2014 HOUSING MARKET 
FORECAST
October 10,2013
Leslie Appleton‐Young, Vice President & Chief Economist
BREAKING NEWS
www.census.gov
THE ECONOMY
So many wildcards...Where to begin? 
• October 1st Government Shut Down – Day 10
• Impact of shut‐down? Depends on how lon...
The Economic Impact of Government Shutdown
Gross Domestic Product: Growth is Stalling
• 2012: 2.2%; 2013 Q2: 1.7% 
ANNUAL PERCENT CHANGE, CHAIN‐TYPE (2005) $

ANNUAL...
Unemployment: Cyclical & Structural
Heading Down: Lowest since 2008
14%

CA

US

12%
10%

9.4%

8%
7.6%
6%
4%
2%
0%

SERIE...
CA Added ~250k Jobs  Aug‐12 to Aug‐13
Recession Job Losses: 1.3 million
Since Jan’10: +805,700; ‐500,000 deficit 
MONTH TO...
Silicon Valley Leads in Job Growth
August 2013: CA +1.5%, +233,900
ANNUAL PERCENT CHANGE
San Jose

3.1%

Orange County

2....
Construction Jobs Fastest Growing
August 2013: CA +1.5%, +233,900
ANNUAL PERCENT CHANGE
Construction
Leisure & Hospitality...
Metro Commercial Space Vacancy Rates 
2013 Q3
MSA

Office

Industrial

Retail

Multi‐Family

Los Angeles

16.0%

4.0%

6.0...
Consumer Confidence: Better But…
September 2013: 79.7

INDEX, 100=1985
120
100
80
60
40
20
0

SERIES: Consumer Confidence
...
CPI: Subdued for Now
• August 2013: All Items +1.5% YTY; Core +1.8% YTY
ANNUAL PERCENT CHANGE

6%
5%

All Items

Core

4%
...
HOUSING & MORTGAGE 
FINANCE 
Mortgage Rates Up 1% Since May
Tapering in 2014?
8%

FRM

ARM

Federal Funds

7%
6%
5%

4.5%

4%
3%
2.6%

2%
1%

SERIES: 3...
US Sales of Existing Homes
Aug.2013 Sales: 5,480,000 Units, +12.1% YTD, +13.2% YTY
8,000,000
7,000,000
6,000,000
5,000,000...
US Median Price of Existing Homes
US, August 2013: $213,500, Up 14.7% YTY
$250,000

$200,000

$150,000

$100,000

$50,000
...
California vs. U.S. Median Prices
• 1970‐2012
 $600,000

 California

 $500,000
 $400,000
 $300,000
 $200,000
 $100,000
 $...
Housing Affordability Hit by Mortgage Rate 
and Price Gains But Still Attractive 
% OF HOUSEHOLDS THAT CAN BUY

80%

CA

U...
CA Housing Affordability Index 
What Will Happen When Mortgage Rates Increase?
% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONS...
CA Median Monthly Mortgage Payment
What Will Happen When Mortgage Rates Increase?
MONTHLY MORTGAGE
$2,000
$1,600

$1,402

...
CA Minimum Qualifying Income
What Will Happen When Mortgage Rates Increase?
Q2‐2013 Median Price $415,770
MONTHLY MORTGAGE...
Mortgage Originations: 2005‐2013
Refinance Share Dropping with Higher Rates  
REFINANCE/PURCHASE SHARE
80%
Refinance Share...
Fannie & Freddie are the Market 

Source: LPS
THE CALIFORNIA RESIDENTIAL 
REAL ESTATE MARKET
California’s Housing Cycles and Membership
• 1970‐2012
 700,000

Home Sales

250,000

Membership

 600,000
200,000
 500,00...
CA Sales of Existing Detached Homes
August 2013 Sales: 434,700 Units, ‐3.2% YTD, ‐1.9% YTY
 700,000
 600,000
 500,000
 400...
85% Equity “Retail”  Sales in August 
California: Aug 2013

Other 
REOs, 
Distressed Sales 
4.7%
(Not Specified), 
Short S...
Share of Equity Sales Has Increased 
Sharply Since Early 2012
100%

Equity Sales

Short Sale

REO

90%
80%

85.9%

70%
60%...
REO & Short Sales
Percent of Total Sales, Southern California: August 2013
25%

REO Sales

Short Sales

20%
15%

15%
15%
1...
REO & Short Sales
Percent of Total Sales, Bay Area: August 2013
25%

REO Sales

Short Sales

20%
15%

14%

10%

11%
9%

5%...
REO & Short Sales
Percent of Total Sales, Central Valley: August 2013
35%

REO Sales

Short Sales

30%
25%
20%

14%
23%

1...
REO & Short Sales
Percent of Total Sales, N CA & Central Coast 
August 2013
40%

REO Sales

35%

Short Sales
4%

2%

30%
2...
Sales Share by Price Range
Aug‐12

Aug‐13

40%

30%

37%

29%
26%

20%

18%

19%
17%

16% 16%
13%
10%

10%

0%
$0 ‐ $200k
...
Median Price of Existing Detached Homes
• California, August 2013: $441,330, Up 28.4% YTY
 $700,000

P: May‐07
$594,530 

...
CA Underwater Mortgages Dropping Sharply
40%

Negative Equity Share in CA

Near Negative Equity Share in CA

35%
30%
25%
2...
Unsold Inventory Index
• California, August 2013: 3.1 Months
18
16
14
12
10
8
6
4
2
0

Note: “Unsold Inventory Index” repr...
Unsold Inventory Index 
Months of Supply
Price Range (Thousand)

Aug‐13

Jul‐13

Aug‐12

$1,000K+

4.6

4.6

6.1

$750‐100...
Change in Inventory by Price Range
• (Year‐to‐Year) 
Aug‐13
30%
18.6%

20%

18.0%
11.0%

10%

5.3%

0%
‐10%
‐20%
‐30%
‐32....
Tight Supply Across the Board
California: August 2013
UNSOLD INVENTORY INDEX (MONTHS)
4
3.1

3

2.9
2.3

2

1

0
Equity Sa...
Why is Inventory so Low? 
• Demand Side
• Housing affordability is at historic highs
• Low rates impacting other investmen...
Mortgage Foreclosure & Delinquency Rates
• California: Q2‐2013
12%

Delinquency Rate

Foreclosure Rate

10%
8%
Delinquenci...
California Foreclosure Filings, August 2013
• NTS: 8,223, ‐54.7% YTD • NOD: 8,189, ‐59.1% YTD 
70,000

Notice of Trustee S...
California Foreclosure Inventories, Aug. 2013
• Preforeclosure: ‐48% YTD • Schedule for Sale: ‐62% YTD • Bank Owned: ‐36% ...
CA New Housing Permits
Still Falling Short 
300,000
250,000
200,000
150,000
100,000
50,000
0

SERIES: New Housing Permits
...
2013 ANNUAL HOUSING 
MARKET SURVEY
Stiff Market Competition Leads to Fewer Sales with 
Price Discount & Less Time on the Market
Med. Price Discount
% with Pr...
Multiple Offers at Record Highs 
Share of home sales with 
multiple offers highest in 
at least the last 15 years 

% with...
Median Net Cash Gain to Sellers Rebounding
$250,000

$200,000

$150,000

$100,000

$55,000
$50,000

$0
2005
2006
2007
2008...
Share of Sellers with Net Cash Loss:
Lowest Since 2007
35%
30%
25%
20%
15%

13.2%

Long Run Average = 12.8%

10%
5%
0%
200...
More Sellers Planning to Repurchase 
Repeat Buyers are Back
80%
70%
60%
50%

49%
40%
30%
20%
10%
0%
2005
2006
2007
2008
Q....
Equity Sales  (2011 vs. 2012 vs. 2013)
2011

2012

2013

Share of Total Sales

58.7%

64.7%

80.8%

Median Home Price

$43...
REO Sales (2011 vs. 2012 vs. 2013)
2011

2012

2013

Share of Total Sales

19.7%

12.3%

4.9%

Median Home Price

$189,500...
Short Sales (2011 vs. 2012 vs. 2013)
2011

2012

2013

Share of Total Sales

20.2%

21.7%

14.0%

Median Home Price

$287,...
Investment & Second/ Vacation Homes : 
25% Market Share
Vacation/Second Home
Investment/Rental Property
30%
25%

6%

20%
1...
Buying to Rent: Winning Investment Strategy

Investment to Flip

Rental Property
SERIES: 2013 Housing Market Survey
SOURCE...
Share of Cash Buyers decreases for the first 
time after 7 years of continuous Increase
35%
30%

% of All Cash Sales

27%
...
Median Down Payment: 20%
Tight Underwriting & Prices Gains
Median Down Payment

% of Down Payment to Price

$90,000

25%

...
Buyers Have More “Skin” in the Game
2006

2012

2013

% of buyers with 20+% down payment

43.2%

54.4%

52.2%

% of buyers...
Share of FHA Lowest in 6 Years 
FHA

40%

VA

30%

6%

20%

17%
10%

0%
2005
2006
2007
Q. Please indicate the type of mort...
Share of First‐Time Buyers is the Lowest Since 2006
% First‐Time Home Buyers

Long Run Average

50%

40%

Long Run Average...
Share of International Buyers is Growing
36%  All Cash
9%
8%

8.0%

7.8%

7%
6%

6.0%
5.3%

5.7% 5.8%

5%
4%
3%
2%
1%
0%
2...
Country of International Buyer
• China (30%)
• Canada (9%)
• India (6%)
• Mexico (13%)
REGIONAL HOUSING 
MARKETS
Northern California
Regional Report Card – Northern California
Current Price to 
Trough Price: +46%

Current YTD Sales to 
Last 5 Yr. Avg: +25...
Sales of Existing Detached Homes
• Northern CA, Aug. 2013: 1,346 Units, +4.1% YTD, +4.1% YTY
1,600
1,400
1,200
1,000
800
6...
Sales of Existing Detached Homes
Northern California Counties
•

County

Aug‐13

Jul‐13

Aug‐12

Butte
Del Norte
Glenn
Hum...
Median Price of Existing Detached Homes
• Northern CA, August 2013: $294,020, Up 22.9% YTY
 $450,000
 $400,000
 $350,000
 ...
Median Price of Existing Detached Homes
• Northern California Counties
County

Aug‐13

Jul‐13

Aug‐12

Butte
Del Norte
Gle...
Supply of Inventory in Northern CA
UII – Active Only

4

3.1
3

1.9
1.4

2

1

0
Equity Sales

REO Sales

SERIES: Distress...
Northern Wine Country
Regional Report Card – Northern Wine
Current Price to 
Trough Price: +45%

Current YTD Sales to 
Last 5 Yr. Avg: +13% 

Cu...
Sales of Existing Detached Homes
• Northern Wine Country, Aug.2013: 673 Units, ‐5.1% YTD, ‐1.0% YTY
900
800
700
600
500
40...
Home Sales in Northern Wine Country Counties
August‐12

August‐13

600
500
400
300
200
100
0
Mendocino
SERIES: Sales of Ex...
Sales of Existing Detached Homes
• Northern Wine Country Counties
•

County

Aug‐13

Jul‐13

Aug‐12

Mendocino
Napa
Sonoma...
Median Price of Existing Detached Homes
• Northern Wine Country, Aug. 2013: $449,010, Up 19.5% YTY
 $700,000
 $600,000
 $5...
Median Price of Existing Detached Homes
• Northern Wine Country Counties
•

County

Aug‐13

Jul‐13

Aug‐12

M‐t‐M

Y‐t‐Y

...
Bay Area
Regional Report Card – Bay Area
Current Price to 
Trough Price: +86%

Current YTD Sales to 
Last 5 Yr. Avg.: +8% 

Current...
Sales of Existing Detached Homes
• Bay Area, Aug. 2013: 4,221 Units, ‐3.7% YTD, ‐0.8% YTY
7,000
6,000
5,000
4,000
3,000
2,...
Sales of Existing Detached Homes
• Bay Area Counties
County

Aug‐13

Jul‐13

Aug‐12

M‐t‐M

Y‐t‐Y

Y‐t‐D

Alameda
Contra C...
Median Price of Existing Detached Homes
• Bay Area, August 2013: $704,830, Up 24.1% YTY
 $900,000
 $800,000
 $700,000
 $60...
Median Price of Existing Detached Homes
• Bay Area Counties
•

County

Aug‐13

Jul‐13

Aug‐12

M‐t‐M

Y‐t‐Y

Alameda
Contr...
Supply of Inventory in Bay Area
UII – Active Only

3

2

2.5

1.4

1.3

1

0
Equity Sales

REO Sales

SERIES: Distressed S...
Central Valley Region
Regional Report Card – Central Valley
Current Price to 
Trough Price: +52%

Current YTD Sales to 
Last 5 Yr. Avg.: ‐8% 

C...
Sales of Existing Detached Homes
• Central Valley, Aug.2013 Sales: 4,477 Units, ‐10.5% YTD,  ‐11.4% YTY
 7,000
 6,000
 5,0...
Sales of Existing Detached Homes
• Central Valley Regions
County
Amador
Calavaras
El Dorado
Fresno
Kern (Bakersfield)
King...
Median Price of Existing Detached Homes
• Central Valley, August 2013: $219,870, Up 34.3% YTY
 $250,000

 $200,000

 $150,...
Median Price of Existing Detached Homes
• Central Valley Counties
County
Amador
Calavaras
El Dorado
Fresno
Kern (Bakersfie...
Supply of Inventory in Central Valley
UII – Active Only

3

2.2

2

1.3
0.9
1

0
Equity Sales

REO Sales

SERIES: Distress...
Central Coast
Regional Report Card – Central Coast
Current Price to 
Trough Price: +82%

Current YTD Sales to 
Last 5 Yr. Avg.: +4% 

Cu...
Sales of Existing Detached Homes
• Central Coast, Aug. 2013: 757 Units, ‐2.9% YTD, ‐3.8% YTY
1,200

1,000

800

600

400

...
Sales of Existing Detached Homes
• Central Coast Counties
•

County

Aug‐13

Jul‐13

Aug‐12

Monterey
San Luis Obispo
Sant...
Median Price of Existing Detached Homes
• Central Coast, August 2013: $474,780, Up 23.7% YTY
 $800,000
 $700,000
 $600,000...
Median Price of Existing Detached Homes
• Central Coast Counties
•

County

Aug‐13

Jul‐13

Aug‐12

M‐t‐M

Y‐t‐Y

Monterey...
Supply of Inventory in Central Coast
UII – Active Only

4

3.3

3

2

1.4

0.5

1

0
Equity Sales

REO Sales

SERIES: Dist...
Southern California Region
Regional Report Card – Southern California
Current Price to 
Trough Price: +70%

Current YTD Sales to 
Last 5 Yr. Avg: +4%...
Sales of Existing Detached Homes
• Southern CA Aug‐13 Sales: 11,977 Units, ‐2.0% YTD, ‐4.1% YTY
18,000
16,000
14,000
12,00...
Sales of Existing Detached Homes
• Southern California Counties
County

Aug‐13

Jul‐13

Aug‐12

M‐t‐M

Y‐t‐Y

Y‐t‐D

Los A...
Median Price of Existing Detached Homes
• Southern California, Aug.2013: $419,340, +24.6% YTY
 $700,000
 $600,000
 $500,00...
Median Price of Existing Detached Homes
• Southern California Region
County

Aug‐13

Jul‐13

Aug‐12

M‐t‐M

Y‐t‐Y

Los Ang...
Supply of Inventory in Southern CA
UII – Active Only

3

2.1
2

1.3
0.9
1

0
Equity Sales

REO Sales

SERIES: Distressed S...
2014  FORECAST
2014 Forecast
U.S. Economic Outlook 2014
Indicator

2008 2009 2010 2011 2012 2013p 2014f

US GDP

‐0.3%

‐3.4%

2.4%

1.8%

2.2%

1.8%

...
California Economic Outlook 2014
Indicator

2008 2009 2010 2011 2012 2013p 2014f

Nonfarm Job Growth

‐1.3%

‐6.0%

1.1%

...
California Housing Market Outlook
Indicator
SFH Resales (000s)

2008 2009 2010 2011 2012 2013p 2014f
416.5

422.6

439.4

...
Sales Bounce back in 2014, as Price Continues to 
Grow
Sales of Existing Detached Homes
Units 
(Thousand)

Median Price
Pr...
CA: Dollar Volume Steadily Improving 
Up 25.3% in 2013, Up 9.3% in 2014
$ in Billion

% Change

$400

$ Volume of Sales

3...
MARKET OPPORTUNITIES 
2014
Share of First‐Time Buyers is the Lowest Since 2006
% First‐Time Home Buyers

Long Run Average

50%

40%

Long Run Average...
2013: 6 out of 10 Buyers Said They 
Found Their Home through Agent

2013

2%

37%

61%

For Sale Sign
Q.  How did you find...
2007: Almost 9 out of 10 Buyers Said They 
Found Their Home through Agent
2% 1%
1%
8%

2007

88%
Website

Agent

Friend/fa...
Nearly All Buyers Use an Agent
100%

91%

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005

2006

2007

2008

Q.  Did you use a...
First‐time Buyers need YOUR help
Connect EARLY and OFTEN
• Financial Literacy: How to manage their finances
• What about s...
2014: Many Market Opportunities
• First‐time Buyers
• Formerly “Underwater” Homeowners
• Property Management 
• Internatio...
Most Buyers and Sellers Interviewed 
Multiple Agents before Selecting One
Buyers

4 agent, 
15%

Seller

1 agent, 
30%

3 ...
THANK YOU!
www.car.org/marketdata
lesliea@car.org
2014 Housing Market and Economy Forecast
2014 Housing Market and Economy Forecast
2014 Housing Market and Economy Forecast
2014 Housing Market and Economy Forecast
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2014 Housing Market and Economy Forecast

  1. 1. 2014 HOUSING MARKET  FORECAST October 10,2013 Leslie Appleton‐Young, Vice President & Chief Economist
  2. 2. BREAKING NEWS
  3. 3. www.census.gov
  4. 4. THE ECONOMY
  5. 5. So many wildcards...Where to begin?  • October 1st Government Shut Down – Day 10 • Impact of shut‐down? Depends on how long • Looming Oct 17th Debt Limit: $16.699 Trillion • Fed will likely begin “Tapering” next year • Future of Fannie and Freddie? • Viability/relevance of FHA • Tax Reform: Mortgage Interest Deduction
  6. 6. The Economic Impact of Government Shutdown
  7. 7. Gross Domestic Product: Growth is Stalling • 2012: 2.2%; 2013 Q2: 1.7%  ANNUAL PERCENT CHANGE, CHAIN‐TYPE (2005) $ ANNUALLY 5% QUARTERLY 4% 3% 1.7% 2% 1% 0% ‐1% ‐2% 2009 Largest Annual Drop since 1938 (‐3.4%) ‐3% SERIES:  GDP SOURCE:  US  Dept. of Commerce, Bureau of Economic Analysis Q2‐13 Q1‐13 Q4‐12 Q3‐12 Q2‐12 Q1‐12 Q4‐11 Q3‐11 Q2‐11 Q1‐11 Q4‐10 Q3‐10 Q2‐10 Q1‐10 2012 2011 2010 2009 2008 2007 2006 2005 ‐4%
  8. 8. Unemployment: Cyclical & Structural Heading Down: Lowest since 2008 14% CA US 12% 10% 9.4% 8% 7.6% 6% 4% 2% 0% SERIES: Unemployment Rate SOURCE:  US Bureau of Labor Statistics, CA Employment Development Division
  9. 9. CA Added ~250k Jobs  Aug‐12 to Aug‐13 Recession Job Losses: 1.3 million Since Jan’10: +805,700; ‐500,000 deficit  MONTH TO MONTH CHANGES 150,000 100,000 50,000 0 ‐50,000 ‐100,000 ‐150,000 SERIES: Total Nonfarm Employment SOURCE:  CA Employment Development Division
  10. 10. Silicon Valley Leads in Job Growth August 2013: CA +1.5%, +233,900 ANNUAL PERCENT CHANGE San Jose 3.1% Orange County 2.3% San Francisco 1.8% Ventura 1.7% Los Angeles 1.4% San Diego 1.2% Fresno MSA 1.1% Stockton MSA 1.0% Bakersfield 0.9% Inland Empire Oakland Sacramento Modesto 0.0% 0.7% 0.4% 0.3% 0.3% 0.5% 1.0% SERIES: Total Nonfarm Employment  SOURCE:  CA Employment Development Division 1.5% 2.0% 2.5% 3.0% 3.5%
  11. 11. Construction Jobs Fastest Growing August 2013: CA +1.5%, +233,900 ANNUAL PERCENT CHANGE Construction Leisure & Hospitality Educational Services Wholesale Trade Admistrative & Support & Waste Services Real Estate & Rental & Leasing Transportation, Warehousing & Utilities Professional, Scientific & Technical Services Health Care & Social Assistance Finance & Insurance Retail Trade Durable Goods Nondurable Goods Information Government 4.2% 4.0% 3.6% 3.1% 2.4% 2.2% 2.2% 1.9% 1.4% 1.3% 0.0% ‐0.2% ‐0.3% ‐0.4% ‐0.5% ‐3% ‐2% ‐1% 1% SERIES: Total Nonfarm Employment By Industry SOURCE:  US Bureau of Labor Statistics, CA Employment Development Division 2% 3% 4% 5% 6%
  12. 12. Metro Commercial Space Vacancy Rates  2013 Q3 MSA Office Industrial Retail Multi‐Family Los Angeles 16.0% 4.0% 6.0% 3.0% Oakland‐East Bay 18.0% 9.2% 6.4% 2.5% Orange County 17.0% 3.8% 5.4% 2.9% Sacramento 21.2% 12.6% 12.9% 3.1% San Bernardino/Riverside 23.6% 6.9% 9.8% 3.2% San Diego 16.0% 7.0% 6.3% 2.1% San Francisco 13.3% 11.2% 3.9% 3.1% San Jose 18.6% 16.6% 6.1% 3.0% Ventura 16.3% ‐ 8.8% 2.6% SOURCE: National Association of REALTORS®
  13. 13. Consumer Confidence: Better But… September 2013: 79.7 INDEX, 100=1985 120 100 80 60 40 20 0 SERIES: Consumer Confidence SOURCE:  The Conference Board
  14. 14. CPI: Subdued for Now • August 2013: All Items +1.5% YTY; Core +1.8% YTY ANNUAL PERCENT CHANGE 6% 5% All Items Core 4% 3% 2% 1% 0% ‐1% ‐2% SERIES: Consumer Price Index SOURCE:  US Bureau of Labor Statistics Jul‐13 Jan‐13 Jul‐12 Jan‐12 Jul‐11 Jan‐11 Jul‐10 Jan‐10 Jul‐09 Jan‐09 Jul‐08 Jan‐08 Jul‐07 Jan‐07 Jul‐06 Jan‐06 Jul‐05 Jan‐05 ‐3%
  15. 15. HOUSING & MORTGAGE  FINANCE 
  16. 16. Mortgage Rates Up 1% Since May Tapering in 2014? 8% FRM ARM Federal Funds 7% 6% 5% 4.5% 4% 3% 2.6% 2% 1% SERIES: 30Yr FRM, 1Yr ARM, Federal Funds SOURCE:  Federal Home Loan Mortgage Corporation Jul‐13 Jan‐13 Jul‐12 Jan‐12 Jul‐11 Jan‐11 Jul‐10 Jan‐10 Jul‐09 Jan‐09 Jul‐08 Jan‐08 Jul‐07 Jan‐07 Jul‐06 Jan‐06 Jul‐05 Jan‐05 0%
  17. 17. US Sales of Existing Homes Aug.2013 Sales: 5,480,000 Units, +12.1% YTD, +13.2% YTY 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 SERIES: Existing Home Sales SOURCE: NATIONAL ASSOCIATION OF REALTORS®
  18. 18. US Median Price of Existing Homes US, August 2013: $213,500, Up 14.7% YTY $250,000 $200,000 $150,000 $100,000 $50,000 $0 SERIES: Existing Home Sales SOURCE: NATIONAL ASSOCIATION OF REALTORS®
  19. 19. California vs. U.S. Median Prices • 1970‐2012  $600,000  California  $500,000  $400,000  $300,000  $200,000  $100,000  $‐ SERIES: Median Price of Existing Single Family Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® US CA Price Trend
  20. 20. Housing Affordability Hit by Mortgage Rate  and Price Gains But Still Attractive  % OF HOUSEHOLDS THAT CAN BUY 80% CA US 70% 60% 50% 60% 40% 30% 20% 10% 0% SERIES: Housing Affordability Index of Traditional Buyers SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  36%
  21. 21. CA Housing Affordability Index  What Will Happen When Mortgage Rates Increase? % OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT Q2‐2013 Median Price $415,770 50% 45% 39% 37% 40% 20% Downpayment 35% 33% 31% 35% 29% 27% 30% 25% 25% 20% 15% 10% 5% 0% 3.0% 3.5% 4.0% 4.5% 5.0% INTEREST RATE SERIES: Housing Affordability Index SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  5.5% 6.0% 6.5%
  22. 22. CA Median Monthly Mortgage Payment What Will Happen When Mortgage Rates Increase? MONTHLY MORTGAGE $2,000 $1,600 $1,402 Q2‐2013 Median Price $415,770 20% Downpayment $1,494 $1,588 $1,994 $1,786 $1,889 $2,102 $1,685 $1,200 $800 $400 $0 3.0% 3.5% 4.0% 4.5% 5.0% INTEREST RATE SERIES: Housing Affordability Index SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  5.5% 6.0% 6.5%
  23. 23. CA Minimum Qualifying Income What Will Happen When Mortgage Rates Increase? Q2‐2013 Median Price $415,770 MONTHLY MORTGAGE 20% Downpayment $120,000 $100,000 $75,218 $78,869 $82,644 $86,538 $90,548 $94,668 $98,893 $103,220 $80,000 $60,000 $40,000 $20,000 $0 3.0% 3.5% 4.0% 4.5% 5.0% INTEREST RATE SERIES: Housing Affordability Index SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  5.5% 6.0% 6.5%
  24. 24. Mortgage Originations: 2005‐2013 Refinance Share Dropping with Higher Rates   REFINANCE/PURCHASE SHARE 80% Refinance Share (%) 70% Purchase Share (%) FRM 30YR FRM 7% 74.1% 60% 6% 5% 50% 40% 3.5% 4% 3% 30% 20% 25.9% 2% 10% 1% 0% 0% SERIES: Mortgage Originations SOURCE:  Mortgage Bankers Association of America
  25. 25. Fannie & Freddie are the Market  Source: LPS
  26. 26. THE CALIFORNIA RESIDENTIAL  REAL ESTATE MARKET
  27. 27. California’s Housing Cycles and Membership • 1970‐2012  700,000 Home Sales 250,000 Membership  600,000 200,000  500,000 150,000  400,000  300,000 100,000  200,000 50,000  100,000  ‐ SERIES: Sales of Existing Single Family Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972 1970 0 *Sales are seasonally adjusted and annualized 
  28. 28. CA Sales of Existing Detached Homes August 2013 Sales: 434,700 Units, ‐3.2% YTD, ‐1.9% YTY  700,000  600,000  500,000  400,000  300,000  200,000  100,000  ‐ SERIES: Sales of Existing Single Family Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  *Sales are seasonally adjusted and annualized 
  29. 29. 85% Equity “Retail”  Sales in August  California: Aug 2013 Other  REOs,  Distressed Sales  4.7% (Not Specified),  Short Sales,  0.4% 10.2% Equity Sales,  84.7% SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  30. 30. Share of Equity Sales Has Increased  Sharply Since Early 2012 100% Equity Sales Short Sale REO 90% 80% 85.9% 70% 60% 50% 40% 30% 20% 10% 0% SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  10.3% 3.4%
  31. 31. REO & Short Sales Percent of Total Sales, Southern California: August 2013 25% REO Sales Short Sales 20% 15% 15% 15% 10% 12% 5% 0% 7% 3% Los Angeles 9% 5% 2% 1% Orange SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Riverside 3% San Bernardino San Diego
  32. 32. REO & Short Sales Percent of Total Sales, Bay Area: August 2013 25% REO Sales Short Sales 20% 15% 14% 10% 11% 9% 5% 0% 5% 2% 4% 5% 1% Alameda Contra Costa 3% 5% Marin Napa SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2% 1% 4% San Mateo Santa Clara 7% 4% 1% Solano Sonoma
  33. 33. REO & Short Sales Percent of Total Sales, Central Valley: August 2013 35% REO Sales Short Sales 30% 25% 20% 14% 23% 15% 14% 19% 13% 12% 10% 11% 15% 5% 17% 9% 7% 11% 0% SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  14% 13% 22% 14% 10% 5% 5% 7% 2% 9%
  34. 34. REO & Short Sales Percent of Total Sales, N CA & Central Coast  August 2013 40% REO Sales 35% Short Sales 4% 2% 30% 25% 20% 32% 15% 10% 5% 6% 8% 17% 6% 5% 6% 9% 0% SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  9% 7% 14% 7% 33% 20% 8% 11% 5% 6% 5% 8% 3% 9%
  35. 35. Sales Share by Price Range Aug‐12 Aug‐13 40% 30% 37% 29% 26% 20% 18% 19% 17% 16% 16% 13% 10% 10% 0% $0 ‐ $200k $200 ‐ $300k SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  $300 ‐ $400k $400 ‐ $500k $500k+
  36. 36. Median Price of Existing Detached Homes • California, August 2013: $441,330, Up 28.4% YTY  $700,000 P: May‐07 $594,530   $600,000  $500,000  $400,000  $300,000  $200,000  $100,000  $‐ SERIES: Median Price of Existing Single Family Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  T: Feb‐09 $245,230 ‐59% from peak 
  37. 37. CA Underwater Mortgages Dropping Sharply 40% Negative Equity Share in CA Near Negative Equity Share in CA 35% 30% 25% 20% 15.4% 15% 10% 5% 0% SERIES: Underwater Mortgages SOURCE:  CoreLogic 2.6%
  38. 38. Unsold Inventory Index • California, August 2013: 3.1 Months 18 16 14 12 10 8 6 4 2 0 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. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  39. 39. Unsold Inventory Index  Months of Supply Price Range (Thousand) Aug‐13 Jul‐13 Aug‐12 $1,000K+ 4.6 4.6 6.1 $750‐1000K 3.2 3.2 4.0 $500‐750K 3.0 2.8 3.1 $300‐500K 2.9 2.7 2.9 $0‐300K 2.8 2.7 2.8 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. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  40. 40. Change in Inventory by Price Range • (Year‐to‐Year)  Aug‐13 30% 18.6% 20% 18.0% 11.0% 10% 5.3% 0% ‐10% ‐20% ‐30% ‐32.9% ‐40% $0 ‐ $300k $300 ‐ $500k $500 ‐ $750k SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  $750 ‐ $1000k $1000k+
  41. 41. Tight Supply Across the Board California: August 2013 UNSOLD INVENTORY INDEX (MONTHS) 4 3.1 3 2.9 2.3 2 1 0 Equity Sales SERIES: Distressed Unsold Inventory Index SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  REO Sales Short Sales
  42. 42. Why is Inventory so Low?  • Demand Side • Housing affordability is at historic highs • Low rates impacting other investment  alternatives • Supply Side • Little new construction for last 5 years • Underwater homeowners are stuck • Foreclosure pipeline drying up in non‐ judicial states • Investors are renting instead of flipping • Off‐market (aka “pocket’) listings growing
  43. 43. Mortgage Foreclosure & Delinquency Rates • California: Q2‐2013 12% Delinquency Rate Foreclosure Rate 10% 8% Delinquencies: Long Run Average: 4.5% 6% 4% Foreclosure Rate: Long Run Average: 1.3% 2% 0% SERIES: Mortgage Foreclosure & Delinquency Rates SOURCE:  Mortgage Bankers Association
  44. 44. California Foreclosure Filings, August 2013 • NTS: 8,223, ‐54.7% YTD • NOD: 8,189, ‐59.1% YTD  70,000 Notice of Trustee Sale ‐ Counts Notice of Defaults ‐ Counts 60,000 6 Month Average: 50,000 NTSs:  8,225 40,000 NODs: 9,012 30,000 20,000 10,000 SERIES: Foreclosure Filings SOURCE:  PropertyRadar.com May‐13 Jan‐13 Sep‐12 May‐12 Jan‐12 Sep‐11 May‐11 Jan‐11 Sep‐10 May‐10 Jan‐10 Sep‐09 May‐09 Jan‐09 Sep‐08 May‐08 Jan‐08 Sep‐07 May‐07 Jan‐07 0
  45. 45. California Foreclosure Inventories, Aug. 2013 • Preforeclosure: ‐48% YTD • Schedule for Sale: ‐62% YTD • Bank Owned: ‐36% YTD 180,000 Preforeclosure Scheduled for Sale Bank Owned 160,000 140,000 120,000 100,000 80,000 6 Month Average: 60,000 Preforeclosure: 45,733 40,000 Schedule for Sale: 28,245 20,000 Bank Owned: 46,247 SERIES: Foreclosure Inventories SOURCE:  PropertyRadar.com May‐13 Jan‐13 Sep‐12 May‐12 Jan‐12 Sep‐11 May‐11 Jan‐11 Sep‐10 May‐10 Jan‐10 Sep‐09 May‐09 Jan‐09 Sep‐08 May‐08 Jan‐08 Sep‐07 May‐07 Jan‐07 0
  46. 46. CA New Housing Permits Still Falling Short  300,000 250,000 200,000 150,000 100,000 50,000 0 SERIES: New Housing Permits SOURCE:  Construction Industry Research Board Single Family Multi‐Family Household Growth: 220,000‐250,000/yr
  47. 47. 2013 ANNUAL HOUSING  MARKET SURVEY
  48. 48. Stiff Market Competition Leads to Fewer Sales with  Price Discount & Less Time on the Market Med. Price Discount % with Price Discount 80% 8% 70% 7% 60% 6% 50% 5% 40% 4% 30% 3% 20% 2% 10% 10% 1% 0% 0% 0% 90% 80% Long Run Average = 66% 70% 12 Med. Weeks on MLS 10 8 60% 50% 40% 34% 6 4 30% 20% 2 2005 2006 2007 2008 2009 2010 2011 2012 2013 1.6 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 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?
  49. 49. Multiple Offers at Record Highs  Share of home sales with  multiple offers highest in  at least the last 15 years  % with Multiple Offers 7 80% 72% 70% 60% 6 5.7 5 50% 4 40% 3 30% 20% 2 10% 0% SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  1 0
  50. 50. Median Net Cash Gain to Sellers Rebounding $250,000 $200,000 $150,000 $100,000 $55,000 $50,000 $0 2005 2006 2007 2008 2009 2010 Q. What was the net cash gain or net loss to the seller as a result of this sale? SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2011 2012 2013
  51. 51. Share of Sellers with Net Cash Loss: Lowest Since 2007 35% 30% 25% 20% 15% 13.2% Long Run Average = 12.8% 10% 5% 0% 2005 2006 2007 2008 2009 2010 Q. What was the net cash gain or net loss to the seller as a result of this sale? SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2011 2012 2013
  52. 52. More Sellers Planning to Repurchase  Repeat Buyers are Back 80% 70% 60% 50% 49% 40% 30% 20% 10% 0% 2005 2006 2007 2008 Q. Is the seller planning on purchasing another home? SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2009 2010 2011 2012 2013
  53. 53. Equity Sales  (2011 vs. 2012 vs. 2013) 2011 2012 2013 Share of Total Sales 58.7% 64.7% 80.8% Median Home Price $431,000  $448,000  $456,635  Square Footage 1,783 1,750 1,678 Price / SF $250  $243  $270  Sales‐to‐List Price Ratio 95.9% 97.3% 100.0% % of Sales With Multiple Offers 35.2% 50.9% 69.0% Avg. Number of Offers 3.0 4.0 5.2 % of All Cash Sales 25.5% 27.3% 25.2 Days on MLS 67 32 10 Days in Escrow 35 35 30 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  54. 54. REO Sales (2011 vs. 2012 vs. 2013) 2011 2012 2013 Share of Total Sales 19.7% 12.3% 4.9% Median Home Price $189,500 $185,000 $175,500 Square Footage 1,500 1,500 1,400 Price / SF $112 $116 $101 Sales‐to‐List Price Ratio 98.0% 100.0% 100.0% % of Sales With Multiple Offers 58.3% 70.8% 91.2% Avg. Number of Offers 4.3 4.2 7.4 % of All Cash Sales 34.0% 43.1% 50.0% Days on MLS 50 30 15 Days in Escrow 35 45 35 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  55. 55. Short Sales (2011 vs. 2012 vs. 2013) 2011 2012 2013 Share of Total Sales 20.2% 21.7% 14.0% Median Home Price $287,000 $235,000 $276,500 Square Footage 1,600 1,600 1,650 Price / SF $175 $154 $146 Sales‐to‐List Price Ratio 95.9% 99.9% 103.0% % of Sales With Multiple Offers 57.5% 66.1% 75.7% Avg. Number of Offers 3.6 4.3 7.1 % of All Cash Sales 23.3% 26.7% 35.7% Days on MLS 141 90 14 Days in Escrow 45 50 60 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  56. 56. Investment & Second/ Vacation Homes :  25% Market Share Vacation/Second Home Investment/Rental Property 30% 25% 6% 20% 15% 10% 5% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 19% SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  57. 57. Buying to Rent: Winning Investment Strategy Investment to Flip Rental Property SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  58. 58. Share of Cash Buyers decreases for the first  time after 7 years of continuous Increase 35% 30% % of All Cash Sales 27% 25% 20% 15% • Almost one‐third of buyers paid with  all cash • The share of all cash buyers has  been on the rise since 2006  10% 5% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  59. 59. Median Down Payment: 20% Tight Underwriting & Prices Gains Median Down Payment % of Down Payment to Price $90,000 25% $80,000 20% $70,000 20% $70,000  $60,000 15% $50,000 $40,000 10% $30,000 $20,000 5% $10,000 0% $0 2005 2006 2007 Q. What was the amount of downpayment? 2008 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2009 2010 2011 2012 2013
  60. 60. Buyers Have More “Skin” in the Game 2006 2012 2013 % of buyers with 20+% down payment 43.2% 54.4% 52.2% % of buyers with zero down payment 21.1% 4.6% 7.0% % of cash buyers 11.0% 29.6% 27.4% % of home buyers with a second  mortgage 43.4% 1.8% 2.2% % of buyer with ARM 32.6% 3.5% 4.0% SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  61. 61. Share of FHA Lowest in 6 Years  FHA 40% VA 30% 6% 20% 17% 10% 0% 2005 2006 2007 Q. Please indicate the type of mortgage. 2008 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2009 2010 2011 2012 2013
  62. 62. Share of First‐Time Buyers is the Lowest Since 2006 % First‐Time Home Buyers Long Run Average 50% 40% Long Run Average = 38% 30% 28% 20% 10% 0% 2005 2006 2007 Q. Was the buyer a first‐time buyer? 2008 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2009 2010 2011 2012 2013
  63. 63. Share of International Buyers is Growing 36%  All Cash 9% 8% 8.0% 7.8% 7% 6% 6.0% 5.3% 5.7% 5.8% 5% 4% 3% 2% 1% 0% 2008 2009 2010 2011 2012 2013 Q. Was the buyer an international buyer – a person who was a citizen of another country who wished to purchase residential real estate in the U.S.?
  64. 64. Country of International Buyer • China (30%) • Canada (9%) • India (6%) • Mexico (13%)
  65. 65. REGIONAL HOUSING  MARKETS
  66. 66. Northern California
  67. 67. Regional Report Card – Northern California Current Price to  Trough Price: +46% Current YTD Sales to  Last 5 Yr. Avg: +25%  Current UII to Long  Run Avg.: ‐37%
  68. 68. Sales of Existing Detached Homes • Northern CA, Aug. 2013: 1,346 Units, +4.1% YTD, +4.1% YTY 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan‐05 Jan‐06 Jan‐07 Jan‐08 SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13
  69. 69. Sales of Existing Detached Homes Northern California Counties • County Aug‐13 Jul‐13 Aug‐12 Butte Del Norte Glenn Humbolt Lake Nevada Placer Plumas Shasta Siskiyou Sutter Tehama Yolo Yuba 124 13 18 113 88 106 485 45 253 46 75 34 155 78 163 19 18 115 77 112 572 37 218 42 54 39 167 66 128 NA 14 92 71 67 533 36 219 48 NA 47 162 NA SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  M‐t‐M Y‐t‐Y Y‐t‐D ‐23.9% ‐3.1% 11.7% ‐31.6% NA NA 0.0% 28.6% 2.5% ‐1.7% 22.8% 16.0% 14.3% 23.9% ‐14.2% ‐5.4% 58.2% NA ‐15.2% ‐9.0% 2.8% 21.6% 25.0% NA 16.1% 15.5% 7.3% 9.5% ‐4.2% 10.0% 38.9% NA NA ‐12.8% ‐27.7% ‐14.2% ‐7.2% ‐4.3% ‐3.6% 18.2% NA NA
  70. 70. Median Price of Existing Detached Homes • Northern CA, August 2013: $294,020, Up 22.9% YTY  $450,000  $400,000  $350,000  $300,000  $250,000  $200,000  $150,000  $100,000  $50,000  $‐ Jan‐05 Jan‐06 Jan‐07 SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12
  71. 71. Median Price of Existing Detached Homes • Northern California Counties County Aug‐13 Jul‐13 Aug‐12 Butte Del Norte Glenn Humbolt Lake Nevada Placer Plumas Shasta Siskiyou Sutter Tehama Yolo Yuba • $281,820 $100,000 $135,000 $247,220 $153,330 $339,500 $361,830 $195,000 $203,650 $140,000 $202,000 $493,950 $667,590 $186,000 $239,280 $155,000 $140,000 $267,050 $141,430 $323,000 $372,220 $249,000 $201,350 $140,000 $212,500 $507,500 $668,750 $170,500 $226,090 NA $160,000 $218,750 $125,560 $245,000 $288,030 $267,250 $165,480 $127,270 NA $439,990 $615,400 NA SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  M‐t‐M Y‐t‐Y 17.8% 24.6% ‐35.5% NA ‐3.6% ‐15.6% ‐7.4% 13.0% 8.4% 22.1% 5.1% 38.6% ‐2.8% 25.6% ‐21.7% ‐27.0% 1.1% 23.1% 0.0% 10.0% ‐4.9% NA ‐2.7% 12.3% ‐0.2% 8.5% 9.1% NA
  72. 72. Supply of Inventory in Northern CA UII – Active Only 4 3.1 3 1.9 1.4 2 1 0 Equity Sales REO Sales SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Short Sales
  73. 73. Northern Wine Country
  74. 74. Regional Report Card – Northern Wine Current Price to  Trough Price: +45% Current YTD Sales to  Last 5 Yr. Avg: +13%  Current UII to Long  Run Avg.: ‐46%
  75. 75. Sales of Existing Detached Homes • Northern Wine Country, Aug.2013: 673 Units, ‐5.1% YTD, ‐1.0% YTY 900 800 700 600 500 400 300 200 100 0 Jan‐05 Jan‐06 Jan‐07 Jan‐08 SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13
  76. 76. Home Sales in Northern Wine Country Counties August‐12 August‐13 600 500 400 300 200 100 0 Mendocino SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Napa Sonoma
  77. 77. Sales of Existing Detached Homes • Northern Wine Country Counties • County Aug‐13 Jul‐13 Aug‐12 Mendocino Napa Sonoma 68 117 488 58 144 478 48 132 500 SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  M‐t‐M Y‐t‐Y 17.2% 41.7% ‐18.8% ‐11.4% 2.1% ‐2.4% Y‐t‐D 3.6% ‐6.5% ‐5.6%
  78. 78. Median Price of Existing Detached Homes • Northern Wine Country, Aug. 2013: $449,010, Up 19.5% YTY  $700,000  $600,000  $500,000  $400,000  $300,000  $200,000  $100,000  $‐ Jan‐05 Jan‐06 Jan‐07 SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12
  79. 79. Median Price of Existing Detached Homes • Northern Wine Country Counties • County Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐Y Mendocino Napa Sonoma $276,670 $565,970 $453,790 $286,360 $511,900 $473,640 $206,250 $385,710 $385,610 ‐3.4% 10.6% ‐4.2% 34.1% 46.7% 17.7% SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  80. 80. Bay Area
  81. 81. Regional Report Card – Bay Area Current Price to  Trough Price: +86% Current YTD Sales to  Last 5 Yr. Avg.: +8%  Current UII to Long  Run Avg.: ‐37%
  82. 82. Sales of Existing Detached Homes • Bay Area, Aug. 2013: 4,221 Units, ‐3.7% YTD, ‐0.8% YTY 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jan‐05 Jan‐06 Jan‐07 Jan‐08 SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13
  83. 83. Sales of Existing Detached Homes • Bay Area Counties County Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐Y Y‐t‐D Alameda Contra Costa (Central County) Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma 716 462 231 117 321 443 1055 388 488 780 514 252 144 351 488 1081 359 478 666 451 242 132 310 436 1046 472 500 ‐8.2% ‐10.1% ‐8.3% ‐18.8% ‐8.5% ‐9.2% ‐2.4% 8.1% 2.1% 7.5% 2.4% ‐4.5% ‐11.4% 3.5% 1.6% 0.9% ‐17.8% ‐2.4% ‐1.2% 3.5% 7.6% ‐6.5% 7.0% ‐2.5% ‐6.0% ‐19.0% ‐5.6% SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  84. 84. Median Price of Existing Detached Homes • Bay Area, August 2013: $704,830, Up 24.1% YTY  $900,000  $800,000  $700,000  $600,000  $500,000  $400,000  $300,000  $200,000  $100,000  $‐ Jan‐05 Jan‐06 Jan‐07 SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12
  85. 85. Median Price of Existing Detached Homes • Bay Area Counties • County Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐Y Alameda Contra Costa (Central County) Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma $654,060 $808,560 $987,740 $565,970 $871,480 $980,000 $805,000 $295,890 $453,790 $662,040 $789,010 $1,000,000 $511,900 $842,550 $919,000 $840,000 $279,330 $473,640 $539,820 $628,290 $806,450 $385,710 $692,980 $777,500 $666,750 $202,240 $385,610 ‐1.2% 2.5% ‐1.2% 10.6% 3.4% 6.6% ‐4.2% 5.9% ‐4.2% 21.2% 28.7% 22.5% 46.7% 25.8% 26.0% 20.7% 46.3% 17.7% SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  86. 86. Supply of Inventory in Bay Area UII – Active Only 3 2 2.5 1.4 1.3 1 0 Equity Sales REO Sales SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Short Sales
  87. 87. Central Valley Region
  88. 88. Regional Report Card – Central Valley Current Price to  Trough Price: +52% Current YTD Sales to  Last 5 Yr. Avg.: ‐8%  Current UII to Long  Run Avg.: ‐42%
  89. 89. Sales of Existing Detached Homes • Central Valley, Aug.2013 Sales: 4,477 Units, ‐10.5% YTD,  ‐11.4% YTY  7,000  6,000  5,000  4,000  3,000  2,000  1,000  ‐ SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  90. 90. Sales of Existing Detached Homes • Central Valley Regions County Amador Calavaras El Dorado Fresno Kern (Bakersfield) Kings County Madera Merced Placer County Sacramento San Benito San Joaquin Stanislaus Tulare Aug‐13 Jul‐13 Aug‐12 51 103 320 810 506 86 37 107 485 1,566 50 647 529 232 39 103 311 848 528 68 39 116 572 1,589 50 660 493 260 63 NA 341 862 560 96 37 128 533 1,712 47 805 571 337 SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  M‐t‐M Y‐t‐Y Y‐t‐D 30.8% 0.0% 2.9% ‐4.5% ‐4.2% 26.5% ‐5.1% ‐7.8% ‐15.2% ‐1.4% 0.0% ‐2.0% 7.3% ‐10.8% ‐19.0% NA ‐6.2% ‐6.0% ‐9.6% ‐10.4% 0.0% ‐16.4% ‐9.0% ‐8.5% 6.4% ‐19.6% ‐7.4% ‐31.2% ‐1.8% NA 2.2% ‐5.2% ‐9.8% ‐10.9% ‐18.1% ‐10.4% 2.8% ‐9.3% ‐6.4% ‐14.1% ‐15.7% ‐19.9%
  91. 91. Median Price of Existing Detached Homes • Central Valley, August 2013: $219,870, Up 34.3% YTY  $250,000  $200,000  $150,000  $100,000  $50,000  $‐ SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  92. 92. Median Price of Existing Detached Homes • Central Valley Counties County Amador Calavaras El Dorado Fresno Kern (Bakersfield) Kings County Madera Merced Placer County Sacramento San Benito San Joaquin Stanislaus Tulare Aug‐13 $213,890 $220,000 $355,840 $184,000 $200,000 $184,000 $170,000 $155,880 $361,830 $257,660 $387,000 $231,390 $203,120 $158,460 SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jul‐13 $196,670 $227,000 $350,760 $183,870 $195,000 $173,330 $175,710 $163,080 $372,220 $254,550 $400,000 $225,000 $193,920 $157,140 Aug‐12 $175,000 NA $268,380 $151,110 $155,000 $153,330 $127,500 $123,330 $288,030 $184,000 $335,000 $168,120 $147,850 $133,560 M‐t‐M 8.8% ‐3.1% 1.4% 0.1% 2.6% 6.2% ‐3.2% ‐4.4% ‐2.8% 1.2% ‐3.3% 2.8% 4.7% 0.8% Y‐t‐Y 22.2% NA 32.6% 21.8% 29.0% 20.0% 33.3% 26.4% 25.6% 40.0% 15.5% 37.6% 37.4% 18.6%
  93. 93. Supply of Inventory in Central Valley UII – Active Only 3 2.2 2 1.3 0.9 1 0 Equity Sales REO Sales SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Short Sales
  94. 94. Central Coast
  95. 95. Regional Report Card – Central Coast Current Price to  Trough Price: +82% Current YTD Sales to  Last 5 Yr. Avg.: +4%  Current UII to Long  Run Avg.: ‐40% Neutral
  96. 96. Sales of Existing Detached Homes • Central Coast, Aug. 2013: 757 Units, ‐2.9% YTD, ‐3.8% YTY 1,200 1,000 800 600 400 200 0 Jan‐05 Jan‐06 Jan‐07 Jan‐08 SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13
  97. 97. Sales of Existing Detached Homes • Central Coast Counties • County Aug‐13 Jul‐13 Aug‐12 Monterey San Luis Obispo Santa Barbara Santa Cruz 228 282 247 199 249 315 242 207 262 281 244 204 SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  M‐t‐M Y‐t‐Y ‐8.4% ‐13.0% ‐10.5% 0.4% 2.1% 1.2% ‐3.9% ‐2.5% Y‐t‐D ‐6.4% 2.4% ‐5.0% 5.4%
  98. 98. Median Price of Existing Detached Homes • Central Coast, August 2013: $474,780, Up 23.7% YTY  $800,000  $700,000  $600,000  $500,000  $400,000  $300,000  $200,000  $100,000  $‐ Jan‐05 Jan‐06 Jan‐07 SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12
  99. 99. Median Price of Existing Detached Homes • Central Coast Counties • County Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐Y Monterey San Luis Obispo Santa Barbara Santa Cruz $407,000 $477,420 $625,000 $629,000 $408,800 $491,790 $598,680 $601,000 $317,500 $386,180 $533,330 $540,000 ‐0.4% ‐2.9% 4.4% 4.7% 28.2% 23.6% 17.2% 16.5% SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  100. 100. Supply of Inventory in Central Coast UII – Active Only 4 3.3 3 2 1.4 0.5 1 0 Equity Sales REO Sales SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Short Sales
  101. 101. Southern California Region
  102. 102. Regional Report Card – Southern California Current Price to  Trough Price: +70% Current YTD Sales to  Last 5 Yr. Avg: +4%  Current Inventory to  Long Run Avg: ‐54% Neutral
  103. 103. Sales of Existing Detached Homes • Southern CA Aug‐13 Sales: 11,977 Units, ‐2.0% YTD, ‐4.1% YTY 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  104. 104. Sales of Existing Detached Homes • Southern California Counties County Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐Y Y‐t‐D Los Angeles Orange County Riverside County San Bernardino San Diego Ventura Santa Barbara 3,697 1,706 2,082 1,368 2,259 618 247 3,687 1,855 2,039 1,269 2,324 623 242 3,928 1,795 2,177 1,341 2,361 648 244 0.3% ‐8.0% 2.1% 7.8% ‐2.8% ‐0.8% 2.1% ‐5.9% ‐5.0% ‐4.4% 2.0% ‐4.3% ‐4.6% 1.2% ‐1.7% 4.7% ‐10.9% ‐5.6% 5.5% 0.7% ‐5.0% SERIES: Sales of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  105. 105. Median Price of Existing Detached Homes • Southern California, Aug.2013: $419,340, +24.6% YTY  $700,000  $600,000  $500,000  $400,000  $300,000  $200,000  $100,000  $‐ SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  106. 106. Median Price of Existing Detached Homes • Southern California Region County Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐Y Los Angeles Orange County Riverside County San Bernardino San Diego Ventura Santa Barbara $444,950 $664,580 $290,030 $183,240 $482,470 $555,560 $625,000 $421,350 $675,000 $294,300 $180,270 $483,800 $545,720 $598,680 $344,770 $567,710 $227,740 $143,470 $389,540 $437,880 $533,330 5.6% ‐1.5% ‐1.5% 1.6% ‐0.3% 1.8% 4.4% 29.1% 17.1% 27.4% 27.7% 23.9% 26.9% 17.2% SERIES: Median Price of Existing Detached Homes SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  107. 107. Supply of Inventory in Southern CA UII – Active Only 3 2.1 2 1.3 0.9 1 0 Equity Sales REO Sales SERIES: Distressed Sales SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  Short Sales
  108. 108. 2014  FORECAST
  109. 109. 2014 Forecast
  110. 110. U.S. Economic Outlook 2014 Indicator 2008 2009 2010 2011 2012 2013p 2014f US GDP ‐0.3% ‐3.4% 2.4% 1.8% 2.2% 1.8% 2.8% Nonfarm Job Growth ‐0.6% ‐4.4% ‐0.7% 1.2% 1.7% 1.6% 1.7% Unemployment 5.8% 9.3% 9.6% 8.9% 8.1% 7.5% 7.0% CPI Real Disposable  Income, % Change 3.8% ‐0.4% 1.6% 3.1% 2.1% 1.6% 2.0% 0.5% 0.9% 1.8% 1.3% 1.5% 1.0% 3.0% SERIES: U.S. Economic Outlook SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  111. 111. California Economic Outlook 2014 Indicator 2008 2009 2010 2011 2012 2013p 2014f Nonfarm Job Growth ‐1.3% ‐6.0% 1.1% 1.6% 2.2% 1.9% Unemployment Rate 7.2% 11.3% 12.3% 11.8% 10.5% 9.0% 8.3% Population Growth Real Disposable  Income, % Change 0.8% 0.6% 0.7% 0.7% 0.7% 0.9% 0.9% 1.5% ‐3.9% 1.0% 1.9% 1.1% 0.9% 3.0% SERIES: CA Economic Outlook SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  ‐1.1%
  112. 112. California Housing Market Outlook Indicator SFH Resales (000s) 2008 2009 2010 2011 2012 2013p 2014f 416.5 422.6 439.4 430.3 444.0 30.4% 24.5% ‐12.3% 1.4% 4.0% ‐2.1% 3.2% Median Price ($000s) $348.5 $275.0 $305.0 $286.0 $319.3 $408.6 $432.8 % Change ‐6.2% 11.6% 28.0% 6.0% % Change 381.4 474.9 ‐37.8% ‐21.1% 10.9% 30‐Yr FRM 6.0% 5.0% 4.7% 4.5% 3.7% 4.1% 5.3%  1‐Yr ARM 5.2% 4.7% 3.8% 3.0% 2.7% 2.7% 3.1% SERIES: CA Housing Market Outlook SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 
  113. 113. Sales Bounce back in 2014, as Price Continues to  Grow Sales of Existing Detached Homes Units  (Thousand) Median Price Price  (Thousand) 700 $600 600 $500 500 430 444 $433  $400 $409  400 $300 300 $200 200 $100 100 $0 0 2005 2007 2009 2011 2013f SERIES: CA Housing Market Outlook SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2005 2007 2009 2011 2013f
  114. 114. CA: Dollar Volume Steadily Improving  Up 25.3% in 2013, Up 9.3% in 2014 $ in Billion % Change $400 $ Volume of Sales 30% Percent Change $350 $300 20% $301  ‐60% $244  $250 10% 0% $200 $176  $164  $150 $133  $131  $127  $192  ‐10% $140  $121  ‐20% $100 $50 ‐30% $0 ‐40% 2005 2006 2007 2008 SERIES: CA Housing Market Outlook SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2009 2010 2011 2012 2013f 2014f
  115. 115. MARKET OPPORTUNITIES  2014
  116. 116. Share of First‐Time Buyers is the Lowest Since 2006 % First‐Time Home Buyers Long Run Average 50% 40% Long Run Average = 38% 30% 28% 20% 10% 0% 2005 2006 2007 Q. Was the buyer a first‐time buyer? 2008 SERIES: 2013 Housing Market Survey SOURCE:  CALIFORNIA ASSOCIATION OF REALTORS®  2009 2010 2011 2012 2013
  117. 117. 2013: 6 out of 10 Buyers Said They  Found Their Home through Agent 2013 2% 37% 61% For Sale Sign Q.  How did you find the home you purchased? Website Agent
  118. 118. 2007: Almost 9 out of 10 Buyers Said They  Found Their Home through Agent 2% 1% 1% 8% 2007 88% Website Agent Friend/family Q.  How did you find the home you purchased? Open house Driving around
  119. 119. Nearly All Buyers Use an Agent 100% 91% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2005 2006 2007 2008 Q.  Did you use a real estate agent in your home buying process? 2009 2010 2011 2012 2013
  120. 120. First‐time Buyers need YOUR help Connect EARLY and OFTEN • Financial Literacy: How to manage their finances • What about student‐loan debt? • Can my parents help me out? • How do I increase my credit score? • How to save for a down payment and how much? • What programs are available? Tools to find out – Downpayment Resource on car.org
  121. 121. 2014: Many Market Opportunities • First‐time Buyers • Formerly “Underwater” Homeowners • Property Management  • International Clients • New Construction • Embrace Learning
  122. 122. Most Buyers and Sellers Interviewed  Multiple Agents before Selecting One Buyers 4 agent,  15% Seller 1 agent,  30% 3 agent,  18% 6 agents,  12% 5 agents, 17% 2 agent,  38% 4 agents,  24% 1 agent,  12% 2 agents,  13% 3 agents,  21% Q.  How many agents did you interview prior to selecting the agent you used in your recent home purchase? Source: C.A.R. 2012 Buyer and Seller Surveys
  123. 123. THANK YOU! www.car.org/marketdata lesliea@car.org
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