10-31-12 Contra Costa AOR

7/31/2019 10-31-12 Contra Costa AOR

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Economic and Housing MarketOutlook (2012 2013)

Contra Costa AOR

October 31, 2012

Oscar WeiSenior Research Analyst

California Association of REALTORS


2/97

Overview

US and California Economies

California Housing Market

Local Market Conditions

Market Opportunities

California Forecast


3/97

US and CaliforniaEconomic Conditions


4/97

Gross Domestic Product: Growth is stalling

-8%

-7%

-6%-5%

-4%

-3%

-2%

-1%

0%1%

2%

3%

4%

5%6%

7%

8%

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

----

Q2-10

Q4-10

Q2-11

Q4-11

Q2-12

2011: 1.6%; 2012 Q3: 2.0%ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $

ANNUAL QTRLY

2009 Largest Annual Drop since1938 (-3.4%)


5/97

Unemployment: Cyclical & Structural

Heading Down: At 3 year lows

SOURCE: CA Employment Development Division

0%

2%

4%

6%

8%

10%

12%

14%

Jan05 Jan06 Jan07 Jan08 Jan09 Jan10 Jan11 Jan12

CA US


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-1000000

-800000

-600000

-400000

-200000

0

200000

400000

600000

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

Oct-11

Jan-12

Apr-12

Jul-12

U.S. Non-farm Job Growth


Month-to-Month ChangesRecession Job Losses: 8.8 million

Since Jan10: +4.2 million


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-160000

-110000

-60000

-10000

40000

90000

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

Oct-11

Jan-12

Apr-12

Jul-12

California Non-farm Job Growth


Month-to-Month ChangesRecession Job Losses: 1.3 million

Since Jan10: + 486,000


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Job Trends by California Metro Area

Source:CAEDD,LaborMarketInformationDivision,LAEDC

July 2012: CA +2.6%, +365.1 thousand Jobs

Annual Percentage Change in Nonfarm Jobs

0.4%1.3%

1.6%

2.0%

2.1%

2.1%2.3%

2.8%

2.9%

3.1%

3.5%4.4%

6.3%

2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

VenturaModesto

LosAngeles

OrangeCounty

Bakersfield

OaklandRiverside

Sacramento

SanDiego

Fresno

SanJoseSan

Francisco

Stockton


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Professional & Business Services

Leading Sector

12%

10%

8%

6%

4%2%

0%

2%

4%

6%

8%


Professional&BusinessServices

SOURCE: CA Employment Development Department


10/97

Construction Is Making a Comeback

25%

20%

15%

10%

5%

0%

5%

10%

15%


Construction



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Manufacturing Stumbling but

Worst Is Over

14%

12%

10%

8%

6%

4%

2%

0%

2%


Manufacturing



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Consumer Confidence

Uneven But Things Are Getting BetterSeptember 2012: 70.3

0

20

40

60

80

100

120

Jan05

Jul05

Jan06

Jul06

Jan07

Jul07

Jan08

Jul08

Jan09

Jul09

Jan10

Jul10

Jan11

Jul11

Jan12

Jul12

INDEX, 100=1985

SOURCE: The Conference Board


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Consumer Price Index Subdued for Now

September 2012: All Items +2.0% YTY; Core +0.7% YTY

-4%

-2%

0%

2%

4%

6%

8%

10%

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

All Items Core

PERCENT CHANGE FROM A YEAR AGO

SOURCE: U.S. Bureau of Labor Statistics


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U.S. Economic Outlook

Indicator 2008 2009 2010 2011 2012p 2013f

USGDP 0.30% 3.50% 3.00% 1.70% 2.00% 2.30%

NonfarmJobGrowth 0.60% 4.40% 0.70% 1.20% 1.40% 1.60%

Unemployment 5.80% 9.30% 9.60% 9.00% 8.20% 8.00%

CPI 3.80% 0.40% 1.60% 3.20% 2.00% 2.10%

RealDisposable

Income,%Change 0.50% 0.90% 1.80% 1.30% 1.60% 1.60%


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California Economic Outlook

Indicator 2008 2009 2010 2011 2012p 2013f

NonfarmJobGrowth 1.3% 6.0% 1.1% 0.9% 1.6% 1.6%

UnemploymentRate 7.2% 11.3% 12.4% 11.7% 10.7% 9.9%

PopulationGrowth 0.8% 0.6% 0.7% 0.7% 0.8% 0.9%

RealDisposable

Income,%Change 1.0% 3.1% 1.8% 1.5% 0.3% 1.0%


16/97

Economic Risks

Fiscal cliff

Fall election Tax reform

State and local government finances

Euro Zone crisis Future of Fannie and Freddie


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California Housing Market


18/97

CA Sales of Existing Detached Homes

September 2012 Sales: 484,240 Units, Up 5.6% YTD, Down 1.2% YTY

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000


SalesUNITS

SOURCE: California Association of REALTORS; The Conference Board

*Sales are seasonally adjusted and annualized


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SOURCE: California Association of REALTORS

63.0%

24.3%

12.3%

0%

10%

20%

30%

40%

50%

60%

70%

Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12

Equity Sales Short Sale REO

Share of Equity Sales Has Been

Trending Upward Since Early 2012


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Equity Sales and Short Sales Continued to

Improve, While REO Sales Dropped

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

-60%

-40%

-20%

0%

20%

Equity Sales Short Sales REO Sales

14.1%

3.6%

-59.0%

(% Change in Sales Year to Year)


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Change in Sales by Sales Type


14.1%

3.6%

-59.0%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12

Equity Sales Short Sales REO Sales

(Year-to-Year)


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REO & Short Sales: Bay Area

(Percent of Total Sales)

0%

20%

40%

60%

80%

100%

10% 10%

8% 11% 7%4%

17%13%

18% 18%16%

26%

13% 18%

42%

24%

Sep 2012

Short Sales

REO Sales


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Sales Dropped in Lower Price Segments


-30%

-20%

-10%

0%

10%

20%

$0 - $200k $200 - $300k $300 - $400k $400 - $500k $500k+

-27.7%

-15.4%

6.7%

14.1% 15.1%

% Chg in Sales

(% Change in Sales Year to Year)


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Change in Sales by Price Range


-27.7%

-15.4%

6.7%

14.1%

15.1%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12

$0 - $200k $200 - $300k $300 - $400k $400 - $500k $500k+

(Year-to-Year)


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Median Price of Existing Detached Homes

California, September 2012: $345,000, Up 19.5% YTY

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000 P:May07$594,530

T:Feb09

$245,230

59%from

peak



26/97

CA Unsold Inventory: Nearing Record Lows

California, September 2012: 3.7 Months


0

2

4

6

8

10

12

14

16

18


MONTHS

Note: Unsold Inventory Index represents the number of months it would take to sell the remaining inventory for the month in question.The remaining inventory for the month is defined as the number of properties that were Active, Pending, and Contingent (whenavailable) and divide the sum by the number of Sold properties for the month in question.


27/97

Price Range (Thousand) Sep-11 Aug-12 Sep-12

$1,000K+ 9.9 6.1 7.7

$750-1000K 6.1 4.0 4.7

$500-750K 6.0 3.1 3.6

$300-500K 5.4 3.0 3.3

$0-300K 4.6 2.8 3.2

Unsold Inventory Index:

Shortage Across All Price Ranges


Note: Unsold Inventory Index represents the number of months it would take to sell the remaining inventory for the month in question.The remaining inventory for the month is defined as the number of properties that were Active, Pending, and Contingent (whenavailable) and divide the sum by the number of Sold properties for the month in question.


28/97

Tight Supply of Inventory,

Especially for REO Sales

0

1

2

3

4

EquitySales REOSales ShortSales

3.8

2.2

3.9

Sep12UnsoldInventory Index(Months)



29/97


0

1

2

3

4

5

6

7

8

9

Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12

Equity Sales REO Short Sales

Inventory Has Been Declining

Since Early 2012UnsoldInventory Index(Months)


30/97

Housing Permits ImprovingSlowly

2012(p): 52,000 units, Up 10.4% from 2011

0

50,000

100,000

150,000

200,000

250,000

2005 2006 2007 2008 2009 2010 2011 2012P

Single Family Multi-Family

Household Growth: 220,000-250,000/yr

SOURCE: Construction Industry Research Board


31/97

57%

4.2

0

1

2

3

4

5

6

0%

10%

20%

30%

40%

50%

60%

2005 2007 2009 2011

% with Multiple Offers # of Multiple offers (Average)

Shareofhomesaleswithmultipleoffersisthehighestinatleastthelast12years

Supply Shortage CreatesMore Market Competition


32/97

Demand for Investment & Second/ Vacation

Homes Dipped Slightly, But Remained Strong

0%

5%

10%

15%

20%

25%

2005 2006 2007 2008 2009 2010 2011 2012

Vacation/SecondHome

Investment/Rental

Property

7%

16%


33/97

For Those Who Purchased

an Investment Property:

Investment to Flip

Rental Property


34/97

More Buyers Are Purchasing with Cash

0%

5%

10%

15%

20%

25%

30%

2005

2006

2007

2008

2009

2010

2011

2012

30%

%ofAllCashSales

Almostonethirdofbuyerspaidwithallcash

Theshareofallcashbuyershasbeenontherisesince2006


35/97

One of Five REALTORS Worked with anInternational Buyer in the Past 12 Months

Q. How many properties have you sold to an international buyer in the last 12 months?

79%

9%5% 3% 1% 3%

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

0 1 2 3 4 5+ #ofProperties

%WhoSoldtoInternationalBuyers

# of Properties Sold to International Buyers in the Last 12 Months


36/97

More Sellers Are Planning to Buy Another

Home as the Market Slowly Recovers

Q. Is the seller planning on purchasing another home?

0%

10%

20%

30%

40%

50%

60%

70%

80%

2005 2006 2007 2008 2009 2010 2011 2012

40%


37/97

Regional/LocalReal Estate Market


38/97

ALAMEDA COUNTY


39/97

Sales of Residential Homes

Alameda County, September 2012: 1,072 Units

Down 22.6% MTM, Down 6.6% YTY

SOURCE: Clarus Market Metrics


40/97

Median Price of Residential Homes

Alameda County, September 2012: $406,000

Down 1.0% MTM, Up 19.4% YTY



41/97

Months Supply of Inventory

Alameda County, September 2012: 1.1 Months


Note: Months Supply of Inventory represents the number of months it would take to sell the remaining inventory for the month in question.The remaining inventory for the month is defined as the number of properties that were For Sale on the last day of the month in question.The inventory figure is then divided by the number of properties that went Under Contract during the month.


42/97

CONTRA COSTA COUNTY


43/97


Contra Costa County, September 2012: 1,056 Units




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Contra Costa County, September 2012: $325,000

Up 6.2% MTM, Up 28.5% YTY



45/97


Contra Costa County, September 2012: 1.1Months




46/97

WALNUT CREEK

S


47/97


Walnut Creek, September 2012: 118 Units



M di P i f R id i l H


48/97


Walnut Creek, September 2012: $478,000

Up 18.9% MTM, Up 35.4% YTY


M th S l f I t


49/97


Walnut Creek, September 2012: 0.8 Months




50/97

DANVILLE



51/97


Danville, September 2012: 58 Units





52/97


Danville, September 2012: $761,920





53/97

Month s Supply of Inventory

Danville, September 2012: 1.6 Months




54/97

CONCORD



55/97


Concord, September 2012: 96 Units





56/97


Concord, September 2012: $287,500





57/97


Concord, September 2012: 0.9 Months




58/97

RICHMOND



59/97


Richmond, September 2012: 88 Units





60/97


Richmond, September 2012: $196,750

Up 8.3% MTM, Up 38.6% YTY




61/97


Richmond, September 2012: 1.2 Months




62/97

EL SOBRANTE



63/97

El Sobrante, September 2012: 11 Units

Down 21.4% MTM, Even 0% YTY




64/97

El Sobrante, September 2012: $305,000

Up 24.1% MTM, Up 28.8% YTY




65/97

pp y y

El Sobrante, September 2012: 1.2 Months




66/97

EL CERRITO



67/97

El Cerrito, September 2012: 16 Units

Up 6.7% MTM, Down 5.9% YTY



68/97



69/97

El Cerrito, September 2012: 1.0 Months




70/97

Alameda County


71/97

Preforeclosure: 1,870 Auction: 2,489 Bank Owned: 540

Source: ForeclosureRadar.com as of 10/25/12.


72/97

Alameda County


73/97



Alameda County


74/97



Contra Costa County


75/97



Contra Costa County


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Contra Costa County


77/97



Contra Costa County


78/97




79/97

Danville


80/97

Preforeclosure: 68 Auction: 104 Bank Owned: 13


Concord


81/97



Richmond


82/97



El Sobrante


83/97



El Cerrito


84/97




85/97

Market Opportunities

January 2009 October 2012

Mortgage Rates at 50 Year Lows


86/97

0%

1%

2%

3%

4%

5%

6%

FRM ARM

SOURCE: Federal Home Loan Mortgage Corporation

WEEKLY AVERAGE MONTHLY WEEKLY

Home Prices Rising but Still Very Attractive

C f S


87/97

California Statewide Median Price

$

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000


CA Housing Affordability at Record Highs


88/97

0%

10%

20%

30%40%

50%

60%

70%

80%

Q12005

Q32005

Q12006

Q32006

Q12007

Q32007

Q12008

Q32008

Q12009

Q32009

Q12010

Q32010

Q12011

Q32011

Q12012

CA US

% OF HOUSEHOLDS THAT CAN BUY


8 in 10 Renters Would Like toBuy in the Future


89/97

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 tobuy a home, just

24% say they

rent out of

choice.

SOURCE: Pew Research Centers Home Sweet Home. Still. Five Years After the Bubble Burst

8 in 10 Americans Agree Buying a Homeis the Best Investment One Can Make


90/97

SOURCE: Pew Research Centers Home Sweet Home. Still. Five Years After the Bubble Burst


91/97

California HousingMarket Forecast

California Housing Market Outlook


92/97

Indicator 2008 2009 2010 2011 2012p 2013f

SFHResales

(000s) 441.81 546.86 492.29 497.86 523.25 530

%Change 27.3% 23.8% 10.0% 1.1% 5.1% 1.3%

MedianPrice

($000s) 348.5$

275.0$

305.0$

286.0$

317.0$

335.0$

%Change 37.8% 21.1% 10.9% 6.2% 10.9% 5.7%

30YrFRM 6.0% 5.1% 4.7% 4.5% 3.8% 4.0%

1YrARM 5.2% 4.7% 3.5% 3.0% 2.8% 2.8%

Recovery Will Continue in 2013,with Both Sales and the Median Price Up


93/97

Units(Thousand)


523.3530.0

0

100

200

300

400

500

600

700

2005 2007 2009 2011 2013f

Sales of Existing Detached Homes

$317

$335

$0

$100

$200

$300

$400

$500

$600

2005 2007 2009 2011 2013f

Median Price

Price(Thousand)

Dollar Volume of Sales ImprovingUp 16.5% in 2012, Up 7.0% in 2013


94/97

$327

$266

$194

$154 $150 $150 $142$166 $178

30%

25%

20%

15%

10%

5%

0%

5%

10%

15%

20%

$0

$50

$100

$150

$200

$250

$300

$350

$400

2005 2006 2007 2008 2009 2010 2011 2012p 2013f

$VolumeofSales PercentChange

% Change$ in Billion

-54%


www.car.org/marketdata Speeches


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Speeches & Presentations

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THANK YOU!

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