Lake Elsinore EWDC 2-21-13

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Lake Elsinore EWDC 2-21-13

  1. 1. February 21, 2013 With your host… Gene Wunderlich
  2. 2. 2013: A Year of Economic Wild Cards Political Oil Price Spikes Change / CA supermajority Arab Spring Fiscal Cliff Debt Crisis in EuroZoneDebt Limit Stock Ceiling & MarketDowngrade Volatilityof US Debt
  3. 3. • Lenders • Short Sales • Foreclosures• Federal Economic Policy • Interest Rates• Regulations • Inflation• Mortgage Interest Deduction • Shadow Inventory• Strategic Foreclosures • Global Economy• Future of GSE’s • Unemployment Unprecedented era of government involvement in housing
  4. 4. “Just because you don’t take an interest in politicsdoesn’t mean politics won’t take an interest in you.” Pericles: 500 B.C. If you don’t have a seat at the table… You’ll probably be on the menu. Wunderlich Codicil: 2000 A.D. You may still be on the menu, but hopefully we can keep you from being the main course 2012 addendum
  5. 5. NAR: The largestgrassroots Political ActionGroup in this country. "These groups are powers in Washington. The National Association of Realtors gave more money than any other group to candidates in the last election ($11+ million). Its 1.1 million members can do a lot of lobbying."CAR: The most effectivebusiness advocacy group inSacramento.
  6. 6. Red State? Blue State?Under all is the land… Realtor® Preamble
  7. 7. May 201212,000+ Realtors® Rally for the American Dream
  8. 8. The Realtor® Home Washington D.C.
  9. 9. So how is the housing market?
  10. 10. 250Southwest California Homes Single Family Homes Unit Sales200150100 50 0 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
  11. 11. Southwest California Homes Annual Sales Volume Single Family Homes10,000 9,000 9 8,000 8 8 , 8 7 8 , , 6 , 7 7,000 , , 4 4 6 2 , 6 6 0 6,000 7 5 5 6 5 9 , 0 5,000 5 0 4 9 2 6 4 6 4,000 5 4 4 3,000 , 0 2,000 1 1,000 5 0
  12. 12. Lake Elsinore Annual Sales Volume Single Family Homes2,000 1,8051,8001,600 1,405 1,4051,400 1,287 1,270 1,1651,200 1,038 999 9621,000 800 600 494 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  13. 13. CA Median Price of Existing Detached Homes • November 2012: $349,300, Up 24.8% YTY$700,000 P: May-07 $594,530$600,000 11/12$500,000 $349,300 T: Feb-09 +30% from $245,230 trough$400,000 -59% from peak$300,000$200,000$100,000 $-SOURCE: California Association of REALTORS®
  14. 14. Southwest California Homes Median Price $499,147$500,000 $461,437 $452,888$450,000 $400,698$400,000 53% drop$350,000 9% gain $288,822$300,000 $247,648 $241,438 256,539$250,000 $234,974$200,000$150,000$100,000 $50,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012
  15. 15. Lake Elsinore Median Price$450,000 $433,996 $391,725$400,000 $377,597$350,000 $323,681 60% drop$300,000$250,000 $230,115 $230,459 7% gain$200,000 $187,347 $180,856 $187,696 $174,666$150,000$100,000 $50,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  16. 16. Southwest California Homes Single Family Homes Median Price$400,000$350,000$300,000$250,000$200,000$150,000 January over January prices rose • 30% in Lake Elsinore ($162,622/$233,280),$100,000 • 18% in Canyon Lake ($233,445/$284,577), • 17% in Menifee (161,143/$195639), $50,000 • 15% in Temecula ($286,246/$334,928), • 12% in Murrieta ($259,975/$294,929) • 9% in Wildomar ($204,109/$225,299) $0 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
  17. 17. Southwest California Homes January Demand300 2 2250 2 2 . . 2 6 1 . 2 8 3 0 . 1 8 1 2 8 9200 1 1 1 2 1 1 1 8 1 4 6 3 . 6 1 1 2150 9 4 9 1 1 1 1 1 6 8 1 0 9 0 9 .100 9 7 7 6 6 4 5 5 0 4 5 9 2 6 5 3 3 50 2 2 0 4 6 8 1 1 1 0 2 0 . . . . . . 2 7 2 8 1 8 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
  18. 18. Southwest California Homes Inventory levels2500 Active Inventory Down 74%2000 Since February15001000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 2010 2011 2012
  19. 19. Lake Elsinore Inventory Level350 317300 290 253250 -66% 196200 149150 121 112 112 107 107 99 95100 50 0 3/12 6/12 9/12 12/12
  20. 20. Lake Elsinore Absorption Rate450.00 4.3400.00 3.7 3.4350.00300.00 2.8250.00 2.4200.00 1.7 1.8 1.6 1.6150.00 .9 .9100.00 .8 50.00 0.00 3/12 6/12 9/12 12/12
  21. 21. January Market Activity By Sales Type Standard Sale Bank Owned Short Sale % of % of % of % of % of % of Active MKT Sold MKT Active MKT Sold MKT Active MKT Sold MKTTemecula 157 84% 59 53% 9 5% 15 14% 18 10% 34 31%Murrieta 138 82% 77 55% 14 8% 15 11% 16 9% 46 33%Wildomar 17 65% 13 38% 5 19% 6 18% 4 15% 14 41%LakeElsinore 86 74% 45 45% 10 9% 14 14% 18 16% 36 36%Menifee 77 65% 73 51% 18 15% 18 13% 19 16% 46 32%CanyonLake 55 86% 13 43% 4 6% 5 17% 4 6% 11 37%RegionalAverage 530 76% 280 52% 60 8% 73 14% 79 12% 187 35%
  22. 22. What lies ahead?
  23. 23. CA Prices Still Below Trend Line Spells Opportunity $600,000 California $500,000 US CA Price Trend $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 2012SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  24. 24. Pent-Up Demand for Housing is Real Household Formation will Rebound with Jobs 38,000 13,400 37,000 13,200In thousands 575 13,000 36,000 377K 12,800 35,000 12,600 34,000 12,400 33,000 12,200 Total Population, California Number of Households, California (right axis) 12,000 32,000 Projected linear estimate 11,800 31,000 Projection, based on U.S. 0.55% growth rate 11,600 30,000 11,400 2000- 2002- 2004- 2006- 2008- 2010- 2001 2003 2005 2007 2009 2011
  25. 25. When it Does CA will Start Building Again 2012(p): 52,000 units, Up 10.4% from 2011 Single Family Multi-Family 250,000 Household Growth: 220,000-250,000/yr. 200,000 150,000 100,000 50,000 0 2005 2006 2007 2008 2009 2010 2011 2012PSOURCE: Construction Industry Research Board
  26. 26. Unemployment16.0 Current US14.0 unemployment: 7.8%12.0 % of people out of work:10.0 14.7% 8.0 6.0 4.0 There’s two ways to reduce unemployment: 2.0 #1 – put people to work #2 – people quit looking for work 0.0 11-06 11-07 11-08 11-09 11-11 11-12 11-10 1-06 3-06 5-06 7-06 9-06 1-08 3-08 5-08 7-08 9-08 1-08 3-09 5-09 7-06 9-09 3-11 5-11 7-11 9-11 1-12 3-12 5-12 7-12 9-12 1-07 3-07 5-07 7-07 9-07 1-10 3-10 5-10 7-10 9-10 1-11 US CA RivCo Lake Elsinore Temecula Murrieta
  27. 27. Mortgage Rates at 50 Year Lows Fed will continue QE until U=6.5% 8% FRM 7% ARM 6% Federal Funds 5% 4% 3% 2% 1% 0% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12SOURCE: Federal Home Loan Mortgage Corporation
  28. 28. California Housing Market OutlookIndicator 2008 2009 2010 2011 2012p 2013fSFH Resales(000s) 441.81 546.86 492.29 497.86 523.25 530% Change 27.3% 23.8% -10.0% 1.1% 5.1% 1.3%Median Price($000s) $ 348.5 $ 275.0 $ 305.0 $ 286.0 $ 317.0 $ 335.0% Change -37.8% -21.1% 10.9% -6.2% 10.9% 5.7%30-Yr FRM 6.0% 5.1% 4.7% 4.5% 3.8% 4.0%1-Yr ARM 5.2% 4.7% 3.5% 3.0% 2.8% 2.8%
  29. 29. Signs of U.S. Housing Recovery1. Prices have bottomed!2. Home equity up 20% last year to $7.71Trillion as rising prices begin to reverse negative equity3. New and Existing Home Sales at four- year highs4. Low inventory across the board5. Housing starts at four-year high6. Threat of shadow inventory fading as delinquencies, foreclosures decline7. Foreclosure starts at 6 year low
  30. 30. But there a few issues…1. Mortgage rates are low but credit is tight2. “Defensive” Lending is prevalent3. Appraisals lagging today’s market4. Listings are scarce: – Underwater homeowners are stuck – Investors are renting instead of flipping – Some sellers still don’t get it
  31. 31. The Political Economy• Fiscal Cliff Averted but Tax and Spend Decisions Await – 60 Day Deadline• Tax Reform: •Mortgage Interest Deductibility •Mortgage Debt Forgiveness• Future of Fannie and Freddie• Future of FHA
  32. 32. Opportunities at the Local Level… Coalitions!• Murrieta-Temecula Group • City of Temecula• EDC of Southwest California • City of Murrieta• Southwest California Legislative Council • City of Lake Elsinore •Temecula Valley Chamber of Commerce • City of Wildomar •Murrieta Chamber of Commerce • City of Menifee •Wildomar Chamber of Commerce • City of Canyon Lake •Lake Elsinore Valley Chamber of Commerce• Building Industry Association • Riverside County• Apartment Managers Association • Riverside County D.A.• Property Mangers Association • NSDAOR, TIGAR, IVAOR• Southern California Escrow Association• California League of Cities • Commercial Real Estate
  33. 33. 5 years from now there will be people who say “I wish I would have bought a home in 2013.”http://www.slideshare.net/genewunderlich

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