104
2016 CALIFORNIA ECONOMIC & MARKET FORECAST October 19, 2015 Deasy /Penner & Partners Leslie Appleton-Young, Vice President & Chief Economist

2016 California Economic & Market Forecast

Embed Size (px)

DESCRIPTION

 

Citation preview

2016 CALIFORNIA ECONOMIC & MARKET FORECAST

October 19, 2015Deasy /Penner & Partners

Leslie Appleton-Young, Vice President & Chief Economist

New Legal Hotline App

App Available NOW!

The Future

2016 FORECAST

2015 FORECAST REPORT CARD

Forecast Date: October 2015 vs. October 2014SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SFH Resales (000s)

% Change

Median Price ($000s)

% Change

30-Yr FRM

Housing Affordability Index

U.S. Gross Domestic Product

2014 Actual

383.3

-7.6%

$447.0

9.8%

4.2%

30%

2.4%

2015 Forecast

402.5

5.8%

$478.7

5.2%

4.5%

27%

3.0%

2015 Projected

407.5

6.3%

$476.3

6.5%

3.9%

31%

2.4%

2016 FORECAST

2010 2011 2012 2013 2014 2015p 2016f

SFH Resales (000s) 416.5 422.6 439.8 414.9 383.3 407.5 433.0

% Change -12.3% 1.4% 4.1% -5.9% -7.6% 6.3% 6.3%

Median Price ($000s) $305.0 $286.0 $319.3 $407.2 $447.0 $476.3 $491.3

% Change 10.9% -6.2% 11.6% 27.5% 9.8% 6.5% 3.2%Housing Affordability Index 48% 53% 51% 36% 30% 31% 27%

30-Yr FRM 4.7% 4.5% 3.7% 4.0% 4.2% 3.9% 4.5%DATE: September 2015 SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

ECONOMIC OUTLOOK

• U.S. is under-performing– Job-growth is slowing– Q3 Earnings reports disappointing– Consumers buying – selectively– Low oil prices help – and hurt– Strong dollar hurting exports

• Fed meets October 27-28 & December 15-16– Don’t expect hike in rates until March 2016

• China is slowing: 6.9% growth in 3rd quarter – Lowest since 2009

LATEST ECONOMIC NEWS

• Oprah likes Weight Watchers – buys 10%– Stock soars 37% on news– Wrestling with how to remain relevant

• Soul Cycle IPO – Who will win: Leslie or Joel?– “ aspirational lifestyle brand"

TRENDING… BOOMERS VS MILLENIALS

-5%

-4%

-3%

-1%

0%

1%

3%

4%

5%

20052006200720082009201020112012201320142015P2016FQ1-12Q2-12Q3-12Q4-12Q1-13Q2-13Q3-13Q4-13Q1-14Q2-14Q3-14Q4-14Q1-15Q2-15

ECONOMY HAS BEEN GROWING FOR 68 MONTHS

2014: 2.4%; 2015: 2.4%; 2016: 2.7% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $

ANNUALLY QUARTERLY

2009 Largest Annual Drop since 1938 (-3.4%)

SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

3.9%

EMPLOYMENT STALLED IN SEPT:142K

-7

-5.25

-3.5

-1.75

0

1.75

3.5

5.25

1/1/05 9/1/06 5/1/08 1/1/10 9/1/11 5/1/13 1/1/15

California USANNUAL PERCENT CHANGE

SERIES: Total Nonfarm Employment SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

Change Growth

United States 2,752,000 2.0%

California 470,000 3.0%

New York 130,500 1.4%

Texas 217,700 1.9%

198K/mo 2015 avg260K/mo 2014 avg

UNEMPLOYMENT RATE HOLDS STEADY

September 2015: US 5.1% & August 2015:CA 6.1%

-8%

0%

8%

15%

23%

30%

1/1/059/1/065/1/081/1/109/1/115/1/131/1/15

CA US US-CA

SERIES: Unemployment Rate The U-6 rate covers the unemployed, underemployed and those who are not looking but who want a jobSOURCE: US Bureau of Labor Statistics, CA Employment Development Division

JOB TRENDS BY CALIFORNIA METRO AREA

San JoseSan Francisco

Orange CountySan Diego

Inland EmpireSacramentoFresno MSA

Stockton MSAOakland

Los AngelesModestoVentura

Bakersfield

-1.5% 0.0% 1.5% 3.0% 4.5% 6.0%

-0.2%0.9%1.0%

1.8%1.9%2.0%

2.6%2.8%

3.0%3.1%3.2%

4.6%5.5%

SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

ANNUAL PERCENT CHANGE

August 2015: CA +3.0%, +470,000

CALIFORNIA JOB CHANGES BY INDUSTRY

Professional, Scientific & Technical ServicesConstruction

Leisure & HospitalityTransportation, Warehousing & Utilities

Admistrative & Support & Waste ServicesReal Estate & Rental & Leasing

Wholesale TradeHealth Care & Social Assistance

InformationEducational Services

Retail TradeGovernment

Durable GoodsFinance & InsuranceNondurable Goods

-2% 0% 2% 4% 5% 7%-1.0%

0.4%

0.5%

1.3%

2.0%

2.0%

2.6%

2.7%

3.0%

3.5%

3.5%

3.6%

4.3%

6.4%

6.8%

SERIES: Total Nonfarm Employment By Industry SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

August 2015: CA +3.0%, +470,000ANNUAL PERCENT CHANGE

CA METRO COMMERCIAL VACANCY RATES

2015 Q2

SOURCE: National Association of REALTORS®

MSA Office Industrial Retail Multi-Family

Los Angeles 14.8% 3.6% 5.7% 3.5%

Oakland-East Bay 17.1% 8.2% 6.0% 2.8%

Orange County 16.3% 3.4% 4.6% 3.3%

Sacramento 20.3% 11.1% 10.0% 2.6%

San Bernardino/Riverside 22.4% 7.2% 9.1% 2.5%

San Diego 14.7% 6.4% 6.1% 2.8%

San Francisco 10.6% 10.4% 3.0% 3.8%

San Jose 16.3% 16.2% 4.6% 3.4%

Ventura 16.4% - 8.5% 2.9%

NONFARM EMPLOYMENT BY REGION

Aug 2015 Aug 2014 Change % Change

Southern California 8,834.4 8,626.3 208.1 2.4%

Bay Area 4,289.3 4,213.0 76.3 1.8%

Central Valley 1,540.9 1,492.4 48.5 3.2%

Central Coast 1,318.4 1,280.0 38.4 3.0%

North Central 1,391.4 1,349.0 42.4 3.1%

CALIFORNIA 294.4 291.9 2.5 0.9%

Nonfarm Employment (Thousands)

SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

CONSUMER PRICE INDEX

August 2015: All Items 0.2% YTY; Core +1.8% YTY

-3%

-2%

0%

2%

3%

5%

6%

1/1/055/1/079/1/091/1/125/1/14

All Items CoreANNUAL PERCENT CHANGE

SERIES: Consumer Price Index SOURCE: US Bureau of Labor Statistics

IS IT TIME? AH… LET’S WAIT A LITTLE LONGER

RE-CALCULATING…

MORTGAGE RATES

January 2009 – October 2015

0%

2%

3%

5%

6%

2009/012009/052009/092010/012010/052010/092011/012011/052011/092012/012012/052012/092013/012013/052013/092014/012014/052014/092015/012015/0508.27.1509.24.15

FRMARM

MONTHLY WEEKLY

SERIES: 30Yr FRM, 1Yr ARM SOURCE: Federal Home Loan Mortgage Corporation

U.S. HOME SALES UP IN 2015U.S., Aug 2015 Sales: 4,690,000 Units, +8.1% YTD, +6.1% YTY

00

1,750,000

3,500,000

5,250,000

7,000,000

3835338384384123844338473385043853438565385963862638657386873871838749387773880838838388693889938930389613899139022390523908339114391423917339203392343926439295393263935639387394173944839479395083953939569396003963039661396923972239753397833981439845398733990439934399653999540026400574008740118401484017940210402384026940299403304036040391404224045240483405134054440575406034063440664406954072540756407874081740848408784090940940409694100041030410614109141122411534118341214412444127541306413344136541395414264145641487415184154841579416094164041671416994173041760417914182141852418834191341944419744200542036420644209542125421564218642217

4,690,000

*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family Homes SOURCE: NATIONAL ASSOCIATION OF REALTORS®

U.S. HOME PRICE GAINS MODERATING

U.S., Aug 2015: $230,200, -1.4% MTM, +5.1% YTY

00

$ 60,000

$ 120,000

$ 180,000

$ 240,000

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

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

U.S. HOUSING MARKET OUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

Existing Home Sales (000s) 4,190 4,260 4,660 5,090 4,940 5,292 5,471

% Change -3.5% 1.7% 9.4% 9.2% -2.9% 7.1% 3.4%

Median Price ($000s) $172.9 $166.1 $176.8 $197.1 $208.3 $221.4 $231.0

% Change 0.2% -3.9% 6.4% 11.5% 5.7% 6.3% 4.3%

SERIES: U.S. Existing home sales of single-family homes and condo/coops SOURCE: NATIONAL ASSOCIATION OF REALTORS®

U.S. ECONOMIC OUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

US GDP 2.4% 1.8% 2.3% 2.2% 2.4% 2.4% 2.7%

Nonfarm Job Growth -0.7% 1.2% 1.7% 1.7% 1.9% 2.1% 1.8%

Unemployment 9.6% 8.9% 8.1% 7.4% 6.2% 5.3% 5.0%

CPI 1.6% 3.1% 2.1% 1.5% 1.6% 0.2% 2.1%Real Disposable Income, % Change 1.0% 2.5% 3.0% -0.2% 2.5% 3.3% 2.7%

30-Yr FRM 4.7% 4.5% 3.7% 4.0% 4.2% 3.9% 4.5%

SERIES: U.S. Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CALIFORNIA ECONOMIC OUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

Nonfarm Job Growth -1.1% 1.1% 2.4% 3.0% 2.2% 2.8% 2.3%

Unemployment Rate 12.3% 11.8% 10.4% 8.9% 7.5% 6.3% 5.5%

Population Growth 0.7% 0.7% 0.7% 0.9% 0.9% 0.9% 0.9%Real Disposable Income, % Change 0.9% 3.4% 4.7% 0.2% 3.0% 4.3% 4.5%

SERIES: CA Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CALIFORNIA HOUSING MARKET OUTLOOK

C.A.R. MEMBERSHIP FOLLOWS SALES WITH 1-2 YEAR LAG

55,000

110,000

165,000

220,000

0

150,000

300,000

450,000

600,000

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

p

Membership Home SalesUnits of Home Sold # of Members

SALES OF EXISTING DETACHED HOMESCalifornia, Sep 2015 Sales: 425,030 Units, +7.3% YTD, +6.9% YTY

00

175,000

350,000

525,000

700,000

383533838438412384433847338504385343856538596386263865738687387183874938777388083883838869388993893038961389913902239052390833911439142391733920339234392643929539326393563938739417394483947939508395393956939600396303966139692397223975339783398143984539873399043993439965399954002640057400874011840148401794021040238402694029940330403604039140422404524048340513405444057540603406344066440695407254075640787408174084840878409094094040969410004103041061410914112241153411834121441244412754130641334413654139541426414564148741518415484157941609416404167141699417304176041791418214185241883419134194441974420054203642064420954212542156421864221742248

*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sep-15: 425,030

Sep-14: 397,490

MEDIAN PRICE OF EXISTING DETACHED HOMES

California, Sep 2015: $482,150, -2.3% MTM, +4.3% YTY

00

$ 150,000

$ 300,000

$ 450,000

$ 600,000

383533838438412384433847338504385343856538596386263865738687387183874938777388083883838869388993893038961389913902239052390833911439142391733920339234392643929539326393563938739417394483947939508395393956939600396303966139692397223975339783398143984539873399043993439965399954002640057400874011840148401794021040238402694029940330403604039140422404524048340513405444057540603406344066440695407254075640787408174084840878409094094040969410004103041061410914112241153411834121441244412754130641334413654139541426414564148741518415484157941609416404167141699417304176041791418214185241883419134194441974420054203642064420954212542156421864221742248

P: May-07$594,530

T: Feb-09$245,230-59% frompeak

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

Sep-15: $482,150Sep-14:

$462,380

-25%

-13%

0%

13%

25%

38%

50%

1/1/1010/1/107/1/11 4/1/12 1/1/1310/1/137/1/14 4/1/15

Condo Single-Family Homes

HOME PRICE APPRECIATIONS HAVE MODERATED SINCE MID 2013

SERIES: Sales of SFH and Condo Units SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

YTY% Chg. in Price

PRICE PER SQUARE FOOT

Sep 2015: $236, Up 0.3% MTM, Up 2.5% YTY

$0

$100

$200

$300

$400

1/1/07 9/1/07 5/1/08 1/1/09 9/1/09 5/1/10 1/1/11 9/1/11 5/1/12 1/1/13 9/1/13 5/1/14 1/1/15 9/1/15

PRICE PER SQ. FT.

SERIES: Median Price Per Square Feet SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CALIFORNIA VS. U.S. MEDIAN PRICES

1970-2015

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

00

$ 150,000

$ 300,000

$ 450,000

$ 600,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015P

California US

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

• Housing market has recovered – Welcome to the new normal – Low mortgage rates– Job & Income growth are positive

• And yet…– Supply well below long-run average– Share of first-time buyers LOW– Affordability key concern for everyone

• It’s not an easy market/transaction for anyone .

2015 - WHERE ARE WE ?

INVENTORY CONTINUED TO DECLINE FROM LAST YEAR

Sep 2014: 4.2 Months; Sep 2015: 3.7 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” (when available) and divide the sum by the number of “Sold” properties for the month in question.

0

4.5

9

13.5

18

1/1/05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15

SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

DEMAND OUTPACING SUPPLY

-11%

-7%

-4%

0%

4%

7%

11%

14%

San Francisco Bay Area Southern California Central Valley

-4.4%

-7.4%-6.2%

13.4%

10.4%

-0.0%

Sales Active ListingsYear-to-Year % Chg

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sep 2015

HOUSING DEMAND OUTPACED SUPPLY IN THE BAY AREA

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Alamed

a          

Contra

Costa     

Marin            

Napa             

San Fr

ancisco    

San M

ateo        

Santa

Clara      

Solan

o           

Sono

ma           

San Fr

ancisco

Bay A

rea

-6.2%

7.2%

-22.5%

3.2%

-4.3%

-39.8%

5.4%

-17.1%

-4.6%-3.9%-0.0%

-8.8%

17.4%

4.1%

-3.9%

-19.5%

27.1%

-2.2%

2.7%

-4.7%

Sales Active ListingsYear-to-Year % Chg

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sep 2015

HOUSING DEMAND OUTPACED SUPPLY IN SO CAL

-20%

-10%

0%

10%

20%

30%

40%

Los A

ngeles

Orange

County

Rivers

ide Cou

nty

San Be

rnardi

no

San D

iego

Ventu

ra

Santa

Barbar

a

South

ern Calif

ornia

-7.4%

2.9%

-6.8%

-14.8%

-4.0%-3.3%-4.2%-8.7%

10.4%

2.6%

34.7%

4.8%9.2%10.4%

13.8%9.6%

Sales Active ListingsYear-to-Year % Chg

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sep 2015

WHERE IS THE INVENTORY?

– Affordability challenge for repeat buyers• Low rate on current mortgage • Low property taxes• Concerned with capital gains• Why list when there is nowhere to go I can afford?• Could not qualify for a mortgage today

– Foreclosure pipeline is dry – Investors renting instead of flipping– New construction recovering but LOW– Demographics: Trade-up buyer pool is smaller– Measurement error? Off- MLS (aka “pocket’) listings not

being counted in listing stats

LOS ANGELES COUNTYPreforeclosure: 5,480 • Auction: 3,926 • Bank Owned: 5,200

SOURCE: PropertyRadar on 10/02/15

LOS ANGELES COUNTYPreforeclosure: 5,480 • Auction: 3,926 • Bank Owned: 5,200

SOURCE: PropertyRadar on 10/02/15

LOS ANGELES COUNTYPreforeclosure: 5,480 • Auction: 3,926 • Bank Owned: 5,200

SOURCE: PropertyRadar on 10/02/15

PASADENA

PASADENAPreforeclosure: 56 • Auction: 46 • Bank Owned: 47

SOURCE: PropertyRadar on 10/15/15

SALES OF RESIDENTIAL HOMES

Pasadena, September 2015: 143 Units Down 3.4% MTM, Up 11.7% YTY

SOURCE: Clarus Market Metrics

MEDIAN PRICE OF RESIDENTIAL HOMES

Pasadena, September 2015: $675,000Down 3.6% MTM, Down 0.7% YTY

SOURCE: Clarus Market Metrics

FOR SALE PROPERTIES

Pasadena, September 2015: 589 Units Down 0.5% MTM, Down 3.4% YTY

SOURCE: Clarus Market Metrics

Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month.

MONTH’S SUPPLY OF INVENTORY

Pasadena, September 2015: 2.6 Months

SOURCE: Clarus Market Metrics

Note: “Month’s 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.

SOUTH PASADENA

SOUTH PASADENAPreforeclosure: 9 • Auction: 2 • Bank Owned: 2

SOURCE: PropertyRadar on 10/15/15

SALES OF RESIDENTIAL HOMES

South Pasadena, September 2015: 22 Units Down 12.0% MTM, Up 57.1% YTY

SOURCE: Clarus Market Metrics

MEDIAN PRICE OF RESIDENTIAL HOMES

South Pasadena, September 2015: $1,133,500Up 2.3% MTM, Up 36.3% YTY

SOURCE: Clarus Market Metrics

FOR SALE PROPERTIES

South Pasadena, September 2015: 54 UnitsDown 15.6% MTM, Down 31.6% YTY

SOURCE: Clarus Market Metrics

Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month.

MONTH’S SUPPLY OF INVENTORY

South Pasadena, September 2015: 1.2 Months

Note: “Month’s 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.

SOURCE: Clarus Market Metrics

SAN MARINO

SAN MARINOPreforeclosure: 5 • Auction: 2 • Bank Owned: 0

SOURCE: PropertyRadar on 10/15/15

SALES OF RESIDENTIAL HOMES

San Marino, September 2015: 6 Units Down 57.1% MTM, Down 50.0% YTY

SOURCE: Clarus Market Metrics

MEDIAN PRICE OF RESIDENTIAL HOMES

San Marino, September 2015: $2,209,000Up 4.4% MTM, Down 17.4% YTY

SOURCE: Clarus Market Metrics

FOR SALE PROPERTIES

San Marino, September 2015: 61 UnitsDown 9.0% MTM, Down 22.8% YTY

Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month.

SOURCE: Clarus Market Metrics

MONTH’S SUPPLY OF INVENTORY

San Marino, September 2015: 5.2 Months

Note: “Month’s 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.

SOURCE: Clarus Market Metrics

ANNUAL HOUSING MARKET SURVEY:

2015 FINDINGS

MARKET COMPETITION COOLS DOWN AFTER PEAKING IN 2013

0

1.5

3

4.5

6

0%

20%

40%

60%

80%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% with Multiple Offers # of Multiple offers (Average)

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FIRST-TIME BUYERS FINDING IT HARD TO BUY

0%

12%

24%

36%

48%

2005 2007 2009 2011 2013 2015

% First-Time Home BuyersLong Run Average

Long Run Average = 38%

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SHARE OF CASH BUYERS LOWEST SINCE 2009

% of All Cash Sales

0%

8%

15%

23%

30%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

21%22%

27%30%

27%

23%

20%21%22%

27%30%

26.80%

23.20%

19.60%18.50%

12.60%11.00%10.80%

• Almost one-fourth of buyers paid with all cash

• The share of all cash buyers is the lowest in the last 6 years

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SHARE OF INVESTMENT PROPERTIES DROPS TO THE LOWEST LEVEL SINCE 2009

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

0%

5%

10%

15%

20%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% to Total Sales

SHARE OF SECOND/ VACATION HOMES HIGHER AFTER TWO YEARS’ OF DECLINE

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

0%

2%

4%

6%

8%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% to Total Sales

YEARS OWNED HOME BEFORE SELLINGAll Sellers

0

3

5

8

10

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

THE BOOMERS AND THEIR NEXT MOVE

THE BOOMERS AND THEIR NEXT MOVE

BOOMERS – BORN BETWEEN 1946-1964

What is your age?SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Average: 59

MAJORITY ARE MARRIED

What is your marital status?

Other18%

Single26%

Married56%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

BABY BOOMERS LESS DIVERSE THAN MILLENNIALS

What is your ethnic background?

Boomers Millennials

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

3/4 BABY BOOMERS ARE HOME OWNERS

What is your current living situation?

Other3%

Rent22%

Own75%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MOST HAVE EQUITY IN THEIR HOME

Do you have equity in your home?

No8%

Yes92%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY DO NOT PLAN TO SELL HOME WHEN THEY RETIRE

Do you plan to sell your current home when you retire?

Don't know/ unsure32%

No58%

Yes10%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY WON’T SELL BECAUSE THEY LIKE THEIR HOME

Why do you not plan to sell your current home when you retire?

5%8%

10%

77%

I like my homeI cannot afford to buy another retirement homeI plan to give the home to my child(ren)Another reason

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

¼ POSTPONED RETIREMENT BECAUSE …

Did you have to postpone your date of retirement due to any of the following? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

> ½ DO NOT FEEL THEY HAVE SAVED ENOUGH MONEY TO RETIRE COMFORTABLY

Do you feel you have saved enough money to retire comfortably?

No54%

Yes46%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY WORRY ABOUT CHILDRENS’ ABILITY TO BECOME HOME OWNERS

Do you worry about your children’s ability to become home owners in the future?

No45%

Yes55%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

2/5 PLAN TO HELP CHILDREN WITH DOWN PAYMENT

Do you plan to help your children with their down payment to purchase a home?

No57%

Yes43%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

WHAT FINANCIAL DECISION WOULD BOOMERS CHANGE?

If you could change one financial decision that you made within the past 10 years, what would it be?

Saving more/ spending less

Better investment decisions

Invest in real estate

Seek better job

Retiring prematurely

Carry less debt/ poor credit

Cash out/ open IRA

Moving to the wrong location

0% 8% 15% 23% 30%

1%

2%

4%

5%

7%

8%

19%

22%

19%

22%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

WHAT KEEPS BOOMERS UP AT NIGHT?

What keeps you up at night?

NothingBills/ finances

Stress/ anxietyFamily issues

WorkJob securityAche/ pain

InsomniaHealth concerns

TV/ internetWorld politics

Economy

0% 10% 20% 30% 40%1%

2%2%3%3%4%4%4%4%

6%13%

39%7%

13%39%

SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CRAFTSMAN BUNGALOW IS DREAM HOME FOR 1/3 HOME OWNERS

Q. Which of the following is your dream home?

craftsman bungalow• 32%

neo colonial• 19%

dream mansion• 14%

Frank Lloyd Wright

desert modernism

art nouveau/art

modernemodern

townhomedowntown

loftbrick urban rowhome

8.5%

12%

5.7% 5.1% 2.6%

1.6%

2/3 HOME OWNERS PREFER A NIGHT IN WITH FAMILY/FRIENDS FOR FUN

Q. In which of the following activities would you like to participate? Select all that apply.

INTERNATIONAL BUYERS MAKE THEIR MARK

THE SHARE OF INTERNATIONAL BUYERS LOWEST IN 8 YEARS

0%

2%

4%

6%

8%

2008 2009 2010 2011 2012 2013 2014 2015

Q. Was the buyer an international buyer – a person who was a citizen of another country who wished to purchase residential real estate in the U.S.?

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

0%

20%

40%

60%

80%

0 1 2 3 4 5 or more

4%1%3%5%

9%

77%

0.0510.0190.026

0.0630.117

0.724

4%2%4%6%

14%

71%

2012201320142015

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

% Who Sold to International Buyers

Q. How many properties have you sold to an international buyer in the last 12 months? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

23% OF CA REALTORS® WORKED WITH AN INTERNATIONAL BUYER IN THE PAST 12 MONTHS

0%

13%

25%

38%

50%

China Mexico South Korea

8%8%

43%

COUNTRY OF INTERNATIONAL BUYER

SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

INTENDED USE FOR PROPERTY? HOME

Primary Residence

Investment/Rental Property

Vacation/Second Home

Other

0% 25% 50% 75% 100%

4%

27%

38%

30%

0%

2%

7%

91%

US BuyerInternational Buyer

What was the intended use of the property in your last closed transaction with an international client?

ALL CASH INTERNATIONAL BUYERS

All cashObtained financing

SOURCE: 2013 International Client Survey, 2013 Annual Housing Market SurveyHow did your last international buyer pay for the property?

MILLENNIALS: TOMORROW’S HOME OWNERS?

OVER 1/3 LIVE WITH THEIR PARENTS

What is your current living situation?

SERIES: 2014 Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

ATTITUDE TOWARD THE HOME BUYING PROCESS – MIXED RESULTS

SOURCE: How would you describe your attitude towards the home buying process? C.A.R. 2014 Millennial Survey

MOST MILLENNIALS UNCERTAIN/DOUBTFUL THAT THEY COULD OBTAIN A MORTGAGE NOW?AMILLENNIAL ETHNICITY

SOURCE: C.A.R. 2014 Millennial Survey Q: Could you obtain a mortgage if you applied now ?

Don't know45%

No33%

Yes22%

PEOPLE WOULD PREFER THE FOLLOWING OVER GOING THROUGH THE HOME MORTGAGE PROCESS AGAIN:

SOURCE: Guaranteed Rate Mortgage Survey of 1,000 adults 25 and older USA Today April 2014

2016 FORECAST

CALIFORNIA HOUSING MARKET OUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

SFH Resales (000s) 416.5 422.6 439.8 414.9 383.3 407.5 433.0

% Change -12.3% 1.4% 4.1% -5.9% -7.6% 6.3% 6.3%

Median Price ($000s) $305.0 $286.0 $319.3 $407.2 $447.0 $476.3 $491.3

% Change 10.9% -6.2% 11.6% 27.5% 9.8% 6.5% 3.2%Housing Affordability Index 48% 53% 51% 36% 30% 31% 27%

30-Yr FRM 4.7% 4.5% 3.7% 4.0% 4.2% 3.9% 4.5%

SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SALES UP FOR 2015 AND CONTINUE TO IMPROVE IN 2015; PRICE WILL GROW STEADILY THIS YEAR AND NEXT

Units (Thousand) Sales of Existing Detached Homes

0

150,000

300,000

450,000

600,000

20052006200720082009201020112012201320142015p2016f

433,030407,490

Median Price

$0

$150,000

$300,000

$450,000

$600,000

2005 2011

Price (Thousand)

SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CA: DOLLAR VOLUME UP 13.3% IN 2015, UP 9.6% IN 2016

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

$0

$100

$200

$300

$400

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p 2016f

$ Volume of Sales Percent Change

$213$194

$171$169$140

$121$127$131$133$164

$244

$301

% Change$ in Billion

-60%

SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

C.A.R. STRATEGIC PLANNING BOOKS

STAY CONNECTED WITH RESEARCH

CARResearchGroup

CARResearchInfo

On.car.org/CARResearch

Housingmatters.car.org

THANK YOU!www.car.org/marketdata

[email protected]: CARResearchgroup

Twitter : CARResearchInfo

This presentation can be found on www.car.org/marketdata