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My recent housing overview for the City of Canyon Lake, CA Economic Development Broker Breakfast.

My recent housing overview for the City of Canyon Lake, CA Economic Development Broker Breakfast.

Published in Technology , Economy & Finance
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  • 1. It’s The Economy, Stupid January 25, 2012 With your host… Gene Wunderlich
  • 2. 2011: A Year of Economic Wild Cards Political Change on Oil Price Spikes Capitol Hill Arab Spring Sovereign Debt Crisis in EuroZoneDebt Limit Stock Ceiling & MarketDowngrade Volatilityof US Debt
  • 3. • Lenders • Short Sales • Interest Rates• Federal Economic Policy • Inflation• Regulations • Shadow Inventory• Unemployment • Global Economy• Foreclosures• Mortgage Interest Deduction• Strategic Foreclosures
  • 4. Economy Housing Fraud Politics
  • 5. EconomyGovernments view of the economy could besummed up in a few short phrases: If it moves,tax it. If it keeps moving, regulate it. And if itstops moving, subsidize it. Ronald Reagan American President
  • 6. Consumer Confidence? Highest Since April November 2011: 64.5 Overall, 62 percent of those160 surveyed say they’re optimistic INDEX, about what 2012 will bring for the 100=1985 country, according to the140 Associated Press-GfK survey. And for themselves and their families,120 Americans are even more positive, with 78 percent telling pollsters100 they are personally hopeful about the year ahead. 80 60 40 20 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
  • 7. Gross Domestic Product: Stall Speed 2010: 2.8%; 2011 Q1: 0.4% Q2: 1.0% 2011 Q3: 2.5% 8% 7% 6% ANNUAL QTRLY 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% 2009 Largest Annual Drop since 1938 (-3.4%) -7% -8% 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11
  • 8. Unemployment Stubbornly High November 2011 California (11.3%) vs. United States (8.6%)14% CA US12%10%8%6%4%2%0% Jan-00 Jan-11 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 SOURCE: CA Employment Development Division
  • 9. Total Payroll Jobs in the U.S.(same as in 2000, but with 30 million more people)
  • 10. How Many Years to Get Job Market Back to Normal?Jobs added per month Assumed new jobs How many years? needed for growing population per month100,000 100,000 Treading water and never back to normal200,000 100,000 6.3 years300,000 100,000 3.2 years400,000 100,000 2.1 years
  • 11. HousingThe housing market will getworse before it gets better. James Wilson American Politician (1742 – 1798)
  • 12. Wall Street Journal“Home Forecast Calls For PAIN.” Prices to stumble through 2015
  • 13. Market at a Glance
  • 14. Sales of Existing Detached Homes: California October 2011 Sales: 493,240 Units, Up 1.1% YTD, Up 8.5% YTYUNITS Sales Consumer Confidence INDEX 700,000 160 600,000 140 120 500,000 100 400,000 80 300,000 60 200,000 40 100,000 20 0 0 Jul-11 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 *Sales are seasonally adjusted and annualized SOURCE: The Conference Board
  • 15. Median Price of Existing Detached Homes California, October 2011: $278,060, Down 8.9% YTY$700,000 P: May-07 $594,530$600,000$500,000 T: Feb-09 $245,230$400,000 -59% from peak$300,000$200,000$100,000 $0 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®
  • 16. California Sales of Existing Homes and Median Price Housing Cycle Comparisons 1970- 2011 Sales of Existing Detached Homes Median PriceUNITS/MEDIAN PRICE $ 700,000 -44% 600,000 500,000 -61% -25% 400,000 300,000 200,000 100,000 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 California Association of REALTORS®
  • 17. Canyon Lake Median Price$800,000 $696,385$700,000$600,000$500,000 Peak to trough -77% in 24 months$400,000$300,000$200,000 $158,489$100,000 $0 3/04 9/04 3/05 9/05 3/06 9/06 3/07 9/07 3/08 9/08 3/09 9/09 3/10 9/10 3/11
  • 18. California vs. U.S. Median Price US Median Price CA Median Price$700,000$600,000$500,000$400,000$300,000$200,000$100,000 $0 California Association of REALTORS®
  • 19. Median Price & Affordability Index
  • 20. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 California Vs. U.S. % OF HOUSEHOLDS THAT CAN BUY Q1 2008 Records Highs Q3 2008 CA Q1 2009 Q3 2009 Q1 2010 Housing Affordability: US Q3 2010 Q1 2011California Association of REALTORS®
  • 21. 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00%2009.012009.042009.072009.102010.01 MONTHLY2010.04 FRM2010.072010.10 ARM2011.012011.042011.07 8.4.118.25.11 WEEKLY9.15.11 Mortgage Rates @ Historical Lows
  • 22. Compelling AffordabilityMonthly Mortgage to buy a Median Priced Home 2005 Q2 2011 Q2San Diego $ 2,833 $ 1,564Miami $ 1,726 $ 853Milwaukee $ 1,014 $ 797Kansas City $ 735 $ 600
  • 23. CA New Housing Permits: Opportunity300,000 Single Family Multi-Family250,000 Average 1988-09: 138,000200,000150,000100,000 50,000 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2009: 36,200 2010: 39,000 2011: ?? SOURCE: CBIA. Forecast: C.A. R.
  • 24. CA Underwater Mortgages: Reverse Wealth Effect Negative Equity Share in CA Near Negative Equity Share in CA40%35% 30.2%30%25%20%15%10% 4.6%5%0% Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011
  • 25. Proportion of Sellers Planning to Repurchase80%70%60%50%40%30%20%10%0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. Is the seller planning on purchasing another home? California Association of REALTORS®
  • 26. Sellers with a Net Cash Loss35%30%25% 21.8%20% Long Run Average = 11.2%15%10%5%0% 2008 2011 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010 What was the net cash gain or net loss to the seller as a result of this sale? California Association of REALTORS®
  • 27. Net Cash to Sellers Median$250,000$200,000$150,000$100,000 $75,000 $50,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the net cash gain or net loss to the seller as a result of this sale? California Association of REALTORS®
  • 28. 8 in 10 Americans (STILL) Agree:Buying a Home is the Best Investment One Can Make SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
  • 29. Direction of Home Prices:Sellers Skeptical/Buyers Hopeful Down Flat Unsure Up 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sellers Buyers California Association of REALTORS®
  • 30. Regional Housing Summary Temecula, Murrieta, Lake Elsinore, Menifee, Wildomar, Canyon Lake Single Family Residential - Full Value Sales Prepared by GeneWunderlich@srcar.org 2004 2005 2006 2007 2008 2009 2010 2011Temecula # Sales 1,975 1,742 1,141 805 1,569 1,334 1,987 1,902 Median $ $437,159 $484,978 $526,237 $475,522 $337,732 $289,857 $300,234 $301,279 Gross Sales Revenue $863,389,025 $844,831,676 $600,436,417 $382,795,210 $529,901,508 $386,669,238 $596,564,958 $573,032,658Murrieta # Sales 1,679 1,661 1,252 687 2,054 1,666 2,236 1,978 Median $ $432,511 $488,757 $530,912 $473,562 $304,466 $271,107 $270,878 $269,948 Gross Sales Revenue $726,185,969 $811,825,377 $664,701,824 $325,337,094 $625,373,164 $451,664,262 $605,683,208 $533,957,144Wildomar # Sales 361 327 317 218 473 287 398 388 Median $ $393,540 $442,018 $463,920 $435,608 $296,054 $225,739 $220,745 $224,634 Gross Sales Revenue $142,067,940 $144,539,886 $147,062,640 $94,962,544 $140,033,542 $64,787,093 $87,856,510 $87,157,992Lake Elsinore # Sales 914 1,054 700 335 1,154 959 1,387 1,237 Median $ $306,607 $363,543 $431,158 $366,358 $183,819 $179,965 $182,925 $176,353 Gross Sales Revenue $280,238,798 $383,174,322 $301,810,600 $122,729,930 $212,127,126 $172,586,435 $253,716,975 $218,148,661Menifee # Sales 820 763 520 498 1,005 651 1,142 1,672 Median $ $323,138 $364,695 $418,974 $370,671 $259,504 $201,866 $206,414 $185,131 Gross Sales Revenue $264,973,160 $278,262,285 $217,866,480 $184,594,158 $260,801,520 $131,414,766 $235,724,788 $309,539,032Canyon Lake # Sales 468 342 286 133 330 306 379 281 Median $ $443,384 $480,200 $567,071 $548,205 $300,561 $241,416 $251,006 $256,420 Gross Sales Revenue $207,503,712 $164,228,400 $162,182,306 $72,911,265 $99,185,130 $73,873,296 $95,131,274 $72,054,020
  • 31. Sales by Type
  • 32. Median Price$400,000$350,000$300,000$250,000$200,000$150,000$100,000 Up 2% over 2010 $50,000 Up 6% over 2009 $0 3/09 6/09 9/09 3/10 6/10 9/10 3/11 6/11 9/11 12/09 12/10 12/11 Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake Poly. (Canyon Lake)
  • 33. 60 Canyon Lake Sales by Price Break50 Least expensive: $30,000 on Lake Drive Most expensive: $2,999,000 on San Joaquin403020 Price point in 2006100 <100 100-200 200-300 300-400 400-500 500-600 600-700 700-800 800-900 900-1,000 1,000+ Active Pending Sold Data courtesy of CRMLS
  • 34. Demand Chart - December500 4 3450 4 7 9 6 3 1 5400350 2 9 4 2300 2 2 4 3 2 7250 3 1 5 1 8 1 7 5 7 1200 1 0 0 4 1 1 1 3 1 1 5 3 2 1 0 7 1 0150 0 0 9 9 1 9 8 8 8 4 9 8 9 8 7 7 7 7 8 7 2100 0 5 4 3 5 2 3 2 2 2 3 4 2 50 0 7 1 . . . . . . 6 3 7 4 0 6 0 On Market (Supply) Pending Closed (Demand) Days on Market Months Supply Absorption rate * Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar * Absorption rate - # of new listings for the month/# of sold listings for the month
  • 35. 2012 Preview : State Accelerated 3% withholding 4% flat tax – including services Point of sale mandates Mortgage interest deduction 40+ ballot propositions Taxes, taxes, Texas
  • 36. Federal Issues – Critical Concerns• High-cost Loan Limits - expired 10/1/11 (except FHA)• Future of Fannie and Freddie? FHA?• Tax Reform on the horizon Mortgage Interest Deduction? Capital Gains?• QRM (Qualified Residential Mortgage) 20% Down Is the future of the 30 year mortgage in doubt?
  • 37. 2012 – What’s Ahead• Stable to increasing home sales• Stable median price• Declining inventory of resale homes• Rising rents• Lack of new home inventory• Compelling affordability• Record low interest rates Pent up demand
  • 38. It’s Time To Buy Again“Forget stocks. Dont bet ongold. After four years ofplunging home prices, themost attractive asset classin America is housing.” SOURCE: “Real estate: It’s time to buy again” Fortune Magazine’s 3/28/11 article written by Shawn Tully
  • 39. Thank You. Any questions? GAD@SRCAR.ORG