southwest california housing update

The Voice for Real Estate

Economic Development Workforce Committee

2015

Lake Elsinore Demographic Shift

2016

6%2%

7% 3%

2017

Lake Elsinore Demographic Shift

Lake Elsinore Population Data

Lake Elsinore Unemployment Data

Lake Elsinore Business Data

SW Market @ A Glance

Southwest

California Reporting

Period

Current

Period

Last

Period

Year

Ago

Change

from

Last

Period

Change

from

Year

Ago

Existing Home Sales

(SFR Detached)September

2017 902 1,103 982 18% 8%

Median Home Price $353,155 $353,983 $334,639 --- 5%

Unsold Inventory

Index (SFR Units) 1,842 1,848 2,348 --- 22%

Unsold Inventory

Index (Months) 2.2 1.6 2.4 17% 8%

Median Time on

Market (Days) 18 18 46 --- 61%

Source: CRMLS

Regional Housing Date

California, August 2017 Sales: 427,630 Units, +2.7% YTD, +1.3% YTY

State Housing Sales DataSales Continue to Grow but at a Slower Pace

-

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 Homes

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Aug-17:

427,630Aug-16:

422,190

0

50

100

150

200

250

300Jan-1

5

Feb-1

5

Ma

r-15

Apr-

15

Ma

y-1

5

Jun-1

5

Jul-15

Aug

-15

Sep-1

5

Oc

t-15

No

v-1

5

Dec

-15

Jan-1

6

Feb-1

6

Ma

r-16

Apr-

16

Ma

y-1

6

Jun-1

6

Jul-16

Aug

-16

Sep-1

6

Oc

t-16

No

v-1

6

Dec

-16

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug

-17

Sep-1

7

Temecula Murrieta Wildomar Lake Elsinore

Regional SFR Sales

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Lake Elsinore 962 1,038 1,287 999 494 1,405 1,805 1,405 1,270 1,165 1,072 1,022 1,091 1,184 1,254

Axis

Tit

leLake Elsinore Sales History

California, August 2017: $565,330, +2.9% MTM, +7.2% YTY

Califoria State Median Price DataMedian Price Continues to Grow YTY

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000P: May-07

$594,530

T: Feb-09

$245,230

-59% from

peak

Aug-17: $565,330

Aug-16: $527,490

SERIES: Median Price of Existing Single Family Homes


$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

Temecula Murrieta Wildomar Lake Elsinore

Regional Median Price Data

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Lake Elsinore $230,115 $323,681 $391,725 $433,996 $377,597 $230,459 $174,666 $187,347 $180,856 $187,696 $247,758 $281,742 $300,432 $321,976 $351,547

47%

60%

50%

Lake Elsinore Median Price History

19%

Lake Elsinore Median Price

September 2017:

2016 2017 %

Temecula $437,500 $470,000 7%

Murrieta $385,000 $418,000 8%

Menifee $315,000 $345,000 9%

Lake Elsinore $330,000 $359,900 8%

Wildomar $370,000 $402,500 8%

Canyon Lake $428,000 $425,000 1%

Hemet $230,000 $257,000 10%

San Jacinto $251,250 $255,000 2%

Perris $265,000 $300,000 12%

0

500

1000

1500

2000

2500

3000

1/12 4/12 7/12 10/12 1/13 4/13 7/13 10/13 1/14 4/14 7/14 10/14 1/15 4/15 7/15 10/15 1/16 4/16 7/16 10/16 1/17 4/17 7/17

Inventory Sales

September Market Activity By Sales Type

Standard Sale Bank Owned Short Sale

Active% of MKT Sold % of MKT Active

% of MKT Sold

% of MKT Active

% of MKT Sold

% of MKT

Temecula 310 87% 147 95% 2 1% 1 1% 10 3% 2 1%

Murrieta 335 90% 149 92% 5 1% 0 0% 13 3% 5 3%

Wildomar 71 89% 31 97% 1 1% 0 0% 4 5% 1 3%

Lake Elsinore 177 93% 94 93% 1 1% 1 1% 8 4% 1 1%

Menifee 251 97% 146 95% 1 0% 3 2% 5 2% 2 1%

Canyon Lake 81 93% 22 96% 0 0% 1 4% 1 1% 0 0%

Hemet 248 89% 153 92% 5 2% 5 3% 8 3% 2 1%

San Jacinto 90 97% 44 92% 1 1% 1 2% 2 2% 2 4%

Perris 116 93% 56 92% 0 0% 1 2% 7 6% 2 3%

Regional Average1679 91% 842 93% 16 1% 13 1% 58 3% 17 2%

Market Activity

Your 'Average' House, September 2017By City

City Median Sold $ Average Sold $ * Average SqFt Bed Bath YrBlt

Temecula $470,000 $514,810 2,418 4 3 1998

Murrieta $418,000 $437,086 2,438 4 3 1999

Wildomar $402,500 $413,189 2,341 4 3 1996

Lake Elsinore $359,900 $345,935 2,069 4 3 1996

Menifee $345,000 $340,831 2,024 3 3 1995

Canyon Lake $425,000 $461,685 2,335 3 3 1986

Hemet $257,000 $263,391 1,756 3 2 1985

San Jacinto $255,000 $250,968 1,786 3 2 1995

Perris $300,000 $301,367 1,976 4 3 1991* Excluding homes over $1,000,000

18825 Oakview Wy, Lake Elsinore

What Lies Ahead?

9.4%

8.6%

7.5%

7.5%

6.5%

5.8%

5.6%

5.4%

5.4%

5.4%

5.1%

4.7%

4.6%

4.4%

4.2%

3.8%

3.5%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Kern

Fresno

Stanislaus

San Joaquin

Riverside

San Bernardino

Monterey

Santa Cruz

Sacramento

Los Angeles

Mono

San Diego

Inyo

Alameda

Orange County

Santa Clara

San Francisco

Unemployment rate by County

SERIES: Unemployment Rate

SOURCE: CA Employment Development Division

Aug 2017: California 5.1%

January 2010 – September 14, 2017

Mortgage Rates: Lowest Level since the Election

0

1

2

3

4

5

6

FRM

ARM

3.78

3.13

3.88

3.15

MONTHLY WEEKLY

SERIES: 30Yr FRM, 5Yr ARM

SOURCE: Freddie Mac

Aug 2016: 3.4 Months; Aug 2017: 2.9 Months

Supply Remains an Issue

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


0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Jan

-05

Se

p-0

5M

ay-0

6Ja

n-0

7Se

p-0

7M

ay-0

8Ja

n-0

9Se

p-0

9M

ay-1

0Ja

n-1

1Se

p-1

1M

ay-1

2Ja

n-1

3Se

p-1

3M

ay-1

4Ja

n-1

5Se

p-1

5M

ay-1

6Ja

n-1

7

7% 5% 5%

-20%

-40%

-8%

-50%

-40%

-30%

-20%

-10%

0%

10%

San

Francisco

Bay Area

Southern

California

Central

ValleyY

ea

r-to

-Ye

ar %

Ch

g

Sales Active Listings

“Missing” 72,000 New Units Annually

SERIES: California New Housing Permits

SOURCE: Construction Industry Research Board

0

50000

100000

150000

200000

250000

300000

350000

Single Family Multi-Family CA HCD Projected

Housing Needs:

180,000/yr.

2016: 98,881 (47,889 sf, 50,992 mf)

2017f: 107,756 (53,708 sf, 54,048 mf )

0.9% 0.8%1.9%

5.7%

10.7%

21.3%

24.0%

31.8%

24.4%

9.0%11.0%

12.4%14.2%

12.0%

8.9%7.3%

0%

5%

10%

15%

20%

25%

30%

35%

1978 &

Earlier

1979 to

1984

1985 to

1989

1990 to

1994

1995 to

1999

2000 to

2005

2005 to

2009

2010 to

2013

California Homeowners by Length of Tenure, 2013

Under 55 55+

Boomers Not Moving as Often

SERIES: Distribution of Home Ownership by Year Moved In

SOURCE: U.S. Census Bureau, 2013 American Housing Survey

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

55%

29%

0%

10%

20%

30%

40%

50%

60%

70%

39%

21%

Housing affordability taking it on the chin

2017-Q2: % able to purchase median-priced home

SERIES: Housing Affordability Index of Traditional Buyers


12%

Affordability Is also an Issue for Renters

SERIES: California asking rent and household incomeSOURCE: California Department of Housing and Community Development, Census Bureau Decennial Census, American Community Survey

173.0

135.9

100

110

120

130

140

150

160

170

180

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

Rent vs. Household Income

Asking Rent

Household

Income

Indexed: 2000=100

$1,032

$1,337

$1,977

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

$2,200 California Average Asking Rent

Homeownership Dropped, Big Gap in CA

63.5

53.2

50

52

54

56

58

60

62

64

66

68

70

Pe

rce

nt

Homeownership Rate, 2005-2016

U.S. CaliforniaSERIES: Homeownership Rate (%)SOURCE: U.S. Census Bureau, Housing Vacancy Survey (HVS)

53.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ne

w Y

ork

Ne

va

da

Ha

wa

ii

Texa

s

Wa

shin

gto

n

Ne

w J

ers

ey

Co

lora

do

Co

nn

ec

tic

ut

Flo

rid

a

Illin

ois

Oh

io

Ten

ne

sse

e

Mis

sou

ri

Ka

nsa

s

Ne

w M

exic

o

Wis

co

nsi

n

Ne

bra

ska

So

uth

Ca

rolin

a

Ala

ba

ma

Iow

a

Ida

ho

Uta

h

Ne

w H

am

psh

ire

Ma

ine

De

law

are

Homeownership Rate

California Ranked the 2nd Lowest Amongst All States

SERIES: Homeownership RatesSOURCE: U.S. Census Bureau

Supply = Solution, but California Not Building Enough Because…

SOURCE: CA Legislative Analyst Office

Building in California is Expensive

SERIES: Homeownership RateSOURCE: CA Legislative Analyst Office

• 2 to 4 times higher on California

(CA) Coasts

• High land costs usually mean more

units being built on each plot of

land, but not the case in CA’s

coastal metros

• During the 2000’s housing density of

a typical neighborhood in CA’s

coastal metro rose only 4%,

considerably less than the 11%

average increase in the comparison

group

• The new housing unit in the

comparison group was also 40%

more dense than that built in CA.

Land Costs Building Costs

• $50k to $75 higher in California

(CA)

• Include labor, building material and

government fees, all higher in CA

than other states

• Development fees are higher in

California than the rest of the

country. A 2012 national survey

found that the average

development fee levied by

California local governments

(excluding water-related fees) was

$22,000 per single family home, as

compared to the $6,000 per single-

family home in the rest of the

country.

4.4%4.6%

5.3%

3.6%3.4%

3.2%2.9%

2.7%

4.8%

7.6%

6.9%

5.6%5.8%

7.0%

7.4%7.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2017.01 2017.02 2017.03 2017.04 2017.05 2017.06 2017.07 2017.08

Year-to-Date Sales Growth vs. Annual Price Growth

Sales Median Price

Sales decelerate, prices accelerate

Let’s talk politics!

Federal Political Fiscal Climate

• Economic stimulus package/tax reform

• $550 billion over 10 years

• Tax reductions/increase in standard deduction/eliminate property tax deduction

• Higher budget deficits will lead to rising interest rates

• Dismantling Dodd-Frank

• Banks will loosen up lending standards

• Buyers could have more mortgage options

• Heighten risks of having another financial bubble

• Reform of GSE’s

• Privatization or not?

• An increase in interest rates is expected if GSE’s were privatized

Federal Wildcards

• Trade Policy• Boarder adjustment tax/Tariff

• Consumer pay higher prices on imported goods

• Higher inflation will lead to higher interest rates

• Other wildcards• Healthcare reform

• Immigration Policy/H1B Visa program

• Policy by Tweet

FED holds off again – see you in December?

Efficacy of Monetary Policy?

Next FED Chair?

• Impact of ‘Gas Tax’

• Fiscal impact of Sanctuary State

• DIF & TUMF Fee Increases

• Housing ‘Fix’ Bills

• New Governor

• Super-Majority Continues?

California ‘Special’ Circumstances

U.S. Economic Outlook

2012 2013 2014 2015 2016 2017p 2018f

US GDP 2.2% 1.7% 2.4% 2.6% 1.6% 2.1% 2.3%

Nonfarm Job

Growth1.7% 1.7% 1.9% 2.1% 1.8% 1.4% 1.2%

Unemployment 8.1% 7.4% 6.2% 5.3% 4.9% 4.5% 4.3%

CPI 2.1% 1.5% 1.6% 0.1% 1.4% 2.0% 2.4%

Real Disposable

Income, % 3.2% -1.4% 2.7% 3.4% 2.7% 2.1% 3.5%

30-Yr FRM 3.7% 4.0% 4.2% 3.9% 3.6% 4.2% 4.7%SERIES: U.S. Economic Outlook


2012 2013 2014 2015 2016 2017p 2018f

SFH Resales (000s) 439.8 414.9 382.7 409.4 416.3 419.6 421.4

% Change 4.1% -5.9% -7.8% 7.0% 1.7% 0.8% 0.4%

Median Price

($000s)$319.3 $407.2 $446.9 $476.3 $502.3 $537.5 $556.0

% Change 11.6% 27.5% 9.8% 6.6% 5.4% 7.0% 3.4%

Housing

Affordability Index51% 36% 30% 31% 31% 29% 26%

30-Yr FRM 3.7% 4.0% 4.2% 3.9% 3.6% 4.2% 4.7%

California Housing Market Outlook

southwest california housing update

Economy & Finance