UNDERSTANDING

CALIFORNIA
HOME SELLERS

September 24,2015
Oscar Wei, Senior Economist

CALIFORNIA HOUSING MARKET

OUTLOOK

SALES OF EXISTING DETACHED HOMES

California, Aug 2015 Sales: 431,800 Units, +7.4%YTD, +9.3%YTY
700,000
600,000
Aug-14: Aug-15:
395,080 431,800

500,000
400,000
300,000
200,000
100,000

SERIES: Sales of Existing Single Family Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

*Sales are seasonally adjusted and annualized

Jul-15

Jan-15

Jul-14

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jan-09

Jul-08

Jan-08

Jul-07

Jan-07

Jul-06

Jan-06

Jul-05

Jan-05

CALIFORNIA SALES
Year-over-Year % Chg

6 per. Mov. Avg. (Year-over-Year % Chg)

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%

SERIES: Sales of Existing Single Family Homes, Seasonally Adjusted

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

-25%

MEDIAN PRICE OF EXISTING DETACHED HOMES

California, Aug 2015: $493,420, 1.0% MTM, +2.5%YTY
P: May-07
$594,530

$700,000
$600,000

Aug-14:
$481,250

$500,000

Aug-15:
$493,420

T: Feb-09
$245,230
-59% from
peak

$400,000
$300,000
$200,000
$100,000

SERIES: Median Price of Existing Single Family Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

Jul-15

Jan-15

Jul-14

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jan-09

Jul-08

Jan-08

Jul-07

Jan-07

Jul-06

Jan-06

Jul-05

Jan-05

$-

INVENTORY CONTINUED TO
DECLINE FROM LASTYEAR
Aug 2014: 4.0 Months; Aug 2015: 3.6 Months
18
16
14
12
10
8
6
4

Jul-15

Jan-15

Jul-14

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jan-

Jul-08

Jan-

Jul-07

Jan-07

Jul-06

Jul-05

Jan-05

Jan-

Note: Unsold Inventory Index represents the number of months it would take to sell the remaining inventory for the month in question. The
remaining inventory for the month is defined as the number of properties that were Active, Pending, and Contingent (when available) and divide
the sum by the number of Sold properties for the month in question.

SERIES: Unsold Inventory Index of Existing Single Family Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

DEMAND OUTPACING SUPPLY

Aug 2015
Sales

Year-to-Year % Chg

Active Listings

20%
13%
10%

0%

7%
0%
-1%
-7%

-10%
-12%
-20%
San Francisco Bay Area
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

Southern California

Central Valley

WHERE IS THE INVENTORY?

Investors renting instead of flipping
Mortgage Lock-In Effect
Where will I go?
Foreclosure pipeline is dry
New construction recovering but LOW
Off-market (aka pocket) listings not being
counted in listing stats

SHORT SALES CONTINUED SHRINKING

Equity Sale
100%
90%
80%
70%

Short Sale

12%

6.0%

4.0%

88%

93%

96%

2013

2014

2015

44%

60%
50%
40%
30%
20%

56%

10%
0%
2012
Q: Was the home sold as a short sale?

YEARS OWNED HOME BEFORE SELLING

12
10
8
6
4
2
0

SERIES: 2015 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

All Sellers
10

FEWER MIDDLE-AGE ADULTS IN RECENTYEARS

Source: Harvard Joint Center of Housing Studies, Census Bureau

DROP IN HOMEOWNERSHIP

Source: Harvard Joint Center of Housing Studies, Census Bureau

DECLINE IN # OF TRADE UP BUYERS DUE TO POPULATION LOSS &

DROP IN HOMEOWNERSHIP RATE

Source: Harvard Joint Center of Housing Studies, Census Bureau

FEWER HOMEOWNERS IN THEIR 30S, 40S LED TO

RECENT DECLINE IN TRADE UP BUYERS

Source: Harvard Joint Center of Housing Studies, Census Bureau

ABOUT THE SELLER

SELLERS AREYOUNGER
70

Median Age
Average Age

60

63

50
40

52
43

46

47

46

46

46

46
41
37

30

40
35

37

20
10
0
2002
Q: What is your age?

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

SELLERS BY GENERATION
Gen Y (1980-1999)

Gen X (1965-1979)

Boomers (1946-1964)

Seniors (before 1946)

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2006
Q: What is your age?

2007

2008

2009

2010

2011

2012

2013

2014

2015

FIRST-TIME SELLERS
60%

57%

50%
44%

47%

48%
40%

40%

35%

33%
30%

25%
21%

20%

20%
16%

18%

17%

15%

10%

0%
2002 2003

2004 2005 2006

Q: Was this your first experience in selling a house?

2007

2008 2009 2010

2011

2012

2013

2014

2015

FIRST-TIME SELLERS
100%
90%

91%

80%
70%
60%

53%

50%

40%

40%
30%

24%

20%
9%

10%
0%
Gen Y

Gen X

Q: Was this your first experience in selling a house?

Boomers

Silent

All

MOST SELLERS ARE MARRIED

Single

Married

Other

120%
100%
17%

17%

16%

16%

53%

50%

48%

50%

22%

20%

46%

47%

19%

12%

13%

80%
61%

60%

76%

63%

64%

87%

48%
71%

71%

40%
20%

39%
24%

37%

36%

30%

34%

37%

35%

13%

32%

33%

32%
12%

17%

0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Q:What was the marital status the head of your household at the time of the sale?

MEDIAN HOUSEHOLD INCOME: $100,000

$200,000+

15%

$150,000-$199,999

13%

$100,000-$149,999

24%

$75,000-$99,999

11%

$50,000-$74,999

14%

< $50,000

23%
0%

Q: What is your annual household income?

5%

10%

15%

20%

25%

MEDIAN ANNUAL INCOME HAS INCREASED

120,000
$100,000

100,000
80,000

$81,918

60,000
40,000
20,000
0
2014

2015

Q: What is your annual household income? (Please enter only numbers, no characters --- ie. $, periods, or
commas)

MEDIAN HOUSEHOLD INCOME: $100,000

< $50,000

$50,000-$74,999

$75,000-$99,999

$100,000-$149,999

$150,000-$199,999

$200,000+

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Q: What is your total annual household income

TOP REASON TO SELL:

MOVING TO A BETTER LOCATION
I wanted to move to a better location
I wanted a larger home
I wanted to downsize
I had a change in family status (i.e. marriage,
I had to relocate for work
I was retiring
I had trouble making the mortgage payment
I am an empty nester
To get the highest price for the home
I lost my job
For the investment advantages
Other

19%
14%
12%
11%
10%
7.9%
4.6%
2.9%
2.8%
2.5%
2.3%
12%

0%
Q: What was your primary reason for selling your home?

5%

10%

15%

20%

TOP 5 REASONS FOR SELLING THEIR HOME

(FIRST TIME VS. REPEAT)
First Time Sellers

Repeat Sellers

I wanted a larger home

22%

I wanted to move to a
better location

20%

I had a change in family

status (i.e. marriage,
child birth, divorce, etc.)
I had to relocate for
work
I wanted to downsize

14%

9%

7%

Q: What was your primary reason for selling your home?

I wanted to move to a
better location

17%

I wanted to downsize

I was retiring
I had to relocate for
work
I wanted a larger home

16%

12%

10%

9%

REASONS FOR MOVING DIFFER ACROSS

GENERATIONS
All

GenY

Gen X

Boomers

Silent

Desired better location

19%

25%

20%

20%

4.5%

Wanted larger home

13%

25%

24%

3.3%

2.3%

Downsizing

12%

1.6%

6.6%

14%

32%

Change in family status

11%

16%

13%

7.6%

9.1%

Relocating for work

11%

14%

16%

8.1%

0%

I was retiring

8.0%

0%

0.6%

17%

5%

Trouble making mortgage

payment

4.3%

4.7%

5.4%

2.9%

7.0%

I am an empty nester

3.3%

0%

o%

7.1%

2.3%

I lost my job

2.9%

3.1%

1.8%

4.3%

0%

For the investment

advantages

2.1%

1.6%

3.0%

0.5%

6.8%

Q: What was your primary reason for selling your home?

TECHNOLOGY USE

THERE IS A 7% INCREASE IN INTERNET USAGE

2014
80%
70%
60%
50%
40%
30%
20%
10%
0%

72%

78%
71%

2015

75%
63%

64%

60%

57%

35%

Gen Y

Gen X

Boomers

Silent

32%

All

 SELLERS LIST ZILLOW AS MOST USEFUL

WEBSITE
25%
14%
14%

4%

Q: What was the most useful website you visited during your home selling process?

GOOD VARIETY IN MARKETING PROPERTIES

80%

MLS
63%

Open house
41%

Privately marketed to agent's network

33%

Virtual tour

27%

Online
Social media

13%
0% 10% 20% 30% 40% 50% 60% 70% 80%

Q: How was your property marketed?

SELLERS BIGGEST CONCERN:

GETTING A GOOD PRICE
Getting good price

47%

Selling quickly

17%

Finding new house

13%

Selling house

13%

Finding qualified buyer

7.7%
0%

10%

Q: What were your biggest concerns as a home seller?

20%

30%

40%

50%

67% OF SELLERS RECEIVED MULTIPLE OFFERS

35%

33%

30%
25%

23%
20%

20%

16%

15%
7.6%

10%
5%
0%
1

Q: How many offers did you receive from buyers?

5+

SELLERS RECEIVING FEWER OFFERS

Average
5.9

6.0
5.0

Number of Offers

4.0
3.3

3.1

3.1

3.0
2.0
1.0
0.0
2012

Q: How many offers did you receive from buyers?

2013

2014

2015

MAJORITY OF SELLERS ACCEPTED HIGHEST

OFFER
Highest

52%

No contingencies

16%

Buyer's ability to close fastest

16%

Personal letter/appeal from buyer

8%

1st received

7%

All cash

6%

Other

9%
0%

Q: Which offer did you accept?

10%

20%

30%

40%

50%

60%

MAJORITY OF SELLERS ACCEPTED

HIGHEST OFFER
Category

All

GenY

Gen X

Boomers

Silent

Highest

52%

49%

55%

52%

52%

Buyer's ability to close fastest

16%

21%

16%

18%

4%

No contingencies

16%

13%

17%

16%

16%

Personal letter/appeal from buyer

8%

10%

9%

7%

12%

1st received

7%

1%

7%

8%

4%

All cash

6%

8%

5%

4%

20%

Other

9%

13%

7%

9%

12%

Q: Please rate your degree of satisfaction with your agent for each of the following
Q: Which offer did you accept?
aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

NET CASH GAIN TO SELLERS HIGHEST SINCE 2007

$250,000

$200,000

$150,000

$120,000
$100,000

$50,000

$0
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?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

2012

2013

2014

2015

SELLERS ARE OPTIMISTIC ABOUT FUTURE

HOME PRICES
Down

Flat

Up

100%
90%
80%
70%
60%

66%

60%

50%
40%
30%
20%
10%
0%

23%
3.4%
1 Year

15%
9.1%
5 Years

Q: Do you think home prices in your neighborhood will go up, down, or stay flat in 1 year? in 5 years?

SELLERS OUTLOOK ABOUT

FUTURE HOME PRICES
Category

All

GenY

Gen X

Boomers

Silent

Up in 1 year

65%

63%

67%

65%

64%

Up in 5 years

59%

59%

58%

59%

61%

Down in 1 year

3.5%

4.7%

0.6%

4.8%

6.8%

Down in 5 years

10%

13%

8.4%

9.0%

14%

Unsure in 1 year

7%

6%

5%

8%

11%

Unsure in 5 years

16%

13%

17%

17%

16%

Q: Please rate your degree of satisfaction with your agent for each of the following
Q: Do you think home prices in your neighborhood will go up, down, or stay flat in 1 year? in 5 years?
aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

MORE THAN HALF OF ALL SELLERS

ARE PLANNING TO BUY ANOTHER HOME
80%
70%
60%
50%

53%

40%
30%
20%
10%
0%
2005

2006

2007

2008

SERIES: 2015 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

2009

2010

2011

2012

2013

2014

2015

FEWER SELLERS MOVED OUT OF STATE

50%
44%

45%

44%

40%
34%

35%
30%

34%
28%

25%

23%

21%

20%
15%

15%
10%
5%

5%

6%

6%

2004

2005

2006

0%
2007

Q. In which county is your current residence located?

2008

2009

2010

2011

2012

2013

2015

TOP STATES WHERE CA SELLERS HAVE

RELOCATED
Arizona

10%

Texas

8.6%

Nevada

7.6%

Washington

7.0%

Oregon

6.5%

Colorado

5.4%

Idaho

4.3%

Florida

4.3%
0%

Q: Which state?

2%

4%

6%

8%

10%

12%

SELLER/AGENT RELATIONSHIP

SELLERS THAT DID NOT USE AN AGENT

REMAINS UNDER 5%
% that used an agent
100%
99%
98%

98.0%

97.7%
96.9%

97%
96%
95%
2013
Q. How did you find your real estate agent?

2014

2015

SELLERS NEEDED MOST HELP WITH

NEGOTIATION
Negotiating terms of sale

20%

Setting the right price

18%

Marketing the property

17%

Preparing home for sale

16%

Preparing transaction documents

12%

Negotiating the price

10%

Other

7%
0%

Q: In what part of the transaction seller needed the most assistance?

5%

10%

15%

20%

MAJORITY OF SELLERS FOUND AGENT BY

REFERRAL/PERSONAL CONTACT
Personal contact

29%

Referral

25%

Previous client

17%

Online

4%

Internet

4%

"For Sale Sign"

3%

Didn't use agent

2%
0%

Q. How did you find your real estate agent?

5%

10%

15%

20%

25%

30%

35%

HOW SELLERS FOUND THEIR AGENT

Category

All

GenY

Gen X

Boomers

Silent

Personal contact

29%

34%

25%

27%

43%

Referral

25%

19%

26%

27%

23%

Previous client

17%

19%

20%

15%

11%

Internet

4%

6%

2%

6%

0%

Online

4%

6%

2%

6%

0%

"For Sale Sign"

3%

5%

3%

3%

2%

Q: Please rate your degree of satisfaction with your agent for each of the following
Q. How did you find your real estate agent?
aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

70% OF SELLERS INTERVIEWED ONLY 1

AGENT
80%
70%

66%

70 %

60%
50%
40%

2014

30%

2015

20%

14% 13%

10%

7.9%

11%
1.4%2.5%

1.5%2.9%

0%
1

3
Number of Agents

5+

Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?

SELLERS INTERVIEWED SLIGHTLY MORE

AGENTS
Average
7.0

6.2

Number of Agents

6.0

5.4

5.0

4.4

4.0
3.0
2.0

5.0

3.1
2.3

3.5

3.5

3.6

3.5

2.2
1.5

1.6

1.0
0.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?

REASON SELLER SELECTED AGENT

Trustworthy (18%)
Worked with agent on previous transaction (17%)
Recommended (17%)
Friend / acquaintance (17%)
Good reputation/successful (16%)
Fastest to respond (6%)
Q: What was the single most important reason for selecting the agent you used in your recent home sale?

REASON SELLER SELECTED AGENT

Category

All

GenY

Gen X

Boomers

Silent

Trustworthy

18%

14%

20%

18%

10%

Worked with agent

previously

17%

22%

19%

15%

14%

Recommended

17%

13%

15%

18%

19%

Friend/Acquaintance

17%

19%

17%

13%

29%

Good reputation

16%

16%

17%

18%

14%

Fastest to repsond

6%

6%

7%

6%

2%

Q: Please rate your degree of satisfaction with your agent for each of the following
Q: What was the single most important reason for selecting the agent you used in your recent home sale?
aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

MORE SELLERS CHANGED AGENTS IN 2015

70%

64%

60%
44%

50%
40%

31%
22%

30%
20%
10%

4.1%

8.1%

0%
2009

2011

2012

2013

2014

Q: Did you initially list your home with an agent other than the one with whom you sold it?

2015

AGENT / SELLER COMMUNICATION IN SYNC

Preferred

Actual

39%

37% 40%
35%

25% 25%

24%
20%
15%
10%

30%
25%
20%
15%
10%
5%
0%

Q: What was the actual method of communication used most frequently with your agent?
Q: What was your preferred method of communication with your agent?

AGENTS MEET RESPONSE TIME EXPECTATIONS

Actual

Expected
28%

30.0%

26%

25.0%
21%
20.0%

16%

16%16%

15.0%
10.0%

15%

16%

13%
10%

8.8%

6.4%

5.1%
5.0%

1.0%

0.0%
Instantly

Within 30
Minutes

Within 1
Hour

Within 2
Hours

Within 4
Hours

Within 1
business
day

> 1 business
day

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 time in which your agent responded to your communications?

SELLER RESPONSE TIME EXPECTATIONS

All

GenY

Gen X

Boomers

Silent

Instantly

5.1%

4.8%

7.9%

3.9%

0%

Within 1 hour

16%

16%

17%

17%

12%

Within 2 hours

12.%

13%

8.0%

15%

19%

Within 1 business day

28%

24%

31%

26%

33%

Q. What was the typical response time you expected from your agent to return any form of communication to you?

SLIGHT DECLINE IN SELLER SATISFACTION

Category

2011

2012

2013

2014

2015

Value received for what you paid your real 3.1

estate agent

3.0

3.0

4.4

3.9

Overall satisfaction with the real estate

agent

2.8

2.8

2.7

4.4

4.2

Overall satisfaction with the home selling

process

2.6

2.5

2.6

4.4

4.0

Q:Please
Pleaserate
rateyour
yourdegree
degreeofofsatisfaction
satisfactionwith
withyour
youragent
agentfor
oneach
theseofthree
things using a 1 to 5 scale where 1 is Least
Q:
the following
Satisfied
5 is of
Most
aspects
on and
a scale
1 to Satisfied.
5, where 1 is least satisfied and 5 is most satisfied.

SELLER SATISFACTION DECREASED IN 2015

Agent

Selling process

5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Q: Please rate your degree of satisfaction with your agent on these three things using a 1 to 5 scale where 1 is Least
Satisfied and 5 is Most Satisfied.

SELLER SATISFACTION WAS NEGATIVELY AFFECTED BY

MISCOMMUNICATION OR LACK OF COMMUNICATION

1. Stayed on top of process

(44%)

1. Didnt communicate well

(5.6%)

2.Good/excellent job (13%)

2. Could have done a better

job (5.4%)

3. Agent was professional

(11%)

Q: Please explain why you had that level of satisfaction with your agent.

3. Could have sold for higher

price (1.8%)

SELLER ADVICE TO AGENTS

47%

Work hard and stay on top of everything

47%

Be honest and ethical

46%

Keep client informed

34%

Listen to client needs

33%

Be up front with clients

30%

Explain the process

27%

Set the correct listing price

Q: What advice would you give to real estate agents to improve the process or level of service?

4/10 SELLERS WOULDNT CHANGE ANYTHING

ABOUT THEIR RECENT SALE
Sell Home for higher price (22%)
Hire a better real estate agent (13%)
Not have to sell (10%)
Sell the home faster (5%)
Do more research about selling process (4%)

Q: If there was one thing you could change about your recent home sale, what would it be?

CONCLUDING REMARKS

THE TAKEAWAY
CA housing market remains strong
Sellers are optimistic about the future
housing market, and many want to buy
another home
Sellers need help with negotiation

Join us for our next webinar

2015 Annual Housing Market Survey:

An Overview of the California
Housing Market
Thursday, October 29, 2015
2:00 PM 3:00 PM
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