2014 - 2015 california economic & Market...
Transcript of 2014 - 2015 california economic & Market...
2015 CALIFORNIA ECONOMIC & MARKET OUTLOOK
January 21,2015
Laguna Association of Realtors
Leslie Appleton-Young, Chief Economist
OVERVIEW
• Macro-Economic Outlook
• California Housing Market Outlook
• Housing Affordability
• Regional Market Stats
• 2015 Forecast
ECONOMIC OUTLOOK
-4%
-3%
-2%
-1%
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Q2
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Q3-
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GROSS DOMESTIC PRODUCT
2013: 1.9%; 2014 Q3: 5.0%
ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
ANNUALLY QUARTERLY
2009 Largest Annual Drop since 1938 (-3.4%)
SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
PERSONAL CONSUMPTION
2014 Q3: 3.2%
-6%
-4%
-2%
0%
2%
4%
6%QUARTERLY PERCENT CHANGE
SERIES: Personal Consumption SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
UNEMPLOYMENT RATE FALLING
December 2014: US 5.6% & CA 7.2%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14% US-CA CA US
SERIES: Unemployment Rate SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
EMPLOYMENT GROWTH, CA & U.S.
-8
-6
-4
-2
0
2
4 California US
ANNUAL PERCENT CHANGE
SERIES: Total Nonfarm Employment SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
JOB LOSSES IN PRIOR RECESSIONS - RECENT CYCLE WORST BY FAR
NONFARM EMPLOYMENT BY REGION
Nov 2014 Nov 2013 Change % Change
Southern California 8,721.2 8,553.1 168.1 2.0%
Bay Area 3,555.6 3,441.0 114.6 3.3%
Central Valley 2,068.4 2,021.6 46.8 2.3%
Central Coast 514.4 503.9 10.5 2.1%
North Central 139.4 137.7 1.7 1.2%
CALIFORNIA 15,650.5 15,306.4 344.1 2.2%
Nonfarm Employment (Thousands)
SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division
CA JOB TRENDS – BAY AREA LEADS
1.4%
1.8%
2.1%
2.1%
2.2%
2.2%
2.6%
2.6%
2.8%
3.2%
3.6%
3.8%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
Los Angeles
Ventura
Modesto
Stockton MSA
Bakersfield
Orange County
Fresno MSA
Sacramento
Oakland
San Diego
San Francisco
San Jose
SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division
ANNUAL PERCENT CHANGE
November 2014: CA +2.2%, +344,100
CONSTRUCTION WORKERS IN DEMAND
-1.0%
-0.5%
-0.1%
0.7%
0.9%
1.4%
1.9%
2.7%
2.9%
2.9%
3.4%
3.6%
4.3%
6.2%
6.4%
-2% -1% 0% 1% 2% 3% 4% 5% 6% 7%
Nondurable GoodsFinance & Insurance
GovernmentDurable Goods
Retail TradeTransportation, Warehousing & Utilities
Real Estate & Rental & LeasingWholesale Trade
Educational ServicesInformation
Leisure & HospitalityHealth Care & Social Assistance
Professional, Scientific & Technical ServicesAdmistrative & Support & Waste Services
Construction
SERIES: Total Nonfarm Employment By Industry SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
November 2014: CA +2.2%, +344,100 ANNUAL PERCENT CHANGE
CPI REMAINS SUBDUED
December 2014: All Items +.8% YTY; Core +1.6% YTY
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6% All Items Core
ANNUAL PERCENT CHANGE
SERIES: Consumer Price Index SOURCE: US Bureau of Labor Statistics
MORTGAGE RATES UP 1% IN MID-2013 SIX YEARS OF 0% FED FUNDS RATE
0%
1%
2%
3%
4%
5%
6%
7%
8% FRM ARM Federal Funds
SERIES: 30Yr FRM, 1Yr ARM, Federal Funds SOURCE: Federal Home Loan Mortgage Corporation
MORTGAGE RATES
• January 2009 – December 2014
0%
1%
2%
3%
4%
5%
6%
20
09
/01
20
09
/04
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09
/07
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10/0
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20
10/0
4
20
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7
20
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20
11/0
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20
11/0
4
20
11/0
7
20
11/1
0
20
12/0
1
20
12/0
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20
12/0
7
20
12/1
0
20
13/0
1
20
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20
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20
14/0
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0
11.0
6.1
4
11.2
7.14
12.1
8.1
4
FRM
ARM
MONTHLY WEEKLY
SERIES: 30Yr FRM, 1Yr ARM SOURCE: Federal Home Loan Mortgage Corporation
FORECAST BIAS FOR RISING RATES
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 Survey SOURCE: Philadelphia Federal Reserve Survey of Professional Forecasters, Bloomberg
CONSUMER CONFIDENCE INDEX
December 2014: 92.6
0
20
40
60
80
100
120INDEX, 100=1985
SERIES: Consumer Confidence SOURCE: The Conference Board
U.S. DEPOSITORY INSTITUTIONS: HIGH LEVEL OF EXCESS RESERVES SINCE 9/08
$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
U.S. ECONOMIC OUTLOOK 2014 - 2015
2009 2010 2011 2012 2013 2014p 2015f
US GDP -3.4% 2.4% 1.8% 2.8% 1.9% 2.5% 3.0%
Nonfarm Job Growth -4.4% -0.7% 1.2% 1.7% 1.7% 2.0% 2.3%
Unemployment 9.3% 9.6% 8.9% 8.1% 7.4% 6.2% 5.6%
CPI -0.4% 1.6% 3.1% 2.1% 1.5% 1.5% 1.6%
Real Disposable
Income, % Change 0.9% 1.8% 1.3% 1.5% 0.7% 2.4% 2.4%
SERIES: U.S. Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CALIFORNIA ECONOMIC FORECAST
SERIES: CA Economic Outlook SOURCE: 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%
CALIFORNIA HOUSING MARKET OUTLOOK
CALIFORNIA’S HOUSING CYCLES AND MEMBERSHIP
1970-2014
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
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14p
Home Sales Membership
*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2014 HOME SALES DOWN 7.6%
California, Dec. 2014 Sales: 366,000 Units, -7.6% YTD, +0.6% 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 Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Dec-14: 366,000
Dec-13: 363,740
SHARE OF EQUITY SALES REMAINED STEADY AT THE HIGHEST LEVEL SINCE LATE 2007
90.5%
4.8%
4.3% 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan
-09
Ap
r-0
9
Jul-
09
Oct
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Jan
-10
Ap
r-10
Jul-
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Oct
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Jul-
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Oct
-11
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Oct
-12
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Oct
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Jan
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Ap
r-14
Jul-
14
Oct
-14
Equity Sales Short Sale REO
SERIES: Distressed Sales, Not Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
ORANGE COUNTY
Preforeclosure: 1,210 • Auction: 1,009 • Bank Owned: 226
SOURCE: PropertyRadar on 1/20/14
ORANGE COUNTY
Preforeclosure: 1,210 • Auction: 1,009 • Bank Owned: 226
SOURCE: PropertyRadar on 1/20/14
ORANGE COUNTY
Preforeclosure: 1,210 • Auction: 1,009 • Bank Owned: 226
SOURCE: PropertyRadar on 1/20/14
LAGUNA BEACH
Preforeclosure: 17 • Auction: 3 • Bank Owned: 4
SOURCE: PropertyRadar on 1/20/14
IRVINE
Preforeclosure: 56 • Auction: 48 • Bank Owned: 9
SOURCE: PropertyRadar on 1/20/14
NEWPORT BEACH
Preforeclosure: 25 • Auction: 20 • Bank Owned: 4
SOURCE: PropertyRadar on 1/20/14
MEDIAN PRICE OF EXISTING DETACHED HOMES
California, Dec. 2014: $452,570, +1.7% MTM, +3.1% 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% from peak
SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Dec-14: $452,570
Dec-13: $444,830
PRICE GAINS DOWN SHARPLY SINCE MID 2013
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50% Condo Single-Family Homes
SERIES: Sales of SFH and Condo Units SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
YTY% Chg. in Price
INVENTORY IMPROVING FROM LAST YEAR
Dec 2013: 3.0 Months; Dec 2014: 3.3 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 Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
UNSOLD INVENTORY INDEX (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.
Price Range (Thousand) Dec-14 Nov-14 Dec-13
$1,000K+ 4.3 5.5 4.3
$750-999K 3.1 4.2 3.2
$500-749K 3.0 4.1 2.7
$400-499K 3.0 3.9 2.6
$300-399K 3.2 4.2 2.8
$200-299K 3.3 4.3 3.0
$0-199K 3.4 4.5 3.1
SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
WHERE IS THE INVENTORY?
– Investors renting instead of flipping –Mortgage Lock-In Effect –Where will I go? – Foreclosure pipeline is dry –New construction recovering but LOW – Off-market (aka “pocket’) listings not eing
counted in listing stats
PRICE PER SQUARE FOOT
December 2014: $210, Down 1.3% MTM, Up 4.9% YTY
$0
$50
$100
$150
$200
$250
$300
$350
$400
Jan
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Ap
r-0
7
Jul-
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Oct
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8
Jul-
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-13
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Ap
r-14
Jul-
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Oct
-14
PRICE PER SQ. FT.
SERIES: Median Price Per Square Feet SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SALES-TO-LIST RATIO
December 2014: 97.0%, Down 0.2% MTM, Down 1.2% YTY
97.5%
$1
$1
$1
$1
$1
$1
$1
$1
$1
Jan
-07
Ap
r-0
7
Jul-
07
Oct
-07
Jan
-08
Ap
r-0
8
Jul-
08
Oct
-08
Jan
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Ap
r-0
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Jul-
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Oct
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Jul-
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-10
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Jan
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Jan
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Ap
r-13
Jul-
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Oct
-13
Jan
-14
Ap
r-14
Jul-
14
Oct
-14
PRICE PER SQ. FT.
SERIES: Median Price Per Square Feet SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
ANNUAL HOUSING MARKET SURVEY:
2014 FINDINGS
MULTIPLE OFFERS DECLINE - LESS INTENSE MARKET COMPETITION
AFTER PEAKING IN 2013
72%
53% 5.7
4.3
0
1
2
3
4
5
6
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
% with Multiple Offers # of Multiple offers (Average)
SERIES: 2014 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
49 % SOLD BELOW ASKING IN 2014
7%
11%
28%
54%
0% 20% 40% 60%
20% or more
10% to 19.99%
5% to 9.99%
Less than 5%
% of Price Reduction (Properties Sold Below Asking Price)
49%
18%
33%
Sale Price to Asking Price
Below Asking Price At Asking Price Above Asking Price
SERIES: 2014 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Reduction: 4.5% of List Price
INVESTMENT BUYERS DROPPING : 15% MARKET SHARE
19%
15%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Long Run Average: 12 %
SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
BUYING TO RENT V. FLIP; CHANGE IN PREFERRED INVESTMENT STRATEGY
Investment to Flip
Rental Property
SERIES: 2014 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
REGIONAL & LOCAL HOUSING MARKETS
ORANGE COUNTY
MEDIAN PRICE OF RESIDENTIAL HOMES
Orange County, December 2014: $565,000
Down 1.9% MTM, Up 2.7% YTY
SOURCE: Clarus Market Metrics
SALES OF RESIDENTIAL HOMES
Orange County, December 2014: 2,177 Units
Up 13.0% MTM, Down 2.6% YTY, Down 8.7% YTD
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
Orange County, December 2014: 8,225 Units
Down 17.0% MTM, Down 7.7% YTY
SOURCE: Clarus Market Metrics
MONTH’S SUPPLY OF INVENTORY
Orange County, December 2014: 3.1 Months
SOURCE: Clarus Market Metrics
Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month.
LAGUNA BEACH
MEDIAN PRICE OF RESIDENTIAL HOMES
Laguna Beach, December 2014: $1,875,000
Up 17.7% MTM, Up 28.5% YTY
SOURCE: Clarus Market Metrics
SALES OF RESIDENTIAL HOMES
Laguna Beach, December 2014: 31 Units
Down 13.9% MTM, Down 8.8% YTY, Down 1.9% YTD
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
Laguna Beach, December 2014: 217 Units
Down 17.2% MTM, Down 13.2% YTY
SOURCE: Clarus Market Metrics
MONTH’S SUPPLY OF INVENTORY
Laguna Beach, December 2014: 6.3 Months
SOURCE: Clarus Market Metrics
Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month.
IRVINE
MEDIAN PRICE OF RESIDENTIAL HOMES
Irvine, December 2014: $749,000
Up 4.1% MTM, Up 12.4% YTY
SOURCE: Clarus Market Metrics
SALES OF RESIDENTIAL HOMES
Irvine, December 2014: 177 Units
Up 1.1% MTM, Up 1.7% YTY, Down 10.3% YTD
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
Irvine, December 2014: 689 Units
Down 19.2% MTM, Down 9.0% YTY
SOURCE: Clarus Market Metrics
MONTH’S SUPPLY OF INVENTORY
Irvine, December 2014: 2.9 Months
SOURCE: Clarus Market Metrics
Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month.
NEWPORT BEACH
MEDIAN PRICE OF RESIDENTIAL HOMES
Newport Beach, December 2014: $1,525,000
Up 15.5% MTM, Up 5.2% YTY
SOURCE: Clarus Market Metrics
SALES OF RESIDENTIAL HOMES
Newport Beach, December 2014: 67 Units
Up 8.1% MTM, Down 2.9% YTY, Down 4.7% YTD
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
Newport Beach, December 2014: 354 Units
Down 15.7% MTM, Up 1.4% YTY
SOURCE: Clarus Market Metrics
MONTH’S SUPPLY OF INVENTORY
Newport Beach, December 2014: 6.0 Months
SOURCE: Clarus Market Metrics
Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month.
LA JOLLA
SALES OF RESIDENTIAL HOMES
La Jolla, December 2014: 56 Units
Up 33.3% MTM, Up 3.7% YTY, Down 6.4% YTD
SOURCE: Clarus Market Metrics
MEDIAN PRICE OF RESIDENTIAL HOMES
La Jolla, December 2014: $1,282,500
Up 28.3% MTM, Down 15.3% YTY
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
La Jolla, December 2014: 321 Units
Down 12.5% MTM, Down 17.1% YTY
Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month.
SOURCE: Clarus Market Metrics
MONTH’S SUPPLY OF INVENTORY
La Jolla, December 2014: 4.6 Months
Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month.
SOURCE: Clarus Market Metrics
CARMEL
SALES OF RESIDENTIAL HOMES
Carmel, December 2014: 16 Units
Down 23.8% MTM, Down 20.0% YTY, Up 21.1% YTD
SOURCE: Clarus Market Metrics
MEDIAN PRICE OF RESIDENTIAL HOMES
Carmel, December 2014: $1,013,500
Down 30.3% MTM, Down 22.2% YTY
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
Carmel, December 2014: 128 Units
Down 12.3% MTM, Down 25.1% YTY
Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month.
SOURCE: Clarus Market Metrics
MONTH’S SUPPLY OF INVENTORY
Carmel, December 2014: 5.9 Months
Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month.
SOURCE: Clarus Market Metrics
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
California vs. U.S. – 1984-2014
% OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME
SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
0%
10%
20%
30%
40%
50%
60%
70%
80% CA USAnnual Quarterly
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000 California US
CA PRICES UPWARD MARCH WILL SLOW
1970-2014
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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%
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 Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INCOME REQUIRED TO BUY A MEDIAN-PRICED HOME IN CA: (PEAK VS. CURRENT)
$56,324
$93,593
$0
$20,000
$40,000
$60,000
$80,000
$100,000
2012 Q1 2014 Q2
• 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 Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF FIRST-TIME BUYERS UP IN ’14 BUT STILL BELOW LONG-RUN AVERAGE
28.1% 30.5%
0%
10%
20%
30%
40%
50%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
% First-Time Home Buyers Long Run Average
Long Run Average = 38%
QUESTION: Was the buyer a first-time buyer? SERIES: 2014 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
WHY DO WE CARE ABOUT LOW LEVEL OF FIRST-TIME BUYERS?
• It signals a constrained flow of new households in the housing market
• Trade-up market cannot be replenished in the long run
• First-time buyers represent the main impulse that drives the state’s homeownership rate
AVERAGE AGE OF BUYERS RISING
40 41 41 41 44
41 40 38 37 36 35
38
48
0
10
20
30
40
50
60
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Average Age
Q. What is your age?
CA BUYERS: MINORITIES THE MAJORITY
White 36%
Hispanic 26%
Black 12%
Asian/Pacific Islander 26%
Q. How would you describe your ethnic background?
$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 2014
Median Down Payment % of Down Payment to Price
Q. What was the amount of downpayment?
20% REMAINS THE MEDIAN DOWN PAYMENT
SERIES: 2014 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
BUYERS DIDN’T PURCHASE SOONER BECAUSE…
57% • Not many good housing options
53% • Waited to see when prices would stabilize
36% • No real buying urgency
30% • Difficulty qualifying for mortgage
21% • Needed to sell existing home
20% • Needed to save for down payment
15% • Waited until finances improved
Q. Why didn’t you buy a home sooner?
SERIES: 2014 Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
REASONS FOR RENTING INSTEAD OF BUYING
44%
9%
6%
6%
6%
5%
5%
3%
2%
Can't afford to buy
Poor credit / Can't qualify
Renting is easier
Young/Starting out/Not ready
Flexibility/Freedom if renting
Cost/Upkeep/Responsibility
Plan to / Saving for down
Never considered it/No interest
Disabled/On disability
SERIES: 2013 Renter Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
STUDENT LOAN DEBT:25% OF RENTERS
Yes, 23%
No, 75%
Refused, 2%
Student Loan Debt
SERIES: 2013 Renter Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
78%
8%
6%
3%
2%
2%
<$10,000
$10-$20K
$20-$50K
$50-$100K
> $100K
Refused
Amount of Debt
STUDENT DEBT: DRAGS ON HOME SALES
HOMEOWNERSHIP RATE LOWER IN CA
California Vs. U.S.
40%
45%
50%
55%
60%
65%
70%
75% CA US
SERIES: Homeownership Rates SOURCE: U.S. Census Bureau
MILLENNIAL HOMEOWNERSHIP FALLING
SOURCE: Census Bureau
CALIFORNIA’S HOUSING DELIMMA
• Even with everything (or at least most things) going right, our homeownership market is in trouble…
• The rental market, even with the conversion of 500,000 SFH’s, is still exhibiting inadequate supply
• CA Housing Needs = Minimally 165,000 Units Annually – Regulatory Problem – Impact Fees – Public Attitudes
CA PERMITS UP BUT MORE UNITS NEEDED
2013: 57,496 Units, Up 43.0% from 2012
SERIES: New Housing Permits SOURCE: Construction Industry Research Board
0
50000
100000
150000
200000
250000
300000
350000 Single Family Multi-Family
Household Growth: 220,000-250,000/yr
SERIES: New Housing Permits SOURCE: Construction Industry Research Board
NEW HOUSING PERMITS
California, August. 2014: 5,810 Units, Down 2.1% YTD
0
5,000
10,000
15,000
20,000
25,000
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Single Family Multi-Family
2015 FORECAST
CALIFORNIA HOUSING MARKET FORECAST
SERIES: CA Housing Market Outlook SOURCE: 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)
380 403
0
100
200
300
400
500
600
700
2005 2007 2009 2011 2013 2015f
Th
ou
san
ds
Sales of Existing Detached Homes
$455
$479
$0
$100
$200
$300
$400
$500
$600
2005 2007 2009 2011 2013 2015f
Th
ou
san
ds
Median Price Price
(Thousand)
SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA: DOLLAR VOLUME UP FOR 4TH YEAR
$301
$244
$164
$133 $131 $127 $121 $140
$169 $173 $193
-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 2013 2014p 2015f
$ Volume of Sales Percent Change
% Change $ in Billion
-60%
SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Up 2.7% in 2014, Up 11.3% in 2015
INTERNATIONAL BUYERS MAKE THEIR MARK
1/3 FROM CHINA
Please tell us about your last closed transaction with an international client. What is your client’s country of permanent residence?
3.8%
4.7%
8.3%
14%
35%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
India
Japan
Mexico
Canada
China/Hong Kong
WHY INTERNATIONAL CLIENTS BUY
5%
5%
5%
7%
12%
14%
18%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Investment to acquire legal permenant U.S.resident status
Tired of renting
Affordable price
Desired a better/other location
Changed jobs/relocated
To rent out property
Investment/tax advantages in U.S.
What was your clients’ main reason for buying/selling now in your last closed transaction with an international client?
WHY U.S. CLIENTS BUY
7.0%
7.0%
9.0%
10.0%
12.0%
38.0%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Promotion/raise
Tired of renting
Investment/Tax advantage
Desired better/other location
Favorable price/financing
Price decreases
What was your clients’ main reason for buying/selling now in your last closed transaction with an international client?
INTENDED USE FOR PROPERTY? HOME
4%
27%
38%
30%
0%
2%
7%
91%
0% 20% 40% 60% 80% 100%
Other
Vacation/Second Home
Investment/Rental Property
Primary Residence
US Buyer
International Buyer
What was the intended use of the property in your last closed transaction with an international client?
ALL CASH INTERNATIONAL BUYERS
0%
20%
40%
60%
80%
100%
International buyers Traditional buyers
69%
27%
31%
73%
All cash Obtained financing
SOURCE: 2013 International Client Survey, 2013 Annual Housing Market Survey How did your last international buyer pay for the property?
Working with International Home Buyers in California Thursday, January 29, 2014
2:00 PM - 3:00 PM
To register:
WWW.CAR.ORG/MARKETDATA/VIDEOS
Join us for our next webinar…
MILLENNIALS: TOMORROW’S HOME OWNERS?
OVER 1/3 LIVE WITH THEIR PARENTS
What is your current living situation?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
I rent I live with myparents
I own I live in a dorm Other:
41%
36%
20%
1% 1%
SERIES: 2014 Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MILLENNIALS’ BIGGEST CONCERNS
What are your biggest concerns about home ownership?
Price/Affordability (45%)
Problems with Credit, Mortgages, or Taxes (19%)
Maintenance/Upkeep (14%)
Satisfaction with Home/Location (7%)
Responsibility (4%)
SERIES: 2014 Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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
0%
10%
20%
30%
40%
50%
60%
Positive Negative Neutral N/A Other
50%
34%
8% 4%
4%
MOST MILLENNIALS UNCERTAIN/DOUBTFUL THAT THEY COULD OBTAIN A MORTGAGE
NOW?AMILLENNIAL ETHNICITY
SOURCE: C.A.R. 2014 Millennial Survey Q: 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