Jeff DaviReal Estate Commissioner

DEPARTMENT OF REAL ESTATE

UPDATE

DRE MISSION To protect the public in

real estate transactions and provide related services to the real estate industry.

DRE AT A GLANCE 342 Authorized Positions Five Offices Statewide Special Fund Department $46.6 Million (Proposed)

Annual Budget 6 Program Divisions Advanced Technology

Base

eLICENSING PROCESS53% of all license renewals59% of all miscellaneous

license transactions, and79% of all examination scheduling

requests, were conducted using eLicensing

LICENSEES AND EMPLOYEES

Licensee Population as Compared to Authorized PYs

411 408391.5

372.5

298 305315 318

310

342

303303

344.5

391.5

314.5

292

269,109

535,000

504,019

449,107

338,579323,858314,082307,051299,744297,359306,939

323,039

393,750

337,062352,963

375,986

0

50

100

150

200

250

300

350

400

450

91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07Fiscal Years

PYs

PYs Authorized

License Population

0

40

80

120

160

200

Reporting Period

Nu

mb

er

of

Da

ys

LICENSING ACCOMPLISHMENTSLicense processing down from 175 to

66 days

DEPARTMENT OF REAL ESTATEENFORCEMENT OVERVIEW

5,091

6,9976,206

6,935

8,453

9,103

01,0002,0003,0004,0005,0006,0007,0008,0009,000

Regulatory Cases(Cases Assigned) – FY 06/07

Real Estate Law ViolationsThe following are approximate percentages based upon a statistical sampling:

Unlicensed Activity5%

Other28% Criminal

Convictions37%

Supervision & Negligence

10%

Trust Fund Handling (includes

Recordkeeping Violations)

20%

2006/07 Fiscal Year

DEPARTMENT OF REAL ESTATE

AUDITS OVERVIEW

Corrective Action Letter

24%

Minor Violations

23%

No Violations18% Major

Violations35%

AUDIT FINDINGSFY 2006/07

AUDIT VIOLATIONSFY 2006/07

Broker Escrow3%

Disclosure11%

Licensing and Employment

20%

Mortgage Loan4%

Supervision4%

Other6%

Trust Funds/Records

52%

DEPARTMENT OF REAL ESTATE

SUBDIVISION OVERVIEW

Volume of Filings and Staffby Fiscal Year

0

1000

2000

3000

4000

5000

Fiscal Year

Vo

lum

e o

f F

ilin

gs

40

45

50

55

60

65

70

75

80

Su

bd

ivis

ion

Sta

ff

Website - good standing status

Publications

Seminars

Speaking engagements

CALIFORNIA CONSUMER CALIFORNIA CONSUMER OUTREACHOUTREACH

http://www.dre.ca.gov/

Electronic License

Exams Project Schedule

Exam Center construction plans being finalized.

Construction to be completed in Spring 2008

Phased deployment planned beginning in Sacramento after construction.

Project Target

Increase Exam Capacity and Security

Promote Subject Matter ExpertiseSchedule Exams SoonerProvide Immediate ResultsIssue Temporary LicenseContain Future Exam Costs

HOUSING & REAL ESTATE MARKET

0

50,000

100,000

150,000

200,000

250,000

300,0001

98

8

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

*

Single Family Multi-Family

SOURCE: Construction Industry Research Board *2006 Projection from CBIA

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

New Housing Permits California 1988-2006

California vs U.S. Median Prices

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

California

US

SOURCE: California Association of REALTORS®

HOUSING CYCLESPeaks and Valleys 1970-2006

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

0

100,000

200,000

300,000

400,000

500,000

600,000

Home Sales Licensees

Sales More Volatile Than Prices

UNITS/MEDIAN PRICE $

Price Stickiness in Down Market …Most Owners Don’t Sell

SOURCE: California Association of REALTORS®

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Sales of Existing Detached Homes Median Price

Long-Term PerspectiveUNITS

2006 Sales Were 11th Highest On Record

SOURCE: California Association of REALTORS®

2006 477,460

1979 477,530

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

19

70

19

71

19

72

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

Long Run Average: 411,000

Variability Among Local Markets

RegionPeak

MonthPeak Price

Median 2007-04

% Chg From Peak

Palm Springs/Lower Desert Jun-05 $393,370 $377,830 -4.0%Central Valley Aug-05 $363,680 $335,090 -7.9%Northern California Aug-05 $440,420 $398,260 -9.6%Sacramento Aug-05 $394,450 $361,850 -8.3%Northern Wine Country Jan-06 $645,080 $608,970 -5.6%High Desert Apr-06 $334,860 $317,420 -5.2%San Diego May-06 $622,380 $610,970 -1.8%San Luis Obispo Jun-06 $620,540 $607,140 -2.2%Ventura Aug-06 $710,910 $691,710 -2.7%Riverside San Bernardino Jan-07 $415,160 $401,690 -3.2%

Variability Among Local Markets

RegionPeak

MonthPeak Price

Median 2007-04

% Chg From Peak

Los Angeles Apr-07 $596,310 $596,310 0.0%Monterey Region Apr-07 $787,950 $787,950 0.0%Orange County Apr-07 $747,260 $747,260 0.0%San Francisco Apr-07 $843,710 $843,710 0.0%Santa Clara Apr-07 $868,410 $868,410 0.0%

Unsold Inventory Index California, April 2007: 10.0 Months

0

2

4

6

8

10

12

14

16

18

20

Ja

n-8

8J

ul-

88

Ja

n-8

9J

ul-

89

Ja

n-9

0J

ul-

90

Ja

n-9

1J

ul-

91

Ja

n-9

2J

ul-

92

Ja

n-9

3J

ul-

93

Ja

n-9

4J

ul-

94

Ja

n-9

5J

ul-

95

Ja

n-9

6J

ul-

96

Ja

n-9

7J

ul-

97

Ja

n-9

8J

ul-

98

Ja

n-9

9J

ul-

99

Ja

n-0

0J

ul-

00

Ja

n-0

1J

ul-

01

Ja

n-0

2J

ul-

02

Ja

n-0

3J

ul-

03

Ja

n-0

4J

ul-

04

Ja

n-0

5J

ul-

05

Ja

n-0

6J

ul-

06

Ja

n-0

7

SOURCE: California Association of REALTORS®

MONTHS

2000 to Present

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

$1,000K+

$750-1000K

$500-750K

$300-500K

$250-300K

$200-250K

$0-200K

Pri

ce

Ra

ng

e (

Th

ou

sa

nd

s)

Months Supply

Last Year

This Year

Unsold Inventory By Price Range California - Existing Homes April 2007 vs. April 2006

SOURCE: California Association of REALTORS®

1990s vs. Now1990s (1990-96) Now (2005-2007)

EconomyUS: +2.6%, CA in Shambles

US GDP: +3.1%CA ~ US

Labor Market (Jobs)

-450,000 (1990-93)

+453,000*

Unempl. Rate 8.1% 5.1%

Mortgage Rates

8.0% 6.3%

Sales (# Homes)

362,500 483,000**

Median Price -12% (1991-96) +10%**

*CA 2003-06: +680,000 jobs! **Since 2005-Q3

IN CONCLUSION

Processing times have been significantly improved. (Licensing processing times down 65%)

Department business continues to be strong. The Department continues to do more with

less. The Department is always looking for better

ways to reach consumers.

Our ducks are in a row...