2017 Housing Market Perspectives2017 Housing Market Perspectives Santa Barbara A.O.R. February 15,...

2017 Housing Market Perspectives

Santa Barbara A.O.R. February 15, 2017

Leslie Appleton-Young, Chief Economist [email protected]

FREE 45-Hour Online CE Package in 2017 car.org/education/LicenseRenewal

It’s Here! The

1996 1997 1998

2009

2010 2016

• Post-Election Outlook • Economic Update • California Housing Market

Outlook • Santa Barbara Update • 2017 Forecast

Overview

• California Housing Market Outlook • Story remains the same, plus some wild

cards • Lots of challenges locally • Luxury market stalling • People to continue to be priced out

• 2017 Forecast

Overview

• R Party – policy is viewed through the lens of oRealtor business success

• Market/Political Conditions are not YOUR Destiny • There will be enough sales in SB in 2017 for EVERYONE in this room to have a great year

Full Disclosure

Post-Election Outlook

Social Media & You

Do you plan to leave the country if…?

[CATEGORY NAME] [VALUE]



Economic Stimulus Package

• $1 trillion in infrastructure investments over 10 years • $100 billion per year “Rebuild our highways, bridges,

tunnels, airports, schools, hospitals.” • Goal: boost economic growth & grow jobs

• Result: GDP higher… at least short-term • More jobs – more housing demand • Upward pressure on housing prices

Big plans already seeing big changes

• $550 billion

Tax Reform

• Overhaul of the current tax code • Reduction in tax rates: Individual 39.5% to 33% • Corporate tax rate from 35% to15% • Drop from 7 tax brackets to 3 (12%, 25%, 33%) • Increase standard deduction • Eliminate the federal estate and gift taxes • Repeal personal exemptions • Cap itemized deductions • Provide a child care deduction • Manufacturers to elect full expensing of plant and equipment

Putting more money in pockets is good.

• What does that do to the MID? • Good for people’s pocket books, not good for

their wealth • Historically, people don’t save unless they have a

home • Bad for communities and social engagement

What about homeownership?

• Boost spending and aggregate demand • Add much needed infrastructure

• Number already declining • Will California get any after immigration scuffles?

• What does tax reform do to housing here? • Creates more demand for housing • In CA, supply already very tight • That means higher home prices • Higher prices mean less affordability • Brings supply constraints fronts and center

Net effect of fiscal policies

• More demand + full employment means inflation • At full employment, wages start to rise • Wage growth typically passed on to consumers • That means potentially higher inflation

• Tax cuts + more spending increase deficits • Including interest: $7.2 trillion in first decade • Estimated $20.9 trillion by 2036

• More inflation + larger deficits raise rates • Bond holders might demand higher rates of return to purchase • Leads to further inflation & higher rates to finance debt

Secondary effects are medium /long term

Fannie & Freddie Dodd- Frank

• Banks will loosen lending standards & increase mortgage options • Lower credit score requirement (still need about 726) FICO • Less onerous capital requirements on banks • Could open up private mortgage financing • GSEs have been dominating this cycle

• There’s always a but! • Increase in housing demand could push up home prices • Affordability already a significant challenge

• Heighten risks of having another housing and credit bubble • Pendulum swung too far on Dodd-Frank • But, we don’t want to go back to wild west either

Changes to Dodd-Frank Should Help Housing

• Market reactions suggest optimism in the future of the GSEs • Mnuchin came out early saying “Privatize” • Backed off privatization during confirmation hearings

• Reform may not move forward in the next four years • How does this stack up with other priorities? • MBA, others don’t think it makes the short list • Could significantly increase the cost of borrowing • Moody’s estimated increase from 40-94 basis points

Red Flag: What will happen to the GSEs?

https://www.economy.com/getlocal?q=1b7e1c1b-8654-4a8c-a7ea-e86ae760a7c1&app=eccafile

The Fed

• Rates rise with anticipated inflation & fiscal stimulus • More inflation anticipated, core nearly at Fed target • 10-year treasuries already up to 2.5%

• 3 rate hikes in 2017 • Will successor be more hawkish? • Other vacancies could shift the balance to hawks • That would mean higher rates, even above current path

• Continued Fed independence questioned

Not a question of if, but how much/quickly

January 2010 – February 02, 2017

Mortgage Rates: Up ~80bps Post-Election

4.20

3.23

0

1

2

3

4

5

6

FRMARM

4.19 3.20

MONTHLY WEEKLY

SERIES: 30Yr FRM, 5Yr ARM SOURCE: Freddie Mac

Mortgage Payment When Rates Rise

What Will Happen When Mortgage Rates Increase?

$1,740 $1,853

$1,971 $2,091 $2,216

$2,344 $2,475 $2,609

$0

$400

$800

$1,200

$1,600

$2,000

$2,400

$2,800

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

Q3-2016 Median Price $515,940

20% Downpayment

INTEREST RATE

MONTHLY MORTGAGE

SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Qualifying Income When Rates Rise


$93,340 $97,871

$102,555 $107,387 $112,363 $117,476

$122,720 $128,088

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

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


20% Downpayment

INTEREST RATE

Minimum Qualifying Income


Housing Affordability When Rates Rise


34% 32%

30% 28% 27% 25%

23% 21%

0%

10%

20%

30%

40%

50%

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


20% Downpayment

INTEREST RATE

% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT


Trade Policy

Trade reform to bring jobs back to America.

• Withdraw from the Trans-Pacific Partnership (TPP) • Renegotiate NAFTA • Tax imports from Mexico • Declare China a currency manipulator • Increase tariffs on Chinese imports • Industry-specific or product-specific tariffs

Lots of uncertainty

Already Withdrew Rocky start with Mexico so far

? ? ?

Trade reform to bring jobs back to America. • Could impact housing demand locally • Lots of logistics & import/export jobs in the region

Silicon Valley highly dependent on trade

Lots of uncertainty

The Wildcards

Healthcare future uncertain • Potentially 4.6M covered under ACA • That’s just CoveredCA and MediCal • That’s health or& pocketbook issue • Could be a hidden negative for the

economy & housing

Important ? for California

http://www.latimes.com/local/california/la-me-obamacare-trump-california-20161110-story.html

• US: What does deportation of 12M people look like?

• California has the largest number of illegal

immigrants in the United States, with an estimated 2.4 million unauthorized immigrants making up about 6.3 percent of the state’s total population, according to the Pew Research Center.

Important ? for California

http://www.pewhispanic.org/2014/11/18/chapter-1-state-unauthorized-immigrant-populations/



Economic Update

How’s the economy closer to home?

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2005 2007 2009 2011 2013 2015 Q2-11Q4-11Q2-12Q4-12Q2-13Q4-13Q2-14Q4-14Q2-15Q4-15Q2-16Q4-16

Ann

ual P

erce

nt C

hang

e,

Cha

in-ty

pe

(200

9) $

2016: 1.6%; 2016 Q4: 1.9%

GDP: ‘16 Slowest in 5 years; Below 3% for 11 years

ANNUALLY QUARTERLY

2009 Largest Annual Drop since 1946 (-2.8%)

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

Jumping off from a decent starting point

3.5%

GDP 2016-Q3

1.5%

Job Growth December 2016

4.7%

Unemployment December 2016

2.8%

Consumption 2016-Q3

January 2017: 111.8

Consumers More Confident

0

20

40

60

80

100

120

IND

EX, 1

00=1

985

SERIES: Consumer Confidence SOURCE: The Conference Board

US 4.7% (December 2016) & CA 5.2% (December 2016)

Unemployment Rates Near 8-year low

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14% US-CA CA US

SERIES: Unemployment Rate SOURCE: U.S. Bureau of Labor Statistics, CA Employment Development Dept.

Unemployment rate lowest in Bay Area

SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Dept.

19.5%

2.7% 5.0%

0%

5%

10%

15%

20%

25%Unemployment Rate

-8

-6

-4

-2

0

2

4

6

Ann

ual P

erce

nt C

hang

e

California US

CA Jobs Growing Faster Than Nation

SERIES: Total Nonfarm Employment SOURCE: U.S. Bureau of Labor Statistics, CA Employment Development Dept.

CA 2.0% (12/16) US 1.5% (12/16)

Wildly Divergent Job Trends

SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Dept.

2.0%

-1.0%

1.4%

2.0%

4.4%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0% Nonfarm Job Growth (%)

Recent Housing Market Trends

Dec. 2016 Sales: 411,230 Units, +1.7% YTD, -0.6% YTY

2016 California Home Sales: + 1.7%

-

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-16: 411,230

Dec-15: 413,700

Dec. 2016: $509,060, +1.5% MTM, +3.9% YTY

2016 California Median Price +3.9%

$-

$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

Dec-16: $509,060

Dec-15: $489,770

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

Peak vs. 6/16: Southern California

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

RegionLast Cyclical Peak Month

Last Cyclical Peak Price

Jun-16 Median

%Chg From Peak

Orange County Jun-07 $775,420 $759,490 -2.1%

San Diego County May-06 $622,380 $594,430 -4.5%

Ventura Couty Aug-06 $710,910 $674,310 -5.1%

CALIFORNIA May-07 $594,530 $519,440 -12.6%

Riverside County Jun-06 $431,710 $357,810 -17.1%

Los Angeles Metro May-07 $578,700 $477,230 -17.5%

Inland Empire Jun-06 $389,380 $319,100 -18.0%

Los Angeles County Sep-07 $625,810 $502,190 -19.8%

San Bernardino County Aug-06 $350,290 $245,220 -30.0%

Peak vs. 6/16 Median: Central Valley




Jun-16 Median

%Chg From Peak

CALIFORNIA May-07 $594,530 $519,440 -12.6%

Madera County Feb-08 $275,000 $234,720 -14.6%

Sacramento County Aug-05 $394,450 $332,580 -15.7%

Placer County Aug-05 $527,990 $444,590 -15.8%

Kern (Bakersfield) County Jun-06 $299,920 $238,400 -20.5%

Kings County Mar-06 $268,050 $211,110 -21.2%

Tulare County Dec-05 $269,710 $211,820 -21.5%

Fresno County Jun-06 $313,510 $242,240 -22.7%

San Benito County May-05 $671,190 $511,500 -23.8%

Merced County Oct-05 $344,610 $207,580 -39.8%

Peak vs. 6/16 Median: Bay Area




Jun-16 Median

%Chg From Cyclical Peak

San Francisco County May-07 $972,010 $1,350,000 38.9%

San Mateo County Oct-07 $1,020,000 $1,306,250 28.1%

Santa Clara County Apr-07 $865,000 $1,050,000 21.4%

Alameda County May-07 $709,420 $803,000 13.2%

San Francisco Bay Area May-07 $789,250 $841,960 6.7%

Marin County Jun-07 $1,149,390 $1,218,500 6.0%

Sonoma County Jan-06 $650,330 $608,000 -6.5%

Contra Costa County May-07 $698,420 $625,000 -10.5%

CALIFORNIA May-07 $594,530 $519,440 -12.6%

Napa County Aug-06 $729,170 $619,000 -15.1%

Solano County Jun-06 $492,800 $390,000 -20.9%

Dec. 2015: 2.8 Months; Dec. 2016: 2.6 Months

Unsold Inventory Remains LOW

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.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

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

2016: Market Conditions Annual Housing Market Survey

Market Remained Competitive

53% 52%

4.0 4.0

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 2015 2016

% with Multiple Offers # of Multiple offers (Average)

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

Investors Still a Force at Lower Prices


0%

5%

10%

15%

20%

25%

30%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Investment/Rental Property Vacation/Second Home% to Total Sales

Demand for Investment Properties remained at the Lowest level since 2009

International Buyers Dropping

8%

6% 5%

6% 6%

8%

6%

4%

3%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2008 2009 2010 2011 2012 2013 2014 2015 2016Q. 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.?


The share of international buyers dropped to the lowest level in 9 years

City of Santa Barbara

City of Santa Barbara, January 2017: 53 Units -11.1% 2016, -17.2% 2017 YTD, -17.2% YTY

Sales of Single Family Homes

SOURCE: Clarus Market Metrics

City of Santa Barbara, January 2017: $1,350,000 Up 2.7% MTM, Down 8.1% YTY

Median Price of Single Family Homes


City of Santa Barbara, January 2017: 356 Units +0.7% 2016, +20.7% 2017 YTD, +20.7% YTY

For Sale Properties

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.


Goleta

Goleta, January 2017: 9 Units 0% 2016, +12.5% 2017 YTD, +12.5% YTY



Goleta, January 2017: $815,000 Down 0.7% MTM, Up 9.3% YTY



Goleta, January 2017: 27 Units +30.6% 2016, +8.0% 2017 YTD, +8.0% YTY

For Sale Properties



Carpintera

Carpintera, January 2017: 4 Units -19.1% 2016, +100.0% 2017 YTD, +100.0% YTY



Carpintera, January 2017: $807,000 Down 8.2% MTM, Up 8.0% YTY



Carpintera, January 2017: 40 Units +9.0% 2016, +42.9% 2017 YTD, +42.9% YTY

For Sale Properties



Achieving Homeownership in

California

Homeownership Rate 50 Year Lows

63.5

53.2

50

52

54

56

58

60

62

64

66

68

70

Perc

ent

Homeownership Rate, 2005-2016

U.S. California

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

Demand & Desire for Homeownership

Real Estate is Still Considered the Best Long Term Investment

SOURCE: Gallup

Millennials: American Dream is still Important

4% 6%

34% 31%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Not at All Important Of Little Importance Moderately Important Important Very Important

How important is fulfilling the 'American Dream' to you? SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

…And Homeownership is part of it

18% 18% 16%

14% 12%

11% 10%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Owning a home A fulfilling job Having a family Education Seeing the world Helping others Becoming wealthy

Which factors contribute to your ideal of the `American Dream` SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Nearly ½ Renters Plan to Buy a Home

Q. When do you plan to buy your next home?

9.6%

13%

14%

11%

24%

28%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Within a year

In 2 Years

3-5 Years

In 5+ Years

Not sure

No plans to buy

55% of Renters Preparing to Buy a Home

1.0%

9.0%

12.0%

16%

21%

34%

45%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Other

Pre-qualified with a lender

Consulted credit counselor/financial advisor

Spoken to a REALTOR®

Searched for home buying process information online

Searched for homes

No preparations

Q. Have you made any of the following preparations to buy a home? Please select all that apply.

69% of Millennial renters would buy with low-down

No, 31%

Yes, 69%

All Millennial Owners

If You knew you could qualify with lower down-payment, would you start to look for a house? SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Only 19% Know about FHA Loans

Yes, [VALUE]

No, [VALUE]

Are you aware of FHA Loans?

FHA backed loans only require a 3.5% down-payment. SERIES: 2016 Generations / Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

0

50000

100000

150000

200000

250000

300000

350000

Single Family Multi-Family

2015: 95,822 (42,959 sf, 52,863 mf); 2016p: 98,300 total units

“Missing” 65,000 New Units Annually

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

Household Growth:

165,000/yr.

SERIES: New Housing Permits SOURCE: Construction Industry Research Board

The median income in Oakland is $47,000, which translates to $1,175/month for rent, but the average monthly rent in Oakland is $3,000.

Austin: 70% Raleigh: 40% Portland: 30%

Lack of Turnover: Causes and

Consequences

• Long-Time Homeowners are not moving as in the past • Low rate on current mortgage • Low property taxes • Capital gains hit • Where can I afford to go? • Could not qualify for a mortgage today

• Remodel and stay • Are we headed for the “European Model” where children

inherit the home of their parents? • One more thing…Secular decline in marriage

Where is the Inventory?

Fewer Units Turning Over Since the Great Recession

SERIES: Percent of existing single-family homes being sold SOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.

Housing Turnover Rate (Single-Family Homes only)

4.2%

4.8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

CA US

10

0

2

4

6

8

10

12 All Sellers

Years Owned Before Selling: Historic Highs


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

$3.9 Billion through July

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

$ Bi

llions

Year-to-Date Through July

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

Owners Investing in Staying Put ?

SOURCE: California Homebuilding Foundation (CHF)/Construction Industry Research Board (CIRB) Downloaded from Moody’s Analytics

6,919,164

1,940,607

6,527,730

2,674,808

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

SF Owners SF Renters

2000 2005 2010 2015

More Single Family Units Now Rentals

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

Potentially between 400,000 and 700,000 SF Rentals that Used to be Owner-Occupied

Most Have Equity in their Home

Do you have equity in your home?

Yes, 92%

No, 8%

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

Majority Do Not Plan to Sell Home When they Retire

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

Yes, 36%

No, 64%

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

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

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

Yes, they will have worse

opportunities, 52%

No, they will have have

better opportunities,

24%

About the same, 24%

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

Time to talk: ¾ Plan or Have Already Helped Children with Down Payment

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

Yes, I am planning to help, 53% Yes, I have

already helped, 24%

No, 23%

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

The Forecast

U.S. Economic Outlook

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

2011 2012 2013 2014 2015 2016p 2017f

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

Nonfarm Job Growth 1.2% 1.7% 1.7% 1.9% 2.1% 1.8% 1.3%

Unemployment 8.9% 8.1% 7.4% 6.2% 5.3% 4.9% 4.7%

CPI 3.1% 2.1% 1.5% 1.6% 0.1% 1.4% 2.4%

Real Disposable Income, % Change 2.5% 3.2% -1.4% 2.7% 3.4% 2.7% 3.0%

30-Yr FRM 4.5% 3.7% 4.0% 4.2% 3.9% 3.6% 4.4%

California Economic Outlook

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

2011 2012 2013 2014 2015 2016p 2017f

Nonfarm Job Growth 1.1% 2.4% 3.0% 2.2% 2.7% 2.3% 1.9%

Unemployment Rate 11.8% 10.4% 8.9% 7.5% 6.2% 5.5% 5.4%

Population Growth 0.7% 0.7% 0.9% 0.9% 0.9% 0.9% 1.0%

Real Disposable Income, % Change 3.5% 4.7% -1.1% 3.2% 3.6% 3.0% 4.5%

California Housing Market Outlook

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

2011 2012 2013 2014 2015 2016 2017f

SFH Resales (000s) 422.6 439.8 414.9 382.7 409.4 416.3 419.6

% Change 1.4% 4.1% -5.9% -7.8% 7.0% 1.7% 0.8%

Median Price ($000s) $286.0 $319.3 $407.2 $446.9 $476.3 $502.3 $525.4

% Change -6.2% 11.6% 27.5% 9.8% 6.6% 5.4% 4.6%

Housing Affordability Index 53% 51% 36% 30% 31% 31% 28%

30-Yr FRM 4.5% 3.7% 4.0% 4.2% 3.9% 3.6% 4.4%

Sales and Price up in 2016 and in 2017


416.3 419.6

0

100

200

300

400

500

600

700

2005 2007 2009 2011 2013 2015 2017f

Sales of Existing Detached Homes

$502 $525

$0

$100

$200

$300

$400

$500

$600

2005 2007 2009 2011 2013 2015 2017f

Median Price Price

(Thousand) Units

(Thousand)

Dollar Volume Up 7.2% in ‘16, Up 5.4% in ‘17

$301

$244

$164 $133 $131 $127 $121

$140 $169 $171

$195 $209 $220

-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 2014 2015 2016p 2017f

$ Volume of Sales Percent Change

$ in Billion % Change


Conclusions

• Lots of political uncertainty • Economy and housing market doing ok for now, but… • Threats to homeownership in California

• Lack of housing and its effects on affordability • Low turnover rate further restricts supply • High prices and down-payment requirements • Rising interest rates • Future policy changes: GSEs, Mortgage Interest Deduction? • Outmigration to more affordable areas

Fasten your seatbelts!

2017 SPF Book Recommendations

LAY’s Book Recommendations

2017 Housing Market Perspectives2017 Housing Market Perspectives Santa Barbara A.O.R. February 15,...

Documents

Transcript of 2017 Housing Market Perspectives2017 Housing Market Perspectives Santa Barbara A.O.R. February 15,...