10 07-11 leslie to mtg

CALIFORNIA HOUSING MARKET 2012 FORECAST

Murrieta Temecula Group Wilson Creek Winery October 7, 2011 Leslie Appleton-Young, Chief Economist

Overview

US and California Economies California Housing Market Regional & Local 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%

2000

2002

2004

2006

2008

2010

Q2-

10

Q4-

10

Q2-

11

ANNUAL QTRLY

Presenter

Presentation Notes

Notes: E – expected, F – forecast, P- preliminary 1929 though first quarter 2009 annual GDP figures were revised in July 2009 using 2005 benchmark.

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 2010Q4 2010Q1 2011Q2 2011

Presenter

Presentation Notes

1929 though first quarter 2009 annual GDP figures were revised in July 2009 using 2005 benchmark.

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-2

000

1Q-2

001

1Q-2

002

1Q-2

003

1Q-2

004

1Q-2

005

1Q-2

006

1Q-2

007

1Q-2

008

1Q-2

009

1Q-2

010

1Q-2

011

Presenter

Presentation Notes

1929 through first quarter 2009 annual GDP figures were revised in July 2009 using 2005 benchmark.

Unemployment Stubbornly High August 2011

SOURCE: CA Employment Development Division

0%

2%

4%

6%

8%

10%

12%

14%

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

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Jan-

11

CA US

California (12.1%) vs. United States (9.1%)

Presenter

Presentation Notes

CA: 08/11 12.1%07/11 12.0% 06/11 11.8%05/11 12.0%04/11 12.1% 03/11 12.0% 02/11 12.1%01/11 12.4%12/10 12.5% 11/10 12.4%10/10 12.4% 9/10 12.4% 8/10 12.4% 7/10 12.3% 6/10 12.3% 5/10 12.4% 4/10 12.5% 2/10 9 12.5% 1/10 12.5% 12/09 12.3% 11/09 12.3%10/09 12.5%9/09 12.38/09 12.3% 7/09 11.9%6/09 11.6% 5/09 11.6%4/09 11.1%3/09 11.2%2/09 10.6%1/09 10.1%12/08 8.7% US: 08/11 9.1%07/11 9.1%06/11 9.2% 05/11 9.1%04/11 9.0%03/11 8.8% 02/11 8.9% 01/11 9.0%12/10 9.4%11/10 9.8%10/10 9.6% 9/10 9.6% 8/10 9.6% 7/10 9.5% 6/10 9.5% 5/10 9.7% 4/10 9.9% 3/10 9.7% 2/10 9.7% 1/10 9.7% 12/09 10.0% 11/09 10.0%11/09 10.0%10/09 10.2% 9/09 9.8%8/09 9.7%7/09 9.4% 6/09 9.5% 5/09 9.4%4/09 8.9%3/09 8.5%2/09 8.1%1/09 7.6%12/08 7.2% Based on revised figures during EDD’s early-2009 rebenchmarking, CA job market has been on a par with US market over past several months. SOURCE: http://www.labormarketinfo.edd.ca.gov/?pageid=164

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

0100,000200,000300,000400,000500,000

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Presenter

Presentation Notes

http://data.bls.gov/pdq/querytool.jsp?survey=ce; in more formatting options : 1 month net change Also in US Nonfarm Employment.xls, column I.

California Job Growth Faltering


Month-to-Month Changes Recession Job Losses: 1.3 million

Since Jan’10: +188,100

-160000-140000-120000-100000

-80000-60000-40000-20000

020000400006000080000

100000

Jan-

08

Mar

-08

May

-08

Jul-0

8

Sep-

08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-

09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov

-10

Jan-

11

Mar

-11

May

-11

Jul-1

1

Presenter

Presentation Notes

http://www.labormarketinfo.edd.ca.gov/?pageid=130; Total nonfarm, seasonally adjusted; subtracted current month with previous month. DO NOT USE THE INSTRUCTIONS BELOW. http://data.bls.gov/cgi-bin/srgate State and Area Employment, Hours, and Earnings 1-Month Net Change Series Id:SMS06000000000000001 Seasonally Adjusted State:California Area:Statewide Industry:Total Nonfarm

Where are California’s Jobs? Employment Trends:

Construction & Financial Sectors Biggest Losers

SOURCE: California Association of REALTORS®

Industry 2005 Jul-11 Year to Date

Mining and Logging 23,600 27,600 4,000Construction 905,300 567,300 -338,000Manufacturing 1,502,600 1,257,600 -245,000Trade, Transportation & Utilities 2,822,100 2,641,500 -180,600Information 473,600 455,400 -18,200Financial Activities 920,300 755,800 -164,500Professional & Business Services 2,160,700 2,136,200 -24,500Educational & Health Services 1,593,400 1,837,000 243,600Leisure & Hospitality 1,475,200 1,531,600 56,400Other Services 505,500 484,500 -21,000Government 2,420,200 2,380,200 -40,000TOTAL 14,802,500 14,074,700 -727,800

Presenter

Presentation Notes

Nonfarm Employment Riverside/SB Metro Area, August 2011: Down 0.6% YTY

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

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


Y-T-Y PERCENT CHANGE

Presenter

Presentation Notes

Sectoral Strengths: State and Local Government Retail Trade Manufacturing Education and Health Services One of the leaders in California job growth SOURCE: http://www.labormarketinfo.edd.ca.gov/?PAGEID=166

Unemployment Rate Riverside County, August 2011: 14.7%


0%

2%

4%

6%

8%

10%

12%

14%

16%

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

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10

Jan-

11

Presenter

Presentation Notes

California not seasonally adjusted: 12.1% August 2011. Based on revised figures during EDD’s 2010 rebenchmarking. Jobless rate rising and above than other regions and state Wide divergence in jobless rate throughout country SOURCE: http://www.labormarketinfo.edd.ca.gov/?pageid=164

New Home Sales Riverside County (Detached) , 2011 Q2 Sales: 653 Units

0

1000

2000

3000

4000

5000

6000

7000

8000Q

1/88

Q1/

89

Q1/

90

Q1/

91

Q1/

92

Q1/

93

Q1/

94

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Q1/

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Q1/

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Q1/

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Q1/

08

Q1/

09

Q1/

10

Q1/

11

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; Hanley Wood

Presenter

Presentation Notes

New Home Sales and Price data have been revised with new data going back to 1Q 2005.

INDEX, 100=1985

Consumer Confidence Slipping Marginal Gains in September

September 2011: 45.4

20

40

60

80

100

120

140

160

Jan-

00

Jul-0

0

Jan-

01

Jul-0

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9

Jan-

10

Jul-1

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Jan-

11

Jul-1

1

Presenter

Presentation Notes

The index is now at its lowest level in more than two years (April 2009, 40.8).

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%

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

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Jan-

10

Jan-

11

All ItemsCore

PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984

Presenter

Presentation Notes

“Core Inflation” is All Items Less Food and Energy The CPI data is seasonally adjusted. SOURCE: Go to http://www.economy.com/freelunch/fl_dictionary.asp?m=34174038-A1EF-4C70-9374-59144B50A3F5&h=H0022000400040002&f=0&c=undefined First choose "All Items." "Monthly" and "Yr/Yr%" series. Then find "All items less food and energy" towards the bottom of the CPI list. Do the same as above.

Monetary Policy

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

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

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%

Jan-

00

Jan-

01

Jan-

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07

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Jan-

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FRMARMFederal Funds

Presenter

Presentation Notes

Rate declines reflect continuing uncertainty and concerns about the US economy and political/economic concerns around the globe. SOURCE: Fed funds - Haver Analytics FRM: http://www.freddiemac.com/pmms/pmms30.htm ARM: http://www.freddiemac.com/pmms/pmmsarm.htm

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

62

1964

19

66

1968

19

70

1972

19

74

1976

19

78

1980

19

82

1984

19

86

1988

19

90

1992

19

94

1996

19

98

2000

20

02

2004

20

06

2008

20

10

Deficit as a % of GDP

Source: US Treasury, BEA, compiled by C.A.R. Note: Positive = Surplus

Presenter

Presentation Notes

Source for Deficit: http://www.treasurydirect.gov/govt/reports/pd/mspd/2010/2010_sep.htm

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%

1962

19

64

1966

19

68

1970

19

72

1974

19

76

1978

19

80

1982

19

84

1986

19

88

1990

19

92

1994

19

96

1998

20

00

2002

20

04

2006

20

08

2010

Debt as a % of GDP

Source: US Treasury, compiled by C.A.R.

Presenter

Presentation Notes

SOURCE: Treasury Direct - Historical Debt Outstanding http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm

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

Housing


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


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

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

CA US

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

% OF HOUSEHOLDS THAT CAN BUY

Presenter

Presentation Notes

C.A.R.’s traditional Housing Affordability Index (HAI) was replaced with the First-Time Buyer Housing Affordability Index (FTB-HAI) in 2006. Note this slide takes the average of the 3 months in each of the quarters. C.A.R. began producing its Housing Affordability Index (HAI) in 1984. At that time, fixed-rate mortgages were the prevailing form of financing a home purchase, while the calculations used to produce the HAI reflected a 20 percent down payment. The methodology also assumed a monthly payment for principal, interest, taxes and insurance that was no more than 30 percent of a household’s income. In the more than two decades since the CALIFORNIA ASSOCIATION OF REALTORS® first conceived the HAI, the mortgage finance landscape has changed dramatically. The range of mortgage products available to buyers as well as underwriting criteria has changed. C.A.R. developed the new index measuring affordability for first-time home buyers to better reflect the realities of today’s real estate market.

CA Underwater Mortgages

SOURCE: CoreLogic

30.2%

4.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Q4-2009

Q1-2010

Q2-2010

Q3-2010

Q4-2010

Q1-2011

Q2-2011

Negative Equity Share in CA Near Negative Equity Share in CA

Presenter

Presentation Notes

Note: Data is for CA Properties with a Mortgage�Near Negative Equity is defined as properties in negative equity or within 5% of being in a negative equity position

0

100

200

300

400

500

600

700

800

900

Q1/

90

Q1/

91

Q1/

92

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08

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Q1/

10

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%Refinance Originations (Bil $)Purchase Originations (Bil $)Fixed Rate Mortgage

ORIGINATION (BIL $) 30-YR FIXED RATE MORTGAGE

Mortgage Originations: 1990-2010

Source: Mortgage Bankers Association of America

• Refinance vs. Purchase

Presenter

Presentation Notes

The Quarterly FRM is derived from FHLMC 3 month average.

What Happened?

Trustee Sales in Anaheim Scheduled for 10/7/10

1872 W. Admiral, 92801

•3 bd, 2.5 ba, built in 1982 •Purchased in Sept 2005 for $594,000 with 30% down. •In April 2006, added a second for $57,000. •In Oct 2006, refinanced the second into a new second for $100,000. •Defaulted in 2010 •Zestimate of current value = $364,000.

1572 W. Orangewood, 92802

•3 bd, 2 ba, 2,016 sq ft built in 1977. •Purchased in June 2003 for $455,000 with 30% down. •March 2004: added a second for $75,000; added a third for $90,500; added a fourth for $80,000. •Within one year of purchase, the property had $565,000 in debt on it! •Defaulted in 2010. •Zestimate of current value •= $442,000.

8871 Regal, 92804

•3 bd, 2 ba, 1,314 sq ft built in 1956. •Purchased as REO in 2007 for $417,000 with zero down. •Had previously sold for $568,000 in 2005. •Defaulted in 2010. •Zestimate of current value = $367,500.

2414 E. Underhill, 92806

•3 bd, 2 ba, 1,459 sq ft built in 1957. •Purchased for $640,000 in July 2006 with piggyback financing: $500,000 first and $140,000 second, i.e. zero down. •Defaulted in 2010. •Zestimate of current value = $387,000.

Conclusions

• Excessive borrowing against home equity is the untold part of the foreclosure story.

• “House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis” by Mian and Sufi: American Economic Review :

• 39% of new defaults from 2006 to 2008 • attributable to home equity borrowing

Understanding the Financial Crisis

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 Growth 1.7% 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%


Forecast Date: September 2011

Presenter

Presentation Notes

California Economic Outlook

• 2005 2006 2007 2008 2009 2010 2011f 2012f

Nonfarm Job Growth 1.8% 1.7% 0.8% -1.3% -6.0% -1.4% 1.5% 2.1%

Unemployment Rate 5.4% 4.9% 5.4% 7.2% 11.4% 12.4% 12.0% 11.2%

Population Growth 1.2% 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%



California Housing Market

California Sales of Existing Homes and Median Price

Housing Cycle Comparisons 1970- 2011 UNITS/MEDIAN PRICE $


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1970

1972

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1978

1980

1982

1984

1986

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2000

2002

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2006

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2010

Sales of Existing Detached Homes Median Price

-61% -25%

-44%

Presenter

Presentation Notes

Peak to trough 1980s: -61% 1990s: -25% 2000s: -47%

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

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

$ Volume of Sales Percent Change% Change $ in Billion


Presenter

Presentation Notes

$ Volume of Sales = Median Price x Annual Sales

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-

00Ju

l-00

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

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08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

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

Presenter

Presentation Notes

Peak:624,957 units in 2005 Valley:189,345 units in 1982 2010 annual sales down 9.4% from 2009 2009 annual sales up 23.8% from 2008 2008 annual sales up 27.3% from 2007 2007 annual sales down 27.3% from 2006 2006 annual sales down 23.6% from 2005 2005 annual sales up 0.03% from 2004 2004 annual sales up 3.8% from 2003 2003 annual sales up 5.1% from 2002 2002 annual sales up 13.6% from 2001 2001 annual sales down 5.9% from 2000 YTD 2000 annual sales down 0.4 from 1999 1999 sales up 6.4% over 1998 10/93: 41.0 Consumer Confidence 01/00: 148.6 03/03: 63.0 5/07: 128.4 2/09: 23.9

Median Price of Existing Detached Homes

P: May-07$594,530

T: Feb-09$245,230

-59% frompeak

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000Ja

n-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


Presenter

Presentation Notes

The monthly gain was the 12th in a row Now up 24% from trough in Feb-09

Unsold Inventory Index

California, August 2011: 5.0 Months

0

2

4

6

8

10

12

14

16

18

20

Jan-

88

Jan-

89

Jan-

90

Jan-

91

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92

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93

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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


MONTHS

Presenter

Presentation Notes

Please note that UII from 1990-1994 have been revised following an audit of our data. Range since 1988: Low: 1.3 months in April 2004 High: 18.8 months in Feb 1991 Long-run average: 7.2 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)


Unsold Inventory By Price Range Jan 2005 – August 2011

0

5

10

15

20

25

30

Jan-

05A

pr-0

5Ju

l-05

Oct

-05

Jan-

06A

pr-0

6Ju

l-06

Oct

-06

Jan-

07A

pr-0

7Ju

l-07

Oct

-07

Jan-

08A

pr-0

8Ju

l-08

Oct

-08

Jan-

09A

pr-0

9Ju

l-09

Oct

-09

Jan-

10A

pr-1

0Ju

l-10

Oct

-10

Jan-

11A

pr-1

1Ju

l-11

$0 - 300K

$300-500K

$500-750K

$750-1000K

$1,000K+-

All


MONTHS

Asking Rents for Class A&B Apartments Inland Empire, 2011 Q2: $1,089 Up 2.8% YTY

$0

$200

$400

$600

$800

$1,000

$1,200

Q3/

97

Q2/

98

Q1/

99

Q4/

99

Q3/

00

Q2/

01

Q1/

02

Q4/

02

Q3/

03

Q2/

04

Q1/

05

Q4/

05

Q3/

06

Q2/

07

Q1/

08

Q4/

08

Q3/

09

Q2/

10

Q1/

11

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; REALFACTS

Presenter

Presentation Notes

California Asking Rent: $1425 Q2 2011

Vacancy Rates for Class A&B Apartments Inland Empire, 2011 Q2: 6.2%

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; REALFACTS

VACANCY RATE

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1990

1993

Q4/

95

Q2/

97

Q1/

98

Q4/

98

Q3/

99

Q2/

00

Q1/

01

Q4/

01

Q3/

02

Q2/

03

Q1/

04

Q4/

04

Q3/

05

Q2/

06

Q1/

07

Q4/

07

Q3/

08

Q2/

09

Q1/

10

Q4/

10

Presenter

Presentation Notes

California Vacancy Rates: 5.1 % Q2 2011

Market Breakdown: Equity v. Distressed

Sales


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

Presenter

Presentation Notes

REO sale: REO is an abbreviation for a REAL ESTATE OWNED property. A real estate owned property indicates that the property in question has been foreclosed on and has been taken back by the mortgage lender or trustee. REOs and FORECLOSUREs are not the same thing, however. An REO is only produced as a result of an unsuccessful foreclosure, in which a buyer for the property cannot be found, and so the mortgage lender repossesses the property to sell separately. Short sale: A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.

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-11 Unsold Inventory Index (Months)


REO & Short Sales: Southern California (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

Los Angeles Orange

Riverside San

Bernardino San Diego

20% 12%

35% 49%

19%

24%

20%

26% 14%

8%

Aug 2011

Short Sales REO Sales


REO & Short Sales: Central Valley (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

Madera Merced

San Benito Sacramento Kern

67%

36% 37% 38% 41%

7%

23% 30% 24% 19%

Aug 2011 Short Sales REO Sales


REO & Short Sales: Bay Area (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

Marin Napa San Mateo Santa

Clara Solano Sonoma

13% 28%

11% 10%

45%

24%

15%

20%

15% 21%

26%

18%

Aug 2011

Short Sales REO Sales


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

05,000

10,00015,00020,00025,00030,00035,00040,00045,00050,00055,00060,00065,000

Jan-

07M

ar-0

7M

ay-0

7Ju

l-07

Sep-

07N

ov-0

7Ja

n-08

Mar

-08

May

-08

Jul-0

8Se

p-08

Nov

-08

Jan-

09M

ar-0

9M

ay-0

9Ju

l-09

Sep-

09N

ov-0

9Ja

n-10

Mar

-10

May

-10

Jul-1

0Se

p-10

Nov

-10

Jan-

11M

ar-1

1M

ay-1

1Ju

l-11

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

Presenter

Presentation Notes

Oct 2010: 6 month and 3 month moving averages for both NODs and NTSs have been very steady throughout 2010.

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

Jan-

07

Apr

-07

Jul-0

7

Oct

-07

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

REOs Sold to 3rd Party Cancellations


6 Month Average:

REO: 10,880

3rd Party: 3,616

Cancelled: 14,447

CA Foreclosure Outcomes August 2011

Presenter

Presentation Notes

Oct 2010: REO: 6 month and 3 month moving averages Cancellations: 6 month MA peaking, 3 month falling in Sept 3rd Party: 6 mo and 3 mo MA steady

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

Jan-

07

Apr

-07

Jul-0

7

Oct

-07

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Preforeclosure Scheduled for Sale Bank Owned


6 Month Average:

Preforeclosure: 115,742

Schedule for Sale: 105,138

Bank Owned: 108,635

Foreclosures Riverside County

0

2000

4000

6000

8000

10000

12000

14000Q

1/89

Q1/

90Q

1/91

Q1/

92Q

1/93

Q1/

94Q

1/95

Q1/

96Q

1/97

Q1/

98Q

1/99

Q1/

00Q

1/01

Q1/

02Q

1/03

Q1/

04Q

1/05

Q1/

06Q

1/07

Q1/

08Q

1/09

Q1/

10Q

1/11

SOURCE: Real Estate Research Council

Riverside Preforeclosure: 1,167 • Auction: 1,235 • Bank Owned: 504

Source: ForeclosureRadar.com as of 10/05/11

Riverside Preforeclosure: 1,167


Riverside Auction: 1,235


Riverside Bank Owned: 504


Temecula Preforeclosure: 427 • Auction: 371 • Bank Owned: 157


Murrieta Preforeclosure: 454 • Auction: 463 • Bank Owned: 202


Regional Housing Markets

Sales of Existing Detached Homes and Consumer Confidence Riverside County, August 2011: 2,320 Units, Down 2.5% YTD, Up 11.2% YTY

0

500

1000

1500

2000

2500

3000

3500

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

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board

INDEX UNITS

Presenter

Presentation Notes

Sample housing data has been expanded and refined to improve quality of the statistics; the historical series has been revised to reflect the changes. Peak: 32,237 units in 2009 Valley: 6,465 units in 1993 2010 annual sales down 19.2% 2009 annual sales up 20.3% from 2008 2008 annual sales up 99.1% from 2007 2007 annual sales down 37.1% from 2006 2006 annual sales down 23.7% from 2005 2005 annual sales up 12.7% from 2004 2004 annual sales up 12.4% from 2003 2003 annual sales up 9.5% from 2002 2002 annual sales up 13.1% from 2001 2001 annual sales down 6.9% from 2000 2000 annual sales up 10.2% from 1999

Sales of Existing Detached Homes Riverside County, 2010: 26,044 Units, Down 19.2% YTY


UNITS

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1989

1992

1995

1998

2001

2004

2007

2010 0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan

Feb

Mar Apr

May Ju

n

Jul

Aug

Sep

t

Oct

Nov

Dec

2008200920102011

ANNUAL MONTHLY

Presenter

Presentation Notes

Sample housing data has been expanded and refined to improve quality of the statistics; the historical series has been revised to reflect the changes. Peak: 32,237 units in 2009 Valley: 6,465 units in 1993 2010 annual sales down 19.2% 2009 annual sales up 20.3% from 2008 2008 annual sales up 99.1% from 2007 2007 annual sales down 37.1% from 2006 2006 annual sales down 23.7% from 2005 2005 annual sales up 12.7% from 2004 2004 annual sales up 12.4% from 2003 2003 annual sales up 9.5% from 2002 2002 annual sales up 13.1% from 2001 2001 annual sales down 6.9% from 2000 2000 annual sales up 10.2% from 1999

Median Price of Existing Detached Homes Riverside County, August 2011: $202,060, Down 2.9% YTY

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000Ja

n-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


Presenter

Presentation Notes

Sample housing data has been expanded and refined to improve quality of the statistics; the historical series has been revised to reflect the changes. Peak:$421,356 in 2006 Valley:$119,717 in 1996 High: Dec 2006: $427,333 2010 annual median price up 12.9% 2009 annual median price down 26.0% from 2008 2008 annual median price down 37.7% from 2007 2007 annual median price down 6.0% from 2006 2006 annual median price up 5.5% from 2005 2005 annual median price up 15.8% from 2004 2004 annual median price up 35.1% from 2003 2003 annual median price up 24.5% from 2002 2002 annual median price up 15.1% from 2001 2001 annual median price up 13.2% from 2000 2000 annual median price up 13.4% over 1999 Is the affordable alternative in the region

Median Price Annual Comparison Riverside County, 2010: $206,180, Up 12.9% YTY


$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,00019

89

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

Jan

Feb

Mar

Apr

May Ju

nJu

lA

ugSe

ptO

ctN

ovD

ec

2008200920102011

MONTHLY ANNUAL

Presenter

Presentation Notes

Sample housing data has been expanded and refined to improve quality of the statistics; the historical series has been revised to reflect the changes. Peak:$421,356 in 2006 Valley:$119,717 in 1996 High: Dec 2006: $427,333 2010 annual median price up 12.9% 2009 annual median price down 26.0% from 2008 2008 annual median price down 37.7% from 2007 2007 annual median price down 6.0% from 2006 2006 annual median price up 5.5% from 2005 2005 annual median price up 15.8% from 2004 2004 annual median price up 35.1% from 2003 2003 annual median price up 24.5% from 2002 2002 annual median price up 15.1% from 2001 2001 annual median price up 13.2% from 2000 2000 annual median price up 13.4% over 1999 Is the affordable alternative in the region

Median Home Sales Price Riverside County

SOURCE: DataQuick Information Systems. The price statistics are derived from all types of home sales -- new and existing, condos and single-family.

Aug-10 Aug-11 Yearly %Change

AGUANGA $119,000 $25,000 -79.0%ANZA $103,000 $172,500 67.5%BANNING $138,000 $113,250 -17.9%BEAUMONT $193,000 $185,000 -4.2%BLYTHE $117,500 $159,500 35.7%CABAZON $290,000 $48,500 -83.3%CALIMESA $162,000 $77,000 -52.5%CATHEDRAL CITY $160,000 $139,500 -12.8%COACHELLA $146,000 $135,500 -7.2%CORONA $325,000 $314,000 -3.4%DESERT HOT SPRINGS $89,500 $89,250 -0.3%HEMET $125,000 $120,000 -4.0%HOMELAND $50,000 $279,000 458.0%




IDYLLWILD $190,000 $186,000 -2.1%INDIAN WELLS $415,000 $483,500 16.5%INDIO $180,000 $160,000 -11.1%LA QUINTA $275,000 $242,500 -11.8%LAKE ELSINORE $200,000 $182,000 -9.0%MECCA $55,000 $35,000 -36.4%MENIFEE $211,000 $195,000 -7.6%MIRA LOMA $311,500 $240,000 -23.0%MORENO VALLEY $156,000 $159,000 1.9%MOUNTAIN CENTER $136,500 $299,500 119.4%MURRIETA $250,000 $242,500 -3.0%NORCO $372,500 $340,000 -8.7%NUEVO $155,000 $145,000 -6.5%




PALM DESERT $220,000 $225,000 2.3%PALM SPRINGS $213,500 $175,000 -18.0%PERRIS $165,000 $150,000 -9.1%RANCHO MIRAGE $374,500 $365,000 -2.5%RIVERSIDE $195,000 $193,000 -1.0%SAN JACINTO $143,000 $135,000 -5.6%SUN CITY $165,000 $164,000 -0.6%TEMECULA $267,750 $278,500 4.0%THOUSAND PALMS $130,000 $135,000 3.9%WHITE WATER $90,000 $62,500 -30.6%WILDOMAR $226,500 $210,000 -7.3%WINCHESTER $240,000 $227,500 -5.2%RIVERSIDE COUNTY $200,000 $190,250 -4.9%

Unsold Inventory Index Riverside County, August 2011: 4.4 Months

0

5

10

15

20

25

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


MONTHS

Presenter

Presentation Notes

Supply of homes peaked in the last quarter of 2007, but has been dropping since. Long Run Average: 5.2 months

Median Time on the Market Single-Family Homes – Riverside, August 2011: 53.5 Days

0

10

20

30

40

50

60

70

80

90

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1


Riverside

Presenter

Presentation Notes

CRMLS

Sales of Residential Homes Riverside, September 2011: 285 Units Down 30.0% MTM, Down 10.9% YTY

SOURCE: Clarus Market Metrics

Median Price of Residential Homes Riverside, September 2011: $195,000 Down 2.5% MTM, Down 2.5% YTY


For Sale Properties Riverside, September 2011

1,617 Units, Down 11.3% MTM, Down 27.9% YTY


Months Supply of Inventory Riverside, September 2011: 2.4 Months


Temecula

Sales of Residential Homes Temecula, September 2011

134 Units, Down 27.2% MTM, Down 30.6% YTY


Median Price of Residential Homes Temecula, September 2011

$264,100, Down 4.3% MTM, Down 0.3% YTY


For Sale Properties Temecula, September 2011



Months Supply of Inventory Temecula, September 2011: 1.9 Months


Murrieta

Presenter

Presentation Notes

Sales of Residential Homes Murrieta, September 2011



Presenter

Presentation Notes

Median Price of Residential Homes Murrieta, September 2011

$236,000, Down 0.8% MTM, Down 1.3% YTY


Presenter

Presentation Notes

For Sale Properties Murrieta, September 2011



Presenter

Presentation Notes

Months Supply of Inventory Murrieta, September 2011: 2.5 Months


Presenter

Presentation Notes

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

Presenter

Presentation Notes

Foreclosure sale: the actual forced sale of real property at a public auction (often on the courthouse steps following public notice posted at the courthouse and published in a local newspaper) after foreclosure on that property as security under a mortgage or deed of trust for a loan that is substantially delinquent. REO sale: REO is an abbreviation for a REAL ESTATE OWNED property. A real estate owned property indicates that the property in question has been foreclosed on and has been taken back by the mortgage lender or trustee. REOs and FORECLOSUREs are not the same thing, however. An REO is only produced as a result of an unsuccessful foreclosure, in which a buyer for the property cannot be found, and so the mortgage lender repossesses the property to sell separately. Short sale: A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.

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%20

00

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%

Presenter

Presentation Notes

The number of sellers who sold their home with a loss dropped for the second year but continued to be above the long run average of 11.2 percent for the fifth year.

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 20110

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

Presenter

Presentation Notes

Multiple Offers

0%

10%

20%

30%

40%

50%

60%

2000 2002 2004 2006 2008 20100

1

2

3

4

5

6

% with Multiple Offers # of Multiple 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/ShortSale/Default

Change in Family Status

Retirement/Move toRetirement Community

Investment/ TaxConsderations

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?

Presenter

Presentation Notes

.

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

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®


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”

C.A.R. Strategic Planning Book Pics

Thank You

www.car.org.marketdata

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Date post:	19-Oct-2014
Category:	Real Estate
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