2014 Investor Survey Webinar

8/12/2019 2014 Investor Survey Webinar

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THE IMPACT OF INVESTORS ONCALIFORNIAS HOUSING MARKET

Presented by

Carmen Hirciag, MBA

Senior Research Analyst


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WHATS GOING ON IN THE CAREAL ESTATE MARKET?


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Sales of Existing Detached Homes

414,670391,030

394,930

-

50,000

100,000

150,000

200,000

250,000

300,000350,000

400,000

450,000

500,000

Jun-13 Dec-13 Jun-14

*Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS


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Median Price of Existing Detached Homes

$428,620

$465,960

$457,160

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

Jun-13 Dec-13 Jun-14

SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS


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Underwater MortgagesDown

0%

5%

10%

15%

20%

25%

30%

35%

40%

Negative Equity Share in CA

Negative Equity Share in CA

SERIES: Underwater MortgagesSOURCE: CoreLogic


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Housing Affordability Index

0%

10%

20%

30%

40%

50%

60%% OF HOUSEHOLDS THAT CAN BUY

SERIES: Housing Affordability Index of Traditional BuyersSOURCE: CALIFORNIA ASSOCIATION OF REALTORS


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0%

2%

4%

6%

8%

10%

12%Delinquency Rate Foreclosure Rate

Mortgage Foreclosure & Delinquency RatesCalifornia: Q1-2014

Delinquencies: Long Run Average: 4.5%

Foreclosure Rate: Long Run Average: 1.3%

SERIES: Mortgage Foreclosure & Delinquency RatesSOURCE: Mortgage Bankers Association


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Unsold Inventory Index By Price RangeCalifornia

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 (when available) and

divide the sum by the number of Sold properties for the month in question.

4.7

3.2

2.7

2.7

2.7

2.7

2.5

4.8

3.9

3.7

3.7

3.5

3.5

3.3

0 1 2 3 4 5 6

$1,000K+

$750-1000K

$500-749K

$400-499K

$300-399K

$200-299K

$0-199K

Jun-13 Jun-14

SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS


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SERIES: Inventory of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS

Change in Inventory by Price Range(Year-to-Year)

-6.1%

27.6%30.4%

35.9%

31.5%

23.7%

12.5%

-10%

0%

10%

20%

30%

40%

Jun-14


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INVESTOR MARKETOVERVIEW


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CA Investor Business Declined

39%

32%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2013 2014

Q: How many investor transactions did you close in the past 12 months?Q: How many total transactions did you close in the past 12 months?


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Most REALTORS Have 5 or Fewer Investor Clients

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1 2 3 4 5 6+

16%

20%

17%

7%

9%

15%

Number of Investor Clients

Q: How many investor clients do you currently have?


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Number of Investor Clients Down

Q: How many investor clients do you currently have?

0

1

2

3

4

5

6

7

2013 2014

7

5.2

Average


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Most REALTORS Had 5 or Fewer Investor Transactions

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1 2 3 4 5 6-10 11+

19%

17% 17%

11%

8%

14%

9%

Number of Investor Transactions

Q: How many investor transactions did you close in the past 12 months?


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Number of Investor Transactions Down

Q: How many investor transactions did you close in the past 12 months?

0

1

2

3

4

5

6

7

2013 2014

6.4

4.9

Average


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Average (All) Closed Transactions: 16.4

0%

5%

10%

15%

20%

25%

30%

35%

1-5 6-10 11-20 21-30 31+

19%

23%

33%

13%12%

Number of Total Transactions

Q: How many total transactions did you close in the past 12 months?


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LAST INVESTOR BUYERTRANSACTION


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Buyers Dominate Investment Transactions

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

77% 70%

23%30%

Sellers

Buyers

Q: Who did you represent?


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Single Family Homes Dominate Investor Market

73%

14%

1%

12%

80%

13%

1%6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Single family

home

Multifamily Bulk sale Other

2014

2013

Q: What type of property did your investor client purchase?


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Majority Transactions Not Distressed

Foreclosure12%

Shortsale18%

Equity / regular /

traditional70%

Q: Was the property a(n)?


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79% of Sales Were Single Units

0% 2% 4% 6% 8% 10% 12% 14% 16%

2-5

6-10

10+

15%

2.4%

4.2%

NumberofUnits

Q: How many units did the property have in your last investor transaction?


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Slightly Fewer Property Units Per Transaction

0.0

1.0

2.0

3.0

4.0

2013 2014

3.83.5

Q: How many units did the property have in your last investor transaction?


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Majority of Transactions Listed Below $500k

0%

10%

20%

30%40%

50%

$250k or less $251k-$500k $501k-$1,000k $1,000k+

37%40%

16%8%

Listing Price

Q: What was the initial/listing price?


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Initial Listing Price Higher

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2013 2014

$307,500$322,500

Median List Price

Q: What was the initial listing price?


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Majority of Transactions Sold Below $500k

0%

10%

20%

30%

40%

$250 or less $251-500 $501-$1,000 $1,000+

37% 39%

16%

8%

Sale Price (In Thousands)

Q: What was the final sale price?


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Final Sale Price Higher

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2013 2014

$292,000$320,000

Median Sale Price

Q: What was the final sale price?


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Median Listing Price > Sale Price

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Listing Sale

$322,500 $320,000

Median Price


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Transaction Cost: $10k or Less for Nearly Investors

9%

36%

30%

9%

16%

1%0%

5%

10%

15%

20%

25%

30%

35%

40%

$0-1 $1-10 $10-50 $50-100 $100-1,000 $1,000+

Transaction Cost (In Thousands)

Q: How much did it cost to purchase the property?


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Transaction Cost Higher

Q: How much did it cost to purchase the property?

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2013 2014

$9,000

$12,000

Median Cost


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Median Transaction Cost Relative to Sale Price isHighest in $500k+ Price Range

5.2%

3.4%

5.3%

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$250 or less $251-500 $500+


Median Sale Price

Median Transaction Cost


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Median Days on Market: 15

0% 10% 20% 30% 40% 50%60%

70%

0-30

31-60

61-90

91-180

180-365

365+

69%

13%

8.5%

5.0%

3.8%

0.8%

DaysonMarket

Q: How many days was the property on the market?


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Days on Market Unchanged

Q: How many days was the property on the market?

0

24

6

8

10

1214

16

2013 2014

15 15

Median Days on Market


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Majority Investors Rented Properties

20%28%

73%58%

7%14%

2013 2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OtherRental

Flip

Q: What was the intended use of the property?


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Most Investors Made Minor or No Repairs

0%20%

40%60%

80%100%

2014

2013

22%

18%

39%

51%

22%

22%

17%

9%

None Minor cosmetic Major cosmetic Major remodeling

Q: What type of rehabilitation/remodeling was done to the property?


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Majority Spent < $30k on Remodeling

0%

5%

10%

15%

20%

6%

13%11%

16% 16%

5%4% 7%

3%

12%

1%

Remodeling Cost

Q: How much did your client invest in rehabilitating/remodeling the property?


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Median Remodeling Cost Increased

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2013 2014

$10,000

$15,000

Q: How much did your client invest in rehabilitating/remodeling the property?


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Median Rehab Cost Ratio is Highest in Lower SalePrice Range

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$250 or less $251-500 $500+

6.5%

3.6%

6.3%


Median Sale Price

Median Rehab Cost


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Top 5 Reasons for Buying Now

14%

21%

26%

43%

58%

0% 10% 20% 30% 40% 50% 60% 70%

low interest rates

personal

location

good price

profit potential

Q: What motivated your client to buy now? (multiple response)


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Most Investors Own Other Properties

0%10%

20%30%

40%50%

None

1

2-5

6-10

11-20

21-50

50-100

100+

17%

12% 47%

17%

2%

3%

2%#

o

f

O

t

h

e

r

P

r

o

p

er

t

i

e

s

Q: How many other investment properties does your client own?


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Investors Own More Other Properties

6.5

8.3

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.09.0

2013 2014

Average

Q: How many other investment properties does your client own?


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Most Properties Were Found on MLS

Another agent's private listing

Directly from seller

Client found property

Other

My listing

MLS

0%20%

40%60%

80%

2%

4%

4%

6%

21%

62%

Q: How did you find the property for your client?


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Future Price Predictions Positive

73% 74%

1% 3%

20%8%

6%

16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

In one year In five years

Don't know

Flat

Down

Up

Q: Do you think real estate prices in the neighborhood where the property is located will go up down or stayflat?


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More than 1/2 Intend to Keep Property < 6 Years

18%

37%

28%

12%

6%

0%

5%

10%

15%

20%

25%

30%

35%40%

Less than 1 1-5 6-10 11-20 21-30

Years

Q: How many years does your client intend to keep the property?


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Intended Length of Ownership Unchanged

5.0 5.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2013 2014

Median Years

Q: How many years does your client intend to keep the property?


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>2/3 Properties Managed by Owner

67% 69%

27% 22%

8%11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

OtherProperty manager

Owner

Q: Who will manage the property?


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FINANCING


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More than 2/3 Paid Cash

All cash

67%

Obtained

financing

33%

Q: How did your client pay for the property?


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Most Cash Funds from Savings

Q: What was the source of the cash funds in your last investor transaction?

Private investors

Proceeds from previous sale

Personal savings

0% 10% 20% 30%40%

50%

15%

26%

45%


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Majority Financing from Bank

Q: What was the source of the financing in your last investor transaction?

0% 20% 40% 60% 80% 100%

Other

1031 exchange

Private investors

Bank loan

8%

1%

6%

86%


51/86

Buyers Overwhelmingly Opted for Fixed Rate Loans

0% 20% 40% 60% 80% 100%

Other

Adjustable

Fixed

1%

6%

86%

9%

87%

2013

2014

Q: What type of loan did your client acquire?


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of Buyers Acquired 30-year Loans

8% 6%

11% 9%

76%76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

30 years15 years

Other

Q: What is the duration of the loan?


53/86

Most Investors Didnt Have Trouble Obtaining Financing

34%

14%12%

4%9%

5% 7% 7%

1%4%

0%

5%

10%15%

20%

25%

30%

35%

40%

Q: Please rate how difficult it was for your last investor client to obtain financing.


54/86

Difficulty of Obtaining Financing Declined4.2

3.8

0.0

0.51.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2013 2014

Average

Q: Please rate how difficult it was for your last investor client to obtain financing.


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Average Down Payment Declined

Q: How much was the down payment (as a percentage of the sale price) in your last investor transaction?

0%

5%

10%

15%

20%

25%

30%

2013 2014

30%

24%


56/86

Average Expected Rate of Return Down

Q: What is the expected rate of return on the property investment?

0%

2%4%

6%

8%

10%

12%

14%

16%

18%

20%

2013 2014

19%17%


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CLIENT AGENTRELATIONSHIP


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Many REALTORS Getting Repeat Business

0% 5% 10% 15% 20% 25% 30% 35% 40%

OtherClient responded to my ad

Relative

"For Sale" sign

Prior dealings with my brokerage

Friend

Refferal

Client found me online

Previous client

9%

2%

3%

6%

6%

12%

14%

14%

36%

Q: How did you find your client?


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Majority Found Property in < 8 Weeks

0%

10%

20%

30%

40%

50%

1-23-4

5-89-12

12+

41%

21% 20%

7% 12%

Weeks

Q: How many weeks did you spend looking for a property with your client?


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Investors Finding Properties Faster

Q: How many weeks did you spend looking for a property with your client?

9.9

6.8

0

2

4

6

8

10

12

2013 2014

#ofWeeks

Average


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Majority Viewed < 6 Properties

0%

10%

20%30%

40%

50%

60%

1-56-10

11+

59%

24%

17%

Number of Properties

Q: How many properties did you view with your client prior to the client making a purchase?


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Investors Viewed Fewer Properties

11.1

6.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2013 2014

#ofPropertie

s

Average

Q: How many properties did you view with your client prior to the client making a purchase?


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Nearly 2/3 Investors Made Offers on Other Properties

37%

19%

13%11%

7%5%

8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

None 1 2 3 4 5 6+

Number of Offers

Q: How many offers did your client make on other properties?


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Fewer Multiple Offers in 2014

0.0

0.5

1.0

1.5

2.02.5

3.0

3.5

4.0

4.5

2013

2014

4.2

2.7

Average Offers

Q: How many offers did your client make on other properties?


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Investment Properties Received 3.3 Offers on Average

0%

5%

10%

15%

20%

25%

1 2 34

56+

23%

21%

18%

8%

6%

16%

Number of Offers

Q: How many offers did the property purchased by your last investor client receive, including that of yourbu er?


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INVESTOR DEMOGRAPHICS


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Most Investors are Individuals

75%

19%

3%

1% 2%

Individual

LLCLLP

Corp

Other

Q: Was your client a(n)?


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Majority of Individual Investors are Male

75%

25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Male Female

Q: What was the clients gender?


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Average Individual Investor is 51 Years Old

0.0%

10.0%

20.0%

30.0%

40.0%

25 or under 26-3536-45

46-55

56-65 66+

1.2% 7.4%

27.2% 30.2%

24.7%

9.3%

Age

Q: What was the clients age at the time the transaction closed?


70/86

Average Individual Investor Age Rises

4851

0

10

20

30

40

50

60

2013 2014

Average Age

Q: What was the clients age at the time the transaction closed?


71/86

of Individual Investors are Married

73%

23%

4%

MarriedSingle

Other

Q: What was the clients marital status at the time the transaction closed?


72/86

Most Individual Investors have Higher Education

0%

5%10%15%20%25%30%

1% 2% 4% 8%

6%

29%

23%

Q: What was the highest level of education your client had completed at the time the transaction closed?


73/86

Fewer Minority Investors in 2014

1% 2%7%9%

13% 10%

26%16%

44%56%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

Caucasian/White

Asian

Hispanic/Latino

Other

African American/Black

Q: How would you describe your clients ethnic background?


74/86

Majority Earn > $200k Annually

0%

5%

10%

15%

20%

25%

30%

12%

30%

20%

16%

14%

8%

Annual Income/Revenue (In Thousands)

Q: What is your clients annual income/revenue?


75/86

Median Annual Income/Revenue Higher

$0

$50,000

$100,000

$150,000

$200,000

2013

2014

$160,000

$200,000Median Income/Revenue

Q: What is your clients annual income/revenue?


76/86

Fewer Foreign Investors in 2014

Q: What is your clients country of origin?

0%

5%

10%

15%

20%

25%30%

35%

40%

2013 2014

37%34%

Foreigners


77/86

> 1/3 Investors are Foreigners

Japan

Germany

India

Taiwan

Mexico

Unsure

China

0%2%

4%6%

8%

1%

1%

2%

2%

4%

6%

7%

Q: What is your clients country of origin?


78/86

KEY CONCLUSIONS &OPPORTUNITIES

I i Id lCli


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Investor is Ideal Client

More affluent

Pay cash

Less timesearching

for

properties

Own other

properties

Welleducated

Needproperty

managers

Notemotional

about

properties


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How to Access Investor Info.


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J i f t bi


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California Real EstateMarket Update

Thursday, August 28, 20142:00 PM - 3:00 PM

To register:WWW.CAR.ORG/MARKETDATA/VIDEOS

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QUESTIONS?

[email protected]

Documents

2014 Investor Survey Webinar