2014 Housing Market and Economy Forecast

2014 HOUSING MARKET
FORECAST
October 10,2013
Leslie Appleton‐Young, Vice President & Chief Economist

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

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) $

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%

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

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

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%

Construction Jobs Fastest Growing
August 2013: CA +1.5%, +233,900
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%

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®

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

CPI: Subdued for Now
• August 2013: All Items +1.5% YTY; Core +1.8% YTY

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%

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: 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%

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®

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®

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®

US

CA Price Trend

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

36%

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

5.5%

6.0%

6.5%

CA Median Monthly Mortgage Payment
MONTHLY MORTGAGE
$2,000
$1,600

$1,402

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

5.5%

6.0%

6.5%

CA Minimum Qualifying Income
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

5.5%

6.0%

6.5%

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

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
500,000
150,000

400,000
300,000

100,000

200,000
50,000
100,000
‐

SERIES: Sales of Existing Single Family Homes

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

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

*Sales are seasonally adjusted and annualized

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

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%


10.3%
3.4%

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


Riverside

3%

San Bernardino

San Diego

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


2%
1%

4%

San
Mateo

Santa
Clara

7%
4%

1%

Solano Sonoma

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%


14%

13%

22%
14%

10%
5%

5%

7%
2%

9%

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%


9%
7%

14%
7%

33%

20%
8%

11%
5%

6%

5%

8%
3%

9%

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

$300 ‐ $400k

$400 ‐ $500k

$500k+

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

T: Feb‐09
$245,230
‐59% from
peak

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%

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

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.


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


$750 ‐ $1000k

$1000k+

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

REO Sales

Short Sales

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

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

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

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

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

2013 ANNUAL HOUSING
MARKET SURVEY

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?

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

1
0

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?

2011

2012

2013

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?

2011

2012

2013

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?

2009

2010

2011

2012

2013

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


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

2012

2013


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


98.0%

100.0%

100.0%


58.3%

70.8%

91.2%


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


Short Sales (2011 vs. 2012 vs. 2013)
2011

2012

2013


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


95.9%

99.9%

103.0%


57.5%

66.1%

75.7%


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


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%

Buying to Rent: Winning Investment Strategy

Investment to Flip

Rental Property

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


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


2009

2010

2011

2012

2013

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%


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


2009

2010

2011

2012

2013

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


2009

2010

2011

2012

2013

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.?

Country of International Buyer
• China (30%)
• Canada (9%)
• India (6%)
• Mexico (13%)

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%

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


Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

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

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

• 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


Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

• 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


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

Supply of Inventory in Northern CA
UII – Active Only

4

3.1
3

1.9
1.4

2

1

0
Equity Sales

REO Sales


Short Sales

Regional Report Card – Northern Wine
Current Price to
Trough Price: +45%

Last 5 Yr. Avg: +13%

Current UII to Long
Run Avg.: ‐46%

• 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


Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

Home Sales in Northern Wine Country Counties
August‐12

August‐13

600
500
400
300
200
100
0
Mendocino

Napa

Sonoma

• Northern Wine Country Counties
•

County

Aug‐13

Jul‐13

Aug‐12

Mendocino
Napa
Sonoma

68
117
488

58
144
478

48
132
500


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%

• 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


Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

• 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%


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

Last 5 Yr. Avg.: +8%

Current UII to Long
Run Avg.: ‐37%

• 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


Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

• 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%


• 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


Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

• 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%


Supply of Inventory in Bay Area
UII – Active Only

3

2

2.5

1.4

1.3

1

0
Equity Sales

REO Sales


Short Sales

Regional Report Card – Central Valley
Current Price to
Trough Price: +52%

Last 5 Yr. Avg.: ‐8%

Current UII to Long
Run Avg.: ‐42%

• 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
‐


• 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


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%

• Central Valley, August 2013: $219,870, Up 34.3% YTY
$250,000

$200,000

$150,000

$100,000

$50,000

$‐


• 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


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%

Supply of Inventory in Central Valley
UII – Active Only

3

2.2

2

1.3
0.9
1

0
Equity Sales

REO Sales


Short Sales

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

Last 5 Yr. Avg.: +4%

Current UII to Long
Run Avg.: ‐40%

Neutral

• 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


Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

• 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


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%

• 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


Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

• 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%


Supply of Inventory in Central Coast
UII – Active Only

4

3.3

3

2

1.4

0.5

1

0
Equity Sales

REO Sales


Short Sales

Regional Report Card – Southern California
Current Price to
Trough Price: +70%

Last 5 Yr. Avg: +4%

Current Inventory to
Long Run Avg: ‐54%

Neutral

• 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


• 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%


• Southern California, Aug.2013: $419,340, +24.6% YTY
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$‐


• 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%


Supply of Inventory in Southern CA
UII – Active Only

3

2.1
2

1.3
0.9
1

0
Equity Sales

REO Sales


Short Sales

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

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

‐1.1%

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

Sales Bounce back in 2014, as Price Continues to
Grow
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


2005

2007

2009

2011

2013f

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


2009

2010

2011

2012

2013f

2014f

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

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

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

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

2014: Many Market Opportunities
• First‐time Buyers
• Formerly “Underwater” Homeowners
• Property Management
• International Clients
• New Construction
• Embrace Learning

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

THANK YOU!
www.car.org/marketdata
lesliea@car.org

2014 Housing Market and Economy Forecast

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