2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®

2020 California Housing Market Forecast

Leslie Appleton-Young Chief Economist + SVP California Association of

REALTORS®

CALIFORNIA ASSOCIATION OF REALTORS®

Where is the market data?

page

2


Housing

Matters

Podcast

page

4

There is no such thing as a bad market. Markets go up and down. Plan for it and you will succeed.

Macro Economic Outlook

UNCERTAINTY


What is everyone worried about? Everything.

page

8

Recession

No deal

BrexitGSE PatchImpeachment

Global

economic

slowdown

Stock market

correction

Fed Misses

the Mark

Trade War

Inconsistent

Policies

CALIFORNIA ASSOCIATION OF REALTORS® page

9

Aren’t we due for a

recession in 2020?


10

Joel: There will be a recession sometime before 2035.

Dave/Spike: We don’t need any more “receptions”.

Cardinal Rule of Forecasting: Never give a number and a date in the same sentence.


Recent Headline – Can 100+ Economists be Wrong?

page

11

Experts Say Next Recession Will Begin in 2020

The most likely triggers for the next recession are trade

policy, a stock market correction or geopolitical crisis.

Housing demand will decrease, but a housing

slowdown is not expected to cause the recession.

Jul 25, 2019

Pulsenomics


Aren’t we due for a recession in 2020?

page

12

• 10th year of economic growth

• Yield curved inverted in August

• Q: What will drive the downturn when it comes ?

a) Global economic slowdown

b) Trade War

c) Geo-political crisis

d) Stock market correction

• Answer: All of the above (& none are housing)

• Bonus Answer: No timetable for recession

Business Leaders are concerned about the current environment

page

13SERIES: U.S. Business Confidence Index

SOURCE: Organization for Economic Co-operation and Development (OECD)

Trade War

Govt.

Shutdown

Tax Reform

Stock market major jitters

page

14

27,349

25,718

26,378

25,479

24500

25000

25500

26000

26500

27000

27500

28000

(7/15/19 – 8/15/19)

20000

21000

22000

23000

24000

25000

26000

27000

28000

(8/13/18 – 8/15/19)

SERIES: Dow 30

SOURCE: Yahoo! Finance

Down 16.1%

Down 6.4%

JP Morgan Volfefe Index: Tweets & Market Volatility

page

15SERIES: Volfefe Index, President’s Trump tweets

SOURCE: JP Morgan, Bloomberg

0

20

40

60

80

100

120

140

160

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IND

EX

, 1

00

=1

98

5Consumer Confidence dropped 9 points in September

page

16

September 2019 125.1

SERIES: Consumer Confidence

SOURCE: The Conference Board


The Conference Board: September News Release

page

17

“While confidence could continue hovering

around current levels for months to come, at

some point this continued uncertainty will

begin to diminish consumers' confidence in the

expansion."

C.A.R. Google Consumer Poll: September 2019Good time to buy? 22% Good time to sell? 46%

page

18

57%56%51%

46%48%50%53%48%45%

51%49%52%

46%

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22%21%27%25%22%25%24%22%22%

26%23%23%22%

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Do you think it’s a good time to sell a

home in California?N=300

Do you think it’s a good time to buy a

home in California?N=300

SERIES: 2018/2019 Google Consumer Poll

SOURCE: NATIONAL ASSOCIATION OF REALTORS®

Properties falling out of escrow because buyer was unsure

page

19

Q. Had the property fallen out of escrow prior to this sale?

15%

0%

10%

20%

2013 2014 2015 2016 2017 2018 2019

% of Properties Fallen out of

Escrow

47%

6%

6%

4%

1%

1%

1%

35%

0% 20% 40% 60%

Buyer changed mind and decided not to buy

Buyer did not qualify for a mortgage on terms

acceptable to the buyer

Buyers could not secure a mortgage because

of his/her credit background

Buyers could not come up with the

downpayment

Lender's delay in approving the short sale

Buyers could not secure a mortgage because

the appraised value was too low

Sellers decided not to sell

Other

SERIES: 2019 Housing Market Survey

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®


20

STOP THE NOISE –Let’s look at the data

Fundamentals appear solid and sustainable if not spectacular…

page

21SOURCE: Bureau of Labor Statistics & Bureau of Economic Analysis

GDP 2.0%2019-Q2

Consumption 4.7%2019-Q2

Unemployment 3.7%August 2019

Core CPI 2.4%August 2019

Job Growth 1.4%August 2019

2.4%

1.7%

2.0%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

An

nu

al Pe

rce

nt

Ch

an

ge

,

Ch

ain

-ty

pe

(20

09

) $

Growth slowed from 3.1% in Q1 to 2.0% in Q2

page

22

GDP: 2018: 2.9% 2019p: 2.4% 2020f: 1.7%

ANNUALLY QUARTERLY

SERIES: GDP

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


Unemployment at lowest rate in 50 years

page

23

0

2

4

6

8

10

12

14

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US California

2.2%

4.5%

9.8%

0% 5% 10% 15%

San Francisco

South Bay

Orange County

Napa

San Diego

Ventura

Solano

Los Angeles

Santa Cruz

Stanislaus

Monterey

Madera

Bakersfield

Merced

Rates remain at historic lows – will move lower in 2020

page

24

January 2012 – April 2019

3.623.73

3.36 3.49

2.25 2

0

1

2

3

4

5

6

FRM

ARM

Fed Funds Rate

MONTHLY WEEKLY

January 2012 – September 2019

SERIES: 30Yr FRM, 5Yr ARM, Fed Funds Rate (Target Rate)

SOURCE: Freddie Mac, St. Louis Fed


U.S. economic outlook

page

25SERIES: U.S. Economic Outlook


2015 2016 2017 2018 2019p 2020f

US GDP 2.6% 1.6% 2.3% 2.9% 2.2% 1.6%

Nonfarm Job Growth 2.1% 1.8% 1.4% 1.6% 1.3% 0.8%

Unemployment 5.3% 4.9% 4.4% 3.9% 3.7% 3.9%

CPI 0.1% 1.4% 2.0% 2.4% 2.0% 2.0%

Real Disposable Income, %

Change3.4% 2.7% 2.1% 2.9% 2.8% 2.5%


California economic outlook

page

26SERIES: U.S. Economic Outlook


2015 2016 2017 2018 2019p 2020f

Nonfarm Job Growth 2.7% 2.3% 1.6% 2.0% 1.5% 1.0%

Unemployment 6.2% 5.5% 4.8% 4.2% 4.3% 4.5%

CA Population (Million) 39.0 39.2 39.5 39.7 39.9 40.1

Population Growth 0.9% 0.7% 0.7% 0.6% 0.5% 0.4%

California Housing Market

Doing Better: Sales dip slightly from July,but remain above 400k

page

28

California, August 2019 Sales: 406,100 Units, -4.1% YTD, 1.6% YTY

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

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SERIES: Sales of Existing Single Family Homes


First back-to-back yearly sales gain since April 2018

page

29

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18

Year-over-Year % Chg 6 per. Mov. Avg. (Year-over-Year % Chg)



Sales constrained by tight supply, particularly at the low end

page

30

August 2019 (YTY% Chg.)

-15.0%

-2.3%

2.9%

6.6%

3.1%

-6.6%

1.5%

-20%

-15%

-10%

-5%

0%

5%

10%

12.5%

15.8%

14.0%

25.6%

12.2%

12.4%

3.5%

0% 10% 20% 30%

$0 - $299k

$300 - $399k

$400 - $499k

$500 - $749k

$750 - $999k

$1,000 - $1,999k

$2,000k+

Share by Price Segment

SERIES: Sales of Existing Detached Homes



Sales by Region

page

31

-2.3%

-3.8%

-0.4%

-6.4%

-1.9%

-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

August 2019 YTY Sales Growth

by Region (NSA)

Central

Valley

23%

S.F. Bay

Area

19%

Southern

California

46%

Central

Coast

4%

Other Counties

8%

August 2019 Home Sales by Region

California median price at all-time high for August

page

32

California, August 2019: $617,410, 1.5% MTM, 3.6% YTY

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

Ja

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SERIES: Median Price of Existing Single Family Homes


Single-family homes had the largest price gain in 10 months

page

33

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%Ja

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YTY

% C

hg

. in

Pric

e

Condo Single-Family Homes

SERIES: Median Price of Existing Condo/Townhomes


Price/Square Foot slightly downfrom last month and inched up from last year

page

34

August 2019: $287, -1.0% MTM, 1.4% YTY

$0

$50

$100

$150

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$400Ja

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PR

ICE P

ER

SQ

. FT.

SERIES: Median Price Per Square Feet of Existing Single Family Homes


Top percentile saw decline in price growth - uncertainty

page

35SERIES: Median Price of Existing Single Family Homes


6.3%5.5%

2.9%

0.0%

-1.9%-2.5%

-1.6%

0.3%

-1.3%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

0-20 20-40 40-60 60-80 80-100 80-85 86-90 91-95 96-100

Percentile

California Year-over-Year Price Growth by Quintile (August 2019)

Inventory index down due primarily to drop in active listings

page

36

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

SERIES: Unsold Inventory Index of Existing Single Family Homes


August 2018: 3.3 Months; August 2019: 3.2 Months

Supply improved only at the upper end of the market

page

37

August 2019

-17.5%-14.3% -12.8%

-3.8%

4.5%

10.8%

-8.9%

-20%

-10%

0%

10%

20%

Active Listing

SERIES: Active Listings of Existing Single Family Homes


Regional inventory mostly flat

page

38

2.5

3.3

2.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

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Bay Area So CA Central Valley

SERIES: Unsold Inventory Index of Existing Single Family Homes


Active listings in August 2019 had the largest drop since Dec 2017

page

39

-8.9%

-20%

-10%

0%

10%

20%

30%

40%

Ja

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Year-over-Year % Chg

SERIES: Active Listing of Existing Single Family Homes


Time on market up as market ends its peak season

page

40

California, August 2019: 23.0 Days

0

10

20

30

40

50

60

70

80

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DA

YS O

N M

AR

KET

SERIES: Median Time of Market of Existing Single Family Homes


Reduced-Price Listings Rising

page

41

Share of Listings with a Reduced Price: 41.0%; Median Reduction Amount: -4.3%

-10%-9%-8%-7%-6%-5%-4%-3%-2%-1%0%

0%5%

10%15%20%25%30%35%40%45%50%

1/1

/20

10

5/1

/20

10

9/1

/20

10

1/1

/20

11

5/1

/20

11

9/1

/20

11

1/1

/20

12

5/1

/20

12

9/1

/20

12

1/1

/20

13

5/1

/20

13

9/1

/20

13

1/1

/20

14

5/1

/20

14

9/1

/20

14

1/1

/20

15

5/1

/20

15

9/1

/20

15

1/1

/20

16

5/1

/20

16

9/1

/20

16

1/1

/20

17

5/1

/20

17

9/1

/20

17

1/1

/20

18

5/1

/20

18

9/1

/20

18

1/1

/20

19

5/1

/20

19

Share Reduced Median Reduction

SERIES: Listing Price of Existing Single Family Homes


One more look at the last 15 years: flat sales with a very strong economy & low rates & pop growth

page

42

California, August 2019 Sales: 406,100 Units, -4.1% YTD, 1.6% YTY

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Ja

n-0

5

Se

p-0

5

Ma

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6

Ja

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7

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p-0

7

Ma

y-0

8

Ja

n-0

9

Se

p-0

9

Ma

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0

Ja

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1

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1

Ma

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How Did We Get Here?


More of everything, except…

page

44

27,052,000

39,740,508

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

California Population

1986 2018

112,491

205,074

0

50,000

100,000

150,000

200,000

250,000

California REALTORS®

1986 2018

393,983402,750

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

California Home Sales

1986 2018

255,559

114,370

0

50,000

100,000

150,000

200,000

250,000

300,000

California Permits

1988* 2018

This Photo by Unknown Author is licensed under CC BY-SA-NC

3.5

Million

http://www.foundsf.org/index.php?title=Mayor_Gavin_Newsom

https://creativecommons.org/licenses/by-nc-sa/3.0/


Number of new housing units off by all measures…

page

46

114,370

HCD Estimated

Need: 180,000

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

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

California Housing Permits

Permits HCD Estimate


LAO agrees

page

47

So does the data…

page

48

1,424,208

845,833

386,467

111,792

379,967

183,111 134,437

28,670

SoCal Bay Area Central Valley Central Coast

California New Jobs vs. New Construction

2010-2018

New Jobs Permits

SERIES: Nonfarm Job Growth & New Housing Permits

SOURCE: CA EDD, Construction Industry Research Board


And so do the cities, really…(RHNA = Regional Housing Needs Assessment)

page

49

CHULA VISTA, 3,209

KERN COUNTY, 4,888 SAN FRANCISCO,

6,234

RIVERSIDE, 7,173

FRESNO, 7,859SAN JOSE, 9,233

LOS ANGELES, 20,427

SAN DIEGO, 21,977

0

5,000

10,000

15,000

20,000

25,000

0 50 100 150 200 250 300 350 400

Current RHNA Allocations


Most cities are failing…

page

50

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

WESTM

INSTE

R

RA

NC

HO

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OSE

Normalized RHNA Progress


In fact, 91% are behind…

page

51

Behind

91%

On

Track

9%

Normalized RHNA Progress

Average: • 28.6% Behind

Worst Performer:• 58.3% Behind

(6-Way Tie, all SD)

Best Performer:• 74.1% Ahead

(Parlier in Fresno

County)

How It Hurts

California Right Now


Prices have grown much faster than incomes

page

54

10.2

4.1

7.5

Avg. 5.0

0

2

4

6

8

10

12

Q1

-90

Q4

-90

Q3

-91

Q2

-92

Q1

-93

Q4

-93

Q3

-94

Q2

-95

Q1

-96

Q4

-96

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

Q4

-11

Q3

-12

Q2

-13

Q1

-14

Q4

-14

Q3

-15

Q2

-16

Q1

-17

Q4

-17

Q3

-18

Q2

-19

California Price/Income Ratio

Minimum Annual Income Required During Affordability Peak vs. Current

page

55

Region 2012 Q1 2019 Q2 % CHG

CA SFH $56,320 $122,960 118.3%

CA

Condo/Townhomes$44,440 $95,960 115.9%

Los Angeles

Metropolitan Area$53,780 $109,090 102.8%

Inland Empire $35,170 $76,760 118.3%

S.F. Bay Area $90,370 $197,970 119.1%

US $32,000 $56,480 76.5%

SERIES: Housing Affordability Index of Existing Detached Homes


Mortgage payment continued to drop;rates lowest in 34 months

page

56

-7.35%-10%

-5%

0%

5%

10%

15%

20%

Ja

n-1

6

Ma

r-16

Ma

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6

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YTY

% C

hg

.

California Median Price vs. Mortgage Payment

Price Growth Mortgage Pmt Growth

SERIES: Price Growth vs. Mortgage Payment Growth



Buyers aren’t responding like they used to …

page

57

-30

-20

-10

0

10

20

30

40

50

60

70

1/4/2019 2/1/2019 3/1/2019 3/29/2019 4/26/2019 5/24/2019 6/21/2019 7/19/2019

We

ekly

% C

ha

ng

e

Purchase Mortgage Applications


Why rates aren’tspurring even more sales

page

58

• Home prices at all time highs

• Big down payments

• Inventory is tight

• Market still competitive

• 1st time buyers have limited options

• Tax reform: FTBs and Trade-ups

• Rates aren’t everything


California has no money left over

page

59

43.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Pu

ert

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ico

Ne

bra

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Wyo

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Cost Burdened

Housing affordability peaked at Q2-2012

page

60

California, 1984-2019

CA, 30%

US, 55%

0%

10%

20%

30%

40%

50%

60%

70%

80%

% O

F H

OU

SEH

OLD

S T

HA

T C

AN

BU

Y A

MED

IAN

-PR

ICED

HO

ME Annual Quarterly

SERIES: Housing Affordability Index of Traditional Buyers


Many simply can’t afford to buy

page

61SERIES: Housing Affordability Index of Traditional Buyers


63%57%

32%

10%

0%

10%

20%

30%

40%

50%

60%

70%2019-Q1: % able to purchase median-priced home

How It Hurts

California Later


Homeownership is not rebounding

page

63

59.9

53.250

55

60

65

70

75

Homeownership Rate

CA U.S.


We’re in questionable company now

page

64

53.2

0

10

20

30

40

50

60

70

80

Q2-19 Homeownership Rate

By 2025: CA majority Renter State

page

65

76.0%

50.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ha

wth

orn

e

Sa

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nto

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ino

Esc

on

did

o

2017 California Renter Rate by City

SERIES: Homeownership Rates

SOURCE: U.S. Census Bureau


Homeownership still aspirational

page

66

8%

13%

29%27%

23%

0%

10%

20%

30%

Perc

ent

n: 1663

How important is homeownership to you?


Population growth slowing

page

67

0.4%0%

2%

4%

6%

8%

10%

12%

19

01

19

06

19

11

19

16

19

21

19

26

19

31

19

36

19

41

19

46

19

51

19

56

19

61

19

66

19

71

19

76

19

81

19

86

19

91

19

96

20

01

20

06

20

11

20

16

California Population Growth


NOT our “job creators”

page

68

-33,491 -34,887-37,853

1,678 566

-40,000

-35,000

-30,000

-25,000

-20,000

-15,000

-10,000

-5,000

0

5,000

$25K or Less $25-$50K $50-$100K $100-$200K $200K +

Net Migration by Income


Hitting us economically

page

69

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Ja

n-1

0

Ma

y-1

0

Se

p-1

0

Ja

n-1

1

Ma

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1

Se

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n-1

2

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2

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p-1

2

Ja

n-1

3

Ma

y-1

3

Se

p-1

3

Ja

n-1

4

Ma

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4

Se

p-1

4

Ja

n-1

5

Ma

y-1

5

Se

p-1

5

Ja

n-1

6

Ma

y-1

6

Se

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Ja

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7

Ma

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7

Se

p-1

7

Ja

n-1

8

Ma

y-1

8

Se

p-1

8

Ja

n-1

9

Ma

y-1

9

CA vs. US Job Growth

CA US

Losing the workers we need

page

70-15,865

-13,220

-9,526

-8,019

-7,854

-7,504

-5,646

-5,103

-3,510

-2,685

-2,474

-2,403

-2,039

-1,938

-523

-167

639

869

1,259

1,503

3,481

3,604

3,900

4,067

Office & Administrative Support

Transportation & Material Moving

Sales & Related

Building & Grounds Cleaning & Maintenance

Construction & Extraction

Production

Management

Food Preparation & Serving Related

Installation, Maintenance, & Repair

Personal Care & Service

Educational Instruction & Library

Protective Service

Unemployed

Healthcare Support

Community & Social Service

Farming, Fishing, & Forestry

Life, Physical, & Social Science

Arts, Design, Entertainment, Sports, & Media

Legal

Healthcare Practitioners & Technical

Business & Financial Operations

Architecture & Engineering

Military Specific

Computer & Mathematical

Net Domestic Migration by Occupation

Conclusion:

A downshift driven by

supply & affordability

constraints

Annual Housing

Market Survey

2019: A shift is afoot

27%

0%

10%

20%

30%

40%

50%

60%% of Sales above Asking Price

Long Run Average = 20%

Market not as Competitive as Prior Years

page

73

0

2

4

6

8

10

12

14

16

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%Med. Price Discount

Med. Weeks on MLS

1.3%,

2.4 wks.



Median Price Discount & Weeks on Market

Less than Half of Sales Received Multiple Offers

page

74

48%

3.7

0

1

2

3

4

5

6

7

0%

10%

20%

30%

40%

50%

60%

70%

80%

% with Multiple Offers# of Multiple offers (Average)



Record Home Prices Pushed up Down Payments

page

75

$100,000

19.8%

0%

5%

10%

15%

20%

25%

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Median Down Payment



Housing Affordability Still the Main Reason for Outmigration

page

76

21%

20%

14%

9%

8%

6%

6%

4%

1%

12%

28%

16%

12%

8%

7%

5%

5%

5%

1%

15%

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

Housing affordability

Quality of life

Closer to family/relative

Second home

Job change

Shorter commute to work/school

Quality of school

Retired

Quality of community services

Other

2019 2018

All BuyersQ. What was the primary reason

for changing county?



Housing Affordability Has Been a Consistent Issue for First-Time Buyers over the Last Few Years

page

77

26%

49%

32%

45%49% 48%

0%

10%

20%

30%

40%

50%

60%

2014 2015 2016 2017 2018 2019

% of First-Time Buyers who Changed County

Because of Housing Affordability

Q. What was the primary reason for changing county?



Share of First Time Buyers Dipped after Reaching Highest Level since 2012

page

78

32.0%

0%

10%

20%

30%

40%

50%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

% First-Time Home Buyers Long Run Average

Long Run Average = 37.2%



1

Investor Buyers Share Dropped to the Lowest since 2008; Fewer Flippers in the Market

page

79

11.8%

4.7%

0%

5%

10%

15%

20%

25%

30%

Vacation/Second Home

Investment/Rental

Property

% to Total Sales

Flip

Rent

2014: 30%

2015: 26%

2016: 20%

2017: 24%

2018: 26%

2019: 18%

2014: 70%

2015: 74%

2016: 80%

2017: 76%

2018: 74%

2019: 82%

Vs.



Investor Buyers Have the Financial Advantage over First-Time Buyers

page

80

First-time Buyers Investor Buyers

Median Sales Price $516,500 $495,000

Median Square Footage 1,500 1,400

Median Household Income $90,000 $200,000

Median Downpayment (in $$) $35,500 $100,000



Fewer Investors Selling Their properties; 4 out of 5 Are Landlords

page

81

20% 19%

0%

5%

10%

15%

20%

25%

30%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sellers Who Owned the Property

as an InvestmentLong Run Average = 20%

Q. How was the property occupied?



International Buyers Bounced back from 2018 Low

page

82

7.8%

6.0%5.3%

5.7% 5.8%

8.0%

6.2%

3.7%

2.9% 3.1%2.7%

3.8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019



Sellers staying put: owned for a median of 11 years

page

83

11

0

2

4

6

8

10

12

14Years Owned Home Before Selling



…Especially for older generations (with consumer survey definition)

page

84

4

8

15

25

0 10 20 30

Millennials

Gen X's

Baby Boomers

Silent Generations

Years Owned Home Before Selling



More Sellers Continue to Move out of California; Highest since 2005

page

85

2005 2009 2015 2019

Within the same county 38% 47% 44% 35%

In another county in California 23% 21% 20% 20%

In another state 31% 19% 22% 30%

Out of US 1% 2% 1% 0%

Don't Know/Not sure 7% 12% 13% 14%

Total 100% 100% 100% 100%

Location of Seller’s New Home



Share of cash buyers lowest in 10 years

page

86

19.7%

0%

5%

10%

15%

20%

25%

30%

35%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

% of All Cash Sales

• One-fifth of buyers paid

with all cash

• The share of all cash buyers

dipped below 20% for the

1st time since 2009



Where is

everyone going?


1841: Westward Ho!

page

88


2010: Eastward Ho!

page

89


~750k people have left since 2010

page

90

-169,336

-57,563

-24,972

-60,839

-41,362

-104,317

-163,922

-105,210

-180,000

-160,000

-140,000

-120,000

-100,000

-80,000

-60,000

-40,000

-20,000

0

2010 2011 2012 2013 2014 2015 2016 2017

California Net Domestic Migration


Step 1: SF Bay to Cheaper Markets

page

91

-8,559 -9,005

-11,659-12,408

-13,053-15,244

-17,697

-25,843

-30,268

-42,777

Merced Solano Washington Stanislaus Santa Cruz Texas Nevada (ST) Oregon San Joaquin Sacramento

MSA

Core San Francisco Bay Area Out Migration (2010-2016)

Another StateElsewhere in CA


Step 2: Pricing Prior Residents Out of State

page

92

-2,260-2,715 -2,917

-3,596-4,002 -4,029 -4,179

-5,020 -5,127

-8,166

Kentucky Santa Cruz Oklahoma Colorado Sutter &

Yuba

San Luis

Obispo

San

Bernardino

Oregon Idaho Nevada (ST)

Sacramento MSA Out Migration

(2010-2016)

Elsewhere in CAAnother State


Step 1: SoCal coastal to cheaper markets

page

93

-19,854-21,935

-34,217 -40,361-42,503

-48,609-65,534

-79,132

-101,914

-124,148

Coastal Southern California Out Migration (2010-2016)

Elsewhere in CA

Another State


Step 2: pricing prior residents out of state

page

94

-3,575-5,117

-7,732 -7,970 -8,344

-10,604-10,680

-10,699

-16,374-17,859

Inland Empire Out Migration

(2010-2016)

Elsewhere in CA

Another State

Best performing cities are

everywhere Milken Institute Annual Report 2018

Top 10 best performing large cities

page

96

Provo-Orem,

UT MSA

Change: Steady

San Jose-

Sunnyvale-Santa

Clara, CA MSA

Change: +9

Austin-Round

Rock, TX MSA

Change: +6

San Francisco-

Redwood City-

South SF, CA MD

Change: Steady

Dallas-Plano-

Irving, TX MD

Change: -2

1 2 3 4 5

6 7 8 9 10

Raleigh, NC

MSA

Change: -4

Orlando-

Kissimmee-

Sanford, FL MSA

Change: Steady

Seattle

Bellevue-

Everett, WA MD

Change: +9

Fort Collins,

CO MSA

Change: -4

Salt Lake City,

UT MSA

Change: Steady

SOURCE: Milken Institute

Top 10 best performing small cities

page

97

1 2 3 4 5

6 7 8 9 10

Gainseville,

GA MSA

Change: Steady

Coeur

d’Alene, ID

MSA

Change: +24

Medford, OR

MSA

Change: +21

Albany, OR

MSA

Change: +13

Logan, UT-ID

MSA

Change: +14

Bend-

Redmond,

OR MSA

Change: Steady

St. George,

UT MSA

Change: Steady

Elkhart-

Goshen, IN

MSA

Change: +2

Athens-Clark

County, GA

MSA

Change: +34

San Rafael,

CA MSA

Change: -2


35

35

35

36

36

48

49

52

54

56

Trenton, NJ MSA

Tallahassee, FL MSA

Albuquerque, NM MSA

Kennewick-Richland, WA MSA

Scranton-Wilkes-Barre-Hazleton, PA MSA

Myrtle Beach-Conway-North Myrtle Beach, SC-…

Lansing-East Lansing, MI MSA

Tucson, AZ MSA

Norwich-New London, CT MSA

Merced, CA MSA

Biggest gainers 2017-2018

page

98

38

123

102

89

51

85

148

66

82

125

Metr

op

olita

n S

tati

sti

cal A

rea (

MS

A)/

Metr

op

olita

n D

ivis

ion

(M

D)

2018 Rank Change


Forecast

2019 Forecast Report Card

Q. How did your client find and select you to represent them?

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® page

100

SFH Resales (000s)

% Change

Median Price ($000s)

% Change

30-Yr FRM

Housing Affordability Index

U.S. Gross Domestic Product

2018

Actual

402.8

-5.2%

$570.0

6.0%

4.5%

28%

2.9%

2019

Forecast

396.8

-3.3%

$593.4

3.1%

5.2%

25%

2.4%

2019

Projected

390.2

-3.1%

$593.2

4.1%

3.9%

32%

2.2%


2020 California Housing Market Forecast

2015 2016 2017 2018 2019p 2020f

SFH Resales (000s) 409.4 417.7 424.9 402.8 390.2 393.5

% Change 7.0% 2.0% 1.7% -5.2% -3.1% 0.8%

Median Price ($000s) $476.3 $502.3 $537.9 $570.0 $593.2 $607.9

% Change 6.6% 5.4% 7.1% 6.0% 4.1% 2.5%

Housing Affordability

Index31% 31% 29% 28% 32% 32%

30-Yr FRM 3.9% 3.6% 4.0% 4.5% 3.9% 3.7%

SERIES: CA Housing Market Outlook


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101

Q: Thanks for the forecast

but what do I DO NOW?

A: You need a plan.


2020 Success Strategies

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103

• Listings need to be priced right – work on your powers of

persuasion & always use data not opinion

• People are moving within and outside of CA – work and

expand your relocation network

• Financial Literacy is a scarce commodity – become an expert

and share your knowledge. Show interested buyers the #’s


2020 Success Strategies

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104

• Rates are at historic lows & some of your past clients would

benefit from a refinance – keep in touch

• Listings need to be beautiful – the “HGTV Effect” is REAL. Buyer

expectations are high especially for millennials. If your

company has a concierge program – use it! Stage EVERYTHING.

• Know what people are looking for – smart homes, home offices,

pet amenities etc.


Find Your Niche

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105

In Closing

How Client Found Their Agent? We asked You.77% Found You Through a Relationship

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107

Q. How did your client find and select you to represent them?

20.8%20.8%

14.1%12.0%

7.5%4.6%

3.2%2.5%

1.6%

1.0%

0.9%

0.5%

0.2%7.5%

0% 5% 10% 15% 20% 25%

Represented Them in Previous Home Transaction

Client was Friend/Relative/NeighborReferral from a client

Recommendations of Friends

Refferal from Business AssociatesOpen House

Web page/Internet

Door-to-Door FarmingRelocation Referral

Direct Mail Marketing

Walk in /Floor CallListing Agent for Home Purchased

Yard SignsTelephone Marketing

Social MediaMobile App

Print Ads/Newspaper & MagazineOther




2020 Broker Conference - Opportunities

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108

• Your brand is your promise – Kofi Nartey

• Be fierce about your data and market knowledge – Steve Murray

• Does your calendar match your priorities? - Ryan Gorman

• We get what we focus on – Tami Bonnell

• Relationships are a marathon not a sprint – Georgia Perez

• Following your why leads you to your LOVE – Taunee English

• Stars will win (and I see a room full of stars) – Joel Singer

Thank You

Documents

2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®