The document discusses uncertainty in the housing market and its impact on sales in July. Key points: 1) Sales in the region were down 10% month-over-month and 4% from last July, with some cities like Hemet and Murrieta seeing even steeper declines. 2) Uncertainty appears to have caused the housing market to weaken earlier than usual, with the slowdown typically happening in September rather than July. 3) Prices held steady month-over-month despite the sales decline. Inventory rose slightly and properties stayed on the market longer. 4) The author expects continued uncertainty through the November election and for the housing market performance to remain unclear.

1. Uncertainty
“Uncertainty may be a part of our lives and our business for many years to come. As
Americans we are accustomed to quick fixes, but this may not be possible right now”. That
was the message conveyed to us on Day 1 of the recent Inman Connect conference in San
Francisco. For 20 years, Brad Inman has been hosting an annual conference bringing together the
best and brightest from the tech world and real estate focusing on the impact of technology in our
lives. As usual, this year featured many media immersed twenty-something's capable of raising $125
million for a single idea that could be bust by this time next year, or sold to Google for $1 billion.
Interesting crowd.
But the theme of uncertainty is one that my readers have been familiar with for some time.
Uncertainty has dogged this entire ‘recovery’ cycle with the housing market being both stronger than
it should and weaker than it should, often at the same time. Just when it looks like we’re out of the
woods, we go off the rails for no apparent reason. Just when you think we’re heading south, prices
and sales spike up. Why? Uncertainty. Just ask the Fed.
Uncertainty hit our market again in July – a month that is historically strong but for some reason took
a dive last month. Despite a national resurgence in July housing numbers, sales in our region were
off a full 10% month-over-month (1,067 / 1,181) and down 4% from last July (1,067 / 1,107). While
most cities were up or down by a few percent, Hemet sales fell 13% (217 / 188) and Murrieta
plummeted 24% (243 / 185).
That’s not supposed to happen until September when the summer selling season is over! Why did it
appear to hit prematurely this year? Uncertainty! And the vagaries of the market. Interest rates
remain at near record lows, inventory ticked up a little giving buyers a few more choices, lenders are
rumored to be loosening their requirements a bit, yet down we went. Pending sales, that precursor of
what lies ahead, is telling us August will be about the same as July. I sincerely hope so because last
year August sales fell nearly 20% month-over-month sliding through the end of the year.
Prices managed to hold even for the month with most cities posting very small increases or
decreases leading to a month over month drop of 0.002% ($333,471 / $332,805). Overall our regional
median price holds a 7% lead over July 2015 ($307,322 / $332,805). That’s not bad and slightly
higher than the state average increase of 5.5%.
With the decline in sales volume, absorption tapered off a bit allowing inventory to edge up slightly
(2,285 / 2,435) providing a 2.6 month cushion, up from 2.5 months in June. Properties also stayed on
the market 3 days longer (56 / 59). Rumors abound that there’s an increase in foreclosure activity by
lenders but you wouldn’t know it looking at our market. Sales of distressed properties, including bank-
owned and short-sales, dropped to pre-recession levels in July at just 5% of sold homes. As a
percentage of standard sales on the market, 97% of Perris sales are ‘normal’ sales, 96% in
Temecula, and 94% in Murrieta and Menifee. Even during the best of times there’s about a 4% slice
of the market in foreclosure so for the time being it looks like our market is back to ‘normal’. That only
took 7 years!
No doubt uncertainty will continue to plague our housing market at least through the November
election, at which time it will either get better, get worse, or stay the same.
Of that, I’m certain.

2. President Obama signs HR 3700
AUGUST 5, 2016
BY MEGAN BOOTH, SEHAR SIDDIQI, COLIN ALLEN
On July 29, 2016, H.R. 3700, sponsored by Reps. Luetkemeyer (R-MO) and Cleaver (R-MO) and through companion
legislation, Senators Menendez (D-NJ) and Scott (R-SC), was signed into law by President Obama. This legislation
previously passed unanimously in both the U.S. House and Senate. This legislation:
Solves a number of concerns regarding FHA’s condo rules:
•Reduces the FHA condo owner occupancy ratio to 35%, unless FHA takes alternative action within 90 days.
•Directs FHA to streamline the condo re-certification process.
•Provides more flexibility for mixed use buildings.
•Mirrors the Federal Housing Finance Agency’s (FHFA) rules regarding private transfer fees for FHA condo
lending.
Provides permanent authority for direct endorsement for approved lenders to approve Rural Housing Service (RHS)
loans.
Makes reforms to federally assisted housing programs to streamline the programs.
REALTORS® worked hard on this legislation, bringing it to Capitol Hill as part of the REALTOR® Legislative Meetings
and Trade Expo, and with a Call for Action. Nearly 140,000 REALTORS® participated in the Call for Action with a
response rate over 15%. This clearly made a difference on Capitol Hill.
Consumers Stand to Win Big With Proposed 'Know Before You Owe' Rule Coming Their Way
WASHINGTON (July 29, 2016) — Since the October 2015 implementation of the Consumer Financial Protection Bureau's
‘Know Before You Owe' mortgage initiative, Realtors® have raised red flags (link is external) over challenges in gaining
access to what's known as the mortgage "closing disclosure" form, or CD. The CD is delivered to homebuyers in advance
of their closing and contains important financial information related to their purchase.
Unfortunately, many lenders have chosen to withhold this document from real estate agents since Know Before You
Owe went into effect, despite a longstanding tradition of sharing similar information.
Earlier this year, the Consumer Finance Protection Bureau announced that it was considering changes to Know Before
You Owe - also known as the TILA-RESPA Integrated Disclosure, or TRID - including a clarification of the rules regarding
sharing the CD.
Today, the CFPB made good on that promise when it announced a proposed rule on TRID, and stated in their
announcement(link is external) that "the Bureau understands that it is usual, accepted and appropriate for creditors and
settlement agents to provide a closing disclosure to consumers, sellers and their real estate brokers or other agents."
The National Association of Realtors® believes this announcement marks significant progress for consumers, as well as
for its members. Giving Realtors® access to the CD would strengthen consumers' understanding of their mortgage and
home purchase by helping agents continue to provide expert advice to their clients.
The following is a statement by NAR President Tom Salomone:
"Realtors® have reported challenges gaining access to the Closing Disclosure ever since TRID went into effect, despite a
long history of access to the substantively similar HUD-1 that is replaced. Today the CFPB acknowledged that concern by
making it clear that it is appropriate and accepted for creditors and settlement agents to share the CD with consumers,
sellers and their real estate agents.
"This is a significant victory that will help Realtors® continue to provide the expert service their clients have come to
expect. We appreciate the CFPB's willingness to reconsider the TRID-related challenges our members face and will
continue to monitor the progress on this important issue in the months ahead.
Realtor® Action works for Consumers / Housing Industry
Good news for our local market

3. SW Market @ A Glance
Southwest
California
Reporting
Period
Current
Period
Last
Period Year Ago
Change
from
Last
Period
Change
from
Year
Ago
Existing Home Sales
(SFR Detached)
July 2016 1,067 1,181 1,107 10% 4%
Median Home Price $332,805 $333,477 $307,322 0.002% 7%
Unsold Inventory Index
(SFR Units) 2,435 2,285 2,570 6% 5%
Unsold Inventory Index
(Months) 2.6 2.5 2.8 4% 7%
Average Time on
Market (Days) 59 56 66 5% 11%
Source: CRMLS

4. June 2016 Transaction Value*:
Temecula $103,379,370 Lake Elsinore $35,635,807
Murrieta $105,581,102 Wildomar $17,380,542
Menifee $59,832,671 Canyon Lake $8,940,032
Hemet $48,895,385 San Jacinto $17,808,865
Perris $20,544,583 Total $417,998,357
* Revenue generated by single family residential transactions for the month.
July 2016 Transaction Value*:
Temecula $89,149,641 Lake Elsinore $36,89,0623
Murrieta $79,287,899 Wildomar $14,679,160
Menifee $59,918,110 Canyon Lake $9,644,300
Hemet $42,625,120 San Jacinto $15,932,648
Perris $19,282,958 Total $ 367,410,459
* Revenue generated by single family residential transactions for the month.
July Median Price:
2015 2016 %
Temecula $405,000 $427,500 5%
Murrieta $375,000 $395,000 5%
Menifee $290,000 $319,500 9%
Lake Elsinore $312,000 $325,500 5%
Wildomar $349,00 $365,000 4%
Canyon Lake $359,000 $417,000 14%
Hemet $207,000 $225,500 8%
San Jacinto $227,000 $249,500 9%
Perris $241,000 $275,000 12%

5. 0
50
100
150
200
250
300
Temecula Murrieta Lake Elsinore Wildomar
Southwest California Homes – I-15 Corridor
Single Family Home Sales
0
50
100
150
200
250
Menifee Canyon Lake Hemet San Jacinto Perris
Southwest California Homes – I-215 Corridor
Single Family Home Sales

6. $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Temecula Murrieta Lake Elsinore Wildomar
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Menifee Canyon Lake Hemet San Jacinto Perris
Southwest California Homes – I-15 Corridor
Single Family Home Median Price
Southwest California Homes – I-215 Corridor
Single Family Home Median Price

7. 0
100
200
300
400
500
600
On Market
(Supply)
Pending Closed
(Demand)
Days on
Market
Months
Supply
Absorption
rate *
4
5
3
1
7
7
1
8
5
5
6 2
.
4
1
0
6
%
5
6
2
1
7
0
1
9
4
5
8 2
.
9
8
9
%
3
4
5
2
0
7
1
8
8
5
5 1
.
8
1
5
0
%
3
1
9
2
1
7
1
8
7
4
3
1
.
7
1
1
2
%
2
5
9
1
2
7
1
1
6
7
0 2
.
2
1
1
0
%
1
4
2
1
3
2
7
0 4
7
2
.
2
1
2
1
1
4
2
9
8 6
6
4
9
2
.
2
1
1
4
%
1
2
5
1
3
3
2
1
1
0
5
6
.
0
9
5
%
8
8 5
6
4
0
4
7
2
.
2
9
5
%
Murrieta Temecula Hemet Menifee Lake Elsininore Perris San Jacinto Canyon Lake Wildomar
* Absorption rate - # of new listings for the month/# of sold listings for the month
0
500
1000
1500
2000
2500
3000
1/12 4/12 7/12 10/12 1/13 4/13 7/13 10/13 1/14 4/14 7/14 10/14 1/15 4/15 7/15 10/15 1/16 4/16 7/16
Inventory Sales
July Demand
On Market (2,285 – 2,435) 6%
Pending Sales (1,300– 1,317) 1%
Closed (1,185– 1,067) 10%
Days on Market (56– 59) 5%
Months Inventory (2.5– 2.6) 4%
Absorption (120% - 112%) 7%
Month over Month
Southwest California Region
Inventory v. Sales

8. July 2016 Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale
Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT
Temecula 539 96% 186 96% 4 1% 3 2% 14 2% 4 2%
Murrieta 425 94% 174 94% 6 1% 2 1% 19 4% 7 4%
Wildomar 82 93% 37 93% 1 1% 1 3% 4 5% 2 5%
Lake Elsinore 137 53% 103 89% 9 3% 1 1% 11 4% 7 6%
Menifee 294 92% 176 94% 5 2% 4 2% 17 5% 7 4%
Canyon Lake 122 98% 19 90% 1 1% 1 5% 2 2% 1 5%
Hemet 324 94% 170 90% 4 1% 9 5% 10 3% 7 4%
San Jacinto 129 91% 61 92% 2 1% 4 6% 9 6% 1 2%
Perris 131 92% 68 97% 5 4% 0 0% 3 2% 1 1%
Regional
Average
2183 90% 994 93% 37 2% 25 2% 89 4% 37 3%
Great article on the next page discussing the issue I mentioned last month – the overall lack of
housing exacerbated by the lack of affordable workforce housing. This recently released article
details the problems extant in the San Diego housing market for both renters and prospective
buyers. But it’s not just a San Diego problem.
As we have experienced in Riverside County, and indeed the entire state, we have built just
12% - 20% of the housing units necessary to house our growing population during the past 6-8
years. That shortage is responsible for pushing prices of both purchase and rental properties
ever higher.
However, as I pointed out last month, the problem is compounded by the fact that builders are
tending to build more homes for upper income buyers, a few for lower income buyers and
relatively few for those caught in the middle, our workforce.
Why? Regulations and fees are mostly to blame. Increases in DIF and TUMF and other city,
county and state mandated fees are one of the fastest growing components of construction
costs. How does a builder compensate for those increased costs? By building more profitable
homes – and that means catering to the upper end of the market where margins are greater
and profits are fatter.
But don’t just blame the builder who is focused on providing a quality product together with a
respectable bottom line for investors after years of tenuous existence. Look also at the fees,
taxes and costs built into every home, including those mandated by the new minimum wage
laws and proposed increases in sales tax by local cities. Everybody's getting squeezed while
pointing the finger at everybody else as being responsible for the squeeze.

9. San Diego’s Housing Crisis Squeezing The Middle Class
Homeowners in San Diego County may not feel it, but a housing crisis is underway in the
region, and the middle class is especially hard squeezed.
Stephen Russell heads the San Diego Housing Federation, which works to produce more low-income
housing for renters with the help of government subsidies.
“Since the year 2000, we’ve seen rents increase by about 32 percent, while wages have decreased 2
percent during that same time frame," he said.
More than half of San Diego renters pay more than one-third of their income in rent, Russell said. The
San Diego Housing Commission estimates more than 70 percent of San Diegans are now priced out
of the market for an average priced home.
"Of the 10,000 that were produced last year, you had only 229 single-family homes that could be sold
at $500,000 or less," according to Matt Adams, vice president of San Diego’s Building Industry
Association, “And then you had only 471 multi-family homes produced that could be sold for
$500,000 or less. The market that is not being met is the market of working middle-class families.“
In the face of this evidence, the profit-motivated building industry chooses to build for the top end of
the market at the expense of the rest, Adams said, citing a 2015 report. It says city regulations are so
costly that they drive up the price of construction to the point where building middle- and low-income
housing is no longer profitable.
Russell said SANDAG should step up and take more of a leadership role.
“We have had some constructive conversations, but I don’t think that the magnitude of the housing
crisis we’re in has really permeated to the minds of all of those board members,” he said. “We have a
lot of work ahead of us to get the level of focus and attention and commitment from SANDAG that the
issue really deserves.”
A graph of the housing market looks
more like a goblet, with a big bowl
for upper-income earners, a tiny
base for low-income earners, and a
thin stem: the squeezed supply for
the middle class.

12. July Marked a Big Month for Housing
DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 05, 2016
The housing market heated up in July, with several factors favoring buyers this summer.
Jonathan Smoke, realtor.com®’s chief economist, says these factors have made this summer one of the
best in a decade: we're seeing the highest consumer confidence for a July since 2007, we've also had
the highest nominal home prices for a July on record, and we've had the lowest July mortgage rates on
record.
Millennials, aged 25 to 34, picked up their presence on the market this summer too. Realtor.com®
reports that last July 75 percent of its 25- to 34-year-old users were looking to purchase a home. Fast-
forward to July 2016, that percentage has bloomed to 81 percent.
Buyers are finding a few more choices later in the summer: There are 1 percent more homes for sale in
July compared with June.
But hurdles do remain for buyers this summer: It’s tougher to get approved for a mortgage than last
year, Smoke notes. In July 2015, 5 percent of first-time buyers reported that qualifying for a mortgage
was a significant hurdle. This July, that percentage has increased to 9 percent, Smoke reports.
Also, repeat buyers say their major challenge is finding a home to buy. The share of repeat buyers who
say “finding a home” is a problem rose to 25 percent this July, realtor.com® reports.
“The good news for would-be buyers who have struggled to find a home or have been outbid in prior
attempts is that the balance of power shifts a bit more in your favor in late summer and fall,” Smoke
writes in his column at realtor.com®. “This is the time of the year when sales slow down, but inventory is
at its peak. That means there are more homes for sale per buyer now, and yet mortgage rates remain
close to their all-time lows. The window to enjoy the best summer in a decade for real estate remains
open for the well-qualified and those ready to act.”
‘Boomerang’ Buyers Are Slow to Return
DAILY REALESTATE NEWS | FRIDAY, AUGUST 05, 2016
Americans who lost their home to foreclosure are slow to return to home ownership, despite being eligible to do
so, according to CoreLogic’s Senior Economist Kristine Yao.
Read more: Return Buyers: Housing's Next Boom
It's been seven years since the peak of the foreclosure crisis, and many of these boomerang buyers now have
their blemishes erased from their credit histories. But that doesn’t mean they are ready to jump back into home
ownership.
About 1.9 million of the 3.1 million home owners who lost their homes to foreclosure between 2007 and 2013
have passed the seven-year mark, the typical required wait period following a foreclosure.
But less than half are buying a home again, even some who are 16 years post-foreclosure, Yao notes.
About 150,000 boomerang buyers return per year – or 12,500 per month – to the housing market, she says. Of
the 4.4 million foreclosures of owner-occupied residences completed since 2000, Yao says that less than one-
quarter of owners have since returned to the housing market.
Economists had predicted that boomerang buyers would have a big impact on home ownership in the coming
years due to their size.
Some states are seeing a pick up in boomerang buyers, mostly in states that saw the biggest foreclosure rates
during the housing crisis. For example, returning home owners have been most pronounced in Arizona, Nevada,
and Michigan, which each have seen 32 percent of foreclosed home owners purchase again. That is about 10
percentage points higher than the national buyer share. California has seen about 24.8 percent of foreclosed
owners return while Florida posts a 20.3 percent return.