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Leslie Appleton-Young Chief Economist & Vice President
Leslie Appleton-Young Chief Economist & Vice President

Leslie Appleton-Young

Chief Economist & Vice President

Leslie Appleton-Young Chief Economist & Vice President
Cadence of Accountability How did I do with last year’s forecast?

Cadence of Accountability

How did I do with last year’s

forecast?

2016 Story

2016 Story

 

US economic and job growth expanding CA economy out-preforming the nation Rates rising in response to Fed policy Millennials leaving the nest as job opportunities expand Listings & new units remain low Formerly owner-occupied units now rentals Affordability challenges for first time & repeat buyers Boomers aren’t moving

2016 Forecast Report Card

2016 Forecast Report Card

 
 

2015

2016

2016

Actual

Forecast

Projected

SFH Resales (000s)

408.8

433.0

407.3

% Change

6.8%

6.3%

-0.4%

Median Price ($000s)

$474.4

$491.3

$503.9

% Change

6.2%

3.2%

6.2%

30-Yr FRM

3.9%

4.5%

3.6%

Housing Affordability Index

31%

27%

33%

U.S. Gross Domestic Product

2.4%

2.7%

1.5%

2016 Story Missed …
2016 Story Missed …

US economic activity failed to support sustained rate hikes Global economic turmoil China et al Degree to which lack of supply and affordability constrained home sales Demographics – boomers really aren’t moving, millennials are Out-migration Uncertainty (election, Fed, Brexit,“Brecession”, etc.)

YTD 2016 CA sales flat compared to 2015

YTD 2016 CA sales flat compared to 2015

California, August 2016 Sales: 420,360 Units, -0.4% YTD, -2.2% YTY

700,000 600,000 Aug-15: Aug-16: 429,900 420,360 500,000 400,000 300,000 200,000 100,000 -
700,000
600,000
Aug-15:
Aug-16:
429,900
420,360
500,000
400,000
300,000
200,000
100,000
-

*Sales are seasonally adjusted and annualized

SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sales began the year strong (TRID Effect?) but

Sales began the year strong (TRID Effect?) but

lost momentum…despite

strong job growth

Sales began the year strong (TRID Effect?) but lost momentum…despite strong job growth Year-over-Year % Chg

Year-over-Year % Chg

15% 11.6% 10% 5% 0% -5% -10% Avg. year-over-year % chg. = -2% -15% Aug-14 Dec-14
15%
11.6%
10%
5%
0%
-5%
-10%
Avg. year-over-year % chg. = -2%
-15%
Aug-14
Dec-14
Apr-15
Aug-15
Dec-15
Apr-16
Aug-16

*Sales are seasonally adjusted and annualized

SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

2016 prices highest since 2007

2016 prices highest since 2007

 

California, Aug. 2016: $526,580, +1.7% MTM, +5.8% YTY

P: May-07 Aug-16: $700,000 $594,530 Aug-15: $526,580 $497,520 $600,000 $500,000 T: Feb-09 $245,230 -59% from $400,000
P: May-07
Aug-16:
$700,000
$594,530
Aug-15:
$526,580
$497,520
$600,000
$500,000
T: Feb-09
$245,230
-59% from
$400,000
peak
$300,000
$200,000
$100,000
$-

SERIES: Median Price of Existing Single Family Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Peak vs. 6/16: Southern California

Peak vs. 6/16: Southern California

Peak Month

Last Cyclical

Last Cyclical

%Chg From

Peak Price

Median

Region

Jun-16

Peak

Peak Month Last Cyclical Last Cyclical %Chg From Peak Price Median Region Jun-16 Peak
Peak Month Last Cyclical Last Cyclical %Chg From Peak Price Median Region Jun-16 Peak

Orange County

Jun-07

San Diego County

May-06

$622,380

$775,420

$759,490

$594,430

-4.5%

-2.1%

-4.5% -2.1%
-4.5% -2.1%

Ventura Couty

Aug-06

$710,910

$674,310

-5.1%

-5.1%

CALIFORNIA

May-07

$594,530

$519,440

-12.6%

-12.6%

Riverside County

Jun-06

$431,710

$357,810

-17.1%

-17.1%

Los Angeles Metro

May-07

$578,700

$477,230

-17.5%

-17.5%

Inland Empire

Jun-06

$389,380

$319,100

-18.0%

-18.0%

Los Angeles County

Sep-07

$625,810

$502,190

-19.8%

-19.8%

San Bernardino County

Aug-06

$350,290

$245,220

-30.0%

-30.0%

SERIES: Median Price of Existing Detached Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Los Angeles County

Los Angeles County

 

538 E Colorado Ave, Glendora, CA 91740 List: $519,000 3 Bed, 2 Bath 1,625 Sq Ft

Last sold in 2011 for

$357,000

Los Angeles County • 538 E Colorado Ave, Glendora, CA 91740 • List: $519,000 • 3
Orange County

Orange County

 

17450 Rockrose Circle, Yorba Linda, CA List: $780,000 5 Bed, 2 Bath 2,809 Sq Ft

Last sold in 2000 for

$400,000

Orange County • 17450 Rockrose Circle, Yorba Linda, CA • List: $780,000 • 5 Bed, 2
Riverside County

Riverside County

 

25522 Buckley Drive, Murrieta, CA List: $360,000 3 Bed, 3 Bath 1,700 Sq Ft

Last sold in 2010 for

$230,000

Riverside County • 25522 Buckley Drive, Murrieta, CA • List: $360,000 • 3 Bed, 3 Bath
Peak vs. 6/16 Median: Central Valley

Peak vs. 6/16 Median: Central Valley

Peak Month

Last Cyclical

Last Cyclical

%Chg From

Peak Price

Median

Region

Jun-16

Peak

Peak Month Last Cyclical Last Cyclical %Chg From Peak Price Median Region Jun-16 Peak
Peak Month Last Cyclical Last Cyclical %Chg From Peak Price Median Region Jun-16 Peak

CALIFORNIA

Fresno County

Tulare County

Kings County

Madera County

Sacramento County

Kern (Bakersfield) Count

Placer County

San Benito County

Merced County

-12.6% May-07 $594,530 $519,440
-12.6%
May-07
$594,530
$519,440
Feb-08 $444,590 $527,990 Aug-05 -15.7% $332,580 $394,450 Aug-05 -20.5% -14.6% $234,720 $275,000 -15.8% $242,240 -22.7% May-05
Feb-08
$444,590
$527,990
Aug-05
-15.7%
$332,580
$394,450
Aug-05
-20.5%
-14.6%
$234,720
$275,000
-15.8%
$242,240
-22.7%
May-05
$671,190
$511,500
Oct-05
$344,610
$207,580
-39.8%
$313,510
-21.5%
$211,820
$269,710
Dec-05
-21.2%
$211,110
$268,050
Mar-06
Jun-06
-23.8%
$238,400
$299,920
Jun-06

SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sacramento County

Sacramento County

 

5109 Ocean Ln Elk Grove, CA 95757 List: $329,900 3 Bed, 2 Bath 1,425 Sq Ft

Last sold in 2010 for

$184,000

Sacramento County • 5109 Ocean Ln Elk Grove, CA 95757 • List: $329,900 • 3 Bed,
Peak vs. 6/16 Median: Bay Area

Peak vs. 6/16 Median: Bay Area

Region

Last Cyclical

Last Cyclical

Jun-16

%Chg From

Peak Month

Peak Price

Median

Cyclical Peak

Region Last Cyclical Last Cyclical Jun-16 %Chg From Peak Month Peak Price Median Cyclical Peak

San Francisco County

May-07

$972,010

$1,350,000

38.9%

San Mateo County

Oct-07

$1,020,000

$1,306,250

28.1%

Santa Clara County

Apr-07

$865,000

$1,050,000

21.4%

Alameda County

May-07

$709,420

$803,000

13.2%

San Francisco Bay Area

May-07

$789,250

$841,960

6.7%

Marin County

Jun-07

$1,149,390

$1,218,500

6.0%

Sonoma County

Jan-06

$650,330

$608,000

-6.5%

CALIFORNIA

May-07

$594,530

$519,440

-12.6%

Napa County

Aug-06

$729,170

$619,000

-15.1%

Solano County

Jun-06

$492,800

$390,000

-20.9%

Contra Costa County

Contra Costa County
Contra Costa County

May-07

May-07

$923,150

$923,150

$625,000

$625,000

-32.3%

SERIES: Median Price of Existing Detached Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Contra Costa County

Contra Costa County

 

2389 Brandon Miles Way, Brentwood, CA

94513

List: $575,000 4 Bed, 3 Bath 2,774 Sq Ft

Last sold in 2011 for

$360,000

Contra Costa County • 2389 Brandon Miles Way, Brentwood, CA 94513 • List: $575,000 • 4
San Francisco

San Francisco

 

77 Christopher Drive, San Francisco, CA List: $1,200,000 4 Bed, 3 Bath 1,890 Sq Ft

Last sold in 2004 for

$778,000

San Francisco • 77 Christopher Drive, San Francisco, CA • List: $1,200,000 • 4 Bed, 3
Don’t Bother Commuting in Major Metros

Don’t Bother Commuting in Major Metros

…from Palo Alto to San Francisco?

…from Riverside to Irvine?

<1 hour 1-2 hours 2+ hours Impossible! Don't bother! 13% 52% 20% 15% 12% 51% 23%
<1 hour
1-2 hours
2+ hours
Impossible! Don't bother!
13%
52%
20%
15%
12%
51%
23%
13%

Q4 - What is the average commute time …

Making Traffic Disappear is Most Desired Super Power

Making Traffic Disappear is Most Desired Super Power

Make traffic disappear 29% Flying 26% Instant mortgage approval 21% Invisibility 19% Super strength 4.9% 0%
Make traffic disappear
29%
Flying
26%
Instant mortgage approval
21%
Invisibility
19%
Super strength
4.9%
0%
5%
10%
15%
20%
25%
30%
35%

Q12 - Which super power would you like to have?

Abundance of

Uncertainty

BREXIT: Markets were surprised

BREXIT: Markets were surprised

 
BREXIT: Markets were surprised
Brexit: Limited Direct Impact on US

Brexit: Limited Direct Impact on US

Brexit: Limited Direct Impact on US • The UK accounted for less than 4 percent of

The UK accounted for less than 4 percent of

American exports of goods in 2015, equivalent

to 0.4 percent of U.S. GDP

Direct economic impact on the U.S. would be small, even if the UK economy slipped into recession.

SOURCE: Wells Fargo

Indirect effects are more significant

Indirect effects are more significant

Financial markets meltdown after the Brexit vote

Adjusted S & P 500 Composite 2140 Closed 2,113.32 2120 2100 2080 -3.6% 2060 2040 2,037.30
Adjusted
S & P 500 Composite
2140
Closed
2,113.32
2120
2100
2080
-3.6%
2060
2040
2,037.30
2020
2000
1980

SOURCE: Yahoo Finance

Global Production & Export Growth Weak

Global Production & Export Growth Weak

World Export & Industrial Production Volume

Year-over-Year % Chg.
Year-over-Year % Chg.

SOURCE: Wells Fargo Securities

Oil Price Decline was Unexpected

Oil Price Decline was Unexpected

Dollars per Barrel

$160 $140 $120 $100 $80 $60 $40 $20 $0
$160
$140
$120
$100
$80
$60
$40
$20
$0

SERIES: Crude Oil Prices: West Texas Intermediate

SOURCE: U.S. Energy Information Administration

Silver lining for economic weakness, political turmoil and uncertainty … • Treasury yield dropped to fresh
Silver lining for economic weakness,
political turmoil and uncertainty …
Treasury yield dropped to fresh low
18
Treasury Yield - 10 Yr.
Treasury Yield - 30 Yr.
amid global bond rally
16
14
12
Fed may raise rates end-2016, but long-
term rates will remain low as foreign
cash flood into U.S. bond
10
06/24/16:
8
10 Yr. – 1.57%
30 Yr. – 2.43%
6
4
2
0
SERIES: Treasury Yield 10 Yr., Treasury Yield 30 Yr.
Jan-62
Jan-65
Jan-68
Jan-71
Jan-74
Jan-77
Jan-80
Jan-83
Jan-86
Jan-89
Jan-92
Jan-95
Jan-98
Jan-01
Jan-04
Jan-07
Jan-10
Jan-13
Jan-16

SOURCE: Yahoo Finance

Fed holds off again – see you in December? Efficacy of Monetary Policy?
Fed holds off again – see you in December?
Efficacy of Monetary Policy?
Fed holds off again – see you in December? Efficacy of Monetary Policy?
Rates remain attractive

Rates remain attractive

 

Today’s rates: FRM 3.48% ARM 2.8%

6 MONTHLY WEEKLY 5 4 3 FRM ARM 2 1 0
6
MONTHLY
WEEKLY
5
4
3
FRM
ARM
2
1
0

SERIES: 30Yr FRM, 5Yr ARM

SOURCE: Freddie Mac

Do you plan to leave the country if…?

Do you plan to leave the country if…?

[CATEGORY NAME] [VALUE]

[CATEGORY

[CATEGORY NAME] [VALUE]
[CATEGORY
NAME]
[VALUE]

NAME] [VALUE]

Economic Outlook

Macro Economic Summary

Macro Economic Summary

 
1.2%
1.2%

GDP 2016-Q2

4.9%
4.9%

Unemployment

2016-07

4.2%
4.2%

Consumption

2016-Q2 1.7%
2016-Q2
1.7%

Job Growth

2016-07

Economic growth painfully slow - Consumer spending recovered in Q2 Investment still weak
Economic growth painfully slow - Consumer spending
recovered in Q2 Investment still weak

US GDP 2015: 2.6%; 2016 Q1: .8% Q2: 1.4%

6% 5% ANNUALLY QUARTERLY 4% 3% 2% 1% 0% -1% -2% 2009 Largest Annual Drop since
6%
5%
ANNUALLY
QUARTERLY
4%
3%
2%
1%
0%
-1%
-2%
2009 Largest Annual Drop since 1946 (-2.8%)
-3%
-4%
2005
2007
2009
2011
2013
2015
Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16
ANNUAL PERCENT CHANGE, CHAIN-TYPE
(2009) $

SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

Consumer Spending Robust Q2 August Retail Sales Weak

Consumer Spending Robust Q2 August Retail Sales Weak

 

2015: 2.6%; 2016 Q2: 4.2%

ANNUAL PERCENT CHANGE

5% ANNUALLY QUARTERLY 4% 3% 2% 1% 0% -1% -2% -3% 2005 2007 2009 2011 2013
5%
ANNUALLY
QUARTERLY
4%
3%
2%
1%
0%
-1%
-2%
-3%
2005
2007
2009
2011
2013
2015
2012
Q1
2012
Q3
2013
Q1
2013
Q3
2014
Q1
2014
Q3
2015
Q1
2015
Q3
2016
Q1

SERIES: Personal Consumption

SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

CA Jobs Are Back

CA Jobs Are Back

 

Recession Job Losses: 1.3 million, Since Jan’10: +2.2 million

150,000 100,000 50,000 0 -50,000 -100,000 -150,000 MONTH TO MONTH CHANGES
150,000
100,000
50,000
0
-50,000
-100,000
-150,000
MONTH TO MONTH CHANGES

SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

California Job Changes by Industry

California Job Changes by Industry

August 2016: CA +2.3%, +378,000 (YTY)

Educational Services

Professional, Scientific & Technical Services Construction

Leisure & Hospitality

Real Estate & Rental & Leasing Health Care & Social Assistance

Information Government Wholesale Trade Admistrative & Support & Waste Services Transportation, Warehousing & Utilities

Retail Trade

Finance & Insurance Durable Goods

Nondurable Goods

6.3% 4.6% 3.7% 3.6% 3.3% 2.9% 2.7% 1.8% 1.8% 1.7% 1.6% 1.3% 0.3% -0.8% -0.8% -2%
6.3%
4.6%
3.7%
3.6%
3.3%
2.9%
2.7%
1.8%
1.8%
1.7%
1.6%
1.3%
0.3%
-0.8%
-0.8%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%

SERIES: Total Nonfarm Employment By Industry SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

Consumer Confidence: 9 Year High

Consumer Confidence: 9 Year High

September 2016: 104.1

120 100 80 60 40 20 0 INDEX, 100=1985
120
100
80
60
40
20
0
INDEX, 100=1985

SERIES: Consumer Confidence SOURCE: The Conference Board

CA Jobs Growing Faster Than Nation

CA Jobs Growing Faster Than Nation

6 California US CA 2.3% US 1.7% 4 2 0 -2 -4 -6 -8 ANNUAL PERCENT
6
California
US
CA 2.3%
US 1.7%
4
2
0
-2
-4
-6
-8
ANNUAL PERCENT CHANGE

SERIES: Total Nonfarm Employment SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

Unemployment Rates Near 8-year low
Unemployment Rates Near 8-year low

August 2016: US 4.9% & CA 5.5%

14% US-CA CA US 12% 10% 8% 6% 4% 2% 0% -2% -4%
14%
US-CA
CA
US
12%
10%
8%
6%
4%
2%
0%
-2%
-4%

SERIES: Unemployment Rate The U-6 rate covers the unemployed, underemployed and those who are not looking but who want a job

SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

CA Job Gains by Region +378,000 last 12 months

CA Job Gains by Region +378,000 last 12 months

Bay Area

3,574.8

3,542.4

  • 32.4 0.9%

Central Valley

2,171.5

2,119.4

52.1

2.5%

Central Coast

534.4

527.2

7.2

1.4%

North Central

143.7

140.9

2.8

2.0%

CALIFORNIA

16,534.3

16,156.3

378.0

2.3%

Southern California

9,007.4

8,824.1

  • 183.3 2.1%

% Change

Change

Nonfarm Employment (Thousands)

Aug 2016

Aug 2015

SERIES: Total Nonfarm Employment

SOURCE: CA Employment Development Division

Silicon Valley Leads Job Growth

Silicon Valley Leads Job Growth

August 2016: CA +2.3%, +378,000 (YTY)

San Jose 3.6% Inland Empire Stockton Fresno MSA Sacramento Orange 3.2% 2.7% 2.7% 2.6% 2.5% San
San Jose
3.6%
Inland Empire
Stockton
Fresno MSA
Sacramento
Orange
3.2%
2.7%
2.7%
2.6%
2.5%
San Francisco
Oakland
Modesto
Bakersfield
San Diego
Los Angeles
2.4%
2.3%
2.3%
2.0%
1.8%
1.7%
Ventura
0.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%

SERIES: Total Nonfarm Employment By Industry

SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

Unemployment by Metro Area

Unemployment by Metro Area

 

August 2016: California 5.5%

Bakersfield Fresno MSA Modesto Stockton MSA 9.7% 8.7% 8.0% 7.8% Inland Empire Ventura Sacramento Los Angeles
Bakersfield
Fresno MSA
Modesto
Stockton MSA
9.7%
8.7%
8.0%
7.8%
Inland Empire
Ventura
Sacramento
Los Angeles
San Diego
Oakland
6.6%
5.8%
5.5%
5.3%
5.0%
4.7%
Orange County
4.4%
San Jose
San Francisco
4.1%
3.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%

SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

Commercial Markets Developers’ Sentiment

Commercial Markets Developers’ Sentiment

Commercial Markets Developers’ Sentiment SOURCE: Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey

SOURCE: Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey

REALTORS CRE Outlook

REALTORS ® CRE Outlook

 
REALTORS CRE Outlook
A Tale of Two Markets: The “New” Normal

A Tale of Two Markets: The “New” Normal

High-end: discretionary & slowing Low/Moderate-end: demand continues unabated Urban coastal CA slowing Inland and Central and Northern CA growing Migration patterns mirror housing affordability and jobs

Supply

Supply Remains an Issue; Unsold Inventory Stays Below the Norm

Supply Remains an Issue; Unsold Inventory Stays Below the Norm

August 2016: 3.4 Months, August 2015: 3.6 Months;

18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0

Note: “Unsold Inventory Index” represents the number of months it would take to sell the

remaining inventory for the month in question. The remaining inventory for the month is defined

as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question.

SERIES: Unsold Inventory Index of Existing Single Family Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Inventory Tightest in the Bay Area

Inventory Tightest in the Bay Area

 
9.0 Bay Area So CA Central Valley 8.0 7.0 6.0 5.0 4.0 3.6 3.0 3.2 2.0
9.0
Bay Area
So CA
Central Valley
8.0
7.0
6.0
5.0
4.0
3.6
3.0
3.2
2.0
2.4
1.0
0.0

Note: “Unsold Inventory Index” represents the number of months it would take to sell the

remaining inventory for the month in question. The remaining inventory for the month is defined

as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question.

SERIES: Unsold Inventory Index of Existing Single Family Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Supply Tighter at the More Affordable Price Ranges …
Supply Tighter at the More Affordable Price
Ranges …
Aug-16 Aug-15 4.9 $1,000K+ 4.9 3.6 $750-1000K 3.7 3.1 $500-749K 3.4 3.0 $400-499K 3.1 3.1 $300-399K
Aug-16
Aug-15
4.9
$1,000K+
4.9
3.6
$750-1000K
3.7
3.1
$500-749K
3.4
3.0
$400-499K
3.1
3.1
$300-399K
3.4
3.0
$200-299K
3.4
3.1
$0-199K
3.5
SERIES: Unsold Inventory Index of Existing Single Family Homes
0
1
2
3
4
5
6
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
… Resulting in Disproportionate Price Distribution Between Supply and Demand
… Resulting in Disproportionate Price
Distribution Between Supply and Demand

Share by Price Segment

Price Segment

Sales (% to Total)

Active Listings (% to Total)

$0 - $199k

9.1%

8.3%

$200 - $299k

16.7%

14.0%

$300 - $399k

15.9%

13.9%

$400 - $499k

14.2%

11.8%

$500 - $749k

21.8%

19.5%

$750 - $999k

10.0%

11.2%

$1,000 - $1,999k

9.6%

13.0%

$2,000k+

2.6%

8.3%

SERIES: Sales and Active Listings of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Where is the inventory?

Where is the inventory?

 

Long-Time Homeowners are not moving as in the past

Low rate on current mortgage

Low property taxes Capital gains hit

Where can I afford to go?

Could not qualify for a mortgage today Remodel and stay

Are we headed for the “European Model” where children

inherit the home of their parents?

One more thing…Secular decline in marriage

Fewer housing units being turned over

Fewer housing units being turned over

 

since the Great Recession

 

Housing Turnover Rate

(Single-Family Homes only) 10% CA US 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
(Single-Family Homes only)
10%
CA
US
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%

4.8%

4.2%

SERIES: Percent of existing single-family homes being sold

SOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.

Years Owned Home Before Selling

Years Owned Home Before Selling

12 All Sellers 10 10 8 6 4 2 0
12
All Sellers
10
10
8
6
4
2
0

SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Owners Investing in Staying Put ?

Owners Investing in Staying Put ?

Alterations/Additions Reach All-Time High & Gaining Steam Up 16% from 2015 YTD levels

$3.9 Billion

4.5 through July 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 88 89 90 91
4.5
through July
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
$ Billions

Year-to-Date Through July

SOURCE: California Homebuilding Foundation (CHF)/Construction Industry Research Board (CIRB)

Downloaded from Moody’s Analytics

Boomers Not Moving as Often

Boomers Not Moving as Often

 

71% of Californian’s aged 55+ haven’t moved since 1999

California Homeowners by Length of Tenure, 2013

35% Under 55 55+ 31.8% 30% 24.4% 24.0% 25% 21.3% 20% 14.2% 15% 12.4% 12.0% 11.0%
35%
Under 55
55+
31.8%
30%
24.4%
24.0%
25%
21.3%
20%
14.2%
15%
12.4%
12.0%
11.0%
10.7%
9.0%
8.9%
10%
7.3%
5.7%
5%
1.9%
0.9%
0.8%
0%

1978 & Earlier

1979 to 1984

1985 to 1989

1990 to 1994

1995 to 1999

2000 to 2005

2005 to 2009

2010 to 2013

SERIES: Distribution of Home Ownership by Year Moved In SOURCE: U.S. Census Bureau, 2013 American Housing Survey

Majority Do Not Plan to Sell Home

Majority Do Not Plan to Sell Home

 

When they Retire

 
Yes, 36% No, 64%
Yes, 36%
No, 64%

Do you plan to sell your current home when you retire?

SERIES: 2016 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Do you worry about your children not having the same opportunities to succeed as you did?

Do you worry about your children not having the same opportunities to succeed as you did?

About the same, 24% Yes, they will No, they will have have better opportunities, have worse
About the
same, 24%
Yes, they will
No, they will
have have
better
opportunities,
have worse
opportunities,
52%
24%

Do you worry about your children or grandchildren not having the same opportunities to succeed as you did?

SERIES: 2016 Generations / Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Time to talk: ¾ Plan of have already Helped Children with Down Payment

Time to talk: ¾ Plan of have already Helped Children with Down Payment

No, 23% Yes, I am Yes, I have already planning to help, 53% helped, 24%
No, 23%
Yes, I am
Yes, I have
already
planning to
help, 53%
helped, 24%

SERIES: 2016 Generations / Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Are you planning to provide help for your children to buy a home by contributing to their down payment or mortgage payments?

Most Have Equity in their Home

Most Have Equity in their Home

 

Do you have equity in your home?

No, 8% Yes, 92%
No, 8%
Yes, 92%

SERIES: 2016 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Baby Boomers Not Moving Because…

Baby Boomers Not Moving Because…

They plan to be buried in the back yard and leave their home to their kids.

They want to see all of their children living under the same roof again.

Their $1M+ in equity isn't enough to retire in style.

All of the above.

Q11 - Why aren’t Baby Boomers moving?

13% 2.2% 44% 41% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
13%
2.2%
44%
41%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
“Missing” 65,000 New Units Annually

“Missing” 65,000 New Units Annually

2015: 95,822 (42,959 sf, 52,863 mf)

350000 2016p: 98,300 total units 300000 Single Family Multi-Family 250000 Household Growth: 200000 165,000/yr. 150000 100000
350000
2016p: 98,300 total units
300000
Single Family
Multi-Family
250000
Household Growth:
200000
165,000/yr.
150000
100000
50000
0

SERIES: California New Housing Permits SOURCE: Construction Industry Research Board

What Would NIMBYs Rather Do?

What Would NIMBYs Rather Do?

Fund Elon Musk’s colony on Mars. (27%)
Fund Elon Musk’s
colony on Mars.
(27%)
Watch constant re- runs of “Keeping Up With The Kardashians.” (25%)
Watch constant re-
runs of “Keeping
Up With The
Kardashians.” (25%)
Cut off their right arm. (18%)
Cut off their right
arm. (18%)
Give away their first-born. (16%)
Give away their
first-born. (16%)
Shop at Smart & Final. (13%)
Shop at Smart &
Final. (13%)

Q10 - What would NIMBYs rather do than allow new housing development?

Three of the Top 10 Markets in Need of More Housing Constructions Are in California

Three of the Top 10 Markets in Need of More Housing Constructions Are in California

Top 10 Markets in Need of More Single-Family Housing Starts

Three of the Top 10 Markets in Need of More Housing Constructions Are in California Top

Metro Area

# of permits required

  • 1. New York

218,541

  • 2. Dallas

132,482

  • 3. San Francisco

127,412

  • 4. Miami

118,937

  • 5. Chicago

94,457

  • 6. Atlanta

93,627

  • 7. Seattle

73,135

  • 8. San Jose, CA

69,042

  • 9. Denver

67,403

10. San Diego

55,825

SOURCE: National Association of Realtors®, Census Bureau

Most Underbuilt Counties in California

Most Underbuilt Counties in California

New Jobs vs. New Permits (2010-2015)

450,000 Jobs 381,300 400,000 Permits 350,000 300,000 250,000 200,000 174,833 162,740 141,162 150,000 127,542 105,586 95,245
450,000
Jobs
381,300
400,000
Permits
350,000
300,000
250,000
200,000
174,833
162,740
141,162
150,000
127,542
105,586
95,245
98,149
88,134
100,000
66,054
44,923
44,772
35,426
40,434
31,255
50,000
18,141
14,901
18,108
6,349
10,890
0

SOURCE: California Employment Development Department, Construction Industry Research Board

The More “Underbuilding”, the Higher the

The More “Underbuilding”, the Higher the

 

Price Growth

 

CA Underbuilding and Price Growth (2010-2015)

12 10 8 6 4 2 0 -40% -20% 0% 20% 40% 60% 80% 100% 120%
12
10
8
6
4
2
0
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
-2
Underbuilding (New Jobs/New Permits)

Price Growth (%)

SERIES: Nonfarm Job Growth, New Housing Permits, Existing Median Prices SOURCE: CA EDD, C.A.R., Construction Industry Research Board

Affordability

Housing Affordability In CA: by county

Housing Affordability In CA: by county

2016-Q2: % able to purchase median-priced home

60 57 56 56 54 52 50 50 50 48 50 46 45 45 45 41
60
57
56
56
54
52
50
50
50
48
50
46
45
45
45
41
40
32
31
30
29
30
27
26
26
25
25
22
20
20
19
20
18
17
14
13
10
0
Housing Affordability In CA: by county 2016-Q2: % able to purchase median-priced home 60 57 56
Housing Affordability In CA: by county 2016-Q2: % able to purchase median-priced home 60 57 56
Housing Affordability In CA: by county 2016-Q2: % able to purchase median-priced home 60 57 56
Housing Affordability In CA: by county 2016-Q2: % able to purchase median-priced home 60 57 56

SERIES: Housing Affordability Index

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Housing Affordability peaked q1 2012 prices v. low rates and income growth

Housing Affordability peaked q1 2012 prices v. low rates and income growth

 

California vs. U.S. 1984-2016

% OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME

Annual Quarterly 80% CA US 70% 57% 60% 50% 40% 31% 30% 20% 10% 0%
Annual
Quarterly
80%
CA
US
70%
57%
60%
50%
40%
31%
30%
20%
10%
0%

SERIES: Housing Affordability Index of Traditional Buyers

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

California’s Single-Family Housing Stock
California’s Single-Family Housing Stock
7,500,000 3,000,000 Owner-Occupied (left) Renter-Occupied (right) 2,500,000 7,000,000 2,000,000 6,500,000 1,500,000 6,000,000 1,000,000 5,500,000 500,000 5,000,000
7,500,000
3,000,000
Owner-Occupied (left)
Renter-Occupied (right)
2,500,000
7,000,000
2,000,000
6,500,000
1,500,000
6,000,000
1,000,000
5,500,000
500,000
5,000,000
0
2000
2003
2006
2009
2012
2015

SOURCE: U.S. Census Bureau, Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS) Downloaded from the National Bureau of Economic Research (NBER)

More Single Family Units Now Rentals

More Single Family Units Now Rentals

8,000,000 Potentially between 400,000 and 700,000 SF Rentals that Used to be Owner-Occupied 6,919,164 7,000,000 6,527,730
8,000,000
Potentially between 400,000 and 700,000 SF Rentals that Used to be Owner-Occupied
6,919,164
7,000,000
6,527,730
6,000,000
5,000,000
4,000,000
3,000,000
2,674,808
1,940,607
2,000,000
1,000,000
0
SF Owners
SF Renters
2000
2005
2010
2015

SOURCE: U.S. Census Bureau, Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS) Downloaded from the National Bureau of Economic Research (NBER)

Wages v. Income Required to Qualify

Wages v. Income Required to Qualify

 

California

$130,000 $126,560 2015 Annual Mean Wage $110,000 $101,260 $92,571 $93,550 $92,170 $90,000 $72,360 $67,920 $70,000 $45,810
$130,000
$126,560
2015 Annual Mean Wage
$110,000
$101,260
$92,571
$93,550
$92,170
$90,000
$72,360
$67,920
$70,000
$45,810
$50,000
$28,430
$30,000
$10,000
Retail
Chefs and
Elementary
Firefighters
Police and
Computer
Registered
Software
-$10,000
Salespersons
Head Cooks
School
Sherriff's Patrol
Programmers
Nurses
Developers
Teachers
Officers
(Applications)
Min. Inc
Required to
Buy a Med.
Home

SOURCE: Bureau of Labor Statistics, C.A.R.

Share of First-Time Buyers remains Below Long-Run Average
Share of First-Time Buyers remains
Below Long-Run Average
% First-Time Home Buyers Long Run Average 50% Long Run Average = 38% 40% 29.5% 30%
% First-Time Home Buyers
Long Run Average
50%
Long Run Average = 38%
40%
29.5%
30%
20%
10%
0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

SERIES: 2015 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Los Angeles: Net Exit to Inland Empire and Kern County

Los Angeles: Net Exit to Inland Empire and Kern County

   

Total

 

Total

Number

Number

Moved

County

Moved to

from Los

Moved

Los Angeles

Angeles

Total Net

To/From

County

County

Migration

Inland

     

Empire

25,777

50,531

-24,754

Kern

2,466

10,460

-7,816

Orange

23,887

31,435

-7,548

San Diego

8,916

7,240

1,676

Ventura

7,464

7,543

-79

Los Angeles: Net Exit to Inland Empire and Kern County Total Total Number Number Moved County
San Francisco: Affordability & Jobs Drive Migration

San Francisco: Affordability & Jobs Drive Migration

County Moved Total Number Moved to San Total Number Moved from San To/From Francisco County Francisco
County Moved
Total Number
Moved to San
Total Number
Moved from San
To/From
Francisco County
Francisco County
Total Net Migration
Alameda
3983
10345
-6362
San Mateo
6161
7984
-1823
Contra Costa
1856
2998
-1142
Sonoma
557
1602
-1045
Marin
1428
1918
-490
Napa
0
243
-243
Solano
796
815
-19
Santa Clara
4041
2691
1350

Demand & Desire for

Homeownership

CA Household Growth Rebounding from

CA Household Growth Rebounding from

 

Great Recession

 
2.0 1.8 1.7 1.6 1.6 1.4 1.3 1.4 1.1 1.2 1.1 1.0 1.0 0.7 0.8 0.7
2.0
1.8
1.7
1.6
1.6
1.4
1.3
1.4
1.1
1.2
1.1
1.0
1.0
0.7
0.8
0.7
0.6
0.4
0.4
0.3
0.3
0.2
0.0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016p
Annual Household Growth (Net Chg,
In Millions)

SERIES: Annual Household Growth SOURCE: US Census Bureau Housing Vacancy Survey

Home Purchase Index Continued to Climb from Same Period of Last Year

Home Purchase Index Continued to Climb from Same Period of Last Year

At the national level, consumer sentiment remains positive.

Home Purchase Index Continued to Climb from Same Period of Last Year At the national level,

“Consumers have a fairly

optimistic 12-month outlook on housing at the end of the

summer home-buying season,

supported by increased job

confidence and more favorable expectations

regarding their personal

financial situations compared

with this time last year,”

SERIES: Home Purchase Sentiment Index

SOURCE: Fannie Mae

Millennials: American Dream is still Important

Millennials: American Dream is still Important

40% 34% 35% 31% 30% 25% 25% 20% 15% 10% 6% 4% 5% 0%
40%
34%
35%
31%
30%
25%
25%
20%
15%
10%
6%
4%
5%
0%

Not at All Important

Of Little Importance

Moderately Important

Important

Very Important

How important is fulfilling the 'American Dream' to you?

SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

…And Homeownership is part of it

…And Homeownership is part of it

 
20% 18% 18% 18% 16% 16% 14% 14% 12% 11% 12% 10% 10% 8% 6% 4%
20%
18%
18%
18%
16%
16%
14%
14%
12%
11%
12%
10%
10%
8%
6%
4%
2%
0%
Owning a home
A fulfilling job
Having a family
Education
Seeing the world
Helping others
Becoming wealthy

Which factors contribute to your ideal of the `American Dream`

SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Many Millennials Also Believe Buying a Home Is a Safe Investment

Many Millennials Also Believe Buying a Home Is a Safe Investment

50% 45% 45% 40% 37% 35% 30% 25% 20% 15% 12% 10% 5% 5% 1% 0%
50%
45%
45%
40%
37%
35%
30%
25%
20%
15%
12%
10%
5%
5%
1%
0%
Strongly Disagree
Disagree
Neighter Agree nor
Disagree
Agree
Strongly Agree
  • Q. Do you think home purchase is still a safe investment?

SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Nearly ½ Renters Plan to Buy a Home

Nearly ½ Renters Plan to Buy a Home

No plans to buy 28% Not sure 24% In 5+ Years 11% 3-5 Years 14% In
No plans to buy
28%
Not sure
24%
In 5+ Years
11%
3-5 Years
14%
In 2 Years
13%
Within a year
9.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
  • Q. When do you plan to buy your next home?

82

55% of Renters Have Made Preparations to Buy a Home

55% of Renters Have Made Preparations to Buy a Home

No preparations 45% Searched for homes 34% Searched for home buying process information online 21% Spoken
No preparations
45%
Searched for homes
34%
Searched for home buying process information online
21%
Spoken to a REALTOR®
16%
Consulted credit counselor/financial advisor
12.0%
Pre-qualified with a lender
9.0%
Other
1.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
  • Q. Have you made any of the following preparations to buy a home? Please select all that apply.

83

69% of Millennial renters would look into purchasing if knew about lower down-payments
69% of Millennial renters would look into purchasing
if knew about lower down-payments
All Millennial Owners No, 31% Yes, 69%
All Millennial Owners
No, 31%
Yes, 69%

If You knew you could qualify with lower down-payment, would you start to look for a house?

SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Only 19% Know about FHA Loans

Only 19% Know about FHA Loans

 

Are you aware of FHA Loans?

Yes, [VALUE] No, [VALUE]
Yes, [VALUE]
No, [VALUE]

FHA backed loans only require a 3.5% down-payment.

SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

2016: Market Conditions

Annual Housing Market survey

Sellers - More than Half Plan to Buy Another Home

Sellers - More than Half Plan to Buy Another Home

         
80% 72% 70% 63% 60% 52% 53% 52% 49% 48% 50% 46% 39% 40% 38% 40%
80%
72%
70%
63%
60%
52%
53%
52%
49%
48%
50%
46%
39%
40%
38%
40%
33%
30%
20%
10%
0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

SERIES: 2016 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Investor Buyers? Dropping Still Have Demand in Lower-Priced Segments
Investor Buyers? Dropping Still Have
Demand in Lower-Priced Segments

Demand for Investment Properties remained at the Lowest level since 2009

% to Total Sales

Investment/Rental Property Vacation/Second Home 30% 25% 20% 15% 10% 5% 0% 1999 2000 2001 2002 2003
Investment/Rental Property
Vacation/Second Home
30%
25%
20%
15%
10%
5%
0%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

SERIES: 2016 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Investors : Still Buying to Rent

Investors : Still Buying to Rent

 
Investors : Still Buying to Rent SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Investors : Still Buying to Rent SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Investors : Still Buying to Rent SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Investors : Still Buying to Rent SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Investors : Still Buying to Rent SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Investors : Still Buying to Rent SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Investors : Still Buying to Rent SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SERIES: 2016 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

International Buyers Dropping

International Buyers Dropping

 
The share of international buyers dropped to the lowest level in 9 years 9% 8% 8%
The share of international buyers dropped to the lowest level in 9 years
9%
8%
8%
8%
7%
6%
6%
6%
6%
6%
5%
5%
4%
4%
3%
3%
2%
1%
0%
2008
2009
2010
2011
2012
2013
2014
2015
2016

Q. Was the buyer an international buyer a person who was a citizen of another country who wished to purchase residential real estate in the U.S.?

SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Market Remained Competitive, as a Result of Tight Supply

Market Remained Competitive, as a Result of Tight Supply

% with Multiple Offers # of Multiple offers (Average) 80% 7 70% 6 60% 53% 5
% with Multiple Offers
# of Multiple offers (Average)
80%
7
70%
6
60%
53%
5
52%
50%
4
40%
4.0
4.0
3
30%
2
20%
1
10%
0%
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

SERIES: 2016 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

62% of Properties Received Multiple Offers

62% of Properties Received Multiple Offers

80% 70% 66% 62% 58% 60% 50% 40% 30% 20% 10% 0%
80%
70%
66%
62%
58%
60%
50%
40%
30%
20%
10%
0%

Q: How many offers did the seller in your last closed transaction receive?

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Market Pulse Survey

92

Number of Offers Steady

Number of Offers Steady

 
4.0 3.5 3.0 2.8 2.8 2.4 2.5 2.0 1.5 1.0 0.5 0.0
4.0
3.5
3.0
2.8 2.8
2.4
2.5
2.0
1.5
1.0
0.5
0.0

Q: How many offers did the seller in your last closed transaction receive?

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Market Pulse Survey

93

More Properties Received 3+ Offers than Last Year

More Properties Received 3+ Offers than Last Year

Aug-15 Aug-16 40% 37% 40% 35% 27% 30% 25% 20% 18% 20% 14% 15% 11% 9.5%
Aug-15
Aug-16
40%
37%
40%
35%
27%
30%
25%
20%
18%
20%
14%
15%
11%
9.5%
7.1%
10%
6.4%
4.5%
3.4%
5%
0%
1
2
3
4
5
6+

Number of Offers

Q: How many offers did the seller in your last closed transaction receive?

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Market Pulse Survey

94

Proportion of 3+ Offers Up From A Year Ago

Proportion of 3+ Offers Up From A Year Ago

1-2 3+ 100% 90% 32% 44% 80% 42% 70% 60% 50% 40% 58% 68% 30% 56%
1-2
3+
100%
90%
32%
44%
80%
42%
70%
60%
50%
40%
58%
68%
30%
56%
20%
10%
0%

Q: How many offers did the seller in your last closed transaction receive?

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Market Pulse Survey

95

Tight Supply Also Pushed up Home Prices, as one- third of Homes Were Sold above the
Tight Supply Also Pushed up Home Prices, as one-
third of Homes Were Sold above the Asking Price
60% % of Sales above Asking Price 50% 40% 33% 32% 30% 20% Long Run Average
60%
% of Sales above Asking Price
50%
40%
33% 32%
30%
20%
Long Run Average = 20%
10%
0%
10% 16 Median Price Discount & Weeks on Market 9% 14 Med. Price Discount 8% Med.
10%
16
Median Price Discount & Weeks on Market
9%
14
Med. Price Discount
8%
Med. Weeks on MLS
12
7%
10
6%
5%
8
4%
6
3%
4
2%
0%, 2.1
weeks
2
1%
0%
0

SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Net Cash Gain to Sellers Highest since 2007

Net Cash Gain to Sellers Highest since 2007

$250,000 $200,000 $175,000 $150,000 $100,000 $50,000 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013
$250,000
$200,000
$175,000
$150,000
$100,000
$50,000
$0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

Q. What was the net cash gain or net loss to the seller as a result of this sale?

SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Student Debt Delayed Decisions to Move out

Student Debt Delayed Decisions to Move out

of Family

Member’s Home After College?

% of Loan borrowers
% of Loan borrowers

SERIES: 2016 Student Loan Debt and Housing Report

SOURCE: National Association of Realtors®

Regional Housing Markets

Sales Growth by Region

Sales Growth by Region

Bay Area So Cal Central Valley 30% 20% 10% 0% -10% -20% -30% YoY % chg.
Bay Area
So Cal
Central Valley
30%
20%
10%
0%
-10%
-20%
-30%
YoY % chg.

SERIES:Existing Single Family Sales, Not Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

2016 California YTD Sales
2016 California
YTD Sales
2016 California Median Prices YTY
2016 California
Median Prices YTY
Northern California

Northern California

 
Sales Median Price 4.3% YTD 12.6% YTY $362,540 8.6% YTY UII MTM Price Sales 3.7 28.8
Sales
Median Price
4.3% YTD
12.6% YTY
$362,540
8.6% YTY
UII
MTM
Price
Sales
3.7
28.8
NA
NA
Months
Days
Per Sq Ft
To List Ratio
2016 Northern CA YTD Sales
2016 Northern CA
YTD Sales
2016 Northern CA Median Prices YTY
2016 Northern CA
Median Prices YTY
Northern Wine Country

Northern Wine Country

 
Sales Median Price -2.7% YTD 1.0% YTY $569,000 7.4% YTY UII MTM Price Sales 3.5 50.1
Sales
Median Price
-2.7% YTD
1.0% YTY
$569,000
7.4% YTY
UII
MTM
Price
Sales
3.5
50.1
$358
98.9%
Months
Days
Per Sq Ft
To List Ratio
2016 Northern Wine YTD Sales
2016 Northern Wine
YTD Sales
2016 Northern Wine Median Prices YTY
2016 Northern Wine
Median Prices YTY
Bay Area
Bay Area
Sales Median Price -7.4% YTD -2.2% YTY $777,160 3.8% YTY UII MTM Price Sales 2.4 23.5
Sales
Median Price
-7.4% YTD
-2.2% YTY
$777,160
3.8% YTY
UII
MTM
Price
Sales
2.4
23.5
$456
101.1%
Months
Days
Per Sq Ft
To List Ratio
2016 Bay Area YTD Sales
2016 Bay Area
YTD Sales
2016 Bay Area Median Prices YTY
2016 Bay Area
Median Prices YTY
Central Valley

Central Valley

 
Sales Median Price 3.7% YTD 8.4% YTY $290,750 7.3% YTY UII MTM Price Sales 3.2 23.1
Sales
Median Price
3.7% YTD
8.4% YTY
$290,750
7.3% YTY
UII
MTM
Price
Sales
3.2
23.1
NA
NA
Months
Days
Per Sq Ft
To List Ratio
2016 Central Valley YTD Sales
2016 Central Valley
YTD Sales
2016 Central Valley Median Prices YTY
2016 Central Valley
Median Prices YTY
Central Coast

Central Coast

 
Sales Median Price 0.1% YTD 4.9% YTY $648,900 17.0% YTY UII MTM Price Sales 4.3 28.8
Sales
Median Price
0.1% YTD
4.9% YTY
$648,900
17.0% YTY
UII
MTM
Price
Sales
4.3
28.8
$358
97.7%
Months
Days
Per Sq Ft
To List Ratio
2016 Central Coast YTD Sales
2016 Central Coast
YTD Sales
2016 Central Coast Median Prices YTY
2016 Central Coast
Median Prices YTY
Southern California

Southern California

 
Sales Median Price -0.1% YTD 6.6% YTY $496,930 6.1% YTY UII MTM Price Sales 3.6 40.2
Sales
Median Price
-0.1% YTD
6.6% YTY
$496,930
6.1% YTY
UII
MTM
Price
Sales
3.6
40.2
$281
98.5%
Months
Days
Per Sq Ft
To List Ratio
2016 Southern Cal YTD Sales
2016 Southern Cal
YTD Sales
2016 Southern Cal Median Prices YTY
2016 Southern Cal
Median Prices YTY

2017 Forecast

U.S. Economic Outlook

U.S. Economic Outlook

 

Unemployment

1.4% 1.8% 2.1% 1.9% 1.7% 1.7% 1.2% Growth Nonfarm Job
1.4%
1.8%
2.1%
1.9%
1.7%
1.7%
1.2%
Growth
Nonfarm Job
4.7% 4.9% 5.3% 6.2% 7.4% 8.1% 8.9%
4.7%
4.9%
5.3%
6.2%
7.4%
8.1%
8.9%

CPI

3.1%

2.1%

1.5%

1.6%

0.1%

1.4%

2.1%

 

2011

2012

2013

2014

2015

2016p

2017f

US GDP

1.8%

2.3%

2.2%

2.4%

2.4%

1.5%

2.2%

Change Real Disposable -1.4% Income, % 2.5% 3.2% 2.7% 3.4% 2.7% 2.7% 30-Yr FRM 4.5% 3.7%
Change Real Disposable -1.4% Income, % 2.5% 3.2% 2.7% 3.4% 2.7% 2.7% 30-Yr FRM 4.5% 3.7%
Change Real Disposable -1.4% Income, % 2.5% 3.2% 2.7% 3.4% 2.7% 2.7% 30-Yr FRM 4.5% 3.7%
Change Real Disposable -1.4% Income, % 2.5% 3.2% 2.7% 3.4% 2.7% 2.7% 30-Yr FRM 4.5% 3.7%
Change Real Disposable -1.4% Income, % 2.5% 3.2% 2.7% 3.4% 2.7% 2.7% 30-Yr FRM 4.5% 3.7%
Change
Real Disposable
-1.4%
Income, %
2.5%
3.2%
2.7%
3.4%
2.7%
2.7%
30-Yr FRM
4.5%
3.7%
4.0%
4.2%
3.9%
3.6%
4.0%

SERIES: U.S. Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

California Economic Outlook

California Economic Outlook

 

Unemployment

 

Rate

11.8%

10.4%

8.9%

7.5%

6.2%

5.5%

5.3%

Population

Growth

1.0% 1.0% 0.9% 0.9% 0.9% 0.7% 0.7%
1.0%
1.0%
0.9%
0.9%
0.9%
0.7%
0.7%

Real Disposable

 

Income, % Change

3.5%

4.7%

-1.1%

3.2%

3.6%

2.9%

3.5%

 

2011

2012

2013

2014

2015 2016p

2017f

Nonfarm Job

Growth

1.1%

2.4%

3.0%

2.2%

2.7%

2.3%

1.6%

SERIES: CA Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Varying Market Expectations for 2017

Varying Market Expectations for 2017

100% 90% 31% 36% 80% 47% 70% 62% 60% Up 50% 44% 35% Flat 40% Down
100%
90%
31%
36%
80%
47%
70%
62%
60%
Up
50%
44%
35%
Flat
40%
Down
40%
30%
20%
35%
29%
25%
10%
13%
3.0%
0%
Prices
Sales
Inventory
Interest rates

Q1 - What do you think will happen to the California real estate market in 2017?

Interest Rate Projected at 5% in 5 Years

Interest Rate Projected at 5% in 5 Years

8% 17% 5% 2% 2.3% 0% 0.2% 0% 10% 20% 30% 40% 50% 60% 70% 80%
8%
17%
5%
2%
2.3%
0%
0.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Interest Rate Projection in 5 Years

81%

90%

Q3 - Today the 30 year fixed rate mortgage is at 3.5%. Where do you think it will be in five years?

California Housing Market Outlook

California Housing Market Outlook

% Change

36% 29% 33% 31% 30%
36%
29%
33%
31%
30%
% Change 36% 29% 33% 31% 30%
% Change 36% 29% 33% 31% 30%

$286.0 $319.3 $407.2 $446.9 $474.4 $503.9 $525.6

($000s)

Median Price

4.0% 4.0% 3.6% 3.9% 4.2% 3.7% 4.5% 30-Yr FRM 51% Housing Affordability Index 53%
4.0%
4.0%
3.6%
3.9%
4.2%
3.7%
4.5%
30-Yr FRM
51%
Housing
Affordability Index
53%
 

-6.2%

11.6%

27.5%

9.8%

6.2%

6.2%

4.3%

% Change 4.1% 1.4% -0.4% 6.8% -7.8% -5.9% 1.4%
% Change
4.1%
1.4%
-0.4%
6.8%
-7.8%
-5.9%
1.4%
% Change 4.1% 1.4% -0.4% 6.8% -7.8% -5.9% 1.4%
% Change 4.1% 1.4% -0.4% 6.8% -7.8% -5.9% 1.4%
2014 2013 2012 2011 SFH Resales (000s) 407.3 2015 2016p 2017f 413.0 408.8 382.7 414.9 439.8
2014
2013
2012
2011
SFH Resales (000s)
407.3
2015 2016p 2017f
413.0
408.8
382.7
414.9
439.8
422.6

SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sales down for 2016 but Improve in 2017; Price will Grow Steadily this Year and Next

Sales down for 2016 but Improve in 2017; Price will Grow Steadily this Year and Next

Sales of Existing Detached Homes

Units

(Thousand)

700 600 500 413.0 407.3 400 300 200 100 0 2005 2007 2009 2011 2013 2015
700
600
500
413.0
407.3
400
300
200
100
0
2005
2007
2009
2011
2013
2015
2017f

Price

(Thousand)

Median Price

$600 $526 $504 $500 $400 $300 $200 $100 $0 2005 2007 2009 2011 2013 2015 2017f
$600
$526
$504
$500
$400
$300
$200
$100
$0
2005
2007
2009
2011
2013
2015
2017f

SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CA: Dollar Volume Up 5.8% in 2016, Up 5.8% in 2017

CA: Dollar Volume Up 5.8% in 2016, Up 5.8% in 2017

 
$ in Billion % Change $400 30% $ Volume of Sales Percent Change $350 20% $301
$ in Billion
% Change
$400
30%
$ Volume of Sales
Percent Change
$350
20%
$301
$300
10%
$244
$250
$217
0%
$205
$194
$200
$169
$171
$164
-10%
$140
$150
$133
$131
$127
$121
-20%
$100
-30%
$50
$0
-40%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015 2016p 2017f

SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

2017 Challenges &

Opportunities

Lack of Affordability Biggest Challenge

Lack of Affordability Biggest Challenge

[CATEGORY NAME], 6% Mortagage rate increase, 10% [CATEGORY Lack of inventory, NAME], [VALUE] 28%
[CATEGORY NAME],
6%
Mortagage rate
increase, 10%
[CATEGORY
Lack of inventory,
NAME], [VALUE]
28%

Q2 - What will be the biggest challenge for the housing market in 2017?

2017 Wild Cards

2017 Wild Cards

 

Unexpected rise in rates Economic collapse Tech giants crumble… Other Black Swans Hit to equities Global instability

2017 Opportunities

2017 Opportunities

 

Up your game Always a good option What business are YOU in?

Educate first time-home buyers talk to their parents Become well versed on down payment assistance programs, debt management and improving credit to turn renters into buyers.

Don’t give up on international buyers Stay involved & stay current Get married!

Thank You