new off to a slow start. - p.o.s.h...
TRANSCRIPT
Off to a slow start.
Poppies! I blame the poppies for the slow housing start this year. People couldn’t get to the region to
buy houses because of the poppypalooza or the apoppycalypse or whatever you call it. But it truly was
spectacular and another reminder why, if you’re going to live in California, this isn’t a bad place to be.
Now the poppies will snooze for a few more years and we can get back to the business of housing.
February sales were up 12% from January and this month was up another 24% (663 / 874). But last
March we sold 926 homes so our 1st quarter numbers for the region show us running about 6% behind
last year (2,256 / 2,120) and some 13% off the pace of 2017 (2,434). That’s the slowest start to the
year since 2007! Pending sales are up another 24% coming in to April so we’ve got momentum coming
into the prime buying season, but don’t expect anything spectacular this year.
And we’re not alone in this. After dropping 3.2% last year, our forecast for the state has sales declining
another 6.9% this year. Even if the stars all align, sales could still drop 3.3% this year, and if the stars
don’t cooperate – a 10.4% drop. The national forecast isn’t much better but does show a very slight
2.4% increase in sales this year with a 4.4% increase in 2020. No recession on the horizon.
Median price across the region grew during the 1st quarter but at the slowest pace in he last decade –
appreciating just 2% over Q1 2018 ($365,975 / $373,972). After logging increases of 9.5% on average
during the past 7 years, a 2% bump is hardly noticeable. Temecula’s median price is actually down 1%
year-over-year and five of our local cities either dropped year-to-year or held even. Also interesting to
note that over 40% of recent sales occurred following a price reduction. Sellers are still optimistic in
setting their initial asking price but reality sets in when it comes to actually selling the property.
Average price across the region fared somewhat better, up 6% for the quarter ($376,740 / $394,988) as
more $1 million+ homes sold in March boosting the quarterly average. 9 homes over $1 million sold in
Temecula, 4 in Murrieta and 2 in Canyon Lake. Sales of upper end homes adds to the average price
while having a minimal impact on the median – but it’s still a good indicator of overall market health.
So sales are down and prices are flat at best. What does that mean for the market? Well, if the trends
continue it means a less competitive market, homes staying on the market longer, fewer multiple-bid
situations, more buyer choice for those buyers active in the market. Generally. But while some of this is
playing out locally, the average home actually stayed on the market 12% fewer days in March than in
February (38.6 / 29). Inventory did increase slightly adding 3% (2,270 / 2,347), but that was more than
offset by the 24% increase in sales, dropping our months inventory by 21% month-over-month (3.4 /
2.7).
Housing affordability across the region and the state continues to decline but slowing price appreciation
coupled with a recent drop in mortgage interest rates may spur more buyers to test the market this
spring. The Fed’s recent decision to hold of further rate hikes is good news for the market as well, and
there are those who foresee a possible Fed rate drop by mid-year to keep the economy from flagging.
We continue to add jobs to the economy with our region being one of the bellwethers in California, and
this is being accompanied by wage increases as well. All good signs for the economy and housing. It
should be a decent year, but not a record-setter. That’s OK – I’ll settle for solid.
Now if we could only reign in our worst tax and regulatory impulses in Sacramento…
Southwest
California
Reporting
Period
Current
Month
Last
Month Year Ago
Change from
Last Month
Change from
Year Ago
Existing Home Sales
(SFR Detached)
March
2018
874 663 926 24% 6%
Median Home Price
$378,411 $372,800 $370,278 1% 2%
Unsold Inventory Index
(SFR Units)
2,347 2,270 1,753 3% 25%
Unsold Inventory Index
(Months)
2.7 3.4 2.1 42% 22%
Median Time on
Market (Days)
29 38.6 19 12% 33%
SW Market @ A Glance
Source: CRMLS
Southwest California Homes
Q1 SFR Sales
Southwest California Homes
Q1 SFR Median Price
February 2019 SFR Transaction Value*:
Temecula $55,709,797 Lake Elsinore $20,201,678
Murrieta $60,624,607 Wildomar $14,483,867
Menifee $43,305,133 Canyon Lake $7,886,400
Hemet $27,781,274 San Jacinto $10,174,118
Perris $19,003,867 Total $259,170,741
* Revenue generated by single family residential transactions for the month.
March 2019 SFR Transaction Value*:
Temecula $78,643,925 Lake Elsinore $31,176,652
Murrieta $69,453,880 Wildomar $14,952,188
Menifee $58,306,805 Canyon Lake $15,191,198
Hemet $38,593,759 San Jacinto $16,497,085
Perris $26,773,727 Total $349,488,219
* Revenue generated by single family residential transactions for the month.
March Median Price:
2018 2019 %
Temecula $487,500 $475,000 3%
Murrieta $430,000 $434,950 1%
Menifee $355,000 $382,250 7%
Lake Elsinore $375,000 $370,000 1%
Wildomar $420,000 $410,000 2%
Canyon Lake $410,000 $452,000 9%
Hemet $265,000 $266,500 --%
San Jacinto $285,000 $285,000 --%
Perris $305,000 $330,000 8%
Southwest California Homes
SFR sales I-215 corridor
Southwest California Homes
SFR sales I-15 corridor
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
Temecula Murrieta Wildomar Lake Elsinore
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
Menifee Canyon Lake Hemet San Jacinto Perris
March Demand
On Market (2,270) = 2,347) 3%Pending Sales (817 - 945) 14%Closed (663 = 874) 24%Days on Market (38.6 - 29) 24%Months Inventory (3.4 – 2.7) 21%Absorption (65% - 63%) 3%
Month over Month
City Median Sold $ Average Sold $ Average SqFt Bed Bath YrBlt
Temecula $475,000 $549,958 2,495 4 3 1997
Murrieta $434,950 $469,283 2,487 4 3 2001
Wildomar $410,000 $404,113 2,272 4 3 1995
Lake Elsinore $370,000 $366,784 2,089 4 3 1999
Menifee $382,250 $378,616 2,176 4 3 2001
Canyon Lake $452,000 $562,637 2,546 4 3 1989
Hemet $266,500 $266,164 1,688 3 2 1987
San Jacinto $285,000 $274,951 1,997 3 3 1997
Perris $330,000 $356,983 2,021 4 3 1994
Your 'Average' House, March 2019
By City
Source: CRMLS
Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold % of MKT
Temecula 357 91% 124 87% 5 1% 5 3% 6 2% 0 0%
Murrieta 379 90% 138 93% 3 1% 3 2% 5 1% 1 1%
Wildomar 55 95% 32 86% 1 2% 1 3% 0 0% 0 0%
Lake Elsinore 218 91% 81 95% 3 1% 2 2% 5 2% 1 1%
Menifee 374 93% 146 95% 3 1% 3 2% 7 2% 0 0%
Canyon Lake 109 96% 26 96% 1 1% 0 0% 1 1% 0 0%
Hemet 403 93% 133 92% 4 1% 5 3% 4 1% 2 1%
San Jacinto 134 91% 58 97% 3 2% 0 0% 4 3% 0 0%
Perris 127 93% 71 95% 1 1% 0 0% 0 0% 2 3%
Regional
Average 2156 92% 809 93% 24 1% 19 2% 32 1% 6 1%
March 2019 Market Activity By Sales Type
Standard Sale Bank Owned Short Sale
During the first quarter of 2019, CoreLogic together with RTi Research
of Norwalk, Connecticut, conducted an extensive survey measuring
consumer-housing sentiment in high-priced markets. In all, 62 percent
of residents in high-priced markets acknowledged that housing in
these markets was unaffordable, compared to only 11 percent of
respondents across all markets surveyed last year. Nearly three
quarters of renters (71 percent) in these high-priced markets felt their
housing costs were unaffordable, compared to just 16 percent of
renters across all markets last year. High-priced markets were
identified as the 15 metropolitan areas with the highest median home
prices. The study focused on the dynamics of housing decision making
and the impact that the housing market had on the attitudes and
perceptions of residents in high-priced markets.
2018 CoreLogic Consumer Housing Sentiment Study
C.A.R. Sponsored Bills - 2019:
AB 599 (Maienschein) Affordable Owner-Occupied Workforce Housing: Definition - Currently, there is no uniform definition in state law for
“affordable owner-occupied workforce housing” or “affordable workforce housing”. This bill will essentially codify the Department of Housing and
Community Development’s definition of “affordable owner-occupied workforce housing” and “affordable workforce housing,” Under that definition such
housing is defined as for households earning up to 120% of area median income (AMI) while allowing for consideration of a higher AMI for “high cost
areas”. A uniform definition will help the state to establish new programs in order to bridge the state’s housing supply and affordability gaps. AB 599 is
pending a hearing in the Assembly Housing and Community Development Committee.
AB 892 (Holden) Clarifications to Real Estate Law Update - In 2015, C.A.R. began its multi-year effort to update and clarify the real estate law with
the enactment of AB 685 (Irwin). Subsequently, in 2017-18
C.A.R. successfully sponsored two further measures, AB 1289 (Arambula) and AB 2884 (Irwin), both of which enacted various, more extensive
changes to both the Civil Code (AB 1289) and to the Business and Profession Code (AB 2884). This legislation will continue to further update and
clarify the real estate law. AB 892 is pending committee assignment.
AB 1020 (Irwin) State Housing Agency: Cabinet Level Secretary - This bill will create a state Housing Agency, with a Cabinet-level Secretary,
charged with overseeing activities related to housing. A new Housing Agency would help to focus the state’s efforts to solve the state’s housing supply
crisis, while the Secretary of Housing would provide the Governor with a resource to oversee and to interact with professional entities, both
governmental and non-governmental, that play a role in the housing market. AB 1020 is pending committee assignment.
AB 1074 (Diep) Bonds for Accessory Dwelling Units (ADUs) - ADUs provide for an additional solution to increasing the supply of affordable housing
especially in tight real estate markets within the state. Unfortunately, there have been problems with funding sources for ADU construction. With this
legislation the state would sell bonds to provide loans to homeowners to construct ADUs helping to alleviate California’s housing crisis. AB 1074 is
pending a hearing in the Assembly Housing and Community Development Committee.
AB 1551 (Daly) Enhancing PACE Assessment Disclosures - In recent years, the Legislature has sought to enhance consumer protections for
Property Assessed Clean Energy (PACE) programs. However, there is still need for more clear and straightforward disclosures of the key terms of
PACE and the consequences of such financing to consumers. This bill will further enhance disclosures for PACE program assessments. AB 1551 is
pending committee assignment.
AB 1568 (McCarty) Housing Element Implementation and Accountability - This measure requires the Department of Housing and Community
Development to verify a local government’s housing production (based on the regional housing needs assessment) prior to a jurisdiction being eligible to
apply for new local transportation project funding created by SB 1 (Beall, Statutes 2017). AB 1568 is pending a hearing in the Assembly Housing and
Community Development Committee.
AB 1590 (Blanca Rubio) First-Time Homebuyer Tax Credit - The opportunities for first time home buyers are dwindling in California due to a lack of
supply and, in turn, increasing costs, especially for individuals and families of low or moderate income in disadvantaged communities. This bill allows
certain first-time homebuyer to receive a tax credit for purchasing a principal residence under specified conditions. AB 1590 is pending committee
assignment.
SB 50 (Wiener) Housing Development - Existing law requires local governments to adopt ordinances which comply with implementation of housing
development projects and to provide the developer with a density bonus and other incentives or concessions to produce lower income housing units.
C.A.R. is co- sponsoring SB 50 which seeks to authorize the implementation of transit-rich housing project bonuses for
new urban developments, similar to the Los Angeles City ordinance that was enacted in 2016. SB 50 also alleviates many of the concerns expressed by
opposition in 2018 to a similar measure. SB 50 is pending a hearing in the Senate Housing Committee.
SB 509 (Portantino) Expansion of “Permanent Source” Funding - Affordable Housing License Plate Program - Under current law, a state
agency may sponsor a specialized license plates when they are sponsored by a state agency. Prior to program implementation, the agency must
receive at least 7,500 paid license applications. While bills directing a state agency to sponsor a specialized license plate have been largely
unsuccessful in the past due to “start-up” costs, C.A.R.’s proposed bill would authorize an affordable housing license plate program and permit a third
party to pay for initial startup costs to offset the costs to the state, DMV, or the department authorized to create the license plate program. SB 509 is
pending committee assignment.
SCA 1 (Allen & Wiener) Public Housing Projects - Enacted by voters in 1950, Article 34 of the California Constitution requires that any development
comprised of “low-rent” dwellings, financed in whole or in part by federal, state or local government be approved by a vote of the people in the city or
county where the project is located, singling out one type of housing for voter approval. Article 34 does not just apply to “public housing”, but also
affects mixed income developments which often contain units partially “subsidized” by local government. Since 1992, C.A.R. has had policy supporting
affordable workforce housing and has sought to advance policies seeking to increase the state’s housing supply. C.A.R. is co- sponsoring SCA 1
which seeks to repeal Article 34 in its entirety. SCA 1 is pending a hearing in the Senate Housing Committee.
SCA 4 (Galgiani) Property Tax Basis Portability/Intergenerational Transfer Reforms - This is a re- introduction of SCA 24 (Galgiani, 2018), which
was introduced in the closing days of the 2017-18 Legislative Session. This measure includes the property tax basis portability provisions of
Proposition 5 (generally, allowing senior homeowners to transfer their property tax basis to a new home regardless of location, price, or the number of
previous transfers). The measure offsets that tax expenditure through reforms to the intergenerational transfer laws; namely, eliminating the transfer of
real property without reassessment other than for the primary residence, requiring the heir to reside in the inherited residence, and capping the value
of the exclusion on the inherited residence at $1 million. SCA 4 is pending a hearing in the Senate Governance and Finance Committee.