09 21-11 forecast2012
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CALIFORNIA HOUSING
MARKET 2012 FORECAST
Leslie Appleton-Young, Chief Economist
Overview
US and California Economies
California Housing Market
CA Regional Housing Markets
2011 Annual Market Survey
2012 Housing Market Forecast
U.S. Economic Outlook
Sovereign
Debt
Crisis in
EuroZone
Oil Price Spikes
2011: A Year of Wild Cards
Arab Uprising
Political
Change
on
Capitol
Hill
Debt Limit
Ceiling &
Downgrade
of US Debt
Stock
Market
Volatility
Gross Domestic Product: Stall Speed
2010: 2.8%; 2011 Q1: 0.4% Q2: 1.0% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
20
00
20
02
20
04
20
06
20
08
20
10
Q2
-10
Q4
-10
Q2
-11
ANNUAL QTRLY
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
Components of GDP:
Consumer Spending Weak; Gov’t Sector Down Quarterly Percent Change
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Consumption Fixed Nonres.
Investment
Net Exports Government
Q3 2010
Q4 2010
Q1 2011
Q2 2011
QUARTERLY PERCENT CHANGE
Consumers Pulling Back
Home Equity & Reverse Wealth Effect
Consumer Spending 2011 Q1: 2.7% Q2: 0.4%
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
-4%
-2%
0%
2%
4%
6%
8%
1Q
-20
00
1Q
-20
01
1Q
-20
02
1Q
-20
03
1Q
-20
04
1Q
-20
05
1Q
-20
06
1Q
-20
07
1Q
-20
08
1Q
-20
09
1Q
-20
10
1Q
-20
11
Unemployment Stubbornly High August 2011
SOURCE: CA Employment Development Division
0%
2%
4%
6%
8%
10%
12%
14%
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CA US
California (12.1%) vs. United States (9.1%)
U.S. Job Growth: Flat in August
SOURCE: US Dept of Labor, Bureau of Labor Statistics
Month-to-Month Changes
Recession Job Losses: 8.4 million
Since Jan’10: +1.8 million
-900,000
-800,000
-700,000
-600,000
-500,000
-400,000
-300,000
-200,000
-100,000
0
100,000
200,000
300,000
400,000
500,000
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California Job Growth Faltering
SOURCE: CA Employment Development Division
Month-to-Month Changes
Recession Job Losses: 1.3 million
Since Jan’10: +188,100
-160000
-140000
-120000
-100000
-80000
-60000
-40000
-20000
0
20000
40000
60000
80000
100000
Ja
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Where are California’s Jobs?
Employment Trends:
Construction & Financial Biggest Losers
SOURCE: California Association of REALTORS®
Industry 2005 Jul-11Year to
Date
Mining and Logging 23,600 27,600 4,000
Construction 905,300 567,300 -338,000
Manufacturing 1,502,600 1,257,600 -245,000
Trade, Transportation & Utilities 2,822,100 2,641,500 -180,600
Information 473,600 455,400 -18,200
Financial Activities 920,300 755,800 -164,500
Professional & Business Services 2,160,700 2,136,200 -24,500
Educational & Health Services 1,593,400 1,837,000 243,600
Leisure & Hospitality 1,475,200 1,531,600 56,400
Other Services 505,500 484,500 -21,000
Government 2,420,200 2,380,200 -40,000
TOTAL 14,802,500 14,074,700 -727,800
INDEX, 100=1985
Consumer Confidence Slipping
Lowest Since April ‘09
August 2011: 44.5
20
40
60
80
100
120
140
160
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Source: National Federation of Independent Business
Crisis of Confidence:
Small Business Optimism Down
Consumer Prices Low but Heading Higher
CPI August 2011: All Items +3.8% YTY; Core +2.0% YTY
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
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All Items
Core
PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984
Housing
SOURCE: California Association of REALTORS®
California vs. U.S. Sales
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
US Home Sales CA Home Sales
SOURCE: California Association of REALTORS®
California vs. U.S. Median Price
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
US Median Price CA Median Price
Housing Affordability: Records Highs
California Vs. U.S.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1
20
00
Q3
20
00
Q1
20
01
Q3
20
01
Q1
20
02
Q3
20
02
Q1
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Q3
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Q1
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Q3
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Q1
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Q3
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Q1
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Q3
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Q1
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Q1
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Q3
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Q1
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Q3
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09
Q1
20
10
Q3
20
10
Q1
20
11
CA US
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
% OF HOUSEHOLDS THAT CAN BUY
CA Underwater Mortgages
SOURCE: CoreLogic
30.2%
4.6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Q4
-20
09
Q1
-20
10
Q2
-20
10
Q3
-20
10
Q4
-20
10
Q1
-20
11
Q2
-20
11
Negative Equity Share in CA Near Negative Equity Share in CA
Monetary Policy
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
20
09
.01
20
09
.04
20
09
.07
20
09
.10
20
10
.01
20
10
.04
20
10
.07
20
10
.10
20
11
.01
20
11
.04
20
11
.07
8.4
.11
8.2
5.1
1
9.1
5.1
1
FRM ARM
MONTHLY WEEKLY
Mortgage Rates @ Historical Lows
Debt Down Grade Ignited Flight to Quality
SOURCE: Federal Home Loan Mortgage Corporation
Classic Liquidity Trap: Consumers Deleveraging
Low Rates and Low Borrowing
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
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FRM
ARM
Federal Funds
Fiscal Policy
US Deficit Highest in Decades 2010: 11% of GDP (Revenues – Expenses)
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
19
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66
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98
20
00
20
02
20
04
20
06
20
08
20
10
Deficit as a % of GDP
Source: US Treasury, BEA, compiled by C.A.R.
Note: Positive = Surplus
US Debt Jumped as Government
Responded to Financial Crisis 2010: 93% of GDP
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
19
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98
20
00
20
02
20
04
20
06
20
08
20
10
Debt as a % of GDP
Source: US Treasury, compiled by C.A.R.
Obama Jobs Proposal
What:
$450 Billion stimulus: Tax cuts ($250B) and infrastructure spending ($200B)
Why:
Economy is stalled/Avoid double-dip
Zero job growth in August/high unemployment
Stabilize confidence: consumer, business, investor
How:
Increase taxes on the rich
Entitlement Reform
Tax Reform
Federal Issues – Critical Concerns
High-cost Loan Limit - expires 10/1/11
Future of Fannie and Freddie in flux - Increase
guarantee fee likely
FHA targeted for market share drop
Tax Reform on the horizon – MID?
QRM (Qualified Residential Mortgage)
20% Down – Is the future of the 30 year
mortgage in doubt?
U.S. Economic Outlook
• 2005 2006 2007 2008 2009 2010 2011f 2012f
US GDP 3.1% 2.7% 2.0% 0.0% -2.6% 2.9% 1.7% 2.0%
Nonfarm Job
Growth1.7% 1.8% 1.1% -0.6% -4.4% -0.7% 1.0% 0.9%
Unemployment 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 9.0% 8.9%
CPI 3.4% 3.2% 2.8% 3.8% -0.4% 1.6% 3.2% 2.3%
Real Disposable
Income, %
Change
1.3% 4.0% 2.2% 0.5% 0.9% 1.4% 1.7% 1.5%
SOURCE: California Association of REALTORS®
Forecast Date: September 2011
California Economic Outlook
• 2005 2006 2007 2008 2009 2010 2011f 2012f
Nonfarm Job
Growth1.8% 1.7% 0.8% -1.3% -6.0% -1.4% 1.5% 2.1%
Unemployment
Rate5.4% 4.9% 5.4% 7.2% 11.4% 12.4% 12.0% 11.2%
Population
Growth1.2% 1.1% 1.1% 1.2% 1.1% 0.9% 0.9% 0.9%
Real Disposable
Income, %
Change
1.3% 3.4% 1.5% 0.1% -2.2% 1.6% 1.5% 2.0%
SOURCE: California Association of REALTORS®
Forecast Date: September 2011
California Housing Market
California Sales of Existing Homes
and Median Price
Housing Cycle Comparisons 1970- 2011 UNITS/MEDIAN PRICE $
SOURCE: California Association of REALTORS®
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
19
70
19
72
19
74
19
76
19
78
19
80
19
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19
84
19
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19
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20
00
20
02
20
04
20
06
20
08
20
10
Sales of Existing Detached Homes Median Price
-61% -25%
-44%
Dollar Volume of Sales Down 5% in 2011, Up 3% in 2012
$129
$327
$150 $143 $147
26%
16%
-19%
-27%
-22%
-2% -1.0%-5%
3%
24%
37%
2%
$0
$50
$100
$150
$200
$250
$300
$350
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
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20
09
20
10
20
11
20
12
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
$ Volume of Sales Percent Change% Change $ in Billion
SOURCE: California Association of REALTORS®
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
California, August 2011 Sales: 497,390 Units, Down 0.4% YTD, Up 10.2% YTY
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan
-00
Ju
l-00
Jan
-01
Ju
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Jan
-02
Ju
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Jan
-03
Ju
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Jan
-04
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-05
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-06
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-07
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Jan
-08
Ju
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-09
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-10
Ju
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Jan
-11
Ju
l-11
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence INDEX UNITS
SOURCE: California Association of REALTORS®; The Conference Board *Sales are seasonally adjusted and annualized
Median Price of Existing
Detached Homes
P: May-07
$594,530
T: Feb-09
$245,230
-59% from
peak
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000Jan
-00
Jan
-01
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
Jan
-10
Jan
-11
California, August 2011: $297,060, Down 7.4% YTY
SOURCE: California Association of REALTORS®
Unsold Inventory Index
California, August 2011: 5.0 Months
0
2
4
6
8
10
12
14
16
18
20
Ja
n-8
8
Ja
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9
Ja
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1
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SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MONTHS
Price Range (Thousand) Aug-10 Jul-11 Aug-11
$1,000K+ 11.1 9.2 9.1
$750-1000K 7.0 6.9 6.2
$500-750K 6.4 6.3 5.6
$300-500K 5.7 5.6 5.2
$0-300K 4.8 5.1 4.6
Unsold Inventory Index (Months)
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Unsold Inventory By Price Range
Jan 2005 – August 2011
0
5
10
15
20
25
30
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$0 - 300K
$300-500K
$500-750K
$750-1000K
$1,000K+-
All
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MONTHS
Market Breakdown:
Equity v. Distressed
Sales
SOURCE: California Association of REALTORS®
24.7%
19.3%
44.5%
25.2%
17.5%
42.9%
24.4%
18.9%
43.7%
0%
20%
40%
60%
REOs Short Sales Distressed Sales
Aug-10 Jul-11 Aug-11
Share of Distressed Sales to Total Sales
Tight Supply of Inventory
for REO Sales
0
1
2
3
4
5
6
7
8
9
Equity Sales REO Sales Short Sales
5.7
2.6
8.1
Aug-11Unsold
Inventory Index
(Months)
SOURCE: California Association of REALTORS®
Distressed Sales: Bay Area (Percent of Total Sales)
0%
20%
40%
60%
80%
100%
MarinNapa
SanMateo
SantaClara Solano
Sonoma
27%
48%
25% 31%
71%
43%
Aug-11
SOURCE: California Association of REALTORS®
REO & Short Sales: Bay Area (Percent of Total Sales)
0%
20%
40%
60%
80%
100%
MarinNapa
SanMateo
SantaClara Solano
Sonoma
13% 28%
11% 10%
45%
24%
15%
20%
15% 21%
26%
18%
Aug 2011
Short Sales
REO Sales
SOURCE: California Association of REALTORS®
Distressed Sales: Southern CA (Percent of Total Sales)
0%
20%
40%
60%
80%
100%
LosAngeles Orange
RiversideSan
Bernardino San Diego
44%
33%
62% 64%
27%
Aug-11
SOURCE: California Association of REALTORS®
0%
20%
40%
60%
80%
100%
LosAngeles Orange
RiversideSan
Bernardino San Diego
20%
12% 35% 49%
19%
24%
20%
26% 14%
8%
Aug 2011
Short Sales
REO Sales
REO & Short Sales: Southern CA (Percent of Total Sales)
SOURCE: California Association of REALTORS®
0%
20%
40%
60%
80%
100%
MaderaMerced
San BenitoSacramento
Kern
73%
59% 67%
62% 60%
Aug-11
Distressed Sales: Central Valley (Percent of Total Sales)
SOURCE: California Association of REALTORS®
0%
20%
40%
60%
80%
100%
MaderaMerced
San BenitoSacramento
Kern
67%
36% 37%
38% 41%
7%
23% 30% 24% 19%
Aug 2011
Short Sales
REO Sales
REO & Short Sales: Central Valley (Percent of Total Sales)
SOURCE: California Association of REALTORS®
0%
20%
40%
60%
80%
100%
59%
42%
31%
64% 62%
45%
35%
48% 56%
Aug-11
Distressed Sales: Rest of California (Percent of Total Sales)
SOURCE: California Association of REALTORS®
REO & Short Sales: Rest of California (Percent of Total Sales)
0%
20%
40%
60%
80%
100%
48%
34% 25%
57%
36% 32%
15%
39% 51%
11%
8%
7%
7%
25%
13%
20%
9% 5%
Aug 2011
Short Sales
REOs
NTS: 24,260, -16.9% YTD • NOD: 32,338, -21.5% YTD
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
Ja
n-0
7
Ma
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7
Ma
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7
Ju
l-0
7
Se
p-0
7
No
v-0
7
Ja
n-0
8
Ma
r-0
8
Ma
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Ju
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8
Se
p-0
8
No
v-0
8
Ja
n-0
9
Ma
r-0
9
Ma
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9
Ju
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9
Se
p-0
9
No
v-0
9
Ja
n-1
0
Ma
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0
Ma
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0
Ju
l-1
0
Se
p-1
0
No
v-1
0
Ja
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1
Ma
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1
Ma
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Ju
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1
Notice of Trustee Sale - Counts Notice of Defaults - Counts
SOURCE: ForeclosureRadar.com
6 Month Average:
NTSs: 23,806
NODs: 23,625
California Foreclosure Filings August 2011
REO: -12.2% YTD • 3rd Party: -4.1% YTD • Cancel: -19.7% YTD
0
5,000
10,000
15,000
20,000
25,000
30,000
Ja
n-0
7
Ap
r-0
7
Ju
l-0
7
Oc
t-0
7
Ja
n-0
8
Ap
r-0
8
Ju
l-0
8
Oc
t-0
8
Ja
n-0
9
Ap
r-0
9
Ju
l-0
9
Oc
t-0
9
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Oc
t-1
0
Ja
n-1
1
Ap
r-1
1
Ju
l-1
1
REOs Sold to 3rd Party Cancellations
SOURCE: ForeclosureRadar.com
6 Month Average:
REO: 10,880
3rd Party: 3,616
Cancelled: 14,447
CA Foreclosure Outcomes August 2011
CA Foreclosure Inventories August 2011
Preforeclosure: -17.5% YTD • Schedule for Sale: -17.8% YTD •
Bank Owned: 7.0% YTD
0
50,000
100,000
150,000
200,000
Ja
n-0
7
Ap
r-0
7
Ju
l-0
7
Oc
t-0
7
Ja
n-0
8
Ap
r-0
8
Ju
l-0
8
Oc
t-0
8
Ja
n-0
9
Ap
r-0
9
Ju
l-0
9
Oc
t-0
9
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Oc
t-1
0
Ja
n-1
1
Ap
r-1
1
Ju
l-1
1
Preforeclosure Scheduled for Sale Bank Owned
SOURCE: ForeclosureRadar.com
6 Month Average:
Preforeclosure: 115,742
Schedule for Sale:
105,138
Bank Owned: 108,635
San Jose
Preforeclosure: 1,367 • Auction: 2,166 •
Bank Owned: 617
Source: ForeclosureRadar.com as of 08/19/11
Santa Clara Preforeclosure: 86 • Auction: 131 • Bank Owned: 41
Source: ForeclosureRadar.com as of 08/19/11
Palo Alto
Preforeclosure: 17 • Auction: 21 • Bank Owned: 4
Source: ForeclosureRadar.com as of 08/11/11
San Francisco
Preforeclosure: 525 • Auction: 681 • Bank Owned: 179
Source: ForeclosureRadar.com as of 08/11/11
South Lake Tahoe
Preforeclosure: 113 • Auction: 112 • Bank Owned: 77
Source: ForeclosureRadar.com as of 08/11/11
Sacramento Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560
Source: ForeclosureRadar.com as of 08/19/11
Stockton
Preforeclosure: 895 • Auction: 1,093 • Bank Owned: 691
Source: ForeclosureRadar.com as of 08/11/11
Los Angeles
Preforeclosure: 2,975 • Auction: 4,659 • Bank Owned: 1,331
Source: ForeclosureRadar.com as of 09/19/2011
Anaheim Preforeclosure: 498 • Auction: 667 • Bank Owned: 219
Source: ForeclosureRadar.com as of 09/14/11
Irvine Preforeclosure: 262 • Auction: 360 • Bank Owned: 92
Source: ForeclosureRadar.com as of 09/14/11
Newport Beach Preforeclosure: 124 • Auction: 154 • Bank Owned: 18
Source: ForeclosureRadar.com as of 09/14/11
San Diego
Preforeclosure: 2,016 • Auction: 2,001 • Bank Owned: 797
Source: ForeclosureRadar.com as of 09/19/2011
Commercial Market
Commercial Outlook
Industrial
US Vacancy Rate 2011-2013: 13.0, 12.2%, 10.0%
Better in LA, Orange County, San Bernardino,
San Diego, and Oakland than elsewhere in US
Need gains in trade and mfg to improve
Retail
US Vacancy Rate 2011-2013: 13.0%, 12.3%,
11.5%
Vacancy rates lower in most CA metro areas,
except Sacramento
Fundamentals weak across markets of the state,
need increased consumer spending to reverse
trend
Commercial Outlook
Office
US Vacancy Rate 2011-2013: 16.6%, 16.4%,
16.0%
Weak markets because of job losses across
many sectors
SF and LA outperforming the US
Multi-Family US Vacancy Rate 2011-2013: 5.6, 4.7%, 4.4%
All CA metro areas outperform US averages
Push from problems in owner-occupied sector
Regional Housing
Markets
Northern California
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Northern CA, August 2011: 1,242 Units, Up 9.3% YTD, Up 24.6% YTY
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Ja
n-9
7
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
Ja
n-1
0
Ja
n-1
1
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence INDEX UNITS
SOURCE: California Association of REALTORS®;
The Conference Board SOURCE: California Association of REALTORS®; The Conference Board
Home Sales in Northern California
0
50
100
150
200
250
300
350
400
450
Butte Humbolt Lake
County
Paradise Placer
County
Shasta Siskiyou
County
South
Lake
Tahoe
Tahoe
Sierra
Tehama
Aug-10 Aug-11
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes
Northern CA, August 2011: $223,890, Down 11.5% YTY
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Ja
n-9
7
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
Ja
n-1
0
Ja
n-1
1
SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
Butte $243,420 $196,430 $201,320 2.5% -17.3%
Humbolt $252,780 $232,999 $223,863 -3.9% -11.4%
Lake County $132,857 $118,888 $123,636 4.0% -6.9%
Paradise $194,999 $134,999 $163,333 21.0% -16.2%
Placer County $292,499 $264,383 $266,233 0.7% -9.0%
Shasta $171,176 $154,705 $162,917 5.3% -4.8%
Siskiyou County $130,000 $130,000 $116,666 -10.3% -10.3%
South Lake Tahoe $295,454 $238,888 $338,889 41.9% 14.7%
Tahoe Sierra $474,999 $397,221 $450,000 13.3% -5.3%
Tehama $127,500 $131,428 $123,333 -6.2% -3.3%
Y-t-YRegion Aug-10 Jul-11 Aug-11 M-t-M
Median Price of Existing Detached Homes
Northern California
SOURCE: California Association of REALTORS® SOURCE: California Association of REALTORS®
Northern Wine Country
Northern Wine Country, Aug. 2011:
620 Units, Up 3.2% YTD, Up 17.2% YTY
0
100
200
300
400
500
600
700
800
900
1000
Jan
-90
Jan
-91
Jan
-92
Jan
-93
Jan
-94
Jan
-95
Jan
-96
Jan
-97
Jan
-98
Jan
-99
Jan
-00
Jan
-01
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
Jan
-10
Jan
-11
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence INDEX UNITS
SOURCE: California Association of REALTORS®; The Conference Board
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Home Sales in Northern Wine Country
0
50
100
150
200
250
300
350
400
450
500
Mendocino Napa Sonoma
Aug-10 Aug-11
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes Northern Wine Country, August 2011:
$330,070, Down 12.5% YTY
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Jan
-90
Jan
-91
Jan
-92
Jan
-93
Jan
-94
Jan
-95
Jan
-96
Jan
-97
Jan
-98
Jan
-99
Jan
-00
Jan
-01
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
Jan
-10
Jan
-11
SOURCE: California Association of REALTORS®
Mendocino 258,330$ 214,290$ 201,920$ -5.8% -21.8%
Napa 394,230$ 334,780$ 354,760$ 6.0% -10.0%
Sonoma 378,830$ 333,490$ 339,200$ 1.7% -10.5%
Y-t-YRegion Aug-10 Jul-11 Aug-11 M-t-M
Northern Wine Country
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes
Bay Area
Bay Area, August 2011: 3,895 Units, Up 0.5% YTD,
Up 12.1% YTY
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Ja
n-0
0
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
Ju
l-0
6
Ja
n-0
7
Ju
l-0
7
Ja
n-0
8
Ju
l-0
8
Ja
n-0
9
Ju
l-0
9
Ja
n-1
0
Ju
l-1
0
Ja
n-1
1
Ju
l-1
1
0
20
40
60
80
100
120
140
160Sales Consumer Confidence
INDEX UNITS
SOURCE: California Association of REALTORS®; The Conference Board
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Home Sales in Bay Area Counties
0
200
400
600
800
1000
1200
1400
Alameda Contra
Costa
(Central
County)
Marin Napa San
Francisco
San Mateo Santa
Clara
Solano Sonoma
Aug-10 Aug-11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
Bay Area, August 2011: $498,190, Down 9.2% YTY
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000J
an
-00
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
Ju
l-0
6
Ja
n-0
7
Ju
l-0
7
Ja
n-0
8
Ju
l-0
8
Ja
n-0
9
Ju
l-0
9
Ja
n-1
0
Ju
l-1
0
Ja
n-1
1
Ju
l-1
1
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Bay Area Counties
Alameda 515,620$ 462,890$ 468,900$ 1.3% -9.1%
Contra Costa (Central County) 670,450$ 618,420$ 607,310$ -1.8% -9.4%
Marin 794,120$ 761,030$ 806,550$ 6.0% 1.6%
Napa 394,230$ 334,780$ 354,760$ 6.0% -10.0%
San Francisco 675,780$ 648,330$ 632,270$ -2.5% -6.4%
San Mateo 780,000$ 729,900$ 742,000$ 1.7% -4.9%
Santa Clara 625,000$ 607,000$ 595,000$ -2.0% -4.8%
Solano 207,090$ 190,560$ 197,880$ 3.8% -4.4%
Sonoma 378,830$ 333,490$ 339,200$ 1.7% -10.5%
Aug-11 M-t-M Y-t-YCounty Aug-10 Jul-11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
Central Valley Region
0
200
400
600
800
1000
1200
1400
1600
1800
Fresn
oKer
n (B
aker
sfie
ld)
Kin
gs County
Mad
era
Mer
ced
Pla
cer C
ounty
Sac
ram
ento
San
Ben
ito
Tulare
Aug-10 Aug-11
Home Sales in Central Valley Region
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Fresno $149,880 139,470$ 145,730$ 4.5% -2.8%
Kern (Bakersfield) $142,700 139,900$ 135,000$ -3.5% -5.4%
Merced $121,870 113,080$ 126,670$ 12.0% 3.9%
Sacramento $186,750 168,060$ 167,040$ -0.6% -10.6%
Y-t-YCounty Aug-10 Jul-11 Aug-11 M-t-M
Median Price of Existing Detached Homes Central Valley Regions
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Fresno 149,880$ 139,470$ 145,730$ 4.5% -2.8%
Kern (Bakersfield) 142,700$ 139,900$ 135,000$ -3.5% -5.4%
Kings County 168,570$ 114,290$ 130,000$ 13.7% -22.9%
Madera 142,500$ 92,500$ 128,750$ 39.2% -9.6%
Merced 121,870$ 113,080$ 126,670$ 12.0% 3.9%
Placer County 292,500$ 264,380$ 266,230$ 0.7% -9.0%
Sacramento 186,750$ 168,060$ 167,040$ -0.6% -10.6%
San Benito 280,000$ 242,500$ 239,900$ -1.1% -14.3%
Tulare 138,420$ 114,230$ 124,680$ 9.1% -9.9%
Y-t-YCounty Aug-10 Jul-11 Aug-11 M-t-M
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Central Valley Regions
Central Coast
Central Coast, Aug. 2011 Sales: 2,296 Units, Up 2.1% YTD,
Up 18.5% YTY
0
100
200
300
400
500
600
700
800
900
1000
1100
Ja
n-9
8
Ju
l-9
8
Ja
n-9
9
Ju
l-9
9
Ja
n-0
0
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
Ju
l-0
6
Ja
n-0
7
Ju
l-0
7
Ja
n-0
8
Ju
l-0
8
Ja
n-0
9
Ju
l-0
9
Ja
n-1
0
Ju
l-1
0
Ja
n-1
1
Ju
l-1
1
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence INDEX UNITS
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Home Sales in Central Coast Region
0
50
100
150
200
250
300
MontereyAtascadero Paso
Robles
Pismo
Coast
San Luis
Obispo
Lompoc
Valley
Santa
Barbara
Santa
Maria
Aug-10 Aug-11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Central Coast, August 2011: $335,710, Down 5.1% YTY
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
$600,000
$650,000
$700,000
$750,000J
un
-00
De
c-0
0
Ju
n-0
1
De
c-0
1
Ju
n-0
2
De
c-0
2
Ju
n-0
3
De
c-0
3
Ju
n-0
4
De
c-0
4
Ju
n-0
5
De
c-0
5
Ju
n-0
6
De
c-0
6
Ju
n-0
7
De
c-0
7
Ju
n-0
8
De
c-0
8
Ju
n-0
9
De
c-0
9
Ju
n-1
0
De
c-1
0
Ju
n-1
1
SOURCE: California Association of REALTORS®
Monterey 257,760$ 255,770$ 263,160$ 2.9% 2.1%
Atascadero 268,750$ 268,750$ 309,091$ 15.0% 15.0%
Paso Robles 295,832$ 306,250$ 277,083$ -9.5% -6.3%
Pismo Coast 407,692$ 364,515$ 419,444$ 15.1% 2.9%
San Luis Obispo 378,124$ 430,000$ 371,428$ -13.6% -1.8%
Lompoc Valley 250,000$ 225,000$ 205,000$ -8.9% -18.0%
Santa Barbara 851,190$ 833,330$ 742,420$ -10.9% -12.8%
Santa Maria 250,000$ 210,290$ 223,530$ 6.3% -10.6%
Monterey County
San Luis Obispo County
Santa Barbara County
Y-t-YRegion Aug-10 Jul-11 Aug-11 M-t-M
Median Price of Existing Detached Homes
SOURCE: California Association of REALTORS®
Southern California Region
Southern California August 2011 Sales: 11,229 Units,
Down 4.0% YTD, Up 8.1% YTY
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
Ja
n-1
0
Ja
n-1
1
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
Sales Consumer Confidence INDEX UNITS
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Home Sales in Southern CA Regions
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Los
Angeles
Orange Riverside San
Bernardino
San Diego Ventura Santa
Barbara
Ventura
Aug-10 Aug-11
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes
Southern CA, August 2011: $294,140, Down 6.3% YTY
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
$600,000
$650,000
Ja
n-0
0
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
Ju
l-0
6
Ja
n-0
7
Ju
l-0
7
Ja
n-0
8
Ju
l-0
8
Ja
n-0
9
Ju
l-0
9
Ja
n-1
0
Ju
l-1
0
Ja
n-1
1
Ju
l-1
1
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Los Angeles $336,420 $317,060 $312,900 -1.3% -7.0%
Orange $561,900 $551,510 $508,910 -7.7% -9.4%
Riverside $208,120 $200,910 $202,060 0.6% -2.9%
San Bernardino $144,210 $135,150 $135,030 -0.1% -6.4%
San Diego $384,700 $375,330 $369,390 -1.6% -4.0%
Ventura $434,480 $421,870 $424,400 0.6% -2.3%
Santa Barbara $536,290 $418,750 $421,430 0.6% -21.4%
Y-t-YCounty Aug-10 Jul-11 Aug-11 M-t-M
Southern California Region
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
2011 Annual Housing
Market Survey
20% 20%
59%
0%
20%
40%
60%
REOs Short Sales Equity Sales
2008 2009 2010 2011
Q. Was the property purchased/sold as a
foreclosure, REO, short sale, or none of the above?
2 in 5 Homes Sold Were
Distressed Properties
Equity vs. REO vs. Short Sales
Equity Sales REO Sales Short Sales
Share of Total Sales 58.7% 19.7% 20.2%
Median Home Price $431,000 $240,000 $287,000
Square Footage 1,783 1,500 1,600
Price / SF $250 $112 $175
Sales-to-List Price Ratio 95.9% 98.0% 95.9%
% of Sales With Multiple Offers 35.2% 58.3% 57.5%
Avg. Number of Offers 3.0 3.0 3.6
% of All Cash Sales 25.5% 34.0% 23.3%
Days on MLS 67 50 141
Days in Escrow 35 35 45
1 in 3 Sellers Sold Because They
Were in Distress
0%
5%
10%
15%
20%
25%
30%
35%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
30% Sold due to foreclosure/Short sale/Default
Q. What was the single most important reason for
selling/buying the property?
Sellers with a Net Cash Loss
21.8%
0%
5%
10%
15%
20%
25%
30%
35%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Q. What was the net cash gain or net loss to
the seller as a result of this sale?
Long Run Average = 11.2%
Net Cash to Sellers
$0
$50,000
$100,000
$150,000
$200,000
$250,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$75,000
Median
Q. What was the net cash gain or net loss to the seller as a result of this sale?
0%
1%
2%
3%
4%
5%
6%
7%
8%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0
2
4
6
8
10
12
14
16Med. Price DiscountMed. Weeks on MLS
Q. 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?
3.9%, 10.5 weeks
Median Price Discount &
Weeks On Market
Multiple Offers
0%
10%
20%
30%
40%
50%
60%
2000 2002 2004 2006 2008 2010
0
1
2
3
4
5
6
% with M ult iple Offers # of M ult iple offers (Average)
Proportion of Sellers Planning to
Repurchase
0%
10%
20%
30%
40%
50%
60%
70%
80%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Q. Is the seller planning on purchasing another home?
Reasons Sellers Not Planning to
Buy Another Home
Q. Why is the seller not planning to purchase
another home?
40.0%
2.7%
4.7%
4.9%
5.7%
10.9%
11.4%
19.8%
0% 10% 20% 30% 40% 50%
Seller is a lender/bank
Seller prefers to have less financial obligation
Poor credit background
Lack of cash for down payment
Out of work/unemployment
Decide to live with family/friends
Waiting for market to bottom
Other
Reasons For Selling All Home Sellers
0% 5% 10% 15% 20% 25% 30% 35%
Foreclosure/Short
Sale/Default
Change in Family Status
Retirement/Move to
Retirement Community
Investment/ Tax
Consderations
Desired Better Location
Desired Smaller Home
Changed Jobs
Desired Larger Home
Other
Q. What was the single most important reason for selling/buying the property?
Cash Sales on the Rise
0%
5%
10%
15%
20%
25%
30%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
% of All Sales
Buyers Who Bought for
Investment/Tax Considerations
Dipped Slightly
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
17% Long Run Average = 12.1%
Q. What was the single most important reason for selling/buying the property?
Investments & Second/
Vacation Homes
0%
5%
10%
15%
20%
25%
17%
7%
Investment/Rental Property Vacation/Second Home
Foreign Buyers
8%
5%6%6%
0%
2%
4%
6%
8%
10%
2008 2009 2010 2011
% of Foreign Buyers
Q. Was the buyer a foreign buyer?
7.06.0
0
2
4
6
8
10
12
14
All Sellers Second Home and Investment Home Sellers
Years Owned Home Before Selling
(All Sellers and Second Home/Investment Home Sellers
California Housing
Market Forecast
Forecast Progress Report
2010
Projected
October
2010
2010 Actual
2011
Forecast
October
2010
2011
Projected
SFH Resales
(000s)492.0 491.5 502.0 491.1
% Change -10.0% -10.1% 2.0% -0.1%
Median Price
($000s)$306.5 $303.1 $312.5 $291.0
% Change 11.5% 10.2% 2.0% -4.0%
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Forecast Date: September 2011 vs October 2010
California Housing Market Outlook
2005 2006 2007 2008 2009 2010 2011f 2012f
SFH Resales
(000s)625.0 477.5 346.9 441.8 546.9 491.5 491.1 496.2
% Change 0.03% -23.6% -27.3% 27.3% 23.8% -10.1% -0.1% 1.0%
Median
Price
($000s)
$522.7 $556.4 $560.3 $348.5 $275.0 $303.1 $291.0 $296.0
% Change 16.0% 6.5% 0.7% -37.8% -21.1% 10.2% -4.0% 1.7%
30-Yr FRM 5.9% 6.4% 6.3% 6.0% 5.1% 4.7% 4.5% 4.7%
1-Yr ARM 4.5% 5.5% 5.6% 5.2% 4.7% 3.5% 3.0% 3.1%
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Forecast Date: September 2011
Closing Thoughts
Direction of Home Prices: Sellers
Skeptical; Buyers Hopeful
0%
20%
40%
60%
80%
100%
Sellers Buyers
Down Flat Unsure Up
Q: Do you think home prices in your neighborhood will go up, down or stay flat in one year, five years and 10 years?
Real Estate: It’s Time To Buy Again
SOURCE: “Real estate: It’s time to buy again” Fortune Magazine’s 3/28/11 article written by Shawn Tully
“Forget stocks. Don't bet on gold.
After four years of plunging home
prices, the most attractive asset
class in America is housing.”
8 in 10 Americans Agree Buying a Home is
the Best Investment One Can Make
SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
8 in 10 Renters Would Like to
Buy in the Future
“…renters are hardly
immune to the allure of
homeownership, even in
the face of the five-year
decline in prices. Asked if
they rent out of choice or
because they cannot
afford to buy a home, just
24% say they
rent out of
choice.”
SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
Thank You
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lesliea@car.org
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