2014 housing market and economy forecast

2014 HOUSING MARKET FORECASTOctober 10,2013Leslie Appleton‐Young, Vice President & Chief Economist

BREAKING NEWS

www.census.gov

THE ECONOMY

So many wildcards...Where to begin? 

•October 1st Government Shut Down – Day 10• Impact of shut‐down? Depends on how long•Looming Oct 17th Debt Limit: $16.699 Trillion• Fed will likely begin “Tapering” next year• Future of Fannie and Freddie?•Viability/relevance of FHA•Tax Reform: Mortgage Interest Deduction

The Economic Impact of Government Shutdown

‐4%

‐3%

‐2%

‐1%

0%

1%

2%

3%

4%

5%

2005

2006

2007

2008

2009

2010

2011

2012

Q1‐10

Q2‐10

Q3‐10

Q4‐10

Q1‐11

Q2‐11

Q3‐11

Q4‐11

Q1‐12

Q2‐12

Q3‐12

Q4‐12

Q1‐13

Q2‐13

1.7%

Gross Domestic Product: Growth is Stalling• 2012: 2.2%; 2013 Q2: 1.7% 

ANNUAL PERCENT CHANGE, CHAIN‐TYPE (2005) $

ANNUALLY QUARTERLY

2009 Largest Annual Drop since 1938 (‐3.4%)

SERIES:  GDPSOURCE:  US  Dept. of Commerce, Bureau of Economic Analysis

Unemployment: Cyclical & StructuralHeading Down: Lowest since 2008

9.4%

7.6%

0%

2%

4%

6%

8%

10%

12%

14% CA US

SERIES: Unemployment RateSOURCE:  US Bureau of Labor Statistics, CA Employment Development Division

‐150,000

‐100,000

‐50,000

0

50,000

100,000

150,000

CA Added ~250k Jobs Aug‐12 to Aug‐13Recession Job Losses: 1.3 millionSince Jan’10: +805,700; ‐500,000 deficit 

MONTH TO MONTH CHANGES

SERIES: Total Nonfarm EmploymentSOURCE:  CA Employment Development Division

Silicon Valley Leads in Job Growth

SERIES: Total Nonfarm Employment SOURCE:  CA Employment Development Division

ANNUAL PERCENT CHANGE

0.3%

0.3%

0.4%

0.7%

0.9%

1.0%

1.1%

1.2%

1.4%

1.7%

1.8%

2.3%

3.1%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%

Modesto

Sacramento

Oakland

Inland Empire

Bakersfield

Stockton MSA

Fresno MSA

San Diego

Los Angeles

Ventura

San Francisco

Orange County

San Jose

August 2013: CA +1.5%, +233,900

Construction Jobs Fastest Growing

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

‐0.5%

‐0.4%

‐0.3%

‐0.2%

0.0%

1.3%

1.4%

1.9%

2.2%

2.2%

2.4%

3.1%

3.6%

4.0%

4.2%

‐3% ‐2% ‐1% 1% 2% 3% 4% 5% 6%

GovernmentInformation

Nondurable GoodsDurable Goods

Retail TradeFinance & Insurance

Health Care & Social AssistanceProfessional, Scientific & Technical Services

Transportation, Warehousing & UtilitiesReal Estate & Rental & Leasing

Admistrative & Support & Waste ServicesWholesale Trade

Educational ServicesLeisure & Hospitality

Construction

August 2013: CA +1.5%, +233,900ANNUAL PERCENT CHANGE

Metro Commercial Space Vacancy Rates 

SOURCE: National Association of REALTORS®

2013 Q3

MSA Office Industrial Retail Multi‐Family

Los Angeles 16.0% 4.0% 6.0% 3.0%

Oakland‐East Bay 18.0% 9.2% 6.4% 2.5%

Orange County 17.0% 3.8% 5.4% 2.9%

Sacramento 21.2% 12.6% 12.9% 3.1%

San Bernardino/Riverside 23.6% 6.9% 9.8% 3.2%

San Diego 16.0% 7.0% 6.3% 2.1%

San Francisco 13.3% 11.2% 3.9% 3.1%

San Jose 18.6% 16.6% 6.1% 3.0%

Ventura 16.3% ‐ 8.8% 2.6%

Consumer Confidence: Better But…

September 2013: 79.7

0

20

40

60

80

100

120INDEX, 100=1985

SERIES: Consumer ConfidenceSOURCE:  The Conference Board

CPI: Subdued for Now• August 2013: All Items +1.5% YTY; Core +1.8% YTY

‐3%

‐2%

‐1%

0%

1%

2%

3%

4%

5%

6%

Jan‐05

Jul‐0

5

Jan‐06

Jul‐0

6

Jan‐07

Jul‐0

7

Jan‐08

Jul‐0

8

Jan‐09

Jul‐0

9

Jan‐10

Jul‐1

0

Jan‐11

Jul‐1

1

Jan‐12

Jul‐1

2

Jan‐13

Jul‐1

3

All Items Core

ANNUAL PERCENT CHANGE

SERIES: Consumer Price IndexSOURCE:  US Bureau of Labor Statistics

HOUSING & MORTGAGE FINANCE 

Mortgage Rates Up 1% Since MayTapering in 2014?

4.5%

2.6%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Jan‐05

Jul‐0

5

Jan‐06

Jul‐0

6

Jan‐07

Jul‐0

7

Jan‐08

Jul‐0

8

Jan‐09

Jul‐0

9

Jan‐10

Jul‐1

0

Jan‐11

Jul‐1

1

Jan‐12

Jul‐1

2

Jan‐13

Jul‐1

3

FRM ARM Federal Funds

SERIES: 30Yr FRM, 1Yr ARM, Federal FundsSOURCE:  Federal Home Loan Mortgage Corporation

US Sales of Existing HomesAug.2013 Sales: 5,480,000 Units, +12.1% YTD, +13.2% YTY

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

SERIES: Existing Home SalesSOURCE: NATIONAL ASSOCIATION OF REALTORS®

US Median Price of Existing HomesUS, August 2013: $213,500, Up 14.7% YTY

$0

$50,000

$100,000

$150,000

$200,000

$250,000

SERIES: Existing Home SalesSOURCE: NATIONAL ASSOCIATION OF REALTORS®

 $‐

 $100,000

 $200,000

 $300,000

 $400,000

 $500,000

 $600,000  California US CA Price Trend

California vs. U.S. Median Prices• 1970‐2012

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®SERIES: Median Price of Existing Single Family HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Housing Affordability Hit by Mortgage Rate and Price Gains But Still Attractive 

36%

60%

0%

10%

20%

30%

40%

50%

60%

70%

80% CA US% OF HOUSEHOLDS THAT CAN BUY

SERIES: Housing Affordability Index of Traditional BuyersSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

CA Housing Affordability Index What Will Happen When Mortgage Rates Increase?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%

39%37%

35%33% 31% 29%

27%25%

Q2‐2013 Median Price $415,770

20% Downpayment

INTEREST RATE

% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT

SERIES: Housing Affordability IndexSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

CA Median Monthly Mortgage PaymentWhat Will Happen When Mortgage Rates Increase?

$0

$400

$800

$1,200

$1,600

$2,000

3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%

$1,402$1,494

$1,588 $1,685$1,786

$1,889$1,994 $2,102Q2‐2013 Median Price $415,770

20% Downpayment

INTEREST RATE

MONTHLY MORTGAGE

SERIES: Housing Affordability IndexSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

CA Minimum Qualifying IncomeWhat Will Happen When Mortgage Rates Increase?

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%

$75,218$78,869

$82,644 $86,538$90,548

$94,668$98,893 $103,220

Q2‐2013 Median Price $415,770

20% Downpayment

INTEREST RATE

MONTHLY MORTGAGE

SERIES: Housing Affordability IndexSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Mortgage Originations: 2005‐2013Refinance Share Dropping with Higher Rates  

74.1%

25.9%

3.5%

0%

1%

2%

3%

4%

5%

6%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80% Refinance Share (%) Purchase Share (%) FRMREFINANCE/PURCHASE SHARE 30YR FRM

SERIES: Mortgage OriginationsSOURCE:  Mortgage Bankers Association of America

Fannie & Freddie are the Market 

Source: LPS

THE CALIFORNIA RESIDENTIAL REAL ESTATE MARKET

California’s Housing Cycles and Membership• 1970‐2012

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

0

50,000

100,000

150,000

200,000

250,000

 ‐

 100,000

 200,000

 300,000

 400,000

 500,000

 600,000

 700,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Home Sales Membership

*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

CA Sales of Existing Detached HomesAugust 2013 Sales: 434,700 Units, ‐3.2% YTD, ‐1.9% YTY

 ‐

 100,000

 200,000

 300,000

 400,000

 500,000

 600,000

 700,000

*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

85% Equity “Retail”  Sales in August 

REOs, 4.7%

Short Sales, 10.2%

Other Distressed Sales (Not Specified), 

0.4%

Equity Sales, 84.7%

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

California: Aug 2013

Share of Equity Sales Has Increased Sharply Since Early 2012

85.9%

10.3%

3.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Equity Sales Short Sale REO

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

REO & Short SalesPercent of Total Sales, Southern California: August 2013

3% 1%5%

9%

2%

12%

7%

15%

15%

3%

0%

5%

10%

15%

20%

25%

Los Angeles Orange Riverside San Bernardino San Diego

REO Sales Short Sales

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

REO & Short SalesPercent of Total Sales, Bay Area: August 2013

2% 1%3% 5%

1% 1%

7%4%

5% 5%4%

11%

2% 4%

14%

9%

0%

5%

10%

15%

20%

25%

Alameda ContraCosta

Marin Napa SanMateo

SantaClara

Solano Sonoma

REO Sales Short Sales

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

REO & Short SalesPercent of Total Sales, Central Valley: August 2013

15%9% 7%

11% 10%5% 5%

2%7% 9%

14%

14%

12%

23%19%

13%

11%14% 22%

17% 13%

14%

0%

5%

10%

15%

20%

25%

30%

35% REO Sales Short Sales

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

REO & Short SalesPercent of Total Sales, N CA & Central Coast 

August 2013

7% 6% 9%

32%

14%

5% 6% 5%

33%

11%

3%9%

6% 8%5%

2%

6%20%

7% 8%

4%

17%

8%

9%

0%

5%

10%

15%

20%

25%

30%

35%

40% REO Sales Short Sales

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales Share by Price Range

29%

19%

16%

10%

26%

18%17% 16%

13%

37%

0%

10%

20%

30%

40%

$0 ‐ $200k $200 ‐ $300k $300 ‐ $400k $400 ‐ $500k $500k+

Aug‐12 Aug‐13

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Median Price of Existing Detached Homes• California, August 2013: $441,330, Up 28.4% YTY

 $‐

 $100,000

 $200,000

 $300,000

 $400,000

 $500,000

 $600,000

 $700,000 P: May‐07$594,530 

T: Feb‐09$245,230‐59% frompeak 

SERIES: Median Price of Existing Single Family HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

CA Underwater Mortgages Dropping Sharply

15.4%

2.6%

0%

5%

10%

15%

20%

25%

30%

35%

40% Negative Equity Share in CA Near Negative Equity Share in CA

SERIES: Underwater MortgagesSOURCE:  CoreLogic

0

2

4

6

8

10

12

14

16

18

Unsold Inventory Index• California, August 2013: 3.1 Months

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

SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Unsold Inventory Index Months of Supply

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

Price Range (Thousand) Aug‐13 Jul‐13 Aug‐12

$1,000K+ 4.6 4.6 6.1

$750‐1000K 3.2 3.2 4.0

$500‐750K 3.0 2.8 3.1

$300‐500K 2.9 2.7 2.9

$0‐300K 2.8 2.7 2.8

SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Change in Inventory by Price Range• (Year‐to‐Year) 

‐32.9%

5.3%

18.6% 18.0%

11.0%

‐40%

‐30%

‐20%

‐10%

0%

10%

20%

30%

$0 ‐ $300k $300 ‐ $500k $500 ‐ $750k $750 ‐ $1000k $1000k+

Aug‐13

Tight Supply Across the Board

0

1

2

3

4

Equity Sales REO Sales Short Sales

3.1

2.3

2.9

SERIES: Distressed Unsold Inventory IndexSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

UNSOLD INVENTORY INDEX (MONTHS)

California: August 2013

Why is Inventory so Low? 

•Demand Side•Housing affordability is at historic highs• Low rates impacting other investment alternatives

• Supply Side• Little new construction for last 5 years•Underwater homeowners are stuck• Foreclosure pipeline drying up in non‐judicial states

• Investors are renting instead of flipping•Off‐market (aka “pocket’) listings growing

0%

2%

4%

6%

8%

10%

12%Delinquency Rate Foreclosure Rate

Mortgage Foreclosure & Delinquency Rates• California: Q2‐2013

Delinquencies: Long Run Average: 4.5%

Foreclosure Rate: Long Run Average: 1.3%

SERIES: Mortgage Foreclosure & Delinquency RatesSOURCE:  Mortgage Bankers Association

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan‐07

May‐07

Sep‐07

Jan‐08

May‐08

Sep‐08

Jan‐09

May‐09

Sep‐09

Jan‐10

May‐10

Sep‐10

Jan‐11

May‐11

Sep‐11

Jan‐12

May‐12

Sep‐12

Jan‐13

May‐13

Notice of Trustee Sale ‐ Counts Notice of Defaults ‐ Counts

California Foreclosure Filings, August 2013• NTS: 8,223, ‐54.7% YTD • NOD: 8,189, ‐59.1% YTD 

6 Month Average:

NTSs:  8,225

NODs: 9,012

SERIES: Foreclosure FilingsSOURCE:  PropertyRadar.com

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Jan‐07

May‐07

Sep‐07

Jan‐08

May‐08

Sep‐08

Jan‐09

May‐09

Sep‐09

Jan‐10

May‐10

Sep‐10

Jan‐11

May‐11

Sep‐11

Jan‐12

May‐12

Sep‐12

Jan‐13

May‐13

Preforeclosure Scheduled for Sale Bank Owned

• Preforeclosure: ‐48% YTD • Schedule for Sale: ‐62% YTD • Bank Owned: ‐36% YTD

California Foreclosure Inventories, Aug. 2013

6 Month Average:

Preforeclosure: 45,733

Schedule for Sale: 28,245

Bank Owned: 46,247

SERIES: Foreclosure InventoriesSOURCE:  PropertyRadar.com

0

50,000

100,000

150,000

200,000

250,000

300,000 Single Family Multi‐Family

CA New Housing PermitsStill Falling Short 

Household Growth: 220,000‐250,000/yr

SERIES: New Housing PermitsSOURCE:  Construction Industry Research Board

2013 ANNUAL HOUSING MARKET SURVEY

1.6

0

2

4

6

8

10

12

0%

1%

2%

3%

4%

5%

6%

7%

8%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Med. Price Discount

Med. Weeks on MLS

Stiff Market Competition Leads to Fewer Sales with Price Discount & Less Time on the Market

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?

34%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2005 2006 2007 2008 2009 2010 2011 2012 2013

% with Price Discount

Long Run Average = 66%

72%

5.7

0

1

2

3

4

5

6

7

0%

10%

20%

30%

40%

50%

60%

70%

80%

% with Multiple Offers

Multiple Offers at Record Highs 

Share of home sales with multiple offers highest in at least the last 15 years 

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

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

$55,000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2005 2006 2007 2008 2009 2010 2011 2012 2013

Median Net Cash Gain to Sellers Rebounding

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Share of Sellers with Net Cash Loss:Lowest Since 2007

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

13.2%

0%

5%

10%

15%

20%

25%

30%

35%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Long Run Average = 12.8%

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2005 2006 2007 2008 2009 2010 2011 2012 2013

More Sellers Planning to Repurchase Repeat Buyers are Back

Q. Is the seller planning on purchasing another home?SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Equity Sales  (2011 vs. 2012 vs. 2013)

2011 2012 2013

Share of Total Sales 58.7% 64.7% 80.8%

Median Home Price $431,000  $448,000  $456,635 

Square Footage 1,783 1,750 1,678

Price / SF $250  $243  $270 

Sales‐to‐List Price Ratio 95.9% 97.3% 100.0%

% of Sales With Multiple Offers 35.2% 50.9% 69.0%

Avg. Number of Offers 3.0 4.0 5.2

% of All Cash Sales 25.5% 27.3% 25.2

Days on MLS 67 32 10

Days in Escrow 35 35 30

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

REO Sales (2011 vs. 2012 vs. 2013)

2011 2012 2013Share of Total Sales 19.7% 12.3% 4.9%

Median Home Price $189,500 $185,000 $175,500

Square Footage 1,500 1,500 1,400

Price / SF $112 $116 $101

Sales‐to‐List Price Ratio 98.0% 100.0% 100.0%

% of Sales With MultipleOffers 58.3% 70.8% 91.2%

Avg. Number of Offers 4.3 4.2 7.4

% of All Cash Sales 34.0% 43.1% 50.0%

Days on MLS 50 30 15

Days in Escrow 35 45 35

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Short Sales (2011 vs. 2012 vs. 2013)

2011 2012 2013Share of Total Sales 20.2% 21.7% 14.0%

Median Home Price $287,000 $235,000 $276,500

Square Footage 1,600 1,600 1,650

Price / SF $175 $154 $146

Sales‐to‐List Price Ratio 95.9% 99.9% 103.0%

% of Sales With MultipleOffers 57.5% 66.1% 75.7%

Avg. Number of Offers 3.6 4.3 7.1

% of All Cash Sales 23.3% 26.7% 35.7%

Days on MLS 141 90 14

Days in Escrow 45 50 60

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Investment & Second/ Vacation Homes : 25% Market Share

6%

19%SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

0%

5%

10%

15%

20%

25%

30%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Vacation/Second Home

Investment/Rental Property

Buying to Rent: Winning Investment Strategy

Investment to Flip

Rental Property

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Share of Cash Buyers decreases for the first time after 7 years of continuous Increase

27%

0%

5%

10%

15%

20%

25%

30%

35%

2005 2006 2007 2008 2009 2010 2011 2012 2013

% of All Cash Sales

• Almost one‐third of buyers paid with all cash

• The share of all cash buyers has been on the rise since 2006 

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

$70,000 

20%

0%

5%

10%

15%

20%

25%

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

2005 2006 2007 2008 2009 2010 2011 2012 2013

Median Down Payment % of Down Payment to Price

Q. What was the amount of downpayment?

Median Down Payment: 20%Tight Underwriting & Prices Gains

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Buyers Have More “Skin” in the Game

2006 2012 2013

% of buyers with 20+% down payment 43.2% 54.4% 52.2%

% of buyers with zero down payment 21.1% 4.6% 7.0%

% of cash buyers 11.0% 29.6% 27.4%

% of home buyers with a second mortgage

43.4% 1.8% 2.2%

% of buyer with ARM 32.6% 3.5% 4.0%

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Q. Please indicate the type of mortgage.

Share of FHA Lowest in 6 Years 

17%

6%

0%

10%

20%

30%

40%

2005 2006 2007 2008 2009 2010 2011 2012 2013

FHA VA

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Share of First‐Time Buyers is the Lowest Since 2006

Q. Was the buyer a first‐time buyer?

28%

0%

10%

20%

30%

40%

50%

2005 2006 2007 2008 2009 2010 2011 2012 2013

% First‐Time Home Buyers Long Run Average

Long Run Average = 38%

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Share of International Buyers is Growing36%  All Cash

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.?

7.8%

6.0%5.3%

5.7% 5.8%

8.0%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2008 2009 2010 2011 2012 2013

Country of International Buyer

• China (30%)

• Canada (9%)

• India (6%)

• Mexico (13%)

REGIONAL HOUSING MARKETS

Northern California

Regional Report Card –Northern California

Current Price to Trough Price: +46%

Current YTD Sales to Last 5 Yr. Avg: +25% 

Current UII to Long Run Avg.: ‐37%

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Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13

Sales of Existing Detached Homes• Northern CA, Aug. 2013: 1,346 Units, +4.1% YTD, +4.1% YTY

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales of Existing Detached HomesNorthern California Counties•

Butte 124 163 128 ‐23.9% ‐3.1% 11.7%Del Norte 13 19 NA ‐31.6% NA NAGlenn 18 18 14 0.0% 28.6% 2.5%

Humbolt 113 115 92 ‐1.7% 22.8% 16.0%Lake 88 77 71 14.3% 23.9% ‐14.2%

Nevada 106 112 67 ‐5.4% 58.2% NAPlacer 485 572 533 ‐15.2% ‐9.0% 2.8%Plumas 45 37 36 21.6% 25.0% NAShasta 253 218 219 16.1% 15.5% 7.3%Siskiyou 46 42 48 9.5% ‐4.2% 10.0%Sutter 75 54 NA 38.9% NA NATehama 34 39 47 ‐12.8% ‐27.7% ‐14.2%Yolo 155 167 162 ‐7.2% ‐4.3% ‐3.6%Yuba 78 66 NA 18.2% NA NA

Y‐t‐DY‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Median Price of Existing Detached Homes• Northern CA, August 2013: $294,020, Up 22.9% YTY

 $‐

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Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12SERIES: Median Price of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Median Price of Existing Detached Homes• Northern California Counties•

Butte $281,820 $239,280 $226,090 17.8% 24.6%Del Norte $100,000 $155,000 NA ‐35.5% NAGlenn $135,000 $140,000 $160,000 ‐3.6% ‐15.6%

Humbolt $247,220 $267,050 $218,750 ‐7.4% 13.0%Lake $153,330 $141,430 $125,560 8.4% 22.1%

Nevada $339,500 $323,000 $245,000 5.1% 38.6%Placer $361,830 $372,220 $288,030 ‐2.8% 25.6%Plumas $195,000 $249,000 $267,250 ‐21.7% ‐27.0%Shasta $203,650 $201,350 $165,480 1.1% 23.1%Siskiyou $140,000 $140,000 $127,270 0.0% 10.0%Sutter $202,000 $212,500 NA ‐4.9% NATehama $493,950 $507,500 $439,990 ‐2.7% 12.3%Yolo $667,590 $668,750 $615,400 ‐0.2% 8.5%Yuba $186,000 $170,500 NA 9.1% NA

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Supply of Inventory in Northern CA

0

1

2

3

4

Equity Sales REO Sales Short Sales

3.1

1.4

1.9

UII –Active Only

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Northern Wine Country

Regional Report Card –Northern Wine

Current Price to Trough Price: +45%

Current YTD Sales to Last 5 Yr. Avg: +13% 

Current UII to Long Run Avg.: ‐46%

0

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900

Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13

Sales of Existing Detached Homes• Northern Wine Country, Aug.2013: 673 Units, ‐5.1% YTD, ‐1.0% YTY

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Home Sales in Northern Wine Country Counties

0

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300

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600

Mendocino Napa Sonoma

August‐12 August‐13

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales of Existing Detached Homes• Northern Wine Country Counties•

Mendocino 68 58 48 17.2% 41.7% 3.6%Napa 117 144 132 ‐18.8% ‐11.4% ‐6.5%

Sonoma 488 478 500 2.1% ‐2.4% ‐5.6%

Y‐t‐DY‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Median Price of Existing Detached Homes• Northern Wine Country, Aug. 2013: $449,010, Up 19.5% YTY

 $‐

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 $200,000

 $300,000

 $400,000

 $500,000

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Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12SERIES: Median Price of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Median Price of Existing Detached Homes• Northern Wine Country Counties•

Mendocino $276,670 $286,360 $206,250 ‐3.4% 34.1%Napa $565,970 $511,900 $385,710 10.6% 46.7%

Sonoma $453,790 $473,640 $385,610 ‐4.2% 17.7%

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Bay Area

Regional Report Card –Bay Area

Current Price to Trough Price: +86%

Current YTD Sales to Last 5 Yr. Avg.: +8% 

Current UII to Long Run Avg.: ‐37%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13

Sales of Existing Detached Homes• Bay Area, Aug. 2013: 4,221 Units, ‐3.7% YTD, ‐0.8% YTY

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales of Existing Detached Homes• Bay Area Counties

Alameda 716 780 666 ‐8.2% 7.5% ‐1.2%Contra Costa (Central County) 462 514 451 ‐10.1% 2.4% 3.5%

Marin 231 252 242 ‐8.3% ‐4.5% 7.6%Napa 117 144 132 ‐18.8% ‐11.4% ‐6.5%

San Francisco 321 351 310 ‐8.5% 3.5% 7.0%San Mateo 443 488 436 ‐9.2% 1.6% ‐2.5%Santa Clara 1055 1081 1046 ‐2.4% 0.9% ‐6.0%Solano 388 359 472 8.1% ‐17.8% ‐19.0%Sonoma 488 478 500 2.1% ‐2.4% ‐5.6%

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐D

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Median Price of Existing Detached Homes• Bay Area, August 2013: $704,830, Up 24.1% YTY

 $‐

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Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12SERIES: Median Price of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Median Price of Existing Detached Homes• Bay Area Counties•

Alameda $654,060 $662,040 $539,820 ‐1.2% 21.2%Contra Costa (Central County) $808,560 $789,010 $628,290 2.5% 28.7%

Marin $987,740 $1,000,000 $806,450 ‐1.2% 22.5%Napa $565,970 $511,900 $385,710 10.6% 46.7%

San Francisco $871,480 $842,550 $692,980 3.4% 25.8%San Mateo $980,000 $919,000 $777,500 6.6% 26.0%Santa Clara $805,000 $840,000 $666,750 ‐4.2% 20.7%Solano $295,890 $279,330 $202,240 5.9% 46.3%Sonoma $453,790 $473,640 $385,610 ‐4.2% 17.7%

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Supply of Inventory in Bay Area

0

1

2

3

Equity Sales REO Sales Short Sales

1.4

2.5

1.3

UII –Active Only

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Central Valley Region

Regional Report Card –Central Valley

Current Price to Trough Price: +52%

Current YTD Sales to Last 5 Yr. Avg.: ‐8% 

Current UII to Long Run Avg.: ‐42%

Sales of Existing Detached Homes• Central Valley, Aug.2013 Sales: 4,477 Units, ‐10.5% YTD,  ‐11.4% YTY

 ‐

 1,000

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SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales of Existing Detached Homes• Central Valley Regions

Amador 51 39 63 30.8% ‐19.0% ‐1.8%Calavaras 103 103 NA 0.0% NA NAEl Dorado 320 311 341 2.9% ‐6.2% 2.2%Fresno 810 848 862 ‐4.5% ‐6.0% ‐5.2%Kern (Bakersfield) 506 528 560 ‐4.2% ‐9.6% ‐9.8%Kings County 86 68 96 26.5% ‐10.4% ‐10.9%Madera 37 39 37 ‐5.1% 0.0% ‐18.1%Merced 107 116 128 ‐7.8% ‐16.4% ‐10.4%Placer County 485 572 533 ‐15.2% ‐9.0% 2.8%Sacramento 1,566 1,589 1,712 ‐1.4% ‐8.5% ‐9.3%San Benito 50 50 47 0.0% 6.4% ‐6.4%San Joaquin 647 660 805 ‐2.0% ‐19.6% ‐14.1%Stanislaus 529 493 571 7.3% ‐7.4% ‐15.7%Tulare 232 260 337 ‐10.8% ‐31.2% ‐19.9%

Y‐t‐DY‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Median Price of Existing Detached Homes• Central Valley, August 2013: $219,870, Up 34.3% YTY

 $‐

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

Median Price of Existing Detached Homes• Central Valley Counties

Amador $213,890 $196,670 $175,000 8.8% 22.2%Calavaras $220,000 $227,000 NA ‐3.1% NAEl Dorado $355,840 $350,760 $268,380 1.4% 32.6%Fresno $184,000 $183,870 $151,110 0.1% 21.8%Kern (Bakersfield) $200,000 $195,000 $155,000 2.6% 29.0%Kings County $184,000 $173,330 $153,330 6.2% 20.0%Madera $170,000 $175,710 $127,500 ‐3.2% 33.3%Merced $155,880 $163,080 $123,330 ‐4.4% 26.4%Placer County $361,830 $372,220 $288,030 ‐2.8% 25.6%Sacramento $257,660 $254,550 $184,000 1.2% 40.0%San Benito $387,000 $400,000 $335,000 ‐3.3% 15.5%San Joaquin $231,390 $225,000 $168,120 2.8% 37.6%Stanislaus $203,120 $193,920 $147,850 4.7% 37.4%Tulare $158,460 $157,140 $133,560 0.8% 18.6%

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Supply of Inventory in Central Valley

0

1

2

3

Equity Sales REO Sales Short Sales

2.2

1.3

0.9

UII –Active Only

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Central Coast

Regional Report Card –Central Coast

Current Price to Trough Price: +82%

Current YTD Sales to Last 5 Yr. Avg.: +4% 

Current UII to Long Run Avg.: ‐40%

Neutral

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Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13

Sales of Existing Detached Homes• Central Coast, Aug. 2013: 757 Units, ‐2.9% YTD, ‐3.8% YTY

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales of Existing Detached Homes• Central Coast Counties•

Monterey 228 249 262 ‐8.4% ‐13.0% ‐6.4%San Luis Obispo 282 315 281 ‐10.5% 0.4% 2.4%Santa Barbara 247 242 244 2.1% 1.2% ‐5.0%Santa Cruz 199 207 204 ‐3.9% ‐2.5% 5.4%

Y‐t‐DY‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Median Price of Existing Detached Homes• Central Coast, August 2013: $474,780, Up 23.7% YTY

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Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12SERIES: Median Price of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Median Price of Existing Detached Homes• Central Coast Counties•

Monterey $407,000 $408,800 $317,500 ‐0.4% 28.2%San Luis Obispo $477,420 $491,790 $386,180 ‐2.9% 23.6%Santa Barbara $625,000 $598,680 $533,330 4.4% 17.2%Santa Cruz $629,000 $601,000 $540,000 4.7% 16.5%

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

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

Supply of Inventory in Central Coast

0

1

2

3

4

Equity Sales REO Sales Short Sales

3.3

1.4

0.5

UII –Active Only

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Southern California Region

Regional Report Card –Southern California

Current Price to Trough Price: +70%

Current YTD Sales to Last 5 Yr. Avg: +4% 

Current Inventory to Long Run Avg: ‐54%

Neutral

Sales of Existing Detached Homes• Southern CA Aug‐13 Sales: 11,977 Units, ‐2.0% YTD, ‐4.1% YTY

0

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SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales of Existing Detached Homes• Southern California Counties

SERIES: Sales of Existing Detached HomesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Los Angeles 3,697 3,687 3,928 0.3% ‐5.9% ‐1.7%Orange County 1,706 1,855 1,795 ‐8.0% ‐5.0% 4.7%Riverside County 2,082 2,039 2,177 2.1% ‐4.4% ‐10.9%San Bernardino 1,368 1,269 1,341 7.8% 2.0% ‐5.6%

San Diego 2,259 2,324 2,361 ‐2.8% ‐4.3% 5.5%Ventura 618 623 648 ‐0.8% ‐4.6% 0.7%

Santa Barbara 247 242 244 2.1% 1.2% ‐5.0%

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M Y‐t‐D

Median Price of Existing Detached Homes• Southern California, Aug.2013: $419,340, +24.6% YTY

 $‐

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

Median Price of Existing Detached Homes• Southern California Region

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

Los Angeles $444,950 $421,350 $344,770 5.6% 29.1%Orange County $664,580 $675,000 $567,710 ‐1.5% 17.1%Riverside County $290,030 $294,300 $227,740 ‐1.5% 27.4%San Bernardino $183,240 $180,270 $143,470 1.6% 27.7%

San Diego $482,470 $483,800 $389,540 ‐0.3% 23.9%Ventura $555,560 $545,720 $437,880 1.8% 26.9%

Santa Barbara $625,000 $598,680 $533,330 4.4% 17.2%

Y‐t‐YCounty Aug‐13 Jul‐13 Aug‐12 M‐t‐M

Supply of Inventory in Southern CA

0

1

2

3

Equity Sales REO Sales Short Sales

2.1

1.3

0.9

UII –Active Only

SERIES: Distressed SalesSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

2014  FORECAST

2014 Forecast

U.S. Economic Outlook 2014

Indicator 2008 2009 2010 2011 2012 2013p 2014f

US GDP ‐0.3% ‐3.4% 2.4% 1.8% 2.2% 1.8% 2.8%

Nonfarm Job Growth ‐0.6% ‐4.4% ‐0.7% 1.2% 1.7% 1.6% 1.7%

Unemployment 5.8% 9.3% 9.6% 8.9% 8.1% 7.5% 7.0%

CPI 3.8% ‐0.4% 1.6% 3.1% 2.1% 1.6% 2.0%Real Disposable Income, % Change 0.5% 0.9% 1.8% 1.3% 1.5% 1.0% 3.0%

SERIES: U.S. Economic OutlookSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

California Economic Outlook 2014

Indicator 2008 2009 2010 2011 2012 2013p 2014f

Nonfarm Job Growth ‐1.3% ‐6.0% ‐1.1% 1.1% 1.6% 2.2% 1.9%

Unemployment Rate 7.2% 11.3% 12.3% 11.8% 10.5% 9.0% 8.3%

Population Growth 0.8% 0.6% 0.7% 0.7% 0.7% 0.9% 0.9%Real Disposable Income, % Change 1.5% ‐3.9% 1.0% 1.9% 1.1% 0.9% 3.0%

SERIES: CA Economic OutlookSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

California Housing Market Outlook

Indicator 2008 2009 2010 2011 2012 2013p 2014f

SFH Resales (000s) 381.4 474.9 416.5 422.6 439.4 430.3 444.0

% Change 30.4% 24.5% ‐12.3% 1.4% 4.0% ‐2.1% 3.2%

Median Price ($000s) $348.5 $275.0 $305.0 $286.0 $319.3 $408.6 $432.8

% Change ‐37.8% ‐21.1% 10.9% ‐6.2% 11.6% 28.0% 6.0%

30‐Yr FRM 6.0% 5.0% 4.7% 4.5% 3.7% 4.1% 5.3%

 1‐Yr ARM 5.2% 4.7% 3.8% 3.0% 2.7% 2.7% 3.1%

SERIES: CA Housing Market OutlookSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

Sales Bounce back in 2014, as Price Continues to Grow

Units (Thousand)

430 444

0

100

200

300

400

500

600

700

2005 2007 2009 2011 2013f

Sales of Existing Detached Homes

$409 

$433 

$0

$100

$200

$300

$400

$500

$600

2005 2007 2009 2011 2013f

Median PricePrice 

(Thousand)

SERIES: CA Housing Market OutlookSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

CA: Dollar Volume Steadily Improving Up 25.3% in 2013, Up 9.3% in 2014

$301 

$244 

$164 

$133  $131  $127  $121 $140 

$176 $192 

‐40%

‐30%

‐20%

‐10%

0%

10%

20%

30%

$0

$50

$100

$150

$200

$250

$300

$350

$400

2005 2006 2007 2008 2009 2010 2011 2012 2013f 2014f

$ Volume of Sales Percent Change

% Change$ in Billion

‐60%

SERIES: CA Housing Market OutlookSOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

MARKET OPPORTUNITIES 2014

Share of First‐Time Buyers is the Lowest Since 2006

Q. Was the buyer a first‐time buyer?

28%

0%

10%

20%

30%

40%

50%

2005 2006 2007 2008 2009 2010 2011 2012 2013

% First‐Time Home Buyers Long Run Average

Long Run Average = 38%

SERIES: 2013 Housing Market SurveySOURCE:  CALIFORNIA ASSOCIATION OF REALTORS® 

2013: 6 out of 10 Buyers Said They Found Their Home through Agent

2%

37%

61%

2013

For Sale Sign Website Agent

Q.  How did you find the home you purchased?

2007: Almost 9 out of 10 Buyers Said They Found Their Home through Agent

8%

88%

1%2%1%2007

Website Agent Friend/family Open house Driving around

Q.  How did you find the home you purchased?

Nearly All Buyers Use an Agent

91%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Q.  Did you use a real estate agent in your home buying process?

First‐time Buyers need YOUR helpConnect EARLY and OFTEN

• Financial Literacy: How to manage their finances• What about student‐loan debt?• Can my parents help me out?• How do I increase my credit score?• How to save for a down payment and how much?• What programs are available? Tools to find out –Downpayment Resource on car.org

2014: Many Market Opportunities

• First‐time Buyers• Formerly “Underwater” Homeowners•Property Management • International Clients•New Construction•Embrace Learning

Most Buyers and Sellers Interviewed Multiple Agents before Selecting One

Q.  How many agents did you interview prior to selecting the agent you used in your recent home purchase?

1 agent, 30%

2 agent, 38%

3 agent, 18%

4 agent, 15%

Buyers

Source: C.A.R. 2012 Buyer and Seller Surveys

1 agent, 12%

2 agents, 13%

3 agents, 21%

4 agents, 24%

5 agents, 17%

6 agents, 12%

Seller

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