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09 21-11 forecast2012

This document provides an overview and forecast of the 2012 California housing market from the Chief Economist at Leslie Appleton-Young. It summarizes that the US and California economies faced challenges in 2011 including oil price spikes, sovereign debt crisis, and political changes that contributed to stock market volatility and consumer spending weakness. Unemployment remains high in California and the US. Job growth was flat in August and California job growth is faltering, with the largest job losses in construction and financial activities. The forecast anticipates continued challenges for the 2012 California housing market.

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CALIFORNIA HOUSING MARKET 2012 FORECAST Leslie Appleton-Young, Chief Economist
Overview US and California Economies California Housing Market CA Regional Housing Markets 2011 Annual Market Survey 2012 Housing Market Forecast
U.S. Economic Outlook
2011: A Year of Wild Cards Political Change on Oil Price Spikes Capitol Hill Arab Uprising Sovereign Debt Crisis in EuroZone Debt Limit Ceiling & Downgrade Stock of US Debt Market Volatility
Gross Domestic Product: Stall Speed 2010: 2.8%; 2011 Q1: 0.4% Q2: 1.0% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ 8% 7% ANNUAL QTRLY 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% -8% 2000 2002 2004 2006 2008 2010 Q2-10 Q4-10 Q2-11
Components of GDP: Consumer Spending Weak; Gov’t Sector Down Quarterly Percent Change 3.0 2.5 Q3 2010 Q4 2010 2.0 Q1 2011 1.5 Q2 2011 1.0 0.5 0.0 -0.5 -1.0 -1.5 Consumption Fixed Nonres. Net Exports Government Investment SOURCE: US Dept of Commerce, Bureau of Economic Analysis
Consumers Pulling Back Home Equity & Reverse Wealth Effect Consumer Spending 2011 Q1: 2.7% Q2: 0.4% 8% QUARTERLY PERCENT CHANGE 6% 4% 2% 0% -2% -4% 1Q-2000 1Q-2001 1Q-2002 1Q-2003 1Q-2004 1Q-2005 1Q-2006 1Q-2007 1Q-2008 1Q-2009 1Q-2010 1Q-2011 SOURCE: US Dept of Commerce, Bureau of Economic Analysis
Unemployment Stubbornly High August 2011 California (12.1%) vs. United States (9.1%) 14% CA US 12% 10% 8% 6% 4% 2% 0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CA Employment Development Division
U.S. Job Growth: Flat in August Month-to-Month Changes Recession Job Losses: 8.4 million Since Jan’10: +1.8 million 500,000 400,000 300,000 200,000 100,000 0 -100,000 -200,000 -300,000 -400,000 -500,000 -600,000 -700,000 -800,000 -900,000 Apr-08 Jul-08 Oct-08 Apr-09 Jul-09 Oct-09 Apr-10 Jul-10 Oct-10 Apr-11 Jul-11 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: US Dept of Labor, Bureau of Labor Statistics
California Job Growth Faltering Month-to-Month Changes Recession Job Losses: 1.3 million Since Jan’10: +188,100 100000 80000 60000 40000 20000 0 -20000 -40000 -60000 -80000 -100000 -120000 -140000 -160000 May-08 May-09 May-10 May-11 Mar-08 Sep-08 Mar-09 Nov-08 Sep-09 Mar-10 Nov-09 Sep-10 Mar-11 Nov-10 Jan-08 Jan-09 Jan-10 Jan-11 Jul-08 Jul-09 Jul-10 Jul-11 SOURCE: CA Employment Development Division
Where are California’s Jobs? Employment Trends: Construction & Financial Biggest Losers Year to Industry 2005 Jul-11 Date Mining and Logging 23,600 27,600 4,000 Construction 905,300 567,300 -338,000 Manufacturing 1,502,600 1,257,600 -245,000 Trade, Transportation & Utilities 2,822,100 2,641,500 -180,600 Information 473,600 455,400 -18,200 Financial Activities 920,300 755,800 -164,500 Professional & Business Services 2,160,700 2,136,200 -24,500 Educational & Health Services 1,593,400 1,837,000 243,600 Leisure & Hospitality 1,475,200 1,531,600 56,400 Other Services 505,500 484,500 -21,000 Government 2,420,200 2,380,200 -40,000 TOTAL 14,802,500 14,074,700 -727,800 SOURCE: California Association of REALTORS®
100 120 140 160 20 40 60 80 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 INDEX, 100=1985 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 August 2011: 44.5 Jan-08 Jul-08 Lowest Since April ‘09 Jan-09 Jul-09 Consumer Confidence Slipping Jan-10 Jul-10 Jan-11 Jul-11
Crisis of Confidence: Small Business Optimism Down Source: National Federation of Independent Business
Consumer Prices Low but Heading Higher CPI August 2011: All Items +3.8% YTY; Core +2.0% YTY PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984 6% All Items 5% Core 4% 3% 2% 1% 0% -1% -2% -3% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Housing
California vs. U.S. Sales US Home Sales CA Home Sales 7,000,000 700,000 6,000,000 600,000 5,000,000 500,000 4,000,000 400,000 3,000,000 300,000 2,000,000 200,000 1,000,000 100,000 0 0 SOURCE: California Association of REALTORS®
California vs. U.S. Median Price US Median Price CA Median Price $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 SOURCE: California Association of REALTORS®
Housing Affordability: Records Highs California Vs. U.S. CA US 100% % OF HOUSEHOLDS THAT CAN BUY 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA Underwater Mortgages Negative Equity Share in CA Near Negative Equity Share in CA 40% 35% 30.2% 30% 25% 20% 15% 10% 4.6% 5% 0% Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011 SOURCE: CoreLogic
Monetary Policy
Mortgage Rates @ Historical Lows Debt Down Grade Ignited Flight to Quality FRM ARM 6.00% MONTHLY WEEKLY 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 9.15.11 2009.01 2009.04 2009.07 2009.10 2010.01 2010.04 2010.07 2010.10 2011.01 2011.04 2011.07 8.4.11 8.25.11
Classic Liquidity Trap: Consumers Deleveraging Low Rates and Low Borrowing 10% 9% 8% 7% 6% 5% 4% 3% 2% FRM ARM 1% Federal Funds 0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: Federal Home Loan Mortgage Corporation
Fiscal Policy
US Deficit Highest in Decades 2010: 11% of GDP (Revenues – Expenses) 4.0% Deficit as a % of GDP 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: US Treasury, BEA, compiled by C.A.R. Note: Positive = Surplus
US Debt Jumped as Government Responded to Financial Crisis 2010: 93% of GDP 100.0% 90.0% Debt as a % of GDP 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 1974 1996 1962 1964 1966 1968 1970 1972 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1998 2000 2002 2004 2006 2008 2010 Source: US Treasury, compiled by C.A.R.
Obama Jobs Proposal What: $450 Billion stimulus: Tax cuts ($250B) and infrastructure spending ($200B) Why: Economy is stalled/Avoid double-dip Zero job growth in August/high unemployment Stabilize confidence: consumer, business, investor How: Increase taxes on the rich Entitlement Reform Tax Reform
Federal Issues – Critical Concerns High-cost Loan Limit - expires 10/1/11 Future of Fannie and Freddie in flux - Increase guarantee fee likely FHA targeted for market share drop Tax Reform on the horizon – MID? QRM (Qualified Residential Mortgage) 20% Down – Is the future of the 30 year mortgage in doubt?
U.S. Economic Outlook 2005 2006 2007 2008 2009 2010 2011f 2012f • US GDP 3.1% 2.7% 2.0% 0.0% -2.6% 2.9% 1.7% 2.0% Nonfarm Job 1.7% 1.8% 1.1% -0.6% -4.4% -0.7% 1.0% 0.9% Growth Unemployment 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 9.0% 8.9% CPI 3.4% 3.2% 2.8% 3.8% -0.4% 1.6% 3.2% 2.3% Real Disposable Income, % 1.3% 4.0% 2.2% 0.5% 0.9% 1.4% 1.7% 1.5% Change Forecast Date: September 2011 SOURCE: California Association of REALTORS®
California Economic Outlook 2005 2006 • 2007 2008 2009 2010 2011f 2012f Nonfarm Job 1.8% 1.7% 0.8% -1.3% -6.0% -1.4% 1.5% 2.1% Growth Unemployment 5.4% 4.9% 5.4% 7.2% 11.4% 12.4% 12.0% 11.2% Rate Population 1.2% 1.1% 1.1% 1.2% 1.1% 0.9% 0.9% 0.9% Growth Real Disposable Income, % 1.3% 3.4% 1.5% 0.1% -2.2% 1.6% 1.5% 2.0% Change Forecast Date: September 2011 SOURCE: California Association of REALTORS®
California Housing Market
California Sales of Existing Homes and Median Price Housing Cycle Comparisons 1970- 2011 UNITS/MEDIAN PRICE $ Sales of Existing Detached Homes Median Price 700,000 -44% 600,000 500,000 -61% -25% 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 SOURCE: California Association of REALTORS®
Dollar Volume of Sales Down 5% in 2011, Up 3% in 2012 $ in Billion % Change $ Volume of Sales Percent Change $350 50% $327 37% 40% $300 24% 30% $250 26% 20% $200 16% 10% 2% $150 3% 0% $129 -2% -1.0% -5% -10% $100 $150 $143 $147 -20% -19% $50 -22% -27% -30% $0 -40% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 SOURCE: California Association of REALTORS®
Sales of Existing Detached Homes and Pacific West Consumer Confidence California, August 2011 Sales: 497,390 Units, Down 0.4% YTD, Up 10.2% YTY UNITS Sales Consumer Confidence INDEX 700,000 160 600,000 140 120 500,000 100 400,000 80 300,000 60 200,000 40 100,000 20 0 0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 SOURCE: California Association of REALTORS®; The Conference Board *Sales are seasonally adjusted and annualized
Median Price of Existing Detached Homes California, August 2011: $297,060, Down 7.4% YTY $700,000 P: May-07 $594,530 $600,000 $500,000 T: Feb-09 $245,230 $400,000 -59% from peak $300,000 $200,000 $100,000 $0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®
0 2 4 6 8 10 12 14 16 18 20 Jan-88 MONTHS Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Unsold Inventory Index Jan-06 Jan-07 Jan-08 California, August 2011: 5.0 Months Jan-09 Jan-10 Jan-11
Unsold Inventory Index (Months) Price Range (Thousand) Aug-10 Jul-11 Aug-11 $1,000K+ 11.1 9.2 9.1 $750-1000K 7.0 6.9 6.2 $500-750K 6.4 6.3 5.6 $300-500K 5.7 5.6 5.2 $0-300K 4.8 5.1 4.6 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Unsold Inventory By Price Range Jan 2005 – August 2011 MONTHS 30 $0 - 300K $300-500K 25 $500-750K $750-1000K 20 $1,000K+- All 15 10 5 0 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-05 Jul-05 Apr-06 Jul-06 Apr-07 Jul-07 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Market Breakdown: Equity v. Distressed Sales
Share of Distressed Sales to Total Sales 60% Aug-10 Jul-11 Aug-11 44.5% 42.9% 43.7% 40% 24.7% 25.2% 24.4% 19.3% 18.9% 20% 17.5% 0% REOs Short Sales Distressed Sales SOURCE: California Association of REALTORS®
Tight Supply of Inventory for REO Sales Aug-11 Unsold Inventory Index (Months) 8.1 9 8 7 5.7 6 5 4 2.6 3 2 1 0 Equity Sales REO Sales Short Sales
Distressed Sales: Bay Area (Percent of Total Sales) Aug-11 100% 80% 71% 60% 48% 40% 27% 43% 25% 31% 20% 0% Marin Napa San Mateo Santa Clara Solano Sonoma SOURCE: California Association of REALTORS®
REO & Short Sales: Bay Area (Percent of Total Sales) 100% Aug 2011 80% Short Sales REO Sales 60% 26% 40% 20% 15% 18% 20% 28% 15% 21% 45% 13% 0% 11% 10% 24% Marin Napa San Mateo Santa Clara Solano Sonoma SOURCE: California Association of REALTORS®
Distressed Sales: Southern CA (Percent of Total Sales) Aug-11 100% 80% 62% 64% 60% 44% 40% 33% 20% 27% 0% Los Angeles Orange Riverside San Bernardino San Diego SOURCE: California Association of REALTORS®
REO & Short Sales: Southern CA (Percent of Total Sales) 100% Aug 2011 80% Short Sales REO Sales 60% 14% 26% 40% 24% 20% 20% 20% 35% 49% 12% 8% 0% 19% Los Angeles Orange Riverside San Bernardino San Diego SOURCE: California Association of REALTORS®
Distressed Sales: Central Valley (Percent of Total Sales) Aug-11 100% 73% 80% 67% 59% 60% 62% 60% 40% 20% 0% Madera Merced San Benito Sacramento Kern SOURCE: California Association of REALTORS®
REO & Short Sales: Central Valley (Percent of Total Sales) 100% Aug 2011 Short Sales 80% REO Sales 7% 60% 23% 30% 40% 24% 19% 67% 20% 36% 37% 38% 41% 0% Madera Merced San Benito Sacramento Kern SOURCE: California Association of REALTORS®
Distressed Sales: Rest of California (Percent of Total Sales) Aug-11 100% 80% 59% 64% 60% 62% 42% 45% 56% 40% 31% 48% 35% 20% 0% SOURCE: California Association of REALTORS®
REO & Short Sales: Rest of California (Percent of Total Sales) 100% Aug 2011 80% Short Sales REOs 60% 11% 7% 40% 8% 25% 5% 48% 7% 57% 13% 9% 20% 34% 25% 36% 20% 32% 51% 0% 39% 15% SOURCE: California Association of REALTORS®
California Foreclosure Filings August 2011 NTS: 24,260, -16.9% YTD • NOD: 32,338, -21.5% YTD Notice of Trustee Sale - Counts Notice of Defaults - Counts 65,000 6 Month Average: 60,000 NTSs: 23,806 55,000 50,000 NODs: 23,625 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Nov-07 Nov-08 Nov-09 Nov-10 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-07 Sep-07 Jan-08 Sep-08 Jan-09 Sep-09 Jan-10 Sep-10 Jan-11 May-07 May-08 May-09 May-10 May-11 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 SOURCE: ForeclosureRadar.com
CA Foreclosure Outcomes August 2011 REO: -12.2% YTD • 3rd Party: -4.1% YTD • Cancel: -19.7% YTD REOs Sold to 3rd Party Cancellations 6 Month Average: 30,000 REO: 10,880 25,000 3rd Party: 3,616 Cancelled: 14,447 20,000 15,000 10,000 5,000 0 Oct-07 Oct-08 Oct-09 Oct-10 Apr-07 Jul-07 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: ForeclosureRadar.com
CA Foreclosure Inventories August 2011 Preforeclosure: -17.5% YTD • Schedule for Sale: -17.8% YTD • Bank Owned: 7.0% YTD 6 Month Average: Preforeclosure Scheduled for Sale Bank Owned Preforeclosure: 115,742 Schedule for Sale: 200,000 105,138 Bank Owned: 108,635 150,000 100,000 50,000 0 Oct-07 Oct-08 Oct-09 Oct-10 Apr-07 Jul-07 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: ForeclosureRadar.com
San Jose Preforeclosure: 1,367 • Auction: 2,166 • Bank Owned: 617 Source: ForeclosureRadar.com as of 08/19/11
Santa Clara Preforeclosure: 86 • Auction: 131 • Bank Owned: 41 Source: ForeclosureRadar.com as of 08/19/11
Palo Alto Preforeclosure: 17 • Auction: 21 • Bank Owned: 4 Source: ForeclosureRadar.com as of 08/11/11
San Francisco Preforeclosure: 525 • Auction: 681 • Bank Owned: 179 Source: ForeclosureRadar.com as of 08/11/11
South Lake Tahoe Preforeclosure: 113 • Auction: 112 • Bank Owned: 77 Source: ForeclosureRadar.com as of 08/11/11
Sacramento Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560 Source: ForeclosureRadar.com as of 08/19/11
Stockton Preforeclosure: 895 • Auction: 1,093 • Bank Owned: 691 Source: ForeclosureRadar.com as of 08/11/11
Los Angeles Preforeclosure: 2,975 • Auction: 4,659 • Bank Owned: 1,331 Source: ForeclosureRadar.com as of 09/19/2011
Anaheim Preforeclosure: 498 • Auction: 667 • Bank Owned: 219 Source: ForeclosureRadar.com as of 09/14/11
Irvine Preforeclosure: 262 • Auction: 360 • Bank Owned: 92 Source: ForeclosureRadar.com as of 09/14/11
Newport Beach Preforeclosure: 124 • Auction: 154 • Bank Owned: 18 Source: ForeclosureRadar.com as of 09/14/11
San Diego Preforeclosure: 2,016 • Auction: 2,001 • Bank Owned: 797 Source: ForeclosureRadar.com as of 09/19/2011
Commercial Market
Commercial Outlook Industrial  US Vacancy Rate 2011-2013: 13.0, 12.2%, 10.0%  Better in LA, Orange County, San Bernardino, San Diego, and Oakland than elsewhere in US  Need gains in trade and mfg to improve Retail  US Vacancy Rate 2011-2013: 13.0%, 12.3%, 11.5%  Vacancy rates lower in most CA metro areas, except Sacramento  Fundamentals weak across markets of the state, need increased consumer spending to reverse trend
Commercial Outlook Office  US Vacancy Rate 2011-2013: 16.6%, 16.4%, 16.0%  Weak markets because of job losses across many sectors  SF and LA outperforming the US Multi-Family  US Vacancy Rate 2011-2013: 5.6, 4.7%, 4.4%  All CA metro areas outperform US averages  Push from problems in owner-occupied sector
Regional Housing Markets
Northern California
Sales of Existing Detached Homes and Pacific West Consumer Confidence Northern CA, August 2011: 1,242 Units, Up 9.3% YTD, Up 24.6% YTY UNITS Sales Consumer Confidence INDEX 1,800 160 1,600 140 1,400 120 1,200 100 1,000 80 800 60 600 40 400 200 20 0 0 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®; SOURCE: California Association of REALTORS®; The Conference Board The Conference Board
Home Sales in Northern California Aug-10 Aug-11 450 400 350 300 250 200 150 100 50 0 Butte Humbolt Lake Paradise Placer Shasta Siskiyou South Tahoe Tehama County County County Lake Sierra SOURCE: California Association of REALTORS® Tahoe
Median Price of Existing Detached Homes Northern CA, August 2011: $223,890, Down 11.5% YTY $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes Northern California Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Butte $243,420 $196,430 $201,320 2.5% -17.3% Humbolt $252,780 $232,999 $223,863 -3.9% -11.4% Lake County $132,857 $118,888 $123,636 4.0% -6.9% Paradise $194,999 $134,999 $163,333 21.0% -16.2% Placer County $292,499 $264,383 $266,233 0.7% -9.0% Shasta $171,176 $154,705 $162,917 5.3% -4.8% Siskiyou County $130,000 $130,000 $116,666 -10.3% -10.3% South Lake Tahoe $295,454 $238,888 $338,889 41.9% 14.7% Tahoe Sierra $474,999 $397,221 $450,000 13.3% -5.3% Tehama $127,500 $131,428 $123,333 -6.2% -3.3% SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
Northern Wine Country
Sales of Existing Detached Homes and Pacific West Consumer Confidence Northern Wine Country, Aug. 2011: 620 Units, Up 3.2% YTD, Up 17.2% YTY UNITS Sales Consumer Confidence INDEX 1000 160 900 140 800 120 700 600 100 500 80 400 60 300 40 200 100 20 0 0 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®; The Conference Board
Home Sales in Northern Wine Country Aug-10 Aug-11 500 450 400 350 300 250 200 150 100 50 0 Mendocino Napa Sonoma SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes Northern Wine Country, August 2011: $330,070, Down 12.5% YTY $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes Northern Wine Country Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Mendocino $ 258,330 $ 214,290 $ 201,920 -5.8% -21.8% Napa $ 394,230 $ 334,780 $ 354,760 6.0% -10.0% Sonoma $ 378,830 $ 333,490 $ 339,200 1.7% -10.5% SOURCE: California Association of REALTORS®
Bay Area
Sales of Existing Detached Homes and Pacific West Consumer Confidence Bay Area, August 2011: 3,895 Units, Up 0.5% YTD, Up 12.1% YTY UNITS INDEX Sales Consumer Confidence 8,000 160 7,000 140 6,000 120 5,000 100 4,000 80 3,000 60 2,000 40 1,000 20 0 0 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®; The Conference Board
Home Sales in Bay Area Counties Aug-10 Aug-11 1400 1200 1000 800 600 400 200 0 Alameda Contra Marin Napa San San Mateo Santa Solano Sonoma Costa Francisco Clara (Central County) SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Bay Area, August 2011: $498,190, Down 9.2% YTY $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Bay Area Counties County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Alameda $ 515,620 $ 462,890 $ 468,900 1.3% -9.1% Contra Costa (Central County) $ 670,450 $ 618,420 $ 607,310 -1.8% -9.4% Marin $ 794,120 $ 761,030 $ 806,550 6.0% 1.6% Napa $ 394,230 $ 334,780 $ 354,760 6.0% -10.0% San Francisco $ 675,780 $ 648,330 $ 632,270 -2.5% -6.4% San Mateo $ 780,000 $ 729,900 $ 742,000 1.7% -4.9% Santa Clara $ 625,000 $ 607,000 $ 595,000 -2.0% -4.8% Solano $ 207,090 $ 190,560 $ 197,880 3.8% -4.4% Sonoma $ 378,830 $ 333,490 $ 339,200 1.7% -10.5% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Central Valley Region
Home Sales in Central Valley Region Aug-10 Aug-11 1800 1600 1400 1200 1000 800 600 400 200 0 d) a d re y no to ito y er ce nt nt l la en fie es n ad ou u er Tu Be m Co s Fr M M C er a n cr er s ak Sa g Sa ac (B in Pl K n er SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® K
Median Price of Existing Detached Homes Central Valley Regions County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Fresno $149,880 $ 139,470 $ 145,730 4.5% -2.8% Kern (Bakersfield) $142,700 $ 139,900 $ 135,000 -3.5% -5.4% Merced $121,870 $ 113,080 $ 126,670 12.0% 3.9% Sacramento $186,750 $ 168,060 $ 167,040 -0.6% -10.6% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Central Valley Regions County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Fresno $ 149,880 $ 139,470 $ 145,730 4.5% -2.8% Kern (Bakersfield) $ 142,700 $ 139,900 $ 135,000 -3.5% -5.4% Kings County $ 168,570 $ 114,290 $ 130,000 13.7% -22.9% Madera $ 142,500 $ 92,500 $ 128,750 39.2% -9.6% Merced $ 121,870 $ 113,080 $ 126,670 12.0% 3.9% Placer County $ 292,500 $ 264,380 $ 266,230 0.7% -9.0% Sacramento $ 186,750 $ 168,060 $ 167,040 -0.6% -10.6% San Benito $ 280,000 $ 242,500 $ 239,900 -1.1% -14.3% Tulare $ 138,420 $ 114,230 $ 124,680 9.1% -9.9% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Central Coast
Sales of Existing Detached Homes and Pacific West Consumer Confidence Central Coast, Aug. 2011 Sales: 2,296 Units, Up 2.1% YTD, Up 18.5% YTY UNITS Sales Consumer Confidence INDEX 1100 160 1000 140 900 800 120 700 100 600 80 500 400 60 300 40 200 20 100 0 0 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
Home Sales in Central Coast Region Aug-10 Aug-11 300 250 200 150 100 50 0 Monterey Atascadero Paso Pismo San Luis Lompoc Santa Santa Robles Coast Obispo Valley Barbara Maria SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Central Coast, August 2011: $335,710, Down 5.1% YTY $750,000 $700,000 $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Monterey County Monterey $ 257,760 $ 255,770 $ 263,160 2.9% 2.1% San Luis Obispo County Atascadero $ 268,750 $ 268,750 $ 309,091 15.0% 15.0% Paso Robles $ 295,832 $ 306,250 $ 277,083 -9.5% -6.3% Pismo Coast $ 407,692 $ 364,515 $ 419,444 15.1% 2.9% San Luis Obispo $ 378,124 $ 430,000 $371,428 -13.6% -1.8% Santa Barbara County Lompoc Valley $ 250,000 $ 225,000 $ 205,000 -8.9% -18.0% Santa Barbara $ 851,190 $ 833,330 $ 742,420 -10.9% -12.8% Santa Maria $ 250,000 $ 210,290 $ 223,530 6.3% -10.6% SOURCE: California Association of REALTORS®
Southern California Region
Sales of Existing Detached Homes and Pacific West Consumer Confidence Southern California August 2011 Sales: 11,229 Units, Down 4.0% YTD, Up 8.1% YTY UNITS Sales Consumer Confidence INDEX 18,000 160.0 16,000 140.0 14,000 120.0 12,000 100.0 10,000 80.0 8,000 60.0 6,000 40.0 4,000 2,000 20.0 0 0.0 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
Home Sales in Southern CA Regions Aug-10 Aug-11 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Los Orange Riverside San San Diego Ventura Santa Ventura Angeles Bernardino Barbara SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes Southern CA, August 2011: $294,140, Down 6.3% YTY $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Southern California Region County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Los Angeles $336,420 $317,060 $312,900 -1.3% -7.0% Orange $561,900 $551,510 $508,910 -7.7% -9.4% Riverside $208,120 $200,910 $202,060 0.6% -2.9% San Bernardino $144,210 $135,150 $135,030 -0.1% -6.4% San Diego $384,700 $375,330 $369,390 -1.6% -4.0% Ventura $434,480 $421,870 $424,400 0.6% -2.3% Santa Barbara $536,290 $418,750 $421,430 0.6% -21.4% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2011 Annual Housing Market Survey
2 in 5 Homes Sold Were Distressed Properties 2008 2009 2010 2011 59% 60% 40% 20% 20% 20% 0% REOs Short Sales Equity Sales Q. Was the property purchased/sold as a foreclosure, REO, short sale, or none of the above?
Equity vs. REO vs. Short Sales Equity Sales REO Sales Short Sales Share of Total Sales 58.7% 19.7% 20.2% Median Home Price $431,000 $240,000 $287,000 Square Footage 1,783 1,500 1,600 Price / SF $250 $112 $175 Sales-to-List Price Ratio 95.9% 98.0% 95.9% % of Sales With Multiple Offers 35.2% 58.3% 57.5% Avg. Number of Offers 3.0 3.0 3.6 % of All Cash Sales 25.5% 34.0% 23.3% Days on MLS 67 50 141 Days in Escrow 35 35 45
1 in 3 Sellers Sold Because They Were in Distress 35% Sold due to foreclosure/Short sale/Default 30% 30% 25% 20% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the single most important reason for selling/buying the property?
Sellers with a Net Cash Loss 35% 30% 25% 21.8% 20% Long Run Average = 11.2% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the net cash gain or net loss to the seller as a result of this sale?
Net Cash to Sellers Median $250,000 $200,000 $150,000 $100,000 $75,000 $50,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the net cash gain or net loss to the seller as a result of this sale?
Median Price Discount & Weeks On Market 3.9%, 10.5 weeks 8% 16 Med. Price Discount 7% Med. Weeks on MLS 14 6% 12 5% 10 4% 8 3% 6 2% 4 1% 2 0% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 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 %with M ultiple Offers # of M ultiple offers (Average) 60% 6 50% 5 40% 4 30% 3 20% 2 10% 1 0% 0 2000 2002 2004 2006 2008 2010
Proportion of Sellers Planning to Repurchase 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. Is the seller planning on purchasing another home?
Reasons Sellers Not Planning to Buy Another Home Seller is a lender/bank 19.8% Seller prefers to have less financial obligation 11.4% Poor credit background 10.9% Lack of cash for down payment 5.7% Out of work/unemployment 4.9% Decide to live with family/friends 4.7% Waiting for market to bottom 2.7% Other 40.0% 0% 10% 20% 30% 40% 50% Q. Why is the seller not planning to purchase another home?
Reasons For Selling All Home Sellers Foreclosure/Short Sale/Default Change in Family Status Retirement/Move to Retirement Community Investment/ Tax Consderations Desired Better Location Desired Smaller Home Changed Jobs Desired Larger Home Other 0% 5% 10% 15% 20% 25% 30% 35% Q. What was the single most important reason for selling/buying the property?
Cash Sales on the Rise % of All Sales 30% 25% 20% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Buyers Who Bought for Investment/Tax Considerations Dipped Slightly 20% Long Run Average = 12.1% 17% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the single most important reason for selling/buying the property?
Investments & Second/ Vacation Homes Investment/Rental Property Vacation/Second Home 25% 20% 7% 15% 10% 17% 5% 0%
Foreign Buyers 10% % of Foreign Buyers 8% 8% 6% 6% 6% 5% 4% 2% 0% 2008 2009 2010 2011 Q. Was the buyer a foreign buyer?
Years Owned Home Before Selling (All Sellers and Second Home/Investment Home Sellers All Sellers Second Home and Investment Home Sellers 14 12 10 8 7.0 6 6.0 4 2 0
California Housing Market Forecast
Forecast Progress Report 2010 2011 Projected Forecast 2011 2010 Actual October October Projected 2010 2010 SFH Resales 492.0 491.5 502.0 491.1 (000s) % Change -10.0% -10.1% 2.0% -0.1% Median Price $306.5 $303.1 $312.5 $291.0 ($000s) % Change 11.5% 10.2% 2.0% -4.0% Forecast Date: September 2011 vs October 2010 Source: CALIFORNIA ASSOCIATION OF REALTORS®
California Housing Market Outlook 2005 2006 2007 2008 2009 2010 2011f 2012f SFH Resales 625.0 477.5 346.9 441.8 546.9 491.5 491.1 496.2 (000s) % Change 0.03% -23.6% -27.3% 27.3% 23.8% -10.1% -0.1% 1.0% Median Price $522.7 $556.4 $560.3 $348.5 $275.0 $303.1 $291.0 $296.0 ($000s) % Change 16.0% 6.5% 0.7% -37.8% -21.1% 10.2% -4.0% 1.7% 30-Yr FRM 5.9% 6.4% 6.3% 6.0% 5.1% 4.7% 4.5% 4.7% 1-Yr ARM 4.5% 5.5% 5.6% 5.2% 4.7% 3.5% 3.0% 3.1% Forecast Date: September 2011 Source: CALIFORNIA ASSOCIATION OF REALTORS®
Closing Thoughts
Direction of Home Prices: Sellers Skeptical; Buyers Hopeful Down Flat Unsure Up 100% 80% 60% 40% 20% 0% Sellers Buyers Q: Do you think home prices in your neighborhood will go up, down or stay flat in one year, five years and 10 years?
Real Estate: It’s Time To Buy Again “Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.” SOURCE: “Real estate: It’s time to buy again” Fortune Magazine’s 3/28/11 article written by Shawn Tully
8 in 10 Americans Agree Buying a Home is the Best Investment One Can Make SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
8 in 10 Renters Would Like to Buy in the Future “…renters are hardly immune to the allure of homeownership, even in the face of the five-year decline in prices. Asked if they rent out of choice or because they cannot afford to buy a home, just 24% say they rent out of choice.” SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
Thank You www.car.org.marketdata lesliea@car.org

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09 21-11 forecast2012

  • 1.
    CALIFORNIA HOUSING MARKET 2012FORECAST Leslie Appleton-Young, Chief Economist
  • 2.
    Overview US andCalifornia Economies California Housing Market CA Regional Housing Markets 2011 Annual Market Survey 2012 Housing Market Forecast
  • 3.
  • 5.
    2011: A Yearof Wild Cards Political Change on Oil Price Spikes Capitol Hill Arab Uprising Sovereign Debt Crisis in EuroZone Debt Limit Ceiling & Downgrade Stock of US Debt Market Volatility
  • 6.
    Gross Domestic Product:Stall Speed 2010: 2.8%; 2011 Q1: 0.4% Q2: 1.0% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ 8% 7% ANNUAL QTRLY 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% -8% 2000 2002 2004 2006 2008 2010 Q2-10 Q4-10 Q2-11
  • 7.
    Components of GDP: ConsumerSpending Weak; Gov’t Sector Down Quarterly Percent Change 3.0 2.5 Q3 2010 Q4 2010 2.0 Q1 2011 1.5 Q2 2011 1.0 0.5 0.0 -0.5 -1.0 -1.5 Consumption Fixed Nonres. Net Exports Government Investment SOURCE: US Dept of Commerce, Bureau of Economic Analysis
  • 8.
    Consumers Pulling Back Home Equity & Reverse Wealth Effect Consumer Spending 2011 Q1: 2.7% Q2: 0.4% 8% QUARTERLY PERCENT CHANGE 6% 4% 2% 0% -2% -4% 1Q-2000 1Q-2001 1Q-2002 1Q-2003 1Q-2004 1Q-2005 1Q-2006 1Q-2007 1Q-2008 1Q-2009 1Q-2010 1Q-2011 SOURCE: US Dept of Commerce, Bureau of Economic Analysis
  • 9.
    Unemployment Stubbornly High August 2011 California (12.1%) vs. United States (9.1%) 14% CA US 12% 10% 8% 6% 4% 2% 0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CA Employment Development Division
  • 10.
    U.S. Job Growth:Flat in August Month-to-Month Changes Recession Job Losses: 8.4 million Since Jan’10: +1.8 million 500,000 400,000 300,000 200,000 100,000 0 -100,000 -200,000 -300,000 -400,000 -500,000 -600,000 -700,000 -800,000 -900,000 Apr-08 Jul-08 Oct-08 Apr-09 Jul-09 Oct-09 Apr-10 Jul-10 Oct-10 Apr-11 Jul-11 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: US Dept of Labor, Bureau of Labor Statistics
  • 11.
    California Job GrowthFaltering Month-to-Month Changes Recession Job Losses: 1.3 million Since Jan’10: +188,100 100000 80000 60000 40000 20000 0 -20000 -40000 -60000 -80000 -100000 -120000 -140000 -160000 May-08 May-09 May-10 May-11 Mar-08 Sep-08 Mar-09 Nov-08 Sep-09 Mar-10 Nov-09 Sep-10 Mar-11 Nov-10 Jan-08 Jan-09 Jan-10 Jan-11 Jul-08 Jul-09 Jul-10 Jul-11 SOURCE: CA Employment Development Division
  • 12.
    Where are California’sJobs? Employment Trends: Construction & Financial Biggest Losers Year to Industry 2005 Jul-11 Date Mining and Logging 23,600 27,600 4,000 Construction 905,300 567,300 -338,000 Manufacturing 1,502,600 1,257,600 -245,000 Trade, Transportation & Utilities 2,822,100 2,641,500 -180,600 Information 473,600 455,400 -18,200 Financial Activities 920,300 755,800 -164,500 Professional & Business Services 2,160,700 2,136,200 -24,500 Educational & Health Services 1,593,400 1,837,000 243,600 Leisure & Hospitality 1,475,200 1,531,600 56,400 Other Services 505,500 484,500 -21,000 Government 2,420,200 2,380,200 -40,000 TOTAL 14,802,500 14,074,700 -727,800 SOURCE: California Association of REALTORS®
  • 13.
    100 120 140 160 20 40 60 80 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 INDEX, 100=1985 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 August 2011: 44.5 Jan-08 Jul-08 Lowest Since April ‘09 Jan-09 Jul-09 Consumer Confidence Slipping Jan-10 Jul-10 Jan-11 Jul-11
  • 14.
    Crisis of Confidence: Small Business Optimism Down Source: National Federation of Independent Business
  • 15.
    Consumer Prices Lowbut Heading Higher CPI August 2011: All Items +3.8% YTY; Core +2.0% YTY PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984 6% All Items 5% Core 4% 3% 2% 1% 0% -1% -2% -3% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
  • 16.
  • 17.
    California vs. U.S.Sales US Home Sales CA Home Sales 7,000,000 700,000 6,000,000 600,000 5,000,000 500,000 4,000,000 400,000 3,000,000 300,000 2,000,000 200,000 1,000,000 100,000 0 0 SOURCE: California Association of REALTORS®
  • 18.
    California vs. U.S.Median Price US Median Price CA Median Price $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 SOURCE: California Association of REALTORS®
  • 19.
    Housing Affordability: RecordsHighs California Vs. U.S. CA US 100% % OF HOUSEHOLDS THAT CAN BUY 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 20.
    CA Underwater Mortgages Negative Equity Share in CA Near Negative Equity Share in CA 40% 35% 30.2% 30% 25% 20% 15% 10% 4.6% 5% 0% Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011 SOURCE: CoreLogic
  • 21.
  • 22.
    Mortgage Rates @Historical Lows Debt Down Grade Ignited Flight to Quality FRM ARM 6.00% MONTHLY WEEKLY 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 9.15.11 2009.01 2009.04 2009.07 2009.10 2010.01 2010.04 2010.07 2010.10 2011.01 2011.04 2011.07 8.4.11 8.25.11
  • 23.
    Classic Liquidity Trap:Consumers Deleveraging Low Rates and Low Borrowing 10% 9% 8% 7% 6% 5% 4% 3% 2% FRM ARM 1% Federal Funds 0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: Federal Home Loan Mortgage Corporation
  • 24.
  • 25.
    US Deficit Highestin Decades 2010: 11% of GDP (Revenues – Expenses) 4.0% Deficit as a % of GDP 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: US Treasury, BEA, compiled by C.A.R. Note: Positive = Surplus
  • 26.
    US Debt Jumpedas Government Responded to Financial Crisis 2010: 93% of GDP 100.0% 90.0% Debt as a % of GDP 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 1974 1996 1962 1964 1966 1968 1970 1972 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1998 2000 2002 2004 2006 2008 2010 Source: US Treasury, compiled by C.A.R.
  • 27.
    Obama Jobs Proposal What: $450 Billion stimulus: Tax cuts ($250B) and infrastructure spending ($200B) Why: Economy is stalled/Avoid double-dip Zero job growth in August/high unemployment Stabilize confidence: consumer, business, investor How: Increase taxes on the rich Entitlement Reform Tax Reform
  • 28.
    Federal Issues –Critical Concerns High-cost Loan Limit - expires 10/1/11 Future of Fannie and Freddie in flux - Increase guarantee fee likely FHA targeted for market share drop Tax Reform on the horizon – MID? QRM (Qualified Residential Mortgage) 20% Down – Is the future of the 30 year mortgage in doubt?
  • 29.
    U.S. Economic Outlook 2005 2006 2007 2008 2009 2010 2011f 2012f • US GDP 3.1% 2.7% 2.0% 0.0% -2.6% 2.9% 1.7% 2.0% Nonfarm Job 1.7% 1.8% 1.1% -0.6% -4.4% -0.7% 1.0% 0.9% Growth Unemployment 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 9.0% 8.9% CPI 3.4% 3.2% 2.8% 3.8% -0.4% 1.6% 3.2% 2.3% Real Disposable Income, % 1.3% 4.0% 2.2% 0.5% 0.9% 1.4% 1.7% 1.5% Change Forecast Date: September 2011 SOURCE: California Association of REALTORS®
  • 30.
    California Economic Outlook 2005 2006 • 2007 2008 2009 2010 2011f 2012f Nonfarm Job 1.8% 1.7% 0.8% -1.3% -6.0% -1.4% 1.5% 2.1% Growth Unemployment 5.4% 4.9% 5.4% 7.2% 11.4% 12.4% 12.0% 11.2% Rate Population 1.2% 1.1% 1.1% 1.2% 1.1% 0.9% 0.9% 0.9% Growth Real Disposable Income, % 1.3% 3.4% 1.5% 0.1% -2.2% 1.6% 1.5% 2.0% Change Forecast Date: September 2011 SOURCE: California Association of REALTORS®
  • 31.
  • 32.
    California Sales ofExisting Homes and Median Price Housing Cycle Comparisons 1970- 2011 UNITS/MEDIAN PRICE $ Sales of Existing Detached Homes Median Price 700,000 -44% 600,000 500,000 -61% -25% 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 SOURCE: California Association of REALTORS®
  • 33.
    Dollar Volume ofSales Down 5% in 2011, Up 3% in 2012 $ in Billion % Change $ Volume of Sales Percent Change $350 50% $327 37% 40% $300 24% 30% $250 26% 20% $200 16% 10% 2% $150 3% 0% $129 -2% -1.0% -5% -10% $100 $150 $143 $147 -20% -19% $50 -22% -27% -30% $0 -40% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 SOURCE: California Association of REALTORS®
  • 34.
    Sales of ExistingDetached Homes and Pacific West Consumer Confidence California, August 2011 Sales: 497,390 Units, Down 0.4% YTD, Up 10.2% YTY UNITS Sales Consumer Confidence INDEX 700,000 160 600,000 140 120 500,000 100 400,000 80 300,000 60 200,000 40 100,000 20 0 0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 SOURCE: California Association of REALTORS®; The Conference Board *Sales are seasonally adjusted and annualized
  • 35.
    Median Price ofExisting Detached Homes California, August 2011: $297,060, Down 7.4% YTY $700,000 P: May-07 $594,530 $600,000 $500,000 T: Feb-09 $245,230 $400,000 -59% from peak $300,000 $200,000 $100,000 $0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®
  • 36.
    0 2 4 6 8 10 12 14 16 18 20 Jan-88 MONTHS Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Unsold Inventory Index Jan-06 Jan-07 Jan-08 California, August 2011: 5.0 Months Jan-09 Jan-10 Jan-11
  • 37.
    Unsold Inventory Index(Months) Price Range (Thousand) Aug-10 Jul-11 Aug-11 $1,000K+ 11.1 9.2 9.1 $750-1000K 7.0 6.9 6.2 $500-750K 6.4 6.3 5.6 $300-500K 5.7 5.6 5.2 $0-300K 4.8 5.1 4.6 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 38.
    Unsold Inventory ByPrice Range Jan 2005 – August 2011 MONTHS 30 $0 - 300K $300-500K 25 $500-750K $750-1000K 20 $1,000K+- All 15 10 5 0 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-05 Jul-05 Apr-06 Jul-06 Apr-07 Jul-07 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 39.
  • 40.
    Share of DistressedSales to Total Sales 60% Aug-10 Jul-11 Aug-11 44.5% 42.9% 43.7% 40% 24.7% 25.2% 24.4% 19.3% 18.9% 20% 17.5% 0% REOs Short Sales Distressed Sales SOURCE: California Association of REALTORS®
  • 41.
    Tight Supply ofInventory for REO Sales Aug-11 Unsold Inventory Index (Months) 8.1 9 8 7 5.7 6 5 4 2.6 3 2 1 0 Equity Sales REO Sales Short Sales
  • 42.
    Distressed Sales: BayArea (Percent of Total Sales) Aug-11 100% 80% 71% 60% 48% 40% 27% 43% 25% 31% 20% 0% Marin Napa San Mateo Santa Clara Solano Sonoma SOURCE: California Association of REALTORS®
  • 43.
    REO & ShortSales: Bay Area (Percent of Total Sales) 100% Aug 2011 80% Short Sales REO Sales 60% 26% 40% 20% 15% 18% 20% 28% 15% 21% 45% 13% 0% 11% 10% 24% Marin Napa San Mateo Santa Clara Solano Sonoma SOURCE: California Association of REALTORS®
  • 44.
    Distressed Sales: SouthernCA (Percent of Total Sales) Aug-11 100% 80% 62% 64% 60% 44% 40% 33% 20% 27% 0% Los Angeles Orange Riverside San Bernardino San Diego SOURCE: California Association of REALTORS®
  • 45.
    REO & ShortSales: Southern CA (Percent of Total Sales) 100% Aug 2011 80% Short Sales REO Sales 60% 14% 26% 40% 24% 20% 20% 20% 35% 49% 12% 8% 0% 19% Los Angeles Orange Riverside San Bernardino San Diego SOURCE: California Association of REALTORS®
  • 46.
    Distressed Sales: CentralValley (Percent of Total Sales) Aug-11 100% 73% 80% 67% 59% 60% 62% 60% 40% 20% 0% Madera Merced San Benito Sacramento Kern SOURCE: California Association of REALTORS®
  • 47.
    REO & ShortSales: Central Valley (Percent of Total Sales) 100% Aug 2011 Short Sales 80% REO Sales 7% 60% 23% 30% 40% 24% 19% 67% 20% 36% 37% 38% 41% 0% Madera Merced San Benito Sacramento Kern SOURCE: California Association of REALTORS®
  • 48.
    Distressed Sales: Restof California (Percent of Total Sales) Aug-11 100% 80% 59% 64% 60% 62% 42% 45% 56% 40% 31% 48% 35% 20% 0% SOURCE: California Association of REALTORS®
  • 49.
    REO & ShortSales: Rest of California (Percent of Total Sales) 100% Aug 2011 80% Short Sales REOs 60% 11% 7% 40% 8% 25% 5% 48% 7% 57% 13% 9% 20% 34% 25% 36% 20% 32% 51% 0% 39% 15% SOURCE: California Association of REALTORS®
  • 51.
    California Foreclosure Filings August 2011 NTS: 24,260, -16.9% YTD • NOD: 32,338, -21.5% YTD Notice of Trustee Sale - Counts Notice of Defaults - Counts 65,000 6 Month Average: 60,000 NTSs: 23,806 55,000 50,000 NODs: 23,625 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Nov-07 Nov-08 Nov-09 Nov-10 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-07 Sep-07 Jan-08 Sep-08 Jan-09 Sep-09 Jan-10 Sep-10 Jan-11 May-07 May-08 May-09 May-10 May-11 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 SOURCE: ForeclosureRadar.com
  • 52.
    CA Foreclosure Outcomes August 2011 REO: -12.2% YTD • 3rd Party: -4.1% YTD • Cancel: -19.7% YTD REOs Sold to 3rd Party Cancellations 6 Month Average: 30,000 REO: 10,880 25,000 3rd Party: 3,616 Cancelled: 14,447 20,000 15,000 10,000 5,000 0 Oct-07 Oct-08 Oct-09 Oct-10 Apr-07 Jul-07 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: ForeclosureRadar.com
  • 53.
    CA Foreclosure Inventories August 2011 Preforeclosure: -17.5% YTD • Schedule for Sale: -17.8% YTD • Bank Owned: 7.0% YTD 6 Month Average: Preforeclosure Scheduled for Sale Bank Owned Preforeclosure: 115,742 Schedule for Sale: 200,000 105,138 Bank Owned: 108,635 150,000 100,000 50,000 0 Oct-07 Oct-08 Oct-09 Oct-10 Apr-07 Jul-07 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: ForeclosureRadar.com
  • 54.
    San Jose Preforeclosure: 1,367• Auction: 2,166 • Bank Owned: 617 Source: ForeclosureRadar.com as of 08/19/11
  • 55.
    Santa Clara Preforeclosure: 86 • Auction: 131 • Bank Owned: 41 Source: ForeclosureRadar.com as of 08/19/11
  • 56.
    Palo Alto Preforeclosure: 17• Auction: 21 • Bank Owned: 4 Source: ForeclosureRadar.com as of 08/11/11
  • 57.
    San Francisco Preforeclosure: 525• Auction: 681 • Bank Owned: 179 Source: ForeclosureRadar.com as of 08/11/11
  • 58.
    South Lake Tahoe Preforeclosure: 113 • Auction: 112 • Bank Owned: 77 Source: ForeclosureRadar.com as of 08/11/11
  • 59.
    Sacramento Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560 Source: ForeclosureRadar.com as of 08/19/11
  • 60.
    Stockton Preforeclosure: 895 • Auction: 1,093 • Bank Owned: 691 Source: ForeclosureRadar.com as of 08/11/11
  • 61.
    Los Angeles Preforeclosure: 2,975 • Auction: 4,659 • Bank Owned: 1,331 Source: ForeclosureRadar.com as of 09/19/2011
  • 62.
    Anaheim Preforeclosure: 498 • Auction: 667 • Bank Owned: 219 Source: ForeclosureRadar.com as of 09/14/11
  • 63.
    Irvine Preforeclosure: 262 • Auction: 360 • Bank Owned: 92 Source: ForeclosureRadar.com as of 09/14/11
  • 64.
    Newport Beach Preforeclosure: 124 • Auction: 154 • Bank Owned: 18 Source: ForeclosureRadar.com as of 09/14/11
  • 65.
    San Diego Preforeclosure: 2,016 • Auction: 2,001 • Bank Owned: 797 Source: ForeclosureRadar.com as of 09/19/2011
  • 66.
  • 67.
    Commercial Outlook Industrial  US Vacancy Rate 2011-2013: 13.0, 12.2%, 10.0%  Better in LA, Orange County, San Bernardino, San Diego, and Oakland than elsewhere in US  Need gains in trade and mfg to improve Retail  US Vacancy Rate 2011-2013: 13.0%, 12.3%, 11.5%  Vacancy rates lower in most CA metro areas, except Sacramento  Fundamentals weak across markets of the state, need increased consumer spending to reverse trend
  • 68.
    Commercial Outlook Office  US Vacancy Rate 2011-2013: 16.6%, 16.4%, 16.0%  Weak markets because of job losses across many sectors  SF and LA outperforming the US Multi-Family  US Vacancy Rate 2011-2013: 5.6, 4.7%, 4.4%  All CA metro areas outperform US averages  Push from problems in owner-occupied sector
  • 69.
  • 70.
  • 71.
    Sales of ExistingDetached Homes and Pacific West Consumer Confidence Northern CA, August 2011: 1,242 Units, Up 9.3% YTD, Up 24.6% YTY UNITS Sales Consumer Confidence INDEX 1,800 160 1,600 140 1,400 120 1,200 100 1,000 80 800 60 600 40 400 200 20 0 0 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®; SOURCE: California Association of REALTORS®; The Conference Board The Conference Board
  • 72.
    Home Sales inNorthern California Aug-10 Aug-11 450 400 350 300 250 200 150 100 50 0 Butte Humbolt Lake Paradise Placer Shasta Siskiyou South Tahoe Tehama County County County Lake Sierra SOURCE: California Association of REALTORS® Tahoe
  • 73.
    Median Price ofExisting Detached Homes Northern CA, August 2011: $223,890, Down 11.5% YTY $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
  • 74.
    Median Price ofExisting Detached Homes Northern California Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Butte $243,420 $196,430 $201,320 2.5% -17.3% Humbolt $252,780 $232,999 $223,863 -3.9% -11.4% Lake County $132,857 $118,888 $123,636 4.0% -6.9% Paradise $194,999 $134,999 $163,333 21.0% -16.2% Placer County $292,499 $264,383 $266,233 0.7% -9.0% Shasta $171,176 $154,705 $162,917 5.3% -4.8% Siskiyou County $130,000 $130,000 $116,666 -10.3% -10.3% South Lake Tahoe $295,454 $238,888 $338,889 41.9% 14.7% Tahoe Sierra $474,999 $397,221 $450,000 13.3% -5.3% Tehama $127,500 $131,428 $123,333 -6.2% -3.3% SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
  • 75.
  • 76.
    Sales of ExistingDetached Homes and Pacific West Consumer Confidence Northern Wine Country, Aug. 2011: 620 Units, Up 3.2% YTD, Up 17.2% YTY UNITS Sales Consumer Confidence INDEX 1000 160 900 140 800 120 700 600 100 500 80 400 60 300 40 200 100 20 0 0 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®; The Conference Board
  • 77.
    Home Sales inNorthern Wine Country Aug-10 Aug-11 500 450 400 350 300 250 200 150 100 50 0 Mendocino Napa Sonoma SOURCE: California Association of REALTORS®
  • 78.
    Median Price ofExisting Detached Homes Northern Wine Country, August 2011: $330,070, Down 12.5% YTY $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®
  • 79.
    Median Price ofExisting Detached Homes Northern Wine Country Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Mendocino $ 258,330 $ 214,290 $ 201,920 -5.8% -21.8% Napa $ 394,230 $ 334,780 $ 354,760 6.0% -10.0% Sonoma $ 378,830 $ 333,490 $ 339,200 1.7% -10.5% SOURCE: California Association of REALTORS®
  • 80.
  • 81.
    Sales of ExistingDetached Homes and Pacific West Consumer Confidence Bay Area, August 2011: 3,895 Units, Up 0.5% YTD, Up 12.1% YTY UNITS INDEX Sales Consumer Confidence 8,000 160 7,000 140 6,000 120 5,000 100 4,000 80 3,000 60 2,000 40 1,000 20 0 0 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®; The Conference Board
  • 82.
    Home Sales inBay Area Counties Aug-10 Aug-11 1400 1200 1000 800 600 400 200 0 Alameda Contra Marin Napa San San Mateo Santa Solano Sonoma Costa Francisco Clara (Central County) SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 83.
    Median Price ofExisting Detached Homes Bay Area, August 2011: $498,190, Down 9.2% YTY $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 84.
    Median Price ofExisting Detached Homes Bay Area Counties County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Alameda $ 515,620 $ 462,890 $ 468,900 1.3% -9.1% Contra Costa (Central County) $ 670,450 $ 618,420 $ 607,310 -1.8% -9.4% Marin $ 794,120 $ 761,030 $ 806,550 6.0% 1.6% Napa $ 394,230 $ 334,780 $ 354,760 6.0% -10.0% San Francisco $ 675,780 $ 648,330 $ 632,270 -2.5% -6.4% San Mateo $ 780,000 $ 729,900 $ 742,000 1.7% -4.9% Santa Clara $ 625,000 $ 607,000 $ 595,000 -2.0% -4.8% Solano $ 207,090 $ 190,560 $ 197,880 3.8% -4.4% Sonoma $ 378,830 $ 333,490 $ 339,200 1.7% -10.5% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 85.
  • 86.
    Home Sales inCentral Valley Region Aug-10 Aug-11 1800 1600 1400 1200 1000 800 600 400 200 0 d) a d re y no to ito y er ce nt nt l la en fie es n ad ou u er Tu Be m Co s Fr M M C er a n cr er s ak Sa g Sa ac (B in Pl K n er SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® K
  • 87.
    Median Price ofExisting Detached Homes Central Valley Regions County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Fresno $149,880 $ 139,470 $ 145,730 4.5% -2.8% Kern (Bakersfield) $142,700 $ 139,900 $ 135,000 -3.5% -5.4% Merced $121,870 $ 113,080 $ 126,670 12.0% 3.9% Sacramento $186,750 $ 168,060 $ 167,040 -0.6% -10.6% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 88.
    Median Price ofExisting Detached Homes Central Valley Regions County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Fresno $ 149,880 $ 139,470 $ 145,730 4.5% -2.8% Kern (Bakersfield) $ 142,700 $ 139,900 $ 135,000 -3.5% -5.4% Kings County $ 168,570 $ 114,290 $ 130,000 13.7% -22.9% Madera $ 142,500 $ 92,500 $ 128,750 39.2% -9.6% Merced $ 121,870 $ 113,080 $ 126,670 12.0% 3.9% Placer County $ 292,500 $ 264,380 $ 266,230 0.7% -9.0% Sacramento $ 186,750 $ 168,060 $ 167,040 -0.6% -10.6% San Benito $ 280,000 $ 242,500 $ 239,900 -1.1% -14.3% Tulare $ 138,420 $ 114,230 $ 124,680 9.1% -9.9% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 89.
  • 90.
    Sales of ExistingDetached Homes and Pacific West Consumer Confidence Central Coast, Aug. 2011 Sales: 2,296 Units, Up 2.1% YTD, Up 18.5% YTY UNITS Sales Consumer Confidence INDEX 1100 160 1000 140 900 800 120 700 100 600 80 500 400 60 300 40 200 20 100 0 0 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
  • 91.
    Home Sales inCentral Coast Region Aug-10 Aug-11 300 250 200 150 100 50 0 Monterey Atascadero Paso Pismo San Luis Lompoc Santa Santa Robles Coast Obispo Valley Barbara Maria SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 92.
    Median Price ofExisting Detached Homes Central Coast, August 2011: $335,710, Down 5.1% YTY $750,000 $700,000 $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 SOURCE: California Association of REALTORS®
  • 93.
    Median Price ofExisting Detached Homes Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Monterey County Monterey $ 257,760 $ 255,770 $ 263,160 2.9% 2.1% San Luis Obispo County Atascadero $ 268,750 $ 268,750 $ 309,091 15.0% 15.0% Paso Robles $ 295,832 $ 306,250 $ 277,083 -9.5% -6.3% Pismo Coast $ 407,692 $ 364,515 $ 419,444 15.1% 2.9% San Luis Obispo $ 378,124 $ 430,000 $371,428 -13.6% -1.8% Santa Barbara County Lompoc Valley $ 250,000 $ 225,000 $ 205,000 -8.9% -18.0% Santa Barbara $ 851,190 $ 833,330 $ 742,420 -10.9% -12.8% Santa Maria $ 250,000 $ 210,290 $ 223,530 6.3% -10.6% SOURCE: California Association of REALTORS®
  • 94.
  • 95.
    Sales of ExistingDetached Homes and Pacific West Consumer Confidence Southern California August 2011 Sales: 11,229 Units, Down 4.0% YTD, Up 8.1% YTY UNITS Sales Consumer Confidence INDEX 18,000 160.0 16,000 140.0 14,000 120.0 12,000 100.0 10,000 80.0 8,000 60.0 6,000 40.0 4,000 2,000 20.0 0 0.0 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
  • 96.
    Home Sales inSouthern CA Regions Aug-10 Aug-11 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Los Orange Riverside San San Diego Ventura Santa Ventura Angeles Bernardino Barbara SOURCE: California Association of REALTORS®
  • 97.
    Median Price ofExisting Detached Homes Southern CA, August 2011: $294,140, Down 6.3% YTY $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 98.
    Median Price ofExisting Detached Homes Southern California Region County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y Los Angeles $336,420 $317,060 $312,900 -1.3% -7.0% Orange $561,900 $551,510 $508,910 -7.7% -9.4% Riverside $208,120 $200,910 $202,060 0.6% -2.9% San Bernardino $144,210 $135,150 $135,030 -0.1% -6.4% San Diego $384,700 $375,330 $369,390 -1.6% -4.0% Ventura $434,480 $421,870 $424,400 0.6% -2.3% Santa Barbara $536,290 $418,750 $421,430 0.6% -21.4% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
  • 99.
    2011 Annual Housing Market Survey
  • 100.
    2 in 5Homes Sold Were Distressed Properties 2008 2009 2010 2011 59% 60% 40% 20% 20% 20% 0% REOs Short Sales Equity Sales Q. Was the property purchased/sold as a foreclosure, REO, short sale, or none of the above?
  • 101.
    Equity vs. REOvs. Short Sales Equity Sales REO Sales Short Sales Share of Total Sales 58.7% 19.7% 20.2% Median Home Price $431,000 $240,000 $287,000 Square Footage 1,783 1,500 1,600 Price / SF $250 $112 $175 Sales-to-List Price Ratio 95.9% 98.0% 95.9% % of Sales With Multiple Offers 35.2% 58.3% 57.5% Avg. Number of Offers 3.0 3.0 3.6 % of All Cash Sales 25.5% 34.0% 23.3% Days on MLS 67 50 141 Days in Escrow 35 35 45
  • 102.
    1 in 3Sellers Sold Because They Were in Distress 35% Sold due to foreclosure/Short sale/Default 30% 30% 25% 20% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the single most important reason for selling/buying the property?
  • 103.
    Sellers with aNet Cash Loss 35% 30% 25% 21.8% 20% Long Run Average = 11.2% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the net cash gain or net loss to the seller as a result of this sale?
  • 104.
    Net Cash toSellers Median $250,000 $200,000 $150,000 $100,000 $75,000 $50,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the net cash gain or net loss to the seller as a result of this sale?
  • 105.
    Median Price Discount& Weeks On Market 3.9%, 10.5 weeks 8% 16 Med. Price Discount 7% Med. Weeks on MLS 14 6% 12 5% 10 4% 8 3% 6 2% 4 1% 2 0% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 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?
  • 106.
    Multiple Offers %with M ultiple Offers # of M ultiple offers (Average) 60% 6 50% 5 40% 4 30% 3 20% 2 10% 1 0% 0 2000 2002 2004 2006 2008 2010
  • 107.
    Proportion of SellersPlanning to Repurchase 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. Is the seller planning on purchasing another home?
  • 108.
    Reasons Sellers NotPlanning to Buy Another Home Seller is a lender/bank 19.8% Seller prefers to have less financial obligation 11.4% Poor credit background 10.9% Lack of cash for down payment 5.7% Out of work/unemployment 4.9% Decide to live with family/friends 4.7% Waiting for market to bottom 2.7% Other 40.0% 0% 10% 20% 30% 40% 50% Q. Why is the seller not planning to purchase another home?
  • 109.
    Reasons For Selling All Home Sellers Foreclosure/Short Sale/Default Change in Family Status Retirement/Move to Retirement Community Investment/ Tax Consderations Desired Better Location Desired Smaller Home Changed Jobs Desired Larger Home Other 0% 5% 10% 15% 20% 25% 30% 35% Q. What was the single most important reason for selling/buying the property?
  • 110.
    Cash Sales onthe Rise % of All Sales 30% 25% 20% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  • 111.
    Buyers Who Boughtfor Investment/Tax Considerations Dipped Slightly 20% Long Run Average = 12.1% 17% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the single most important reason for selling/buying the property?
  • 112.
    Investments & Second/ Vacation Homes Investment/Rental Property Vacation/Second Home 25% 20% 7% 15% 10% 17% 5% 0%
  • 113.
    Foreign Buyers 10% % of Foreign Buyers 8% 8% 6% 6% 6% 5% 4% 2% 0% 2008 2009 2010 2011 Q. Was the buyer a foreign buyer?
  • 114.
    Years Owned HomeBefore Selling (All Sellers and Second Home/Investment Home Sellers All Sellers Second Home and Investment Home Sellers 14 12 10 8 7.0 6 6.0 4 2 0
  • 115.
  • 116.
    Forecast Progress Report 2010 2011 Projected Forecast 2011 2010 Actual October October Projected 2010 2010 SFH Resales 492.0 491.5 502.0 491.1 (000s) % Change -10.0% -10.1% 2.0% -0.1% Median Price $306.5 $303.1 $312.5 $291.0 ($000s) % Change 11.5% 10.2% 2.0% -4.0% Forecast Date: September 2011 vs October 2010 Source: CALIFORNIA ASSOCIATION OF REALTORS®
  • 117.
    California Housing MarketOutlook 2005 2006 2007 2008 2009 2010 2011f 2012f SFH Resales 625.0 477.5 346.9 441.8 546.9 491.5 491.1 496.2 (000s) % Change 0.03% -23.6% -27.3% 27.3% 23.8% -10.1% -0.1% 1.0% Median Price $522.7 $556.4 $560.3 $348.5 $275.0 $303.1 $291.0 $296.0 ($000s) % Change 16.0% 6.5% 0.7% -37.8% -21.1% 10.2% -4.0% 1.7% 30-Yr FRM 5.9% 6.4% 6.3% 6.0% 5.1% 4.7% 4.5% 4.7% 1-Yr ARM 4.5% 5.5% 5.6% 5.2% 4.7% 3.5% 3.0% 3.1% Forecast Date: September 2011 Source: CALIFORNIA ASSOCIATION OF REALTORS®
  • 118.
  • 119.
    Direction of HomePrices: Sellers Skeptical; Buyers Hopeful Down Flat Unsure Up 100% 80% 60% 40% 20% 0% Sellers Buyers Q: Do you think home prices in your neighborhood will go up, down or stay flat in one year, five years and 10 years?
  • 120.
    Real Estate: It’sTime To Buy Again “Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.” SOURCE: “Real estate: It’s time to buy again” Fortune Magazine’s 3/28/11 article written by Shawn Tully
  • 121.
    8 in 10Americans Agree Buying a Home is the Best Investment One Can Make SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
  • 122.
    8 in 10Renters Would Like to Buy in the Future “…renters are hardly immune to the allure of homeownership, even in the face of the five-year decline in prices. Asked if they rent out of choice or because they cannot afford to buy a home, just 24% say they rent out of choice.” SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
  • 123.