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
2011: A Year of Wild Cards
Political
Change
on
Oil Price Spikes Capitol
Hill
Arab Uprising
Sovereign
Debt
Crisis in
EuroZone
Debt Limit
Ceiling &
Downgrade Stock
of US Debt 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%
ANNUAL QTRLY
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
2000
2002
2004
2006
2008
2010
Q2-10
Q4-10
Q2-11
Components of GDP:
Consumer Spending Weak; Gov’t Sector Down
Quarterly Percent Change
3.0
2.5 Q3 2010
Q4 2010
2.0
Q1 2011
1.5 Q2 2011
1.0
0.5
0.0
-0.5
-1.0
-1.5
Consumption Fixed Nonres. Net Exports Government
Investment
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
Consumers Pulling Back
Home Equity & Reverse Wealth Effect
Consumer Spending 2011 Q1: 2.7% Q2: 0.4%
8%
QUARTERLY PERCENT CHANGE
6%
4%
2%
0%
-2%
-4%
1Q-2000
1Q-2001
1Q-2002
1Q-2003
1Q-2004
1Q-2005
1Q-2006
1Q-2007
1Q-2008
1Q-2009
1Q-2010
1Q-2011
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
Unemployment Stubbornly High
August 2011
California (12.1%) vs. United States (9.1%)
14%
CA US
12%
10%
8%
6%
4%
2%
0%
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: CA Employment Development Division
U.S. Job Growth: Flat in August
Month-to-Month Changes
Recession Job Losses: 8.4 million
Since Jan’10: +1.8 million
500,000
400,000
300,000
200,000
100,000
0
-100,000
-200,000
-300,000
-400,000
-500,000
-600,000
-700,000
-800,000
-900,000
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
SOURCE: US Dept of Labor, Bureau of Labor Statistics
California Job Growth Faltering
Month-to-Month Changes
Recession Job Losses: 1.3 million
Since Jan’10: +188,100
100000
80000
60000
40000
20000
0
-20000
-40000
-60000
-80000
-100000
-120000
-140000
-160000
May-08
May-09
May-10
May-11
Nov-08
Nov-09
Nov-10
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Jan-08
Jan-09
Jan-10
Jan-11
Jul-08
Jul-09
Jul-10
Jul-11
SOURCE: CA Employment Development Division
Where are California’s Jobs?
Employment Trends:
Construction & Financial Biggest Losers
Year to
Industry 2005 Jul-11
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
SOURCE: California Association of REALTORS®
20
40
60
80
100
120
140
160
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
INDEX, 100=1985
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
August 2011: 44.5
Jan-08
Jul-08
Lowest Since April ‘09
Jan-09
Jul-09
Consumer Confidence Slipping
Jan-10
Jul-10
Jan-11
Jul-11
Crisis of Confidence:
Small Business Optimism Down
Source: National Federation of Independent Business
Consumer Prices Low but Heading Higher
CPI August 2011: All Items +3.8% YTY; Core +2.0% YTY
PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984
6%
All Items
5%
Core
4%
3%
2%
1%
0%
-1%
-2%
-3%
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Housing
California vs. U.S. Sales
US Home Sales CA Home Sales
7,000,000 700,000
6,000,000 600,000
5,000,000 500,000
4,000,000 400,000
3,000,000 300,000
2,000,000 200,000
1,000,000 100,000
0 0
SOURCE: California Association of REALTORS®
California vs. U.S. Median Price
US Median Price CA Median Price
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
SOURCE: California Association of REALTORS®
Housing Affordability: Records Highs
California Vs. U.S.
CA US
100%
% OF HOUSEHOLDS THAT CAN BUY
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q1 2000
Q3 2000
Q1 2001
Q3 2001
Q1 2002
Q3 2002
Q1 2003
Q3 2003
Q1 2004
Q3 2004
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA Underwater Mortgages
Negative Equity Share in CA Near Negative Equity Share in CA
40%
35%
30.2%
30%
25%
20%
15%
10%
4.6%
5%
0%
Q4‐2009
Q1‐2010
Q2‐2010
Q3‐2010
Q4‐2010
Q1‐2011
Q2‐2011
SOURCE: CoreLogic
Monetary Policy
Mortgage Rates @ Historical Lows
Debt Down Grade Ignited Flight to Quality
FRM ARM
6.00%
MONTHLY WEEKLY
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2009.01
2009.04
2009.07
2009.10
2010.01
2010.04
2010.07
2010.10
2011.01
2011.04
2011.07
8.4.11
8.25.11
9.15.11
Classic Liquidity Trap: Consumers Deleveraging
Low Rates and Low Borrowing
10%
9%
8%
7%
6%
5%
4%
3%
2% FRM
ARM
1%
Federal Funds
0%
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: Federal Home Loan Mortgage Corporation
Fiscal Policy
US Deficit Highest in Decades
2010: 11% of GDP (Revenues – Expenses)
4.0%
Deficit as a % of GDP
2.0%
0.0%
‐2.0%
‐4.0%
‐6.0%
‐8.0%
‐10.0%
‐12.0%
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
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
100.0%
90.0%
Debt as a % of GDP
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
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
1.7% 1.8% 1.1% -0.6% -4.4% -0.7% 1.0% 0.9%
Growth
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, % 1.3% 4.0% 2.2% 0.5% 0.9% 1.4% 1.7% 1.5%
Change
Forecast Date: September 2011
SOURCE: California Association of REALTORS®
California Economic Outlook
2005 2006 •
2007 2008 2009 2010 2011f 2012f
Nonfarm Job
1.8% 1.7% 0.8% -1.3% -6.0% -1.4% 1.5% 2.1%
Growth
Unemployment
5.4% 4.9% 5.4% 7.2% 11.4% 12.4% 12.0% 11.2%
Rate
Population
1.2% 1.1% 1.1% 1.2% 1.1% 0.9% 0.9% 0.9%
Growth
Real Disposable
Income, % 1.3% 3.4% 1.5% 0.1% -2.2% 1.6% 1.5% 2.0%
Change
Forecast Date: September 2011
SOURCE: California Association of REALTORS®
California Housing Market
California Sales of Existing Homes
and Median Price
Housing Cycle Comparisons 1970- 2011
UNITS/MEDIAN PRICE $ Sales of Existing Detached Homes Median Price
700,000
-44%
600,000
500,000
-61% -25%
400,000
300,000
200,000
100,000
0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
SOURCE: California Association of REALTORS®
Dollar Volume of Sales
Down 5% in 2011, Up 3% in 2012
$ in Billion % Change
$ Volume of Sales Percent Change
$350 50%
$327
37% 40%
$300
24% 30%
$250
26% 20%
$200 16% 10%
2%
$150 3% 0%
$129
-2% -1.0%
-5% -10%
$100
$150 $143 $147
-20%
-19%
$50 -22%
-27% -30%
$0 -40%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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
UNITS Sales Consumer Confidence INDEX
700,000 160
600,000 140
120
500,000
100
400,000
80
300,000
60
200,000
40
100,000 20
0 0
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jul-00
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
SOURCE: California Association of REALTORS®; The Conference Board
*Sales are seasonally adjusted and annualized
Median Price of Existing
Detached Homes
California, August 2011: $297,060, Down 7.4% YTY
$700,000 P: May-07
$594,530
$600,000
$500,000 T: Feb-09
$245,230
$400,000 -59% from
peak
$300,000
$200,000
$100,000
$0
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®
0
2
4
6
8
10
12
14
16
18
20
Jan-88
MONTHS
Jan-89
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Unsold Inventory Index
Jan-06
Jan-07
Jan-08
California, August 2011: 5.0 Months
Jan-09
Jan-10
Jan-11
Unsold Inventory Index (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
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Unsold Inventory By Price Range
Jan 2005 – August 2011
MONTHS
30
$0 - 300K
$300-500K
25
$500-750K
$750-1000K
20 $1,000K+-
All
15
10
5
0
Apr-05
Oct-05
Apr-06
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Jul-05
Jul-06
Apr-07
Jul-07
Apr-08
Jul-08
Apr-09
Jul-09
Apr-10
Jul-10
Apr-11
Jul-11
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Market Breakdown:
Equity v. Distressed
Sales
Share of Distressed Sales to Total Sales
60% Aug-10 Jul-11 Aug-11
44.5% 42.9% 43.7%
40%
24.7% 25.2% 24.4%
19.3% 18.9%
20% 17.5%
0%
REOs Short Sales Distressed Sales
SOURCE: California Association of REALTORS®
Share of Equity Sales
Increased Throughout 2011
Equity Sales Short Sale Bank Owned
60%
50%
40%
30%
20%
10%
0%
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11
SOURCE: ForeclosureRadar.com
Price Trends by Sale Type
Equity Sales Short Sale Bank Owned
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11
SOURCE: ForeclosureRadar.com
Tight Supply of Inventory
for REO Sales
Aug‐11
Unsold
Inventory Index
(Months)
8.1
9
8
7 5.7
6
5
4 2.6
3
2
1
0
Equity Sales REO Sales Short Sales
Distressed Sales: Bay Area
(Percent of Total Sales)
Aug-11
100%
80%
71%
60%
48%
40% 27% 43%
25% 31%
20%
0%
Marin
Napa
San
Mateo Santa
Clara Solano
Sonoma
SOURCE: California Association of REALTORS®
REO & Short Sales: Bay Area
(Percent of Total Sales)
100% Aug 2011
80% REO Sales
Short Sales
60%
26%
40% 20%
15% 18%
20%
28% 15% 21% 45%
13%
0% 11%
10% 24%
Marin
Napa
San
Mateo Santa
Clara Solano
Sonoma
SOURCE: California Association of REALTORS®
Distressed Sales: Southern CA
(Percent of Total Sales)
Aug-11
100%
80%
62% 64%
60%
44%
40% 33%
20% 27%
0%
Los
Angeles Orange
Riverside
San
Bernardino San Diego
SOURCE: California Association of REALTORS®
REO & Short Sales: Southern CA
(Percent of Total Sales)
100% Aug 2011
80% REO Sales
Short Sales
60%
14%
26%
40%
24%
20% 20%
20% 35% 49%
12% 8%
0%
19%
Los
Angeles Orange
Riverside
San
Bernardino San Diego
SOURCE: California Association of REALTORS®
Distressed Sales: Central Valley
(Percent of Total Sales)
Aug-11
100%
73%
80%
67%
59%
60% 62%
60%
40%
20%
0%
Madera
Merced
San Benito
Sacramento
Kern
SOURCE: California Association of REALTORS®
REO & Short Sales: Central Valley
(Percent of Total Sales)
100% Aug 2011
REO Sales
80% Short Sales
7%
60%
23% 30%
40% 24% 19%
67%
20% 36%
37%
38% 41%
0%
Madera
Merced
San Benito
Sacramento
Kern
SOURCE: California Association of REALTORS®
Distressed Sales: Rest of California
(Percent of Total Sales)
Aug-11
100%
80%
59% 64%
60% 62%
42%
45% 56%
40% 31% 48%
35%
20%
0%
SOURCE: California Association of REALTORS®
Distressed Sales: Rest of California
(Percent of Total Sales)
100% Aug 2011
80%
Short Sales
REOs
60%
11% 7%
40% 8% 25%
5%
48% 7% 57%
13% 9%
20% 34%
25% 36% 20%
32% 51%
0% 39%
15%
SOURCE: California Association of REALTORS®
California Foreclosure Filings
August 2011
NTS: 24,260, -16.9% YTD • NOD: 32,338, -21.5% YTD
Notice of Trustee Sale - Counts Notice of Defaults - Counts
65,000 6 Month Average:
60,000
NTSs: 23,806
55,000
50,000 NODs: 23,625
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Nov-07
Nov-08
Nov-09
Nov-10
Sep-07
Sep-08
Sep-09
Jul-07
Sep-10
Jan-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
May-07
May-08
May-09
May-10
May-11
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
SOURCE: ForeclosureRadar.com
CA Foreclosure Outcomes
August 2011
REO: -12.2% YTD • 3rd Party: -4.1% YTD • Cancel: -19.7% YTD
REOs Sold to 3rd Party Cancellations
6 Month Average:
30,000
REO: 10,880
25,000 3rd Party: 3,616
Cancelled: 14,447
20,000
15,000
10,000
5,000
0
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
SOURCE: ForeclosureRadar.com
CA Foreclosure Inventories
August 2011
Preforeclosure: -17.5% YTD • Schedule for Sale: -17.8% YTD •
Bank Owned: 7.0% YTD
6 Month Average:
Preforeclosure Scheduled for Sale Bank Owned Preforeclosure: 115,742
Schedule for Sale:
200,000 105,138
Bank Owned: 108,635
150,000
100,000
50,000
0
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Jan-07
Apr-07
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
SOURCE: ForeclosureRadar.com
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
UNITS Sales Consumer Confidence INDEX
1,800 160
1,600 140
1,400
120
1,200
100
1,000
80
800
60
600
40
400
200 20
0 0
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®;
SOURCE: California Association of REALTORS®; The Conference Board
The Conference Board
Home Sales in Northern California
Aug-10 Aug-11
450
400
350
300
250
200
150
100
50
0
Butte Humbolt Lake Paradise Placer Shasta Siskiyou South Tahoe Tehama
County County County Lake Sierra
SOURCE: California Association of REALTORS® Tahoe
Median Price of Existing Detached Homes
Northern CA, August 2011: $223,890, Down 11.5% YTY
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
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®
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes
Northern California
Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y
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%
SOURCE: California Association of REALTORS®
SOURCE: California Association of REALTORS®
Northern Wine Country
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Northern Wine Country, Aug. 2011:
620 Units, Up 3.2% YTD, Up 17.2% YTY
UNITS Sales Consumer Confidence INDEX
1000 160
900 140
800
120
700
600 100
500 80
400 60
300
40
200
100 20
0 0
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®; The Conference Board
Home Sales in Northern Wine Country
Aug-10 Aug-11
500
450
400
350
300
250
200
150
100
50
0
Mendocino Napa Sonoma
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes
Northern Wine Country, August 2011:
$330,070, Down 12.5% YTY
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
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®
Median Price of Existing Detached Homes
Northern Wine Country
Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y
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%
SOURCE: California Association of REALTORS®
Bay Area
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Bay Area, August 2011: 3,895 Units, Up 0.5% YTD,
Up 12.1% YTY
UNITS INDEX
Sales Consumer Confidence
8,000 160
7,000 140
6,000 120
5,000 100
4,000 80
3,000 60
2,000 40
1,000 20
0 0
Jul-00
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
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®; The Conference Board
Home Sales in Bay Area Counties
Aug-10 Aug-11
1400
1200
1000
800
600
400
200
0
Alameda Contra Marin Napa San San Mateo Santa Solano Sonoma
Costa Francisco Clara
(Central
County)
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
Bay Area, August 2011: $498,190, Down 9.2% YTY
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
Bay Area Counties
County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y
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%
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Central Valley Region
Home Sales in Central Valley Region
Aug-10 Aug-11
1800
1600
1400
1200
1000
800
600
400
200
0
)
y
to
ty
to
a
d
ld
re
no
nt
er
ce
un
en
ie
ni
la
es
ou
ad
er
sf
Tu
Be
am
Co
Fr
C
M
M
er
n
cr
ak
er
gs
Sa
Sa
ac
(B
in
Pl
K
n
er
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
K
Median Price of Existing Detached Homes
Central Valley Regions
County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y
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%
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
Central Valley Regions
County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y
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%
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Central Coast
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Central Coast, Aug. 2011 Sales: 2,296 Units, Up 2.1% YTD,
Up 18.5% YTY
UNITS Sales Consumer Confidence INDEX
1100 160
1000
140
900
800 120
700 100
600
80
500
400 60
300 40
200
20
100
0 0
Jul-98
Jul-99
Jul-00
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
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®; The Conference Board
Home Sales in Central Coast Region
Aug-10 Aug-11
300
250
200
150
100
50
0
MontereyAtascadero Paso Pismo San Luis Lompoc Santa Santa
Robles Coast Obispo Valley Barbara Maria
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
Central Coast, August 2011: $335,710, Down 5.1% YTY
$750,000
$700,000
$650,000
$600,000
$550,000
$500,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Jun-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes
Region Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y
Monterey County
Monterey $ 257,760 $ 255,770 $ 263,160 2.9% 2.1%
San Luis Obispo County
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%
Santa Barbara County
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%
SOURCE: California Association of REALTORS®
Southern California Region
Sales of Existing Detached Homes and
Pacific West Consumer Confidence
Southern California August 2011 Sales: 11,229 Units,
Down 4.0% YTD, Up 8.1% YTY
UNITS Sales Consumer Confidence INDEX
18,000 160.0
16,000 140.0
14,000
120.0
12,000
100.0
10,000
80.0
8,000
60.0
6,000
40.0
4,000
2,000 20.0
0 0.0
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®; The Conference Board
Home Sales in Southern CA Regions
Aug-10 Aug-11
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Los Orange Riverside San San Diego Ventura Santa Ventura
Angeles Bernardino Barbara
SOURCE: California Association of REALTORS®
Median Price of Existing Detached Homes
Southern CA, August 2011: $294,140, Down 6.3% YTY
$650,000
$600,000
$550,000
$500,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes
Southern California Region
County Aug-10 Jul-11 Aug-11 M-t-M Y-t-Y
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%
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2011 Annual Housing
Market Survey
2 in 5 Homes Sold Were
Distressed Properties
2008 2009 2010 2011
59%
60%
40%
20% 20%
20%
0%
REOs Short Sales Equity Sales
Q. Was the property purchased/sold as a
foreclosure, REO, short sale, or none of the above?
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
35% Sold due to foreclosure/Short sale/Default 30%
30%
25%
20%
15%
10%
5%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Q. What was the single most important reason for
selling/buying the property?
Sellers with a Net Cash Loss
35%
30%
25%
21.8%
20%
Long Run Average = 11.2%
15%
10%
5%
0%
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?
Net Cash to Sellers
Median
$250,000
$200,000
$150,000
$100,000 $75,000
$50,000
$0
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?
Median Price Discount &
Weeks On Market
3.9%, 10.5 weeks
8% 16
Med. Price Discount
7% Med. Weeks on MLS 14
6% 12
5% 10
4% 8
3% 6
2% 4
1% 2
0% 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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?
Multiple Offers
%with M ultiple Offers # of M ultiple offers (Average)
60% 6
50% 5
40% 4
30% 3
20% 2
10% 1
0% 0
2000 2002 2004 2006 2008 2010
Proportion of Sellers Planning to
Repurchase
80%
70%
60%
50%
40%
30%
20%
10%
0%
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
Seller is a lender/bank 19.8%
Seller prefers to have less financial obligation 11.4%
Poor credit background 10.9%
Lack of cash for down payment 5.7%
Out of work/unemployment 4.9%
Decide to live with family/friends 4.7%
Waiting for market to bottom 2.7%
Other 40.0%
0% 10% 20% 30% 40% 50%
Q. Why is the seller not planning to purchase
another home?
Reasons For Selling
All Home Sellers
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
0% 5% 10% 15% 20% 25% 30% 35%
Q. What was the single most important reason for selling/buying the property?
Cash Sales on the Rise
% of All Sales
30%
25%
20%
15%
10%
5%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Buyers Who Bought for
Investment/Tax Considerations
Dipped Slightly
20% Long Run Average = 12.1%
17%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Q. What was the single most important reason for selling/buying the property?
Investments & Second/
Vacation Homes
Investment/Rental Property Vacation/Second Home
25%
20% 7%
15%
10%
17%
5%
0%
Foreign Buyers
10%
% of Foreign Buyers
8%
8%
6% 6%
6% 5%
4%
2%
0%
2008 2009 2010 2011
Q. Was the buyer a foreign buyer?
Years Owned Home Before Selling
(All Sellers and Second Home/Investment Home Sellers
All Sellers Second Home and Investment Home Sellers
14
12
10
8
7.0
6 6.0
4
2
0
California Housing
Market Forecast
Forecast Progress Report
2010 2011
Projected Forecast 2011
2010 Actual
October October Projected
2010 2010
SFH Resales
492.0 491.5 502.0 491.1
(000s)
% Change ‐10.0% ‐10.1% 2.0% ‐0.1%
Median Price
$306.5 $303.1 $312.5 $291.0
($000s)
% Change 11.5% 10.2% 2.0% ‐4.0%
Forecast Date: September 2011 vs October 2010
Source: CALIFORNIA ASSOCIATION OF REALTORS®
California Housing Market Outlook
2005 2006 2007 2008 2009 2010 2011f 2012f
SFH Resales
625.0 477.5 346.9 441.8 546.9 491.5 491.1 496.2
(000s)
% Change 0.03% -23.6% -27.3% 27.3% 23.8% -10.1% -0.1% 1.0%
Median
Price $522.7 $556.4 $560.3 $348.5 $275.0 $303.1 $291.0 $296.0
($000s)
% 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%
Forecast Date: September 2011
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Closing Thoughts
Direction of Home Prices: Sellers
Skeptical; Buyers Hopeful
Down Flat Unsure Up
100%
80%
60%
40%
20%
0%
Sellers Buyers
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
“Forget stocks. Don't bet on gold.
After four years of plunging home
prices, the most attractive asset
class in America is housing.”
SOURCE: “Real estate: It’s time to buy again” Fortune Magazine’s 3/28/11 article written by Shawn Tully
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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