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
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
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
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
Jan-
08
Jan-
09
Jan-
10
Jan-
11
CA US
California (12.1%) vs. United States (9.1%)
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
California Job Growth Faltering
SOURCE: CA Employment Development Division
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
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
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
SOURCE: CA Employment Development Division
Y-T-Y PERCENT CHANGE
Unemployment Rate Riverside County, August 2011: 14.7%
SOURCE: CA Employment Development Division
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
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
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
Q1/
95
Q1/
96
Q1/
97
Q1/
98
Q1/
99
Q1/
00
Q1/
01
Q1/
02
Q1/
03
Q1/
04
Q1/
05
Q1/
06
Q1/
07
Q1/
08
Q1/
09
Q1/
10
Q1/
11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; Hanley Wood
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
1
Jan-
02
Jul-0
2
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
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-
09
Jan-
10
Jan-
11
All ItemsCore
PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984
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-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
FRMARMFederal Funds
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
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.
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
SOURCE: California Association of REALTORS®
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
SOURCE: California Association of REALTORS®
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
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
0
100
200
300
400
500
600
700
800
900
Q1/
90
Q1/
91
Q1/
92
Q1/
93
Q1/
94
Q1/
95
Q1/
96
Q1/
97
Q1/
98
Q1/
99
Q1/
00
Q1/
01
Q1/
02
Q1/
03
Q1/
04
Q1/
05
Q1/
06
Q1/
07
Q1/
08
Q1/
09
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
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%
SOURCE: California Association of REALTORS®
Forecast Date: September 2011
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%
SOURCE: California Association of REALTORS®
Forecast Date: September 2011
California Housing Market
California Sales of Existing Homes and Median Price
Housing Cycle Comparisons 1970- 2011 UNITS/MEDIAN PRICE $
SOURCE: California Association of REALTORS®
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
2008
2010
Sales of Existing Detached Homes Median Price
-61% -25%
-44%
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
SOURCE: California Association of REALTORS®
Sales of Existing Detached Homes and Pacific West Consumer Confidence
California, August 2011 Sales: 497,390 Units, Down 0.4% YTD, Up 10.2% YTY
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
Jan-
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
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
SOURCE: California Association of REALTORS®
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
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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)
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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
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
Market Breakdown: Equity v. Distressed
Sales
SOURCE: California Association of REALTORS®
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
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)
SOURCE: California Association of REALTORS®
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
SOURCE: California Association of REALTORS®
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
SOURCE: California Association of REALTORS®
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
SOURCE: California Association of REALTORS®
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
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
SOURCE: ForeclosureRadar.com
6 Month Average:
REO: 10,880
3rd Party: 3,616
Cancelled: 14,447
CA Foreclosure Outcomes August 2011
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
SOURCE: ForeclosureRadar.com
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
Source: ForeclosureRadar.com as of 10/05/11
Riverside Auction: 1,235
Source: ForeclosureRadar.com as of 10/05/11
Riverside Bank Owned: 504
Source: ForeclosureRadar.com as of 10/05/11
Temecula Preforeclosure: 427 • Auction: 371 • Bank Owned: 157
Source: ForeclosureRadar.com as of 10/05/11
Murrieta Preforeclosure: 454 • Auction: 463 • Bank Owned: 202
Source: ForeclosureRadar.com as of 10/05/11
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
Sales of Existing Detached Homes Riverside County, 2010: 26,044 Units, Down 19.2% YTY
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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
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
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price Annual Comparison Riverside County, 2010: $206,180, Up 12.9% YTY
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
$-
$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
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%
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
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%
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
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
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Riverside
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
SOURCE: Clarus Market Metrics
For Sale Properties Riverside, September 2011
1,617 Units, Down 11.3% MTM, Down 27.9% YTY
SOURCE: Clarus Market Metrics
Months Supply of Inventory Riverside, September 2011: 2.4 Months
SOURCE: Clarus Market Metrics
Temecula
Sales of Residential Homes Temecula, September 2011
134 Units, Down 27.2% MTM, Down 30.6% YTY
SOURCE: Clarus Market Metrics
Median Price of Residential Homes Temecula, September 2011
$264,100, Down 4.3% MTM, Down 0.3% YTY
SOURCE: Clarus Market Metrics
For Sale Properties Temecula, September 2011
757 Units, Down 13.2% MTM, Down 27.8% YTY
SOURCE: Clarus Market Metrics
Months Supply of Inventory Temecula, September 2011: 1.9 Months
SOURCE: Clarus Market Metrics
Murrieta
Sales of Residential Homes Murrieta, September 2011
144 Units, Down 28.4% MTM, Down 27.3% YTY
SOURCE: Clarus Market Metrics
Median Price of Residential Homes Murrieta, September 2011
$236,000, Down 0.8% MTM, Down 1.3% YTY
SOURCE: Clarus Market Metrics
For Sale Properties Murrieta, September 2011
904 Units, Down 13.7% MTM, Down 32.0% YTY
SOURCE: Clarus Market Metrics
Months Supply of Inventory Murrieta, September 2011: 2.5 Months
SOURCE: Clarus Market Metrics
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
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%
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
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?
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®
Forecast Date: September 2011
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