2015 california economic & market forecast october 9,2014 expo - anaheim convention center...
Post on 23-Dec-2015
215 Views
Preview:
TRANSCRIPT
2015 CALIFORNIA ECONOMIC &
MARKET FORECASTOctober 9,2014EXPO - Anaheim Convention CenterLeslie Appleton-Young, Vice President & Chief Economist
AS I WAS SAYING…
FORECAST REPORT CARD
NOTE: Average FICO score for 2014 is based on data from January 2014 through August 2014Forecast Date: October 2014 vs. October 2013SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®, Ellie Mae
SFH Resales (000s)
% Change
Median Price ($000s)
% Change
30-Yr FRM
Housing Affordability Index
FICO Score
U.S. Gross Domestic Product
2013 Actual
414.3
-5.8%
$407.2
27.5%
4.0%
36.0%
738
1.9%
2014 Forecas
t
444.0
3.2%
$432.8
6.0%
5.3%
28.2%
--
2.8%
2014 Project
ed
380.5
-8.2%
$455.0
11.8%
4.3%
30.0%
726*
2.2%
HOUSING FUNDAMENTALS ARE POSITIVE
• Mortgage rates are low & lending is loosening up a bit
• Affordability is still good and price gains are slowing
• Foreclosure & delinquency rates are low & distressed sales are less than 10% of the market
• Investors are leaving creating more opportunity for buyers needing financing
• Overall homeownership rate has stabilized• International demand for housing in CA still strong• Construction is up – residential and non-
residential
ECONOMIC FUNDAMENTALS ARE BETTER • Economic growth is accelerating• Unemployment rate 5.9% - lowest since
?• 248,000 new jobs in Sept• Construction jobs +230,000 in last 12
months
BUT...DEMOGRAPHICS AS DESTINY?
• Affordability is worsening • Homeownership rate for 18-34 - year-olds still falling• Household formation is VERY slow• Census: US added 476,000 HH v. 1.3 m HH prior 2
years• Majority of new households rent: “Renter Nation”• Millennials delaying “adulthood”: Getting married
later or not at all; Student loans; dim job prospects• Baby boomers delaying “retirement” and staying put
longer; they will love their loans when rates do rise• Inventory is better but still well below “normal”.
AND… FIRST TIME BUYERS FACE MANY OBSTACLES
• Lot’s of competition for existing housing stock
• Affordability constraints• Lack of a down-payment• Lack of information about the home-buying
process • Fear of financing: “I can’t qualify” • Job prospects/security still dim for many • Many who have jobs are under-employed
#1 TRANSACTIONS
CA HOME SALES: 1995 – 2014
20002001
20022003
20042005
20062007
20082009
20102011
20122013
2014 P -
100,000
200,000
300,000
400,000
500,000
600,000
700,000
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
-5.8%-8.2%
Sales Percent Change
SERIES: Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Units YOY % Chg
CA HOME SALES 2010 – 2014
California, Aug. 2014 Sales: 394,280 Units -10.1% YTD, -9.3% YTY
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 -
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Aug-14: 394,280
Aug-13:434,910
WE’VE COME A LONG WAY:EQUITY SALES NOW 9 OUT OF 10 TRANSACTIONS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%90.6%
4.9%
4.1%
Equity Sales Short Sale REO
SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DISTRESSED SALES: NORTHERN CA
Percent of Total Sales
Butte Humboldt Lake Shasta Siskiyou Sonoma Sutter Yolo Yuba0%
10%
20%
30%
40%
50%
60%
70%
6.9%10%
28%
14%18%
4.2%8.1% 6.2%
13%
28% 26%
65%
42%
31% 32%36%
Aug-14 Aug-12
SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DISTRESSED SALES: BAY AREA
Percent of Total Sales
Alameda Contra Costa
Marin Napa Solano Sonoma0%
10%
20%
30%
40%
50%
60%
2.5% 2.9% 1.8%4.5%
13%
4.2%
23% 22%25%
36%
60%
32%
Aug-14 Aug-12
SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DISTRESSED SALES: CENTRAL VALLEY
Percent of Total Sales
Fr G K M M PlSa
cSa
nSa
nSt
a Tu0%
10%
20%
30%
40%
50%
60%
70%
15%19%
10%15%
19%14%
7%12%
7%
14%12%
19%
47%
64%
47%51%
49%
59%
43%
52%
60%56% 57%
47%
Aug-14 Aug-12
SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DISTRESSED SALES: CENTRAL COAST
Percent of Total Sales
Monterey San Luis Obispo Santa Cruz0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
10%7.9% 7.0%
44%
30%28%
Aug-14 Aug-12
SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DISTRESSED SALES: SOUTHERN CA
Percent of Total Sales
Los Angeles Orange Riverside San Bernardino
San Diego0%
10%
20%
30%
40%
50%
60%
7.6%4.9%
11%14%
6.2%
36%
27%
52%49%
17%
Aug-14 Aug-12
SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CHANGE IN SALES BY PRICE RANGE
(Year-to-Year)
-60%-50%-40%-30%-20%-10%
0%10%20%30%40%50%60%70%
-28%
-0.2%
-6.5%-8.7%
-1.5%
$0 - $200k $500k+ $200 - $300k $300 - $400k $400 - $500k
SERIES: Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INVENTORY IMPROVING FROM LAST YEAR August 2013: 3.0 Months; August 2014: 4.0 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.
0
2
4
6
8
10
12
14
16
18
SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INVENTORY HIGHER AT UPPER PRICE RANGES
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-14 Jul-14 Aug-13
$1,000K+ 5.0 4.7 4.6
$750-1000K 3.9 3.9 3.2
$500-750K 3.8 3.7 2.9
$300-500K 3.9 3.6 2.9
$0-300K 4.0 3.5 2.8
SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
#2 HOUSING PRICES
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
P $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000 California US
CALIFORNIA VS. U.S. MEDIAN PRICES
1970-2014
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA HOME MEDIAN PRICE: 1995 – 2014
20002001
20022003
20042005
20062007
20082009
20102011
20122013
2014 P$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
27.5%
11.8%
Median Price Percent Change
SERIES: Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price
YOY % Chg
PRICE PLATEAU AHEAD; ANNUAL GAINS SLOWING
California, Aug 2014: $480,280, Up 8.9% YTY
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Aug-14: $480,280
Aug-13: $441,010
TROUGH VS. CURRENT PRICE
By Counties, August 2014
SERIES: Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region Trough Month
Trough Price
Aug-14 Median
%Chg Fr Trough
Santa Barbara Mar-09 $296,590
$806,030 171.8%
Monterey May-09 $203,500
$492,500 142.0%
Alameda Jan-09 $346,236
$732,220 111.5%
Lake Jun-11 $85,620 $178,330 108.3%
California Feb-09 $245,230
$480,280
95.8%
Santa Clara Feb-09 $445,000
$865,000 94.4%
Merced Jan-10 $96,670 $186,670 93.1%
Los Angeles May-10 $248,850
$474,640 90.7%
Tehama Feb-11 $83,330 $156,000 87.2%
Riverside Apr-09 $171,480
$318,640 85.8%
TROUGH VS. CURRENT PRICE
By Counties, August 2014
SERIES: Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region Trough Month
Trough Price
Aug-14 Median
%Chg Fr Trough
Kern (Bakersfield)
Apr-09 $115,000
$210,900 83.4%
Solano Feb-12 $179,020
$328,280 83.4%
San Mateo Jan-09 $551,000
$1,000,000
81.5%
Madera Jul-11 $92,500 $166,670 80.2%
San Benito Mar-12 $232,350
$415,000 78.6%
Amador Mar-12 $118,750
$211,110 77.8%
Napa Apr-11 $306,820
$541,670 76.5%
San Bernardino May-09 $120,410
$209,200 73.7%
Santa Cruz Feb-09 $380,000
$657,600 73.1%
Sacramento Jan-12 $162,290
$272,750 68.1%
TROUGH VS. CURRENT PRICE
By Counties, August 2014
SERIES: Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region Trough Month
Trough Price
Aug-14 Median
%Chg Fr Trough
Ventura Feb-09 $359,630
$602,060 67.4%
Tulare Apr-11 $111,600
$184,440 65.3%
Mendocino Jun-11 $181,430
$291,670 60.8%
San Francisco Jan-12 $561,270
$900,910 60.5%
Kings Jul-11 $114,290
$183,330 60.4%
Orange Jan-09 $442,170
$699,430 58.2%
Contra Costa Jan-12 $476,470
$750,000 57.4%
San Diego Mar-09 $326,830
$510,860 56.3%
Fresno Jan-12 $131,070
$203,760 55.5%
TROUGH VS. CURRENT PRICE
By Counties, August 2014
SERIES: Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region Trough Month
Trough Price
Aug-14 Median
%Chg Fr Trough
Sonoma Feb-09 $312,340
$484,640 55.2%
Placer Feb-12 $251,450
$388,720 54.6%
Marin Feb-11 $632,580
$977,460 54.5%
Siskiyou May-11 $85,000 $127,500 50.5%
Shasta Feb-12 $141,900
$212,500 49.5%
Tuolumne Jan-12 $147,140
$214,710 45.9%
San Luis Obispo Feb-11 $328,750
$475,000 44.5%
Butte Feb-12 $177,860
$255,000 43.4%
Humboldt Aug-12 $218,750
$255,260 16.7%
#3 MORTGAGE RATES & HOUSING
FINANCE
FORECASTS OF 30-YR FRM
2013 Project
ed
2013 Actua
l
2014 Foreca
st
2014 Project
ed
2015 Foreca
st
Fannie Mae 4.1% 4.0% 5.1% 4.2% 4.4%
Freddie Mac 4.1% 4.0% 5.0% 4.3% 4.7%
Mortgage Banker Association 4.1% 4.0% 4.9% 4.3% 5.0%
National Association of REALTORS® 4.2% 4.0% 5.3% 4.3% 5.1%
California Association of REALTORS® 4.1% 4.0% 5.3% 4.3% 4.5%
SOURCE: Fannie Mae, Freddie Mac, MBAA, NAR, Wells Fargo, CALIFORNIA ASSOCIATION OF REALTORS®
FORECASTERS HAVE BEEN EXPECTING RATES TO RISE
Percent
0
1
2
3
4
5
6
0
1
2
3
4
5
6
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Actual 10-year Treasury yield (solid black line)
Predictions out to five quarters ahead of professional forecasters (hatched lines)
Percent
SERIES: Loan Officer SurveySOURCE: Philadelphia Federal Reserve Survey of Professional Forecasters, Bloomberg
MORTGAGE RATES + 1% SPRING 2013ACTUAL TAPERING NO IMPACT
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
Jan-
14
Jul-1
40%
1%
2%
3%
4%
5%
6%
7%
8% FRM ARM Federal Funds
SERIES: 30Yr FRM, 1Yr ARM, Federal FundsSOURCE: Federal Home Loan Mortgage Corporation
U.S. DEPOSITORY INSTITUTIONS:HIGH LEVEL OF EXCESS RESERVES
Jan-05Jul-0
5
Jan-06Jul-0
6
Jan-07Jul-0
7
Jan-08Jul-0
8
Jan-09Jul-0
9
Jan-10Jul-1
0
Jan-11Jul-1
1
Jan-12Jul-1
2
Jan-13Jul-1
3
Jan-14Jul-1
4$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
SERIES: Excess Reserves of Depository Institutions SOURCE: Federal Reserve Bank of Saint Louis
$ BILLIONS
2009
/01
2009
/05
2009
/09
2010
/01
2010
/05
2010
/09
2011
/01
2011
/05
2011
/09
2012
/01
2012
/05
2012
/09
2013
/01
2013
/05
2013
/09
2014
/01
2014
/05
2014
/09
8.28
.14
9.25
.14
0%
1%
2%
3%
4%
5%
6%
FRMARM
MORTGAGE RATES
January 2009 – August 2014
MONTHLY WEEKLY
SERIES: 30Yr FRM, 1Yr ARMSOURCE: Federal Home Loan Mortgage Corporation
LOAN OFFICERS SURVEY SAY LENDING STANDARDS ARE EASING
2007
Q2
2007
Q4
2008
Q2
2008
Q4
2009
Q2
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
2013
Q4
2014
Q2-80
-60
-40
-20
0
20
40
60
80
100tightening standards for prime mortgage loans
stronger demand for prime mortgage loansNet Percentage
SERIES: Loan Officer SurveySOURCE: US Board of Governors of the Federal Reserve System
LOOSENED CREDIT REQUIREMENTS:
FICO Scores Trending Down Since 2012
SERIES: Average FICO Score on Closed LoansSOURCE: Ellie Mae
Aug-1
1
Oct-1
1
Dec-1
1
Feb-
12
Apr-1
2
Jun-
12
Aug-1
2
Oct-1
2
Dec-1
2
Feb-
13
Apr-1
3
Jun-
13
Aug-1
3
Oct-1
3
Dec-1
3
Feb-
14
Apr-1
4
Jun-
14
Aug-1
4710
720
730
740
750
760
SAY WHAT?
#4 HOUSING AFFORDABILITY
REAL ENEMY OF THE FUTURE OF CALIFORNIA?• Housing Affordability• The Achilles Heel of the California
Economy• What happens when housing costs are
too high? • Impact on jobs and economic growth• Impact on neighborhoods and family
stability
HOUSING AFFORDABILITY DOWN SHARPLY SINCE Q1 2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
30%
57%
CA US
% OF HOUSEHOLDS THAT CAN BUY
SERIES: Housing Affordability Index of Traditional BuyersSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HOMEOWNERSHIP RATES
California Vs. U.S.
19841986
19881990
19921994
19961998
20002002
20042006
20082010
20120%
10%
20%
30%
40%
50%
60%
70%
80% CA US
SERIES: Homeownership RatesSOURCE: U.S. Census Bureau
HOMEOWNERSHIP RATE BY AGE OF HOUSEHOLDER
SOURCE: Census Bureau
INCOME REQUIRED TO BUY A MEDIAN-PRICED HOME IN CA: (PEAK VS. CURRENT)
2012 Q1 2014 Q2$0
$20,000
$40,000
$60,000
$80,000
$100,000
$56,324
$93,593• Change in minimum required income:
$37,269
• Increase in income attributed to interest rate increase: $836 (2.2% of total change)
• Increase in income attributed to price increase : $36,433 (97.8% of total change)
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DROP IN INCOME CONTRIBUTED TO THE DECLINE IN HAI
2012 Q1 2014 Q20
10
20
30
40
50
6056
30
• HAI declined from 56 to 30 from 2012 Q1 to 2014 Q2
• Median household income slipped from $58,553 in 2012 to $58,504 in 2014
• The decline in household income alone led HAI to drop by about 2 index points.
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HOUSING AFFORDABILITY:BAY AREA
S.F. Bay Area
Alameda
Contra-Costa (Central County)
Marin
Napa
San Francisco
San Mateo
Santa Clara
Solano
Sonoma
0 10 20 30 40 50 60 70 80 90
Q2/2014 Q1/2012
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HOUSING AFFORDABILITY: CENTRAL VALLEY
Fresno
Kings
Madera
Merced
Placer
Sacramento
Tulare
0 10 20 30 40 50 60 70 80 90
Q2/2014 Q1/2012
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HOUSING AFFORDABILITY: SO CAL
Los Angeles Metro
Inland Empire
Los Angeles
Orange
Riverside
San Bernardino
San Diego
Ventura
Santa Barbara
0 10 20 30 40 50 60 70 80 90
Q2/14 Q1/2012
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HOUSING AFFORDABILITY INDEX
What Will Happen When MORTGAGE RATES Increase?
3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
35%34%
32%29% 27% 26%
24%22%
Q2-2014 Median Price $457,140
20% Down payment
INTEREST RATE
% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MEDIAN MONTHLY MORTGAGE PAYMENT
What Will Happen When Mortgage Rates Increase?
3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%$0
$400
$800
$1,200
$1,600
$2,000
$2,400
$1,542$1,642
$1,746 $1,853$1,963
$2,076$2,193
$2,312
INTEREST RATE
MONTHLY MORTGAGE
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q2-2014 Median Price $457,140
20% Down payment
MINIMUM QUALIFYING INCOME
What Will Happen When Mortgage Rates Increase?
3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$82,703$86,717
$90,867 $95,149$99,557
$104,087$108,734
$113,490
INTEREST RATE
MONTHLY MORTGAGE
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q2-2014 Median Price $457,140
20% Down payment
MEDIAN CA HOUSE PAYMENT WELL BELOW PEAK
Jan-80Feb-80Mar-80Apr-80May-80Jun-80Jul-80Aug-80Sep-80Oct-80Nov-80Dec-80Jan-81Feb-81Mar-81Apr-81May-81Jun-81Jul-81Aug-81Sep-81Oct-81Nov-81Dec-81Jan-82Feb-82Mar-82Apr-82May-82Jun-82Jul-82Aug-82Sep-82Oct-82Nov-82Dec-82Jan-83Feb-83Mar-83Apr-83May-83Jun-83Jul-83Aug-83Sep-83Oct-83Nov-83Dec-83Jan-84Feb-84Mar-84Apr-84May-84Jun-84Jul-84Aug-84Sep-84Oct-84Nov-84Dec-84Jan-85Feb-85Mar-85Apr-85May-85Jun-85Jul-85Aug-85Sep-85Oct-85Nov-85Dec-85Jan-86Feb-86Mar-86Apr-86May-86Jun-86Jul-86Aug-86Sep-86Oct-86Nov-86Dec-86Jan-87Feb-87Mar-87Apr-87May-87Jun-87Jul-87Aug-87Sep-87Oct-87Nov-87Dec-87Jan-88Feb-88Mar-88Apr-88May-88Jun-88Jul-88Aug-88Sep-88Oct-88Nov-88Dec-88Jan-89Feb-89Mar-89Apr-89May-89Jun-89Jul-89Aug-89Sep-89Oct-89Nov-89Dec-89Jan-90Feb-90Mar-90Apr-90May-90Jun-90Jul-90Aug-90Sep-90Oct-90Nov-90Dec-90Jan-91Feb-91Mar-91Apr-91May-91Jun-91Jul-91Aug-91Sep-91Oct-91Nov-91Dec-91Jan-92Feb-92Mar-92Apr-92May-92Jun-92Jul-92Aug-92Sep-92Oct-92Nov-92Dec-92Jan-93Feb-93Mar-93Apr-93May-93Jun-93Jul-93Aug-93Sep-93Oct-93Nov-93Dec-93Jan-94Feb-94Mar-94Apr-94May-94Jun-94Jul-94Aug-94Sep-94Oct-94Nov-94Dec-94Jan-95Feb-95Mar-95Apr-95May-95Jun-95Jul-95Aug-95Sep-95Oct-95Nov-95Dec-95Jan-96Feb-96Mar-96Apr-96May-96Jun-96Jul-96Aug-96Sep-96Oct-96Nov-96Dec-96Jan-97Feb-97Mar-97Apr-97May-97Jun-97Jul-97Aug-97Sep-97Oct-97Nov-97Dec-97Jan-98Feb-98Mar-98Apr-98May-98Jun-98Jul-98Aug-98Sep-98Oct-98Nov-98Dec-98Jan-99Feb-99Mar-99Apr-99May-99Jun-99Jul-99Aug-99Sep-99Oct-99Nov-99Dec-99Jan-00Feb-00Mar-00Apr-00May-00Jun-00Jul-00Aug-00Sep-00Oct-00Nov-00Dec-00Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Jan-04Feb-04Mar-04Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-052006 Q12006 Q22006 Q32006 Q42007 Q12007 Q22007 Q32007 Q42008 Q12008 Q22008 Q32008 Q42009 Q12009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32011 Q42012 Q12012 Q22012 Q32012 Q42013 Q12013 Q22013 Q32013 Q42014 Q12014 Q2 $-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
PITI/Month
Peak: $3,668/mo (2007 Q2)
Latest: $2,340/mo (2014 Q2)
… MINIMUM QUALIFYING INCOME BELOW PEAK
Jan-80Feb-80Mar-80Apr-80May-80Jun-80Jul-80Aug-80Sep-80Oct-80Nov-80Dec-80Jan-81Feb-81Mar-81Apr-81May-81Jun-81Jul-81Aug-81Sep-81Oct-81Nov-81Dec-81Jan-82Feb-82Mar-82Apr-82May-82Jun-82Jul-82Aug-82Sep-82Oct-82Nov-82Dec-82Jan-83Feb-83Mar-83Apr-83May-83Jun-83Jul-83Aug-83Sep-83Oct-83Nov-83Dec-83Jan-84Feb-84Mar-84Apr-84May-84Jun-84Jul-84Aug-84Sep-84Oct-84Nov-84Dec-84Jan-85Feb-85Mar-85Apr-85May-85Jun-85Jul-85Aug-85Sep-85Oct-85Nov-85Dec-85Jan-86Feb-86Mar-86Apr-86May-86Jun-86Jul-86Aug-86Sep-86Oct-86Nov-86Dec-86Jan-87Feb-87Mar-87Apr-87May-87Jun-87Jul-87Aug-87Sep-87Oct-87Nov-87Dec-87Jan-88Feb-88Mar-88Apr-88May-88Jun-88Jul-88Aug-88Sep-88Oct-88Nov-88Dec-88Jan-89Feb-89Mar-89Apr-89May-89Jun-89Jul-89Aug-89Sep-89Oct-89Nov-89Dec-89Jan-90Feb-90Mar-90Apr-90May-90Jun-90Jul-90Aug-90Sep-90Oct-90Nov-90Dec-90Jan-91Feb-91Mar-91Apr-91May-91Jun-91Jul-91Aug-91Sep-91Oct-91Nov-91Dec-91Jan-92Feb-92Mar-92Apr-92May-92Jun-92Jul-92Aug-92Sep-92Oct-92Nov-92Dec-92Jan-93Feb-93Mar-93Apr-93May-93Jun-93Jul-93Aug-93Sep-93Oct-93Nov-93Dec-93Jan-94Feb-94Mar-94Apr-94May-94Jun-94Jul-94Aug-94Sep-94Oct-94Nov-94Dec-94Jan-95Feb-95Mar-95Apr-95May-95Jun-95Jul-95Aug-95Sep-95Oct-95Nov-95Dec-95Jan-96Feb-96Mar-96Apr-96May-96Jun-96Jul-96Aug-96Sep-96Oct-96Nov-96Dec-96Jan-97Feb-97Mar-97Apr-97May-97Jun-97Jul-97Aug-97Sep-97Oct-97Nov-97Dec-97Jan-98Feb-98Mar-98Apr-98May-98Jun-98Jul-98Aug-98Sep-98Oct-98Nov-98Dec-98Jan-99Feb-99Mar-99Apr-99May-99Jun-99Jul-99Aug-99Sep-99Oct-99Nov-99Dec-99Jan-00Feb-00Mar-00Apr-00May-00Jun-00Jul-00Aug-00Sep-00Oct-00Nov-00Dec-00Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Jan-04Feb-04Mar-04Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-052006 Q12006 Q22006 Q32006 Q42007 Q12007 Q22007 Q32007 Q42008 Q12008 Q22008 Q32008 Q42009 Q12009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32011 Q42012 Q12012 Q22012 Q32012 Q42013 Q12013 Q22013 Q32013 Q42014 Q12014 Q2 $-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
Min. IncomePeak: $146,701/yr (2007 Q2)
Latest: $93,593/yr (2014 Q2)
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF FIRST-TIME BUYERS UP BUT STILL BELOW LONG-RUN AVERAGE
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%
10%
20%
30%
40%
50%
28.1%30.5%
% First-Time Home Buyers Long Run Average
Long Run Average = 38%
QUESTION: Was the buyer a first-time buyer?SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
FIRST-TIME BUYERS GETTING OLDER
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
10
20
30
40
50
60
43
35
47
All Buyers First-Time Buyers Repeat Buyers
SERIES: 2014 C.A.R. Annual Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Years
#5 2014 CA HOUSING MARKET
SURVEY
MULTIPLE OFFERS DECLINE WITH LESS INTENSE MARKET COMPETITION IN 2014AFTER PEAKING IN 2013
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%
10%
20%
30%
40%
50%
60%
70%
80%
0
1
2
3
4
5
6
772%
53%5.7
4.3
% with Multiple Offers# of Multiple offers (Average)
SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0%
10%
20%
30%
40%
50%
60%
50%
33%
% of Sales above Asking Price
Long Run Average = 19%
FEWER HOMES SOLD ABOVE THE ASKING PRICE AS MARKET COMPETITION COOLED IN 2014
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
2
4
6
8
10
12
14
16
Med. Price Discount
Med. Weeks on MLS
0%, 2.1 weeks
Median Price Discount & Weeks on Market
QUESTION: 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?SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
FEWER HOMES SOLD ABOVE ASKING IN 2014
20% or more
10% to 19.99%
5% to 9.99%
Less than 5%
0% 10% 20% 30% 40% 50% 60%
7%
11%
28%
54%
Amt. of Price Reduction
49%
18%
33%
Sale Price to Asking Price
Below Asking Price At Asking Price
Above Asking Price
SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Reduction = 4.5% of List Price
IN 2009 OVER 2/3 SOLD BELOW ASKING PRICE
20% or more
10% to 19.99%
5% to 9.99%
Less than 5%
0% 5% 10% 15% 20% 25% 30% 35%
24%
23%
23%
30%
Amt. of Price Reduction
69%
8%
23%
Sale Price to Asking Price
Below Asking Price At Asking Price
Above Asking Price
SERIES: 2009 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Reduction = 9.1% of List Price
SHARE OF CASH BUYERS IS THE LOWEST SINCE 2009
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%
5%
10%
15%
20%
25%
30%
35%
27%
22%
% of All Cash Sales
SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF FHA STILL SIGNIFICANTLY HIGHER THAN 2007, BUT WAS THE LOWEST IN 7 YEARS (FIRST MORTGAGE)
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%
10%
20%
30%
40%
16%
7%
FHA VA
QUESTION: Please indicate the type of mortgage.SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INVESTMENT HOMES : 15% MARKET SHARE
19992000200120022003200420052006200720082009201020112012201320140%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20% 19%
15%
Long Run Average: 12 %
SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
BUYING TO RENT V. FLIP; CHANGE IN PREFERRED INVESTMENT STRATEGY
2013: 18%
2014: 30%
2013: 82%
2014: 70%
Investment to Flip
Rental Property
SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF INTERNATIONAL BUYERS OFF FROM 2013, 2ND HIGHEST IN THE LAST 6 YEARS
2008 2009 2010 2011 2012 2013 20140%
1%
2%
3%
4%
5%
6%
7%
8%
9%
8%
6%
QUESTION: 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: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INTERNATIONAL BUYERS: CHINA!
• China (36%)
• Canada (10%)
• India (12%)
SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF FIRST-TIME BUYERS UP BUT STILL BELOW LONG-RUN AVERAGE
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%
10%
20%
30%
40%
50%
28.1%30.5%
% First-Time Home Buyers Long Run Average
Long Run Average = 38%
QUESTION: Was the buyer a first-time buyer?SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
19881990
19921994
19961998
20002002
20042006
20082010
20120
50,000
100,000
150,000
200,000
250,000
300,000 Single Family Multi-Family
CA PERMITS UP BUT MORE UNITS NEEDED
2013: 57,496 Units, Up 43.0% from 2012
Household Growth: 220,000-250,000/yr
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
#6 REGIONAL HOUSING MARKETS
2014 CA SALES YTD
SERIES: Year to Date Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SERIES: Year to Year Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2014 CA MEDIAN PRICE YTY
SERIES: Year to Date Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
NORTHERN CA SALES
NORTHERN CA PRICES
SERIES: Year to Year Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
NORTHERN WINE SALES
SERIES: Year to Date Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
NORTHERN WINE PRICES
SERIES: Year to Year Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
BAY AREA SALES
SERIES: Year to Date Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
BAY AREA PRICES
SERIES: Year to Year Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CENTRAL VALLEY SALES
SERIES: Year to Date Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CENTRAL VALLEY PRICES
SERIES: Year to Year Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CENTRAL COAST SALES
SERIES: Year to Date Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CENTRAL COAST PRICES
SERIES: Year to Year Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SOUTHERN CA SALES
SERIES: Year to Date Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SOUTHERN CA PRICES
SERIES: Year to Year Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
#7 THE MILLENNIALS & THE FUTURE OF
HOMEOWNERSHIP
HOMEOWNERSHIP RATES BY AGE
California (2010 Census)
15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+0%
10%
20%
30%
40%
50%
60%
70%
80%
12%
28%
49%
62%
70%74% 74%
66%
SERIES: Homeownership RatesSOURCE: U.S. Census Bureau
HOMEOWNERSHIP RATE BY AGE OF HOUSEHOLDER
SOURCE: Census Bureau
MILLENNIAL HOMEOWNERSHIP FALLING
SOURCE: Census Bureau
YOUNGER BUYERS CONTINUE TO DECLINE
20022003200420052006200720082009201020112012201320140%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Refused65+55-6445-5435-4425-34Under 25
Question: What is your age?SERIES: 2014 C.A.R. Home Buyers SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
¾ MILLENNIALS NOT MARRIED
SOURCE: C.A.R. 2014 Millennial SurveyQ: What is your marital status
Married 26%
Single 50%
In a com-mitted re-lationship
23%
Other 2%
CA MILLENNIAL ETHNICITY
SOURCE: C.A.R. 2014 Millennial SurveyQ: What is your ethnicity?
African Amer-ican
Asian Caucasian/ White
Hispanic/ Latino
Other0%
5%
10%
15%
20%
25%
30%
35%
40%
7%
18%
38%
35%
4%
YOUNGER MILLENNIALS – GREATER DIVERSITY
SOURCE: C.A.R. 2014 Millennial SurveyQ: What is your ethnicity?
African American
Asian Caucasian/ White
Hispanic/ Latino
Other0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
18-2627-34AllCA
2009 2010 2011 2012 2009 - 2012
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
-5,485
165,105223,058
575,156
957,834
Households not formed
# OF HOUSEHOLDS LOST SINCE THE GREAT RECESSION
SOURCE: California Dept. of Finance; compiled by C.A.R.
SHARE OF YOUNG ADULTS LIVING WITH PARENTS
SERIES: Share of Young Adults Living ParentsSOURCE: U.S, Census, PUMS, ACS, NAHB Estimates.
STUDENT LOAN DEBT: OVER-RATED & REAL
Yes; 23%
No; 75%
Refused; 2%
Student Loan Debt
<$10,000
$10-$20K
$20-$50K
$50-$100K
> $100K
Refused
78%
8%
6%
3%
2%
2%
Amount of Debt
Question: Do you have any outstanding debt from student loans? How much is the outstanding student loan debt? SERIES: 2014 C.A.R. Home Buyers SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
BUYERS: MANY DID NOT BUY SOONER BECAUSE OF LACK OF URGENCY & UNCERTAINTY
SOURCE: C.A.R. 2014 Millennial SurveyQ: Why didn’t you buy sooner?
Other
Difficulty qualifying for mortgage
Needed to sell existing home first
Not many good housing options
Waited until finances improved
Needed to save for down payment
Waited to see when prices would stabilize
No buying urgency
0% 5% 10% 15% 20% 25% 30% 35%
5%
7%
8%
26%
26%
27%
32%
33%
RENTERS: MAJORITY RENT BECAUSE THEY CANT AFFORD TO BUY
SOURCE: C.A.R. 2014 Millennial SurveyQ: Why do you rent instead of own?
Other
Believe housing market will decline in the near future
No interest in buying
Don't want the responsibility of owning
Don't have a job
Enjoy the flexibility/freedom of renting
Too costly to maintain property as owner
Can't qualify for a mortgage
Don't have a down payment
It's easier to rent
Not ready to buy
Can't afford to buy
0% 10%20%30%40%50%60%70%80%
2%4%
7%9%
10%
15%
16%
17%
20%
24%
37%
67%
FORMER OWNERS: MANY SOLD HOME BECAUSE OF FINANCIAL DISTRESS
SOURCE: C.A.R. 2014 Millennial SurveyQ: Why did you sell your previous home?
Other
Believe housing market is going down
Recent rise in home values
Opted to become a renter
Needed to move for work
Needed to move for family reasons
Financial distress
0% 10% 20% 30% 40%
12%
2%
7%
10%
22%
24%
39%
MOST UNCERTAIN/DOUBTFUL THAT THEY COULD OBTAIN A MORTGAGE NOW?AMILLENNIAL ETHNICITY
SOURCE: C.A.R. 2014 Millennial SurveyQ: Could you obtain a mortgage if you applied now ?
Yes 22%
No 33%
Don't know 45%
PEOPLE WOULD PREFER THE FOLLOWING OVER GOING THROUGH THE HOME MORTGAGE PROCESS AGAIN:
SOURCE: Guaranteed Rate Mortgage Survey of 1,000 adults 25 and older USA Today April 2014
ATTITUDE TOWARD THE HOME BUYING PROCESS – MIXED RESULTS
SOURCE: How would you describe your attitude towards the home buying process?C.A.R. 2014 Millennial Survey
Positive Negative Neutral N/A Other0%
10%
20%
30%
40%
50%
60%50%
34%
8%4%
4%
#8 MACRO ECONOMIC
ENVIRONMENT
2005
2007
2009
2011
2013
Q3-10
Q1-11
Q3-11
Q1-12
Q3-12
Q1-13
Q3-13
Q1-14
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
ECONOMY GAINING MOMENTUM 2014 2.0%
2013: 1.9%; 2014 Q2: 4.5% 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
US UNEMPLOYMENT RATE BELOW 6%
CA - 7.4% (Aug. 2014) vs. US - 5.9% (Sep. 2014)
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
Jan-
14
Jul-1
4-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14% US-CA CA US
SERIES: Unemployment RateSOURCE: US Bureau of Labor Statistics, CA Employment Development Division
PERCENT JOB LOSSES PRIOR RECESSIONS – RECENT CYCLE WORST BY FAR
US V CA JOB GROWTH
ANNUAL PERCENT CHANGE
SERIES: Total Nonfarm EmploymentSOURCE: US Bureau of Labor Statistics, CA Employment Development Division
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
Jan-
14
Jul-1
4-8
-6
-4
-2
0
2
4 California US
JOB TRENDS BY CALIFORNIA METRO AREA
Orange County
Modesto
Sacramento
Bakersfield
Fresno MSA
San Jose
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
1.2%
1.2%
1.3%
1.3%
2.0%
2.2%
2.2%
2.2%
2.4%
2.6%
3.2%
3.3%
SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division
ANNUAL PERCENT CHANGE
August 2014: CA +1.7%, +291,700
CALIFORNIA JOB CHANGES BY INDUSTRY
SERIES: Total Nonfarm Employment By IndustrySOURCE: US Bureau of Labor Statistics, CA Employment Development Division
August 2014: CA +1.7%, +291,700ANNUAL PERCENT CHANGE
Finance & InsuranceTransportation, Warehousing & Utilities
Nondurable GoodsGovernment
Durable GoodsHealth Care & Social Assistance
Wholesale TradeRetail Trade
Real Estate & Rental & LeasingLeisure & HospitalityEducational Services
InformationProfessional, Scientific & Technical Services
Admistrative & Support & Waste ServicesConstruction
-3% -2% -1% 0% 1% 2% 3% 4% 5% 6%
-2.2%-1.8%-1.7%
-0.2%0.7%0.8%
1.1%1.1%1.3%
2.7%3.3%
3.9%3.9%4.0%
5.2%
METRO COMMERCIAL SPACE VACANCY RATES
2014 Q2
SERIES: Commercial Vacancy RateSOURCE: National Association of REALTORS®
MSA Office Industrial Retail Multi-Family
Los Angeles 15.3% 3.8% 5.8% 3.1%
Oakland-East Bay 18.0% 9.3% 6.2% 2.7%
Orange County 16.8% 3.5% 5.3% 2.5%
Sacramento 20.7% 11.8% 11.6% 2.6%
San Bernardino/Riverside 23.6% 6.9% 10.1% 2.5%
San Diego 16.2% 6.7% 6.3% 2.6%
San Francisco 12.6% 10.9% 3.5% 3.0%
San Jose 18.1% 16.6% 4.5% 2.4%
Ventura 18.9% - 8.9% 2.8%
CONSUMER PRICE INDEX
August 2014: All Items +1.7% YTY; Core +1.7% YTY
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
Jan-
14
Jul-1
4-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6% All Items Core
ANNUAL PERCENT CHANGE
SERIES: Consumer Price IndexSOURCE: US Bureau of Labor Statistics
CONSUMER CONFIDENCE: UNCERTAINTY
September 2013: 79.7INDEX, 100=1985
SERIES: Consumer ConfidenceSOURCE: The Conference Board
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
Jan-
14
Jul-1
40
20
40
60
80
100
120
U.S. ECONOMIC FORECAST
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Gross Domestic Product
Nonfarm Job Growth
Unemployment Rate
Consumer Price Index
Real Disposable Income, % Change
2011
1.8%
1.2%
8.9%
3.1%
1.3%
2012
2.8%
1.7%
8.1%
2.1%
1.5%
2013
1.9%
1.7%
7.4%
1.5%
0.7%
2014 P
2.2%
1.8%
6.2%
2.0%
2.6%
2015 F
3.0%
2.2%
5.8%
2.2%
2.6%
CALIFORNIA ECONOMIC FORECAST
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Nonfarm Job Growth
Unemployment Rate
Population Growth
Real Disposable Income, % Change
2011
1.1%
11.8%
0.7%
1.9%
2012
2.4%
10.4%
0.7%
1.1%
2013
3.0%
8.9%
0.9%
0.9%
2014 P
2.2%
7.5%
0.9%
3.0%
2015 F
2.4%
6.7%
0.9%
3.8%
#9 PUBLIC POLICY
LEGISLATIVE & REGULATORY PRESSURES ABOUND AT ALL LEVELS OF GOVERNMENTLocal:
– Point of Sale– Business License Tax– Transfer Taxes
State: – Affordable Housing, not Homeownership– Attacks on Ellis Act., Costa-Hawkins– Fiscal and Taxation Threats– Anti-speculation Tax (SF)
LEGISLATIVE & REGULATORY PRESSURES ABOUND AT ALL LEVELS OF GOVERNMENTFederal:
– GSE’s: Future of Fannie & Freddie – FHA – Fees & Loan Limits – Mortgage Interest Deduction– Flood Insurance– Taxation
FANNIE & FREDDIE ARE THE MARKET
Source: LPS
#10 WILD CARDS
REALITY: WORLD OF UNCERTAINTY
– Stock market volatility– Slower growth: China & Europe– Geo-political tensions– Terrorism– Bio-terrorism– Natural Disasters – 2014 mid-term elections
2015 FORECAST
CALIFORNIA HOUSING MARKET FORECAST
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SFH Resales (000s)
% Change
Median Price ($000s)
% Change
Housing Affordability Index
30-Yr FRM
2011
422.6
1.4%
$286.0
-6.2%
53%
4.5%
2012
439.8
4.1%
$319.3
11.6%
51%
3.7%
2013
413.3
-5.8%
$407.2
27.5%
36%
4.0%
2014 P
380.5
-8.2%
$455.0
11.8%
30%
4.3%
2015 F
402.5
5.8%
$478.7
5.2%
27%
4.5%
CALIFORNIA HOUSING MARKET OUTLOOK• Sales Down for 2014 but will Improve in
2015; Price Gains Slowing
Units (Thousand)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014p
2015f
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
380,470402,540
Sales of Existing Detached Homes
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014p
2015f
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$455,030
$478,690
Median PricePrice
(Thousand)
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA: DOLLAR VOLUME UP FOR 4TH YEAR
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014p 2015f$0
$50
$100
$150
$200
$250
$300
$350
$400
-40%
-30%
-20%
-10%
0%
10%
20%
30%
$301
$244
$164 $133 $131 $127 $121
$140 $169 $173
$193
$ Volume of Sales Percent Change
% Change$ in Billion
-60%
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
• Up 2.7% in 2014, Up 11.3% in 2015
MARKET OPPORTUNITIES
2015
OPPORTUNITIES TO EXPAND YOUR BUSINESS
• Connect with the IPO crowd – Twitter IPO created 1400 millionaires
• Educate Under-informed Potential Buyers• Begin conversations with Millennials• Connect with Boomerang Buyers• Connect with International buyers • Support local and state efforts to build!• Dress up and get out there!
mortgage.car.org
MOMRTGAGE RESOURCE DIRECTORYKNOW YOUR TOOLS! MORTGAGE.CAR.ORG
OUTLOOK
THE TRUTH
“There will be enough transactions in 2015
for you to have a great year.”
THE ECONOMY OF LOVE
Give freelyReceive
graciously
THANK YOU!www.car.org/marketdatalesliea@car.org
top related