Housing Market Forecast from C.A.R. July 10, 2014

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July 10, 2014
WSGVAR
Leslie Appleton-Young, Chief Economist
California Association of REALTORS®

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Housing Market Forecast from C.A.R. July 10, 2014

  1. 1. 2014 HOUSING MARKET UPDATE July 10, 2014 WSGVAR Leslie Appleton-Young, Chief Economist California Association of REALTORS®
  2. 2. C.A.R.NEWS
  3. 3. • Familiarize yourself with the many changes • Learn how to properly complete the new form • Understand the new approach addressing wood destroying pests • Complete all mandatory and recommended disclosures • Learn how to write offers without deposit checks For an upcoming class near you: www.car.org/education/calendar
  4. 4. TheFinanceHelpline • FREE Member Benefit • Provides one-on-one help • Direct Line to Lenders finance.car.org (213)739-8383 financehelpline@car.org “Being a member of C.A.R. for 27 years, this member service, by far, in my humble opinion, is the next best thing to having a license in this climate. Bravo!” - REALTOR®
  5. 5. 2014 EXPO: October 7-9 Anaheim Terri Sjodin Best-selling author of Small Message, Big Impact Captain Chesley “Sully” Sullenberger Best-selling author of Highest Duty Leslie Appleton- Young C.A.R.Vice President and Chief Economist Tuesday Wednesday Thursday
  6. 6. THE ECONOMY
  7. 7. -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 GrossDomesticProduct 2013: 1.9%; 2014 Q1: -2.9% ANNUAL PERCENTCHANGE, CHAIN-TYPE (2005) $ ANNUALLY QUARTERLY 2009 Largest Annual Drop since 1938 (-3.4%) SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
  8. 8. SERIES:Components of GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis Components of GDP -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Consumption Fixed Nonres. Investment Net Exports Government Q2 2013 Q3 2013 Q4 2013 Q1 2014 ANNUAL PERCENTCHANGE
  9. 9. -3% -2% -1% 0% 1% 2% 3% 4% 5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 PersonalConsumption 2013: 2.0%; 2014 Q1: 1.03% ANNUAL PERCENTCHANGE ANNUALLY QUARTERLY SERIES: Personal Consumption SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
  10. 10. -1,000,000 -800,000 -600,000 -400,000 -200,000 0 200,000 400,000 600,000 800,000 U.S.Non-farmJobGrowth Recession Job Losses: 8.8 million Since Jan’10: +8.9 millionMONTHTO MONTH CHANGE SERIES: Employment Growth SOURCE: US Bureau of Labor Statistics
  11. 11. NonfarmEmploymentByRegion May 2014 May 2013 Change % Change Southern California 8,561.5 8,385.8 175.7 2.1% Bay Area 4,193.3 4,104.0 89.3 2.2% Central Valley 1,478.3 1,455.7 22.6 1.6% Central Coast 1,254.6 1,225.3 29.3 2.4% North Central 1,342.7 1,313.4 29.3 2.2% CALIFORNIA 292.6 287.4 5.2 1.8% Nonfarm Employment (Thousands) SERIES:Total Nonfarm Employment SOURCE: CA Employment Development Division
  12. 12. JobTrendsbyCaliforniaMetroArea SERIES:Total Nonfarm Employment SOURCE: CA Employment Development Division ANNUAL PERCENTCHANGE 1.2% 1.4% 1.6% 1.9% 2.0% 2.2% 2.2% 2.4% 2.5% 2.7% 2.8% 4.0% 4.1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% Modesto Bakersfield Oakland Orange County Ventura San Diego Los Angeles Inland Empire Stockton MSA Sacramento San Francisco San Jose Fresno MSA April 2014: CA +2.2%, +340,200
  13. 13. CaliforniaJobChangesbyIndustry SERIES:Total Nonfarm Employment By Industry SOURCE: US Bureau of Labor Statistics, CA Employment Development Division -1.9% -1.6% 0.6% 0.6% 1.9% 2.0% 2.1% 2.3% 2.8% 3.2% 3.4% 3.5% 3.7% 4.7% 6.4% -3% -1% 2% 4% 6% 8% Finance & Insurance Nondurable Goods Government Durable Goods Wholesale Trade Transportation, Warehousing & Utilities Retail Trade Leisure & Hospitality Real Estate & Rental & Leasing Information Health Care & Social Assistance Educational Services Professional, Scientific & Technical Services Admistrative & Support & Waste Services Construction April 2014: CA +2.2%, +340,200 ANNUAL PERCENTCHANGE
  14. 14. UnemploymentRateFalling California (7.8%) vs. United States (6.1%) -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% US-CA CA US SERIES: Unemployment Rate SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
  15. 15. “The sustainability of the housing market going forward depends on the strength of economic growth, household formation and job creation”
  16. 16. ConsumerConfidenceIndex June 2014: 85.2 0 20 40 60 80 100 120 INDEX, 100=1985 SERIES:Consumer Confidence SOURCE: The Conference Board
  17. 17. MortgageRates • January 2009 – July 2014 0% 1% 2% 3% 4% 5% 6% 2009/01 2009/04 2009/07 2009/10 2010/01 2010/04 2010/07 2010/10 2011/01 2011/04 2011/07 2011/10 2012/01 2012/04 2012/07 2012/10 2013/01 2013/04 2013/07 2013/10 2014/01 2014/04 5.22.14 6.12.14 7.07.14 FRM ARM MONTHLY WEEKLY SERIES: 30Yr FRM, 1Yr ARM SOURCE: Federal Home Loan Mortgage Corporation
  18. 18. Forecastershavebeenexpectinglongterm interestratestorise…foradecade,now. 19 Percent 0 1 2 3 4 5 6 0 1 2 3 4 5 6 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Actual 10-year Treasuryyield(solidblackline) Predictionsout tofivequartersaheadof professional forecasters(hatchedlines) Percent Source: Philadelphia Federal Reserve Survey of Professional Forecasters, Bloomberg Source: Philadelphia Federal Reserve Survey of Professional Forecasters, Bloomberg
  19. 19. U.S.DepositoryInstitutions: HighLevelofExcessReserves $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 SERIES: Excess Reserves of Depository Institutions SOURCE: Federal Reserve Bank of Saint Louis $ BILLIONS
  20. 20. AffordabilityErodingasRates&PricesRise California vs. U.S. 33% 59% 0% 10% 20% 30% 40% 50% 60% 70% 80% CA US % OF HOUSEHOLDSTHAT CAN BUY SERIES: Housing Affordability Index ofTraditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  21. 21. AffordabilityPeakedin2012;DroppingSinceThen HAI Peak vs. Current 0% 10% 20% 30% 40% 50% 60% 70% 80% US CA SFH CA Condo/Townhomes Los Angeles Metropolitan Area Inland Empire S.F. Bay Area 59% 33% 41% 34% 48% 22% Q1-2014 Q1-2012 SERIES: Distressed Sales, Not Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  22. 22. Buyers:FinancingDifficulttoObtain 0% 0% 0% 0% 6% 6% 11% 6% 38% 33% 0% 5% 10% 15% 20% 25% 30% 35% 40% 1 2 3 4 5 6 7 8 9 10 20132013 Q. Please rate how easy or difficult it was to obtain financing on a scale of 1 to 10 with 1 being very easy and 10 being very difficult. EASY DIFFICULT Average: 8.6
  23. 23. Peoplewouldpreferthefollowingovergoing throughthehomemortgageprocessagain: SOURCE: Guaranteed Rate Mortgage Survey of 1,000 adults 25 and older; USAToday Maybe a new mortgage process is part of creating the sustainable housing market …
  24. 24. SqueakyCleanCreditRequired 80%700orAbove 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 2008 2009 2010 2011 2012 2013 Low Risk Average Risk High Risk Source: Equifax CreditTrends 4.0; Low risk defined as accounts with an Equifax Risk Score ≥ 700; high risk defined as accounts with ERS <620; Average risk defined as accounts with 620 ≤ ERS ≤ 700
  25. 25. Fannie&FreddiearetheMarket:85% Source: LPS
  26. 26. U.S.EconomicOutlook2014 Indicator 2009 2010 2011 2012 2013 2014p 2015f US GDP -3.4% 2.4% 1.8% 2.8% 1.9% 2.0% 3.0% Nonfarm Job Growth -4.4% -0.7% 1.2% 1.7% 1.7% 1.7% 2.0% Unemployment 9.3% 9.6% 8.9% 8.1% 7.4% 6.4% 6.0% CPI -0.4% 1.6% 3.1% 2.1% 1.5% 1.9% 2.3% Real Disposable Income, % Change 0.9% 1.8% 1.3% 1.5% 0.7% 2.3% 3.2% SERIES: U.S. Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  27. 27. CaliforniaEconomicOutlook2014 SERIES:CA Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Indicator 2009 2010 2011 2012 2013 2014p 2015f Nonfarm Job Growth -6.0% -1.1% 1.1% 2.4% 3.0% 2.2% 2.4% Unemployment Rate 11.3% 12.3% 11.8% 10.4% 8.9% 7.7% 6.8% Population Growth 0.6% 0.7% 0.7% 0.7% 0.9% 0.9% 1.0% Real Disposable Income, % Change -3.9% 1.0% 1.9% 1.1% 0.9% 3.0% 3.8%
  28. 28. HOWAREWE DOING?
  29. 29. CA:HousingCyclesandMembership CurrentlyMovinginOppositeDirections 1970-2014 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 0 50,000 100,000 150,000 200,000 250,000 - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014p Home Sales Membership *Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  30. 30. Newvs.RenewingMembers ~LRAverage:16%-84%Split~ 0 50,000 100,000 150,000 200,000 250,000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 New Renewing
  31. 31. C.A.R.Membershipvs.DRELicensees ~MovinginTandem~ 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Membership DRE Licensees
  32. 32. THECALIFORNIA RESIDENTIAL REAL ESTATE MARKET
  33. 33. SalesofExistingDetachedHomes California, May. 2014 Sales: 391,030 Units, -11.2%YTD, -9.5%YTY - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 *Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  34. 34. Peakvs.CurrentPrice–April2014 Region Peak Month Peak Price Apr-14 Median % Chg From Peak High Desert Apr-06 $334,860 $178,990 -46.5% Monterey Region Aug-07 $789,290 $451,500 -42.8% CALIFORNIA May-07 $594,530 $369,770 -37.8% Los Angeles Sep-07 $625,810 $406,750 -35.0% Sacramento Aug-05 $394,450 $267,260 -32.2% Northern Wine Country Jan-06 $645,080 $469,920 -27.2% San Luis Obispo Jun-06 $617,260 $465,300 -24.6% Northern California Aug-05 $410,040 $311,210 -24.1% Palm Springs/Lower Desert Jun-05 $393,370 $304,070 -22.7% San Diego May-06 $622,380 $492,080 -20.9% Riverside/San Bernardino Jun-06 $389,380 $309,240 -20.6% Ventura Aug-06 $710,910 $575,390 -19.1% Orange County Jun-07 $775,420 $679,820 -12.3% San Francisco Bay Area May-07 $821,540 $768,110 -6.5% Santa Clara Apr-14 $900,000 $900,000 0.0% SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  35. 35. REO&ShortSales Percent ofTotal Sales, Southern California: Apr 2014 3% 1% 8% 11% 3% 8% 5% 7% 6% 1% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Los Angeles Orange Riverside San Bernardino San Diego REO Sales Short Sales SERIES: Distressed Sales, Not Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  36. 36. EquitySalesDominatetheMarket 88.4% 5.9% 5.3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Equity Sales Short Sale REO SERIES: Distressed Sales, Not Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  37. 37. NineofTenSalesWereEquitySales REOs, 5.4% Short Sales, 5.9% Other Distressed Sales (Not Specified), 0.5% Equity Sales, 88.4% SERIES: Distressed Sales, Not Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® California: Apr 2014
  38. 38. MedianPriceofExistingDetachedHomes California, May 2014: $465,960, Up 11.7%YTY $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 P: May-07 $594,530 T: Feb-09 $245,230 -59% from peak SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  39. 39. UnsoldInventoryIndex California, May 2014: 3.6 Months 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. 0 2 4 6 8 10 12 14 16 18 SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  40. 40. MoreInventoryat HigherPriceRanges 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. Price Range (Thousand) Apr-14 Mar-14 Apr-13 $1,000K+ 4.8 5.6 4.8 $750-1000K 3.9 4.4 3.2 $500-750K 3.5 3.8 2.8 $300-500K 3.4 3.7 2.6 $0-300K 3.2 3.6 2.5 SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  41. 41. UnsoldInventoryIndexByPriceRange California, May 2014 0 5 10 15 20 25 30 $0 - 300K $300-500K $500-750K $750-1000K $1,000K+- SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  42. 42. Whywas/isInventorysoLow? • Demand Side • Housing affordability was at historic highs • Low rates hurt investment alternatives • Supply Side • Little new construction for last 5 years • Underwater homeowners are stuck • Foreclosure pipeline drying up • Investors are renting instead of flipping • Off-market (aka “pocket’) listings
  43. 43. AskingRentsforClassA&BApartments California, 2013 Q4: $1,615, Up 6.5%YTY $- $250 $500 $750 $1,000 $1,250 $1,500 $1,750 SERIES:Asking Rents SOURCE: Realfacts
  44. 44. 0 50000 100000 150000 200000 250000 300000 350000 Single Family Multi-Family CANewHomeConstructionMovingHigher 2013: 80,319 Units, Up 37.2% from 2012 Household Growth: 220,000-250,000/yr SERIES: Residential Permits SOURCE: Moody’s Analytics
  45. 45. DISTRESSED MARKET UPDATE
  46. 46. “The weight of the lingering stock of distressed homes on the housing recovery will be small.” Dismal Scientist May 27, 2014.
  47. 47. CAUnderwaterMortgages ReverseWealthEffectv.SquatterEconomy 11.2% 2.2% 0% 5% 10% 15% 20% 25% 30% 35% 40% Negative Equity Share in CA Near Negative Equity Share in CA SERIES: Underwater Mortgages SOURCE: CoreLogic
  48. 48. 0% 2% 4% 6% 8% 10% 12% Delinquency Rate Foreclosure Rate MortgageForeclosure&DelinquencyRates California: Q1-2014 Delinquencies: Long Run Average: 4.5% Foreclosure Rate: Long Run Average: 1.3% SERIES: Mortgage Foreclosure & Delinquency Rates SOURCE: Mortgage Bankers Association
  49. 49. • Preforeclosure: 5,215• Auction: 4,835 • Bank Owned: 912 LosAngelesCounty SOURCE: PropertyRadar.com as of 07/07/14
  50. 50. • Preforeclosure: 5,215• Auction: 4,835 • Bank Owned: 912 LosAngelesCounty SOURCE: PropertyRadar.com as of 07/07/14
  51. 51. • Preforeclosure: 5,215• Auction: 4,835 • Bank Owned: 912 LosAngelesCounty SOURCE: PropertyRadar.com as of 07/07/14
  52. 52. • Preforeclosure: 17 • Auction: 13 • Bank Owned: 0 SanGabriel SOURCE: PropertyRadar.com as of 07/07/14
  53. 53. • Preforeclosure: 16 • Auction: 20 • Bank Owned: 4 Alhambra SOURCE: PropertyRadar.com as of 07/07/14
  54. 54. • Preforeclosure: 16 • Auction: 12 • BankOwned: 1 MontereyPark SOURCE: PropertyRadar.com as of 07/07/14
  55. 55. LOCAL MARKET CONDITIONS
  56. 56. LOSANGELESCOUNTY
  57. 57. SalesofResidentialHomes • Los Angeles County, June 2014: 4,457 Units • Down 0.1% MTM, Down 8.5%YTY SOURCE: Clarus Market Metrics
  58. 58. MedianPriceofResidentialHomes • Los Angeles County, June 2014: $500,000 • Up 0.2% MTM, Up 8.7%YTY SOURCE: Clarus Market Metrics
  59. 59. ForSaleProperties • Los Angeles County, June 2014: 20,233 Units • Down 0.1% MTM, Down 0.4%YTY Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month. SOURCE: Clarus Market Metrics
  60. 60. Month’sSupplyofInventory • Los Angeles County, June 2014: 2.4 Months Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month. SOURCE: Clarus Market Metrics
  61. 61. SANGABRIEL
  62. 62. SalesofResidentialHomes • San Gabriel, June 2014: 36 Units • Up 89.5% MTM, Up 24.1%YTY SOURCE: Clarus Market Metrics
  63. 63. MedianPriceofResidentialHomes • San Gabriel, June 2014: $635,000 • Up 39.6% MTM, Down 0.3%YTY SOURCE: Clarus Market Metrics
  64. 64. ForSaleProperties • San Gabriel, June 2014: 111 Units • Down 5.9% MTM, Down 25.5%YTY Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month. SOURCE: Clarus Market Metrics
  65. 65. Month’sSupplyofInventory • San Gabriel, June 2014: 3.2 Months Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month. SOURCE: Clarus Market Metrics
  66. 66. ALHAMBRA
  67. 67. SalesofResidentialHomes • Alhambra, June 2014: 38 Units • Up 18.8% MTM, Up 35.7%YTY SOURCE: Clarus Market Metrics
  68. 68. MedianPriceofResidentialHomes • Alhambra, June 2014: $480,000 • Down 5.4% MTM, Up 10.3%YTY SOURCE: Clarus Market Metrics
  69. 69. ForSaleProperties • Alhambra, June 2014: 170 Units • Up 17.2% MTM, Up 16.4%YTY Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month. SOURCE: Clarus Market Metrics
  70. 70. Month’sSupplyofInventory • Alhambra, June 2014: 2.5 Months Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month. SOURCE: Clarus Market Metrics
  71. 71. MONTEREYPARK
  72. 72. SalesofResidentialHomes • Monterey Park, June 2014: 31 Units • Up 3.3% MTM, Up 10.7%YTY SOURCE: Clarus Market Metrics
  73. 73. MedianPriceofResidentialHomes • Monterey Park, June 2014: $515,000 • Up 4.3% MTM, Up 19.4%YTY SOURCE: Clarus Market Metrics
  74. 74. ForSaleProperties • Monterey Park, June 2014: 145 Units • Up 2.1% MTM, Up 0.7%YTY Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month. SOURCE: Clarus Market Metrics
  75. 75. Month’sSupplyofInventory • Monterey Park, June 2014: 2.2 Months Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month. SOURCE: Clarus Market Metrics
  76. 76. 2013ANNUAL HOUSING MARKETSURVEY
  77. 77. 72% 5.7 0 1 2 3 4 5 6 7 0% 10% 20% 30% 40% 50% 60% 70% 80% % with Multiple Offers MultipleOffersatRecordHighs Share of home sales with multiple offers highest in at least the last 15 years SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  78. 78. Q. Please indicate the type of mortgage. ShareofFHALowestin6Years 17% 6% 0% 10% 20% 30% 40% 2005 2006 2007 2008 2009 2010 2011 2012 2013 FHA VA SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  79. 79. ShareofFirst-TimeBuyersistheLowestSince2006 Q.Was the buyer a first-time buyer? 28% 0% 10% 20% 30% 40% 50% 2005 2006 2007 2008 2009 2010 2011 2012 2013 % First-Time Home Buyers Long Run Average Long Run Average = 38% SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  80. 80. InvestmentHomes:19%MarketShare 19% SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Investment/Rental Property Investment/Rental Property Long Run Average: 11 %
  81. 81. BuyingtoRent:WinningInvestmentStrategy Investment to Flip Rental Property SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  82. 82. ShareofCashBuyersdecreasesforthefirst timeafter7yearsofcontinuousIncrease 27% 0% 5% 10% 15% 20% 25% 30% 35% 2005 2006 2007 2008 2009 2010 2011 2012 2013 % of All Cash Sales • Almost one-third of buyers paid with all cash • The share of all cash buyers has been on the rise since 2006 SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  83. 83. InternationalBuyersareGettingaBiggerSliceof theMarketthanBefore 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.? 8% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 2008 2009 2010 2011 2012 2013 SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  84. 84. CountryofInternationalBuyer • China (30%) • Canada (9%) • India (6%) • Mexico (13%)
  85. 85. CALIFORNIA HOUSING MARKET FORECAST June 2014
  86. 86. CaliforniaHousingMarketOutlook Indicator 2009 2010 2011 2012 2013 2014p 2015f SFH Resales (000s) 474.9 416.5 422.6 439.8 413.9 395.7 417.9 % Change 24.5% -12.3% 1.4% 4.1% -5.9% -4.4% 5.6% Median Price ($000s) $275.0 $305.0 $286.0 $319.3 $407.2 $447.8 $463.7 % Change -21.1% 10.9% -6.2% 11.6% 27.5% 10.0% 3.5% 30-Yr FRM 5.0% 4.7% 4.5% 3.7% 4.0% 4.6% 5.3% 1-Yr ARM 4.7% 3.8% 3.0% 2.7% 2.6% 2.5% 3.0% SERIES:CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  87. 87. SalesDownfor2014butImprovein2015;Price ContinuestoGrowthisYearandNextYear Units (Thousand) 396 418 0 100 200 300 400 500 600 700 2005 2007 2009 2011 2013 2015f Thousands Sales of Existing Detached Homes $448 $464 $0 $100 $200 $300 $400 $500 $600 2005 2007 2009 2011 2013 2015f Thousands Median Price Price (Thousand) SERIES:CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  88. 88. CA:DollarVolumeSteadilyImproving Up5.2%in2014 & 9.3%in2015 $301 $244 $164 $133 $131 $127 $121 $140 $169 $177 $194 $0 $50 $100 $150 $200 $250 $300 $350 $400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014p 2015f $Volume of Sales $ in Billion -60% SERIES:CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  89. 89. MARKETOPPORTUNITIES
  90. 90. ManyMarketOpportunities • First-time Buyers • Formerly “Underwater” Homeowners • Property Management • InternationalClients • New Construction • Embrace Learning
  91. 91. STORMCLOUDSONTHE HORIZON?
  92. 92. StormClouds–PrepareforDiscontinuous Change • Fall of Independent Contractor Status • Rise of the “Team” • Turbo-Tax for real estate? • Marginalization of the traditional brokerage • GSE’s out – new and more expensive capital sources in • Millennials priced out of the market – housing affordability tightens its grip • Google buys Zillow and dominates market
  93. 93. 2014 C.A.R. Strategic Planning Books
  94. 94. 2014 “Good Reads Recommendations”
  95. 95. BEST PRACTICES
  96. 96. WhatmakesagoodREALTOR? • Local knowledge • Visibility • Tech Saavy • Communication • Ethical/Honest/Trustworthy • Social Media Guru • Follow-through • Organized with attention to detail • Transparency • Good Listener • Visible in the community
  97. 97. FACT: MOST BUYERSSAYTHEY FOUND THEIR AGENTON-LINE Best Practice: Be visible on the web
  98. 98. MostBuyersFindAgentsOnline 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 2013 2014 13% 29% 21% 28% 28% 21% 12% 11% 9% 7% 55% 59% 66% 63% 65% 2% Relationships/Contacts Advertising Internet Other Q. How did you find your real estate agent?
  99. 99. FACT: MOSTSELLERS & BUYERS INTERVIEW MULTIPLE AGENTS Best Practice: Create opportunities to connect with new clients. Networking & prospecting are worth it!
  100. 100. MostBuyers&SellersInterviewed MultipleAgents Buyers 1 agent 2 agents 3 agents 4 agents 5 agents 6 agents 7 agents Sellers 1 agent 2 agents 3 agents 4 agents 5 agents 6 agents Source:C.A.R. 2014 Home Buyer Survey,C.A.R. 2013 Home Seller Survey Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase/sale?
  101. 101. Morethan¾BuyersInterviewedatLeast2Agents 0% 5% 10% 15% 20% 25% 1 2 3 4 5 6 7 24% 23% 10% 18% 16% 5% 4% # of Agents Interviewed Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase?
  102. 102. FACT: MOST BUYERS FOUND THEIR HOMEON-LINE Best Practice: Re-define your role
  103. 103. 2007:Almost9outof10BuyersSaidThey FoundTheirHomethroughAgent 8% 88% 1%2% 1% 2007 Website Agent Friend/family Open house Driving around Q. How did you find the home you purchased?
  104. 104. 2014:5outof10BuyersSaidThey FoundTheirHomethroughAgent 3% 39% 53% 3% 2% 2014 For Sale Sign Website Agent Open house Other Q. How did you find the home you purchased?
  105. 105. FACT:CLIENTSWANT “BETTER” COMMUNICATION Best Practice: Ask them how they want to communicate. Establish rules of engagement early in the process.
  106. 106. Have the DTR* conversation with your clients first! *Define the Relationship
  107. 107. GapinPhone&TextCommunication 17% 50% 29% 4% 51% 43% 5% 0% Telephone Email Text Message In Person Preferred Actual Q. What was your preferred method of communicating with your agent? Q. How did your agent actually communicate with you?
  108. 108. GapinPhone&TextCommunication Telephone Email Text Message In Person 11% 47% 40% 1% 38% 46% 15% 0% Preferred Actual Q. What was your preferred method of communicating with your agent? Q. How did your agent actually communicate with you?
  109. 109. 38% 37% 42% 44% 49% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2010 2011 2012 2013 2014 Q.What was the typical response time you expected from your agent to return any form of communication to you? MoreBuyersExpectInstantResponsefromAgents
  110. 110. RoomforImprovementinAgentResponseTime 0% 10% 20% 30% 40% 50% 60% Instantly Within 30 mins. Within 1 hr. Within 2 hrs. Within 4 hrs. Same day 1 business day or longer 49% 29% 16% 4% 2% 0% 0% 18% 7% 11% 17% 24% 13% 10% Expected Actual Q.What was the typical response time you expected from your agent to return any form of communication to you? Q. On average, what was the actual response time of your agent to return any form of communication to you?
  111. 111. FACT:WE NEED MORE FIRST-TIME BUYERS Best Practice: Understand “Millennials” and meet them on their own turf/terms.
  112. 112. FACT:OFF-MARKET LISTINGSAREA PROBLEM Best Practice: List properties on the MLS
  113. 113. Only8outof10PropertiesListedon theMLS Yes 81% No 19% Q. Was the home you purchased listed on a multiple listing service?
  114. 114. FACT:SOCIAL MEDIA ISA REALITY Best Practice: Engage on social media
  115. 115. 77%ofBuyersUsedSocialMediainBuying Process Q. Which social media websites did you use during your home buying process? N = 1073
  116. 116. SocialMediaUseContinuesRise 0% 10% 20% 30% 40% 50% 60% 70% 80% 2011 2012 2013 2014 52% 68% 75% 77% Q. Did you use social media (such as Facebook,Twitter,YouTube, etc.) in your home buying process?
  117. 117. BuyersRemainReceptivetoReceivingInformation ViaSocialMedia 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2011 2012 2013 2014 4.2 4.1 4.1 4.1 Average Q. How receptive would you be to receiving information about the home buying process directly from your real estate agent via social media? (Scale: 1-5)
  118. 118. SocialMediaUsedforBuyingTips& NeighborhoodInfo 0% 10% 20% 30% 40% 50% Agents' YouTube Neighborhood profiles Home buying info Neighborhood amenities Neighborhood lifestlye Agent referrals Agent's Facebook page Neighborhood info from friends Buying tips, suggestions from friends 20% 23% 23% 31% 33% 35% 42% 44% 44% Q. How did you use social media (such as Facebook,Twitter,YouTube, etc.) in your home buying process? N = 1073
  119. 119. FACT: MOBILE IS HERE Best Practice: Calibrate everything you do for mobile.
  120. 120. MoreBuyersUsingMobile 85% 91% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 Q. Did you use a mobile device in the home buying process?
  121. 121. 91%ofBuyersUsedMobileDeviceinBuyingProcess 78% • Look for comparable prices 45% • Search for homes 45% • Communicate 43% • Take photos of homes/amenities/neighborhoods 42% • Research a particular home 41% • Search websites 39% • Communicate w/agent 22% • Research communities/neighborhoods Q. How did you use your mobile device in the home buying process? N = 1269
  122. 122. ZillowisMostUsefulApp Q.What was the most useful app that you used during the home buying process? N = 1269
  123. 123. Realtor.com&ZillowareMostUsefulWebsitesin BuyingProcess 4% 5% 8% 9% 10% 22% 31% 0% 5% 10% 15% 20% 25% 30% 35% Q.What was the single most useful website that you visited during your home buying process? Brokerage Agent
  124. 124. Realtor.com&ZillowMostUsefulWebsites 43% 26% 24% 30% 22% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2010 2011 2012 2013 2014 Zillow realtor.com Redfin Q.What was the single most useful website that you visited during your home buying process?
  125. 125. MostBuyersFoundHomeonRealtor.comor Zillow 4% 5% 8% 12% 13% 26% 33% 0% 5% 10% 15% 20% 25% 30% 35% Q. On which website did you find your home?
  126. 126. Realtor.com&ZillowHelpedMostBuyersFind Homes 33% 28% 30% 26% 0% 5% 10% 15% 20% 25% 30% 35% 2011 2012 2013 2014 realtor.com Zillow Redfin Q. On which website did you find your home?
  127. 127. FACT: MOST REALTORS DO NOT WANTTO BE RATED BYTHEIR CLEINTS Best Practice: everyone is beingYELPED whether they like it or not.Take charge of your reputation and get rated
  128. 128. AgentSatisfactionRatingsImprove -AverageRatingson1-5Scale- 2013 2014 Your real estate agent’s negotiating skills 3.2 3.4 Overall process of finding a home 3.2 3.3 Overall satisfaction with your real estate agent 3.1 3.3 Q. Please rate your degree of satisfaction with the following aspects of your home buying experience on a scale of 1-5, where 1 is “least satisfied” and 5 is “most satisfied”.
  129. 129. ReasonsforSatisfactionWithAgent Q.Why do you have that level of satisfaction with your agent?
  130. 130. ReasonsforDissatisfactionWithAgent Q.Why do you have that level of satisfaction with your agent?
  131. 131. MoreBuyersWouldWorkw/AgentAgain 72% 54% 60% 52% 61% 11% 11% 12% 22% 33% 17% 35% 28% 26% 6% 2010 2011 2012 2013 2014 Unsure No Yes Q. Would you work with the same agent again?
  132. 132. THANKYOU! www.car.org/marketdata lesliea@car.org

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