All things housing for Southwest California

1. A Matter of Perception
Yes, we’re all very aware that our housing market is going through some changes right now. If you’re
not aware of that, this month’s report will bring it on home as our market continues to slide into
yearend. But we were reminded last month by National Association of Realtors® Chief Economist Dr.
Lawrence Yun, that our perception of current events is clouded by how good or bad our memory is.
For example, home sales locally and across the country will be down this year compared to last.
Nationally they’re expected to drop about 3% from 2017, locally we’ll be down closer to 10%. But keep
in mind that last year was one of our best sales years in a decade. Any correction can look like a
downturn, and doom & gloom media headlines can become a self-fulfilling prophecy if we don't
challenge them. Dr. Yun’s forecast calls for ‘boring’ growth in 2019 and 2020 at about 1% a year for
existing home sales, slightly better for new home sales – assuming we can get new homes built.
That’s not a recession or housing bubble.
Governor-elect Newsom has called for building 3 million new homes over the next five years. The
how, where, when, and how much are as yet undefined. The willingness of his new mega-majority
legislature will be sorely tested on whether to support his call to arms, or continue obeisance to their
radical environmental constituency. But before that, we have to rebuild 20,000+ homes lost in recent
wildfires, and that will be a test in itself. A bill introduced last year that would have allowed
reconstruction after a fire to include an Accessory Dwelling Unit (granny flat) died in committee, which
may not portend well for current efforts not only to rebuild but to use the opportunity to expand.
We’ve been told that CEQA reform and a serious look at permitting costs and timeframes will be on
the table in the upcoming session. Of course CEQA reform has been a hot topic of conversation
almost since it was adopted with no relief from its worst litigious excesses, and local governments
strapped for cash have continued to pile on permitting and entitlement costs making it difficult for
developers to efficiently build more affordable housing. Now factor in another effort by our legislators
to reduce the vote threshold allowing municipalities to increase taxes with a 55% vote instead of 66%,
and you have another impediment to affordable housing for first time buyers and others. This is where
perception and reality collide.
Across our region sales dropped 14% from October (896 / 769) and were 8% below October 2017
(837). With pending sales down 10% going into December (755 / 679), we’re not lining up a strong
finish for year-end either. Median prices were off 1% month-over-month ($376,028 / $371,333) but
remained 5% ahead year-over-year ($351,578). November was out 3rd consecutive month of declining
median prices and our lowest month since March of this year. Again, as sales slow there is less
upward pressure on prices which is not unusual during this last quarter and no great cause for alarm
unless the trend continues unabated after the first of the year.
As our economists continue to point out, the underlying economy is strong with unemployment,
including local unemployment, at record lows, wages picking up, and home equity and other wealth
factors increasing. If our new Congress can focus on the business of government, and our new
legislature can keep their hands out of our pockets, we will weather this correction with only minor
inconvenience and minimal worries. Of course there’s still France, China, trade wars, investigations,
impeachment, the Russians, the caravan and the mega-majority. No worries!
Merry Christmas and a Happy and Prosperous New Year!

2. Southwest
California
Reporting
Period
Current
Month
Last
Month Year Ago
Change from
Last Month
Change from
Year Ago
Existing Home Sales
(SFR Detached)
November
2018
769 896 837 14% 8%
Median Home Price $371,333 $376,028 $351,578 1% 5%
Unsold Inventory Index
(SFR Units)
2,703 2,815 1,618 4% 40%
Unsold Inventory Index
(Months)
3.1 3.5 1.7 11% 45%
Median Time on
Market (Days)
32.6 33.6 30.2 3% 7%
SW Market @ A Glance
Source: CRMLS

3. October 2018 SFR Transaction Value*:
Temecula $75,194,029 Lake Elsinore $37,237,550
Murrieta $83,567,387 Wildomar $12,818,290
Menifee $51,283,933 Canyon Lake $14,344,449
Hemet $37,749,952 San Jacinto $15,509,545
Perris $23,534,208 Total $351,274,439
* Revenue generated by single family residential transactions for the month.
November 2018 SFR Transaction Value*:
Temecula $78,346,586 Lake Elsinore $29,746,965
Murrieta $61,351,565 Wildomar $9,787,730
Menifee $46,833,540 Canyon Lake $8,188,900
Hemet $33,481,599 San Jacinto $14,374,242
Perris $22,075,184 Total $304,186,311
* Revenue generated by single family residential transactions for the month.
November Median Price:
2017 2018 %
Temecula $463,000 $450,000 3%
Murrieta $425,000 $434,600 2%
Menifee $343,500 $356,999 4%
Lake Elsinore $355,000 $364,900 3%
Wildomar $394,000 $430,000 9%
Canyon Lake $448,000 $420,000 6%
Hemet $249,450 $270,000 8%
San Jacinto $270,000 $304,000 11%
Perris $302,500 $311,500 3%

4. 0
50
100
150
200
250
300
Temecula Murrieta Wildomar Lake Elsinore
0
50
100
150
200
250
Menifee Canyon Lake Hemet San Jacinto Perris
Southwest California Homes
SFR sales I-15 corridor
Southwest California Homes
SFR sales I-215 corridor

5. $250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
Temecula Murrieta Wildomar Lake Elsinore
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
Menifee Canyon Lake Hemet San Jacinto Perris

6. November Demand
On Market (2,815 – 2,703) 3%
Pending Sales (755 - 676) 10%
Closed (896 - 769) 14%
Days on Market (33.6 – 32.6) 3%
Months Inventory (3.5 – 3.1) 11%
Absorption (76% - 79%) 4%
Month over Month

7. City Median Sold $ Average Sold $ Average SqFt Bed Bath YrBlt
Temecula $450,000 $512,069 2,362 4 3 1997
Murrieta $434,600 $494,771 2,586 4 3 2000
Wildomar $430,000 $425,553 2,435 4 3 1999
Lake Elsinore $364,900 $407,493 2,033 4 3 1998
Menifee $356,999 $346,915 1,973 3 2 1995
Canyon Lake $420,000 $481,700 2,213 3 3 1985
Hemet $270,000 $267,853 1,753 3 2 19895
San Jacinto $304,000 $276,428 1,913 4 2 1994
Perris $311,500 $329,480 1,901 3 3 1996
Your 'Average' House, November 2018
By City
Source: CRMLS
Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold % of MKT
Temecula 384 88% 139 91% 7 2% 0 0% 8 2% 0 0%
Murrieta 410 91% 109 88% 3 1% 0 0% 11 2% 4 3%
Wildomar 73 89% 20 87% 2 2% 0 0% 0 0% 2 9%
Lake Elsinore 277 95% 66 90% 4 1% 1 1% 5 2% 1 1%
Menifee 426 94% 131 97% 8 2% 0 0% 8 2% 1 1%
Canyon Lake 98 97% 17 100% 1 1% 0 0% 0 0% 0 0%
Hemet 485 94% 116 93% 3 1% 2 2% 10 2% 1 1%
San Jacinto 182 93% 43 83% 4 2% 1 2% 5 3% 2 4%
Perris 167 93% 65 97% 4 2% 1 1% 5 3% 0 0%
Regional
Average 2502 93% 706 92% 36 1% 5 1% 52 2% 11 1%
November 2018 Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale

8. A few slides from our presentation last month by NAR Chief
Economist Dr. Lawrence Yun. Dr. Yun’s takeaway is that the housing
market, while not as robust as the past few years, is not in any
danger and we have not created a bubble. Years of record low
interest rate sparked a surge in home buying that drove prices
inexorably upwards. Now the confluence of those increased prices
coupled with increasing interest rates, will moderate home sales,
especially in high growth/high appreciation markets like California,
until a balance is again reached between affordability and ability.
Beware of perception becoming reality with these kinds of headlines.

9. Keep things in a longer term perspective. False comparisons against your
best year in a decade is bound to produce anxiety.

19. -1.5% MTM
4.6% YTY
9.0% MTM
-6.1% YTD
-6.5% MTM
16.2% YTY
0.0% MTM
17.2% YTY
For SFH Homes
Trends At A Glance For: October 2018
Median Time on Market
34 Days
Home Sales
-2.9% YTY
Median Price
$400,000
Unsold Inventory
4.3 Months
For SFH Homes
For SFH Homes
For SFH Homes
CALIFORNIA ASSOCIATION OF REALTORS® Research & Economics
Alameda County Market Update
$320,000
$340,000
$360,000
$380,000
$400,000
$420,000
Oct-16 Apr-17 Oct-17 Apr-18 Oct-18
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-10%
0%
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20%
30%
40%
Oct-16 Apr-17 Oct-17 Apr-18 Oct-18
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Oct-16 Apr-17 Oct-17 Apr-18 Oct-18
525 S. Virgil Ave. Los Angeles, CA 90020 | 213-739-8200 | www.car.org/marketdata| research@car.org
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Oct-16 Apr-17 Oct-17 Apr-18 Oct-18
Riverside County Market Update