2008 California Real Estate Outlook

2008 Real Estate Market Forecast October 10, 2007 Leslie Appleton-Young C.A.R. Vice President and Chief Economist Overview California Real Estate Market: • 2007 Recap • 2007 Forecast • Sub-Prime, Credit Crunch • Timeline of Events • Underlying Economic Fundamentals Overview • Regional Markets – Mixed Performance Southern California Bay Area Central Valley Central Coast Northern California Northern Wine Country • 2008 Forecast • 2008 Market Opportunities California Real Estate Market: 2007 Sales of Existing Detached Homes Annual Comparison California, 2006 Sales: 477,460 Units, Down 23.6% Y-T-Y UNITS 700,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Jul Sept Apr O ct Aug M ar Nov 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 600,000 500,000 400,000 300,000 200,000 100,000 0 2005 2006 2007 M ay Dec Feb Jun Jan SOURCE: California Association of REALTORS®; The Conference Board Sales of Existing Detached Homes and Pacific West Consumer Confidence California, August 2007 Sales: 319,200 Units, Down 20.9% Y-T-D, Down 27.8% Y-T-Y 2007 projected: 367,500; lowest since 1995’s 342,540 UNITS 700,000 600,000 500,000 400,000 80 300,000 60 200,000 100,000 0 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 SOURCE: California Association of REALTORS®; The Conference Board Sales Consumer Confidence 650,800 INDEX 160 140 120 100 40 20 0 Statewide Market Weaker Below $1 Million High end stable • Below $500,000 – Sales down 24.6% YTD • $500,000 to $999,999 – Sales down 24.2% YTD • $1 million and above – Sales down 0.5% YTD SOURCE: California Association of REALTORS® Median Price Annual Comparison • California, 2006: $556,640, Up 6.5% Y-T-Y $600,000 $700,000 $600,000 $500,000 $500,000 $400,000 $400,000 $300,000 $300,000 $200,000 $200,000 $100,000 $- $100,000 2007 2005 2006 Jul Sept Apr O ct Aug M ar Nov 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 $- SOURCE: California Association of REALTORS® M ay Dec Feb Jun Jan Median Price of Existing Detached Homes California, August 2007: $588,970, Up 2.0% Y-T-Y $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 May-00 May-01 May-02 May-03 May-04 May-05 May-06 Jan-07 May-07 SOURCE: California Association of REALTORS® Variability Among Local Markets Region Northern California Sacramento Central Valley High Desert Riverside San Bernardino Northern Wine Country Ventura Orange County San Diego Palm Springs/Lower Desert San Luis Obispo San Francisco Santa Clara Monterey Region Los Angeles Peak Month Aug-05 Aug-05 Aug-05 Apr-06 Jan-07 Jan-06 Aug-06 Apr-07 May-06 Jun-05 Jun-06 May-07 Apr-07 Aug-07 Aug-07 Peak Price $440,420 $394,450 $363,680 $334,860 $415,160 $645,080 $710,910 $747,260 $622,380 $393,370 $620,540 $853,910 $868,410 $798,210 $605,300 Aug-07 % Chg Median From Peak $370,390 -15.9% $332,510 -15.7% $309,740 -14.8% $287,390 -14.2% $377,130 -9.2% $600,000 -7.0% $669,870 -5.8% $710,380 -4.9% $595,070 -4.4% $377,920 -3.9% $598,400 -3.6% $832,760 -2.5% $860,000 -1.0% $798,210 0.0% $605,300 0.0% SOURCE: California Association of REALTORS® Annual Percent Change in Median Price California1982-2008f 22 20 18 16 14 12 10 8 6 4 2 0 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 -2 -4 -6 SOURCE: California Association of REALTORS® 2008 Year-to-Year Price Change By Number of Bedrooms Two or fewer bedrooms 25% Three bedrooms Four or more bedrooms 20% 15% High-End Doing Better 10% 5% High-End Hit Harder 0% -5% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -10% SOURCE: California Association of REALTORS® 2007 YTD Unsold Inventory Index California, Aug 2007: 11.8 Months MONTHS 13 Average Since 1988: Approx. 7 Months 12 11 10 9 8 7 6 5 4 3 2 1 0 Sep-00 Sep-01 Sep-02 Jan-00 Jan-01 Sep-03 Jan-02 Sep-04 Sep-05 Jan-03 Jan-04 Sep-06 Jan-05 Jan-06 May-00 May-01 May-02 May-03 May-04 May-05 May-06 Jan-07 May-07 SOURCE: California Association of REALTORS® 10 12 14 16 18 MONTHS 20 0 2 4 6 8 SOURCE: California Association of REALTORS® Unsold Inventory Index California, August 2007: 11.8 Months Jan-88 Jul-88 Jan-89 Jul-89 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 Unsold Inventory Index vs. Price Changes California, 1982-2007 % Change Annual Median Price 22 20 18 16 14 12 10 8 6 4 2 0 Unsold Inv Index (months) Long Term Avg = 7 Months 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 -2 -4 -6 SOURCE: California Association of REALTORS® 2006 Listings by Month, Selected Years California (1982-2007 Average=100) 1983 200 180 160 140 120 100 80 60 40 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1992 2004 2006 2007 SOURCE: California Association of REALTORS® CA New Housing Permits: 1988 - 2007 Down 30.0% Y-T-D in 2007 300,000 Single Family 250,000 Household Growth: 220,000-250,000/yr Multi-Family 200,000 150,000 100,000 50,000 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD SOURCE: Construction Industry Research Board 2007 Forecast vs. Actual California Housing Market Forecast 2007 Forecast vs. Actual • 2005 SFH Resales (thousands) % Change 2006 477.5 -23.0% $560.7 7.0% 2007f 444.1 -7.0% $550.0 -2.0% 2007p 367.5 -23.0% $576.0 3.5% 625.0 0.04% Median Price $524.0 ($ thousands) % Change 16.2% SOURCE: California Association of REALTORS® This Time Last Year... • If we had continued to remain at a sales level above the 445,000-450,000 range, our forecast would have held. • It did not, WHY? – – – – – – Inventory build up: foreclosures, new construction Credit crunch Consumer confidence/expectations of lower prices Affordability constraints Tighter lending standards No urgency in the market This Time Two Years Ago... • We talked about a soft landing for the CA housing market with a modest decline in home sales and slower price appreciation in 2006. • Demand would drop because of affordability constraints on first time buyers while more trade up buyers remained on the sidelines (equity, property taxes, low rate mortgage). • Inventories would increase as sellers sought to time the market peak while investors left the market. • We discredited the “bubble” scenario because the economy would be growing and mortgage rates would remain near all time lows . Historically, significant housing price declines are associated with economic downturns: job losses and/or high mortgage rates. Sales of Existing Detached Homes and Pacific West Consumer Confidence California, August 2007 Sales: 319,200 Units, Down 20.9% Y-T-D, Down 27.8% Y-T-Y UNITS 700,000 600,000 500,000 400,000 80 300,000 60 200,000 100,000 0 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 SOURCE: California Association of REALTORS®; The Conference Board Sales Consumer Confidence 650,800 INDEX 160 140 120 100 40 20 0 California Market Stats: 2000-2005 • Four Year Housing Boom 2000 SFH Resales (thousands) % Change 2001 504.0 -5.9% $262.4 8.7% 7.0% 1.7% 2002 572.6 13.6% $316.1 20.5% 6.5% 14.0% 2003 601.8 5.1% $372.7 17.9% 5.8% 12.1% 2004 624.7 3.8% $450.8 20.9% 5.8% 15.1% 2005 625.0 0.04% $524.0 16.2% 5.9% 10.3% 535.5 -0.4% $241.4 11.0% 8.1% 2.9% Median Price ($ thousands) % Change 30 YR FRM Rate of return SOURCE: California Association of REALTORS® Sub-Prime Fall-out and Foreclosures Prime, Sub-Prime, & Other Loans As a Percentage of All Loans Outstanding in California Prime Conventional 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q1/98 Q1/99 Q1/00 Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 15% 83% Subprime Conventional FHA/VA/Other SOURCE: Mortgage Bankers Association, C.A.R. Percent of Buyers with Zero Downpayment First-Time Buyers vs. Repeat Buyers: 1998 - 2006 50% 40% All Hom e Buyers Repeat Buyers First-Tim e Buyers 40.9% 30% 21.1% 20% 10% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 11.3% Percent of Buyers with Zero Downpayment First-Time Buyers vs. Repeat Buyers: 1998 - 2007 All Hom buyers Repeat Buyers First-Tim e Buyers 50% 40% 29.4% 30% 20% 10% 17.7% 10.2% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 SOURCE: C.A.R. 2007 Annual Housing Market Survey Foreclosures per Household August 2007 RealtyTrac Foreclosures per Household (%) August 2007 Nation = 0.20% < 0.1% 0.1% - 0.4% > 0.4% No Data Source: RealtyTrac, SF Fed Mortgage Foreclosure & Delinquency Rates California Delinquency Rate 7% 6% Delinquencies: LR Avg: 3.9% Foreclosure Rate 5% 4% 3% 2% Foreclosure Rate: LR Avg: 0.81% 1% 0% Q1/74 Q2/75 Q3/76 Q4/77 Q1/79 Q2/80 Q3/81 Q4/82 Q1/84 Q2/85 Q3/86 Q4/87 Q1/89 Q2/90 Q3/91 Q4/92 Q1/94 Q2/95 Q3/96 Q4/97 Q1/99 Q2/00 Q3/01 Q4/02 Q1/04 Q2/05 Q3/06 SOURCE: Mortgage Bankers Association Notices of Default – California Houses & Condos 2007Q1 2006Q2 2007Q2 QTQ % Change 15.3% 14.4% 17.3% 21.1% YTY % Change 151.2% 164.5% 175.7% 158.0% Region Southern California 30,828 26,748 12,271 San Francisco Bay Area 7,696 6,730 2,910 Central Valley 12,964 11,054 Statewide 4,703 53,943 44,532 20,909 •Record High NoDs: 61,541 in Q1-1996 •Record Low NoDs: 12,417 in Q3-2007 SOURCE: Data Quick Information Systems Framing the Sub-Prime Situation 3 Types of Homeowners in Sub-Prime Category: • Right $$$ House & Right Mortgage – Not in trouble - no fix necessary • Right $$$ House & Wrong Mortgage – Refinance, but end is not near Troublesome Categories • Wrong $$$ House & Wrong Mortgage – Mortgage resets, foreclosures, etc. Prime Versus Sub-Prime Past Due California Q2-2007 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Q1-1998 Q1-1999 Q1-2000 Q1-2001 Q1-2002 Q1-2003 Q1-2004 Q1-2005 Q1-2006 Q1-2007 Prime Past Due: LR Avg: 1.8% Sub-Prime Past Due: LR Avg: 7.0% Conventional Prime: Past Due Conventional Subprime: Past Due SOURCE: Mortgage Bankers Association Credit/Liquidity Situation Credit Crunch emerges in July/August Sub-prime defaults spurred volatility in financial markets Investors supply credit for mortgage market Nervous Investors sell off of mortgage-backed securities – Translates into less money to lending institutions – Less money to fund home loans • Much tighter lending standards – Mortgage lenders pulling back – require higher credit scores, “exotic” products disappear • Impact on CA market: Sales to slow through year end • • • • Timeline of Events Surrounding Credit Crunch Aug 7 – Fed leaves Aug 10 – Fed fed-funds rate at provides liquidity 5.25% into the financial system July 10 - S&Ps to downgrade credit ratings of $12b bonds backed by subprime loans Tipping Point: Aug 14-16 – Global securities selloff, DJIA drops below 13,000 Sept 18 – Fed cut fed-funds rate from 5.25% to 4.75%, DJIA jumps 2.5% in one day Oct 5 - Dept of Labor: +110,000 jobs in Sept, +89,000 jobs in Aug (R) 10-Jul 25-Jul July 25 – Countrywide Income in Q2 bec of "piggyback" loans 9-Aug 24-Aug 8-Sep 23-Sep 8-Oct Aug 17 – Fed cut discount rate to 5.25% Sept 7 – Dept of Labor: -4,000 jobs Aug July 19 – DJIA closed above 14,000, new record 51,850 or 82% of layoffs in financial industry tied to mortgage lending in Aug & Sept* *reported by Challenger, Gray, & Christmas *reported by Challenger, Gray, & Christmas Bernanke Bounce: September 18, 2007 • “…tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth.” • Unexpectedly large .5% cut in Fed Funds rate from 5.25% to 4.75%. First cut in over four years • Dow up 336 points, biggest 1 day gain since 2002 • Prime rate cut to 7.75% by key banks – will affect $800 billion in credit card debt • Goal: Boost confidence and prevent recession 11,500 1-Jan-07 16-Jan-07 31-Jan-07 15-Feb-07 2-Mar-07 17-Mar-07 1-Apr-07 16-Apr-07 1-May-07 16-May-07 31-May-07 15-Jun-07 30-Jun-07 15-Jul-07 30-Jul-07 14-Aug-07 29-Aug-07 13-Sep-07 28-Sep-07 Daily Close 14,500 12,000 12,500 13,000 13,500 14,000 SOURCE: Dow Jones Dow 30 Industrial Index 7/19/07 14,000 ----- Market Turmoil -----10/9/07 14,164 Economic Fundamentals Gross Domestic Product Year 2006: 2.9%; 2007 2.0% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2000) $ 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% 2007p 2008f 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -3% SOURCE: Bureau of Economic Analysis Employment Growth, California vs. U.S. 2007P: CA 1.2% US 1.3% YEAR TO YEAR % CHANGE 6 5 4 3 2 1 0 -1 -2 California US SOURCE: CA EDD, Bureau of Labor Statistics 2007P 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Share of Total Job Growth Q3 2003 – Q3 2006 Professional and business services1 19% Health care and social assistance 17% Leisure and hospitality 16% Housing 23% Retail and wholesale1 23% Other 16% Source: Moody’s Economy.com Note: 1Excluding housing 1.0% 3.0% 5.0% 7.0% % Change Construction MFG Trans. Whsg. & Util. Trade -5.0% -3.0% -1.0% SOURCE: CA EDD, UCLA Anderson Forecast 2005 Information 2006 F.I.R.E. Prof Bus. Svcs. California 2005-2007 2007F Edu. & Hlth Safety Leisure & Hosp. Other Svcs. Year-to-Year % Change in Jobs Federal Gov't State & Local Gov't 10% -4% 0% 2% 4% 6% 8% -2% SOURCE: CA Employment Development Division Unemployment Rate California vs. United States US-CA CA US Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 Nonfarm Employment By Region (Thousands) Southern California Bay Area Central Valley Central Coast North Central CALFORNIA Nonfarm Employment August-07 8,545.6 3,270.0 2,042.1 500.8 144.8 15,273.7 Nonfarm Employment August-06 8,443.6 3,222.5 2,019.1 497.5 142.8 15,110.4 Change 106.4 56.6 30.5 4.4 3.2 163.3 Percent Change 1.3% 1.8% 1.5% 0.9% 2.2% 1.1% SOURCE: CA Employment Development Division Consumer Confidence Index August 2007: 105.6, Sept 2007: 99.8 INDEX, 100=1985 150 140 130 120 110 100 90 80 70 60 50 40 Jan-88 Jan-89 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 SOURCE: The Conference Board 1Q-1990 1Q-1991 1Q-1992 1Q-1993 1Q-1994 1Q-1995 1Q-1996 1Q-1997 1Q-1998 1Q-1999 1Q-2000 1Q-2001 1Q-2002 1Q-2003 1Q-2004 1Q-2005 1Q-2006 1Q-2007 -3 0 1 2 3 4 5 6 7 -2 -1 SOURCE: Bureau of Economic Analysis QUARTERLY PERCENT CHANGE Personal Consumption 2007 Q2: +1.4% 10% 15% ANNUAL PERCENT CHANGE 20% -10% -5% 0% 5% SOURCE: California State Board of Equalization Taxable Sales California Q1/89 Q3/89 Q1/90 Q3/90 Q1/91 Q3/91 Q1/92 Q3/92 Q1/93 Q3/93 Q1/94 Q3/94 Q1/95 Q3/95 Q1/96 Q3/96 Q1/97 Q3/97 Q1/98 Q3/98 Q1/99 Q3/99 Q1/00 Q3/00 Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Consumer Price Index August 2007: All Items 2.0% Y-T-Y; Core 2.1% Y-T-Y PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984 16% All Items 14% 12% 10% 8% 6% 4% 2% 0% Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 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 Core SOURCE: Bureau of Labor Statistics 10% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% • SOURCE: Federal Home Loan Mortgage Corporation FRM ARM Mortgage Rates Fed cuts to 4.75% on 9/18/07 Federal Funds Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 Economy through 2008: Razor’s Edge • • • • • • Sub par economic growth (below 3.0%) Weak but positive job growth Unemployment rate up slightly Inflation a concern but in check Uncertainty about economy/credit crunch KEY CONCERN: Will turmoil in the housing market tip the economy into recession? 2007 Housing Market Survey Median Price Discount And Weeks On Market Median Price Discount 7% 6% 5% Med. Price Discount Med. Weeks on MLS Weeks on MLS 16 14 12 4.3%, 8.6 weeks 4% 3% 2% 1% 0% 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 10 8 6 4 2 0 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? Percent with Price Discount 100% 80% 60% 40% 20% 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 76% Q. What was the original list sales price of the property? What was the final sales price of the property? Median Net Cash To Sellers $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 $180,000 Q. What was the net cash gain or net loss to the seller as a result of this sale? Percent of Jumbo Loans and Loan Limit (New First Mortgage) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 2005 2006 $417,000 $450,000 $400,000 $350,000 $300,000 51.5% $250,000 $200,000 $150,000 $100,000 $50,000 $0 2007 Proportion of First-Time Homebuyers California 60% 50% 40% 30.4% 30% 20% 10% 0% 81 83 85 87 89 91 93 95 97 99 01 03 05 07 Q. Was the buyer a first-time buyer? Mixed Market Performance Across Regions Southern California Region Sales of Existing Detached Homes and Pacific West Consumer Confidence Southern California August 2007 Sales: 8,329 Units, Down 27.9% Y-T-Y, Down 22.5% Y-T-D UNITS 18,000 16,000 14,000 12,000 10,000 80.0 8,000 6,000 4,000 2,000 0 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 SOURCE: California Association of REALTORS®; The Conference Board Sales Consumer Confidence INDEX 160.0 140.0 120.0 100.0 60.0 40.0 20.0 0.0 Home Sales in Southern California Regions 5,000 4,000 3,000 2,000 1,000 0 High Los Orange Palm Rivers/SB San Desert Angeles Springs Diego Santa Ventura Barbara Aug-06 Aug-07 SOURCE: California Association of REALTORS® New Home Sales Southern California Counties County Los Angeles Orange Riverside San Bernardino San Diego Santa Barbara Ventura So Cal Total 2000 2001 2002 2003 2004 2005 2006 2007 YTD* 6,331 7,478 10,257 5,149 9,259 568 2,965 42,007 7,387 5,928 13,491 5,049 9,570 588 2,935 44,948 8,042 6,256 17,263 5,830 10,591 798 2,439 51,219 9,121 6,436 20,702 8,048 12,131 828 2,244 59,510 9,905 5,840 24,048 9,584 14,812 933 1,385 66,507 12,065 5,494 28,732 10,894 15,902 754 2,192 76,033 12,369 5,204 25,232 10,291 11,659 399 2,154 67,308 5,682 2,089 7,267 3,143 4,351 206 736 23,474 * Thru Q2 2007 SOURCE: California Association of REALTORS® SOURCE: DataQuick Information Systems Year-to-Year Change in New Home Sales Southern California Counties County Los Angeles Orange Riverside San Bernardino San Diego Santa Barbara Ventura So Cal Total 2000 2001 2002 2003 2004 2005 2006 2007 YTD* 7.3% -4.7% 11.4% 7.8% -0.8% 25.4% 1.6% 3.9% 16.7% -20.7% 31.5% -1.9% 3.4% 3.5% -1.0% 7.0% 8.9% 5.5% 28.0% 15.5% 10.7% 35.7% -16.9% 14.0% 13.4% 2.9% 19.9% 38.0% 14.5% 3.8% -8.0% 16.2% 8.6% -9.3% 16.2% 19.1% 22.1% 12.7% -38.3% 11.8% 21.8% -5.9% 19.5% 13.7% 7.4% -19.2% 58.3% 14.3% 2.5% -5.3% -12.2% -5.5% -26.7% -47.1% -1.7% -11.5% -14.2% -26.2% -47.2% -39.3% -24.6% -0.5% -24.0% -33.6% * Thru Quarter 2 of 2007 SOURCE: DataQuick Association of REALTORS® California Information Systems Median Price of Existing Detached Homes Southern California, August 2007: $576,230 Up 3.8% Y-T-Y $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 SOURCE: California Association of REALTORS® Median Price of Existing Detached Homes Southern California Regions County High Desert Los Angeles Orange Palm Springs Riverside/SB San Diego Sta. Barbara-So. Coast Sta. Barbara-North Cnty. Ventura Aug-07 Jul-07 Aug-06 M-t-M Y-t-Y $ 287,394 $ 605,305 $ 710,383 $ 377,921 $ 377,127 $ 595,070 $ 1,262,500 $ 390,740 $ 669,871 $ 296,218 $ 592,303 $ 709,717 $ 378,312 $ 393,066 $ 601,731 $ 1,175,000 $ 386,110 $ 682,926 $ 332,897 $ 589,736 $ 698,084 $ 355,327 $ 407,403 $ 598,580 $ 1,190,000 $ 453,488 $ 710,906 -3.0% 2.2% 0.1% -0.1% -4.1% -1.1% 7.4% 1.2% -1.9% -13.7% 2.6% 1.8% 6.4% -7.4% -0.6% 6.1% -13.8% -5.8% SOURCE: California Association of REALTORS® Notices of Default – So CAL County/Region Los Angeles Orange San Diego Riverside San Bernardino Ventura SoCal* 2007Q2 10,393 2,984 4,383 6,648 5,141 1,059 30,828 2007Q1 8,843 2,644 3,931 5,750 4,357 965 26,748 2006Q2 4,586 1,255 1,778 2,287 1,839 452 12,271 QTQ%Chg 17.5% 12.9% 11.5% 15.6% 18.0% 9.7% 15.3% YTY%Chg 126.6% 137.8% 146.5% 190.7% 179.6% 134.3% 151.2% * Includes additional counties SOURCE: Data Quick Information Systems Non-Residential Permits, Valuations 7 Southern California Counties (1989-2006) Millions of Dollars 12000 10000 8000 6000 4000 2000 0 Industrial Bldgs Retail Bldgs Office Bldgs Other(Gap to Non Res Total) 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 SOURCE: Real Estate Research Council of Southern California 2006 Central Valley Region Sales of Existing Detached Homes and Pacific West Consumer Confidence Central Valley, August 2007 Sales: 2,296 Units, Down 30.5% Y-T-D, Down 33.8% Y-T-Y UNITS INDEX 6,000 5,000 4,000 3,000 2,000 1,000 0 Sales Consumer Confidence 160 140 120 100 80 60 40 20 0 SOURCE: California Association of REALTORS®; The Conference Board Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Home Sales in Central Valley Region 1200 1000 800 600 400 200 0 ie ld d m en to kt on to le y no di a Tr ac M er ce Fr es rs f M an M od Oa k St oc Ba ke cr a Tu rlo c te c Lo es da k Aug-06 Aug-07 SOURCE: California Association of REALTORS® Sa New Home Sales Central Valley Counties County El Dorado Fresno Placer Sacramento San Joaquin Stanislaus Central Valley Total 2001 2002 2003 2004 2005 2006 2007 YTD* 181 1,875 1,350 1,952 1,213 886 7,457 780 930 1,127 1,214 1,062 597 2,250 2,879 3,220 3,792 4,374 4,679 4,002 5,017 4,649 4,544 4,363 3,160 7,119 8,770 9,897 9,603 9,470 5,946 3,765 4,100 5,565 5,826 5,274 3,795 2,363 2,599 2,557 3,832 4,313 2,796 20,279 24,295 27,015 28,811 28,856 20,973 * Thru Q2 2007 SOURCE: California Association of REALTORS® SOURCE: DataQuick Information Systems Year-to-Year Change in New Home Sales Central Valley Counties County El Dorado Fresno Placer Sacramento San Joaquin Stanislaus Central Valley Total 2001 25.8% 15.0% 6.3% 29.7% -5.4% 27.9% 14.9% 2002 19.2% 28.0% 25.4% 23.2% 8.9% 10.0% 19.8% 2003 21.2% 11.8% -7.3% 12.9% 35.7% -1.6% 11.2% 2004 7.7% 17.8% -2.3% -3.0% 4.7% 49.9% 6.6% 2005 -12.5% 15.3% -4.0% -1.4% -9.5% 12.6% 0.2% 2006 -43.8% 7.0% -27.6% -37.2% -28.0% -35.2% -27.3% 2007 YTD* -46.6% -20.2% -16.9% -35.5% -36.7% -41.5% -30.8% * Thru Quarter 2 of 2007 SOURCE: DataQuick Association of REALTORS® California Information Systems Median Price of Existing Detached Homes Central Valley, August 2007: $309,740, Down 11.5% Y-T-Y $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 SOURCE: California Association of REALTORS® Median Price of Existing Detached Homes Central Valley Regions County Bakersfield Fresno Lodi Manteca Merced Modesto Oakdale Sacramento Stockton Tracy Turlock Aug-07 $270,000 $271,067 $ 352,941 $ 374,999 $ 250,000 $ 322,273 $ 420,000 $ 332,509 $ 297,413 $ 473,529 $ 316,667 Jul-07 $273,975 $286,494 $357,692 $390,322 $285,714 $330,769 $409,091 $346,217 $330,000 $450,000 $328,333 Aug-06 M-t-M Y-t-Y $285,000 -1.5% -5.3% $292,856 -5.4% -7.4% $ 354,411 -1.3% -0.4% $424,324 -3.9% -11.6% $266,666 -12.5% -6.2% $357,631 -2.6% -9.9% $364,999 2.7% 15.1% $378,177 -4.0% -12.1% $358,741 -9.9% -17.1% $556,818 5.2% -15.0% $350,999 -3.6% -9.8% SOURCE: California Association of REALTORS® Notices of Default – Central Valley County/Region 2007Q2 2007Q1 2006Q2 QTQ%Chg YTY%Chg Sacramento San Joaquin Placer Kern Fresno Madera Merced Tulare Yolo El Dorado Stanislaus Central Valley* 3,840 1,983 627 1,593 1,380 215 642 428 232 222 1,286 12,964 3,234 1,721 518 1,297 1,116 184 511 436 197 219 1141 11,054 1,352 604 276 549 590 92 214 258 77 86 407 4,703 18.7% 15.2% 21.0% 22.8% 23.7% 16.8% 25.6% -1.8% 17.8% 1.4% 12.7% 17.3% 184.0% 228.3% 127.2% 190.2% 133.9% 133.7% 200.0% 65.9% 201.3% 158.1% 216.0% 175.7% * Includes additional counties SOURCE: California Association of REALTORS® Non-Residential Permits Valuations Sacramento County (1989-2006) Millions of Dollars Industrial Bldgs Retail Bldgs Office Bldgs Other(Gap to Non Res Total) 800 700 600 500 400 300 200 100 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 SOURCE:U.S. Real Estate Research Council of Northern California 2006 0 Bay Area Sales of Existing Detached Homes and Pacific West Consumer Confidence Bay Area, August 2007: 2,718 Units, Down 15.3% Y-T-D, Down 26.5% Y-T-Y UNITS INDEX 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Sales Consumer Confidence 160 140 120 100 80 60 40 20 0 SOURCE: California Association of REALTORS®; The Conference Board Jan-98 May-98 Sep-98 Jan-99 May-99 Sep-99 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Home Sales in Bay Area Counties 1200 1000 800 600 400 200 0 Alameda Contra Costa Marin San San MateoSanta Francisco Clara Santa Solano Sonoma Cruz Aug-06 Aug-07 SOURCE: California Association of REALTORS® New Home Sales Bay Area Counties County Alameda Contra Costa Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma Bay Area Total 2001 2002 2003 2004 2005 2006 2007 YTD* 1,299 1,688 22 75 655 296 1,725 478 477 6,715 1,798 1,875 2,372 3,269 3,367 2,429 3,644 4,015 4,285 4,402 4,548 5,050 131 105 259 471 565 277 530 598 390 540 420 296 263 734 1,111 1,459 1,009 1,121 348 363 415 586 280 209 1,660 1,645 1,900 3,108 3,670 3,595 1,742 1,853 1,528 2,248 2,638 1,327 1,068 1,262 795 877 850 905 11,184 12,450 13,055 16,960 17,347 15,209 * Thru Q2 2007 SOURCE: California Association of REALTORS® SOURCE: DataQuick Information Systems Year-to-Year Change in New Home Sales Bay Area Counties County Alameda Contra Costa Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma Bay Area Total 2001 2002 2003 2004 2005 2006 2007 YTD* -36.1% -6.4% -56.5% 68.3% -18.3% -50.6% -35.6% 36.9% -39.8% -20.0% 4.3% 10.2% -19.8% 12.8% 179.1% 4.3% -0.9% 6.4% 18.2% 11.3% 26.5% 6.7% 146.7% -34.8% 51.4% 14.3% 15.5% -17.5% -37.0% 4.9% 37.8% 2.7% 81.9% 38.5% 31.3% 41.2% 63.6% 47.1% 10.3% 29.9% 3.0% 3.3% 20.0% -22.2% -30.8% -52.2% 18.1% 17.3% -3.1% 2.3% -27.9% 11.0% -51.0% -29.5% 11.1% -25.4% -2.0% -49.7% 6.5% -12.3% 8.3% -21.2% -88.4% -56.9% 28.7% 171.6% -10.2% -23.3% 2.8% -8.4% * Thru Quarter 2 of 2007 SOURCE: DataQuick Association of REALTORS® California Information Systems $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 SOURCE: California Association of REALTORS® Bay Area, August 2007: $832,760, Up 9.9% Y-T-Y Median Price of Existing Detached Homes Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Median Price of Existing Detached Homes Bay Area Counties County Alameda Contra Costa Marin San Francisco San Mateo Santa Clara Santa Cruz Solano Sonoma Aug-07 Jul-07 Aug-06 M-t-M Y-t-Y $ 711,895 $ 883,445 $ 1,064,285 $ 876,506 $ 950,000 $ 860,000 $ 794,200 $ 417,347 $ 597,826 $ 705,546 $ 908,823 $ 984,154 $ 898,195 $ 1,011,000 $ 856,500 $ 780,000 $ 446,825 $ 596,456 $ $ $ $ $ $ $ $ $ 686,393 809,524 967,187 851,190 850,000 770,000 765,000 469,202 612,222 0.9% -2.8% 8.1% -2.4% -6.0% 0.4% 1.8% -6.6% 0.2% 3.7% 9.1% 10.0% 3.0% 11.8% 11.7% 3.8% -11.1% -2.4% SOURCE: California Association of REALTORS® Notices of Default – Bay Area County/Region 2007Q2 San Francisco Alameda Contra Costa Santa Clara San Mateo Marin Solano Sonoma Napa Bay Area 257 1,612 2,316 1,275 463 118 1,065 462 128 7,696 2007Q1 216 1,578 1,969 1,058 382 118 914 407 88 6,730 2006Q2 127 649 725 530 222 58 350 202 47 2,910 QTQ%Chg 19.0% 2.2% 17.6% 20.5% 21.2% 0.0% 16.5% 13.5% 45.5% 14.4% YTY%Chg 102.4% 148.4% 219.4% 140.6% 108.6% 103.4% 204.3% 128.7% 172.3% 164.5% SOURCE: Data Quick Information Systems Non-Residential Permits Valuations 9 Bay-Area Counties (1989-2006) Millions of Dollars 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 SOURCE:U.S. Real Estate Research Council of Northern California 2006 7500 7000 6500 6000 5500 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Industrial Bldgs Retail Bldgs Office Bldgs Other(Gap to Non Res Total) Central Coast Sales of Existing Detached Homes and Pacific West Consumer Confidence Central Coast, August 2007: 291 Units, Down 8.3% Y-T-D, Down 25.2% Y-T-Y UNITS Sales Consumer Confidence INDEX 700 600 500 400 300 200 100 0 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 SOURCE: California Association of REALTORS®; The Conference Board 160 140 120 100 80 60 40 20 0 Home Sales in San Luis Obispo County 70 Aug-06 Aug-07 60 50 40 30 20 10 0 Atascadero Paso Robles Pismo Coast San Luis Obispo SOURCE: California Association of REALTORS® Home Sales in Santa Barbara County 120 Aug-06 Aug-07 100 80 60 40 20 0 Lompoc Valley SOURCE: California Association of REALTORS® Santa Barbara Santa Maria Median Price of Existing Detached Homes Central Coast, August 2007: $664,583, Down 0.8% Y-T-Y $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-90 Dec-90 Jun-91 Dec-91 Jun-92 Dec-92 Jun-93 Dec-93 Jun-94 Dec-94 Jun-95 Dec-95 Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 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 SOURCE: California Association of REALTORS® Median Price of Existing Detached Homes San Luis Obispo County Region Atascadero Paso Robles Pismo Coast San Luis Obispo Aug-07 $ 466,666 $ 484,615 $ 714,285 $669,642 Jul-07 $ 511,364 $ 483,333 $ 625,000 $672,618 Aug-06 $541,667 $524,038 $676,470 $684,523 M-t-M Y-t-Y -8.7% -13.8% 0.3% -7.5% 14.3% 5.6% -0.4% -2.2% Santa Barbara County Region Aug-07 Jul-07 $ 342,857 $ 1,125,000 $ 415,000 Aug-06 $ 423,077 $ 1,157,894 $ 466,666 M-t-M Y-t-Y Lompoc Valley $ 372,727 Santa Barbara $ 1,242,187 Santa Maria $ 402,941 SOURCE: California Association of REALTORS® 8.7% -11.9% 10.4% 7.3% -2.9% -13.7% Foreclosure Activity Houses and Condos Notices of Default 2007Q2 2007Q1 2006Q2 QTQ%Chg YTY%Chg 434 372 147 16.67% 195.2% 208 181 79 14.92% 163.3% County/Region Santa Barbara San Luis Obispo Recorded Trustee Deeds County/Region 2007Q2 2006Q2 YTY%Chg Santa Barbara 137 16 756.3% San Luis Obispo 52 4 1200.0% SOURCE: Data Quick Information Systems Northern California Sales of Existing Detached Homes and Pacific West Consumer Confidence Northern California, August 2007: 648 Units, Down 4.9% Y-T-D, Down 14.4% Y-T-Y UNITS Sales Consumer Confidence INDEX 1400 1200 1000 800 600 400 200 0 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 SOURCE: California Association of REALTORS®; The Conference Board 160 140 120 100 80 60 40 20 0 Home Sales in Northern California 350 300 250 200 150 100 50 0 Chico Paradise Humboldt Lake County Placer County Siskiyou County Tahoe Sierra Aug-06 Aug-07 SOURCE: California Association of REALTORS® Median Price of Existing Detached Homes Northern California, August 2007: $370,390, Down 6.6% Y-T-Y $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 SOURCE: California Association of REALTORS® Median Price of Existing Detached Homes Region Aug-07 Jul-07 Aug-06 M-t-M Y-t-Y Chico $ 308,333 $ 334,482 $ 321,621 -7.8% -4.1% Paradise $ 272,727 $ 292,856 $ 300,000 -6.9% -9.1% Humboldt $ 307,407 $ 328,750 $ 293,181 -6.5% 4.9% Lake County $ 243,749 $ 286,538 $ 320,000 -14.9% -23.8% Placer County $ 431,060 $ 451,973 $ 467,326 -4.6% -7.8% Siskiyou County $ 207,143 $ 271,875 $ 262,500 -23.8% -21.1% Tahoe Sierra $ 607,142 $ 683,823 $ 641,666 -11.2% -5.4% SOURCE: California Association of REALTORS® Northern Wine Country Sales of Existing Detached Homes and Pacific West Consumer Confidence Northern Wine Country, August 2007: 426 Units, Down 15.5% Y-T-D, Down 25.0% Y-T-Y UNITS Sales Consumer Confidence INDEX 1000 900 800 700 600 500 400 300 200 100 0 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 SOURCE: California Association of REALTORS®; The Conference Board 160 140 120 100 80 60 40 20 0 Home Sales in Northern Wine Country 500 450 400 350 300 250 200 150 100 50 0 Mendocino SOURCE: California Association of REALTORS® Aug-06 Aug-07 Napa Sonoma $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $0 SOURCE: California Association of REALTORS® Median Price of Existing Detached Homes Northern Wine Country, August 2007: $600,000, Down 1.6% Y-T-Y Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 Median Price of Existing Detached Homes Northern Wine Country Region Mendocino Napa Sonoma Aug-07 $431,250 $673,386 $597,826 Jul-07 $553,571 $704,545 $596,456 Aug-06 M-t-M Y-t-Y 9.8% -7.6% -2.4% $392,856 -22.1% $729,166 -4.4% $612,222 0.2% SOURCE: California Association of REALTORS® 2008 Forecast U.S. Economic Forecast 2003 US GDP Nonfarm Job Growth Unemployment CPI Real Disposable Income 2.5% -0.3% 6.0% 2.3% 2.4% 2004 3.6% 1.1% 5.5% 2.7% 3.4% 2005 3.1% 1.7% 5.1% 3.4% 1.2% 2006 2.9% 1.8% 4.6% 3.2% 2.6% 2007p 2008f 2.0% 1.3% 4.6% 2.9% 3.4% 2.7% 1.0% 4.9% 2.3% 3.2% SOURCE: California Association of REALTORS® • California Economic Forecast 2003 Nonfarm Job Growth Unemployment Rate Population Growth Real Disposable Income, % Change -0.5% 6.8% 1.7% 2.1% 2004 1.0% 6.2% 1.5% 4.1% 2005 1.8% 5.4% 1.3% 1.0% 2006 1.9% 4.9% 1.3% 2.5% 2007p 1.3% 5.2% 1.2% 2.6% 2008f 0.9% 5.7% 1.1% 2.6% SOURCE: California Association of REALTORS® Sales More Volatile Than Prices Price Stickiness in Down Market …Most Owners Don’t Sell UNITS/MEDIAN PRICE $ 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1970 1972 1974 1976 Sales of Existing Detached Homes Median Price 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 SOURCE: California Association of REALTORS® 2006 California Housing Market Forecast • 2003 SFH Resales (thousands) % Change 2004 624.7 3.8% 2005 625.0 0.04% 2006 477.5 2007p 367.5 2008f 334.5 -9.0% $553.0 -4.0% 6.5% 5.2% 601.8 5.1% -23.6% -23.0% Median Price $372.7 $450.8 $524.0 $556.6 $576.0 ($ thousands) % Change 17.9% 5.8% 3.8% 20.9% 5.8% 3.9% 16.2% 5.9% 4.5% 6.2% 6.4% 5.5% 3.5% 6.5% 5.5% 30-Yr FRM 1-Yr ARM SOURCE: California Association of REALTORS® Closing Comments California vs U.S. Median Prices $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 California US SOURCE: California Association of REALTORS® Loan Limit vs. Annual Median Price California, 1980-2006 ANNUAL MEDIAN SALES PRICE $600,000 Loan Limit Median Price $500,000 $400,000 $300,000 $200,000 $100,000 $0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 SOURCE: California Association of REALTORS® California’s Housing Cycles and Membership 1970-2007 THOUSANDS Home Sales Membership 250,000 700,000 600,000 200,000 500,000 400,000 300,000 200,000 50,000 100,000 0 2008f 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 0 150,000 100,000 Biggest Key To Success in 2007 -From Top Producers• “People will not take the time to properly research and understand the market, particularly in these conditions. They need to know I am doing it for them, which I why I will not reduce my marketing spending in this market.” • “Continuing to advertise on the Internet … not cutting marketing.” • “I have earned a reputation as a market expert. I need to really know the market statistics, so prospects know how experienced and knowledgeable I am.” C.A.R. 2007 Top Producer In-Depth Study What it’s all about… We did the impossible.....bought a house in Southern California! Papers sent to escrow today! Please make a note of our new address Moving day is Sunday September 30th, so come help, please! 3 tiny bedrooms, 1 full bath, 1 3/4 bath, laundry room, two car garage, fire place, swimming pool, the empty lot next door, and a lot of fixing up to do 1200 square feet What it’s all about… Thank You lesliea@car.org