Q42014 quarterlyreport ezine

Quarterly Real Estate ReportQ4 2014

The Forecasts Are In: Pacific Union Releases 2017 Real Estate Outlooks for 9 Northern California Regions 4

Contra Costa County 6

East Bay 12

Marin County 18

Napa County 24

San Francisco 30

Silicon Valley 40

Sonoma County 52

Sonoma Valley 58

Lake Tahoe/Truckee 64

Table of Contents

Mark A. McLaughlin, CEO, Pacific Union

Please remember to seek out local news, trend analysis, and expert advice for your real estate decisions.

The Forecasts Are In: Pacific Union Releases 2017 Real Estate Outlooks for 9 Northern California Regions

On Nov. 5, 2014, Pacific Union teamed with noted consulting firm John Burns Real Estate Consulting (JBREC) to deliver a first-of-its-kind, forward-looking report and presentation that offer a lens into the future of the Bay Area’s residential real estate market and economy.

In a live event at the SFJAZZ Center in San Francisco, which was simulcast live via the Internet and translated to Mandarin, we presented the factors that will shape the Bay Area and Lake Tahoe/Truckee real estate landscapes through December 2017. You can view a video of the entire event here.

Now for the first time, we are releasing the detailed writings for each of the nine Northern California markets in which Pacific Union operates. Highlights from the forecast and reports include:

• The Bay Area’s housing market is currently the hottest in the United States, but prices are close to peaking.

• Job growth is outpacing population growth across the Bay Area – our economy is generating exceptional, high-paying jobs.

• There are very few new homes being built. In 2013, more homes were constructed in the Houston metropolitan area than in the entire state of California.

• Affordability in the Bay Area ranges from 23 percent in San Francisco to 43 percent in Sonoma County.

• As a result, the rate of annual price appreciation in the Bay Area will likely slow from its current rate of roughly 8 percent to 1 to 4 percent beginning in 2016.

The Bay Area is currently experiencing a perfect storm of hot market conditions, exceptional job growth, excellent income levels, and limited supply. Our outlook, explained in detail in this newsletter, illustrates slowing appreciation beginning in 2016, largely as a result of limited affordability.

We recognize that neighborhoods and homes are different. Our real estate professionals are ultraqualified to assist you in decision support by combining our real estate outlook with your investment criteria to help you navigate the current market. Please be sure to consult with your Pacific Union real estate professional for specific advice.

I truly hope your 2015 is off to a top-notch start.

Sincerely,

http://library.fora.tv/2014/11/05/Pacific_Union_Real_Estate_Economic_Forecast_SF_Bay_Area

Bay Area 10-Year OverviewHere’s a look at home sales in the Bay Area’s real estate markets in the fourth quarter of 2014, with a glance back at the 10 preceding fourth quarters.

Click here to see specific 10-year data on key cities in the Bay Area.

REGION Q4 '04 Q4 '05 Q4 '06 Q4 '07 Q4 '08 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14

CONTRA COSTA COUNTY 3,165 2,929 2,153 1,248 3,343 3,063 2,657 2,757 2,814 2,463 2,367

EAST BAY 813 831 708 510 515 601 595 634 807 757 671

MARIN COUNTY 661 580 541 390 303 522 454 453 593 558 519

NAPA COUNTY 414 316 266 161 281 325 282 324 376 313 268

SAN FRANCISCO (SFH) 856 807 652 488 481 649 615 665 737 712 659

SAN FRANCISCO (CONDOS) 575 563 548 490 353 516 447 466 625 690 607

SILICON VALLEY 763 661 618 467 335 573 584 500 686 589 544

SONOMA COUNTY 1,614 1,295 1,090 667 1,303 1,154 1,014 1,230 1,300 1,143 1,131

SONOMA VALLEY 175 127 108 63 94 110 97 127 142 126 145

LAKE TAHOE/TRUCKEE (SFH) 377 272 220 178 167 297 249 293 356 283 317

LAKE TAHOE/TRUCKEE (CONDOS) 93 84 70 60 45 74 87 73 97 95 88Copyright © Pacific Union. Source: BrokerMetrics / Terradatum, Inc. using data from SFARMLS, EBRD, BAREIS, MLSLSTINGS, TSIERRA, January 7, 2015.

Bay Area: 10-Year Overview of Q4 Homes Sold

http://docs.pacunion.com/2014q4/10year_monsterchart.pdf

http://docs.pacunion.com/2014q4/10year_monsterchart.pdf

Ellen AndersonSenior Vice President, Contra Costa [email protected] Sycamore Valley Road West | Danville, CA 94526

Contra Costa CountyQuarterly Real Estate ReportQ4 2014

mailto:[email protected]

Contra Costa County: Q4 ResultsReal estate activity slowed in the fourth quarter in Pacific Union’s Contra Costa County region, held back by a shrinking pool of available homes. It’s a problem that has bedeviled the region for much of the past year, caused in part by would-be sellers who remain unsure of the market and where they will find their next homes. At the same time, buyers were more cautious in the fourth quarter, too. Except in the most sought-after communities such as Lafayette and Orinda, few buyers were willing to pay above the list price or engage in bidding wars.

Home prices were up solidly compared with one year ago, although the pace of appreciation slowed significantly from what we saw one and two years ago — more evidence that the Bay Area’s real estate markets are gradually settling down after several years of frenzied recovery. Fewer high-end properties sold during the fourth quarter than in previous quarters, though that will likely change as spring approaches.

Looking Forward: We expect to see more homes coming on the market in the first and second quarters of 2015, spurred not just by the advent of springtime but also the likelihood that the current near-record-low mortgage rates will soon disappear.

Defining Contra Costa County: Our real estate markets in Contra Costa County include the cities of Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek. Sales data in the charts below includes single-family homes in these communities.

Contra Costa Countypacificunion.com

Median Sales Price

Months’ Supply of Inventory

$920,000 $860,000

$931,500

$1,036,975 $1,004,000

$1,050,000 $975,000

$1,040,000 $1,060,000

$965,000 $997,500 $1,015,000

$995,000

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Median sales price for single-family homes in these Contra Costa County communities:

Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

1.4

2.2 2.4

1.8 1.7

1.6 1.5 1.5 1.5

1.9

1.6 1.6

0.9

0.1

0.6

1.1

1.6

2.1

2.6

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

http://pacificunion.com

http://docs.pacunion.com/2014q4/contracosta_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/contracosta_chart2_msi.pdf


Average Days on the Market

37 38

30

23

18 19

23 21

25 27

29 31 30

0

5

10

15

20

25

30

35

40


Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

Sales Price as a Percentage of Original Price

97.3% 97.4%

100.2% 99.9%

101.8% 102.0%

100.2% 100.6%

99.1% 99.3%

98.2% 98.6%

98.4%

94%

95%

96%

97%

98%

99%

100%

101%

102%

103%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes under contract in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

Percentage of Properties Under Contract

23.9%

30.2%

34.4%

39.7% 37.9% 38.2%

37.8% 33.0%

32.0% 29.9%

33.2% 33.5% 34.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.


http://docs.pacunion.com/2014q4/contracosta_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/contracosta_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2014q4/contracosta_chart4_percentundercontract.pdf

A Closer Look at Contra Costa County

Q4 '13 Q4 '14 % change Q4 '13 Q4 '14 % change Q4 '13 Q4 '14 % change Q4 '13 Q4 '14 % change

Alamo 55,910,233$ 68,901,781$ 23% 38 43 13% 56 43 -23% 1,370,000$ 1,500,000$ 9%

Blackhawk 34,962,300$ 33,101,888$ -5% 22 21 -5% 63 50 -21% 1,240,000$ 1,378,000$ 11%

Danville 170,474,711$ 141,348,273$ -17% 145 114 -21% 27 30 11% 1,045,000$ 1,160,000$ 11%

Diablo 7,174,000$ 7,737,025$ 8% 3 4 33% 188 43 -77% 2,500,000$ 1,350,000$ -46%

Lafayette 79,361,550$ 87,211,524$ 10% 59 64 8% 49 23 -53% 1,155,000$ 1,180,000$ 2%

Moraga 28,761,000$ 31,051,500$ 8% 26 27 4% 26 26 0% 1,108,500$ 1,060,000$ -4%

Orinda 70,786,565$ 82,696,340$ 17% 59 61 3% 38 35 -8% 1,010,000$ 1,200,000$ 19%

PleasantHill 54,200,265$ 47,021,699$ -13% 91 69 -24% 24 30 25% 580,000$ 650,000$ 12%

San Ramon 144,377,550$ 149,268,427$ 3% 161 158 -2% 23 26 13% 830,000$ 891,240$ 7%

Walnut Creek 113,469,950$ 128,550,065$ 13% 136 133 -2% 24 30 25% 786,500$ 888,420$ 13%

Source: Terradatum, January 7, 2015. Data is for single-family homes in selected Contra Costa County cities.

Contra Costa County Snapshot: Q4 2014 vs. Q4 2013

Sales Volume Homes Sold Avg. Days on Market Median Price


http://docs.pacunion.com/2014q4/contracosta_chart6_sect2_cities.pdf



Contra Costa County Housing and Economic Outlook

While also forming its own dynamic employment base, Contra Costa primarily remains a comparatively affordable commuter housing market. The new BART rail line should make a major difference to home investment along state Route 4, where many buyers stretch to qualify for a home.

THE ECONOMY

Solid Job Growth: Contra Costa County had over 335,000 employed individuals in 2013 and was projected to add another 5,800 by the end of 2014. That is a solid growth rate of about 1.7 percent for 2014. We project even stronger job growth through 2016, followed by an easing through 2018.

Sector Growth: The education, health services, trade, transportation, and utilities sectors have experienced the largest job growth over the past year.

Solid Employment: With an unemployment rate of 6.1 percent, the East Bay MSA (Contra Costa and Alameda County combined) is in line with the national average of 5.9 percent.

High Incomes: With a median household income of over $78,000 in 2013, Contra Costa County enjoys a relatively higher income profile, well above the national norm of about $52,000, but is an outlet of affordable housing for the upper middle class. Income growth finally surged last year and is projected to be strong over the next few years.

DEMOGRAPHICS

Stable Growth: Contra Costa County has seen its population grow at a stable rate of around 1.4 percent in recent years. This equates to just over 14,000 additional residents annually over the last five years. Population growth, however, is projected to ease.

Slower Growth Ahead: Though slower growth is forecast in the coming years, household growth should outpace population growth as millennials begin to move out and, more generally, household formations pick up.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 325,900 316,500 317,300 325,800 335,100 340,900 349,200 357,300 362,300 365,500 Change -17,300 -9,400 800 8,500 9,300 5,800 8,300 8,100 5,000 3,200 Change Rate -5.0% -2.9% 0.3% 2.7% 2.9% 1.7% 2.4% 2.3% 1.4% 0.9%Median Income $75,700 $74,100 $73,200 $74,300 $78,300 $81,200 $84,800 $88,700 $92,600 $96,000 Change Rate -4.0% -2.1% -1.2% 1.5% 5.4% 3.7% 4.4% 4.6% 4.4% 3.7%

Source: Moody Analytics

Jobs and Median Income Trends and Projections - Contra Costa County

2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PPopulation Total 1,037,900 1,052,700 1,065,900 1,078,300 1,095,100 1,103,400 1,102,500 1,109,500 1,118,000 1,127,600 1,137,800 Change 14,500 14,800 13,200 12,300 16,900 5,200 7,400 7,000 8,500 9,700 10,200 Change Rate 1.4% 1.4% 1.3% 1.2% 1.6% 0.5% 0.7% 0.6% 0.8% 0.9% 0.9%Household Total 372,100 377,000 380,100 382,900 385,400 389,600 388,800 393,000 397,200 401,200 405,100 Change 4,800 4,900 3,100 2,800 2,500 3,600 3,400 4,200 4,200 4,100 3,900 Change Rate 1.3% 1.3% 0.8% 0.7% 0.7% 0.9% 0.9% 1.1% 1.1% 1.0% 1.0%

Population and Households Trends and Projections - Contra Costa County



http://docs.pacunion.com/2014q4/contra_costa_jbrec_1.pdf



THE HOUSING MARKET

Easing Home Prices: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the East Bay MSA shows prices have risen 8.7 percent over the last year, which has slowed from double-digit upticks in 2012 and 2013. JBREC forecasts slower price increases after 2015.

Historically Solid Resale Volumes: The resale volume in 2013 was down 5 percent from 2012 to about 15,700 sales in Contra Costa County. Projections at the MSA level indicate strong volume growth through 2016, followed by marginal decreases in 2017-2018.

Investors Leaving: Investors are purchasing about 18 percent of homes in the East Bay MSA, down from 31 percent at the peak in the beginning of 2013. Higher home prices, and hence lesser returns on rented homes, is the main reason.

Affordability: Though low mortgage rates help keep affordability at a historically normal level in Contra Costa County, comparatively high prices mean homeownership is still somewhat expensive. The median income household would need to pay 36 percent of their income to buy the median-priced resale home and about 38 percent to afford the median-priced new home.

New Home Pricing: New home prices have generally been at about the $500,000 level over the past year and a half, up nearly 10 percent from the calendar year 2013.

MARKET COLOR

Bigger BART: An extension of the Bay Area Rapid Transit (BART) is currently underway, bringing the service to eastern Contra Costa County along the state Route 4 corridor via an eBART connecting train. With stops located in Antioch, Pittsburg, and eventually Brentwood, this extension will help alleviate often brutal congestion for state Route 4 corridor commuters, a key new home locale. The Antioch station is anticipated to open in late 2017, while the Brentwood station’s timing is still uncertain.

Urban Lafayette: Lafayette is a high-end community in the affluent “Lamorinda” area. Historically characterized by large homes on large lots, aging households in the area are seeking more urbanized alternatives. But rather than having to move to San Francisco or Oakland, these households will have options in downtown Lafayette. KB Home, Lennar, and The New Home Company are all planning midrise, single-level condominiums in downtown Lafayette. Similar developments are planned in other parts of the East Bay, as empty-nesters and older couples look to downsize into lock-and-go convenience that is still luxurious enough to meet their needs.

2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PBurns Home Value Index 110.97 105.46 99.51 115.21 139.63 148.79 149.41 156.88 160.01 161.61 161.61 Change Rate -3.1% -5.0% -5.6% 15.8% 21.2% 8.7% 7.0% 5.0% 2.0% 1.0% 0.0%Affordability Index 1.9 1.7 0.7 0.5 3.3 4.8 4.7 5.3 5.6 5.7 5.7

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating excellent affordability poor affordability compared to that market’s norm.

Burns Home Value Index Trends and Projections - East Bay MSA



Pam HoffmanSenior Vice President, Managing Broker, East Bay [email protected] Mountain Boulevard | Oakland, CA 94611

East BayQuarterly Real Estate ReportQ4 2014


East Bay: Q4 ResultsFourth-quarter home sales typically start to slow as the holiday season approaches, but another factor was also at work during the last quarter of 2014: an extreme shortage of available homes in Pacific Union’s East Bay region. The number of new listings fell precipitously after the first week of November and didn’t recover. But if sellers were in short supply, buyers were not, and those properties that were available were quickly sold.

The East Bay remains a popular destination for buyers priced out of San Francisco, and the most in-demand neighborhoods were those that score high on walkability ratings and are close to BART stations. Homes selling for $500,000 to $1 million saw the most sales activity, and those that were priced accurately attracted multiple offers and sold above their list prices.

Looking Forward: With an exceptionally robust local economy and mortgage rates still hovering near record lows, we expect strong sales in 2015. Many sellers wait until springtime before putting their homes on the market, but we recommend that they start earlier — in January and February, when less competition will help their properties stand out. Talk with a real estate professional now if you plan to prepare your home for sale in the coming weeks.

Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Alameda; Albany; Berkeley; El Cerrito; Kensington; and Piedmont. Sales data in the charts below includes single-family homes in these communities.

East Baypacificunion.com

Median Sales Price


$700,000 $713,750 $725,000 $758,500

$813,500 $817,000 $842,500

$790,000 $834,000

$778,000 $835,000 $826,500 $820,000

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000


Source: Terradatum, January 7, 2015. Median sales price for single-family homes in the East Bay.

1.0

2.0 2.1

1.4 1.3

1.2 1.2 1.0

1.1

1.6

1.0 0.8

0.6

0.1

0.6

1.1

1.6

2.1

2.6


Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in the East Bay.


http://docs.pacunion.com/2014q4/eastbay_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/eastbay_chart2_msi.pdf



32 33

28 25

20 22 21 20

23 23 21 20

27

0

5

10

15

20

25

30

35


Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in the East Bay.


104.1%

100.8%

106.2%

109.4%

113.2% 111.8%

109.2% 110.3%

109.3% 107.7%

111.6% 112.1%

109.3%

94%

96%

98%

100%

102%

104%

106%

108%

110%

112%

114%

116%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes under contract in the East Bay.


27.9% 31.1%

36.1%

42.8% 43.2% 45.6%

43.7% 45.6%

39.6% 36.2%

45.6% 46.2%

39.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in the East Bay.


http://docs.pacunion.com/2014q4/eastbay_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/eastbay_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2014q4/eastbay_chart4_percentundercontract.pdf

A Closer Look at the East Bay


Alameda 71,203,231$ 67,657,950$ -5% 95 82 -14% 23 22 -4% 730,000$ 813,000$ 11%

Albany 26,781,750$ 14,772,000$ -45% 40 17 -58% 24 20 -17% 680,500$ 845,000$ 24%

Berkeley 154,139,234$ 153,259,580$ -1% 166 145 -13% 31 23 -26% 810,000$ 960,087$ 19%

El Cerrito 36,339,755$ 39,314,551$ 8% 57 55 -4% 20 23 15% 595,000$ 685,000$ 15%

Kensington 21,572,105$ 23,635,720$ 10% 24 25 4% 30 27 -10% 790,000$ 786,720$ 0%

Oakland* 262,849,498$ 274,316,079$ 4% 355 321 -10% 25 23 -8% 704,000$ 801,000$ 14%

Piedmont 33,603,000$ 50,060,776$ 49% 20 26 30% 23 13 -43% 1,327,500$ 1,725,000$ 30%

East Bay Snapshot: Q4 2014 vs. Q4 2013

Source: Terradatum, January 7, 2015. Data is for single-family homes in selected East Bay cities; *Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705.



Under $500,000 48,526,620$ 26,069,700$ -46% 121 66 -45% 30 36 20% 415,000$ 405,000$ -2%

Over $500,000 557,961,953$ 596,946,956$ 7% 636 605 -5% 25 21 -16% 771,750$ 852,000$ 10%

$500,000 - $1 million 360,408,549$ 313,319,237$ -13% 499 412 -17% 26 23 -12% 718,000$ 760,000$ 6%

Over $1 million 197,553,404$ 283,627,719$ 44% 137 193 41% 22 17 -23% 1,260,000$ 1,328,000$ 5%

Source: Terradatum, January 7, 2015. Data is for SFH in the East Bay: Alameda, Albany, Berkeley, El Cerrito, Kensington, Piedmont, and Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705.

East Bay Price Range Snapshot: Q4 2014 vs. Q4 2013


Q4 '13 Q4 '14 % change Q4 '13 Q4 '14 % change

Montclair / Joaquin Miller 73 73 0% $850,834 $980,696 15%

Crocker Highlands / Grand Lake 39 34 -13% $865,568 $1,062,770 23%

Rockridge / Claremont 49 33 -33% $1,074,012 $1,266,553 18%

Glenview / Oakmore 48 49 2% $710,296 $843,316 19%

Laurel / Dimond 28 22 -21% $497,041 $640,159 29%

Redwood Heights / Lincoln Heights 24 18 -25% $634,777 $672,777 6%

Crestmont / Ridgemont / Skyline 12 10 -17% $875,750 $1,110,700 27%

Temescal / Piedmont Ave. 13 5 -62% $655,615 $680,600 4%

Oakland Snapshot: Q4 2014 vs. Q4 2013

NeighborhoodHomes Sold Average Price

Source: EBRD, January 7, 2015. Data is for single-family homes in selected Oakland neighborhoods.


http://docs.pacunion.com/2014q4/eastbay_chart6_sect2_cities.pdf

http://docs.pacunion.com/2014q4/eastbay_chart7_sect2_prices.pdf

http://docs.pacunion.com/2014q4/eastbay_chart8_sect2_oaklandprices.pdf



Alameda County Housing and Economic Outlook

Benefitting from easy access to both San Francisco and Silicon Valley, Alameda County offers relatively affordable housing opportunities for commuters as well as quality housing for its own economic base. Areas with good schools significantly outperform those with mediocre schools.

THE ECONOMY

Solid Job Growth: Alameda County had nearly 700,000 employed residents in 2013 and was projected to add another 12,200 by the end of 2014. Employment growth has been at 3-plus percent over for the past two years, and we anticipate solid increases going forward.

Growing Sectors: The education, health services, trade, transportation, and utilities job sectors have experienced the largest job growth over the past year.

Solid Employment: With an unemployment rate of 6.1 percent, the East Bay MSA (Contra Costa and Alameda County combined) is in line with the national average of 5.9 percent.

Strong Incomes: At $70,900 in 2013, the Alameda County median household income is well above state and national benchmarks and low by Bay Area standards. Income levels rose in 2012 and really began to accelerate in 2013. They are projected to continue to grow through the next few years at fairly robust levels.

DEMOGRAPHICS

Stable Growth: Alameda County has experienced population growth at a rate between 1.0 percent and 1.5 percent in recent years. This translates into over 100,000 additional residents in the past five years. Population growth is projected to ease to a level of less than 1 percent per year going forward.

Slower Growth Ahead: Though slower growth is forecast in the coming years, household growth should outpace population growth as millennials begin to move out and, more generally, household formations pick up. We anticipate an increase of 28,200 additional households by the end of 2018.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 657,800 646,400 653,600 674,200 698,700 728,100 745,000 755,500 762,300 1,638,111 Change -43,600 -11,400 7,200 20,600 24,500 17,200 16,900 10,500 6,800 14,900 Change Rate -6.2% -1.7% 1.1% 3.2% 3.6% 2.4% 2.3% 1.4% 0.9% 0.9%Median Income $68,300 $67,000 $66,200 $67,500 $70,900 $73,200 $76,100 $79,500 $82,900 $86,000 Change Rate 2.9% -1.9% -1.2% 2.0% 5.0% 3.2% 4.0% 4.5% 4.3% 3.7%


Jobs and Median Income Trends and Projections - Alameda County


Population and Households Trends and Projections - Alameda County



http://docs.pacunion.com/2014q4/east_bay_jbrec_1.pdf



THE HOUSING MARKET

Easing Home Price Growth: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the East Bay MSA shows prices have risen 8.7 percent over the last year, which has slowed from double digit upticks in 2012 and 2013. JBREC forecasts slower price increases after 2015.

Slightly Declining Resale Volumes: Alameda County’s resale volume in 2013 was down 3 percent from 2012 to about 16,700 sales. Projections at the MSA level indicate strong volume growth through 2016, followed by marginal decreases in 2017-18.

Investor Activity Slowing: Investors are purchasing about 18 percent of homes in the East Bay MSA, down from 31 percent at the peak in the beginning of 2013. Higher home prices, and hence lesser returns on rented homes, is the main reason.

Affordability: Though low mortgage rates help keep affordability at a historically normal level, comparatively high prices in Alameda County mean homeownership is still a burden on an average income. The median-income household would need to pay 56 percent of their income to buy the median-priced resale home and about 60 percent to afford the median-priced new home.

New Home Pricing: New home prices have generally been at about the $720,000 level over the past year and a half in Alameda County, up more than 18 percent from the calendar year 2013.

MARKET COLOR

Urbanizing Alameda: While Dublin has become one of the most active and attractive new-home nodes in the Bay Area with a family-friendly suburban environment, other parts of Alameda County are urbanizing. Downtown Oakland and the nearby Waterfront district are slated for major urban infill projects, such as the Brooklyn Basin, that will offer an array of midrise and high-rise living options. Even historically more suburban Fremont in southwest Alameda County near Silicon Valley is urbanizing. Lennar, for instance, recently purchased 100 acres around an upcoming Bay Area Rapid Transit (BART) station that is expected to yield over 2,000 homes. Toll Brothers’ nearby 34-acre site is slated for about 1,000 homes. These densities will demand multistory living, likely both for-sale and rental housing. Throughout the region, builders are searching for more urban opportunities, both for the young tech-oriented households but also to satisfy older buyers eager to shed a high-maintenance home for a more convenient lifestyle.




Burns Home Value Index Trends and Projections - East Bay MSA



Brent ThomsonPresident, Marin [email protected] Redwood Highway, Suite 150 | Mill Valley, CA 94941

Marin CountyQuarterly Real Estate ReportQ4 2014


Marin County: Q4 ResultsA tight supply of available homes held back fourth-quarter sales in Pacific Union’s Marin County region. Buyers were plentiful, however, resulting in rising sales prices overall and multiple offers on all well-priced homes in attractive areas. Homes priced from $1 million to $2 million saw the biggest increase in sales. Continuing a recent trend, the quarter also saw a significant number of private, off-market sales.

Like other Bay Area regions, homeowners in Marin County were slow to put their properties on the market even as sales prices continued to rise — perhaps worried about their prospects after the transaction when they, too, would become buyers in a tight market. Buyers, meanwhile, were more selective than in past quarters, refusing to settle for anything less than exactly what they wanted.

Looking Forward: We are optimistic that 2015 will be a strong year for Marin County home sales. The Bay Area’s vibrant economy will continue to encourage buyers, aided by near-record-low mortgage rates. And with no shortage of qualified buyers, would-be sellers should consider putting their homes on the market sooner rather than later. The supply of available homes will expand by the springtime, and properties on the market before then will enjoy less competition.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the charts below includes single-family homes in these communities.

Marin Countypacificunion.com

Median Sales Price


$852,000

$935,000 $995,000 $1,001,500 $1,030,000

$1,100,000 $1,054,100 $1,051,500

$952,500

$1,175,000

$991,000

$1,100,000 $1,020,000

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000


Source: Terradatum, January 7, 2015. Median sales price for single-family homes in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.

1.8

2.6 2.6

1.8 1.8

1.5 1.5

1.8 1.9

2.6

1.8 1.8

1.4

0.1

0.6

1.1

1.6

2.1

2.6

3.1


Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.


http://docs.pacunion.com/2014q4/marin_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/marin_chart2_msi.pdf




75

84

73

56

45 53

46 53 50 52 55

60

70

0

10

20

30

40

50

60

70

80

90


Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.

18.6%

32.0% 31.3%

40.0%

33.8%

38.2% 35.2%

30.2% 28.0% 29.5%

30.7%

26.5% 23.3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.


93.8% 94.5%

98.0%

95.8%

100.7%

99.3% 98.2%

97.4% 97.0% 97.5%

98.0%

95.8%

93.5%

88%

90%

92%

94%

96%

98%

100%

102%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes under contract in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.


http://docs.pacunion.com/2014q4/marin_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/marin_chart4_percentundercontract.pdf

http://docs.pacunion.com/2014q4/marin_chart5_salesprice_originalprice.pdf

A Closer Look at Marin County


Belvedere 7,033,000$ 22,940,000$ 226% 3 6 100% 115 120 4% 2,292,000$ 3,775,000$ 65%

Corte Madera 24,757,734$ 16,418,250$ -34% 21 11 -48% 36 58 61% 1,012,000$ 1,350,000$ 33%

Fairfax 17,935,302$ 15,627,000$ -13% 26 17 -35% 52 37 -29% 619,000$ 860,000$ 39%

Greenbrae 7,215,600$ 10,132,225$ 40% 7 8 14% 139 39 -72% 1,006,600$ 1,320,000$ 31%

Kentfield 38,607,049$ 29,566,500$ -23% 18 15 -17% 71 65 -8% 1,800,000$ 1,850,000$ 3%

Larkspur 17,989,375$ 29,270,750$ 63% 12 18 50% 53 53 0% 1,487,000$ 1,447,000$ -3%

Mill Valley 128,202,550$ 106,939,125$ -17% 91 68 -25% 53 46 -13% 1,180,000$ 1,316,500$ 12%

Novato 84,043,369$ 91,854,627$ 9% 113 113 0% 62 62 0% 666,600$ 751,000$ 13%

Ross 38,181,500$ 48,625,000$ 27% 9 13 44% 113 85 -25% 2,725,000$ 3,000,000$ 10%

San Anselmo 59,020,925$ 52,663,600$ -11% 56 44 -21% 69 56 -19% 902,500$ 1,070,000$ 19%

San Rafael 118,472,140$ 115,587,310$ -2% 122 118 -3% 59 59 0% 827,500$ 899,500$ 9%

Sausalito 28,348,500$ 26,640,000$ -6% 21 18 -14% 63 70 11% 1,300,000$ 1,392,500$ 7%

Tiburon 56,838,000$ 98,722,887$ 74% 24 34 42% 75 81 8% 1,865,000$ 2,385,500$ 28%

Source: Terradatum, January 7, 2015. Data is for single-family homes in selected Marin County cities.

Marin County Snapshot: Q4 2014 vs. Q4 2013



http://docs.pacunion.com/2014q4/marin_chart6_sect2_cities.pdf



Marin County Housing and Economic Outlook

This affluent San Francisco suburban bedroom community hasn’t experienced the same price surge as San Francisco. Supply constraints and great schools make this market a safer long-term investment than most areas.

THE ECONOMY

Decent Jobs: Marin County is San Francisco’s quieter, more suburban neighbor on the other side of the Golden Gate Bridge. It has an employment basis of only 110,000 and recent job growth has been a solid 2,600 jobs in the last year. We project continued good job growth ahead.

High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin Counties), the higher paying sectors – finance, information, and professional and business services – are critical and have experienced tremendous growth over the last two years. These sectors added over 44,000 jobs MSA-wide from 2011 to 2013.

Highly Employed Population: Only 4.5 percent of the labor pool cannot find a suitable job.

Well Off and Getting Better: Marin County is highly affluent, supporting a 2014 median household income of $91,200 per year. Wage growth has recently been solid and is projected to be quite strong for the next few years.

DEMOGRAPHICS

Slow and Steady: Marin County is home to about 250,000 people in 105,000 households. Population growth is forecast to remain fairly slow as it has been historically, both a function of high housing prices and a generally slow growth sentiment.

By the Numbers: Growth projections translate into about 1,500 new residents annually in Marin County, or about 1,000 new households, with household growth projected to increase at a somewhat faster pace.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 102,900 101,400 102,800 105,700 109,200 111,800 113,800 115,600 117,100 118,100 Change -6,800 -1,500 1,400 2,900 3,500 2,600 2,000 1,800 1,500 1,000 Change Rate -6.2% -1.5% 1.4% 2.8% 3.3% 2.3% 1.8% 1.6% 1.3% 0.9%Median Income $85,800 $84,500 $83,400 $85,600 $87,800 $91,200 $96,300 $101,600 $106,500 $111,200 Change Rate -2.4% -1.5% -1.3% 2.6% 2.6% 3.9% 5.6% 5.5% 4.8% 4.4%


Jobs and Median Income Trends and Projections - Marin County

2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PPopulation Total 250,900 252,900 255,300 255,800 258,000 259,700 259,500 260,900 262,500 264,200 265,700 Change 2,500 2,000 2,400 600 2,100 1,200 1,500 1,500 1,600 1,700 1,500 Change Rate 1.0% 0.8% 0.9% 0.2% 0.8% 0.5% 0.6% 0.6% 0.6% 0.6% 0.6%Household Total 102,400 103,300 103,900 103,600 104,200 105,100 105,000 106,000 107,100 108,200 109,100 Change 1,100 900 500 -200 600 700 700 1,000 1,100 1,100 900 Change Rate 1.0% 0.9% 0.5% -0.2% 0.6% 0.7% 0.7% 0.9% 1.1% 1.0% 0.9%


Population and Households Trends and Projections - Marin County


http://docs.pacunion.com/2014q4/marin_jbrec_1.pdf



THE HOUSING MARKET

Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA shows prices up 7.8 percent over the last year, and we expect 7 percent appreciation over the next four years.

Consistent Resale Volumes: There have been about 3,600 resales in Marin County over the last 12 months. At the MSA level, we forecast sales growth of about 3 percent to 5 percent for the next two years.

Affordability Decreasing: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific just to Marin County, a household earning the median income would need to pay 62 percent of their income to buy the median-priced resale home and 70 percent for the median-priced new home.

High Priced Commodity: Marin County sees very few new homes built in any given year. Thus undersupply, an attractive environment, and strong incomes mean new home prices are always very high, averaging over $1 million over the last year.

MARKET COLOR

Building Here and There: Like neighboring Sonoma County, there is very little new development activity in Marin County. The New Home Company made a splash with its Rose Lane community in Larkspur, offering conventional large detached homes, small-lot cottages, and even age-restricted low-rise condominiums. Marin County will continue to be a generally undersupplied, slow-growing market characterized by occasional subdivisions in generally infill sites, typically located from Tiburon to the north.

SMART Commuting: The SMART train will provide a rail commuter option that parallels the congested Highway 101 from Sonoma County to the north and into Marin County, terminating at Larkspur. With several stations slated to open in 2016, SMART riders can catch a ferry in Larkspur into the massive – and generally high-paying – San Francisco jobs node.




Burns Home Value Index Trends and Projections - San Francisco MSA



Linda CarrollRegional Executive, Napa [email protected] Main Street | Napa, CA 94559

Napa CountyQuarterly Real Estate ReportQ4 2014


Napa County: Q4 ResultsPacific Union’s Napa County region enjoyed robust sales throughout the fourth quarter. The supply of homes was tight — a common problem throughout the Bay Area — but buyers were eager to scoop up any fairly priced property and in all areas of the county, from the city of Napa in the south to high-end communities such as St. Helena farther north.

Napa County is no longer the tight seller’s market of a year ago. Properties sat on the market longer in the fourth quarter, and buyers were able to negotiate deals that were unheard of in the first and second quarters. That said, attractive properties that were priced well still commanded multiple offers throughout the county.

Looking Forward: We expect to see increased inventory levels beginning in January and continuing through the spring and summer. Many sellers wait until flowers are blooming and their properties are looking their best before they put their homes on the market, but we encourage them to get a jump on the competition and put out a for-sale sign early in the year. Rents are high and mortgage rates are low, and many prospective homebuyers may find that they can pay less in monthly mortgage payments than they would in rent.

Defining Napa County: Our real estate markets in Napa County include the cities of American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville. Sales data in the charts below includes all single-family homes in Napa County.

Napa Countypacificunion.com

Median Sales Price


$475,000 $528,000

$471,000

$563,250 $510,022

$575,000 $527,000

$592,000

$510,000

$602,500

$535,000

$610,000

$530,000

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000


Source: Terradatum, January 7, 2015. Median sales price for single-family homes in Napa County.

3.0

4.3 4.7

4.9

3.5 3.6 3.4 3.7

5.3

4.2 4.0 4.2

3.0

0.1

1.1

2.1

3.1

4.1

5.1

6.1


Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in Napa County.


http://docs.pacunion.com/2014q4/napa_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/napa_chart2_msi.pdf




91

127

110 100

65 71

77 81 71

90 87 81

95

0

20

40

60

80

100

120

140


Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in Napa County.

14.5%

20.3%

17.5%

24.8%

19.3%

23.3%

19.3%

16.0% 16.3% 16.9% 17.7% 19.6%

17.7%

0%

5%

10%

15%

20%

25%

30%


Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in Napa County.


94.1%

90.0% 90.7%

93.7%

96.4% 95.4% 95.8%

88.6%

93.5% 93.4% 92.5%

95.1%

91.6%

84%

86%

88%

90%

92%

94%

96%

98%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes under contract in Napa County.


http://docs.pacunion.com/2014q4/napa_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/napa_chart4_percentundercontract.pdf

http://docs.pacunion.com/2014q4/napa_chart5_salesprice_originalprice.pdf

A Closer Look at Napa County


American Canyon 18,567,150$ 11,826,350$ -36% 48 28 -42% 75 53 -29% 373,000$ 407,500$ 9%

Angwin 5,779,000$ 6,720,000$ 16% 7 3 -57% 138 294 113% 629,000$ 2,100,000$ 234%

Calistoga 14,311,250$ 6,587,900$ -54% 18 8 -56% 142 122 -14% 644,500$ 565,000$ -12%

Napa 121,901,482$ 130,286,684$ 7% 206 189 -8% 78 78 0% 479,500$ 559,000$ 17%

St. Helena 36,437,582$ 35,820,500$ -2% 25 34 36% 155 141 -9% 1,110,000$ 778,000$ -30%

Yountville 4,572,500$ 6,060,088$ 33% 6 6 0% 96 86 -10% 715,000$ 790,000$ 10%

Source: Terradatum, January 7, 2015. Data is for single-family homes in selected Napa County cities.

Napa County Snapshot: Q4 2014 vs. Q4 2013



Under $500,000 61,609,432$ 41,492,263$ -33% 164 104 -37% 66 62 -6% 385,000$ 418,250$ 9%

$500,000 - $999,999 72,312,532$ 83,112,171$ 15% 111 124 12% 93 96 3% 627,000$ 650,000$ 4%

$1 million - $3 million 57,852,000$ 61,992,088$ 7% 35 37 6% 144 126 -13% 1,550,000$ 1,614,000$ 4%

Over $3 million 21,820,000$ 10,705,000$ -51% 3 3 0% 340 158 -54% 7,175,000$ 3,505,000$ -51%

Median Price

Source: Terradatum, January 7, 2015. Data is for single-family homes in Napa County.

Napa County Price Range Snapshot: Q4 2014 vs. Q4 2013

Sales Volume Homes Sold Avg. Days on Market


http://docs.pacunion.com/2014q4/napa_chart6_sect2_cities.pdf

http://docs.pacunion.com/2014q4/napa_chart7_sect2_prices.pdf



Napa County Housing and Economic Outlook

Net worth drives the second-home and retiree markets in Napa, and net-worth growth has been fantastic. Rising stock and home prices continue to create Napa housing opportunities for the affluent, and the locals benefit from the increased spending.

THE ECONOMY

Robust Job Growth: Napa County added 3,000 net new jobs in 2013 and was projected to add another 2,500 in 2014, which would bring the county to over 69,000 jobs. That is a strong projected growth rate of 3.8 percent. We project strong job growth next year, and then easing through 2018.

Tourism and Job Diversity: The health, education, tourism, manufacturing, and professional business services sectors matter most to the local economy.


Middle Class: At $68,100 per year, Napa enjoys a solid income profile not far above the statewide and national norms. Napa County is much more of a middle-class area than is perceived by many from outside Napa, who only know it for its vineyards and luxury vacation homes.

DEMOGRAPHICS

Usually Slow Growth: Napa has long favored a slow-growth sentiment. Population growth has fallen below 1.0 percent in recent years and household growth is at 0.6 percent year over year. We project continued slow growth going forward, though we expect household growth to outpace population growth as millennials begin to move out and, more generally, household formation trends to gravitate back toward long-term norms.

Slow Growth Future: Growth projections translate into only about 600 to 1,200 new Napa County residents annually over next few years, or just a few hundred new households annually.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 61,400 60,600 61,200 63,600 66,600 69,100 71,600 73,100 74,100 74,600 Change -4,000 -800 600 2,400 3,000 2,500 2,500 1,500 1,000 500 Change Rate -6.1% -1.3% 1.0% 3.9% 4.7% 3.8% 3.6% 2.1% 1.4% 0.7%Median Income $63,900 $63,500 $62,600 $63,400 $66,100 $68,100 $70,600 $72,800 $74,900 $76,700 Change Rate -2.7% -0.6% -1.4% 1.3% 4.3% 3.0% 3.7% 3.1% 2.9% 2.4%


Jobs and Median Income Trends and Projections - Napa County

2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PPopulation Total 135,300 136,800 137,900 138,900 140,300 141,200 141,100 141,700 142,600 143,700 144,800 Change 1,200 1,500 1,100 1,000 1,400 600 800 600 900 1,100 1,100 Change Rate 0.9% 1.1% 0.8% 0.7% 1.0% 0.4% 0.6% 0.4% 0.6% 0.8% 0.8%Household Total 48,500 49,000 49,300 49,600 49,800 50,100 50,100 50,500 51,000 51,500 52,100 Change 300 500 300 400 200 300 300 400 500 600 500 Change Rate 0.6% 1.0% 0.6% 0.7% 0.3% 0.6% 0.5% 0.8% 1.0% 1.1% 1.0%


Population and Households Trends and Projections - Napa County


http://docs.pacunion.com/2014q4/napa_jbrec_1.pdf



THE HOUSING MARKET

Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI shows prices have risen 8.0 percent over the last year, which has slowed from double-digit upticks in 2012 and 2013. JBREC forecasts slow but steady growth in this measure over the next few years, from 2.0 to 5.4 percent.

Slightly Declining Volumes: We expect 2014 resale volume to barely exceed 2013. We project flat to slightly declining volumes over the next few years, but this is at a level very roughly in line with the long-term norm of about 1,250 to 1,450 sales per year.

Investors Slowing Down: Investors are purchasing about 26 percent of Napa market homes, down from 36 percent at the peak at the end of 2012.

Affordability: Though low mortgage rates help keep affordability at a historically normal level in Napa County, comparatively high prices mean homeownership is still expensive. The median-income household would need to pay 43 percent of their income to buy the median-priced resale home and about 56 percent to afford the median-priced new home.

Expensive New Homes: New home prices bounce all over the place due to low supply. The median August price was $970,000, which is much higher than last year’s $533,525.

MARKET COLOR

Napa is an extremely slow-growth market with very little new home activity. So the Napa Pipe development, with 945 homes and a commercial component anchored by a Costco and a hotel, will make a huge impact. There has been fierce neighborhood antagonism to this development located just south of the city of Napa, fueled by concerns about impacts on traffic and services, and more recently about seismic risk after the August earthquake. Still, the Napa Pipe development continues to move through the entitlement process. When and if this project gets off the ground, it would be the 1,000-pound gorilla of the Napa housing market. Other new housing developments will be of the infill variety, particularly given the demise of the Pacific Union College “ecovillage” plan.




Burns Home Value Index Trends and Projections - Napa County



Patrick [email protected] Letterman Drive, Building C, Suite 500 | San Francisco, CA 94129

San FranciscoQuarterly Real Estate ReportQ4 2014


San Francisco: Q4 ResultsReal estate activity typically pulls back in San Francisco during the fourth quarter as buyers and sellers alike turn their attention to holiday planning, and such was the case as 2014 wound down. The seasonal slowdown helped keep the inventory of available homes exceptionally tight across all price points in the fourth quarter, and unit sales also decelerated. Coming after an exceptional year of strong sales and price appreciation that ranked among the highest in the nation, the slowdown was predictable — even beyond the expected holiday relaxation factor. Still, single-family homes and condominiums that were fairly priced sold quickly, with many receiving multiple offers.

Fourth-quarter sales activity was not as frenzied as in past quarters, but the positive economic fundamentals of the San Francisco market remain unmatched: one of the most desirable locations in the nation, an expanding job base, and economic growth that shows little sign of slowing down.

Looking Forward: The year 2015 should shape up to be another busy one for buyers and sellers. We expect to see inventory levels rise appreciably in the first quarter; sales prices will also continue to rise, although not likely at the pace seen in 2014. Mortgage rates hovered near record lows throughout 2014 but are likely to succumb to upward-force vectors in 2015 — an added incentive for buyers to close deals early in the year to lock in low rates.

San Franciscopacificunion.com

Single-Family Homes – Median Sales Price

Condominiums – Median Sales Price

$947,000 $925,000

$1,050,000

$985,000

$1,100,000 $1,090,500 $1,175,000

$1,082,000 $964,000

$1,040,000

$1,180,000 $1,150,000 $1,082,000

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000


Source: Terradatum, January 7, 2015. Median sales price for single-family homes in San Francisco.

$770,000

$950,000 $945,000 $977,000

$920,000 $970,000

$1,050,000

$957,500 $980,000 $950,000

$1,006,500 $1,025,000

$970,000

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

$1,100,000


Source: Terradatum, January 7, 2015. Median sales price for condominiums in San Francisco.


http://docs.pacunion.com/2014q4/sanfran_chart1_mediansalesprice_sfh.pdf

http://docs.pacunion.com/2014q4/sanfran_chart2_mediansalesprice_condos.pdf


Single-Family Homes – Months’ Supply of Inventory

1.1

2.1

1.7 1.5

1.4 1.4

1.8 1.6 1.6

2.1

1.2 1.1

0.7

0.1

0.6

1.1

1.6

2.1

2.6


Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in San Francisco.

Single-Family Homes – Average Days on the Market

42 41 38

32 35

26 27 30 29

27 31 31

40

0

5

10

15

20

25

30

35

40

45


Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in San Francisco.

Condominiums – Months’ Supply of Inventory

1.0

2.0

1.7

1.3 1.2

1.4

1.6 1.7

1.4

1.8

1.3 1.3

0.7

0.1

0.3

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1


Source: Terradatum, January 7, 2015. Months' supply of inventory for condominiums in San Francisco.


http://docs.pacunion.com/2014q4/sanfran_chart3_msi_sfh.pdf

http://docs.pacunion.com/2014q4/sanfran_chart5_avgdom_sfh.pdf

http://docs.pacunion.com/2014q4/sanfran_chart4_msi_condos.pdf


Condominiums – Average Days on the Market

43 47

40

30 30 28

35 33 33

40 37 36

51

0

10

20

30

40

50

60


Source: Terradatum, January 7, 2015. Average days on market for condominiums sold in San Francisco.

Condominiums – Percentage of Properties Under Contract

33.0% 33.4%

38.9%

46.1%

41.2% 40.2% 37.8%

33.4% 37.8% 37.0% 36.3%

40.5%

34.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Source: Terradatum, January 7, 2015. Percentage of condominiums under contract in San Francisco.

Single-Family Homes – Percentage of Properties Under Contract

27.9%

32.3%

37.5% 42.0%

40.6% 36.7%

36.1% 35.5% 32.9%

35.6%

40.8% 42.0%

34.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in San Francisco.


http://docs.pacunion.com/2014q4/sanfran_chart6_avgdom_condos.pdf

http://docs.pacunion.com/2014q4/sanfran_chart8_percentundercontract_condos.pdf

http://docs.pacunion.com/2014q4/sanfran_chart7_percentundercontract_sfh.pdf


Single-Family Homes – Sales Price as a Percentage of Original Price

99.5%

103.6%

106.9%

109.3% 109.8%

113.4%

110.3% 109.7% 109.1% 109.7% 109.6%

107.2% 105.3%

90%

95%

100%

105%

110%

115%


Source: Terradatum, January 7, 2014. Sales price as % of original price (including adjustments) for single-family homes under contract in San Francisco.

Condominiums – Sales Price as a Percentage of Original Price

101.3% 99.9%

105.5%

108.2% 106.9%

107.9% 106.7%

107.6%

105.2% 104.0%

106.0% 105.7%

101.3%

94%

96%

98%

100%

102%

104%

106%

108%

110%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for condominiums under contract in San Francisco.


http://docs.pacunion.com/2014q4/sanfran_chart9_salesprice_originalprice_sfh.pdf

http://docs.pacunion.com/2014q4/sanfran_chart10_salesprice_originalprice_condos.pdf

Delving into San Francisco’s Districts

San Francisco is defined by 10 separate districts, each of which encompasses several neighborhoods.

District 1: Inner Richmond, Central Richmond, Outer Richmond, JordanPark/Laurel Heights, Lake, Lone Mountain, Sea Cliff.

District 2: Outer Sunset, Central Sunset, Inner Sunset, Outer Parkside, Parkside, Inner Parkside, Golden Gate Heights.

District 3: Pine Lake Park, Merced Manor, Lake Shore, Lakeside, Stonestown, Merced Heights, Ingleside, Ingleside Heights,

Oceanview.

District 4: Balboa Terrace, Diamond Heights, Forest Hill, Forest Hill Extension, Forest Knolls, Ingleside Terrace, Midtown

Terrace, Miraloma Park, Monterey Heights, Mount Davidson Manor, Sherwood Forest, St. Francis Wood,

Sunnyside, West Portal, Westwood Highlands, Westwood Park.

District 5: Buena Vista/Ashbury Heights, Clarendon Heights, Cole Valley/Parnassus Heights, Corona Heights,

Duboce Triangle, Eureka Valley/Dolores Heights, Glen Park, Haight-Ashbury, Mission Dolores, Noe Valley, Twin Peaks.

District 6: Alamo Square, Anza Vista, Hayes Valley, Lower Pacific Heights, North Panhandle, Western Addition.

District 7: Cow Hollow, Marina, Pacific Heights, Presidio Heights.

District 8: Downtown, Financial District/Barbary Coast, Nob Hill, North Beach, North Waterfront, Russian Hill, Telegraph Hill,

Tenderloin, Van Ness/Civic Center.

District 9: Bernal Heights, Central Waterfront/Dogpatch, Inner Mission, Mission Bay, Potrero Hill, South Beach,

South of Market, Yerba Buena.

District 10: Bayview, Bayview Heights, Candlestick Point, Crocker Amazon, Excelsior, Hunters Point, Little Hollywood,

Outer Mission, Mission Terrace, Portola, Silver Terrace, Visitacion Valley.





District 1 92,234,628$ 110,106,919$ 19% 58 61 5% 33 29 -12% 1,317,500$ 1,540,000$ 17%

District 2 126,791,192$ 130,112,434$ 3% 147 124 -16% 38 36 -5% 835,000$ 950,000$ 14%

District 3 41,161,209$ 33,420,388$ -19% 51 40 -22% 42 55 31% 750,000$ 810,000$ 8%

District 4 114,459,024$ 130,304,745$ 14% 96 95 -1% 36 25 -31% 1,053,500$ 1,250,000$ 19%

District 5 175,942,526$ 198,591,899$ 13% 94 93 -1% 35 27 -23% 1,662,500$ 1,785,000$ 7%

District 6 24,549,000$ 36,463,000$ 49% 13 15 15% 27 27 0% 1,550,000$ 2,195,000$ 42%

District 7 184,407,998$ 187,752,971$ 2% 40 39 -3% 41 40 -2% 3,812,500$ 3,800,000$ 0%

District 8 24,075,000$ 11,465,000$ -52% 7 5 -29% 78 36 -54% 2,500,000$ 2,050,000$ -18%

District 9 91,895,075$ 87,884,000$ -4% 72 66 -8% 28 27 -4% 1,151,000$ 1,267,500$ 10%

District 10 83,794,800$ 89,792,698$ 7% 134 121 -10% 36 39 8% 603,750$ 716,000$ 19%

Source: Terradatum, January 7, 2015. Data is for single-family homes in San Francisco districts.

San Francisco Snapshot: SFH, Q4 2014 vs. Q4 2013



District 1 29,463,066$ 41,384,500$ 40% 32 33 3% 42 35 -17% 894,000$ 1,300,000$ 45%

District 2 10,478,422$ 7,725,000$ -26% 14 9 -36% 45 31 -31% 729,500$ 875,000$ 20%

District 3 4,364,000$ 3,900,000$ -11% 8 8 0% 34 41 21% 491,500$ 471,000$ -4%

District 4 7,106,338$ 8,909,948$ 25% 15 15 0% 52 35 -33% 485,000$ 589,000$ 21%

District 5 111,543,546$ 97,644,500$ -12% 95 83 -13% 35 34 -3% 1,150,000$ 1,175,000$ 2%

District 6 67,704,500$ 70,989,281$ 5% 82 69 -16% 30 52 73% 760,000$ 1,090,000$ 43%

District 7 107,400,475$ 125,422,667$ 17% 78 81 4% 35 32 -9% 1,212,500$ 1,350,000$ 11%

District 8 120,686,114$ 88,968,651$ -26% 120 83 -31% 44 40 -9% 760,000$ 860,000$ 13%

District 9 232,961,163$ 222,187,415$ -5% 228 210 -8% 39 41 5% 852,750$ 954,444$ 12%

District 10 9,735,807$ 8,337,673$ -14% 18 16 -11% 49 80 63% 530,000$ 535,500$ 1%

Source: Terradatum, January 7, 2015. Data is for condominiums in San Francisco districts.

San Francisco Snapshot: Condos, Q4 2014 vs. Q4 2013



http://docs.pacunion.com/2014q4/sanfran_chart11_sect2_districts_sfh.pdf

http://docs.pacunion.com/2014q4/sanfran_chart12_sect2_districts_condos.pdf



Under $1 million 288,661,726$ 208,293,634$ -28% 392 270 -31% 38 41 8% 745,000$ 782,500$ 5%

$1 million - $3 million 416,746,728$ 529,734,450$ 27% 267 333 25% 32 28 -13% 1,420,000$ 1,425,000$ 0%

Over $3 million 253,901,998$ 277,865,970$ 9% 53 56 6% 42 32 -24% 3,800,000$ 3,883,500$ 2%

San Francisco Price Range Snapshot: SFH, Q4 2014 vs. Q4 2013

Source: Terradatum, January 7, 2015. Data is for single-family homes in San Francisco County.



Under $1 million 284,974,430$ 208,752,740$ -27% 422 298 -29% 41 48 17% 681,250$ 730,750$ 7%

$1 million - $2 million 309,390,300$ 371,196,395$ 20% 230 272 18% 31 32 3% 1,267,500$ 1,310,000$ 3%

Over $2 million 107,078,701$ 95,520,500$ -11% 38 37 -3% 61 43 -30% 2,583,050$ 2,475,000$ -4%

Source: Terradatum, January 7, 2015. Data is for condominiums in San Francisco County.

San Francisco Price Range Snapshot: Condos, Q4 2014 vs. Q4 2013



http://docs.pacunion.com/2014q4/sanfran_chart13_sect2_prices_sfh.pdf

http://docs.pacunion.com/2014q4/sanfran_chart14_sect2_prices_condos.pdf


San Francisco County Housing and Economic Outlook

A surging tech employment base and a flood of activity from overseas continue to drive San Francisco’s home prices higher. While San Francisco emerges as one of the most expensive places to live in the world, and for good reason, the recent surge in prices concerns us that a slowdown in tech could indeed result in a slowdown in home prices.

THE ECONOMY

Great Job Growth: San Francisco County is the financial center of Northern California and increasingly a tech/software hub. It is the most concentrated jobs node in the Bay Area, with over 620,000 employed and over 55,000 net new jobs added over the last two years (2012-2013). We project continued solid job increases ahead, albeit at slower rates of growth.

High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin Counties), the higher-paying sectors – finance, information, and professional and business services – added over 44,000 jobs MSA-wide from 2011 to 2013. San Francisco specifically has become a favorite place for new software and tech companies with unparalleled urban amenities.


Affluence: San Francisco County is very affluent, evidenced by its 2014 median household income of $78,100, though wealth disparities remain. Wage growth has been solid for the last two years and is projected to remain solid to strong going forward.

DEMOGRAPHICS

Steady Growth Ahead: San Francisco County is approaching a population of 850,000 and has over 360,000 households. Recent growth has been fairly strong for such a built-out, physically small locale, and is expected to grow steadily over the next few years.

By the Numbers: Growth projections translate into about 8,000 to 9,000 new residents annually in San Francisco County or about 4,000 to 5,000 new households each year. Household sizes are typically smaller than the norm in more suburban areas.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 539,800 538,200 552,000 581,600 608,500 622,700 634,100 644,300 652,800 658,500 Change -24,600 -1,600 13,800 29,600 26,900 14,200 11,400 10,200 8,500 5,700 Change Rate -4.4% -0.3% 2.6% 5.4% 4.6% 2.3% 1.8% 1.6% 1.3% 0.9%Median Income $69,600 $69,900 $71,000 $74,000 $76,100 $78,100 $81,300 $84,900 $88,200 $91,000 Change Rate -2.0% 0.4% 1.6% 4.2% 2.8% 2.6% 4.1% 4.4% 3.9% 3.2%


Jobs and Median Income Trends and Projections - San Francisco County

2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PPopulation Total 801,900 805,700 815,000 827,400 838,200 848,300 846,700 855,000 863,600 872,300 881,500 Change 10,800 3,800 9,300 12,400 10,800 8,200 8,500 8,300 8,600 8,800 9,200 Change Rate 1.4% 0.5% 1.2% 1.5% 1.3% 1.0% 1.0% 1.0% 1.0% 1.0% 1.1%Household Total 345,600 346,000 348,700 352,500 356,200 361,200 360,200 365,100 370,300 375,400 380,400 Change 3,000 400 2,700 3,800 3,700 4,200 4,100 4,800 5,200 5,100 5,000 Change Rate 0.9% 0.1% 0.8% 1.1% 1.0% 1.2% 1.1% 1.3% 1.4% 1.4% 1.3%


Population and Households Trends and Projections - San Francisco County


http://docs.pacunion.com/2014q4/sf_jbrec_1.pdf



THE HOUSING MARKET

Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA shows prices up 7.8 percent over the last year, and we expect 7 percent appreciation over the next four years.

Consistent Resale Volumes: There have been over 5,800 resales in San Francisco County over the last 12 months. At the MSA level, we forecast sales growth of about 3 to 5 percent for the next two years, but dipping to slight decreases in 2017-2018.

Investors Still Here: San Francisco MSA investor activity has slowly diminished, but remains at about 22 percent, down from a high of over 24 percent in early 2013. While never as high a market share as in more outlying parts of the region, investors still represent a healthy part of the market. Much of this is in the form of overseas money, most often from China.

Affordability Decreasing: Though mortgage rates remain historically low, the San Francisco MSA’s current affordability level is worse than its long-term norm. Within San Francisco County, a household earning the median income would need to pay 71 percent of their income to buy the median-priced resale home and 66 percent for the median-priced new home (the discrepancy due to far higher densities in the new home environment). Thus thousands of people working in San Francisco live elsewhere or rent.

New Homes Difficult to Find: San Francisco County has a tremendous amount of potential supply, but actual supply is typically constrained. Supply conditions and local incomes mean new home prices are always high despite small home sizes and high densities. Over the past year and a half, new home prices have fluctuated wildly depending on what sold in any given month but have centered in the high-$800,000s. This compares to a new home median for all of 2013 of $738,637.

MARKET COLOR

Urban Publics: Some traditionally suburban-oriented big public builders like KB Home and Lennar are making inroads into the urban heart of San Francisco. KB Home will build a 74-unit midrise in the South Beach district and is looking for more sites in the city. Lennar recently opened its much anticipated 750-acre Hunter’s Point – Candlestick Point redevelopment in the southeastern part of the city. Lennar also has a major stake in the potential Treasure Island redevelopment. Trumark, a private builder also typically in more suburban locales, has multiple San Francisco sites lined up for building. The proposed Parkmerced redevelopment could add another 8,000 units as well.

Lowdown on the Waterfront: In June 2014, San Franciscans approved Proposition B, which gives them a greater say in the development of any future housing units along a 7.5-mile stretch of San Francisco’s waterfront. The measure requires voter approval for any new building on Port of San Francisco property that exceeds existing height limits of 105 feet. This is likely to lead to diminished development in the area. The most immediate result was that the Golden State Warriors terminated a plan to build an arena on Piers 30–32 and a mixed-used project at Pier 70 was reworked to lower the maximum height from 230 feet to 90 feet.







David BarcaVice President, Silicon [email protected] El Camino Real, Suite 220 | Menlo Park CA 94025

Silicon ValleyQuarterly Real Estate ReportQ4 2014


Silicon Valley: Q4 ResultsOctober and November were exceptionally strong months for real estate activity in Pacific Union’s Silicon Valley region, but sales dropped off a ledge after the last week of November. December was as slow as the previous months were busy. Inventory remained flat throughout the quarter, while the average sales price continued rising. Many homes attracted multiple offers from buyers, but not at the levels seen in previous quarters. Overall, buyers started to regain some control on the market, holding back on bidding for overpriced homes.

With home prices in Palo Alto, Menlo Park, and nearby communities starting at $2 million and $3 million, we saw a migration of buyers — first-time buyers in particular — to more affordable areas such as Redwood City and San Carlos, where improving schools and more vibrant downtowns have helped increase their desirability.

Looking Forward: We expect business to pick up again in January, with rising inventory levels and renewed interest among both buyers and sellers thanks to the Bay Area’s strong economic growth. The likelihood of mortgage rates trending significantly higher later this year will be a strong impetus for buyers to close deals.

Defining Silicon Valley: Our real estate markets in the Silicon Valley region include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the charts below includes all single-family homes in these communities.

Defining the Mid-Peninsula: Our real estate markets in the Mid-Peninsula subregion include the cities of Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area). Sales data in the charts below includes all single-family homes in these communities.

Silicon Valleypacificunion.com

Median Sales Price


$2,330,000 $2,350,000 $2,316,000

$2,600,000 $2,466,000 $2,415,000

$2,430,000 $2,400,000 $2,450,000

$2,566,000 $2,450,000 $2,500,000

$2,399,100

$100,000

$600,000

$1,100,000

$1,600,000

$2,100,000

$2,600,000

$3,100,000

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Median sales price for single-family homes in these Silicon Valley communities:

Atherton, Los Altos (excluding County area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside.

1.6

2.9 3.1

1.8 1.8 1.7

1.5 1.6 1.6

2.2

1.1 1.2 0.9

0.1

0.6

1.1

1.6

2.1

2.6

3.1

3.6

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in these SIlicon Valley communities:



http://docs.pacunion.com/2014q4/siliconvalley_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/siliconvalley_chart2_msi.pdf



37

52

29 24

20 18 23

27

37

31

25 27

37

0

10

20

30

40

50

60

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in these Silicon Valley communities:



102.0% 100.7%

104.5%

102.9%

106.4%

104.8% 103.8%

102.2% 101.0%

101.8%

105.5%

103.3%

99.0%

94%

96%

98%

100%

102%

104%

106%

108%

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes under contract in these Silicon Valley communities:



18.8%

25.1%

29.6%

39.2%

33.9%

39.5%

34.2% 30.7%

33.5% 34.7%

40.7%

32.0% 29.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in these Silicon Valley communities:



http://docs.pacunion.com/2014q4/siliconvalley_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/siliconvalley_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2014q4/siliconvalley_chart4_percentundercontract.pdf


A Closer Look at Silicon Valley


Atherton 110,637,776$ 137,600,000$ 24% 26 23 -12% 81 43 -47% 4,075,000$ 5,375,000$ 32%

Los Altos* 144,078,240$ 166,856,601$ 16% 66 60 -9% 31 17 -45% 2,190,000$ 2,505,001$ 14%

Los Altos Hills 100,599,688$ 112,881,125$ 12% 31 28 -10% 51 37 -27% 3,050,000$ 3,575,000$ 17%

Menlo Park** 132,346,388$ 175,732,000$ 33% 72 83 15% 23 26 13% 1,690,000$ 2,000,000$ 18%

Palo Alto 272,342,758$ 230,223,110$ -15% 109 85 -22% 15 18 20% 2,300,000$ 2,500,000$ 9%

Portola Valley 40,220,000$ 42,021,000$ 4% 15 18 20% 58 47 -19% 2,300,000$ 2,292,500$ 0%

Woodside 50,423,050$ 58,755,000$ 17% 17 19 12% 56 70 25% 2,350,000$ 2,100,000$ -11%

Source: Terradatum, January 7, 2015. Data is for single-family homes in selected Silicon Valley cities. *Excludes County area **Excludes east of U.S. 101

Silicon Valley Snapshot: Q4 2014 vs. Q4 2013



http://docs.pacunion.com/2014q4/siliconvalley_chart6_sect2_cities.pdf


Santa Clara County Housing and Economic Outlook

The booming tech market continues to drive home prices and rents beyond the reach of most employees. Ongoing expansions by major local employers should continue to create more affluence for years to come.

THE ECONOMY

Vibrant Tech Boom: Santa Clara County is the focal point of the nation’s tech sector The county added a remarkable 40,000 net new jobs last year and should add nearly 35,000 more this year, pushing employment to nearly 1 million. We project job growth to ease in the coming years, but still remain strong for the next two years at nearly 30,000 annually before slowing.

Tech Sets the Stage: For the San Jose MSA as a whole (which includes Santa Clara County and far smaller San Benito County), manufacturing, education/health, and trade/utilities play an important role, but the high-paying professional and business services is paramount at about 20 percent of total jobs. The tech sector is the engine that drives Silicon Valley, and tech jobs are distributed throughout a variety of sectors.


Affluence: With a median income of $106,100 per year, Santa Clara County is one of the most affluent areas in the nation. And also unlike the nation as a whole, income growth has been robust – 8.5 percent in 2013 and projected to come in at 5.6 percent in 2014 with solid growth forecast for the next few years.

DEMOGRAPHICS

Steady Growth, Potentially Slowing: Santa Clara County is nearing 1.9 million residents in over 625,000 households, making it one of the largest population centers on the West Coast. Population growth has been fairly strong recently at 1.4 percent in 2012 and 2013, though it appears to be slowing. This is at least in part due to constrained housing supply, but note that population growth could outpace the projections seen in the table below, particularly as more rental product comes onto the market.

Pushed Out?: Growth projections translate into about 10,000 to 15,000 new residents annually in Santa Clara County, adding about 6,000 to 7,000 housing units to existing stock each year. High prices and lack of new supply make Santa Clara County a major exporter of housing demand into more outlying parts of the Bay Area.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 855,600 853,100 873,500 908,200 948,200 982,700 1,012,300 1,039,900 1,053,500 1,063,000 Change -5,600 -2,500 20,400 34,700 40,000 34,500 29,600 27,600 13,600 9,500 Change Rate -6.1% -0.3% 2.4% 4.0% 4.4% 3.6% 3.0% 2.7% 1.3% 0.9%Median Income $85,200 $84,200 $86,900 $92,600 $100,500 $106,100 $111,200 $116,500 $121,200 $125,400 Change Rate -3.1% -1.2% 3.2% 6.6% 8.5% 5.6% 4.8% 4.8% 4.0% 3.5%


Jobs and Median Income Trends and Projections - Santa Clara County



Population and Households Trends and Projections - Santa Clara County


http://docs.pacunion.com/2014q4/siliconvalley_sc_jbrec_1.pdf



THE HOUSING MARKET

Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Jose MSA shows prices have risen 7.5 percent over the last year. Greater San Jose experienced growth rates of 17.0 percent and 13.5 percent in 2012-2013, so the projected BHVI increases ranging from 1.0 percent to 4.6 percent from 2015-2018 signal a normalizing market.

Consistent Resales Volumes: Over the past 12 months, Santa Clara County has supported over 18,000 resales. We forecast solid increase over the next two years of about 7.0 to 8.0 percent or more, followed by modest dips the following two years. Though these 18,000-20,000 annual sales are roughly in line with the long-term norm, this volume level is just more than half the market peak experienced in 2004.

Investors Fewer and Shrinking: Investor activity was never as strong in the San Jose MSA as it was in many other regional markets given the strength of conventional demand. Still, investors represented 16 percent of the market in the second quarter, down from a Q1 2013 peak of 21 percent.

Affordability: Though low mortgage rates help keep affordability at a historically normal level in the San Jose MSA, high prices mean homeownership still requires a fairly high share of incomes in spite of the area’s affluence. The median-income household would need to pay 42 percent of their income to buy the median-priced resale home and 44 percent for the median-priced new home (similar because new home densities are almost always higher than the existing housing stock).

Expensive and Uncommon New Homes: Limited new supply and the tremendous appeal of Santa Clara County means new home prices are consistently high. Over the past year and a half, the median new home price has centered at about $765,000. This compares to a full year 2013 median new home price of $721,190.

MARKET COLOR

Apple Campus 2 Breaks Ground: Apple Inc. has started construction in Cupertino on its sprawling new campus. When completed, the new campus is expected to have over 3 million square feet of space housing at least 12,000 employees. Apple will keep its existing campus, indicating they will continue to add new jobs in Cupertino.

Venture Capital Reaching Dot-Com Levels: Venture-capital investment in Silicon Valley is growing exponentially this year. In the first six months of 2014, venture-capital investment was already at the full year 2013 total value. If the trend continues, investment would be back to around $20-$24 billion for the full year, above the 1999 level, but still below 2000 when the tech bubble burst. Bonuses and stock options at tech companies in the region are a major pillar of the housing market.




Burns Home Value Index Trends and Projections - San Jose MSA




San Mateo County Housing and Economic Outlook

Located between two of the hottest counties in the U.S. – San Francisco and Santa Clara – San Mateo County offers great housing options to those who want a better value per square foot and are willing to commute.

THE ECONOMY

Great Job Growth: San Mateo County is part Silicon Valley and part suburban extension of San Francisco. It is a major employment node in its own right, with 15,000 net new jobs added in 2013 and about 6,000 to 8,000 new jobs projected annually through 2016.

High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin Counties), the higher-paying sectors – finance, information, and professional and business services – are critical and have experienced tremendous growth over the last two-plus years. These sectors added over 44,000 jobs MSA-wide from 2011 to 2013.


Affluence: San Mateo County is highly affluent, supporting a 2014 median household income of $87,500 per year. Wage growth was strong last year after a few years of stagnation, and is forecast to remain healthy for the next few years at least.

DEMOGRAPHICS

Steady Growth Ahead: San Mateo County is home to about 750,000 people in over 265,000 households. Population growth is forecast to ease somewhat over the near term, but household growth should be higher as household formations trend back toward longer-term norms.

By the Numbers: Growth projections translate into about 7,000 to 8,000 new residents annually in San Mateo County, or about 3,000 to 4,000 new households each year. As is true in most of the core Bay Area, many working in the county cannot afford to live there and thus seek housing in outlying parts of the region.



Jobs and Median Income Trends and Projections - San Mateo County

2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PPopulation Total 713,600 719,800 728,300 738,700 747,000 755,300 753,800 761,200 768,900 776,800 784,600 Change 9,800 6,100 8,500 10,400 8,300 6,700 6,800 7,300 7,700 7,900 7,900 Change Rate 1.4% 0.9% 1.2% 1.4% 1.1% 0.9% 0.9% 1.0% 1.0% 1.0% 1.0%Household Total 255,900 258,200 260,000 262,400 264,500 268,100 267,400 271,100 275,300 279,300 283,000 Change 3,500 2,300 1,800 2,400 2,200 3,100 2,900 3,800 4,100 4,000 3,800 Change Rate 1.4% 0.9% 0.7% 0.9% 0.8% 1.2% 1.1% 1.4% 1.5% 1.5% 1.3%


Population and Households Trends and Projections - San Mateo County


http://docs.pacunion.com/2014q4/siliconvalley_sm_jbrec_1.pdf



THE HOUSING MARKET

Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA shows prices up 7.8 percent over the last year, and we expect 7 percent appreciation over the next four years. After solid growth projected in 2014 and 2015, we forecast much slower growth below 1 percent annually.

Consistent Resale Volumes: There have been over 7,500 resales in San Mateo County over the last 12 months. At the MSA level, we forecast sales growth of about 3 percent to 5 percent for the next two years.

Affordability Decreasing: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific just to San Mateo County, a household earning the median income would need to pay 61 percent of their income to buy the median-priced resale home and 67 percent for the median-priced new home. This is why so many who work in the county live elsewhere or rent.

Expensive New Homes and Few of Them: San Mateo County has long been undersupplied for new homes. This combines with its affluence and appeal to push home prices to extraordinary levels. Over the past year, new home pricing has averaged about $950,000 and mainly for attached product.

MARKET COLOR

Where to Build?: San Mateo County has been a notoriously difficult development environment. Years of planning finally brought the Bay Meadows master plan in San Mateo to the market last year, where there will eventually be over 1,000 residential units and hundreds of thousands of square feet of commercial space. The Saltworks planned community in Redwood City, however, continues to face a buzz saw of local antagonism and is currently being “scaled back” from already diminished expectations. San Mateo County will likely continue to be characterized mainly by small infill sites here and there, with the occasional new apartment complex.







Mid-Peninsulapacificunion.com

Median Sales Price

$1,556,250

$1,352,500 $1,300,000 $1,300,500 $1,434,000

$1,500,000 $1,436,500

$1,341,000 $1,328,000 $1,350,000 $1,305,000

$1,357,500 $1,450,000

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000

$1,500,000

$1,700,000

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Median sales price for single-family homes in these San Mateo County communities:

Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area).


32

49

32

25

19

33

16

33

26 28 30 25 26

0

10

20

30

40

50

60

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in these San Mateo County communities:



1.2

2.3

3.1

1.7

1.3 1.3 1.4 1.5 1.2 1.3

0.9 1.1

0.5

0.1

0.6

1.1

1.6

2.1

2.6

3.1

3.6

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in these San Mateo County communities:



http://docs.pacunion.com/2014q4/midpen_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/midpen_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/midpen_chart2_msi.pdf



22.5% 24.2%

29.7%

45.5% 42.3%

39.0%

31.7%

42.1% 39.0% 39.9%

46.6% 44.9%

35.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in these San Mateo County communities:


A Closer Look at the Mid-Peninsula


Burlingame* 107,649,373$ 88,794,888$ -18% 67 50 -25% 18 26 44% 1,550,000$ 1,700,000$ 10%

Hillsborough 129,405,800$ 117,599,500$ -9% 35 31 -11% 54 64 19% 3,350,000$ 3,050,000$ -9%

San Mateo** 170,521,535$ 186,581,451$ 9% 151 147 -3% 20 21 5% 997,425$ 1,101,000$ 10%

Source: Terradatum, January 7, 2015. Data is for single-family homes in selected San Mateo County cities. * Excludes Ingold Millsdale Industrial Center ** Excludes the North Shoreview/Dore Cavanaugh area

Mid-Peninsula Snapshot: Q4 2014 vs. Q4 2013



98.1%

99.0%

103.2% 103.2% 103.6%

102.5%

103.9%

101.2% 101.4%

99.8%

101.1% 100.7%

101.4%

95%

96%

97%

98%

99%

100%

101%

102%

103%

104%

105%

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes under contract in these San Mateo County communities:



http://docs.pacunion.com/2014q4/midpen_chart4_percentundercontract.pdf

http://docs.pacunion.com/2014q4/midpen_chart6_sect2_cities.pdf

http://docs.pacunion.com/2014q4/midpen_chart5_salesprice_originalprice.pdf


San Mateo County Housing and Economic Outlook

Located between two of the hottest counties in the U.S. – San Francisco and Santa Clara – San Mateo County offers great housing options to those who want a better value per square foot and are willing to commute.

THE ECONOMY

Great Job Growth: San Mateo County is part Silicon Valley and part suburban extension of San Francisco. It is a major employment node in its own right, with 15,000 net new jobs added in 2013 and about 6,000 to 8,000 new jobs projected annually through 2016.

High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin Counties), the higher-paying sectors – finance, information, and professional and business services – are critical and have experienced tremendous growth over the last two-plus years. These sectors added over 44,000 jobs MSA-wide from 2011 to 2013.


Affluence: San Mateo County is highly affluent, supporting a 2014 median household income of $87,500 per year. Wage growth was strong last year after a few years of stagnation, and is forecast to remain healthy for the next few years at least.

DEMOGRAPHICS

Steady Growth Ahead: San Mateo County is home to about 750,000 people in over 265,000 households. Population growth is forecast to ease somewhat over the near term, but household growth should be higher as household formations trend back toward longer-term norms.

By the Numbers: Growth projections translate into about 7,000 to 8,000 new residents annually in San Mateo County, or about 3,000 to 4,000 new households each year. As is true in most of the core Bay Area, many working in the county cannot afford to live there and thus seek housing in outlying parts of the region.



Jobs and Median Income Trends and Projections - San Mateo County



Population and Households Trends and Projections - San Mateo County


http://docs.pacunion.com/2014q4/midpeninsula_jbrec_1.pdf



THE HOUSING MARKET

Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA shows prices up 7.8 percent over the last year, and we expect 7 percent appreciation over the next four years. After solid growth projected in 2014 and 2015, we forecast much slower growth below 1 percent annually.

Consistent Resale Volumes: There have been over 7,500 resales in San Mateo County over the last 12 months. At the MSA level, we forecast sales growth of about 3 percent to 5 percent for the next two years.

Affordability Decreasing: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific just to San Mateo County, a household earning the median income would need to pay 61 percent of their income to buy the median-priced resale home and 67 percent for the median-priced new home. This is why so many who work in the county live elsewhere or rent.

Expensive New Homes and Few of Them: San Mateo County has long been undersupplied for new homes. This combines with its affluence and appeal to push home prices to extraordinary levels. Over the past year, new home pricing has averaged about $950,000 and mainly for attached product.

MARKET COLOR

Where to Build?: San Mateo County has been a notoriously difficult development environment. Years of planning finally brought the Bay Meadows master plan in San Mateo to the market last year, where there will eventually be over 1,000 residential units and hundreds of thousands of square feet of commercial space. The Saltworks planned community in Redwood City, however, continues to face a buzz saw of local antagonism and is currently being “scaled back” from already diminished expectations. San Mateo County will likely continue to be characterized mainly by small infill sites here and there, with the occasional new apartment complex.







Rick LawsSenior Vice President, Sonoma [email protected] Mendocino Avenue, Suite 210 | Santa Rosa, CA 95403

Sonoma CountyQuarterly Real Estate ReportQ4 2014


Sonoma County: Q4 ResultsThe last quarter of 2014 bore remarkable similarities to the first quarter in Sonoma County, with a constrained supply of available homes and a ready pool of would-be buyers. Many sellers continued to receive multiple offers on well-priced properties, although bidding activity was not as frenetic as it was at the start of the year, and price appreciation has slowed considerably from the double-digit percentage increases that had become commonplace.

Even with the limited supply, buyers in the fourth quarter no longer bid as franticly on overpriced properties or those with problems as they might have as recently as six months ago. This change in attitude caught some sellers by surprise, but it reflects the growing normalization of the market as buyers began to show some signs of price resistance, especially at the higher end of the market.

The fourth quarter saw fewer sales of homes priced below $500,000, reflecting the virtual disappearance of distressed properties such as short sales and foreclosures on the market.

Looking Forward: Sonoma County may see fewer sales overall in the first quarter, but dollar volume will continue rising as buyers choose from more high-end homes on the market. Springtime is always a busy season for real estate, and 2015 will be no different.

Defining Sonoma County: Our real estate markets in Sonoma County include the cities of Cotati, Healdsburg, Penngrove, Petaluma, Rohnert Park, Santa Rosa, Sebastopol, and Windsor. Sales data in the charts below includes all single-family homes and farms and ranches in Sonoma County.

Sonoma Countypacificunion.com

Median Sales Price


$465,000 $460,000 $449,325

$491,500 $468,950 $487,500

$495,000 $507,000 $475,000

$496,000 $489,950 $482,000 $516,500

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$550,000


Source: Terradatum, January 7, 2015. Median sales price for single-family homes and farms/ranches in Sonoma County.

2.0

2.5 2.5 2.1

2.4 2.2 2.2 2.1

2.4 2.2 2.2

1.9

1.3

0.1

0.6

1.1

1.6

2.1

2.6

3.1


Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes and farms/ranches in Sonoma County.


http://docs.pacunion.com/2014q4/sonomacounty_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/sonomacounty_chart2_msi.pdf



79 81

72 73 74

59 57 62 61

67 68 74

80

0

10

20

30

40

50

60

70

80

90


Source: Terradatum, January 7, 2015. Average days on market for single-family homes and farms/ranches sold in Sonoma County.


96.9%

93.7%

95.9% 96.0% 96.8%

98.9% 98.4%

96.9% 97.6%

96.6% 96.6%

95.5%

93.9%

91%

92%

93%

94%

95%

96%

97%

98%

99%

100%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes and farms/ranches under contract in Sonoma County.


21.9%

27.3%

33.4% 31.7% 31.7% 31.4%

30.0% 29.3% 28.0% 26.6%

29.8% 30.1% 29.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%


Source: Terradatum, January 7, 2015. Percentage of single-family homes and farms/ranches under contract in Sonoma County.


http://docs.pacunion.com/2014q4/sonomacounty_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/sonomacounty_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2014q4/sonomacounty_chart4_percentundercontract.pdf

A Closer Look at Sonoma County


Healdsburg 39,869,556$ 37,209,095$ -7% 42 41 -2% 111 102 -8% 755,500$ 579,000$ -23%

Petaluma 85,186,684$ 71,316,473$ -16% 151 117 -23% 63 61 -3% 508,000$ 540,050$ 6%

Rohnert Park 19,322,183$ 30,559,900$ 58% 48 69 44% 63 47 -25% 399,500$ 430,000$ 8%

Santa Rosa 238,480,612$ 256,728,269$ 8% 459 457 0% 65 65 0% 416,000$ 456,000$ 10%

Sebastopol 39,702,740$ 56,962,833$ 43% 59 63 7% 76 67 -12% 626,000$ 720,000$ 15%

Windsor 40,148,673$ 34,807,450$ -13% 83 66 -20% 68 66 -3% 459,000$ 482,000$ 5%

Source: Terradatum, January 7, 2015. Data is for single-family homes and farms/ranches in selected Sonoma County cities.

Sonoma County Snapshot: Q4 2014 vs. Q4 2013



Under $1 million 511,914,258$ 525,060,409$ 3% 1065 1,028 -3% 69 71 3% 440,000$ 470,000$ 7%

$1 million and over 133,555,905$ 173,003,890$ 30% 78 103 32% 137 99 -28% 1,370,000$ 1,320,000$ -4%

Source: Terradatum, January 7, 2015. Data is for single-family homes and farms/ranches in selected Sonoma County cities.

Sonoma County Price Range Snapshot: Q4 2014 vs. Q4 2013



http://docs.pacunion.com/2014q4/sonomacounty_chart6_sect2_cities.pdf

http://docs.pacunion.com/2014q4/sonomacounty_chart7_sect2_prices.pdf



Sonoma County Housing and Economic Outlook

While net worth drives the second-home and retiree market in Sonoma, and net-worth growth has been fantastic, most residents work locally or commute a very long way to San Francisco. We are most bullish on retirement opportunities in Sonoma because of the surge in people reaching their late 60s right now.

THE ECONOMY

Solid Job Growth: Sonoma County added 7,400 net new jobs in 2013 and was projected to add 4,000 in 2014, pushing total jobs to over 186,000. The 2014 figure would be a solid 2.2 percent improvement from 2013, with similar rates projected for the next two years before we expect job growth to slow.

Tourism and Some Tech: Tourism-based leisure and hospitality jobs trail only trade/utilities and education and health in job volumes in Sonoma County. Professional and business services is also a key sector, however, with a sizeable tech presence in the county, including Agilent in Santa Rosa.


Middle Class: At $61,000 per year, Sonoma supports an essentially middle-class income profile, though there are high-end jobs in the professional services and tech sectors. Substantial housing demand, however, also comes from more affluent areas to the south such as San Francisco.

DEMOGRAPHICS

Steady Growth: Sonoma is not a huge population center, with about 500,000 residents at present. Population growth is modest, below 1.0 percent in recent years, with household growth slightly higher. We project slow and steady population growth ahead at just under 1.0 percent annually. We expect household growth, however, to outpace population growth as millennials begin to move out and, more generally, household formation trends to gravitate back toward long-term norms.

More of the Same: Growth projections translate into approximately 8,500-9,000-plus new Sonoma residents annually over the next few years, or about 2,300-2,800 new households each year.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 173,500 169,800 171,700 175,000 182,400 186,400 190,900 195,900 197,900 198,900 Change -14,700 -3,700 1,900 3,300 7,400 4,000 4,500 5,000 2,000 1,000 Change Rate -7.8% -2.1% 1.1% 1.9% 4.2% 2.2% 2.4% 2.6% 1.0% 0.5%Median Income $61,600 $59,700 $58,300 $58,200 $59,500 $61,000 $62,900 $64,800 $66,700 $68,300 Change Rate -3.9% -3.1% -2.3% -0.2% 2.2% 2.5% 3.1% 3.0% 2.9% 2.4%


Jobs and Median Income Trends and Projections - Sonoma County



Population and Households Trends and Projections - Sonoma County


http://docs.pacunion.com/2014q4/soco_jbrec_1.pdf



THE HOUSING MARKET

Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI shows prices have risen 8.4 percent over the last year, which is down from a tremendous rate of 16.9 percent in 2013. JBREC forecasts far more modest growth in this measure going forward, ranging from 1.0 percent to 4.0 percent from 2015-2018.

Consistent Resales Volumes: We project 2014 resale volume to come in at about 11 percent below the 2013 level of 6,322 sales. We project about 6,000 sales each of the next two years, but then sales to decline very slightly the next two years. This is down from about 8,000-10,000 annual resales, however, from the late 1990s through 2005.

Investors Slowing but Still Key: Investors are purchasing about 29 percent of the Sonoma market homes, down marginally from 34 percent at the peak at the end of 2012.

Affordability: Though low mortgage rates help keep affordability at a historically normal level in Sonoma County, comparatively high prices mean homeownership is still expensive. The median income household would need to pay 47 percent of their income to buy the median-priced resale home and about 44 percent to afford the median-priced new home (the lower new home price due to typically higher new home densities).

Expensive and Uncommon New Homes: Very limited activity means new home prices can fluctuate but typically average from the mid-$400s to the low-$500s. Over the past year and a half, the median new home price was about $475,000 countywide, which compares to $432,560 for calendar year 2013.

MARKET COLOR

University Park: University Park is an upcoming 1,200-plus-unit master planned community in Rohnert Park, north of Petaluma. Brookfield Homes plans to offer an array of mainly smaller-lot detached homes. Interestingly, Brookfield may carve out several hundred of the 1,200-plus homes to fashion an age-restricted (55-plus) community. There are very few age-restricted new home options throughout the region and strong potential demand given an aging population. Regardless, with so few future new home communities throughout Sonoma County likely to enter the market in the near term at least, University Park will be a key part of the housing landscape.

SMART Commuting: The SMART train will provide a rail commuter option that parallels the congested Highway 101 through Sonoma County and into Marin County to the south. With several stations slated to open in 2016, SMART riders can catch a ferry in Larkspur into the massive – and generally high-paying – San Francisco jobs node.


Burns Home Value Index Trends and Projections - Sonoma County





Jill SilvasRegional Executive, Sonoma [email protected] West Napa Street, Suite 200 | Sonoma, CA 95476

Sonoma ValleyQuarterly Real Estate ReportQ4 2014


Sonoma Valley: Q4 ResultsPacific Union’s Sonoma Valley region saw strong sales throughout the fourth quarter. There was no shortage of would-be buyers, and well-priced properties in good condition continued to attract multiple offers.

In a change from past quarters, buyers started to gain an upper hand in negotiations with sellers, a sign of a normalizing real estate market. Once buyers completed due diligence, they weren’t shy about asking for concessions or repairs, and sellers found that they had to be more careful in pricing their homes — some with unrealistic expectations found themselves sitting on properties far longer than they would have even six months earlier.

Homes sold well across Sonoma Valley and at all price points, but especially those that were priced under $750,000. Inventory remained exceptionally tight.

Looking Forward: The year 2015 looks to be a busy one for buyers and sellers in the Sonoma Valley region. With a strong Bay Area economy and mortgage rates still hovering near record lows, the first quarter should be exceptionally active. We recommend that sellers not wait until the spring to put their properties on the market. Buyers are active year-round, and those properties on the market in January, February, and March face less competition and will stand out.

Defining Sonoma Valley: Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the charts below refers to all residential properties – including single-family homes, condominiums, and farms and ranches – in these communities.

Sonoma Valleypacificunion.com

Median Sales Price


$477,000

$608,500 $610,672

$500,000

$645,000

$540,000 $555,000

$697,500

$525,000 $580,250 $587,500

$750,000

$589,500

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000


Source: Terradatum, January 7, 2015. Median sales price for single-family homes, condominiums, and farms/ranches in Sonoma Valley.

3.0

2.3

3.0 3.3

3.0

2.3

3.3

2.2

3.0 2.7

2.1 2.1

1.3

0.1

0.6

1.1

1.6

2.1

2.6

3.1

3.6


Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes, condominiums, and farms/ranches in Sonoma Valley.


http://docs.pacunion.com/2014q4/sonomavalley_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2014q4/sonomavalley_chart2_msi.pdf



69

80 77

105

78

50

61

77

56

96

82 77

82

0

20

40

60

80

100

120


Source: Terradatum, January 7, 2015. Average days on market for single-family homes, condominiums, and farms/ranches sold in Sonoma Valley.


94.6%

92.2% 91.8% 92.5%

96.8%

99.5%

96.7%

95.1%

97.5%

92.5%

93.7% 93.5% 94.7%

86%

88%

90%

92%

94%

96%

98%

100%

102%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes, condominiums, and farms/ranches under contract in Sonoma Valley.


22.7% 23.9%

26.6% 28.3% 30.5%

22.7%

27.0%

22.0% 25.3%

26.7%

31.1% 28.7%

20.8%

0%

5%

10%

15%

20%

25%

30%

35%


Source: Terradatum, January 7, 2015. Percentage of single-family homes, condominiums, and farms/ranches under contract in Sonoma Valley.


http://docs.pacunion.com/2014q4/sonomavalley_chart3_avgdom.pdf

http://docs.pacunion.com/2014q4/sonomavalley_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2014q4/sonomavalley_chart4_percentundercontract.pdf

A Closer Look at Sonoma Valley


Glen Ellen 9,087,000$ 16,995,192$ 87% 8 18 125% 64 91 42% 726,750$ 787,000$ 8%

Kenwood 1,458,200$ 9,758,500$ 569% 3 8 167% 37 128 246% 480,000$ 1,081,250$ 125%

Sonoma 81,605,075$ 92,991,303$ 14% 115 119 3% 60 76 27% 510,000$ 580,000$ 14%

Source: Terradatum, January 7, 2015. Data is for single-family homes, condominiums, and farms/ranches in selected Sonoma Valley cities.

Sonoma Valley Snapshot: Q4 2014 vs. Q4 2013



http://docs.pacunion.com/2014q4/sonomavalley_chart6_sect2_cities.pdf



Sonoma County Housing and Economic Outlook

While net worth drives the second-home and retiree market in Sonoma, and net-worth growth has been fantastic, most residents work locally or commute a very long way to San Francisco. We are most bullish on retirement opportunities in Sonoma because of the surge in people reaching their late 60s right now.

THE ECONOMY

Solid Job Growth: Sonoma County added 7,400 net new jobs in 2013 and was projected to add 4,000 in 2014, pushing total jobs to over 186,000. The 2014 figure would be a solid 2.2 percent improvement from 2013, with similar rates projected for the next two years before we expect job growth to slow.

Tourism and Some Tech: Tourism-based leisure and hospitality jobs trail only trade/utilities and education and health in job volumes in Sonoma County. Professional and business services is also a key sector, however, with a sizeable tech presence in the county, including Agilent in Santa Rosa.


Middle Class: At $61,000 per year, Sonoma supports an essentially middle-class income profile, though there are high-end jobs in the professional services and tech sectors. Substantial housing demand, however, also comes from more affluent areas to the south such as San Francisco.

DEMOGRAPHICS

Steady Growth: Sonoma is not a huge population center, with about 500,000 residents at present. Population growth is modest, below 1.0 percent in recent years, with household growth slightly higher. We project slow and steady population growth ahead at just under 1.0 percent annually. We expect household growth, however, to outpace population growth as millennials begin to move out and, more generally, household formation trends to gravitate back toward long-term norms.

More of the Same: Growth projections translate into approximately 8,500-9,000-plus new Sonoma residents annually over the next few years, or about 2,300-2,800 new households each year.

2009 2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018PJobs Total 173,500 169,800 171,700 175,000 182,400 186,400 190,900 195,900 197,900 198,900 Change -14,700 -3,700 1,900 3,300 7,400 4,000 4,500 5,000 2,000 1,000 Change Rate -7.8% -2.1% 1.1% 1.9% 4.2% 2.2% 2.4% 2.6% 1.0% 0.5%Median Income $61,600 $59,700 $58,300 $58,200 $59,500 $61,000 $62,900 $64,800 $66,700 $68,300 Change Rate -3.9% -3.1% -2.3% -0.2% 2.2% 2.5% 3.1% 3.0% 2.9% 2.4%


Jobs and Median Income Trends and Projections - Sonoma County



Population and Households Trends and Projections - Sonoma County


http://docs.pacunion.com/2014q4/soval_jbrec_1.pdf



THE HOUSING MARKET

Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI shows prices have risen 8.4 percent over the last year, which is down from a tremendous rate of 16.9 percent in 2013. JBREC forecasts far more modest growth in this measure going forward, ranging from 1.0 percent to 4.0 percent from 2015-2018.

Consistent Resales Volumes: We project 2014 resale volume to come in at about 11 percent below the 2013 level of 6,322 sales. We project about 6,000 sales each of the next two years, but then sales to decline very slightly the next two years. This is down from about 8,000-10,000 annual resales, however, from the late 1990s through 2005.

Investors Slowing but Still Key: Investors are purchasing about 29 percent of the Sonoma market homes, down marginally from 34 percent at the peak at the end of 2012.

Affordability: Though low mortgage rates help keep affordability at a historically normal level in Sonoma County, comparatively high prices mean homeownership is still expensive. The median income household would need to pay 47 percent of their income to buy the median-priced resale home and about 44 percent to afford the median-priced new home (the lower new home price due to typically higher new home densities).

Expensive and Uncommon New Homes: Very limited activity means new home prices can fluctuate but typically average from the mid-$400s to the low-$500s. Over the past year and a half, the median new home price was about $475,000 countywide, which compares to $432,560 for calendar year 2013.

MARKET COLOR

University Park: University Park is an upcoming 1,200-plus-unit master planned community in Rohnert Park, north of Petaluma. Brookfield Homes plans to offer an array of mainly smaller-lot detached homes. Interestingly, Brookfield may carve out several hundred of the 1,200-plus homes to fashion an age-restricted (55-plus) community. There are very few age-restricted new home options throughout the region and strong potential demand given an aging population. Regardless, with so few future new home communities throughout Sonoma County likely to enter the market in the near term at least, University Park will be a key part of the housing landscape.

SMART Commuting: The SMART train will provide a rail commuter option that parallels the congested Highway 101 through Sonoma County and into Marin County to the south. With several stations slated to open in 2016, SMART riders can catch a ferry in Larkspur into the massive – and generally high-paying – San Francisco jobs node.


Burns Home Value Index Trends and Projections - Sonoma County





Sally GardnerRegional Executive, Tahoe/TruckeeTahoe City 530.581.1882 | Truckee 530.587.7098 | Squaw Valley [email protected]

Lake Tahoe/TruckeeQuarterly Real Estate ReportQ4 2014


Lake Tahoe/Truckee: Q4 ResultsThe fourth quarter is traditionally a busy time in Pacific Union’s Lake Tahoe/Truckee region, as out-of-town buyers — many from the Bay Area — shop for vacation homes in time for the coming ski season. This year was no different, helped by several high-end sales at the end of the year. Sales were particularly brisk in Martis Camp and the Village at Squaw Valley, as well as for homes priced above $1 million across the region.

Unlike in the Bay Area, the Lake Tahoe/Truckee region had an ample supply of homes at various price points in the fourth quarter, giving buyers an opportunity to find exactly what they were looking for. Attractive homes that were fairly priced were subject to multiple offers, but properties with unrealistically high prices typically sat on the market for months on end without a single bid.

Looking Forward: First-quarter home sales in the Lake Tahoe/Truckee area are influenced by the weather; all it takes is a good snowstorm or two for Bay Area residents to pack their skis and head for the Sierras. If the weather cooperates, we look forward to a busy winter and spring. And as the snow recedes, we expect to see a healthy supply of new listings hit the market.

Defining Lake Tahoe/Truckee: Our real estate markets in Tahoe/Truckee include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the charts below includes single-family homes and condominiums in these communities.

Lake Tahoe/Truckeepacificunion.com

Single-Family Homes – Median Sales Price

Condominiums – Median Sales Price

$614,605 $605,000

$699,000

$610,000

$530,000

$629,000

$529,277

$595,000

$665,000

$589,000 $607,342

$740,000

$574,500

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000


Source: Terradatum, January 7, 2015. Median sales price for single-family homes in the Lake Tahoe/Truckee region.

$345,000

$262,000

$390,000

$290,000

$334,000

$387,500 $350,000

$445,000

$345,000

$385,000

$416,000 $392,500

$370,250

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000


Source: Terradatum, January 7, 2015. Median sales price for condominiums in the Lake Tahoe/Truckee region.


http://docs.pacunion.com/2014q4/tahoetruckee_chart1_mediansalesprice_sfh.pdf

http://docs.pacunion.com/2014q4/tahoetruckee_chart2_mediansalesprice_condos.pdf


Single-Family Homes – Months’ Supply of Inventory

6.3

8.7

6.7

7.5 7.0

5.8

8.7

10.8

7.3 7.0

5.8

4.7 4.3

0.1

2.1

4.1

6.1

8.1

10.1

12.1


Source: Terradatum, January 7, 2015. Months' supply of inventory for single-family homes in the Lake Tahoe/Truckee region.

Single-Family Homes – Average Days on the Market

107 93

100

140

101 95

72 66

54

89 88

127 118

0

20

40

60

80

100

120

140

160


Source: Terradatum, January 7, 2015. Average days on market for single-family homes sold in the Lake Tahoe/Truckee region.

Condominiums – Months’ Supply of Inventory

7.2

8.8

12.9

11.4

8.9 7.8

10.6

8.6

6.9 6.5 6.1 6.0

9.6

0.1

2.1

4.1

6.1

8.1

10.1

12.1

14.1


Source: Terradatum, January 7, 2015. Months' supply of inventory for condominiums in the Lake Tahoe/Truckee region.


http://docs.pacunion.com/2014q4/tahoetruckee_chart3_msi_sfh.pdf

http://docs.pacunion.com/2014q4/tahoetruckee_chart5_avgdom_sfh.pdf

http://docs.pacunion.com/2014q4/tahoetruckee_chart4_msi_condos.pdf


Condominiums – Average Days on the Market

122

150 150 137

54

114

83

127

53

197

154

101 120

0

50

100

150

200

250


Source: Terradatum, January 7, 2015. Average days on market for condominiums sold in the Lake Tahoe/Truckee region.

Condominiums – Percentage of Properties Under Contract

9.1%

7.1%

11.5% 10.5%

8.9% 8.2% 9.6%

13.7%

11.9%

9.1%

14.6%

6.0%

9.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%


Source: Terradatum, January 7, 2015. Percentage of condominiums under contract in the Lake Tahoe/Truckee region.

Single-Family Homes – Percentage of Properties Under Contract

8.7%

13.5%

11.1%

17.2%

14.9%

9.1% 8.6%

11.1% 12.4% 12.5%

14.1% 13.3%

11.6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%


Source: Terradatum, January 7, 2015. Percentage of single-family homes under contract in the Lake Tahoe/Truckee region.


http://docs.pacunion.com/2014q4/tahoetruckee_chart6_avgdom_condos.pdf

http://docs.pacunion.com/2014q4/tahoetruckee_chart8_percentundercontract_condos.pdf

http://docs.pacunion.com/2014q4/tahoetruckee_chart7_percentundercontract_sfh.pdf

Single-Family Homes – Sales Price as a Percentage of Original Price

92.8% 92.1% 91.3%

89.2%

95.4%

94.1%

95.6% 96.2%

95.2%

93.3% 91.9%

89.8% 91.1%

84%

86%

88%

90%

92%

94%

96%

98%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for single-family homes under contract in the Lake Tahoe/Truckee region.

Condominiums – Sales Price as a Percentage of Original Price

93.0% 92.5%

96.1%

89.5%

94.6% 94.8%

96.7%

94.1%

96.0% 96.4%

89.0%

87.6% 87.3%

82%

84%

86%

88%

90%

92%

94%

96%

98%


Source: Terradatum, January 7, 2015. Sales price as % of original price (including adjustments) for condominiums under contract in the Lake Tahoe/Truckee region.


http://docs.pacunion.com/2014q4/tahoetruckee_chart9_salesprice_originalprice_sfh.pdf

http://docs.pacunion.com/2014q4/tahoetruckee_chart10_salesprice_originalprice_condos.pdf


A Closer Look at Tahoe/Truckee


Alpine Meadows 3,745,500$ 4,222,500$ 13% 5 6 20% 66 49 -26% 675,000$ 567,500$ -16%

Donner Lake 6,669,400$ 4,384,900$ -34% 13 5 -62% 125 74 -41% 415,000$ 1,150,000$ 177%

Donner Summit 5,346,250$ 8,875,700$ 66% 12 15 25% 82 95 16% 377,250$ 445,000$ 18%

Martis Valley 38,819,606$ 70,394,159$ 81% 28 36 29% 91 136 49% 612,803$ 1,133,750$ 85%

North Lake Tahoe 39,035,601$ 57,122,000$ 46% 52 58 12% 123 110 -11% 520,000$ 558,500$ 7%

Northstar 7,592,000$ 5,690,000$ -25% 9 7 -22% 114 305 168% 815,000$ 695,000$ -15%

Squaw Valley 10,052,800$ 5,185,000$ -48% 5 3 -40% 259 348 34% 2,125,000$ 2,070,000$ -3%

Tahoe City 8,549,500$ 28,611,500$ 235% 14 24 71% 94 82 -13% 507,500$ 830,000$ 64%

Tahoe Donner 49,836,525$ 46,102,909$ -7% 80 63 -21% 68 96 41% 583,750$ 630,000$ 8%

Truckee 43,799,606$ 84,453,159$ 93% 39 59 51% 78 101 29% 545,000$ 597,813$ 10%

West Shore 21,045,810$ 40,291,500$ 91% 26 41 58% 117 135 15% 545,000$ 529,000$ -3%

Source: Terradatum, January 7, 2015. Data is for single-family homes in the Lake Tahoe/Truckee region.

Lake Tahoe/Truckee Snapshot: SFH, Q4 2014 vs. Q4 2013



Alpine Meadows 315,000$ 905,000$ 187% 1 2 100% 6 18 200% 315,000$ 452,500$ 44%

Donner Lake 60,000$ n/a 1 0 n/a 190 n/a 60,000$ n/a

Donner Summit 210,000$ n/a 0 1 n/a 290 n/a 210,000$ n/a

North Lake Tahoe 10,844,520$ 12,556,500$ 16% 22 23 5% 176 148 -16% 335,000$ 367,500$ 10%

NorthStar 5,417,500$ 7,549,150$ 39% 11 12 9% 112 116 4% 375,000$ 405,000$ 8%

Squaw Valley 5,991,400$ 5,946,500$ -1% 11 7 -36% 283 164 -42% 520,000$ 670,000$ 29%

Tahoe City 5,519,270$ 5,475,500$ -1% 12 9 -25% 99 135 36% 320,001$ 315,000$ -2%

Tahoe Donner 3,014,500$ 3,748,500$ 24% 11 13 18% 125 94 -25% 292,500$ 295,000$ 1%

Truckee 12,646,400$ 11,860,500$ -6% 20 18 -10% 129 98 -24% 437,500$ 448,500$ 3%

West Shore 6,522,000$ 5,760,000$ -12% 6 3 -50% 84 307 265% 980,000$ 2,275,000$ 132%

Lake Tahoe/Truckee Snapshot: Condos, Q4 2014 vs. Q4 2013

Source: Terradatum, January 7, 2015. Data is for condominiums in the Lake Tahoe/Truckee region.



http://docs.pacunion.com/2014q4/tahoetruckee_chart11_sect2_communities_sfh.pdf

http://docs.pacunion.com/2014q4/tahoetruckee_chart12_sect2_communities_condos.pdf



Lake Tahoe Area Housing and Economic Outlook

As a year-round resort getaway for affluent Bay Area residents, the Lake Tahoe housing market depends heavily on the health of the Bay Area economy and housing markets, both of which have appreciated tremendously in the last few years.

BAY AREA IMPACT

Feeder Markets: An analysis of housing and employment data from core Bay Area MSAs helps us understand how the Lake Tahoe market will perform. Strong job growth, and income and net-worth growth in the Bay Area means stronger demand in Lake Tahoe. High and rising home prices in the Bay Area and a strong sales environment provide the equity for primary or second homes in Lake Tahoe.

Jobs and Income: Bay Area jobs have been booming over the last three years, with 4 percent annual job growth since 2011. We project this growth to continue going forward, though at a somewhat more conservative rate. The Bay Area is a highly affluent region with the current median household income in the East Bay and San Francisco MSAs of about $75,000 to $80,000-plus, and topping $100,000 in the San Jose MSA.

Strong Sales: Existing home sales have been strong throughout the Bay Area in recent years and are projected to maintain steady growth, though the San Francisco MSA will be relatively stagnant.

High Prices: Pricing of existing homes has surged in all three core Bay Area MSA’s. We project existing home prices will rise solidly this year and next, but appreciation will be more modest from 2016-2018. (JBREC does not project home prices, but the table below shows our price change rate projections for each MSA.)

Source: U.S. Bureau of Labor

Source: DataQuick

MSA 2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018P

East Bay MSA 983,500 962,900 971,000 999,900 1,033,900 1,058,900 1,051,900 1,077,400 1,102,400 1,117,900 1,127,900San Francisco MSA 964,000 955,000 978,700 1,024,800 1,070,100 1,111,200 1,095,100 1,115,100 1,133,100 1,148,100 1,158,100San Jose MSA 868,300 865,600 886,100 921,100 961,800 998,800 996,800 1,026,800 1,054,800 1,068,600 1,078,200Aggregate Total 2,815,800 2,783,500 2,835,800 2,945,800 3,065,800 3,168,900 3,143,800 3,219,300 3,290,300 3,334,600 3,364,200

Aggregate Change -167,600 -32,300 52,300 110,000 120,000 88,700 78,000 75,500 71,000 44,300 29,600Aggregate Change Rate -5.6% -1.1% 1.9% 3.9% 4.1% 2.9% 2.5% 2.4% 2.3% 1.4% 0.9%

Source: U.S. Department of Labor

Employment Trends and Projections - Bay Area

Sales 2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PEast Bay MSA 34,036 30,652 31,000 33,750 32,392 31,046 31,000 34,200 36,900 35,190 33,660San Francisco MSA 13,120 13,629 14,587 17,635 17,873 17,010 16,900 17,800 18,400 17,600 16,800San Jose MSA 19,146 18,058 18,209 20,273 20,053 18,662 18,900 20,500 21,870 20,790 19,710Aggregate Total 66,302 62,339 63,796 71,658 70,318 66,718 66,800 72,500 77,170 73,580 70,170

Aggregate Change 10,954 -3,963 1,457 7,862 -1,340 -4,369 -3,518 5,700 4,670 -3,590 -3,410Aggregate Change Rate 19.8% -6.0% 2.3% 12.3% -1.9% -6.1% -5.0% 8.5% 6.4% -4.7% -4.6%

Median Pricing 2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PEast Bay MSA $290,424 $337,723 $318,057 $352,634 $467,309 $585,000 7.0% 5.0% 2.0% 1.0% 0.0%San Francisco MSA $669,548 $705,562 $669,212 $718,174 $851,747 $912,000 5.0% 4.9% 0.7% 0.7% 0.4%San Jose MSA $486,217 $544,453 $524,921 $582,690 $709,190 $787,000 7.0% 4.6% 2.7% 2.0% 1.0%

Source: DataQuick

Existing Home Sales Trends and Projections - Bay Area

Source: DataQuick

Existing Home Pricing Trends and BHVI Projections - Bay Area

Sales 2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PEast Bay MSA 34,036 30,652 31,000 33,750 32,392 31,046 31,000 34,200 36,900 35,190 33,660San Francisco MSA 13,120 13,629 14,587 17,635 17,873 17,010 16,900 17,800 18,400 17,600 16,800San Jose MSA 19,146 18,058 18,209 20,273 20,053 18,662 18,900 20,500 21,870 20,790 19,710Aggregate Total 66,302 62,339 63,796 71,658 70,318 66,718 66,800 72,500 77,170 73,580 70,170

Aggregate Change 10,954 -3,963 1,457 7,862 -1,340 -4,369 -3,518 5,700 4,670 -3,590 -3,410Aggregate Change Rate 19.8% -6.0% 2.3% 12.3% -1.9% -6.1% -5.0% 8.5% 6.4% -4.7% -4.6%

Median Pricing 2009 2010 2011 2012 2013 Current 2014P 2015P 2016P 2017P 2018PEast Bay MSA $290,424 $337,723 $318,057 $352,634 $467,309 $585,000 7.0% 5.0% 2.0% 1.0% 0.0%San Francisco MSA $669,548 $705,562 $669,212 $718,174 $851,747 $912,000 5.0% 4.9% 0.7% 0.7% 0.4%San Jose MSA $486,217 $544,453 $524,921 $582,690 $709,190 $787,000 7.0% 4.6% 2.7% 2.0% 1.0%

Source: DataQuick

Existing Home Sales Trends and Projections - Bay Area

Source: DataQuick

Existing Home Pricing Trends and BHVI Projections - Bay Area


http://docs.pacunion.com/2014q4/tahoe_jbrec_1.pdf




DEMOGRAPHICS

Steady Growth Ahead: Lake Tahoe has just over 37,000 residents in about 15,600 households. The area’s population has declined since 2000 at a rate of -1.0 percent per year, but is forecast to grow over the next five years and roughly reach its 2000 level by 2019.

By the Numbers: Growth projections for the next five years translate into about 400 new residents annually in the Lake Tahoe area, or about 200 new households each year. Household growth at a higher rate than population is common in largely secondary markets like Lake Tahoe.

THE HOUSING MARKET

Prices Up: The median sales price for existing homes in the Lake Tahoe area has been increasing at a solid to strong rate. Single-family home prices are up 6.4 percent year over year, and condominium pricing is up 9.2 percent. Median pricing can fluctuate considerably from month to month given the comparatively low volumes and the variety of homes that might come onto the market.

Higher Supply Levels: There is a considerable amount of homes on the market in Lake Tahoe, with just under seven months of supply available. This is relatively high in terms of larger market standards, but for high-end, second-home-oriented markets it is to be expected.

Extended Days to Sell: High-end vacation homes typically stay on the market longer than conventional housing given how discretionary a second home purchase is. In Lake Tahoe, the average single-family home is on the market for close to three months, and it is not uncommon for condominiums to be up for sale longer.

MARKET COLOR

Reno Wins the Tesla War: Northern Nevada won the battle for the new Tesla gigafactory. A $1.25 billion tax incentive program assembled by the state enticed Tesla to choose Nevada for this facility. The project will have more than 5 million square feet of manufacturing space and is expected to generate a $100 billion economic impact over 20 years. Though some economists have challenged the ultimate level of economic impact from Tesla’s operations, there is no question it will boost the Northern Nevada economy and could produce more local buyers for Lake Tahoe’s vacation homes.

2000 2010 2014 2019PPopulation Total 39,436 35,531 37,328 39,402 Annualized Change Rate - -1.0% 1.3% 1.1%Household Total 15,491 14,758 15,647 16,619 Avg. HH Size 2.53 2.37 2.35 2.34

Source: ESRI. The Lake Tahoe area is defined as the following eight California ZIP codes: 96140, 96141, 96142, 96143, 96145, 96146, 96148, and 96150.

Population and Households Trends and Projections - Lake Tahoe Area, California

Median Sales Price Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 YoY % Single-Family Homes $550,000 $545,000 $560,000 $614,605 $605,000 $699,000 $610,000 $530,000 $629,000 $529,277 $595,000 $665,000 $585,000 6.4% Condominiums $350,250 $381,500 $374,500 $345,000 $262,000 $390,000 $290,000 $334,000 $387,500 $350,000 $445,000 $345,000 $382,500 9.2%Months of Supply Single-Family Homes 4.9 5.1 5.3 6.2 8.5 6.6 7.3 6.8 5.7 8.5 10.6 7.1 6.8 38.8% Condominiums 5.5 5.2 7.0 7.2 8.8 12.9 11.4 8.9 7.8 10.6 8.5 6.8 6.8 23.6%Avg Days on the Market Single-Family Homes 97 101 94 107 93 100 140 101 95 72 66 54 87 -10.3% Condominiums 159 113 159 122 150 150 137 54 114 83 127 53 200 25.8%

Existing Home Pricing and Supply Trends - Lake Tahoe / Truckee

Source: Pacific Union. The Lake Tahoe / Truckee region includes the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley,Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. YOY figures measure September 2014 against September 2013.




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Q42014 quarterlyreport ezine