in California 2008-2010 </li></ul>% Change SOURCE: CA EDD, LAEDC
New Housing Permits <ul><li>California, 1988-2009: Down 48.8% YTD </li></ul>SOURCE: Construction Industry Research Board
 
2010 Forecast
U.S. Economy SOURCE: California Association of REALTORS® Forecast Date: October 2009
California Economy SOURCE: California Association of REALTORS® Forecast Date: October 2009
California Housing Market Outlook Source: CALIFORNIA ASSOCIATION OF REALTORS® Forecast Date: October 2009
Forecast Wild Cards <ul><li>First-time Buyer Tax Credit </li></ul><ul><li>Additional Stimulus – Job Creation ? </li></ul><...
Market Opportunities <ul><li>First time buyers: Growing share of the market </li></ul><ul><li>Connect with past clients: V...
In Closing….
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Leslie Appleton Young 2010 Forecast

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California real estate market analysis by Leslie Appleton-Young, C.A.R. Vice President and Chief Economist

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  • Peak to trough 1980s: -61% 1990s: -25% 2000s: -47%
  • $ Volume of Sales = Median Price x Annual Sales
  • Sales numbers revised from April 2008 to May 2009 Peak: 624,957 units in 2005 Valley: 189,345 units in 1982 Record sales in 2005 2008 annual sales up 26.8% from 2007 2007 annual sales down 27.3% from 2006 2006 annual sales down 23.6% from 2005 2005 annual sales up 0.03% from 2004 2004 annual sales up 3.8% from 2003 2003 annual sales up 5.1% from 2002 2002 annual sales up 13.6% from 2001 2001 annual sales down 5.9% from 2000 YTD 2000 annual sales down 0.4 from 1999 1999 sales up 6.4% over 1998 Consumer outlook improving as economic recovery and expansion become more evident. 10/93: 41.0 01/00: 148.6 03/03: 63.0 5/07: 128.4 2/09: 24.3
  • Median pricing numbers revised from April 2008 to May 2009 Peak: $560,270 in 2007 Valley: $177,270 in 1996 High: May 2007: $594,530 2000 annual median price up 11.0% over 1999 2001 annual median price up 8.7% from 2000 2002 annual median price up 20.5% from 2001 2003 annual median price up 17.5% from 2002 2004 annual median price up 21.3% from 2003 2005 annual median price up 16.0% from 2004 2006 annual median price up 6.5% from 2005 2007 annual median price up 0.7% from 2006 2008 annual median price down 38.2% from 2007
  • Sub-$500k peaked in Jan-09 at 85%
  • Please note that UII from 1990-1994 have been revised following an audit of our data. Range since 1988: Low: 1.3 months in April 2004 High: 18.8 months in Feb 1991 Long-run average: 7.2 months
  • will be double checking these figures….should be correct though.
  • Historical data has been revised due to refined methodology. Peak: 21,199 units in 2003 Valley: 4,762 units in 1993 2008 annual sales up 91.4% from 2007 2007 annual sales down 34.9% from 2006 2006 annual sales down 23.9% from 2005 2005 annual sales down 1.9% from 2004 2004 annual sales down 13.3% from 2003 2003 annual sales up 13.2% from 2002 2002 annual sales up 13.1% from 2001 2001 annual sales down 2.9% from 2000 2000 annual sales up 10.8% from 1999 Consumer Confidence 10/93: 41.0 01/00: 148.6 03/03: 63.0 5/07: 128.4 2/09: 24.3
  • Historical data has been revised due to refined methodology. Peak: 21,199 units in 2003 Valley: 4,762 units in 1993 2008 annual sales up 91.4% from 2007 2007 annual sales down 38.8% from 2006 2006 annual sales down 18.3% from 2005 2005 annual sales down 1.9% from 2004 2004 annual sales down 13.3% from 2003 2003 annual sales up 13.2% from 2002 2002 annual sales up 13.1% from 2001 2001 annual sales down 2.9% from 2000 2000 annual sales up 10.8% from 1999
  • Historical data has been revised due to refined methodology. Peak: $415,008 in 2006 Valley: $113,776 in 1996 High: Feb 2007: $430,769 2008 annual median price down 39.8% from 2007 2007 annual median price down 4.8% from 2006 2006 annual median price up 5.8% from 2005 2005 annual median price up 18.9% from 2004 2004 annual median price up 33.1% from 2003 2003 annual median price up 22.8% from 2002 2002 annual median price up 17.4% from 2001 2001 annual median price up 16.5% from 2000 2000 annual median price up 12.7% over 1999 Is the affordable alternative in the region
  • Historical data has been revised due to refined methodology. Peak: $415,008 in 2006 Valley: $113,776 in 1996 High: Feb 2007: $430,769 2008 annual median price down 39.8% from 2007 2007 annual median price down 4.8% from 2006 2006 annual median price up 5.8% from 2005 2005 annual median price up 18.9% from 2004 2004 annual median price up 33.1% from 2003 2003 annual median price up 22.8% from 2002 2002 annual median price up 17.4% from 2001 2001 annual median price up 16.5% from 2000 2000 annual median price up 12.7% over 1999 Is the affordable alternative in the region
  • Supply of homes peaked in the last quarter of 2007, but has been dropping since. Long Run Average: 7.1 months
  • 2008 annual new housing permits: 5,919 units, down 52.5% from 2007 2007 annual new housing permits: 12,453 units, down 50.6% from 2006 2006 annual new housing permits: 25,211 units, down 26.1% from 2005 2005 annual new housing permits: 34,134 units, down 0.3% from 2004 2004 annual new housing permits: 34,226 units, up 12.7% from 2003 2003 annual new housing permits: 30,361 units, up 34.0% from 2002 2002 annual new housing permits up 19.2% from 2001 2001 annual new housing permits up 23.4% from 2000 2000 annual permits up 5.7% over 1999
  • Annual percent change Q2/09: Detached homes: Down 16.3% Attached homes: Down 2.9%
  • The number of sellers who sold their home with a loss increased for the fifth year to 32.9 percent. It was the highest percentage since C.A.R started tracking the statistics. This is the % of Sellers who reported a net cash loss.
  • Share of first-time buyers increased from 35.9 percent in 2008 to 47.0 percent in 2009, and has surged passed the long-run average of 38.6 percent. The jump in the share of first-time buyers was due primarily to the steep decline in home prices, low levels of interest rates, and the first-time buyer tax credit.
  • Medians of down payment differ considerably between FHA loans and conventional loans.
  • One of five buyers purchased their home with all cash, the highest since 1998.
  • C.A.R.’s traditional Housing Affordability Index (HAI) was replaced with the First-Time Buyer Housing Affordability Index (FTB-HAI) in 2006. C.A.R. began producing its Housing Affordability Index (HAI) in 1984. At that time, fixed-rate mortgages were the prevailing form of financing a home purchase, while the calculations used to produce the HAI reflected a 20 percent down payment. The methodology also assumed a monthly payment for principal, interest, taxes and insurance that was no more than 30 percent of a household’s income. In the more than two decades since the CALIFORNIA ASSOCIATION OF REALTORS® first conceived the HAI, the mortgage finance landscape has changed dramatically. The range of mortgage products available to buyers as well as underwriting criteria has changed. C.A.R. developed the new index measuring affordability for first-time home buyers to better reflect the realities of today’s real estate market.
  • Foreclosure rate rising since the second half of 2005 Delinquency Rate, Low: 1.82% in Q1 2005, PRIOR CYCLE – PREVIOUS High: 6.06% in Q4 1982 Foreclosure Rate, Low: 0.12% in Q4 1979, PRIOR CYCLE – PREVIOUS High: 1.99% in Q1 1997
  • SB 1137 passed in July (effect of which showed up in Sep NODs), requires lenders file a 30-day Notice of Intent to file a Notice of Default. In other words, extending the initial NOD filing. This is for Owner-occupied residential properties sold between Jan 1, 2003 and Dec 31, 2007.
  • Notes: E – expected, F – forecast, P- preliminary 1929 though first quarter 2009 annual GDP figures were revised in July 2009 using 2005 benchmark.
  • Consumers repairing balance sheets
  • Huge LT concerns – will the Fed monetize the deifict and enflame inflation a few years out. Tight balancing act. “ Core Inflation” is All Items Less Food and Energy The CPI data is seasonally adjusted. SOURCE: Go to http:// www.economy.com/freelunch/fl_dictionary.asp?m =34174038-A1EF-4C70-9374-59144B50A3F5&amp;h=H0022000400040002&amp;f=0&amp;c=undefined First choose &amp;quot;All Items.&amp;quot; &amp;quot;Monthly&amp;quot; and &amp;quot;Yr/Yr%&amp;quot; series. Then find &amp;quot;All items less food and energy&amp;quot; towards the bottom of the CPI list. Do the same as above.
  • 1998
  • 8/09 Credit is Loosening The Federal Reserve&apos;s aggressive efforts have succeeded in lowering borrowing costs and easing the credit crunch. Fixed mortgage rates are a full percentage point lower than we estimate they would be if not for the near-zero fed funds rate and the Fed&apos;s purchases of Treasury debt and Fannie Mae and Freddie Mac securities. Without the Fed&apos;s actions, Freddie&apos;s 30-year conforming loan rate would be closer to 6% than its actual 5% The Fed Funds Rate was reduced to a target range of 0 to .25% in mid-December 2008. The spread between the FRM and ARM continues to be narrow by historic standards. SOURCE: Fed funds - Haver Analytics FRM : http://www.freddiemac.com/pmms/pmms30.htm ARM : http://www.freddiemac.com/pmms/pmmsarm.htm
  • Lower spread is a driect consequence of Fed purchases of Fannie and Freddie MBS ($375B)
  • Paul Bishop – fine to use these slides. They are not proprietary to NAR, as long as we site the actual source…which we did.
  • SOURCE: http://www.haverselect.com/dlx/home.htm (MUST HAVE A LOGIN AND PASSWORD) Click on Quick Order - put in code SPDJI - and order
  • CA: 9/09 Unreleased 8/09 12.2% 7/09 11.9% 6/09 11.6% 5/09 11.6% 4/09 11.1% 3/09 11.2% 2/09 10.6% 1/09 10.1% 12/08 8.7% US: 9/09 9.8% 8/09 9.7% 7/09 9.4% 6/09 9.5% 5/09 9.4% 4/09 8.9% 3/09 8.5% 2/09 8.1% 1/09 7.6% 12/08 7.2% California not seasonally adjusted: 12.1% Aug-09 Based on revised figures during EDD’s early-2009 rebenchmarking, CA job market has been on a par with US market over past several months. SOURCE : http://www.labormarketinfo.edd.ca.gov/?pageid=164
  • Based on revised figures during EDD’s early-2009 rebenchmarking, CA job market has been on a par with US market over past several months.
  • Sectoral Strengths: State and Local Government Retail Trade Manufacturing Education and Health Services One of the leaders in California job growth SOURCE: http://www.labormarketinfo.edd.ca.gov/?PAGEID=166
  • California not seasonally adjusted: 12.1% Aug-09 Jobless rate rising and above than other regions and state Wide divergence in jobless rate throughout country SOURCE : http://www.labormarketinfo.edd.ca.gov/?pageid=164
  • Red line represents approximate number of new households per year (estimated range: 220 to 250 thousand per year)
  • NOTES: based on WBC, UCLA, LAEDC
  • So far this year we have read Hot Flat and Crowded and The Ascent of Money .
  • For the second half of the year we are reading two books that provide contrasting perspectives (Wall St vs. Main St) on the causes and implications of the current financial crisis: Dear Mr. Buffett Chain of Blame
  • For the second half of the year we are reading two books that provide contrasting perspectives (Wall St vs. Main St) on the causes and implications of the current financial crisis: Dear Mr. Buffett Chain of Blame
  • Leslie Appleton Young 2010 Forecast

    1. 1. October 22, 2009 California Desert AOR Leslie Appleton-Young C.A.R. Vice President and Chief Economist 2010 California Real Estate Market Forecast
    2. 2. California Real Estate Market
    3. 3. California’s Housing Cycles and Membership 1970-2009 THOUSANDS
    4. 4. Sales Hit Bottom in 2007, Up in 2008 & 2009 <ul><li>California Sales of Existing Homes and Median Price </li></ul>UNITS/MEDIAN PRICE $ SOURCE: California Association of REALTORS® -61% -25% -44%
    5. 5. California vs U.S. Median Prices 1970-2009 <ul><li>1970: CA $24,640 US $23,000 </li></ul><ul><li>2009: CA $271,000 US $172,600 </li></ul>SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
    6. 6. Dollar Volume of Sales Peaked in ’05 Down 55% Thru ‘09 % Change $ in Billion SOURCE: California Association of REALTORS® -55%
    7. 7. Sales of Existing Detached Homes and Pacific West Consumer Confidence <ul><li>California, August 2009 Sales: 526,970 Units, Up 38.2% YTD, Up 9.0% YTY </li></ul>INDEX UNITS SOURCE: California Association of REALTORS®; The Conference Board *Sales are seasonally adjusted and annualized
    8. 8. Median Price of Existing Detached Homes <ul><li>California, August 2009: $292,960, Down 16.9% YTY </li></ul>SOURCE: California Association of REALTORS®
    9. 9. Sales By Price Range October 2004 – present SOURCE: Mortgage Bankers Association, C.A.R. Credit Freeze: 8/2007
    10. 10. Peak vs Current Price - August 2009 SOURCE: California Association of REALTORS®
    11. 11. Unsold Inventory Index <ul><li>California, August 2009: 4.3 Months </li></ul>SOURCE: California Association of REALTORS® MONTHS
    12. 12. Unsold Inventory Index (Months) SOURCE: California Association of REALTORS®
    13. 13. Unsold Inventory Index: Over & Under $500K SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
    14. 14. California – A Tale of Two Markets
    15. 15. Distressed Sales to Total Sales Ratio (Aug 2009) SOURCE: California Association of REALTORS®
    16. 16. Distressed Sales to Total Sales Ratio SOURCE: California Association of REALTORS®
    17. 17. Distressed Sales vs. Non Distressed Sales Source: C.A.R. 2009 Housing Market Survey
    18. 18. Year-to-Year Percent Change in Sales <ul><li>By Price Interval </li></ul>SOURCE: Mortgage Bankers Association, C.A.R. SOURCE: California Association of REALTORS®
    19. 19. Year-to-Year Percent Change in Median Price <ul><li>Within Price Interval </li></ul>SOURCE: Mortgage Bankers Association, C.A.R. SOURCE: California Association of REALTORS®
    20. 20. Regional Markets
    21. 21. Home Sales in Southern California Regions SOURCE: California Association of REALTORS®
    22. 22. Median Price of Existing Detached Homes <ul><li>Southern California Regions </li></ul>SOURCE: California Association of REALTORS®
    23. 23. Riverside County Economic Profile
    24. 24. Riverside County Profile 977,980 26,565 7,207 31.5 $ 58,145 $ 24,885 4.5% 6.3% 40.3% 46.7% 76.48% 32.0% 2,061,597 Statistic State Rank Characteristic 4 2007 Population Estimate 4 % Population Change 1990-2000 % White 2007 % Hispanic 2007 % Black 2007 % Asian & Pacific Islander 2007 8 2000 Total Establishments 4 Land Area Square Miles 2007 Civilian Employment 2007 Median Age 2007 Median Household Income 2007 Per Capita Income 1 % Population Change 1980-1990
    25. 25. Sales of Existing Detached Homes and Pacific West Consumer Confidence <ul><li>Riverside County, August 2009: 1,645 Units, Up 48.1% YTD, Down 1.6% YTY </li></ul>SOURCE: California Association of REALTORS®; The Conference Board INDEX UNITS
    26. 26. Sales of Existing Detached Homes <ul><li>Riverside County, 2008: 17,271 Units, Up 91.4% YTY </li></ul>SOURCE: California Association of REALTORS® UNITS ANNUAL MONTHLY
    27. 27. Median Price of Existing Detached Homes <ul><li>Riverside County, August 2009: $173,510, Down 24.4% YTY </li></ul>SOURCE: California Association of REALTORS ®
    28. 28. Median Price Annual Comparison <ul><li>Riverside County, 2008: $ 238,984 , Down 39.7% YTY </li></ul>SOURCE: California Association of REALTORS ® MONTHLY ANNUAL
    29. 29. Median Home Sales Price <ul><li>Riverside County </li></ul>SOURCE: C.A.R.; DataQuick Information Systems. The price statistics are derived from all types of home sales -- new and existing, condos and single-family.
    30. 30. Median Home Sales Price <ul><li>Riverside County </li></ul>SOURCE: C.A.R.; DataQuick Information Systems. The price statistics are derived from all types of home sales -- new and existing, condos and single-family.
    31. 31. Unsold Inventory Index <ul><li>Riverside and San Bernardino Counties, August 2009 : 2.7 Months </li></ul>SOURCE: California Association of REALTORS® MONTHS
    32. 32. Median Time on the Market <ul><li>Single-Family Homes – Riverside, August 2009: 28.9 Days </li></ul>SOURCE: California Association of REALTORS®
    33. 33. New Housing Permits <ul><li>Riverside County, August 2009: 370 Units, Down 38.9% YTD </li></ul>SOURCE: Construction Industry Research Board
    34. 34. Median Price for New Homes <ul><li>Riverside County 2Q09 Detached: $299,900, Attached: $242,990 </li></ul>SOURCE: California Association of REALTORS ®; Hanley Wood
    35. 35. Foreclosures <ul><li>Riverside County </li></ul>SOURCE: Real Estate Research Council
    36. 36. Riverside: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
    37. 37. Riverside: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
    38. 38. Palm Springs: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
    39. 39. Palm Springs: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
    40. 40. Desert Hot Springs: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
    41. 41. Indio: Hybrid Map Foreclosure Mapping Source: ForeclosureRadar.com
    42. 42. Desert Hot Springs: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
    43. 43. Indio: Street Map Foreclosure Mapping Source: ForeclosureRadar.com
    44. 44. 2009 Housing Market Survey
    45. 45. Median Price Discount And Weeks On Market Q. What was the original list sales price of the property? What was the final sales price of the property? How many weeks did the property remain on the MLS? 4.6%, 6.4 weeks
    46. 46. Percent with Price Discount Selling price below listing price Long Run Average = 68% Q. What was the original list sales price of the property? What was the final sales price of the property?
    47. 47. Median Net Cash To Sellers 2005: $220K 2009: $50K Q. What was the net cash gain or net loss to the seller as a result of this sale? $50,000
    48. 48. Sellers Reporting a Net Cash Loss Percent of All Sellers Q. What was the net cash gain or net loss to the seller as a result of this sale? Long Run Average = 9.3%
    49. 49. Proportion of Home Sellers Planning to Repurchase Q. Is the seller planning on purchasing another home?
    50. 50. Proportion of First-Time Homebuyers California Q. Was the buyer a first-time buyer?
    51. 51. FHA and VA Mortgages (First Mortgage) Q. Please indicate the type of mortgage
    52. 52. FHA Loans in CA <ul><li># of Total Loans in CA & US </li></ul>CA Tops All States with a 10% Market Share of all FHA Lending in US (Source: Inside FHA Lending) Source: HUD CA Endorsements US Endorsements
    53. 53. FHA vs. Conventional (New First Mortgages )
    54. 54. Multiple Offers: Over 1/2 homes sold 2009 had multiple offers
    55. 55. Percent of Buyers with Zero Down Payment First-Time Buyers vs. Repeat Buyers 5.0% 3.7% 2.8%
    56. 56. Percent of All Cash Sales
    57. 57. Buyer Use of Property (All Homes)
    58. 58. Signs of Distress in 2008-2009 Sellers Are Reacting to Financial Stress The Role of Market Conditions In the Decision to Sell SOURCE: C.A.R. 2009 Survey of Home Sellers
    59. 59. While Buyers See Opportunities … The Role Of Market Conditions In The Decision To Buy SOURCE: C.A.R. 2009 Survey of Home Buyers
    60. 60. The Bottom Line: Great Time to be a First Time Buyer
    61. 61. First-time Buyer Housing Affordability Index <ul><li>California Vs. U.S. 2000-2009 </li></ul>% OF HOUSEHOLDS THAT CAN BUY SOURCE: California Association of REALTORS®
    62. 62. Federal First-Time Buyer Tax Credit <ul><li>Legislation Passed February 2009 </li></ul><ul><li>Retroactive to January 1, 2009 </li></ul><ul><li>Extended/modified version of 2008 Tax Credit </li></ul><ul><ul><li>Current expiration November 30, 2009 </li></ul></ul><ul><ul><li>6 month extension under deliberation </li></ul></ul><ul><li>National Impact – 1.4 million families in US (IRS) </li></ul><ul><li>California Results – 39% of first-timers would not have bought in 2009 w/o tax credit (C.A.R. Survey) </li></ul>
    63. 63. Bought Home Regardless of Federal First-Time Home Buyer Tax Credit? Q. Would you have bought a home if there were not a Federal First-Time Home Buyer Tax Credit, or if you knew you did not qualify for the credit? CAR Telephone Survey 2009
    64. 64. Mean = 8.1 Median = 9 Scale: “1” = very easy, “10” = very difficult Level of Difficulty to Obtain Financing (All Buyers) Q. Please rate how easy of difficult it was to obtain financing on a scale of 1 to 10, with 1 being very easy and 10 being very difficult.
    65. 65. Buyers Who Know the Terms of Their Loan Q. Do you know the term of your loan?
    66. 66. CA Mortgage Foreclosure & Delinquency Rates <ul><li>California: Q2-2009, NSA </li></ul>SOURCE: Mortgage Bankers Association Delinquencies: Long Run Average: 4.1% Foreclosure Rate: Long Run Average: 1.0%
    67. 67. California Foreclosure Activity 09/06 - Present SOURCE: ForeclosureRadar.com
    68. 68. <ul><li>California Foreclosure Activity 2008 - present </li></ul>Government Intervention September 2008: CA SB 1137 Takes Effect September 18, 2008: Paulson asks For TARP Funds SOURCE: ForeclosureRadar.com February 11 2009: Frank’s Moratorium Request February 20, 2009: CA Foreclosure Prevention Act March 4, 2009: Making Home Affordable/HAMP
    69. 69. US and California Economic Conditions
    70. 70. Historic Fiscal Stimulus <ul><li>Fiscal Policy: “Spend Now – Worry Later” </li></ul><ul><li> To date: $3 trillion in government spending </li></ul><ul><ul><ul><li>MBS purchases ($693 billion) </li></ul></ul></ul><ul><ul><ul><li>TARP ($372 billion) </li></ul></ul></ul><ul><ul><ul><li>Obama stimulus package ($304 billion) </li></ul></ul></ul><ul><ul><ul><li>Cash for Clunkers </li></ul></ul></ul><ul><ul><ul><li>First-time Buyer Tax Credit </li></ul></ul></ul><ul><ul><ul><li>Extension of Unemployment Benefits </li></ul></ul></ul><ul><ul><ul><li>Tax Cuts </li></ul></ul></ul><ul><li>Result: Federal budget deficit will reach 1.6 trillion this year </li></ul>
    71. 71. Gross Domestic Product <ul><li>2008: +0.4%; 2009P -2.6%; Q2: -0.7% </li></ul>ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ ANNUAL QTRLY
    72. 72. Personal Consumption <ul><li>2009 Q2: -0.87% </li></ul>QUARTERLY PERCENT CHANGE SOURCE: US Dept of Commerce, Bureau of Economic Analysis
    73. 73. U.S. Savings Rate: 1960 – 2009 Is increase Permanent or Temporary? SOURCES: BEA S&P 500
    74. 74. Consumer Behavior: Permanent Change or Temporary Hiatus From Spending? <ul><li>“ Credit impaired lower income consumers can’t spend the way they used to and wealth impaired affluent consumers won’t.” </li></ul><ul><li>UCLA Forecast 9/09 </li></ul>
    75. 75. Consumer Price Index <ul><li>August 2009: All Items -1.4% YTY; Core 1.5% YTY </li></ul>PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984
    76. 76. Historic Monetary Stimulus
    77. 77. Mortgage Rates and Monetary Policy “Whatever it Takes ” SOURCE: Federal Home Loan Mortgage Corporation
    78. 78. 30-Year FRM vs. 10-Year T-Bond <ul><li>Above-Average Risk Premiums Associated With Mortgage Loans </li></ul>SOURCE: Federal Home Loan Mortgage Corporation – 30-yr FRM Federal Reserve Board – 10-Year T-Bond Average. Risk Premium: 1.6% Lower spread in 2009 - FED purchases from Fannie and Freddie
    79. 79. Distressed Commercial RE Growing billions Distressed properties include those that are in bankruptcy, foreclosures, those that have received lender forbearance, or lender REO .
    80. 80. Commercial Debt Crisis Ahead billions
    81. 81. Commercial MBS Market billions
    82. 82. Consumer Confidence Index: Better…Sort Of <ul><li>August 2009: 54.5 September 2009: 53.1 </li></ul>INDEX, 100=1985
    83. 83. Dow Jones Stock Price and Consumer Confidence <ul><li>30 Industrial Index vs. Consumer Confidence Index 1987-2009 </li></ul>DJI Monthly Avg. Cons. Conf.
    84. 84. Unemployment Rate <ul><li>California (8/09 12.2%) vs. United States (9/09 9.8%) </li></ul>SOURCE: CA Employment Development Division
    85. 85. Employment Growth, California vs. U.S. 8/09 CA: -4.9% YTY 9/09 US: -4.2% YTY YEAR TO YEAR % CHANGE SOURCE: CA Employment Development Division
    86. 86. Nonfarm Employment By Region SOURCE: CA Employment Development Division
    87. 87. Nonfarm Employment <ul><li>Riverside/San Bernardino Metropolitan Area, August 2009: Down 6.0% YTY </li></ul>SOURCE: CA Employment Development Division Y-T-Y PERCENT CHANGE
    88. 88. Unemployment Rate <ul><li>Riverside County, August 2009: 15.0% </li></ul>SOURCE: CA Employment Development Division
    89. 89. Employment by Sector <ul><li>YTY % Changes in California 2008-2010 </li></ul>% Change SOURCE: CA EDD, LAEDC
    90. 90. New Housing Permits <ul><li>California, 1988-2009: Down 48.8% YTD </li></ul>SOURCE: Construction Industry Research Board
    91. 92. 2010 Forecast
    92. 93. U.S. Economy SOURCE: California Association of REALTORS® Forecast Date: October 2009
    93. 94. California Economy SOURCE: California Association of REALTORS® Forecast Date: October 2009
    94. 95. California Housing Market Outlook Source: CALIFORNIA ASSOCIATION OF REALTORS® Forecast Date: October 2009
    95. 96. Forecast Wild Cards <ul><li>First-time Buyer Tax Credit </li></ul><ul><li>Additional Stimulus – Job Creation ? </li></ul><ul><li>Foreclosure Pipeline </li></ul><ul><li>Commercial Defaults – Impact on Credit Market </li></ul><ul><li>Inflation - Will Fed monetize the deficit? </li></ul><ul><li>H1N1 (Stock tip: Purell) </li></ul>
    96. 97. Market Opportunities <ul><li>First time buyers: Growing share of the market </li></ul><ul><li>Connect with past clients: Valuable information to share and receive (LISTEN) </li></ul><ul><li>Educate clients: What is Responsible Homeownership? </li></ul><ul><li>Educate yourself: Professional Development is Critical </li></ul>
    97. 98. In Closing….
    98. 99. www.car.org  Economics
    99. 105. Thank You [email_address]
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