A GOOD YEAR FOR THE CALIFORNIA HOUSING MARKET SO FAR, HOW DID WE GET THERE? October 31, 2013 Oscar Wei, Senior Research Analyst

A GOOD YEAR FOR THE CALIFORNIA HOUSING MARKET SO FAR, HOW DID WE GET THERE?

October 31, 2013

Oscar Wei, Senior Research Analyst

CALIFORNIA HOUSING MARKET OUTLOOK

Sales of Existing Detached Homes• California, Sept. 2013 Sales: 412,880 Units, -3.1% YTD, -2.6% YTY

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

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3 -

100,000

200,000

300,000

400,000

500,000

600,000

700,000

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

Median Price of Existing Detached Homes• California, September 2013: $428,810, Up 24.4% YTY

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

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3 $-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000 P: May-07$594,530

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

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

CA Unsold Inventory: Nearing Record Lows• California, September 2013: 3.6 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

2

4

6

8

10

12

14

16

18

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

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

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

$0 - $300k $300 - $500k $500 - $750k $750 - $1000k $1000k+-30%

-20%

-10%

0%

10%

20%

30%

-26.8%

9.7%

25.6%

19.3%

14.2%

Sep-13

Supply of Inventory Remained Tight, But Continued to Improve

Equity Sales REO Sales Short Sales0

1

2

3

43.5

2.7

3.8

SERIES: Distressed Unsold Inventory IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

UNSOLD INVENTORY INDEX (MONTHS)

• California: September 2013

For the 5th Month in a Row, the Supply of Distressed Sales Improved

Aug-1

1

Oct-1

1

Dec-1

1

Feb-

12

Apr-1

2

Jun-

12

Aug-1

2

Oct-1

2

Dec-1

2

Feb-

13

Apr-1

3

Jun-

13

Aug-1

30

1

2

3

4

5

6

7

8

9 Equity Sales REO Short Sales

SERIES: Distressed Months Supply of InventorySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

UNSOLD INVENTORY INDEX (MONTHS)

California Housing Market Outlook

Indicator 2008 2009 2010 2011 20122013p2014f

SFH Resales (000s) 381.4 474.9 416.5 422.6 439.4 430.3 444.0

% Change 30.4% 24.5% -12.3% 1.4% 4.0% -2.1% 3.2%

Median Price ($000s) $348.5 $275.0 $305.0 $286.0 $319.3 $408.6 $432.8

% Change -37.8% -21.1% 10.9% -6.2% 11.6% 28.0% 6.0%

30-Yr FRM 6.0% 5.0% 4.7% 4.5% 3.7% 4.1% 5.3%

1-Yr ARM 5.2% 4.7% 3.8% 3.0% 2.7% 2.7% 3.1%

SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Sales Bounce back in 2014, as Price Continues to Grow

Units (Thousand)

2005

2006

2007

2008

2009

2010

2011

2012

2013f

2014f

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

430,270444,040

Sales of Existing Detached Homes

2005

2006

2007

2008

2009

2010

2011

2012

2013f

2014f

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$408,560

$432,850

Median PricePrice

(Thousand)


CA: Dollar Volume Steadily Improving Up 25.3% in 2013, Up 9.3% in 2014

2005 2006 2007 2008 2009 2010 2011 2012 2013f 2014f$0

$50

$100

$150

$200

$250

$300

$350

$400

-40%

-30%

-20%

-10%

0%

10%

20%

30%

$301

$244

$164

$133 $131 $127 $121 $140

$176 $192

$ Volume of Sales Percent Change

% Change$ in Billion

-60%


2013 ANNUAL HOUSING MARKET SURVEY

Methodology

• C.A.R. has conducted the Annual Housing Market Survey since 1981. The questions and methodology have stayed essentially the same throughout that time.

• The survey was sent via email to a random sample of 20,199 REALTORS® throughout California. The sample represented the geographical distribution of C.A.R. membership across the state. The survey asked REALTORS® to provide information from their most recent sales transaction that closed escrow in the second quarter of 2013.

• The survey instrument was a questionnaire with both multiple choice

and open-ended questions. There were 976 valid survey responses, equivalent to a response rate of 4.8 percent. The margin of error for this survey was +/- 3.2 percent at a 95 percent confidence level.

2005

2006

2007

2008

2009

2010

2011

2012

2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

1

2

3

4

5

6

7

% with Multiple Offers

# of Multiple offers (Average)

Supply Shortage Creates More Market Competition• Share of home sales with multiple offers is the highest in at least the last 15 years

SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

2005

2006

2007

2008

2009

2010

2011

2012

2013

0%

10%

20%

30%

40%

50%

60%

26%

50%

% of Sales above Asking Price

Long Run Average = 18%

Market Competition Leads to More Sales with Above Asking Price

2005 2006 2007 2008 2009 2010 2011 2012 20130%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0

2

4

6

8

10

12

14

16

Med. Price Discount

Med. Weeks on MLS

0%, 1.6 weeks

Median Price Discount & Weeks on Market

2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

19%

46%

34%43%

30%

57%% of Sales Above Asking Price

All Equity Sales REO Short Sales

Market Competition Leads to More Sales with Above Asking Price

Equity Sales vs. REO vs. Short Sales (2013)

Equity Sales

REO Sales

Short Sales

Share of Total Sales 80.8% 4.9% 14.0%

Median Home Price $456,635 $175,500 $276,500

Square Footage 1,678 1,400 1,650

Price / SF $270 $101 $146

Sales-to-List Price Ratio 100.0% 100.0% 103.0%

% of Sales With Multiple Offers 69.0% 91.2% 75.7%

Avg. Number of Offers 5.2 7.4 7.1

% of All Cash Sales 25.2% 50.0% 35.7%

Days on MLS 10 15 14

Days in Escrow 30 35 60SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Equity Sales (2011 vs. 2012 vs. 2013)

2011 2012 2013




Price / SF $250 $243 $270

Sales-to-List Price Ratio 95.9% 97.3% 100.0%% of Sales With Multiple

Offers 35.2% 50.9% 69.0%


% of All Cash Sales 25.5% 27.3% 25.2


Days in Escrow 35 35 30


REO Sales (2011 vs. 2012 vs. 2013)

2011 2012 2013




Price / SF $112 $116 $101




% of All Cash Sales 34.0% 43.1% 50.0%


Days in Escrow 35 45 35


Short Sales (2011 vs. 2012 vs. 2013)

2011 2012 2013




Price / SF $175 $154 $146




% of All Cash Sales 23.3% 26.7% 35.7%


Days in Escrow 45 50 60SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Share of Cash Buyers decreases for the first time after 7 years of continuous Increase

0%

5%

10%

15%

20%

25%

30%

35%

27%

% of All Cash Sales

• Over a quarter of buyers paid with all cash

• The share of all cash buyers had been on the rise until this year


Demand for Investment & Second/ Vacation Homes Rises from Last Year’s Dip

0%

5%

10%

15%

20%

25%

30%

Investment/Rental PropertyVacation/Second Home

6%

19%SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

For Those Who Purchased an Investment Property:

18%

82%

Investment to Flip

Rental Property


For Those Who Purchased an Investment Property:

Investment

Flip – 19% Flip – 38%

Rent – 81% Rent – 62%

REO Sales

Equity Sales

Short Sales

2012 2013

Investment

Flip – 2% Flip – 22%

Rent – 98% Rent – 78%

Investment

Flip – 20% Flip – 12%

Rent – 80% Rent – 88%

Home Buyer Profile (By Type of Sales) - 2012

Equity Sales REO Sales Short Sales

Median Age of Buyers 45 40 40

Median Household Income $120,000 $85,000 $75,000

% of First Time Buyers 30.3% 40.6% 44.9%

% of International Buyers 6.7% 3.7% 4.9%

% Bought as Investment to Flip 2.2% 4.6% 0.5%

% Bought as Investment to Rent 8.8% 19.3% 23.5%

Median Down Payment $84,000 $28,000 $23,500

% of Down Payment 20.0% 10.0% 13.0%




Median Age of Buyers 44 50 43

Median Household Income $100,000 $60,000 $75,000

% of First Time Buyers 28.6% 19.5% 22.1%

% of International Buyers 7.8% 4.8% 10.2%

% Bought as Investment to Flip 2.0% 12.8% 8.0%

% Bought as Investment to Rent 13.8% 20.5% 27.7%

Median Down Payment $80,000 $20,000 $28,000

% of Down Payment 20.0% 10.1% 7.1%



First Time Buyer

Investors

Household Income $80,000 $100,000

% of All Cash Buyers 10.5% 65.3%

% Down Payment 10.0% 23.1%


More Distressed Sales Are Being Absorbed by Investors Overtime

2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

42%

21%25%

35%

Share of Distressed Sales Bought by First-Time BuyersShare of Distressed Sales Bought by Investment Buyers


Share of First-Time Buyers is the Lowest Since 2006

Q. Was the buyer a first-time buyer?2005 2006 2007 2008 2009 2010 2011 2012 2013

0%

10%

20%

30%

40%

50%

28%

% First-Time Home Buyers Long Run Average

Long Run Average = 38%


Reasons for Buying

Q. What was the single most important reason for buying the property?

Tired of Renting; 22.5%

Desired Larger Home; 16.6%

Investment/ Tax Consider-ations; 21.0%

Desired Better Lo-cation; 15.1%

Change in Family Status; 4.4%

Changed Jobs; 3.6%

Foreclosure/Short Sale/Default; 1.6%

Desired Smaller Home; 3.8%

Retirement/Move to Retirement Com-

munity; 2.6% Other; 8.8%


Reasons For Buying First Time Homebuyers Vs. Repeat Homebuyers

Q. What was the single most important reason for selling/buying the property?

Tired of Renting

Desired Larger Home

Investment/ Tax Considerations

Desired Better Location

Change in Family Status

Changed Jobs

Foreclosure/Short Sale/Default

Desired Smaller Home

Retirement/Move to Retirement Community

Other

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

Repeat Buyers First-Time Buyers


First-Time Buyers Bought Because They Were Tired of Renting, Highest in Three Years

Q. Was the buyer a first-time buyer?2007 2008 2009 2010 2011 2012 2013

40%

50%

60%

70%

55%

% Bought Because of Tired of Renting


2005 2006 2007 2008 2009 2010 2011 2012 2013$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

0%

5%

10%

15%

20%

25%

$65,000 $70,000

20%

Median Down Payment % of Down Payment to Price

Q. What was the amount of downpayment?

The Median Down Payment Up 8% from 2012, As Home Prices Continue to Increase


Median Down PaymentFirst-Time Homebuyers Vs. Repeat Homebuyers

Q. What was the amount of downpayment?2005 2006 2007 2008 2009 2010 2011 2012 2013

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$20,500$31,420

$100,000$96,300

First-Time Buyers Repeat Buyers


Cash Source for Down PaymentFirst-Time Buyer vs. Repeat Buyer

Q. What was the source of the cash the buyer used for a downpayment or to purchase the residence?

First-time

BuyersRepeat Buyers All Buyers

Personal saving 70.5% 55.7% 59.0%

Proceeds from sale of previous residence 0.0% 21.5% 15.7%

Borrowed or gift from relatives 13.9% 4.3% 7.0%

Sale of personal assets other than real property

2.4% 2.3% 2.3%

Inheritance 2.0% 3.0% 2.8%

Proceeds from sale or refi of another property 0.0% 3.1% 2.2%

Other 11.2% 10.1% 11.0%


Repeat Buyers Rely on Personal Savings As Down Payment

Q. What was the source of the cash the buyer used for a down payment or to purchase the residence?

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

22%

56%

Sale of Previous Residence Savings


International Buyers are Getting a Bigger Slice of the Market than Last Year.

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.?

2008 2009 2010 2011 2012 20130%

1%

2%

3%

4%

5%

6%

7%

8%

9%

8%


Country of International Buyer

• China (34%)

• Canada (10%)

• Mexico (15%)


REALTORS® Worked with International Buyers in the Past 12 Months

Q. How many properties have you sold to an international buyer in the last 12 months?

0 1 2 3 4 5+0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

71%

14%

6% 4% 2% 4%

79%

9%5% 3% 1% 3%

2013

2012

# of Properties

% Who Sold to International Buyers

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


Reasons For Selling

Q. What was the single most important reason for selling the property?

Foreclosure/Short Sale/Default; 15.5%

Change in Family Status; 11.6%

Retirement/Move to Retirement Com-

munity; 9.5%

Investment/ Tax Considerations;

10.8%Desired Better Location; 11.0%

Desired Smaller Home; 6.0%

Changed Jobs; 6.3%

Desired Larger Home; 12.6%

Other; 16.7%


One of Six Sellers Sold Because Their Properties Were in Distressed Status

Q. What was the single most important reason for selling/buying the property?

2005 2006 2007 2008 2009 2010 2011 2012 20130%

5%

10%

15%

20%

25%

30%

35%

16%

% of Homes Sold Due to Foreclosure/Short Sale/Default


Reasons For Selling Home (2013)Equity vs. REO vs. Short Sales

Equity Sales REO Sales Short Sales All Sales

Foreclosure/Short Sale/Default 2% 91% 74% 16%

Change in Family Status 13% 4% 5% 12%

Retirement/Move to Retirement Community 12% 0% 1% 10%

Investment/ Tax Considerations 12% 0% 1% 11%

Desired Better Location 14% 0% 2% 11%

Desired Smaller Home 7% 0% 1% 6%

Changed Jobs 7% 0% 6% 6%

Desired Larger Home 15% 0% 2% 13%

Other 18% 4% 8% 17%

Q. What was the single most important reason for selling the property?SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Seller Household FormationEquity vs. REO vs. Short Sales


Single 25.8% 0.0% 31.6%

Married Couple with Dependents 31.2% 2.6% 38.6%

Married Couple without Dependents 26.3% 5.3% 18.4%

2 or More Individuals (Related or Unrelated) 9.0% 0.0% 7.0%

Banks/Lending Institutions 0.3% 84.2% 0.9%

Other 7.3% 7.9% 3.5%

Total 100.0% 100.0% 100.0%


Q. What was the net cash gain or net loss to the seller as a result of this sale?

2005 2006 2007 2008 2009 2010 2011 2012 2013$0

$50,000

$100,000

$150,000

$200,000

$250,000

$55,000

After Reaching a Record Low in 2012, the Median Net Cash Gain to Sellers Bounced Back.


Sellers with Net Cash Loss Dropped to the Lowest Level since 2007

Q. What was the net cash gain or net loss to the seller as a result of this sale?

2005 2006 2007 2008 2009 2010 2011 2012 20130%

5%

10%

15%

20%

25%

30%

35%

13.2%Long Run Average = 12.8%


Home Seller Profile(By Type of Sales)

Equity Sales Short Sales

Median Age of Sellers 55 50

Median Household Income $100,000 $60,000

Years Seller Lived in Home 9 8

Percent of Sales with Net Cash Loss 6.2% 40.4%

Median Net Cash Gain/Net Cash Loss to Seller $80,000 $0


More Sellers Are Planning to Buy Another Home As the Market Slowly Recovers

Q. Is the seller planning on purchasing another home?2005 2006 2007 2008 2009 2010 2011 2012 2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

49%


For Those Who Do Not Plan to Repurchase, Here Are Their Top 5 Reasons:

Seller prefers to have less financial obligation

Decide to live with family/friends

Seller is a lender/bank

Lack of cash for down payment

Poor credit background

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

14.4%

8.1%

15.3%

8.6%

8.8%

22.0%

7.3%

7.1%

5.5%

5.0%

2013 2012


Reasons Sellers Not Planning to Buy Another Home(2012)

Q. Why is the seller not planning to purchase another home?

Equity Sales

REO Sales

Short Sales

Seller is lender/bank 0% 88% 3%

Seller prefers to have less financial obligation 20% 0% 12%

Poor credit background 0% 3% 31%

Lack of cash for down payment 6% 3% 17%

Out of work/unemployment 3% 0% 10%

Decide to live with family/friends 11% 0% 9%

Waiting for market to bottom 1% 0% 0%

Other 57% 6% 19%

Total 100% 100% 100%


Reasons Sellers Not Planning to Buy Another Home (2013)

Q. Why is the seller not planning to purchase another home?

Equity Sales

REO Sales

Short Sales

Seller is lender/bank 0% 88% 5%

Seller prefers to have less financial obligation 26% 0% 18%

Poor credit background 1% 0% 19%

Lack of cash for down payment 3% 0% 18%

Out of work/unemployment 4% 0% 9%

Decide to live with family/friends 7% 0% 9%

Waiting for market to bottom 3% 4% 0%

Other 56% 8% 23%

Total 100% 100% 100%


Top Reasons Under “Other” for Equity Sellers Not Planning to Buy Another Home

Seller Has Another Home

Moved to Retirement Facility/Nursing Home

Deceased

Change in Family Status

Inheritance

Seller Is a Builder

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

13.2%

7.6%

4.5%

3.4%

2.8%

2.0%


Location of Seller’s New Home

2005

2006

2007

2008

2009

2010

2011

2012

2013

Within the same county 38% 41% 37% 45% 47% 42% 49% 49% 46%

In another county in California 23% 18% 24% 17% 21% 21% 19% 18% 20%

In another state 31% 28% 29% 27% 19% 20% 20% 22% 19%

Out of US 1% 2% 1% 1% 2% 1% 1% 1% 0%

Don't Know/Not sure 7% 11% 9% 10% 12% 16% 10% 10% 15%

Total 100% 100% 100% 100% 100% 100% 100% 100%

100%


IS THE HOUSING RECOVERY SUSTAINABLE?

Buyers Have More “Skin” in the Game

2006 2012 2013

% of buyers with 20% or more down payment

43.2% 54.4% 52.2%

% of buyers with zero down payment

21.1% 4.6% 5.9%

% of cash buyers 11.0% 29.6% 27.4%

% of home buyers with a second mortgage

43.4% 1.8% 2.2%

% of buyer with ARM 32.6% 3.5% 4.0%


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

5.9%

7.9%

5.1%

All Hombuyers First-Time Buyers Repeat Buyers

Percent of Buyers with Zero Down Payment


Proportion of Transactions With Second Mortgages

Q. In addition to the first mortgage or assumption, was there a second mortgage?

2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

2%

Percent of Home Sales with Second Mortgage


Percent of Buyers with Second Mortgage

2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

70% First-Time Buyers Repeat Buyers


Q. Please indicate the type of mortgage.

Share of FHA Still Significantly Higher than 2007, But Was the Lowest in 6 Years (First Mortgage)

2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

17%

6%

FHA VA


Less Likelihood to Default as Monthly Payment Is More Affordable

2006 2012 2013

Average mortgage rate (FRM) 6.4% 3.7% 3.8%

Median home price for existing single-family homes

$556,430 $319,310 $408,600

Median household income for home buyers

$100,000 $100,000 $100,000

Housing Affordability Index 12.0% 51.0% 36.0%


Mortgage Rates • January 2009 – October 2013

2009

/01

2009

/04

2009

/07

2009

/10

2010

/01

2010

/04

2010

/07

2010

/10

2011

/01

2011

/04

2011

/07

2011

/10

2012

/01

2012

/04

2012

/07

2012

/10

2013

/01

2013

/04

2013

/07

09.0

5.13

09.2

6.13

0%

1%

2%

3%

4%

5%

6%

FRMARM

MONTHLY WEEKLY

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

Housing Affordability Hit by Mortgage Rate and Price Gains But Still Attractive

0%

10%

20%

30%

40%

50%

60%

70%

80%

36%

60%

CA US% OF HOUSEHOLDS THAT CAN BUY

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

House Payment Is Significantly Below What It was at the Peak

Jan-80Feb-80Mar-80Apr-80May-80Jun-80Jul-80Aug-80Sep-80Oct-80Nov-80Dec-80Jan-81Feb-81Mar-81Apr-81May-81Jun-81Jul-81Aug-81Sep-81Oct-81Nov-81Dec-81Jan-82Feb-82Mar-82Apr-82May-82Jun-82Jul-82Aug-82Sep-82Oct-82Nov-82Dec-82Jan-83Feb-83Mar-83Apr-83May-83Jun-83Jul-83Aug-83Sep-83Oct-83Nov-83Dec-83Jan-84Feb-84Mar-84Apr-84May-84Jun-84Jul-84Aug-84Sep-84Oct-84Nov-84Dec-84Jan-85Feb-85Mar-85Apr-85May-85Jun-85Jul-85Aug-85Sep-85Oct-85Nov-85Dec-85Jan-86Feb-86Mar-86Apr-86May-86Jun-86Jul-86Aug-86Sep-86Oct-86Nov-86Dec-86Jan-87Feb-87Mar-87Apr-87May-87Jun-87Jul-87Aug-87Sep-87Oct-87Nov-87Dec-87Jan-88Feb-88Mar-88Apr-88May-88Jun-88Jul-88Aug-88Sep-88Oct-88Nov-88Dec-88Jan-89Feb-89Mar-89Apr-89May-89Jun-89Jul-89Aug-89Sep-89Oct-89Nov-89Dec-89Jan-90Feb-90Mar-90Apr-90May-90Jun-90Jul-90Aug-90Sep-90Oct-90Nov-90Dec-90Jan-91Feb-91Mar-91Apr-91May-91Jun-91Jul-91Aug-91Sep-91Oct-91Nov-91Dec-91Jan-92Feb-92Mar-92Apr-92May-92Jun-92Jul-92Aug-92Sep-92Oct-92Nov-92Dec-92Jan-93Feb-93Mar-93Apr-93May-93Jun-93Jul-93Aug-93Sep-93Oct-93Nov-93Dec-93Jan-94Feb-94Mar-94Apr-94May-94Jun-94Jul-94Aug-94Sep-94Oct-94Nov-94Dec-94Jan-95Feb-95Mar-95Apr-95May-95Jun-95Jul-95Aug-95Sep-95Oct-95Nov-95Dec-95Jan-96Feb-96Mar-96Apr-96May-96Jun-96Jul-96Aug-96Sep-96Oct-96Nov-96Dec-96Jan-97Feb-97Mar-97Apr-97May-97Jun-97Jul-97Aug-97Sep-97Oct-97Nov-97Dec-97Jan-98Feb-98Mar-98Apr-98May-98Jun-98Jul-98Aug-98Sep-98Oct-98Nov-98Dec-98Jan-99Feb-99Mar-99Apr-99May-99Jun-99Jul-99Aug-99Sep-99Oct-99Nov-99Dec-99Jan-00Feb-00Mar-00Apr-00May-00Jun-00Jul-00Aug-00Sep-00Oct-00Nov-00Dec-00Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Jan-04Feb-04Mar-04Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-052006 Q12006 Q22006 Q32006 Q42007 Q12007 Q22007 Q32007 Q42008 Q12008 Q22008 Q32008 Q42009 Q12009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32011 Q42012 Q12012 Q22012 Q32012 Q42013 Q12013 Q2 $-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

PITI/Month

Peak: $3,668/mo (2007 Q2)

Latest: $1,998/mo (2013 Q2)

… And Minimum Qualifying Income Is More Than 40% Below the Peak

Jan-80Feb-80Mar-80Apr-80May-80Jun-80Jul-80Aug-80Sep-80Oct-80Nov-80Dec-80Jan-81Feb-81Mar-81Apr-81May-81Jun-81Jul-81Aug-81Sep-81Oct-81Nov-81Dec-81Jan-82Feb-82Mar-82Apr-82May-82Jun-82Jul-82Aug-82Sep-82Oct-82Nov-82Dec-82Jan-83Feb-83Mar-83Apr-83May-83Jun-83Jul-83Aug-83Sep-83Oct-83Nov-83Dec-83Jan-84Feb-84Mar-84Apr-84May-84Jun-84Jul-84Aug-84Sep-84Oct-84Nov-84Dec-84Jan-85Feb-85Mar-85Apr-85May-85Jun-85Jul-85Aug-85Sep-85Oct-85Nov-85Dec-85Jan-86Feb-86Mar-86Apr-86May-86Jun-86Jul-86Aug-86Sep-86Oct-86Nov-86Dec-86Jan-87Feb-87Mar-87Apr-87May-87Jun-87Jul-87Aug-87Sep-87Oct-87Nov-87Dec-87Jan-88Feb-88Mar-88Apr-88May-88Jun-88Jul-88Aug-88Sep-88Oct-88Nov-88Dec-88Jan-89Feb-89Mar-89Apr-89May-89Jun-89Jul-89Aug-89Sep-89Oct-89Nov-89Dec-89Jan-90Feb-90Mar-90Apr-90May-90Jun-90Jul-90Aug-90Sep-90Oct-90Nov-90Dec-90Jan-91Feb-91Mar-91Apr-91May-91Jun-91Jul-91Aug-91Sep-91Oct-91Nov-91Dec-91Jan-92Feb-92Mar-92Apr-92May-92Jun-92Jul-92Aug-92Sep-92Oct-92Nov-92Dec-92Jan-93Feb-93Mar-93Apr-93May-93Jun-93Jul-93Aug-93Sep-93Oct-93Nov-93Dec-93Jan-94Feb-94Mar-94Apr-94May-94Jun-94Jul-94Aug-94Sep-94Oct-94Nov-94Dec-94Jan-95Feb-95Mar-95Apr-95May-95Jun-95Jul-95Aug-95Sep-95Oct-95Nov-95Dec-95Jan-96Feb-96Mar-96Apr-96May-96Jun-96Jul-96Aug-96Sep-96Oct-96Nov-96Dec-96Jan-97Feb-97Mar-97Apr-97May-97Jun-97Jul-97Aug-97Sep-97Oct-97Nov-97Dec-97Jan-98Feb-98Mar-98Apr-98May-98Jun-98Jul-98Aug-98Sep-98Oct-98Nov-98Dec-98Jan-99Feb-99Mar-99Apr-99May-99Jun-99Jul-99Aug-99Sep-99Oct-99Nov-99Dec-99Jan-00Feb-00Mar-00Apr-00May-00Jun-00Jul-00Aug-00Sep-00Oct-00Nov-00Dec-00Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Jan-04Feb-04Mar-04Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-052006 Q12006 Q22006 Q32006 Q42007 Q12007 Q22007 Q32007 Q42008 Q12008 Q22008 Q32008 Q42009 Q12009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32011 Q42012 Q12012 Q22012 Q32012 Q42013 Q12013 Q2 $-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Min. Income

Peak: $146,701/yr (2007 Q2)

Latest: $79,914/yr (2013 Q2)

CA Median Monthly Mortgage Payment

What Will Happen When Mortgage Rates Increase?

3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%$0

$400

$800

$1,200

$1,600

$2,000

$1,402$1,494

$1,588$1,685

$1,786$1,889

$1,994 $2,102Q2-2013 Median Price $415,770

20% Downpayment

INTEREST RATE

MONTHLY MORTGAGE

SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CA Minimum Qualifying IncomeWhat Will Happen When Mortgage Rates

Increase?

3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$75,218$78,869

$82,644 $86,538$90,548

$94,668$98,893 $103,220

Q2-2013 Median Price $415,770

20% Downpayment

INTEREST RATE

MONTHLY MORTGAGE


CA Housing Affordability Index What Will Happen When Mortgage Rates

Increase?

3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

39%37%

35%33% 31% 29%

27%25%

Q2-2013 Median Price $415,770

20% Downpayment

INTEREST RATE

% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT


2014: Many Market Opportunities

• First-time Buyers• Formerly “Underwater” Homeowners• Property Management • International Clients

How Client Found Their Agent

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

Referral from a clientRepresented Them in Previous Home Transaction

Client was Friend/Relative/NeighborRecommendations of Friends

Referral from Business AssociatesWeb page/Internet/Socia Media

Open HouseWalk in /Floor Call

Yard SignsDoor-to-Door Farming

Listing Agent for Home PurchasedRelocation Referral

Print Ads/Newspaper & MagazineDirect Mail MarketingTelephone Marketing

Other

0% 4% 8% 12%

16%

20%


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Documents

A GOOD YEAR FOR THE CALIFORNIA HOUSING MARKET SO FAR, HOW DID WE GET THERE? October 31, 2013 Oscar Wei, Senior Research Analyst