Pasadena Foothills Association of Realtors Leslie Appleton ......2017 Forecast Report Card SFH...
Transcript of Pasadena Foothills Association of Realtors Leslie Appleton ......2017 Forecast Report Card SFH...
Pasadena Foothills Association of Realtors
October 25, 2017
Leslie Appleton-Young
Chief Economist & Vice President
FREE 45-Hour Online CE Package in 2017
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2017 Forecast Report Card
SFH Resales (000s)
% Change
Median Price ($000s)
% Change
30-Yr FRM
Housing Affordability Index
U.S. Gross Domestic Product
2016
Actual
416.7
1.8%
$502.3
5.4%
3.6%
31%
1.6%
2017
Forecast
413.0
1.4%
$525.6
4.3%
4.0%
29%
2.2%
2017
Projected
421.9
1.3%
$538.5
7.2%
4.0%
29%
2.1%
•US economic and job growth expanding
•CA economy out-preforming the nation – maybe not
•Rates rising in response to growth & Fed policy
•Affordability challenges for first time & repeat buyers
•Boomers aren’t moving – if they do they lease more often
•Millennials leaving the nest & the state “getting a life”
•Listings & new units remain low wrt trend & demand
•Hang-over - Formerly owner-occupied units now rentals
What to expect in 2018
Macro Economic Outlook
Stronger Economic Growth in Q2 Consumer – Led Economy
3.1%
GDP 2017-Q2
1.2%
Job Growth
Sep 2017
4.2%
Unemployment
Sep 2017
3.3%
Consumption
2017-Q2
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2005 2008 2011 2014 Q3-11 Q2-12 Q1-13 Q4-13 Q3-14 Q2-15 Q1-16 Q4-16
An
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erc
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ha
ng
e,
Ch
ain
-typ
e (
20
09
) $
2016: 1.6% 2017(p) 2.1% 2018(f) 2.3%
Economic Growth
ANNUALLY QUARTERLY
2009 Largest Annual Drop since 1946 (-2.8%)
SERIES: GDPSOURCE: US Dept. of Commerce, Bureau of Economic Analysis
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
200
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2016: 2.7%; 2017 Q2: 3.3%
Consumers Driving the Economy
ANNUAL PERCENT CHANGE
ANNUALLY QUARTERLY
SERIES: Personal Consumption
SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
September 2017: 119.8
Confidence? Holding on to “Trump Bump”
0
20
40
60
80
100
120
140
IND
EX
, 1
00
=1
98
5
SERIES: Consumer ConfidenceSOURCE: The Conference Board
August 2017: 2,456.2
S&P 500: Historic Highs
0
500
1000
1500
2000
2500
3000
Mo
nth
ly A
ve
rag
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January 2010 – October 05, 2017
Mortgage Rates: Surged Post-Election
0
1
2
3
4
5
6
FRM
ARM
3.85
3.18
3.81
3.16
MONTHLY WEEKLY
SERIES: 30Yr FRM, 5Yr ARM
SOURCE: Freddie Mac
California Job Growth Slowing
-8
-6
-4
-2
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4
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California US
SERIES: Total Nonfarm Employment
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
CA 1.6%
US 1.4%
September 2017: US 4.2% & August 2017: CA 5.4%
Extremely Tight Labor Markets
-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
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
MO
NTH
TO
MO
NTH
CH
AN
GES
Recession Job Losses: 1.3 million
Since Jan’10: +2.4 million
California 7 Year Jobs Recovery
SERIES: Total Nonfarm Employment
SOURCE: CA Employment Development Division
Employment By Region
Aug 2017 Aug 2016 Change % Change
Southern California 9,155.0 9,053.8 101.2 1.1%
Bay Area 3,640.4 3,590.3 50.1 1.4%
Central Valley 2,213.8 2,177.6 36.2 1.7%
Central Coast 537.6 529.9 7.7 1.5%
North Central 150.9 145.5 5.4 3.7%
CALIFORNIA 16,777.8 16,512.7 265.1 1.6%
Nonfarm Employment (Thousands)
SERIES: Total Nonfarm EmploymentSOURCE: CA Employment Development Division
-1.1%
-0.4%
0.0%
0.1%
0.2%
0.5%
1.0%
1.2%
1.5%
1.6%
1.8%
2.2%
2.7%
4.0%
6.0%
-2% -1% 0% 1% 2% 3% 4% 5% 6% 7%
Nondurable Goods
Professional, Scientific & Technical Services
Retail Trade
Durable Goods
Transportation, Warehousing & Utilities
Finance & Insurance
Admistrative & Support & Waste Services
Information
Real Estate & Rental & Leasing
Wholesale Trade
Government
Leisure & Hospitality
Health Care & Social Assistance
Educational Services
Construction
Annual Percent Change
Construction Jobs Lead Growth
SERIES: Total Nonfarm Employment By Industry
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
August 2017: CA +1.6%, +265,100 (YTY)
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% 4.4% 4.2%
CPI 2.1% 1.5% 1.6% 0.1% 1.4% 2.0% 2.2%
Real Disposable
Income, % 3.2% -1.4% 2.7% 3.4% 2.7% 2.1% 3.0%
30-Yr FRM 3.7% 4.0% 4.2% 3.9% 3.6% 4.0% 4.3%
SERIES: U.S. Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
California Economic Outlook
2012 2013 2014 2015 2016 2017p 2018f
Nonfarm Job
Growth2.4% 3.0% 2.2% 2.7% 2.3% 1.6% 1.2%
Unemployment
Rate10.4% 8.9% 7.5% 6.2% 5.5% 4.8% 4.6%
CA Population
(Million)38.0 38.4 38.7 39.1 39.4 39.7 40.0
Population
Growth0.7% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8%
Real Disposable
Income, % Change4.7% -1.1% 3.2% 3.6% 3.0% 4.1% 4.3%
SERIES: CA Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Abundance of Uncertainty
Tax Reform
President Trump’s tax reform proposal includes changes that will increase the cost of homeownership. Do you expect its effect to be:
Tax reform passes, Sales Down & Prices Flat
14%
5%
37%
57%
48%
38%
0%
10%
20%
30%
40%
50%
60%
On Prices On Sales
Up Down Same/Flat
SERIES: 2017 EXPO FUN SURVEY
SOURCE: C.A.R.
Impact of Tax Reform
Two Provisions on the Individual Tax Reform Proposal:
- Doubling the Standard Deduction
- Repeal the state and local tax deduction
Impact on the housing market:
- The repeal of the state and local tax deduction increases the cost of
owning a home
- Incentives of using MID as a tax saving tool as a homeowner would be
nullified
- Home values decline as these tax saving advantages vanish
Impact of Tax Reform on the Housing Market
- The proposed tax reform would lead to fewer sales transactions as
the tax incentives of being a homeowner vanish for many who
want to purchase a property. Home sales would decline 3.4
percent if the proposed tax reform were to be implemented
- The decline in home values would also lead to homeowners’
reluctance to put their property on the market and further tighten
up the housing supply condition in California. An estimated 1.5
percent would be lost in the first year after the implementation of
the tax reform.
Incentives for Homeownership Obliterated
• First-time buyers ($100K income, $437K home) - federal tax
incentive to own vs. rent drops from $3,291 to zero in the first year.
• Typical buyers ($120K income, $533.5K home):
$5,782 to $362 in the first year.
• Mid-range buyers ($150K income, $615K home):
$8,099 to $1,334 in the first year.
• High-end buyers/SF/LA Metro Buyers ($200K income, $1.2M home):
$16,615 to $5,725 in the first year.
Tax Expenditures Estimates: CA
173.8
74.5
226.7
34.8
0.0
34.8
0
50
100
150
200
250
Mortgage Interest
Deduction
Property Tax Deduction Mortgage Interest &
Property Tax Coimbined
Deductions for Mortgage Interest and
Property Taxes in California
(FY2018-2027)
Current Law Comprehensive Tax Reform Option
Housing Market Trends
C.A.R. Membership & SF Sales
0
50,000
100,000
150,000
200,000
250,000
0
100,000
200,000
300,000
400,000
500,000
600,000
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Home Sales
Membership
Sales Peaks: 1978, 1988, 2004-05
Membership Peaks: 1980, 1990, 2006
California, Sept. 2017 Sales: 436,920 Units, +2.6% YTD, +1.7% YTY
Sales Stalled With Strong Fundamentals
-
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®
Sep-17:
436,920Sep-16:
429,760
Sales Began 2017 Strong … Growth Slowing
*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
11.8%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17
Year-over-Year % Chg
Avg. year-over-year % chg. = 3%
California, September 2017: $553,490, -2.1% MTM, +7.2% YTY
CA Median Price Up 7.2%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
Sep-17: $553,490Sep-16:
$516,450
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
YTY
% C
hg
. in
Pric
e
Condo Single-Family Homes
Home Price Appreciations Have Moderated Since Mid 2013
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Southern California: Peak vs. Aug 2017
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
RegionPeak
Month
Peak
PriceAug-17
%Chg Fr
Peak
Orange Jun-07 $775,420 $789,000 1.8%
San Diego May-06 $622,380 $605,000 -2.8%
California May-07 $594,530 $565,330 -4.9%
Los Angeles Sep-07 $625,812 $575,130 -8.1%
Ventura Aug-06 $710,910 $640,000 -10.0%
Riverside Jun-06 $431,710 $388,500 -10.0%
Inland Empire Jun-06 $389,380 $341,340 -12.3%
LA Metro May-07 $578,700 $499,970 -13.6%
San Bernardino Aug-06 $350,290 $269,950 -22.9%
Central Coast: Peak vs. Sep-2017
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
RegionPeak
Month
Peak
PriceSep-17
%Chg Fr
Peak
Monterey Aug-07 $777,000 $569,900 -26.7%
San Benito Jun-05 $671,190 $508,500 -24.2%
Santa Barbara Jul-07 $878,120 $707,000 -19.5%
California May-07 $594,530 $549,460 -7.6%
Santa Cruz Oct-07 $865,000 $845,000 -2.3%
San Luis Obispo Oct-05 $619,950 $607,500 -2.0%
Central Valley: Peak v. Current Price
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
RegionPeak
Month
Peak
PriceAug-17
%Chg Fr
Peak
Madera County Feb-08 $275,000 $263,500 -4.2%
California May-07 $594,530 $565,330 -4.9%
San Benito County May-05 $671,190 $600,000 -10.6%
Sacramento County Aug-05 $394,450 $348,000 -11.8%
Placer County Aug-05 $527,990 $462,000 -12.5%
Kings County Mar-06 $268,050 $225,000 -16.1%
Tulare County Dec-05 $269,710 $224,900 -16.6%
San Joaquin County Jun-06 $426,830 $355,000 -16.8%
Fresno County Jun-06 $313,500 $259,000 -17.4%
Stanislaus County Sep-05 $370,100 $294,290 -20.5%
Kern County Jun-06 $299,920 $235,100 -21.6%
Merced County Oct-05 $344,610 $250,000 -27.5%
Glenn County Feb-07 $312,500 $225,000 -28.0%
Bay Area: Peak v. Current Price
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region
Peak
Month
Peak
Price Aug-17%Chg Fr
Peak
San Francisco May-07 $972,010 $1,380,000 42.0%
San Mateo Oct-07 $1,020,000 $1,375,000 34.8%
Santa Clara Oct-07 $865,000 $1,150,000 32.9%
Alameda May-07 $709,420 $867,500 22.3%
Marin Jun-07 $1,149,390 $1,207,120 5.0%
Sonoma Jan-06 $650,330 $625,500 -3.8%
California May-07 $594,530 $565,330 -4.9%
Contra Costa May-07 $698,420 $627,860 -10.1%
Napa Jun-07 $729,170 $654,000 -10.3%
Solano Jun-07 $492,800 $410,000 -16.8%
Note: Not including transactions in foreclosure.
What Recovery Looks Like
97.5%
1.3%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Equity Sales Short Sale REO
Equity Sales Vs. Distressed Sales
SERIES: Distressed Sales, Not Seasonally Adjusted
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
0.7%
Supply
“At some point a supply problem becomes a
demand problem” – Joel Singer
Sept 2016: 3.5 Months; Sept 2017: 3.2 Months
Constrained Supply Defines the Market
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
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
-11.2%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Jan
-15
Ma
r-15
Ma
y-1
5
Ju
l-1
5
Se
p-1
5
No
v-1
5
Jan
-16
Ma
r-16
Ma
y-1
6
Jul-1
6
Se
p-1
6
No
v-1
6
Jan
-17
Ma
r-17
Ma
y-1
7
Ju
l-1
7
Se
p-1
7
Year-over-Year % Chg
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
5
Ma
y-0
6
Jan
-07
Se
p-0
7
Ma
y-0
8
Jan
-09
Se
p-0
9
Ma
y-1
0
Jan
-11
Se
p-1
1
Ma
y-1
2
Jan
-13
Se
p-1
3
Ma
y-1
4
Jan
-15
Se
p-1
5
Ma
y-1
6
Jan
-17
Se
p-1
7
Inventory Index Highest in Millions
2.9 2.6 2.7 2.6 3.0 2.6
3.6 3.6
4.9
9.7
2.9 3.1 3.0 3.1 3.1 3.7 3.3
4.7 4.5
6.4
11.5
3.4
0
2
4
6
8
10
12
14
Aug-17 Aug-16
Turnover Rate Very Low: US & CA
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)
4.6%
5.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
CA US Linear (CA)
CA turnover rate trend
Long-Time Homeowners are not
moving as in the past because:
• Capital gains hit
• Low property taxes
• Low rate on current mortgage
• Demographic shift
• Where can I afford to go?
Affordability
Housing Affordability: 28% Los Angeles
5754 53 52 52 51
48 47 47 47 47 46 45 44 44 43 43 43 4240 39 39 38 36 35 33 31
29 28 27 27 26 26 25 2521 21 19 17 17 17 16 14
12
0
10
20
30
40
50
60
70
2017-Q2: % able to purchase median-priced home
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
California, 1984-2017
Housing Affordability Peaked Q1 2012
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
29%
57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
% O
F H
OU
SEH
OLD
S T
HA
T C
AN
BU
Y A
MED
IAN
-PR
ICED
HO
ME
Annual Quarterly
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
5,000,000
5,500,000
6,000,000
6,500,000
7,000,000
7,500,000
2000 2003 2006 2009 2012 2015
Owner-Occupied (left) Renter-Occupied (right)
California’s Single-Family Housing Stock
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)
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 Underbuilt Counties in California
381,300
174,833 162,740127,542 141,162
95,245 98,149 105,58666,054
44,772
88,134
35,426 44,92318,141
40,43414,901 18,108 31,255
6,349 10,8900
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
New Jobs vs. New Permits (2010-2015)
Jobs
Permits
SOURCE: California Employment Development Department, Construction Industry Research Board
Regional Housing Markets
$856,20010.2% YTY
2.6% YTD
6.5% YTY
1.9 15.0 101.9%$489UII
Months Days
MTM Price
Per Sq Ft
Sales
To List Ratio
Median PriceSales
Bay Area
2017 Bay AreaYTD Sales
2017 Bay AreaMedian Prices YTY
$528,0006.7% YTY
3.4% YTD
4.8% YTY
3.0 20.0 98.9%$301UII
Months Days
MTM Price
Per Sq Ft
Sales
To List Ratio
Median PriceSales
Southern California
2017 Southern CalYTD Sales
2017 Southern CalMedian Prices YTY
Pasadena & LAHousing Market Trends
Pasadena
Pasadena, September 2017: 59 Units
-5.8% 2016 YTD, +0.4% 2017 YTD, -9.2% YTY
Sales of Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Pasadena, September 2017: $1,060,000
Up 11.6% MTM, Up 21.1% YTY
Median Price of Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Pasadena, September 2017: 115 Units
+6.1% 2016 YTD, -23.4% 2017 YTD, -28.6% 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.
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Altadena
Altadena, September 2017: 23 Units
-3.4% 2016 YTD, -14.5% 2017 YTD, -34.3% YTY
Sales of Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Altadena, September 2017: $875,000
Down 0.3% MTM, Up 19.0% YTY
Median Price of Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Altadena, September 2017: 43 Units
-7.3% 2016 YTD, -18.1% 2017 YTD, +16.2% 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.
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
La Canada Flintridge
La Canada Flintridge, September 2017: 17 Units
-1.7% 2016 YTD, -8.5% 2017 YTD, +6.3% YTY
Sales of Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
La Canada Flintridge, September 2017: $1,587,500
Down 10.6% MTM, Down 4.5% YTY
Median Price of Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
La Canada Flintridge, September 2017: 40 Units
-5.6% 2016 YTD, -19.3% 2017 YTD, -25.0% 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.
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q: “How‘s the Market?A: It’s Complicated
2017 Annual HousingMarket Survey
• Started in 1981 – 36 years ago •On-line survey In the field July and August 2017• The survey was sent via email to a random sample of 25,804 REALTORS® throughout California. The sample represented the geographical distribution of C.A.R. membership across the state.
•Asks about closed transactions in Q2 2017•Questionnaire with both multiple choice and open-ended questions. There were 1,303 valid survey responses, equivalent to a response rate of 5.0 percent. The margin of error for this survey was +/- 2.6 percent at a 95 percent confidence level.
Methodology
Who is Buying in California?
31%Age 20 – 37
40%Age 38 – 52
24%Age 53 – 71
4%72 and older
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Age: 45
Who is Selling in California?
11%Age 20 – 37
27%Age 38 – 52
48%Age 53 – 71
14%72 and older
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Age: 57
32% 33%
0%
10%
20%
30%
40%
50%
60% % of Sales Above Asking Price
Long Run Average = 20%
Tight Supply Pushed up Home Prices1/3 Sold Above Asking
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
52%
60%
4.0 4.1
0
1
2
3
4
5
6
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
2005200620072008200920102011201220132014201520162017
% with Multiple Offers
# of Multiple offers (Average)
Market Competitiveness Up in 20176 out of 10 had Multiple Offers
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Competitiveness by Price Range: LA/OC/SD
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
$0 -$300k$301k -
$500k
$501k -
$750k
$751k -
$1000k
$1001 and
upAll Prices
% with Multiple
Offer58.3% 67.2% 71.6% 73.5% 48.2% 62.7%
% of Sales
Above
Asking Price
46.2% 32.3% 33.3% 40.0% 22.6% 33.4%
Days on Market 8 10 13.5 8.5 25 14
77%
59%
50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
SF Bay Area So CA Rest of CA
% of Multiple Offer
… By Region
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
13
15
14
10
0 10 20
California
Other Counties
in CA
So CA
SF Bay Area
Days on Market
59.8%
28.5%
23.8%
0%
10%
20%
30%
40%
50%
60%
70%
SF Bay Area So CA Rest of CA
% of Sales Above
Asking Price
Most Competitive for First-Time Buyers …
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
First-time Buyers Repeat Buyers All Buyers
% with Multiple Offer 68.8% 55.5% 60.4%
% of Sales Above
Asking Price41% 28.8% 32.9%
Days on Market 10 14 13
40%
30% 30%32%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Bay Area So CA Rest of CA California
% of First-Time Buyers
…Partly Because Many of Them Live in the Supply Constraint Bay Area
17%
24%
59%
54%
24%
22%
Repeat Buyers
First-Time Buyers
0% 50% 100%
Where are the buyers?
Bay Area So CA Rest of CA
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Share of 1sTime Buyers Up but Below LR AverageNational Share is 50%
31.7%
0%
10%
20%
30%
40%
50%
% First-Time Home Buyers Long Run Average
Long Run Average = 37.4%
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
International Buyers 3% of Transactions
8%
6%
5%6% 6%
8%
6%
4%
3% 3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Q. Was the buyer an international buyer – a person who was a citizen of another country who wished to purchase residential real estate in the U.S.?
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
The share of international buyers dropped to the lowest level in 9 years
International Buyers: Metro Areas Preferred
3.0%
3.6%
1.1%
3.1%
4.4%
2.2%
0%
1%
2%
3%
4%
5%
% of International Buyers
20%
71%
9%
Where are the properties?
Bay Area So CA Rest of CA
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Cash Outflow Restrictions Had a Negative Effect on the Share of Chinese Buyers
2016
• China (53%)
• Mexico (10%)
• India (10%)
2017
• China (31%)
• Mexico (6%)
• India (9%)
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q. What country did the (international) buyer come from?
Share of Cash Buyers Steady
22%
0%
5%
10%
15%
20%
25%
30%
35%% of All Cash Sales
• One-fifth of buyers paid with all cash
• The share of all cash buyers is virtually unchanged in the last 4 years
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q. Please indicate the type of mortgage.
FHA Loans Lowest since 2007
14.8%
5.8%
0%
10%
20%
30%
40%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
FHA VA
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Investor Buyers Inched Up in 2017; More Flippers in the Market
13.8%
4.1%
0%
5%
10%
15%
20%
25%
30%
199
9
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
201
7
Vacation/Second Home
Investment/Rental Property
% to Total Sales
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Flip Rent
2014: 30%2015: 26%
2016: 20%
2017: 24%
2014: 70%2015: 74%
2016: 80%
2017: 76%
Vs.
Net Cash Gain to Sellers Highest since 2006
$200,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Q. What was the net cash gain or net loss to the seller as a result of this sale?
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sellers Are Not Moving as Often as Before
11
0
2
4
6
8
10
12Years Owned Home Before Selling
Long-Time Homeowners are not
moving as in the past because:
• Capital gains hit
• Low property taxes
• Low rate on current mortgage
• Where can I afford to go?
• Remodel and stay
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sellers Who Planned to Buy Another Home Reached the Highest Level since 2006
54%
0%
10%
20%
30%
40%
50%
60%
70%
80%
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
76%
63%
60%
28%
0% 50% 100%
Millennials
Gen X's
Baby Boomers
Silent
Generations
Sellers Moving out of California: Highest since 2007
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Within the same county 37% 45% 47% 42% 49% 49% 46% 44% 44% 40% 38%
In another county in
California24% 17% 21% 21% 19% 18% 20% 21% 20% 21% 20%
In another state 29% 27% 19% 20% 20% 22% 19% 22% 22% 25% 28%
Out of US 1% 1% 2% 1% 1% 1% 0% 1% 1% 1% 1%
Don't Know/Not sure 9% 10% 12% 16% 10% 10% 15% 13% 13% 13% 14%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Location of Seller’s New Home
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
How Client Found Their Agent
Q. How did your client find and select you to represent them?
0% 5% 10% 15% 20% 25%
Represented Them in Previous Home…
Client was Friend/Relative/Neighbor
Referral from a client
Recommendations of Friends
Refferal from Business Associates
Other
Web page/Internet
Open House
Door-to-Door Farming
Relocation Referral
Walk in /Floor Call
Direct Mail Marketing
Yard Signs
Listing Agent for Home Purchased
Social Media
Telephone Marketing
Print Ads/Newspaper & Magazine
All Buyers
SERIES: 2017 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2017 Forecast
How’s the market? A tad hot.
How would you describe the real estate market in your area today?
37%
20%
43%
Too hot Too cold Just right
SERIES: 2017 EXPO FUN SURVEY
SOURCE: C.A.R.
Prices Up, Sales Flat, Rates Up, Affordability
What do you think will happen for the CA market in 2018?
64%
24%19%
64%
8%7%
30%39%
3%
72%
29%
45%42%
33%
21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Home prices Home Sales Inventory Mortgage interest
rates
Affordability
Up Down Same/Flat
SERIES: 2017 EXPO FUN SURVEY
SOURCE: C.A.R.
2012 2013 2014 2015 2016 2017p 2018f
SFH Resales (000s) 439.8 414.9 382.7 409.4 416.7 421.9 426.2
% Change 4.1% -5.9% -7.8% 7.0% 1.8% 1.3% 1.0%
Median Price
($000s)$319.3 $407.2 $446.9 $476.3 $502.3 $538.5 $561.0
% Change 11.6% 27.5% 9.8% 6.6% 5.4% 7.2% 4.2%
Housing
Affordability Index51% 36% 30% 31% 31% 29% 26%
30-Yr FRM 3.7% 4.0% 4.2% 3.9% 3.6% 4.0% 4.3%
California Housing Market Outlook
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
421.9426.2
0
100
200
300
400
500
600
700
2005 2007 2009 2011 2013 2015 2017p
Un
its
(Th
ou
san
d)
Sales of Existing Detached Homes
Sales and Price up in 2017 and in 2018
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
$539 $561
$0
$100
$200
$300
$400
$500
$600
2005 2007 2009 2011 2013 2015 2017p
Pric
e (
Tho
usa
nd
)
Median Price
CA: Dollar Volume Up 8.6% in 2017, Up 5.2% in 2018
$301
$244
$164
$133 $131 $127 $121 $140
$169 $171
$195 $209
$227 $239
-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 2016 2017p 2018f
$ Volume of Sales Percent Change
$ in Billion % Change
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2017 Challenges & Opportunities &Slow Moving Disasters
•CA Housing Affordability Crisis
•CA Pension Funds
•Boomers: Not prepared for Retirement
•Millennials: Student Loan Debt
•Skewing of the Income Distribution
• Institutional Investor ownership of SFH
• Tax Reform (Not slow anymore)
SMD’s: Slow Moving Disasters
Challenges: Affordability and Supply
What will be the biggest challenge for the housing market in 2018?
50%
36%
6% 6%2%
0%
10%
20%
30%
40%
50%
60%
Lack of
inventory
Lack of
affordability
Increase in
mortgage rates
New brokerage
models (Open
Door, Instant
Offer, etc)
Recession
SERIES: 2017 EXPO FUN SURVEY
SOURCE: C.A.R.
•Up your game – Do YOU.
•What is your WHY? Selling houses or changing lives?
•Revisit: What business are YOU in? Find your niche
•Reconnect: Who are YOUR clients?
•Educate first time-home buyers – Focus on Financial Literacy Become well versed on down payment assistance programs, debt management and improving credit
•Reach out to Boomers
• Think globally – We may be affordable for some
2018 Opportunities
One more thing…
Do you have a pet / Do you consider your pet a part of your family
All Creatures Great and Small
Yes I have a
pet, 63%
No I
don’t,
37%
Yes, my pet is
my family,
92%
No, its just a (special)
animal, 8%
SERIES: 2017 EXPO FUN SURVEY
SOURCE: C.A.R.
4 out of 10 – Pet Drives Moving Decisions
42%
28%
16%13%
No, but I double
down on the treats.
We have a equal,
deliberative process.
They complain, but I
try to ignore it.
My pet makes the
decision for me.
SERIES: 2017 EXPO FUN SURVEY
SOURCE: C.A.R.
If you were to move, would your pets' needs be paramount in your purchase decision.
What about a different kind of animal... Do you live with a Millennial?
Speaking of independence…
Yes, they just make lots of
noise if I don't. 67%
No, they like to
pretend to be …Yes, sigh, I live
with a Millennial,
14%
Nope, I'm FREE!!!!, 86%
SERIES: 2017 EXPO FUN SURVEY
SOURCE: C.A.R.
Do you pay for their cell phone plan?
2017 SPF Book Recommendations
2018 SPF Book Recommendations
The Economy of LoveGive Freely
Receive Graciously
Thank You