Craft is what we are expected to do;

art is the unexpected use of our craft.

Ed Catmull

President of Walt Disney Animation Studios

UNDERSTANDING TODAY’S HOME BUYER

How to use this information with your buyers and sellers

Survey Methodology

• 1,400 telephone interviews

• conducted in February 2014

• home buyers who purchased Aug. 2013 – Jan. 2014

So-Cal 55%

NorCal 20%

Other CA

26%

WHO IS THE 2014 BUYER?Demographics

Average Age: 48

25-34

35-44

45-54

55-64

65+

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

12%

32%

26%

25%

7%

Age

Q. What is your age?

Buyer Age Continues Rising

20022003200420052006200720082009201020112012201320140

10

20

30

40

50

60

40 41 41 4144

41 4038 37 36 35

38

48

Average Age

Q. What is your age?

Younger Buyers Continue to Decline

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0%10%20%30%40%50%60%70%80%90%

100%

Refused65+55-6445-5435-4425-34Under 25

Q. What is your age?

Housing Affordability Index

20022003

20042005

20062007

20082009

20102011

20122013

0%

10%

20%

30%

40%

50%

60% CA

Housing Affordability (State) Peak vs. Current

US CA SFH CA Condo/Townhomes

Los Angeles Metropolitan

Area

Inland Empire S.F. Bay Area

0%

10%

20%

30%

40%

50%

60%

70%

80%

59%

33% 41%34%

48%

22%

71%

56%

64%

56%

71%

45%

Q1-2014 Q1-2012

Minimum Annual Income Required Peak vs. CurrentBy Counties, 2014 Q1 vs. 2012 Q1

Region Peak 2014 Q1 % CHG

CA SFH $56,320 $86,419 53%

CA Condo/Townhomes $44,440 $71,994 62%

Los Angeles Metropolitan Area $53,780 $81,195 51%

Inland Empire $35,170 $55,302 57%

S.F. Bay Area $90,370 $140,977 56%

US $32,000 $39,734 24%

SERIES: Housing Affordability Index of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Percent of First-time Buyers Continues Decline

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

8% 7%

15%

25%25%

19%19%

38%

46%43%

54%

42%

12%

Q. Was this your first home purchase?

Minorities are the Majority

White 36%

Hispanic 26%

Black 12%

Asian/Pacific Is-lander 26%

Q. How would you describe your ethnic background?

Majority of Buyers are Married

married 59%

Single 27%

Other 14%

Married Buyers on the Decline

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Married Single Other

Q. What is your marital status?

More than Half of Buyers have College Degrees

High School

Some College

Vocation/ Technical

College Grad

Post Grad

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

7%

11%

23%

50%

11%

Q. What is the highest level of education you have completed?

THE BUYING EXPERIENCE

Purchase Price

$200,000-$299,999

$300,000-$399,999

$400,000-$499,999

$500,000-$599,999

$600,000-$699,999

$700,000-$799,999

$800,000+

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

26%

27%

24%

7%

5%

3%

10%

Median: $375,000

Q. What was the price of the home you purchased?

Purchase/Listing Prices Nearly Equal

Listing Purchase$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$380,000 $375,000

Median

Q. What was the price of the home you purchased?

Nearly 6/10 Buyers Were Previous Home Owners

Owned59%

Rented40%

Lived with Parents

2%

Q. What was the living arrangement immediately before your recent home purchase?

More Buyers Owned Previous Residence

2011 2012 2013 20140%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Owned RentedLived w/parents Other

Q. What was the living arrangement immediately before your recent home purchase?

Buyers Spending Less Time than Last Year Considering Purchase Before Contacting Agent

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

5

10

15

20

25

Q. How many weeks did you consider buying a home before contacting a real estate agent? (Asked if agent was used)

Average Weeks

Buyers Spending Less Time than Last Year Investigating Homes & Neighborhoods Before Contacting Agent

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

5

10

15

20

25

30

Weeks

Q. How many weeks did you spend investigating homes and neighborhoods before contacting a real estate agent? (Asked if agent was used)

Average Weeks

The Home Search is Getting Lengthier

0

2

4

6

8

10

12

Average Weeks

Q. Once you found your agent, about how many weeks did you spend looking for a home with your agent? (Asked if agent was used)

All Buyers Viewed at Least 10 Homes Before Buying

10 12-18 20 > 20

29%

16%

37%

19%

Number of Homes

Q. How many different homes did you preview and visit with your agent prior to making a purchase?

Increase in Homes Viewed Reflects Inventory Improvement

20022003200420052006200720082009201020112012201320140

5

10

15

20

25

Q. How many different homes did you preview and visit with your agent prior to making a purchase?

Median

91% of Buyers Made Offers on Other Homes

0 1 2 3 4 5+0%

5%

10%

15%

20%

25%

30%

35%

9% 10% 11%

24%

14%

32%

Number of Offers

Q. How many offers did you make on other homes?

Buyers Made More Offers on Other Homes

Q. How many offers did you make on other homes?

2013 20140

0.5

1

1.5

2

2.5

3

3.5

4

3

3.6

Average

Price Decreases are Main Reason for Buying

Change in family

Long term appreciation

Desired larger home

Investment/Tax advantage

Desired better/other location

Favorable price/financing

Low interest rates

Promotion/raise

Price decreases

8%

9%

13%

15%

16%

17%

29%

34%

54%

Q. What were your main reasons for buying your home?

Buyers Didn’t Purchase Sooner Because…

57% •Not many good housing options

53% •Waited to see when prices would stabilize

36% •No real buying urgency

30% •Difficulty qualifying for mortgage

21% •Needed to sell existing home

20% •Needed to save for down payment

15% •Waited until finances improved

Q. Why didn’t you buy a home sooner?

Nearly Half of Buyers Settled on Best Available Home

Satisfied 54%

Selected best option given lim-ited supply 46%

Q. Are you satisfied with the home you purchased or do you feel like you selected the best option given the limited supply of homes?

More Buyers Settled on Best Available Home

Q. Are you satisfied with the home you purchased or do you feel like you selected the best option given the limited supply of homes?

2013

2014

0%10%20%30%40%50%60%70%80%90%

100%

66%

54%

34%

46%

Satisfied Settled

Most Buyers Found Home through Agent

Home builder/developer

For sale sign

Open house

Website

Agent

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

2%

3%

3%39%

54%

Q. How did you find the home you purchased?

More Buyers are Finding Homes Online

20092010

20112012

20132014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Agent Website Other

Q. How did you find the home you purchased?

Most Homes Were Listed on MLS

Yes81%

No19%

Q. Was the home you purchased listed on a multiple listing service?

Buyers Plan to Keep Homes Longer

Q. How long do you plan to keep the property?

2013 20140123456789

6

8.8

Average Years

Buyers Optimistic About Long Term Direction of Home Prices

Up

Flat

Unsure

1 Year 5 Years

Q Do you think home prices in the neighborhood where you purchased will go up, down, or stay flat … in one year, in five years?

More Buyers Believe Prices Will Rise

In 1 Year In 5 Years0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

60%

81%

8%

35%

20142009

Q Do you think home prices in the neighborhood where you purchased will go up in one year, in five years?

Internet Use

More Buyers Using Mobile

2013 20140%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

85%91%

Q. Did you use a mobile device in the home buying process?

91% of Buyers Used Mobile Device in Buying Process

78% •Look for comparable prices

45% •Search for homes

45% •Communicate

43% •Take photos of homes/amenities/neighborhoods

42% •Research a particular home

41% •Search websites

39% •Communicate w/agent

22% •Research communities/neighborhoods

Q. How did you use your mobile device in the home buying process? N = 1269

Zillow is Most Useful App

Q. What was the most useful app that you used during the home buying process? N = 1269

Realtor.com & Zillow are Most Useful Websites in Buying Process

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

4%

5%

8%

9%

10%

22%

31%

Q. What was the single most useful website that you visited during your home buying process?

Brokerage

Agent

Realtor.com & Zillow Most Useful Websites

2007 2008 2009 2010 2011 2012 2013 20140%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Zillow realtor.com BrokerageYahoo Redfin

Q. What was the single most useful website that you visited during your home buying process?

Most Buyers Found Home on Realtor.com or Zillow

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

4%

5%

8%

12%

13%

26%

33%

Q. On which website did you find your home?

Realtor.com & Zillow Helped Most Buyers Find Homes

2011 2012 2013 20140%

5%

10%

15%

20%

25%

30%

35%

realtor.com Zillow Trulia Redfin

Q. On which website did you find your home?

Social Media Use Continues Rising

2011 2012 2013 20140%

10%

20%

30%

40%

50%

60%

70%

80%

52%

68%75% 77%

Q. Did you use social media (such as Facebook, Twitter, YouTube, etc.) in your home buying process?

77% of Buyers Used Social Media in Buying Process

Q. Which social media websites did you use during your home buying process? N = 1073

Social Media Used for Buying Tips & Neighborhood Info

Agents' YouTube

Neighborhood profiles

Home buying info

Neighborhood amenities

Neighborhood lifestlye

Agent referrals

Agent's Facebook page

Neighborhood info from friends

Buying tips, suggestions from friends

20%

23%

23%

31%

33%

35%

42%

44%

44%

Q. How did you use social media (such as Facebook, Twitter, YouTube, etc.) in your home buying process? N = 1073

92% of Buyers are Receptive to Receiving Information via Social Media

2011 2012 2013 20141.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.04.2 4.1 4.1

4.1

Average

Q. How receptive would you be to receiving information about the home buying process directly from your real estate agent via social media? (Scale: 1-5)

Fewer Buyers Google their Agent

2007 2008 2009 2010 2011 2012 2013 20140%

10%

20%

30%

40%

50%

60%

70%

80%

Q. Did you Google your agent…?

Internet Info as Useful as Agent Info

Agent info as useful as internet info

28%

Internet info less useful than agent info 26%

Internet info more useful than agent info 23%

Internet info different

from agent info 19%

Q. How would you compare the information you gathered on the Internet to the information provided by your real estate agent?N = 1238

Financing

More than ¼ Buyers Paid Cash

Financing 74%

Cash 26%

Q. How did you pay for the home you purchased?

Most Cash Buyers Used Proceeds from Previous Residence

Borrowed/gifted

Pension fund

Proceeds from sale/refi of another property

Inheritance

Personal savings

Sale of personal assets

Proceeds from previous residence

5%

16%

29%

32%

40%

44%

95%

Q. If all cash, where did the funds come from? N = 367

Average Down Payment Remains Above 20%

2009 2010 2011 2012 2013 20140%

5%

10%

15%

20%

25%

30%

35%

25%

31%

26%25% 25%

28%

Average

Q. What was your down payment for the home purchased, in percent of the home value?

Most Buyers Obtain Fixed Rate Loans

Fixed 92%

Ad-justable 8%

Q. What type of loan do you have?

Fixed Rate Loans Remain Majority

2009 2010 2011 2012 2013 20140%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

69%79% 84%

93% 91% 92%

31% 15%16%

7% 8% 8%6%1%

Fixed Adjustable Other

Q. What type of loan do you have?

85% of Loans are for 30 Years

20112012

20132014

0%10%20%30%40%50%60%70%80%90%

100%

85%87%

85%86%

15% 13%15%

14%

15 Year 30 Year

Q. What was the duration of your loan?

2/3 Buyers Did Not Have Appraisal Problems

66%

15%

19%

NoneHad to get 2nd appraisalHad to find more recent comps

Q. What, if any, problems did you have with the home appraisal when attempting to obtain financing?

More Buyers Had Appraisal Problems

Q. What, if any, problems did you have with the home appraisal when attempting to obtain financing?

2013

2014

0%

20%

40%

60%

80%

100%

None Had to get 2nd appraisalHad to get more recent comps

BUYER/AGENT RELATIONSHIP

Fewer Buyers Used Agent

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

74%

86% 86% 84% 86% 89% 87% 90% 92% 94% 96%91% 88%

Q. Did you use a real estate agent in your home buying process?

Most Buyers Find Agents Online

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0%10%20%30%40%50%60%70%80%90%

100%

Relationships/Contacts AdvertisingInternet Other

Q. How did you find your real estate agent?

More than ¾ Buyers Interviewed at Least 2 Agents

1 2 3 4 5 6 70%

5%

10%

15%

20%

25%24% 23%

10%

18%16%

5%4%

# of Agents Interviewed

Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase?

Buyers Continue Interviewing Multiple Agents

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2.3 2.3 2.4 2.5 2.5 2.4

2.8

2.2

1.8

2.2

3.2 3.1

Average

Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase?

Previous Performance Important to Buyers in Selecting Agent

Most knowledgeable

Distressed property knowledge

Negotiating ability

1st to respond

Seemed most aggressive

Seemed most reponsive

Previously used agent

3%

7%

8%

13%

13%

22%

29%

Q. What was the single most important reason for selecting the agent that you used in your recent home purchase?.

Gap in Phone & Text Communication

TelephoneEmail

Text MessageIn Person

11%

47%

40%

1%

38%

46%

15%

0%

Preferred Actual

Q. What was your preferred method of communicating with your agent?

Q. How did your agent actually communicate with you?

2007 2008 2009 2010 2011 2012 2013 20140%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

10%

24%

35%38% 37%

42%44%

49%

Q. What was the typical response time you expected from your agent to return any form of communication to you?

More Buyers Expect Instant Response from Agents

Room for Improvement in Agent Response Time

-10%

0%

10%

20%

30%

40%

50%

60%49%

29%

16%

4% 2% 0% 0%

18%

7%11%

17%

24%

13%10%

Expected Actual

Q. What was the typical response time you expected from your agent to return any form of communication to you?

Q. On average, what was the actual response time of your agent to return any form of communication to you?

Reasons for Satisfaction With Agent

Worked hard (63%)

Negotiated good deal (38%)

Helped find best home (37%)

Always quick to respond (26%)

Listened to needs (13%)

Q. Why do you have that level of satisfaction with your agent?

Reasons for Dissatisfaction With Agent

Slow response (71%)

Didn’t communicate how client wanted (61%)

Agent communicated ineffectively/inefficiently (51%)

Not aggressive in negotiation (40%)

Agent needed to do better job of monitoring transaction/paperwork (13%)

Q. Why do you have that level of satisfaction with your agent?

More Buyers Would Work w/Agent Again

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

88% 87%

50%67% 61% 64% 72%

54% 60%52%

61%

2% 3%

4%

3% 15% 13%11%

11%12% 22%

33%

10% 10%

46%30%

25%22% 17%

35% 28% 26%

6%

Unsure No Yes

Q. Would you work with the same agent again?

What Buyers Would Change About the Home Buying Experience

1. Better Communication with agent (38%)

2. Faster agent response (26%)

3. Better agent negotiation (19%)

4. Better market understanding (14%)

5. More assistance with mortgage approval (3%)

Q. If there was one thing you could change about the home buying experience, what would it be?

SO WHAT?Key Conclusions & Opportunities

Buyer Demographics are ChangingMore

femalesMost

minorities

More singlesMajority affluent/educate

d

Adjust

your marketing plan

Buying Process Begins Before Agent is Contacted

5 months before contacting agent

•Buyers consider purchase

5 months before contacting agent

•Buyers investigate homes/ neighborhoods

Target consumers during due

dilligence period

Buyers Need Most Agent Assistance in Finding the Right Home

Determine affordability

Determine comps

Negotiate terms of sale

Price negotiation

Find the right home

0% 10% 20% 30% 40% 50% 60% 70% 80%

30%

56%

60%

75%

79%

Q. In which part(s) of the transaction did you need the most assistance from your agent?

Communication

Important to buyers in agent selection

• Response time

• Being aggressive

• Negotiation skills

• Knowledgeable

Communicate better

• Respond immediately

• Market your skills effectively

• Communicate according to client preference

Importance of Mobile

Nearly all buyers use mobile devices

• Comps• Homes• Communicate• Photos/video

Market on mobile apps

• Zillow• Realtor.com• Trulia

Buyers using social media

Buyers receptive to receiving info via social media

Financing

• Buyers had difficulty obtaining financing

54%

• Lender contacts• Loan options• Downpayment

assistance programs

Provide solutions

What Buyers Would Change About the Home Buying Experience

1. Better Communication with agent (38%)

2. Faster agent response (26%)

3. Better agent negotiation (19%)

Q. If there was one thing you could change about the home buying experience, what would it be?

Advice to Agents from Buyers

Respond faster (63%)

Communicate according to client preference (55%)

Communicate better (44%)

Negotiate better (24%)

Understand market direction better (12%)

Q. What advice would you give to real estate agents to improve the process or the level of service?

THANK YOU!