California Real Estate Market Update Senate Transportation Committee March 7, 2012 Leslie...

California Real Estate Market Update

Senate Transportation Committee

March 7, 2012

Leslie Appleton-Young, Chief Economist

California Housing Market

Sales Hit Bottom in 2007, Median Price in 2009California Sales of Existing Homes and Median Price

UNITS/MEDIAN PRICE $

SOURCE: California Association of REALTORS®

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

Sales of Existing Detached Homes Median Price

-61% -25%

-44%

Sales of Existing Detached Homes and Pacific West Consumer Confidence• California, January 2012 Sales: 517,740 Units, Down 5.7% YTD, Down 5.7% YTY

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

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20

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120

140

160

Sales Consumer Confidence INDEXUNITS

SOURCE: California Association of REALTORS®; The Conference Board

*Sales are seasonally adjusted and annualized

Share of Distressed Sales to Total Sales

SOURCE: California Association of REALTORS®

SOURCE: California Association of REALTORS®

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

MarinNapa

San MateoSanta Clara

SolanoSonoma

0%

20%

40%

60%

80%

100%

20% 26%

19%15%

37%

28%

19%

36%

20%26%

37%

29%

Jan 2012

Short Sales

REO Sales

SOURCE: California Association of REALTORS®

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

Los AngelesOrange

RiversideSan Bernardino

San Diego

0%

20%

40%

60%

80%

100%

22%

15%31%

49%

20%

29%

27%

30%

20%

10%

Jan 2012

Short Sales

REO Sales

SOURCE: California Association of REALTORS®

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

MaderaMerced

San BenitoSacramento

Kern

0%

20%

40%

60%

80%

100%

65%

36%

22% 33%35%

0%

29%55% 33% 29%

Jan 2012Short Sales

REO Sales

SOURCE: California Association of REALTORS®

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

AmadorButte

HumboldtLake

Monterey

San Luis Obispo

Santa Cruz

Siskiyou

South Lake Tahoe

Mendocino

Tehama

0%

20%

40%

60%

80%

100%

42%

25% 26%

55%

30%28% 29%

67%

50%44% 53%

8%

18%8%

17%

27%21% 25%

4%

20%

5%

12%

Jan 2012

Short Sales

REOs

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

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Jan

-01

Jan

-02

Jan

-03

Jan

-04

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Jan

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-09

Jan

-10

Jan

-11

Jan

-12

Median Price of Existing Detached HomesCalifornia, January 2012: $268,280, Down 3.9% YTY

SOURCE: California Association of REALTORS®

Trough vs. Current Price – January 2012

RegionTrough Month

Trough Price

Jan-12 Median

% Chg From Trough

Contra Costa (Central County) Jan-12 $476,470 $476,470 0.0%

San Francisco County Jan-12 $561,270 $561,270 0.0%

Solano County Jan-12 $184,440 $184,440 0.0%

Sonoma County Feb-09 $312,338 $326,920 4.7%

San Mateo County Jan-09 $551,000 $578,500 5.0%

CALIFORNIA Feb-09 $245,230 $268,280 9.4%

San Francisco Bay Area Feb-09 $378,520 $415,120 9.7%

Marin County Feb-11 $632,580 $694,440 9.8%

Santa Clara County Feb-09 $445,000 $495,000 11.2%

Napa County Apr-11 $306,820 $344,740 12.4%

Alameda County Jan-09 $346,236 $395,830 14.3%

SOURCE: California Association of REALTORS®

Bay Area

Trough vs. Current Price – January 2012Central Valley

RegionTrough Month

Trough Price

Jan-12 Median

% Chg From Trough

Fresno County Jan-12 $131,070 $131,070 0.0%

Sacramento County Jan-12 $162,290 $162,290 0.0%

Placer County Mar-11 $253,750 $258,210 1.8%

Tulare County Apr-11 $111,600 $116,670 4.5%

San Benito County Jul-09 $239,000 $260,000 8.8%

CALIFORNIA Feb-09 $245,230 $268,280 9.4%

Kern (Bakersfield) County Apr-09 $115,000 $130,000 13.0%

Merced County Jan-10 $96,670 $112,000 15.9%

Madera County Jul-11 $92,500 $113,750 23.0%

Kings County Jul-11 $114,290 $145,710 27.5%

SOURCE: California Association of REALTORS®

Trough vs. Current Price – January 2012Southern California

RegionTrough Month

Trough Price

Jan-12 Median

% Chg From Trough

Palm Springs/Lower Desert Apr-09 $150,140 $157,610 5.0%

San Diego County Mar-09 $326,830 $350,680 7.3%

Ventura Couty Feb-09 $359,630 $386,870 7.6%

San Bernardino County May-09 $120,410 $129,920 7.9%

Orange County Jan-09 $442,170 $483,510 9.3%

CALIFORNIA Feb-09 $245,230 $268,280 9.4%

Inland Empire Apr-09 $150,860 $169,280 12.2%

Southern California Apr-09 $246,063 $276,580 12.4%

Los Angeles Metro Apr-09 $227,370 $256,000 12.6%

Riverside County Apr-09 $171,480 $196,050 14.3%

Los Angeles County May-09 $248,850 $290,890 16.9%

SOURCE: California Association of REALTORS®

Unsold Inventory IndexCalifornia, January 2012: 5.5 Months

0

2

4

6

8

10

12

14

16

18

20

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SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MONTHS

Price Range (Thousand) Jan-11 Dec-11 Jan-12

$1,000K+ 13.8 8.3 13.7$750-1000K 9.1 5.8 8.5$500-750K 6.9 4.5 6.9$300-500K 6.4 4.3 5.9$0-300K 5.4 3.9 4.9

Unsold Inventory Index (Months)

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Tight Supply of Inventory for REO Sales

SOURCE: California Association of REALTORS®

Housing Affordability IndexCalifornia Vs. U.S.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1

20

00

Q3

20

00

Q1

20

01

Q3

20

01

Q1

20

02

Q3

20

02

Q1

20

03

Q3

20

03

Q1

20

04

Q3

20

04

Q1

20

05

Q3

20

05

Q1

20

06

Q3

20

06

Q1

20

07

Q3

20

07

Q1

20

08

Q3

20

08

Q1

20

09

Q3

20

09

Q1

20

10

Q3

20

10

Q1

20

11

Q3

20

11

CA US

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

% OF HOUSEHOLDS THAT CAN BUY

CA Underwater MortgagesReverse Wealth Effect v. Squatter Economy

SOURCE: CoreLogic

29.7%

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

Q3-2011

Negative Equity Share in CA Near Negative Equity Share in CA

Distressed Market:Issues and Overview

7.2%

3.5%

0%

2%

4%

6%

8%

10%

12%

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

Q4

/07

Q1

/09

Q2

/10

Q3

/11

Delinquency Rate Foreclosure Rate

Mortgage Foreclosure & Delinquency RatesCalifornia: Q4-2011

SOURCE: Mortgage Bankers Association

Delinquencies: Long Run Average: 4.5%

Foreclosure Rate: Long Run Average: 1.3%

California Foreclosure Inventories, Jan. 2012Preforeclosure: -30.1% YTD • Schedule for Sale: -34.3% YTD •

Bank Owned: -11.9% YTD

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Preforeclosure Scheduled for Sale Bank Owned

SOURCE: ForeclosureRadar.com

6 Month Average:

Preforeclosure: 104,364

Schedule for Sale: 87,112

Bank Owned: 98,851

Los Angeles CountyPreforeclosure: 13,793

Source: ForeclosureRadar.com as of 02/23/12.

Los Angeles CountyAuction: 19,444

Source: ForeclosureRadar.com as of 02/23/12.

Los Angeles CountyBank Owned: 5,490

Source: ForeclosureRadar.com as of 02/23/12.

San Gabriel

Preforeclosure: 30 • Auction: 46 • Bank Owned: 10

Source: ForeclosureRadar.com as of 02/23/12.

SaratogaPreforeclosure: 19 • Auction: 25 • Bank Owned: 2

Source: ForeclosureRadar.com as of 01/30/2012.

Palo AltoPreforeclosure: 8 • Auction: 13 • Bank Owned: 0

Source: ForeclosureRadar.com as of 01/30/2012.

San JosePreforeclosure: 1,243 • Auction: 1,873 • Bank Owned: 441

Source: ForeclosureRadar.com as of 01/30/2012.

San Diego CountyPreforeclosure: 4,916

Source: ForeclosureRadar.com as of 03/02/12.

San Diego CountyAuction: 5,921

Source: ForeclosureRadar.com as of 03/02/12.

San Diego CountyBank Owned: 1,826

Source: ForeclosureRadar.com as of 03/02/12.

Sacramento• Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560

Source: ForeclosureRadar.com as of 08/19/11

Sacramento• Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560

Source: ForeclosureRadar.com as of 08/19/11

Sacramento• Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560

Source: ForeclosureRadar.com as of 08/19/11

2011 Annual Housing Market Survey

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

Proportion of Sellers Planning to Repurchase

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110%

10%

20%

30%

40%

50%

60%

70%

80%

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?

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

Reasons For SellingAll 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?

Investments & Second/Vacation Homes

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110%

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?

California Housing Market Forecast

California Housing Market Outlook

2005 2006 2007 2008 2009 2010 2011 2012f

SFH Resales (000s)

625.0 477.5 346.9 441.8 546.9 492.3 497.9 502.8

% Change 0.03% -23.6% -27.3% 27.3% 23.8% -10.0% 1.1% 1.0%Median Price ($000s)

$522.7 $556.4 $560.3 $348.5 $275.0 $305.0 $286.0 $290.9

% Change 16.0% 6.5% 0.7% -37.8% -21.1% 10.9% -6.2% 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: February 2012

Thank You

www.car.org/marketdata

lesliea@car.org