Q42015 quarterlyreport ezine

Quarterly Real Estate ReportQ4 2015

Contra Costa County/Tri-Valley 4

East Bay 10

Marin County 16

Napa County 22

San Francisco 28

Silicon Valley 38

Sonoma County 50

Sonoma Valley 56

Lake Tahoe/Truckee 62

Table of Contents

Bay Area 10-Year OverviewHere’s a look at home sales in the Bay Area’s real estate markets in the fourth quarter of 2015, 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 '05 Q4 '06 Q4 '07 Q4 '08 Q4 '09 Q4 '10 Q4 '11 Q4 '12 Q4 '13 Q4 '14 Q4 '15

CONTRA COSTA COUNTY 2,921 2,068 1,205 3,343 3,063 2,657 2,757 2,814 2,464 2,493 2,513

EAST BAY 831 708 510 515 601 595 634 807 757 680 694

MARIN COUNTY 580 541 390 303 522 454 453 593 558 525 514

NAPA COUNTY 316 266 161 281 325 282 324 376 313 271 273

SAN FRANCISCO (SFH) 807 652 488 481 649 615 665 737 712 675 620

SAN FRANCISCO (CONDOS) 563 548 490 353 516 447 466 625 690 621 587

SILICON VALLEY 662 619 467 335 573 584 501 687 590 550 477

SONOMA COUNTY 1,295 1,090 667 1,303 1,154 1,014 1,230 1,300 1,143 1,143 1,195

SONOMA VALLEY 127 108 63 94 110 97 127 142 126 146 113

LAKE TAHOE/TRUCKEE (SFH) 272 220 178 167 297 249 293 356 283 325 317

LAKE TAHOE/TRUCKEE (CONDOS) 84 70 60 45 74 87 73 97 95 88 86Copyright © Pacific Union. Source: BrokerMetrics / Terradatum, Inc. using data from SFARMLS, EBRD, BAREIS, MLSLSTINGS, TSIERRA, January 7, 2016.

Bay Area: 10-Year Overview of Q4 Homes Sold

http://docs.pacunion.com/2015q4/10year_monsterchart.pdf

http://docs.pacunion.com/2015q4/10year_monsterchart.pdf

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

Contra Costa County/Tri-ValleyQuarterly Real Estate ReportQ4 2015

mailto:[email protected]

Contra Costa County/Tri-Valley: Q4 ResultsMarket activity slowed during the fourth quarter in Pacific Union’s Contra Costa County/Tri-Valley region, with sales and active listings both down significantly from the previous quarter. Activity peaked in the second quarter of 2015 and moderated in the third before slipping further in the fourth, largely because of a severe shortage of homes on the market. Potential sellers were cautious – tempted by rising prices to put their homes on the market but uncertain of their prospects when they too become buyers.

Buyers were more cautious as well. After the frantic pace of recent years, homebuyers generally took longer to make buying decisions in the fourth quarter. They inspected homes more frequently before making offers, and they were less likely to overbid. New buyers continued to enter the market, however, encouraged by the Bay Area’s strong economy and extremely low interest rates.

Looking Forward: The upcoming election year and uncertainty over future interest-rate increases could slow sales activity in the first quarter of 2016, but the Bay Area’s economic fundamentals remain exceptionally strong. We fully expect that the coming of spring will energize both buyers and sellers.

Defining Contra Costa County/Tri-Valley: 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 County/Tri-Valleypacificunion.com

Median Sales Price

Months’ Supply of Inventory

$1,000,000 $970,000

$1,010,000 $1,093,500 $1,100,000 $1,110,000

$1,185,000 $1,100,000

$1,069,000 $1,057,500 $1,022,500 $1,049,000 $1,001,600

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. 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.

1.2

1.9

2.3

1.5 1.4 1.4

1.3 1.3 1.4

1.6 1.6

1.3

0.6

0.1

0.6

1.1

1.6

2.1

2.6

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

Source: Terradatum, January 7, 2016. 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.

pacificunion.com

http://docs.pacunion.com/2015q4/contracosta_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/contracosta_chart2_msi.pdf


Average Days on the Market

31

40

29

25

19 19 18

22 24

27 28

34 32

0

5

10

15

20

25

30

35

40

45


Source: Terradatum, January 7, 2016. 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

98.3% 97.2%

98.8%

101.0%

102.4% 101.6% 101.3%

99.8% 99.3% 99.0%

99.5%

96.0%

98.8%

92%

94%

96%

98%

100%

102%

104%


Source: Terradatum, January 7, 2016. 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

29.5%

33.7% 35.8%

45.4% 42.4% 40.3%

38.0% 36.9% 35.9%

33.3% 36.4% 38.8% 37.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Source: Terradatum, January 7, 2016. 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.

pacificunion.com

http://docs.pacunion.com/2015q4/contracosta_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/contracosta_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2015q4/contracosta_chart4_percentundercontract.pdf

A Closer Look at Contra Costa County/Tri-Valley

Q4 '14 Q4 '15 % change Q4 '14 Q4 '15 % change Q4 '14 Q4 '15 % change Q4 '14 Q4 '15 % change

Alamo 71,641,781$ 83,325,905$ 16% 45 42 -7% 43 68 58% 1,500,000$ 1,770,000$ 18%

Blackhawk 33,101,888$ 30,610,788$ -8% 21 16 -24% 50 80 60% 1,378,000$ 1,647,000$ 20%

Danville 143,733,273$ 163,482,579$ 14% 116 129 11% 30 37 23% 1,166,500$ 1,175,000$ 1%

Diablo 9,449,525$ 1,800,000$ -81% 5 1 -80% 47 154 228% 1,475,000$ 1,800,000$ 22%

Lafayette 90,114,024$ 87,370,315$ -3% 67 62 -7% 23 23 0% 1,160,000$ 1,275,000$ 10%

Moraga 31,051,500$ 23,454,500$ -24% 27 18 -33% 26 16 -38% 1,060,000$ 1,280,000$ 21%

Orinda 83,476,340$ 67,997,000$ -19% 62 51 -18% 35 27 -23% 1,197,500$ 1,250,000$ 4%

PleasantHill 47,786,699$ 59,818,135$ 25% 70 91 30% 30 22 -27% 652,500$ 650,000$ 0%

San Ramon 149,943,427$ 157,387,546$ 5% 159 154 -3% 27 29 7% 889,000$ 963,750$ 8%

Walnut Creek 130,050,065$ 154,738,161$ 19% 134 152 13% 30 23 -23% 889,210$ 927,950$ 4%

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Contra Costa County cities.

Contra Costa County Snapshot: Q4 2015 vs. Q4 2014

Sales Volume Homes Sold Avg. Days on Market Median Price


http://docs.pacunion.com/2015q4/contracosta_chart6_sect2_cities.pdf

pacificunion.com


Contra Costa County Housing and Economic Outlook

Though places like San Ramon, Berkeley, Concord, and Richmond are major local employment centers, Contra Costa is primarily a 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 nearly 344,000 employed individuals in 2014 and is projected to add another 7,900 by the year’s end. That translates to a solid growth rate of 2.3 percent for 2015. Though still positive, we project an easing of job growth heading into 2018.

Sector Growth: The Education & Health Services and Professional & Business Services sectors have experienced the largest job growth over the past year.

Solid Employment: With an unemployment rate of 4.4 percent, Contra Costa County is below the national average of 5.1 percent.

High Incomes: With a median household income of nearly $82,000 in 2014, Contra Costa County enjoys a relatively strong income profile, well above the national norm of about $52,000. 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 solid to strong rate of 1.2 percent - 1.5 percent in recent years. This equates to about 14,700 additional residents annually over the last five years. Like growth, however, population growth is projected to ease through 2018.

Household formation picking up: Household growth should outpace population growth as millennials begin to move out and, more generally, household formations pick up. We anticipate an increase of over 23,000 additional households by the end of 2018.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 326,400 316,700 317,500 326,100 336,600 343,900 351,800 358,100 363,100 364,600 Change -16,900 -9,700 800 8,600 10,500 7,300 7,900 6,300 5,000 1,500 Change Rate -4.9% -3.0% 0.3% 2.7% 3.2% 2.2% 2.3% 1.8% 1.4% 0.4%Median Income $75,746 $74,126 $74,141 $76,064 $79,100 $81,908 $85,745 $89,595 $94,098 $98,607 Change Rate -4.0% -2.1% 0.0% 2.6% 4.0% 3.5% 4.7% 4.5% 5.0% 4.8%

Source: Bureau of Labor Statistics; Moody Analytics

Jobs and Median Income Trends and Projections - Contra Costa County

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

Population Total 1,037,900 1,052,900 1,066,600 1,079,400 1,096,000 1,111,300 1,126,800 1,141,800 1,154,800 1,166,800

Change 14,500 15,000 13,700 12,800 16,600 15,400 15,500 15,000 13,000 12,000

Change Rate 1.4% 1.4% 1.3% 1.2% 1.5% 1.4% 1.4% 1.3% 1.1% 1.0%

Household Total 371,900 376,700 380,400 384,100 388,500 393,500 399,200 405,400 411,100 416,600

Change 4,700 4,900 3,700 3,700 4,400 5,000 5,700 6,200 5,700 5,500

Change Rate 1.3% 1.3% 1.0% 1.0% 1.1% 1.3% 1.4% 1.6% 1.4% 1.3%Source: Moody Analytics; John Burns Real Estate Consulting

Population and Households Trends and Projections - Contra Costa County

pacificunion.com

http://docs.pacunion.com/2015q4/contra_costa_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 10.1 percent over the last year. Though appreciation still remains strong, it has slowed substantially from the rates experienced in 2012 and 2013. JBREC forecasts slower price increases through 2018.

Resale Volume Trending Up for 2015: The resale volume in Contra Costa County was down an average of 7 percent annually in 2013 and 2014, but is currently up 7.4 percent year over year. Projections at the MSA level indicate conservative volume growth of 0.5 - 2.0 percent through 2018.

Investor Activity Slowing: Investors are purchasing about 16 percent of homes in the East Bay MSA, down from 31 percent at the peak at the beginning of 2013. Higher home prices, and hence lesser returns on rented homes, is the main reason as investors chase relative bargains elsewhere.

Affordability: Though low mortgage rates help keep affordability at a historically normal level in Contra Costa County, comparatively high prices mean homeownership is still slightly more onerous than is ideal. The median-income household would need to pay 36 percent of their income to buy the median-priced resale home and about 43 percent to afford the median-priced new home.

New Home Pricing: The median new home price in Contra Costa County is $601,250, up 17 percent from calendar 2014.

MARKET COLOR

Chevron to Cut 7,000 Additional Jobs: In October, San Ramon-based Chevron Corp. announced it will be eliminating up to 7,000 positions companywide. As of August 2015, Chevron had a workforce of 6,500 employees throughout the Bay Area, 3,200 of which were located at the San Ramon headquarters. Though it is uncertain how many of these job losses will be within the East Bay, the company has already eliminated 600 jobs in the region since the beginning of 2015.

Growth to Push Eastward?: The state Route 4 corridor that stretches from Pittsburg to Brentwood has long been a major focus of new home builders looking to supply family-friendly detached product at comparatively affordable prices. With mostly infill opportunities in the western portions of this submarket, east Oakley may be the next major new home node there. Brookfield Homes and its partner DeNova Homes have started initial sales efforts in eastern Oakley at Emerson Ranch. As these 567 homes begin to wind down, the vast East Oakley Specific Plan area east of Emerson Ranch will likely take over. This area has multiple landowners, but may be fashioned into a large cohesive masterplan with thousands of new homes. Delta Coves, north of the East Oakley area, will eventually sell water-oriented upscale new homes, most of which will have their own slip in a marina environment.

2009 2010 2011 2012 2013 2014 Current 2015P 2016P 2017P 2018PBurns Home Value Index 111.0 105.5 99.5 115.2 139.9 153.0 165.4 169.6 178.2 183.9 187.1 Change Rate -3.1% -5.0% -5.6% 15.8% 21.4% 9.4% 10.1% 10.9% 5.1% 3.2% 1.7%Affordability Index 1.4 1.4 0.8 0.6 3.9 5.4 5.2 5.0 5.5 5.7 5.7

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 poor affordability compared to that market’s norm.

Source: John Burns Real Estate Consulting

Burns Home Value Index Trends and Projections - East Bay MSA

pacificunion.com


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

East BayQuarterly Real Estate ReportQ4 2015


East Bay: Q4 ResultsHomebuyers in Pacific Union’s East Bay region faced a severe shortage of available homes throughout 2015. The fourth quarter saw a modest increase in listings hit the market, but they were snapped up by an influx of buyers, leaving supply just as constrained as when the year started. Under such conditions, sales prices posted double-digit gains, buyers continued to submit bids above asking prices, and multiple offers remained the norm for desirable homes that were fairly priced.

Fourth-quarter sales velocity remained strong through November before tapering off in December as the holiday season drew near. Overall, low interest rates, high rental prices, and a thriving regional economy kept buyers coming to the East Bay.

Looking Forward: With the Bay Area’s high salaries and strong employment numbers, we look forward to a busy year for East Bay real estate markets this year. The Federal Reserve’s recent decision to raise interest rates will likely help motivate indecisive buyers in the months ahead. Interest rates at the start of 2016, after all, remain exceptionally low by historical levels.

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


$820,000 $792,500 $805,100

$900,000 $925,000 $915,000 $910,000 $918,500

$850,000 $865,000 $913,500 $925,000 $892,500

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000


Source: Terradatum, January 7, 2016. Median sales price for single-family homes in the East Bay.

0.7

1.9 2.1

1.1

0.9 1.0

0.8 0.9 0.9

1.6

1.1

0.7

0.3

0.1

0.6

1.1

1.6

2.1

2.6


Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in the East Bay.

pacificunion.com

http://docs.pacunion.com/2015q4/eastbay_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/eastbay_chart2_msi.pdf



27

37

24

20

16

23

17 17

22 20 19 20

24

0

5

10

15

20

25

30

35

40


Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in the East Bay.


109.0%

104.2%

110.4%

115.7% 115.6% 115.2% 115.8% 114.9%

112.7%

110.6%

114.1%

112.2% 110.8%

98%

100%

102%

104%

106%

108%

110%

112%

114%

116%

118%


Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in the East Bay.


34.4% 32.4%

42.9%

50.0% 51.0% 50.1% 51.1% 46.6%

42.4% 39.6%

46.1%

52.8% 52.7%

0%

10%

20%

30%

40%

50%

60%


Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in the East Bay.

pacificunion.com

http://docs.pacunion.com/2015q4/eastbay_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/eastbay_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2015q4/eastbay_chart4_percentundercontract.pdf

A Closer Look at the East Bay


Alameda 69,352,950$ 101,791,157$ 47% 84 99 18% 22 20 -9% 813,000$ 938,000$ 15%

Albany 14,772,000$ 20,578,500$ 39% 17 21 24% 20 19 -5% 845,000$ 875,000$ 4%

Berkeley 154,347,155$ 158,447,749$ 3% 147 136 -7% 23 22 -4% 960,000$ 1,055,500$ 10%

El Cerrito 40,163,451$ 37,783,338$ -6% 56 51 -9% 23 17 -26% 685,000$ 750,000$ 9%

Kensington 23,635,720$ 19,365,000$ -18% 25 18 -28% 27 17 -37% 786,720$ 1,046,500$ 33%

Oakland* 277,391,079$ 328,555,439$ 18% 325 344 6% 23 22 -4% 801,000$ 887,500$ 11%

Piedmont 50,060,776$ 47,026,388$ -6% 26 25 -4% 13 24 85% 1,725,000$ 1,668,888$ -3%

East Bay Snapshot: Q4 2015 vs. Q4 2014

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected East Bay cities; *Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705.



Under $500,000 26,409,700$ 14,271,100$ -46% 67 34 -49% 36 31 -14% 403,000$ 437,500$ 9%

Over $500,000 603,313,431$ 699,276,471$ 16% 613 660 8% 21 21 0% 851,000$ 935,000$ 10%

$500,000 - $1 million 318,585,712$ 297,042,424$ -7% 419 379 -10% 23 21 -9% 760,000$ 800,000$ 5%

Over $1 million 284,727,719$ 402,234,047$ 41% 194 281 45% 17 21 24% 1,326,500$ 1,300,000$ -2%

Source: Terradatum, January 7, 2016. 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 2015 vs. Q4 2014


Q4 '14 Q4 '15 % change Q4 '14 Q4 '15 % change

Montclair / Joaquin Miller 76 83 9% $978,695 $1,060,727 8%

Crocker Highlands / Grand Lake 35 34 -3% $1,054,548 $1,212,426 15%

Rockridge / Claremont 33 38 15% $1,266,553 $1,368,033 8%

Glenview/Oakmore 42 32 -24% $893,452 $980,375 10%

Laurel / Dimond 22 23 5% $640,159 $631,869 -1%

Redwood Heights / Lincoln Heights 20 25 25% $647,800 $819,750 27%

Crestmont / Ridgemont / Skyline 10 11 10% $1,110,700 $1,035,545 -7%

Temescal / Piedmont Ave. 18 19 6% $865,833 $987,342 14%

Oakland Snapshot: Q4 2015 vs. Q4 2014

NeighborhoodHomes Sold Average Price

Source: EBRD, January 7, 2016. Data is for single-family homes in selected Oakland neighborhoods.


http://docs.pacunion.com/2015q4/eastbay_chart6_sect2_cities.pdf

http://docs.pacunion.com/2015q4/eastbay_chart7_sect2_prices.pdf

http://docs.pacunion.com/2015q4/eastbay_chart8_sect2_oaklandprices.pdf

pacificunion.com


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 those working locally. Areas with good schools are the most desirable as many parts of the county are more family oriented than the core urban parts of the region

THE ECONOMY

Solid Job Growth: Alameda County had over 721,000 employed residents in 2014 and is projected to add another 16,600 by the end of the year. Employment growth has been at +/- 3 percent over for the past three years and we anticipate healthy increases going forward, though growth will slow by 2018.

Growing Sectors: The Professional & Business Services and Leisure & Hospitality job sectors have experienced the largest job growth over the past year.

High Employment: With an unemployment rate of 4.2 percent, Alameda County is below the national average of 5.1 percent.

Good Incomes: At $75,600 in 2014, the Alameda County median household income is above state and national benchmarks, though lower than in other parts of the Bay Area such as San Francisco or San Jose. Income levels have risen by over 4 percent in the last two years and are projected to remain at solidly positive levels through 2018.

DEMOGRAPHICS

Stable Growth: Alameda County has experienced population growth at a rate between 1.0 percent and 1.7 percent in recent years. This translates into over 112,000 additional residents in the past five years. Population growth is projected to maintain a solid level of about 1.2 percent to 1.5 percent annually over the next several years.

Household Formation Growing: Household growth should outpace population growth as millennials begin to move out and, more generally, household formations pick up. We anticipate an increase of 35,700 additional households by the end of 2018.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 658,600 647,600 655,200 676,000 700,900 721,100 737,700 751,000 761,500 764,500 Change -43,800 -11,000 7,600 20,800 24,900 20,200 16,600 13,300 10,500 3,000 Change Rate -6.2% -1.7% 1.2% 3.2% 3.7% 2.9% 2.3% 1.8% 1.4% 0.4%Median Income $68,344 $67,008 $67,309 $69,342 $72,399 $75,569 $78,453 $81,651 $85,469 $89,251 Change Rate -2.9% -2.0% 0.4% 3.0% 4.4% 4.4% 3.8% 4.1% 4.7% 4.4%

Jobs and Median Income Trends and Projections - Alameda County


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

Population Total 1,498,500 1,513,600 1,532,500 1,556,200 1,583,200 1,610,900 1,634,900 1,656,900 1,676,900 1,696,400

Change 21,300 15,100 18,900 23,700 27,000 27,700 24,000 22,000 20,000 19,500

Change Rate 1.4% 1.0% 1.2% 1.5% 1.7% 1.7% 1.5% 1.3% 1.2% 1.2%

Household Total 541,100 546,300 551,400 558,700 566,200 575,400 584,300 593,500 602,200 611,100

Change 7,500 5,200 5,000 7,300 7,500 9,200 8,900 9,200 8,700 8,900

Change Rate 1.4% 1.0% 0.9% 1.3% 1.3% 1.6% 1.5% 1.6% 1.5% 1.5%

Population and Households Trends and Projections - Alameda County

Source: Moody Analytics; John Burns Real Estate Consulting

pacificunion.com

http://docs.pacunion.com/2015q4/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 10.1 percent over the last year. Though appreciation still remains strong, it has slowed substantially from the rates experienced in 2012 and 2013. JBREC forecasts slower price increases through 2018.

Resale Volume Finally Trending Up: Alameda County’s resale volume was down about 5 percent annually in 2013 and 2014, but is up 4 percent currently to a level of 16,300 sales. Projections at the MSA level indicate conservative growth in sales volumes of 0.5 percent - 2.0 percent through 2018.

Investor Activity Slowing: Investors are purchasing about 16 percent of homes in the East Bay MSA, down from an early 2013 peak of 31 percent. Higher home prices, and hence lesser returns on rented homes, is the main reason as investors chase comparative bargains elsewhere.

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 for a household with an average income. The median-income household would need to pay 53 percent of their income to buy the median-priced resale home and about 65 percent to afford the median-priced new home.

New Home Pricing: The median new home price in Alameda County is $848,000, up 10 percent from calendar year 2014.

MARKET COLOR

Tesla Expanding Operations: Tesla Motors has announced it will be leasing the old Solyndra vehicle factory in Fremont. The company already owns the former NUMMI plant nearby, which employs nearly 6,000 people. Tesla will use the additional 500,000-square-foot complex to “expand manufacturing and build more engineering labs as production increases.” Even with the existing car plant just down the street, this new endeavor could potentially add up to another 1,000 jobs.

Pushing East on Interstate 580: While Dublin has been a tremendous new-home market for several years now, Livermore is starting to experience growth as well. Active projects in Dublin have actually diminished over the last two-plus years, though the impending market introductions of Wallis Ranch and then Dublin Crossing will change that. Livermore, meanwhile, has seen new infill neighborhoods just east of its revitalized downtown area and a ma-jor KB Home multineighborhood community (Vineyard Crossing) just north of the famed Livermore Labs complex. Shea Homes, moreover, will soon enter the market with a 460-plus-unit community of its own called Sage in north Livermore. This demand migration makes sense given frothy pricing in Dublin and will continue as long as that price difference remains.

New Activity in Old Places: Southwest Alameda County, stretching roughly from Hayward south to Fremont, is a generally urban-suburban environment that is largely built out. Some significant development has occurred in Hayward, while Fremont, with its enviable schools, also has had a variety of new infill neighborhoods. Now some major developments are slated for Fremont (for example, Warm Springs by Lennar) that will include thousands of new homes. Meanwhile, places like Union City and Newark that have not seen much new housing activity in years have experienced strong sales at recent new home additions (for example, Trumark Homes and K. Hovnanian in Newark, Pulte in Union City). There are also sizable planned developments in this subregion that could combine to make this a major regional new-home hotbed.




Burns Home Value Index Trends and Projections - East Bay MSA

pacificunion.com


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

Marin CountyQuarterly Real Estate ReportQ4 2015


Marin County: Q4 ResultsThere were plenty of buyers in Pacific Union’s Marin County region during the fourth quarter but nowhere near enough homes to accommodate them – a problem that has persisted across the Bay Area for several years. In a marked change, however, buyers in the second half of the year started to gain the upper hand in negotiations. They displayed little sense of urgency and were more likely to pass on an attractive house at a competitive price, waiting to see what will come on the market in the weeks and months ahead.

Sales prices rose throughout the year, climbing aggressively earlier in 2015 before moderating in the fourth quarter. Demand for housing remained high, and sellers continued to enjoy healthy premiums. Private purchase agreements – reached without homes ever appearing on a local MLS and without competing bids – were not uncommon.

Looking Forward: Marin County remains an attractive destination for buyers. The chilly weather may affect sales in January and February, but we expect a very busy spring and summer, aided by a booming Bay Area economy. Interest rates remain exceptionally low, and any further increases would likely have little effect on Marin County sales.

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


$1,008,000 $990,000 $980,000

$1,160,000 $1,175,000 $1,175,000

$1,112,000 $1,056,000

$1,095,000 $1,055,000

$1,201,908 $1,200,000 $1,130,000

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000


Source: Terradatum, January 7, 2016. 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

2.7

2.4

1.6

1.3 1.4 1.5 1.4 1.6

2.3

1.7 1.5

0.9

0.1

0.6

1.1

1.6

2.1

2.6

3.1


Source: Terradatum, January 7, 2016. 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.

pacificunion.com

http://docs.pacunion.com/2015q4/marin_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/marin_chart2_msi.pdf




74

62 58

47

59 56

38 38

51 57

48 53

56

0

10

20

30

40

50

60

70

80


Source: Terradatum, January 7, 2016. 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.

21.8%

29.9%

35.2%

43.8% 42.5%

37.1% 39.3% 36.7%

31.1% 30.8%

35.2% 32.3%

29.3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Source: Terradatum, January 7, 2016. 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.


93.7%

98.1% 99.2%

100.8%

95.7% 94.8%

102.5%

100.2%

97.8%

95.1%

98.3%

96.1% 96.7%

88%

90%

92%

94%

96%

98%

100%

102%

104%


Source: Terradatum, January 7, 2016. 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.

pacificunion.com

http://docs.pacunion.com/2015q4/marin_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/marin_chart4_percentundercontract.pdf

http://docs.pacunion.com/2015q4/marin_chart5_salesprice_originalprice.pdf

A Closer Look at Marin County


Belvedere 22,890,500$ 33,858,000$ 48% 6 9 50% 120 67 -44% 3,775,000$ 3,400,000$ -10%

Corte Madera 16,418,250$ 29,999,616$ 83% 11 23 109% 58 56 -3% 1,350,000$ 1,275,000$ -6%

Fairfax 15,627,000$ 14,177,500$ -9% 17 17 0% 37 53 43% 860,000$ 750,000$ -13%

Greenbrae 10,132,225$ 18,438,500$ 82% 8 12 50% 39 34 -13% 1,320,000$ 1,530,750$ 16%

Kentfield 29,566,500$ 37,869,000$ 28% 15 16 7% 65 115 77% 1,850,000$ 2,070,000$ 12%

Larkspur 29,270,750$ 23,987,500$ -18% 18 14 -22% 53 58 9% 1,447,000$ 1,577,250$ 9%

Mill Valley 110,579,125$ 143,274,000$ 30% 71 79 11% 54 48 -11% 1,300,000$ 1,488,000$ 14%

Novato 94,281,527$ 105,556,000$ 12% 116 117 1% 63 54 -14% 758,000$ 847,000$ 12%

Ross 48,625,000$ 42,300,000$ -13% 13 8 -38% 85 78 -8% 3,000,000$ 4,275,000$ 43%

San Anselmo 52,663,600$ 38,717,000$ -26% 44 31 -30% 56 38 -32% 1,070,000$ 1,151,000$ 8%

San Rafael 115,587,310$ 129,242,335$ 12% 118 111 -6% 59 44 -25% 899,500$ 1,060,000$ 18%

Sausalito 26,640,000$ 31,969,000$ 20% 18 15 -17% 70 51 -27% 1,392,500$ 2,000,000$ 44%

Tiburon 98,722,887$ 90,024,500$ -9% 34 29 -15% 81 58 -28% 2,385,500$ 2,750,000$ 15%

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Marin County cities.

Marin County Snapshot: Q4 2015 vs. Q4 2014



http://docs.pacunion.com/2015q4/marin_chart6_sect2_cities.pdf

pacificunion.com


Marin County Housing and Economic Outlook

This affluent San Francisco suburban bedroom community offers older, but generally well-maintained and desirable homes. Supply constraints and great schools make this market a relatively safe long-term investment.

THE ECONOMY

Decent Jobs: Marin County is only a bridge away from San Francisco but is a world apart with a quiet, suburban environment. It has an employment basis of only 112,000 and recent job growth has been a solid 1,900 jobs in the last year. We project continued job growth ahead, at least for the near term.

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 three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014.

Highly Employed Population: Only 3.1 percent of the county labor pool cannot find a suitable job.

Well Off and Getting Better: Marin County is highly affluent, supporting a 2014 median household income of $100,700 per year. Wage growth has recently been excellent and is projected to be very strong for the next few years as well.

DEMOGRAPHICS

Slow and Steady: Marin County is home to a little over one-quarter of a million people in 106,000 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 2,000 new residents annually in Marin County, or about 1,000 new households, with household growth projected to increase at a slightly faster pace.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 100,800 100,400 102,200 105,500 109,700 111,600 116,100 118,100 119,000 118,500 Change -6,600 -400 1,800 3,300 4,200 1,900 4,500 2,000 900 -500 Change Rate -6.1% -0.4% 1.8% 3.2% 4.0% 1.7% 4.0% 1.7% 0.8% -0.4%Median Income $85,810 $84,473 $86,559 $90,871 $96,580 $100,677 $104,507 $109,276 $115,111 $120,684 Change Rate -2.4% -1.6% 2.5% 5.0% 6.3% 4.2% 3.8% 4.6% 5.3% 4.8%

Jobs and Median Income Trends and Projections - Marin County


2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PPopulation Total 250,900 252,900 255,400 256,100 258,800 260,800 262,800 264,900 267,000 269,000

Change 2,500 2,000 2,500 700 2,700 1,900 2,000 2,100 2,100 2,000

Change Rate 1.0% 0.8% 1.0% 0.3% 1.0% 0.7% 0.8% 0.8% 0.8% 0.7%

Household Total 102,500 103,400 104,100 104,200 104,900 105,500 106,400 107,500 108,600 109,700

Change 1,100 900 700 100 700 700 900 1,100 1,100 1,100

Change Rate 1.0% 0.9% 0.7% 0.1% 0.7% 0.6% 0.9% 1.0% 1.0% 1.0%

Population and Households Trends and Projections - Marin County


pacificunion.com

http://docs.pacunion.com/2015q4/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 6.9 percent over the last year. We expect appreciation to shift to a more modest trend in the coming years as recent price increases have pushed absolute price points to extraordinary levels.

Consistent Resale Volumes: There have been about 3,500 resales in Marin County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017.

Shrinking Affordability: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific to Marin County, a household earning the median income would need to pay 56 percent of their income to buy a median-priced resale home and an infeasible 97 percent for a median-priced new home (new home activity in Marin is extremely limited and therefore median pricing can fluctuate substantially).

High and Still Rising: 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 high, with a current median of over $1.6 million over the last year.

MARKET COLOR

Will Tech Fill Departing Jobs?: The Fireman’s Fund Insurance Co. announced this summer they were packing up their office of over 700 employees in Novato for more affordable rent 12 miles north in Petaluma. While this hurts the local jobs picture, there has been a buzz about who will occupy the 500,000-square-foot office complex in Marin. A number of Silicon Valley-based companies have inquired about the soon to be unoccupied space, including the Google-founded biotech company Calico. According to Novato economic development officials, a new tenant will be determined by the end of 2015. Though no more than rumors, other tech-oriented companies are said to be looking into Marin County for its proximity to the core Bay Area and lower rents.

SMART on Track: 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. SMART is currently testing track to check onboard systems and operational requirements, and is on schedule to open several stations in late 2016. SMART riders will need to catch a ferry in Larkspur to commute to San Francisco jobs, but it will certainly take pressure off Highway 101 and make Marin County homes more attractive to those working in San Francisco.




Burns Home Value Index Trends and Projections - San Francisco MSA

pacificunion.com


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

Napa CountyQuarterly Real Estate ReportQ4 2015


Napa County: Q4 ResultsLimited inventory squeezed sales volume in Napa County in 2015, while average sales prices climbed higher. Homes priced under $500,000 were in particularly short supply in the fourth quarter and commanded multiple offers, while those priced above $700,000 – typically a popular move-up market – sat idle longer than we had seen in quite some time.

Even with the prospect of robust sales prices, sellers were reluctant to put their homes on the market, and many of those that did so added contingencies allowing them to find a new place to live before leaving their current home. Such contingencies made for some complex fourth-quarter deals, with several sales dependent on both the buyer and seller completing separate transactions first.

Looking Forward: Buyers typically don’t like to shop in the rain, so first-quarter sales – particularly vineyard land – could be affected by the El Niño storms forecast for the West Coast. Otherwise, sellers who pulled their properties off the market in November and December will be returning them in the spring, when trees and flowers are blooming and Napa County looks its finest. Make no mistake: Buyers will be waiting.

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


$522,500 $497,000 $492,000

$559,750

$633,000 $586,250 $600,000

$630,250 $571,316

$620,000 $655,000

$685,000

$575,000

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000


Source: Terradatum, January 7, 2016. Median sales price for single-family homes in Napa County.

3.4 3.8

3.4

2.6

3.2 2.9 2.9

2.4

3.6 3.4

5.7

3.2

2.3

0.1

1.1

2.1

3.1

4.1

5.1

6.1


Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in Napa County.

pacificunion.com

http://docs.pacunion.com/2015q4/napa_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/napa_chart2_msi.pdf




99 100

114

91 93

71 71 72

60

72

92 85

79

0

20

40

60

80

100

120


Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in Napa County.

15.9%

23.2%

26.1%

28.2%

25.5% 25.1% 23.6% 24.3%

21.8%

13.8%

21.2%

18.1%

21.9%

0%

5%

10%

15%

20%

25%

30%


Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in Napa County.


91.2% 91.2%

92.0%

94.5%

95.9%

94.7%

96.5% 95.8%

96.4%

94.2% 94.6%

92.9%

95.0%

88%

89%

90%

91%

92%

93%

94%

95%

96%

97%


Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in Napa County.

pacificunion.com

http://docs.pacunion.com/2015q4/napa_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/napa_chart4_percentundercontract.pdf

http://docs.pacunion.com/2015q4/napa_chart5_salesprice_originalprice.pdf

A Closer Look at Napa County


American Canyon 11,826,350$ 14,723,500$ 24% 28 33 18% 53 68 28% 407,500$ 435,000$ 7%

Angwin 6,720,000$ 1,330,000$ -80% 3 2 -33% 294 61 -79% 2,100,000$ 665,000$ -68%

Calistoga 6,587,900$ 8,022,084$ 22% 8 12 50% 122 73 -40% 565,000$ 525,000$ -7%

Napa 131,025,684$ 169,771,870$ 30% 191 193 1% 80 78 -3% 550,000$ 640,000$ 16%

St. Helena 36,505,500$ 41,213,500$ 13% 35 22 -37% 140 165 18% 776,000$ 964,500$ 24%

Yountville 6,060,088$ 17,538,500$ 189% 6 9 50% 86 90 5% 790,000$ 1,110,000$ 41%

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Napa County cities.

Napa County Snapshot: Q4 2015 vs. Q4 2014



Under $500,000 42,231,263$ 28,821,029$ -32% 106 72 -32% 65 66 2% 416,250$ 415,000$ 0%

$500,000 - $999,999 83,797,171$ 104,518,734$ 25% 125 151 21% 96 83 -14% 650,000$ 675,000$ 4%

$1 million - $3 million 61,992,088$ 67,158,691$ 8% 37 42 14% 126 107 -15% 1,614,000$ 1,353,500$ -16%

Over $3 million 10,705,000$ 52,880,000$ 394% 3 8 167% 158 156 -1% 3,505,000$ 4,792,500$ 37%

Median Price

Source: Terradatum, January 7, 2016. Data is for single-family homes in Napa County.

Napa County Price Range Snapshot: Q4 2015 vs. Q4 2014

Sales Volume Homes Sold Avg. Days on Market


http://docs.pacunion.com/2015q4/napa_chart6_sect2_cities.pdf

http://docs.pacunion.com/2015q4/napa_chart7_sect2_prices.pdf

pacificunion.com


Napa County Housing and Economic Outlook

Net worth drives the second home and retiree market in Napa, and net-worth growth has been excellent. 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 2,700 net new jobs last year and is projected to add another 2,000 by the end of 2015, which would bring the county to over 71,000 jobs. That is a solid growth rate of 2.9 percent this year, though below the 4.0-plus percent experienced in 2013 and 2014. We project job growth to ease through 2018.

Tourism and Job Diversity: The educational and health services, leisure and hospitality, and manufacturing sectors matter most to the local economy.

Highly Employed Population: Only 3.6 percent of the labor pool cannot find a suitable job.

Upper-Middle Class: At $73,300 per year, Napa enjoys a solid income profile, though not as far above the statewide norm as some other parts of the Bay Area region. Napa County is somewhat 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 0.8 percent in 2014. We project continued modest growth going forward, though we expect household growth to outpace population growth as millennials begin to move out and, more generally, household formation trends gravitate toward long-term norms.

Slow Growth Future: Growth projections translate into only about 1,000 new Napa County residents annually over the next few years and about 500 new households annually.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 61,400 60,600 61,200 63,500 66,500 69,200 71,200 73,200 74,700 75,700 Change -4,000 -800 600 2,300 3,000 2,700 2,000 2,000 1,500 1,000 Change Rate -6.1% -1.3% 1.0% 3.8% 4.7% 4.1% 2.9% 2.8% 2.0% 1.3%Median Income $63,875 $63,511 $64,533 $67,217 $70,914 $73,277 $75,574 $77,894 $81,030 $84,104 Change Rate -2.8% -0.6% 1.6% 4.2% 5.5% 3.3% 3.1% 3.1% 4.0% 3.8%


Jobs and Median Income Trends and Projections - Napa County


Change 1,200 1,500 1,200 1,100 1,400 1,100 1,000 1,000 1,000 900

Change Rate 0.9% 1.1% 0.9% 0.8% 1.0% 0.8% 0.7% 0.7% 0.7% 0.6%

Household Total 48,500 49,000 49,300 49,600 49,900 50,200 50,600 51,100 51,600 52,100

Change 300 500 300 300 300 300 400 500 500 500


Population and Households Trends and Projections - Napa County

pacificunion.com

http://docs.pacunion.com/2015q4/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 7.6 percent over the last year, which has slowed from double-digit upticks in 2012 and 2013. JBREC forecasts slower price growth over the next few years, from 1.8 percent to 3.6 percent.

Slightly Improving Volumes: We expect 2015 resale volume to be about 12 percent higher than 2014. Volumes will increase only marginally over the next few years, about 3-4 percent annually. This will put Napa at a level in line with the long-term norm of about 1,250 to 1,450 sales per year.

Investors Slowing Down: Investors are purchasing about 24 percent of homes in the Napa market, down from 36 percent at the peak at the end of 2012.

Affordability: Though low mortgage rates help keep affordability slightly below a historically normal level in Napa, rising prices will continue to impact affordability. The median-income household would need to pay 43 percent of their income to buy the median-priced resale home and about 68 percent to afford the median-priced new home.

Expensive New Homes: New home prices fluctuate drastically due to low supply. The current median price is $854,000, compared to last year at $770,000.

MARKET COLOR

Uptick in Activity?: Napa has always been and will always be a supply-constrained new home market. Resale inventory is also extremely low. There have been some recent additions to the housing market, though, and they have generally been well-received. Richmond American opened Silverado Trail, and Lafferty opened Riva Reserve early this year, while Taylor Morrison recently opened Chesapeake Village with relatively affordable attached townhomes. Lafferty will soon open an upscale neighborhood in northwest Napa, and there are some other infill communities likely coming soon. Still, these communities have barely whet the appetites of Napa buyers. The 945-home, mixed-use Napa Pipe development just south of Napa, is the only major community on the near-term horizon, still winding its way through the entitlement process.

Living the Life in Napa: Though incomes in Napa are generally middle to upper-middle class, there is an extraordinary amount of wealth in the area due to its cachet as wine country and its proximity to the affluent core of the Bay Area. Napa is particularly attractive to Bay Area households as a retiree or vacation-home option. An example of this impact is that Napa has the fourth-highest concentration of $1 million-plus homes in the nation (as a percentage of total listings). However, since Napa’s high-end market is closely tied to the fortunes of San Francisco and Silicon Valley, it will be heavily impacted by economic and housing market trends in those areas.




Burns Home Value Index Trends and Projections - Napa County

pacificunion.com


Patrick [email protected] Van Ness Avenue | San Francisco, CA 94109

San FranciscoQuarterly Real Estate ReportQ4 2015


San Francisco: Q4 ResultsSan Francisco has been a seller’s market for several years now, but by the fourth quarter of 2015, the landscape had slightly shifted in the direction of a more balanced market – for both condominiums and single-family homes. Sales prices kept rising, to be sure, but not at the pace of past quarters. And while many homes still commanded multiple offers, overbids have also slowed. Available homes stayed on the market a bit longer than in previous quarters before going into escrow. December closed out a very strong quarter, though the third quarter was stronger.

But this may be the most surprising fact: More than a few San Francisco homes sold for below their asking prices in the fourth quarter – a phenomenon virtually unheard of at the start of 2015. The inventory of available homes remained tight, but we saw signs that owners are gradually more willing to put their homes on the market.

Looking Forward: San Francisco remains an exceptionally desirable market with a booming regional economy – two factors that ensure strong real estate activity in the months ahead. El Niño storms could delay some sales, but only briefly, and interest rates are forecast to remain exceptionally low far into 2016.

San Franciscopacificunion.com

Single-Family Homes – Median Sales Price

Condominiums – Median Sales Price

$1,075,000 $975,000

$1,115,000

$1,250,000 $1,307,500

$1,400,000 $1,300,000 $1,280,000 $1,225,444

$1,155,000

$1,280,000 $1,285,000 $1,203,000

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000

$1,500,000


Source: Terradatum, January 7, 2016. Median sales price for single-family homes in San Francisco.

$960,012 $885,000

$1,100,000 $1,105,000 $1,069,000

$1,138,000 $1,105,000

$1,102,563 $1,050,000 $1,030,000

$1,111,500 $1,150,000 $1,100,000

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000


Source: Terradatum, January 7, 2016. Median sales price for condominiums in San Francisco.

pacificunion.com

http://docs.pacunion.com/2015q4/sanfran_chart1_mediansalesprice_sfh.pdf

http://docs.pacunion.com/2015q4/sanfran_chart2_mediansalesprice_condos.pdf


Single-Family Homes – Months’ Supply of Inventory

1.0

2.4 2.6

1.7

1.5 1.7 1.6 1.5

1.8

2.5

1.5 1.3

0.7

0.1

0.6

1.1

1.6

2.1

2.6

3.1


Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in San Francisco.

Single-Family Homes – Average Days on the Market

39

47

31 27 26

24

29 28 29 29 28 28

33

0

5

10

15

20

25

30

35

40

45

50


Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in San Francisco.

Condominiums – Months’ Supply of Inventory

1.1

2.3 2.2

1.3 1.3 1.3 1.3 1.4

1.8

3.0

1.8 1.7

0.8

0.1

0.6

1.1

1.6

2.1

2.6

3.1

3.6


Source: Terradatum, January 7, 2016. Months' supply of inventory for condominiums in San Francisco.

pacificunion.com

http://docs.pacunion.com/2015q4/sanfran_chart3_msi_sfh.pdf

http://docs.pacunion.com/2015q4/sanfran_chart5_avgdom_sfh.pdf

http://docs.pacunion.com/2015q4/sanfran_chart4_msi_condos.pdf


Condominiums – Average Days on the Market

50 54

29 31 34 32

28 29 27

36

27

34

42

0

10

20

30

40

50

60


Source: Terradatum, January 7, 2016. Average days on market for condominiums sold in San Francisco.

Condominiums – Percentage of Properties Under Contract

30.7% 30.5%

38.5%

44.2%

40.3% 39.6% 41.3% 38.8%

30.6% 31.6%

36.5% 35.0%

21.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Source: Terradatum, January 7, 2016. Percentage of condominiums under contract in San Francisco.

Single-Family Homes – Percentage of Properties Under Contract

32.3%

27.9% 29.1%

41.2%

37.2% 38.7%

35.4% 35.5%

31.8% 33.8%

39.3% 38.1%

27.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in San Francisco.

pacificunion.com

http://docs.pacunion.com/2015q4/sanfran_chart6_avgdom_condos.pdf

http://docs.pacunion.com/2015q4/sanfran_chart8_percentundercontract_condos.pdf

http://docs.pacunion.com/2015q4/sanfran_chart7_percentundercontract_sfh.pdf


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

105.3% 104.8%

110.9% 109.6%

112.7%

109.8%

113.9% 112.2%

110.8%

116.4%

110.4%

107.2% 106.9%

98%

100%

102%

104%

106%

108%

110%

112%

114%

116%

118%


Source: Terradatum, January 7, 2016. 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

101.4%

103.3%

106.8% 108.4%

107.2%

109.3% 108.3%

106.5%

108.2% 109.2%

108.2%

105.7%

102.8%

96%

98%

100%

102%

104%

106%

108%

110%


Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for condominiums under contract in San Francisco.

pacificunion.com

http://docs.pacunion.com/2015q4/sanfran_chart9_salesprice_originalprice_sfh.pdf

http://docs.pacunion.com/2015q4/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.


pacificunion.com



District 1 110,106,919$ 72,780,000$ -34% 61 42 -31% 29 30 3% 1,540,000$ 1,500,000$ -3%

District 2 131,471,834$ 125,847,887$ -4% 125 108 -14% 36 28 -22% 950,000$ 1,162,500$ 22%

District 3 34,800,388$ 54,825,288$ 58% 42 54 29% 54 30 -44% 792,500$ 964,000$ 22%

District 4 132,596,745$ 165,106,352$ 25% 97 104 7% 26 28 8% 1,250,000$ 1,417,500$ 13%

District 5 200,051,899$ 183,722,976$ -8% 94 81 -14% 27 27 0% 1,781,000$ 1,895,000$ 6%

District 6 36,463,000$ 26,990,000$ -26% 15 10 -33% 27 31 15% 2,195,000$ 2,250,000$ 3%

District 7 187,752,971$ 137,075,888$ -27% 39 26 -33% 40 38 -5% 3,800,000$ 4,225,000$ 11%

District 8 11,465,000$ 35,406,000$ 209% 5 6 20% 36 51 42% 2,050,000$ 4,900,000$ 139%

District 9 88,634,000$ 105,853,685$ 19% 67 73 9% 27 24 -11% 1,265,000$ 1,317,500$ 4%

District 10 95,601,498$ 98,881,500$ 3% 130 116 -11% 39 35 -10% 712,950$ 844,000$ 18%

Source: Terradatum, January 7, 2016. Data is for single-family homes in San Francisco districts.

San Francisco Snapshot: SFH, Q4 2015 vs. Q4 2014



District 1 42,109,500$ 46,348,500$ 10% 34 41 21% 34 40 18% 1,260,000$ 1,100,000$ -13%

District 2 7,725,000$ 11,849,500$ 53% 9 12 33% 31 62 100% 875,000$ 945,000$ 8%

District 3 4,475,000$ 4,075,000$ -9% 9 7 -22% 37 30 -19% 530,000$ 542,000$ 2%

District 4 9,459,948$ 7,067,538$ -25% 16 10 -38% 35 28 -20% 569,500$ 682,500$ 20%

District 5 97,644,500$ 132,138,181$ 35% 83 104 25% 34 27 -21% 1,175,000$ 1,250,063$ 6%

District 6 76,353,281$ 76,040,384$ 0% 74 58 -22% 51 29 -43% 1,070,000$ 1,277,500$ 19%

District 7 125,422,667$ 94,003,329$ -25% 81 56 -31% 32 28 -13% 1,350,000$ 1,502,500$ 11%

District 8 91,693,651$ 110,097,688$ 20% 85 96 13% 40 37 -8% 860,000$ 962,500$ 12%

District 9 225,682,215$ 237,147,396$ 5% 214 192 -10% 41 38 -7% 952,444$ 1,142,000$ 20%

District 10 8,337,673$ 7,171,534$ -14% 16 11 -31% 80 37 -54% 535,500$ 680,000$ 27%

Source: Terradatum, January 7, 2016. Data is for condominiums in San Francisco districts.

San Francisco Snapshot: Condos, Q4 2015 vs. Q4 2014


pacificunion.com

http://docs.pacunion.com/2015q4/sanfran_chart11_sect2_districts_sfh.pdf

http://docs.pacunion.com/2015q4/sanfran_chart12_sect2_districts_condos.pdf



Under $1 million 218,586,834$ 145,127,587$ -34% 284 178 -37% 40 33 -18% 775,000$ 836,500$ 8%

$1 million - $3 million 532,491,450$ 613,978,101$ 15% 335 394 18% 28 27 -4% 1,425,000$ 1,422,500$ 0%

Over $3 million 277,865,970$ 247,383,888$ -11% 56 48 -14% 32 36 13% 3,883,500$ 4,275,000$ 10%

San Francisco Price Range Snapshot: SFH, Q4 2015 vs. Q4 2014

Source: Terradatum, January 7, 2016. Data is for single-family homes in San Francisco County.



Under $1 million 214,796,540$ 172,598,210$ -20% 307 225 -27% 48 38 -21% 730,000$ 788,000$ 8%

$1 million - $2 million 376,461,395$ 426,000,840$ 13% 276 315 14% 32 31 -3% 1,310,000$ 1,300,000$ -1%

Over $2 million 97,645,500$ 127,340,000$ 30% 38 47 24% 42 37 -12% 2,452,500$ 2,500,000$ 2%

Source: Terradatum, January 7, 2016. Data is for condominiums in San Francisco County.

San Francisco Price Range Snapshot: Condos, Q4 2015 vs. Q4 2014


pacificunion.com

http://docs.pacunion.com/2015q4/sanfran_chart13_sect2_prices_sfh.pdf

http://docs.pacunion.com/2015q4/sanfran_chart14_sect2_prices_condos.pdf


San Francisco County Housing and Economic Outlook

The movement of tech/software firms into the city attracting urban-oriented workers and the ongoing activity of overseas investors looking for opportunity have pushed San Francisco’s home prices ever higher. Though San Francisco will always be one of the most desirable, and thus one of the most expensive, places to live in the world, any substantial slowdown in the tech sector would have an almost immediate negative impact on prices.

THE ECONOMY

Great Job Growth: San Francisco County has long been the financial center of Northern California but is now also a tech/software hub. It is the most concentrated jobs node in the Bay Area with nearly 640,000 employed and over 86,000 net new jobs added over the last three years (2012-14). We project continued solid job increases through 2017, 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 – are key and have experienced tremendous growth over the last three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014.


Affluence: San Francisco County is very affluent, evidenced by its 2014 median household income of $80,200, though wealth disparities remain. Wage growth has been strong since 2012 and is projected to remain on an upward trend through 2018.

DEMOGRAPHICS

Steady Growth Ahead: San Francisco County is approaching a population of 863,000 and has over 362,000 households. Recent growth has been fairly strong for such a small and mature market, and is expected to grow steadily over the next few years.

By the Numbers: Growth projections translate into 8,500 to 10,000 new residents annually in San Francisco County, or about 4,500 to 4,900 new households each year. Household sizes are typically smaller than the norm in more suburban areas.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 541,100 539,000 552,900 582,900 611,400 639,200 664,800 676,100 681,500 678,800 Change -24,800 -2,100 13,900 30,000 28,500 27,800 25,600 11,300 5,400 -2,700 Change Rate -4.4% -0.4% 2.6% 5.4% 4.9% 4.5% 4.0% 1.7% 0.8% -0.4%Median Income $69,569 $69,894 $70,840 $73,609 $77,485 $80,226 $82,324 $87,197 $93,234 $99,714 Change Rate -2.0% 0.5% 1.4% 3.9% 5.3% 3.5% 2.6% 5.9% 6.9% 7.0%

Jobs and Median Income Trends and Projections - San Francisco County



Change 10,800 3,900 10,400 13,500 11,400 11,300 10,000 9,500 9,000 8,500

Change Rate 1.4% 0.5% 1.3% 1.6% 1.4% 1.3% 1.2% 1.1% 1.0% 1.0%

Household Total 344,000 346,100 349,400 354,400 357,900 362,300 366,800 371,700 376,500 381,300

Change 5,000 2,100 3,300 5,000 3,500 4,400 4,500 4,900 4,800 4,800

Change Rate 1.5% 0.6% 1.0% 1.4% 1.0% 1.2% 1.2% 1.3% 1.3% 1.3%

Population and Households Trends and Projections - San Francisco County


pacificunion.com

http://docs.pacunion.com/2015q4/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 is up 6.9 percent over the last year. We expect appreciation to slow in coming years, particularly by about 2018.

Consistent Resale Volumes: There have been over 5,500 resales in San Francisco County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017.

Investors Still Here: San Francisco MSA investor activity has gradually receded, but remains at about 21 percent, down from a high of over 24 percent in early 2013. While never reaching 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 notably from China.

Affordability Decreasing: Though mortgage rates remain historically low, the San Francisco MSA’s current affordability level is considerably worse than its long-term norm. Within San Francisco County, a household earning the median income would need to pay 87 percent of their income to buy a median-priced resale home and 80 percent for a 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 level of potential supply and a ton of supply on the way near-term, but demand is massive and supply was stagnant for years. These conditions, combined with high incomes, mean new home prices are always high despite small home sizes and high densities. Over the last 12 months, new home prices have fluctuated wildly depending on what sold in any given month, but have centered just above $1,100,000. This compares to a new home median for 2014 of $1,038,000 (current is up 6 percent).

MARKET COLOR

Supply Relief: By one account, there are over 1,300 condominiums under construction in San Francisco and over 4,000 new apartments. This alone will be a comparatively major increase in the city’s supply. There are also, however, another 6,750-plus condos and over 6,200 apartments either approved, under review, or in the conceptual stage, and thousands more units with a less certain status. Given the nature of high-density urban development, anything not being built could vanish overnight, but this is still a tremendous amount of supply. This activity represents a massive collective bet in the continued good fortune of San Francisco.

Construction Begins at SF Transit Center: A new Transbay development will help revitalize public transit. Construction has started on a transit center just south of the Financial District. Plans call for the 1 million-square-foot facility to accommodate 100,000 passengers daily. The area encompassing the center will feature 4,400 new housing units, 1,200 of which will be at affordable pricing.

Rents Continue to Surge: With affordability worsening in the for-sale sector, people are flocking to the rental market. The average rental price in the San Francisco MSA is currently $3,015, an increase of 9.2 percent year over year, and nearly double the average rent in 2004 of $1,594.





pacificunion.com


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

Silicon ValleyQuarterly Real Estate ReportQ4 2015


Silicon Valley: Q4 ResultsAfter a strong third quarter and a continued shortage of available homes, we expected real estate activity to slow down in the fourth quarter in Pacific Union’s Silicon Valley region. Instead, sellers returned to the market, and sales rose in October and November – and in December, too, when we had expected them to taper off.

Homes sold quickly, although most received fewer bids than earlier in the year. Sales prices continued to climb, even as the region made headlines for some of the priciest neighborhoods in the nation. Buyers were plentiful at all price points, even if they were more cautious with their offers than in the past.

Looking Forward: Strong fourth-quarter sales bode well for the first quarter of 2016, although available homes may be hard to find in January after the December sales surge. There will be no shortage of buyers, attracted by Silicon Valley’s charming communities and the expanding workforces of the region’s world-famous tech companies. Some sales could be delayed by the coming El Niño rains, but not for long. Interest rates are expected to remain at historically low levels far into 2016.

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


$2,399,100 $2,751,000

$2,800,000 $2,800,000

$2,665,000 $2,625,000 $2,700,000 $2,700,000

$2,750,000

$3,280,000

$2,750,000 $2,612,500 $2,641,500

$100,000

$600,000

$1,100,000

$1,600,000

$2,100,000

$2,600,000

$3,100,000

$3,600,000

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. 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.

1.2

2.2

1.9

1.4 1.3 1.2 1.3 1.2

1.4

2.5

2.0 1.9

0.9

0.1

0.6

1.1

1.6

2.1

2.6

3.1

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in these SIlicon Valley communities:


pacificunion.com

http://docs.pacunion.com/2015q4/siliconvalley_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/siliconvalley_chart2_msi.pdf



37 40

25 26

19 21 22

20 23 24

18

24

36

0

5

10

15

20

25

30

35

40

45

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in these Silicon Valley communities:



99.1% 99.5%

106.3% 106.1% 106.5%

104.0% 104.9%

103.0% 104.2% 104.4%

104.7%

99.4%

96.8%

90%

92%

94%

96%

98%

100%

102%

104%

106%

108%

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in these Silicon Valley communities:



25.7%

31.0%

38.7%

45.4% 44.3% 42.2%

36.4%

41.9%

30.6% 29.1%

33.2%

27.2%

20.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in these Silicon Valley communities:


pacificunion.com

http://docs.pacunion.com/2015q4/siliconvalley_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/siliconvalley_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2015q4/siliconvalley_chart4_percentundercontract.pdf


A Closer Look at Silicon Valley


Atherton 141,295,000$ 117,579,000$ -17% 24 13 -46% 44 67 52% 4,937,500$ 6,000,000$ 22%

Los Altos* 166,856,601$ 176,887,710$ 6% 60 63 5% 17 18 6% 2,505,001$ 2,700,000$ 8%

Los Altos Hills 112,881,125$ 57,466,000$ -49% 28 15 -46% 37 25 -32% 3,575,000$ 3,550,000$ -1%

Menlo Park** 177,783,000$ 141,089,950$ -21% 84 60 -29% 26 21 -19% 2,000,000$ 1,917,250$ -4%

Palo Alto 230,223,110$ 227,259,250$ -1% 85 77 -9% 18 20 11% 2,500,000$ 2,607,000$ 4%

Portola Valley 42,021,000$ 34,845,000$ -17% 18 14 -22% 47 43 -9% 2,292,500$ 2,612,500$ 14%

Woodside 60,305,000$ 77,670,151$ 29% 20 22 10% 70 42 -40% 2,055,500$ 2,950,000$ 44%

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Silicon Valley cities. *Excludes County area **Excludes east of U.S. 101

Silicon Valley Snapshot: Q4 2015 vs. Q4 2014


pacificunion.com

http://docs.pacunion.com/2015q4/siliconvalley_chart6_sect2_cities.pdf


Santa Clara County Housing and Economic Outlook

As long as the tech sector stays strong, it will fuel home prices and rents beyond the reach of most people living in Silicon Valley. Job and income growth remain sensational but are bound to slow. This will undoubtedly impact the housing market given how high prices have reached and how tech-fueled market demand has become.

THE ECONOMY

Jobs Still Surging: The county added a tremendous 43,000 net new jobs last year and should add nearly 54,500 more in 2015, pushing employment well over one million. We project job growth to ease in the coming years, but still remain strong through 2016 until going relatively stagnant in 2018.

Tech Key: For the San Jose MSA as a whole (which includes Santa Clara County and the far smaller San Benito County), education and health services and leisure and hospitality are important, but the high-paying professional and business services and information sectors are paramount with a combined 27 percent of total jobs. The tech sector is the engine that drives Silicon Valley and tech jobs are distributed throughout a variety of sectors.

Highly Employed Population: Only 3.7 percent of the labor pool in the county cannot find a suitable job.

Affluence: With a median income of $96,000 per year, Santa Clara County is one of the most affluent areas in the nation. Income growth has been robust in the past three years and is projected to maintain this trend through 2018.

DEMOGRAPHICS

Steady Growth, Potentially Slowing: Santa Clara County is a huge population hub with nearly 1.92 million residents in over 643,000 households by the end of 2015. Population growth has been fairly strong recently with an average of 1.4 percent annually since 2009 despite supply constraints due to lack of developable land and high land prices. Population growth may outpace the projections seen in the table below, particularly as more new rental developments come onto the market.

Pushed Out?: Growth projections translate into about 18,000 to 22,000 new residents annually in Santa Clara County, adding about 7,800 to 8,200 housing units to existing stock each year. Much of the county’s housing demand is exported to more outlying parts of the region due to high prices and lack of new supply.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 855,300 852,600 873,300 908,100 947,100 990,100 1,044,600 1,079,100 1,098,500 1,094,100 Change -56,000 -2,700 20,700 34,800 39,000 43,000 54,500 34,500 19,400 -4,400 Change Rate -6.1% -0.3% 2.4% 4.0% 4.3% 4.5% 5.5% 3.3% 1.8% -0.4%Median Income $85,162 $84,210 $84,919 $87,813 $92,014 $95,990 $100,646 $106,377 $112,933 $120,089 Change Rate -3.1% -1.1% 0.8% 3.4% 4.8% 4.3% 4.9% 5.7% 6.2% 6.3%

Jobs and Median Income Trends and Projections - Santa Clara County


2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PPopulation Total 1,765,100 1,786,900 1,814,100 1,841,100 1,871,100 1,894,600 1,916,600 1,936,600 1,955,600 1,973,600

Change 24,200 21,800 27,200 27,000 30,000 23,500 22,000 20,000 19,000 18,000

Change Rate 1.4% 1.2% 1.5% 1.5% 1.6% 1.3% 1.2% 1.0% 1.0% 0.9%

Household Total 598,100 606,000 613,200 621,000 628,700 635,800 643,600 651,800 659,900 668,000

Change 8,700 7,900 7,200 7,800 7,700 7,100 7,800 8,200 8,100 8,100

Change Rate 1.5% 1.3% 1.2% 1.3% 1.2% 1.1% 1.2% 1.3% 1.2% 1.2%

Population and Households Trends and Projections - Santa Clara County


pacificunion.com

http://docs.pacunion.com/2015q4/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 11.9 percent over the last year. The MSA experienced growth rates of over 9.5 percent annually since 2012. The projected BHVI increases will begin to normalize in the near-term and level off by 2018.

Consistent Resales Volumes: Over the past 12 months, Santa Clara County has supported +/- 18,100 resales. We forecast increases over the next three years to range from 2.0-6.4 percent. Though these 17,500-20,000 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 1Q 2013 peak of 20 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 56 percent of their income to buy a median-priced resale home and 49 percent for a median-priced new home (the discrepancy is due to new home densities being 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 last 12 months, the median new home price has centered at about $810,000. This compares to a full year 2014 median new home price of $749,000. In the heart of Silicon Valley (such as Sunnyvale and Mountain View), new townhomes will typically sell for over $1 million.

MARKET COLOR

Venture Capital Approaching Peak Levels: Venture capital is the beating heart of Silicon Valley and is now reaching peak levels only experienced during the tech boom of late 1990s and early 2000s. With $25.3 billion in funding in the Bay Area last year, it is not far from the $33.4 billion in investments from the lucrative year of 2000. While the number of deals is approximately half of what was experienced during the peak, the size of the deals are what matter most. Venture-capital investments in 2014 averaged $17.4 million and are trending up in Q1 2015, exceeding the former peak of $15.5 million in 2000. This shows VCs are being more selective with their investments for now, while concentrating larger capital in each deal.




Burns Home Value Index Trends and Projections - San Jose MSA

pacificunion.com



San Mateo County Housing and Economic Outlook

Situated between two of the strongest housing markets and job hubs in the country – San Francisco and Santa Clara – San Mateo County offers suburban and urban housing and commute options in an affluent and appealing environment.

THE ECONOMY

Great Job Growth: Though easily commutable to San Francisco and Silicon Valley – and ideal for split commutes – San Mateo County is also a major employment node in its own right. About 17,300 net new jobs were added last year, though we project that employment growth will begin to slow.

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 three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014.


Affluence: San Mateo County is highly affluent, supporting a 2014 median household income of $94,800 per year. Wage growth has been strong since 2012 and is forecast to remain strong through 2018.

DEMOGRAPHICS

Steady Growth Ahead: San Mateo County is home to about three-quarters of a million people in nearly 270,000 households. Population growth is forecast to ease somewhat over the next few years, but household growth should be higher as household formations trend back toward longer-term norms.

By the Numbers: Growth projections translate into about 8,000 new residents annually in San Mateo County, or about 3,000 to 3,500 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.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 322,300 315,900 324,500 338,000 353,200 370,500 385,300 391,900 395,000 393,400 Change -18,200 -6,400 8,600 13,500 15,200 17,300 14,800 6,600 3,100 -1,600 Change Rate -5.3% -2.0% 2.7% 4.2% 4.5% 4.9% 4.0% 1.7% 0.8% -0.4%Median Income $83,493 $82,196 $83,373 $86,694 $91,322 $94,752 $97,617 $103,442 $110,670 $118,353 Change Rate -2.1% -1.6% 1.4% 4.0% 5.3% 3.8% 3.0% 6.0% 7.0% 6.9%


Jobs and Median Income Trends and Projections - San Mateo County


Change 9,800 6,300 9,500 11,300 9,800 8,100 8,500 8,000 7,500 7,300

Change Rate 1.4% 0.9% 1.3% 1.6% 1.3% 1.1% 1.1% 1.0% 1.0% 0.9%

Household Total 256,100 258,400 260,900 264,400 266,800 269,400 272,600 276,100 279,500 282,900

Change 3,500 2,200 2,600 3,500 2,400 2,500 3,200 3,500 3,400 3,400


Population and Households Trends and Projections - San Mateo County

pacificunion.com

http://docs.pacunion.com/2015q4/siliconvalley_sm_jbrec_1.pdf



THE HOUSING MARKET


Consistent Resale Volumes: There have been over 7,100 resales in San Mateo County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017.

Affordability Decreasing: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific to San Mateo County, a household earning the median income would need to pay 67 percent of their income to buy a median-priced resale home and 71 percent for a 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 last year, the median new home price is $1,161,000 and primarily for attached product.

MARKET COLOR


A Spark in Daly City: In the ordinarily nonexistent new home market of Daly City, there have been several housing projects that have either come online recently or are expected to enter the market soon. Less than 10 miles south of core San Francisco and 25 miles north of Palo Alto, Daly City is regionally one of the most desirable locations imaginable. There are currently two active new home projects (Lennar and Warmington), selling small-lot detached homes for $1 million plus in Daly City, a figure most market observers would have thought impossible even a few years ago.





pacificunion.com


Mid-Peninsulapacificunion.com

Median Sales Price

$1,462,500 $1,675,700

$1,490,000 $1,590,000 $1,688,000

$1,400,000

$1,600,000

$1,800,000

$1,501,000 $1,575,000

$1,550,000 $1,530,000

$1,781,500

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

$1,300,000

$1,500,000

$1,700,000

$1,900,000

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. 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).


28

47

32

21 21

14

21 21 19

22

34

25

19

0

5

10

15

20

25

30

35

40

45

50

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in these San Mateo County communities:



0.7

2.3

2.0

0.9 1.1

1.0 0.9

1.0 1.2

1.6

1.2

0.9 0.7

0.1

0.6

1.1

1.6

2.1

2.6

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in these San Mateo County communities:


pacificunion.com

http://docs.pacunion.com/2015q4/midpen_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/midpen_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/midpen_chart2_msi.pdf

Mid-Peninsulapacificunion.com


26.0%

31.7%

41.8%

53.3%

47.2% 50.8% 50.0% 46.6%

36.7%

42.0% 42.9% 43.5%

37.8%

0%

10%

20%

30%

40%

50%

60%

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in these San Mateo County communities:


A Closer Look at the Mid-Peninsula


Burlingame* 92,769,888$ 78,607,000$ -15% 52 35 -33% 28 15 -46% 1,700,000$ 2,035,000$ 20%

Hillsborough 117,599,500$ 110,748,000$ -6% 31 23 -26% 64 75 17% 3,050,000$ 4,625,000$ 52%

San Mateo** 187,481,451$ 227,896,388$ 22% 148 155 5% 21 22 5% 1,093,000$ 1,405,000$ 29%

Source: Terradatum, January 7, 2016. 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 2015 vs. Q4 2014



101.2%

97.5%

102.7%

107.8% 107.3%

110.6%

106.7% 105.3% 105.3%

100.9% 101.7% 101.1%

103.0%

90%

95%

100%

105%

110%

115%

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in these San Mateo County communities:


pacificunion.com

http://docs.pacunion.com/2015q4/midpen_chart4_percentundercontract.pdf

http://docs.pacunion.com/2015q4/midpen_chart6_sect2_cities.pdf

http://docs.pacunion.com/2015q4/midpen_chart5_salesprice_originalprice.pdf


San Mateo County Housing and Economic Outlook

Situated between two of the strongest housing markets and job hubs in the country – San Francisco and Santa Clara – San Mateo County offers suburban and urban housing and commute options in an affluent and appealing environment.

THE ECONOMY

Great Job Growth: Though easily commutable to San Francisco and Silicon Valley – and ideal for split commutes – San Mateo County is also a major employment node in its own right. About 17,300 net new jobs were added last year, though we project that employment growth will begin to slow.

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 three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014.


Affluence: San Mateo County is highly affluent, supporting a 2014 median household income of $94,800 per year. Wage growth has been strong since 2012 and is forecast to remain strong through 2018.

DEMOGRAPHICS

Steady Growth Ahead: San Mateo County is home to about three-quarters of a million people in nearly 270,000 households. Population growth is forecast to ease somewhat over the next few years, but household growth should be higher as household formations trend back toward longer-term norms.

By the Numbers: Growth projections translate into about 8,000 new residents annually in San Mateo County, or about 3,000 to 3,500 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.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 322,300 315,900 324,500 338,000 353,200 370,500 385,300 391,900 395,000 393,400 Change -18,200 -6,400 8,600 13,500 15,200 17,300 14,800 6,600 3,100 -1,600 Change Rate -5.3% -2.0% 2.7% 4.2% 4.5% 4.9% 4.0% 1.7% 0.8% -0.4%Median Income $83,493 $82,196 $83,373 $86,694 $91,322 $94,752 $97,617 $103,442 $110,670 $118,353 Change Rate -2.1% -1.6% 1.4% 4.0% 5.3% 3.8% 3.0% 6.0% 7.0% 6.9%


Jobs and Median Income Trends and Projections - San Mateo County


Change 9,800 6,300 9,500 11,300 9,800 8,100 8,500 8,000 7,500 7,300

Change Rate 1.4% 0.9% 1.3% 1.6% 1.3% 1.1% 1.1% 1.0% 1.0% 0.9%

Household Total 256,100 258,400 260,900 264,400 266,800 269,400 272,600 276,100 279,500 282,900

Change 3,500 2,200 2,600 3,500 2,400 2,500 3,200 3,500 3,400 3,400


Population and Households Trends and Projections - San Mateo County

pacificunion.com




THE HOUSING MARKET


Consistent Resale Volumes: There have been over 7,100 resales in San Mateo County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017.

Affordability Decreasing: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific to San Mateo County, a household earning the median income would need to pay 67 percent of their income to buy a median-priced resale home and 71 percent for a 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 last year, the median new home price is $1,161,000 and primarily for attached product.

MARKET COLOR


A Spark in Daly City: In the ordinarily nonexistent new home market of Daly City, there have been several housing projects that have either come online recently or are expected to enter the market soon. Less than 10 miles south of core San Francisco and 25 miles north of Palo Alto, Daly City is regionally one of the most desirable locations imaginable. There are currently two active new home projects (Lennar and Warmington), selling small-lot detached homes for $1 million plus in Daly City, a figure most market observers would have thought impossible even a few years ago.





pacificunion.com


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

Sonoma CountyQuarterly Real Estate ReportQ4 2015


Sonoma County: Q4 ResultsPacific Union’s Sonoma County region moved much closer to a balanced real estate market in 2015 after several years tilted decidedly in sellers’ favor. Buyers were reluctant to overpay for homes and submitted fewer multiple offers, and bidding wars usually involved lower-priced homes. It was a buyer’s market for multimillion-dollar homes, with many properties sitting on the market for extended periods and selling only after price reductions. Inventory levels rose during the first three quarters of the year before pulling back in the fourth.

Sales prices jumped higher in the first quarter of the year before moderating for the next three quarters. There was no shortage of homebuyers in the region, with the strongest demand – and scarcest inventory – seen in Healdsburg and Sebastopol.

Looking Forward: Many Sonoma County sellers pulled their homes off the market at the end of the fourth quarter, and we expect sales activity to pick up once that inventory is back in the picture. Spring is always a busy season for real estate, although El Niño storms could delay some sales. The Federal Reserve’s recent decision to raise interest rates, which remain exceptionally low by historical levels, may actually boost sales by motivating indecisive buyers.

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


$515,000 $479,000 $492,000

$510,000 $536,000 $545,000 $546,000 $545,000 $541,000 $541,500

$529,750 $527,000 $549,450

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$550,000

$600,000


Source: Terradatum, January 7, 2016. Median sales price for single-family homes and farms/ranches in Sonoma County.

1.6

2.5 2.6 2.3

1.8 1.9 1.7 1.7

2.1

2.5

2.1 1.9

1.3

0.1

0.6

1.1

1.6

2.1

2.6

3.1


Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes and farms/ranches in Sonoma County.

pacificunion.com

http://docs.pacunion.com/2015q4/sonomacounty_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/sonomacounty_chart2_msi.pdf



80

89 89

66

56 63

56 59 60 60 60 64

73

0

10

20

30

40

50

60

70

80

90

100


Source: Terradatum, January 7, 2016. Average days on market for single-family homes and farms/ranches sold in Sonoma County.


93.8%

95.0% 95.3%

98.5%

99.6%

96.9%

99.5%

97.9%

95.1%

97.7% 96.7% 96.5%

93.7%

90%

91%

92%

93%

94%

95%

96%

97%

98%

99%

100%


Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes and farms/ranches under contract in Sonoma County.


23.8%

29.7% 31.1%

36.5% 36.8% 34.3% 34.6%

31.4%

28.2% 28.0%

31.4% 30.6% 27.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%


Source: Terradatum, January 7, 2016. Percentage of single-family homes and farms/ranches under contract in Sonoma County.

pacificunion.com

http://docs.pacunion.com/2015q4/sonomacounty_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/sonomacounty_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2015q4/sonomacounty_chart4_percentundercontract.pdf

A Closer Look at Sonoma County


Cloverdale 12,484,900$ 15,808,900$ 27% 34 36 6% 89 64 -28% 350,000$ 430,500$ 23%

Healdsburg 39,504,095$ 39,499,080$ 0% 42 47 12% 111 75 -32% 619,500$ 700,000$ 13%

Petaluma 72,726,473$ 100,881,808$ 39% 120 146 22% 61 62 2% 540,025$ 600,000$ 11%

Rohnert Park 31,256,400$ 35,623,380$ 14% 71 73 3% 46 49 7% 430,000$ 470,000$ 9%

Santa Rosa 260,224,001$ 286,960,659$ 10% 462 515 11% 65 63 -3% 456,510$ 489,900$ 7%

Sebastopol 56,962,833$ 38,383,678$ -33% 63 47 -25% 67 60 -10% 720,000$ 748,000$ 4%

Windsor 34,807,450$ 47,099,855$ 35% 66 74 12% 66 56 -15% 482,000$ 529,475$ 10%

Source: Terradatum, January 7, 2016. Data is for single-family homes and farms/ranches in selected Sonoma County cities.

Sonoma County Snapshot: Q4 2015 vs. Q4 2014



Under $1 million 528,526,641$ 592,550,488$ 12% 1037 1,094 5% 71 61 -14% 470,000$ 515,000$ 10%

$1 million and over 178,193,890$ 176,309,524$ -1% 106 101 -5% 103 114 11% 1,322,250$ 1,349,500$ 2%

Source: Terradatum, January 7, 2016. Data is for single-family homes and farms/ranches in selected Sonoma County cities.

Sonoma County Price Range Snapshot: Q4 2015 vs. Q4 2014



http://docs.pacunion.com/2015q4/sonomacounty_chart6_sect2_cities.pdf

http://docs.pacunion.com/2015q4/sonomacounty_chart7_sect2_prices.pdf

pacificunion.com


Sonoma County Housing and Economic Outlook

Though most residents work locally or commute into San Francisco or the Peninsula, net worth also drives the second-home and retiree markets in Sonoma, which are critical. We are optimistic about retirement opportunities in Sonoma particularly as the growth in households reaching their 60s continues.

THE ECONOMY

Solid Job Growth: Sonoma County added 8,400 net new jobs last year and is projected to add 4,400 this year, pushing total jobs to over 196,000. The 2015 figure would be a solid 2.3 percent improvement from last year, with similar rates projected through 2016 before we expect job growth to slow.

Tourism and Some Tech: Tourism-based leisure and hospitality jobs represent about 13 percent of total jobs in Sonoma. Professional and business services, trade, transportation and utilities, and government are also key sectors within this market.


Middle Class: At $62,000 per year, Sonoma supports an essentially middle-class income profile, though there are many higher-income professionals. Substantial housing demand, however, also comes from the more affluent San Francisco.

DEMOGRAPHICS

Steady Growth: Sonoma is home to about half a million residents. Population growth is modest, near 1.0 percent in recent years, with household growth slightly lower. We project slow and steady population growth at 1.0 percent annually going forward. Household growth, however, should outpace population growth as household formation trends return to long-term norms.

Continuity: Growth projections translate into approximately 5,000 new Sonoma residents annually over the next few years, or about 2,100-2,500 new households each year.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 173,600 169,900 171,800 175,100 183,600 192,000 196,400 201,300 203,300 204,300 Change -14,600 -3,700 1,900 3,300 8,500 8,400 4,400 4,900 2,000 1,000 Change Rate -7.8% -2.1% 1.1% 1.9% 4.9% 4.6% 2.3% 2.5% 1.0% 0.5%Median Income $61,579 $59,697 $58,850 $59,520 $61,029 $61,646 $63,556 $65,543 $68,160 $70,724 Change Rate -3.9% -3.1% -1.4% 1.1% 2.5% 1.0% 3.1% 3.1% 4.0% 3.8%


Jobs and Median Income Trends and Projections - Sonoma County


Change 6,400 5,200 3,100 3,100 4,600 4,900 5,200 5,100 5,000 5,000

Change Rate 1.4% 1.1% 0.6% 0.6% 0.9% 1.0% 1.0% 1.0% 1.0% 1.0%

Household Total 183,700 186,100 186,700 187,500 188,500 190,100 192,200 194,600 197,000 199,500

Change 2,800 2,400 600 800 1,000 1,600 2,100 2,400 2,400 2,500


Population and Households Trends and Projections - Sonoma County

pacificunion.com

http://docs.pacunion.com/2015q4/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 8.8 percent over the last year, down from a remarkable 17.2 percent in 2013. JBREC forecasts more modest growth in this measure, ranging from 2.0 percent to 4.0 percent from 2016-18.

Consistent Resales Volumes: We project 2015 resale volume to come in at about 5 percent above 2014 with 6,400 sales. Sales should slowly increase to approximately 6,400-6,700 per year through 2018. 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 26 percent of the Sonoma market homes, down from the 33 percent at the peak in 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 48 percent of their income to buy a median-priced resale home and about 46 percent to afford a median-priced new home (the lower new home price due to typically higher new home densities).

Expensive and Uncommon New Homes: Limited new residential development translates into new home prices that often fluctuate, but typically average from the mid-$400s to the low-$500s. Over the last 12 months, the median new home price is about $483,000 countywide.

MARKET COLOR

Over 500 Jobs to Sonoma County: Fireman’s Fund Insurance Co. announced they were downsizing their current office in Novato to bring potentially up to 550 employees to a newer, smaller office complex located in Petaluma. As office rents in comparatively closer-in parts of the Bay Area, and even Marin County, continue to increase, some businesses will opt for lower rents in more outlying markets.

Vacation Rentals Hurting Housing Inventory: Since 2011, Sonoma County has issued over 1,000 permits for “whole-house vacation rentals,” while only constructing 495 new residential units. With a growing trend of a “sharing economy,” activity has flourished for such websites as Airbnb. Currently there are hundreds of Sonoma County short-term rentals available, many of which lack proper permitting, that would otherwise be included in the resale inventory market. This trend further heightens the housing shortage while applying pressure to both resale pricing and rents in the area. From 2011 to 2014, existing home prices are up a total of 40 percent, while apartment rents have grown 29 percent.

SMART on Track: 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. SMART is currently testing track to check onboard systems and operational requirements, and is on schedule to open several stations in late 2016. SMART riders will need to catch a ferry in Larkspur to commute to San Francisco jobs, but it will certainly take pressure off Highway 101 and make Sonoma County homes more attractive to those working in San Francisco.




Burns Home Value Index Trends and Projections - Sonoma County

pacificunion.com


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

Sonoma ValleyQuarterly Real Estate ReportQ4 2015


Sonoma Valley: Q4 ResultsFourth-quarter activity in Pacific Union’s Sonoma Valley region could be titled “A Tale of Two Markets.” There were plenty of closings in September as the summer wound down, but a dearth of new transactions created a sluggish October. But in November, homebuyers woke up and quickly got busy. December, typically a slower month, was anything but, as buyers hustled to make and close deals before the end of the year.

Overall, the Sonoma Valley region ended 2015 just as it started: in a very strong state. Residential sales volume climbed higher, and the average sales price jumped considerably. Well-priced, attractive properties continued to draw buyers, but sellers found that they had to be careful in pricing their homes; some with unrealistic expectations found themselves sitting on properties far longer than they would have a year earlier.

Looking Forward: Sonoma Valley is an attractive destination, and employment remains strong across the Bay Area – two factors that bode well for future real estate activity. The impact of rising interest rates on home sales in the region remains to be seen, even though they are at historically low levels. Many Sonoma Valley sales involve second homes, and buyers’ discretionary income is often closely tied to the stock market, which is anticipated to be as volatile in 2016 as it was in 2015, and to some extent interest rates.

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


$589,500

$545,000 $540,000 $572,000

$756,000

$665,000 $637,000

$712,500

$640,000

$575,000

$740,000

$672,150

$759,000

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000


Source: Terradatum, January 7, 2016. Median sales price for single-family homes, condominiums, and farms/ranches in Sonoma Valley.

1.6

3.6 3.3 3.2

2.3 2.0

2.3 2.5

2.1

3.9

2.5 2.5

1.7

0.1

0.6

1.1

1.6

2.1

2.6

3.1

3.6

4.1


Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes, condominiums, and farms/ranches in Sonoma Valley.

pacificunion.com

http://docs.pacunion.com/2015q4/sonomavalley_chart1_mediansalesprice.pdf

http://docs.pacunion.com/2015q4/sonomavalley_chart2_msi.pdf



82 89

76

64 66

53 47

65 60 58

68 69

85

0

10

20

30

40

50

60

70

80

90

100


Source: Terradatum, January 7, 2016. Average days on market for single-family homes, condominiums, and farms/ranches sold in Sonoma Valley.


94.7% 95.2% 96.3% 96.7%

100.5%

95.4%

101.4%

96.7%

98.8% 98.5%

93.5%

96.5%

89.4%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

102%

104%


Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes, condominiums, and farms/ranches under contract in Sonoma Valley.


16.8%

22.4%

29.9%

32.2% 31.8%

27.9%

23.5%

28.4%

24.9% 25.0% 23.0% 26.3%

15.7%

0%

5%

10%

15%

20%

25%

30%

35%


Source: Terradatum, January 7, 2016. Percentage of single-family homes, condominiums, and farms/ranches under contract in Sonoma Valley.

pacificunion.com

http://docs.pacunion.com/2015q4/sonomavalley_chart3_avgdom.pdf

http://docs.pacunion.com/2015q4/sonomavalley_chart5_salesprice_originalprice.pdf

http://docs.pacunion.com/2015q4/sonomavalley_chart4_percentundercontract.pdf

A Closer Look at Sonoma Valley


Glen Ellen 16,995,192$ 12,999,600$ -24% 18 10 -44% 91 102 12% 787,000$ 750,500$ -5%

Kenwood 9,758,500$ 9,339,000$ -4% 8 6 -25% 128 116 -9% 1,081,250$ 1,370,000$ 27%

Sonoma 94,386,303$ 91,563,610$ -3% 120 97 -19% 76 68 -11% 580,000$ 680,000$ 17%

Source: Terradatum, January 7, 2016. Data is for single-family homes, condominiums, and farms/ranches in selected Sonoma Valley cities.

Sonoma Valley Snapshot: Q4 2015 vs. Q4 2014



http://docs.pacunion.com/2015q4/sonomavalley_chart6_sect2_cities.pdf

pacificunion.com


Sonoma County Housing and Economic Outlook

Though most residents work locally or commute into San Francisco or the Peninsula, net worth also drives the second-home and retiree markets in Sonoma, which are critical. We are optimistic about retirement opportunities in Sonoma particularly as the growth in households reaching their 60s continues.

THE ECONOMY

Solid Job Growth: Sonoma County added 8,400 net new jobs last year and is projected to add 4,400 this year, pushing total jobs to over 196,000. The 2015 figure would be a solid 2.3 percent improvement from last year, with similar rates projected through 2016 before we expect job growth to slow.

Tourism and Some Tech: Tourism-based leisure and hospitality jobs represent about 13 percent of total jobs in Sonoma. Professional and business services, trade, transportation and utilities, and government are also key sectors within this market.


Middle Class: At $62,000 per year, Sonoma supports an essentially middle-class income profile, though there are many higher-income professionals. Substantial housing demand, however, also comes from the more affluent San Francisco.

DEMOGRAPHICS

Steady Growth: Sonoma is home to about half a million residents. Population growth is modest, near 1.0 percent in recent years, with household growth slightly lower. We project slow and steady population growth at 1.0 percent annually going forward. Household growth, however, should outpace population growth as household formation trends return to long-term norms.

Continuity: Growth projections translate into approximately 5,000 new Sonoma residents annually over the next few years, or about 2,100-2,500 new households each year.

2009 2010 2011 2012 2013 2014 2015P 2016P 2017P 2018PJobs Total 173,600 169,900 171,800 175,100 183,600 192,000 196,400 201,300 203,300 204,300 Change -14,600 -3,700 1,900 3,300 8,500 8,400 4,400 4,900 2,000 1,000 Change Rate -7.8% -2.1% 1.1% 1.9% 4.9% 4.6% 2.3% 2.5% 1.0% 0.5%Median Income $61,579 $59,697 $58,850 $59,520 $61,029 $61,646 $63,556 $65,543 $68,160 $70,724 Change Rate -3.9% -3.1% -1.4% 1.1% 2.5% 1.0% 3.1% 3.1% 4.0% 3.8%


Jobs and Median Income Trends and Projections - Sonoma County


Change 6,400 5,200 3,100 3,100 4,600 4,900 5,200 5,100 5,000 5,000

Change Rate 1.4% 1.1% 0.6% 0.6% 0.9% 1.0% 1.0% 1.0% 1.0% 1.0%

Household Total 183,700 186,100 186,700 187,500 188,500 190,100 192,200 194,600 197,000 199,500

Change 2,800 2,400 600 800 1,000 1,600 2,100 2,400 2,400 2,500


Population and Households Trends and Projections - Sonoma County

pacificunion.com




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 8.8 percent over the last year, down from a remarkable 17.2 percent in 2013. JBREC forecasts more modest growth in this measure, ranging from 2.0 percent to 4.0 percent from 2016-18.

Consistent Resales Volumes: We project 2015 resale volume to come in at about 5 percent above 2014 with 6,400 sales. Sales should slowly increase to approximately 6,400-6,700 per year through 2018. 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 26 percent of the Sonoma market homes, down from the 33 percent at the peak in 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 48 percent of their income to buy a median-priced resale home and about 46 percent to afford a median-priced new home (the lower new home price due to typically higher new home densities).

Expensive and Uncommon New Homes: Limited new residential development translates into new home prices that often fluctuate, but typically average from the mid-$400s to the low-$500s. Over the last 12 months, the median new home price is about $483,000 countywide.

MARKET COLOR

Over 500 Jobs to Sonoma County: Fireman’s Fund Insurance Co. announced they were downsizing their current office in Novato to bring potentially up to 550 employees to a newer, smaller office complex located in Petaluma. As office rents in comparatively closer-in parts of the Bay Area, and even Marin County, continue to increase, some businesses will opt for lower rents in more outlying markets.

Vacation Rentals Hurting Housing Inventory: Since 2011, Sonoma County has issued over 1,000 permits for “whole-house vacation rentals,” while only constructing 495 new residential units. With a growing trend of a “sharing economy,” activity has flourished for such websites as Airbnb. Currently there are hundreds of Sonoma County short-term rentals available, many of which lack proper permitting, that would otherwise be included in the resale inventory market. This trend further heightens the housing shortage while applying pressure to both resale pricing and rents in the area. From 2011 to 2014, existing home prices are up a total of 40 percent, while apartment rents have grown 29 percent.

SMART on Track: 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. SMART is currently testing track to check onboard systems and operational requirements, and is on schedule to open several stations in late 2016. SMART riders will need to catch a ferry in Larkspur to commute to San Francisco jobs, but it will certainly take pressure off Highway 101 and make Sonoma County homes more attractive to those working in San Francisco.




Burns Home Value Index Trends and Projections - Sonoma County

pacificunion.com


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

Lake Tahoe/TruckeeQuarterly Real Estate ReportQ4 2015


Lake Tahoe/Truckee: Q4 ResultsSnow is a magical thing in the Sierra Nevadas. Elsewhere it slows traffic and shuts down businesses, but in Lake Tahoe/Truckee it opens world-famous winter resorts and attracts skiers, outdoor enthusiasts, and vacation homebuyers. After a long and difficult drought, snowfall was enthusiastically welcomed in the area in the fourth quarter. Weather conditions held back sales for much of 2015, but real estate activity was brisk by the end of the year, traditionally a busy time as out-of-town buyers – many from the Bay Area – shop for vacation homes in time for the ski season.

Lake Tahoe/Truckee is a buyer’s market, and multiple offers were rare last year. Buyers leveraged home prices that still haven’t reached their prerecession peaks in many communities to score some exceptional bargains.

Looking Forward: First-quarter home sales in Lake Tahoe/Truckee are influenced by the weather, and forecasts suggest that the winter and spring will be busy times indeed as Bay Area residents pack their skis and head for the mountains. We also expect that many sellers who pulled their properties off the market last year will return them to the mix in the coming weeks and months.

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

$572,000

$725,000

$611,250 $650,000

$535,000 $530,500 $560,000

$585,000 $577,500 $605,500 $579,000 $550,000

$595,000

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000


Source: Terradatum, January 7, 2016. Median sales price for single-family homes in the Lake Tahoe/Truckee region.

$370,250

$290,000

$359,500 $362,500

$281,000

$339,000

$385,000

$356,000

$427,500

$391,500 $375,000

$335,000 $330,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000


Source: Terradatum, January 7, 2016. Median sales price for condominiums in the Lake Tahoe/Truckee region.

pacificunion.com

http://docs.pacunion.com/2015q4/tahoetruckee_chart1_mediansalesprice_sfh.pdf

http://docs.pacunion.com/2015q4/tahoetruckee_chart2_mediansalesprice_condos.pdf


Single-Family Homes – Months’ Supply of Inventory

4.8

6.7

8.4

6.3 7.0

8.5

6.7 6.8

8.0

5.3 5.6 6.0

4.2

0.1

1.1

2.1

3.1

4.1

5.1

6.1

7.1

8.1

9.1


Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in the Lake Tahoe/Truckee region.

Single-Family Homes – Average Days on the Market

118 110

143

183

102

83

59

80 81 95 89

98 111

0

20

40

60

80

100

120

140

160

180

200


Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in the Lake Tahoe/Truckee region.

Condominiums – Months’ Supply of Inventory

9.9

14.5

11.3 9.4

19.3

9.4

12.5

8.9 8.3

12.1

6.2

10.7 10.9

0.1

5.1

10.1

15.1

20.1

25.1


Source: Terradatum, January 7, 2016. Months' supply of inventory for condominiums in the Lake Tahoe/Truckee region.

pacificunion.com

http://docs.pacunion.com/2015q4/tahoetruckee_chart3_msi_sfh.pdf

http://docs.pacunion.com/2015q4/tahoetruckee_chart5_avgdom_sfh.pdf

http://docs.pacunion.com/2015q4/tahoetruckee_chart4_msi_condos.pdf


Condominiums – Average Days on the Market

120 122

138

112 100

73

42

107

55

107 119

103

122

0

20

40

60

80

100

120

140

160


Source: Terradatum, January 7, 2016. Average days on market for condominiums sold in the Lake Tahoe/Truckee region.

Condominiums – Percentage of Properties Under Contract

9.3%

11.7%

7.0% 6.3%

9.7%

7.8% 7.3%

12.6%

7.8%

11.4%

7.8% 6.9% 6.7%

0%

2%

4%

6%

8%

10%

12%

14%


Source: Terradatum, January 7, 2016. Percentage of condominiums under contract in the Lake Tahoe/Truckee region.

Single-Family Homes – Percentage of Properties Under Contract

10.0%

12.1% 12.9%

12.3%

14.4% 13.8%

9.6%

14.9%

12.4% 13.1%

13.5%

11.7% 12.2%

0%

2%

4%

6%

8%

10%

12%

14%

16%


Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in the Lake Tahoe/Truckee region.

pacificunion.com

http://docs.pacunion.com/2015q4/tahoetruckee_chart6_avgdom_condos.pdf

http://docs.pacunion.com/2015q4/tahoetruckee_chart8_percentundercontract_condos.pdf

http://docs.pacunion.com/2015q4/tahoetruckee_chart7_percentundercontract_sfh.pdf

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

90.9%

88.6% 88.2%

95.0%

92.1% 91.5%

96.5%

86.8%

90.6%

92.9%

94.2% 93.4% 93.5%

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%


Source: Terradatum, January 7, 2016. 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

87.3%

92.7% 91.3%

94.3% 94.3% 94.1%

96.5% 95.9% 95.6%

90.2%

91.6% 92.8% 93.4%

82%

84%

86%

88%

90%

92%

94%

96%

98%


Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for condominiums under contract in the Lake Tahoe/Truckee region.


http://docs.pacunion.com/2015q4/tahoetruckee_chart9_salesprice_originalprice_sfh.pdf

http://docs.pacunion.com/2015q4/tahoetruckee_chart10_salesprice_originalprice_condos.pdf

pacificunion.com

A Closer Look at Lake Tahoe/Truckee


Alpine Meadows 4,222,500$ 4,547,500$ 8% 6 7 17% 49 72 47% 567,500$ 595,000$ 5%

Donner Lake 4,384,900$ 7,426,700$ 69% 5 11 120% 74 115 55% 1,150,000$ 615,000$ -47%

Donner Summit 8,875,700$ 4,723,000$ -47% 15 8 -47% 95 93 -2% 445,000$ 477,500$ 7%

Martis Valley 70,744,159$ 46,118,199$ -35% 37 29 -22% 133 116 -13% 890,000$ 579,000$ -35%

North Lake Tahoe 57,686,000$ 42,744,750$ -26% 59 52 -12% 110 94 -15% 560,000$ 595,000$ 6%

Northstar 7,157,500$ 3,380,000$ -53% 9 4 -56% 292 64 -78% 695,000$ 812,500$ 17%

Squaw Valley 5,185,000$ 7,335,000$ 41% 3 4 33% 348 377 8% 2,070,000$ 1,712,500$ -17%

Tahoe City 29,175,500$ 16,390,250$ -44% 25 20 -20% 83 80 -4% 810,000$ 690,000$ -15%

Tahoe Donner 46,102,909$ 49,313,003$ 7% 63 79 25% 96 87 -9% 630,000$ 575,000$ -9%

Truckee 84,803,159$ 55,873,919$ -34% 60 50 -17% 100 96 -4% 596,407$ 501,500$ -16%

West Shore 41,545,500$ 57,558,000$ 39% 43 53 23% 140 110 -21% 535,000$ 650,000$ 21%

Source: Terradatum, January 7, 2016. Data is for single-family homes in the Lake Tahoe/Truckee region.

Lake Tahoe/Truckee Snapshot: SFH, Q4 2015 vs. Q4 2014



Alpine Meadows 905,000$ -$ n/a 2 0 n/a 18 0 n/a 452,500$ -$ n/a

Donner Lake -$ 470,650$ n/a 0 4 n/a 0 247 n/a -$ 119,575$ n/a

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

North Lake Tahoe 12,556,500$ 9,753,500$ -22% 23 22 -4% 148 114 -23% 367,500$ 348,500$ -5%

Northstar 7,549,150$ 3,674,500$ -51% 12 8 -33% 116 95 -18% 405,000$ 403,500$ 0%

Squaw Valley 5,946,500$ 5,738,500$ -3% 7 11 57% 164 149 -9% 670,000$ 422,000$ -37%

Tahoe City 5,475,500$ 5,992,500$ 9% 9 12 33% 135 107 -21% 315,000$ 426,000$ 35%

Tahoe Donner 3,748,500$ 3,742,000$ 0% 13 13 0% 94 92 -2% 295,000$ 312,000$ 6%

Truckee 11,860,500$ 8,202,000$ -31% 18 14 -22% 98 147 50% 448,500$ 375,750$ -16%

West Shore 5,760,000$ 1,128,000$ -80% 3 2 -33% 307 337 10% 2,275,000$ 564,000$ -75%

Lake Tahoe/Truckee Snapshot: Condos, Q4 2015 vs. Q4 2014

Source: Terradatum, January 7, 2016. Data is for condominiums in the Lake Tahoe/Truckee region.



http://docs.pacunion.com/2015q4/tahoetruckee_chart11_sect2_communities_sfh.pdf

http://docs.pacunion.com/2015q4/tahoetruckee_chart12_sect2_communities_condos.pdf

pacificunion.com


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 been very strong for the last few years.

BAY AREA IMPACT

Feeder Markets: Housing and employment data from core Bay Area MSAs helps us understand how the Lake Tahoe market will perform. Strong job income, and net-worth growth in the Bay Area means more demand in Lake Tahoe. High and rising home prices in the Bay Area and a strong sales environment provide the equity for primary (often retiree) 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 in the near term, though at a 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 at $81,000 and $90,000, respectively, and the San Jose MSA just under $100,000.

Sales Volume: Existing home sales have been strong throughout the Bay Area in recent years and are projected to maintain steady growth.

High Prices: Pricing of existing homes has surged in all three core Bay Area MSAs. We project existing home prices will rise healthily in the coming years, though appreciation will slow notably by 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 2014 Current 2015P 2016P 2017P 2018P

East Bay MSA 984,900 964,300 972,700 1,002,100 1,037,500 1,065,000 1,085,900 1,090,000 1,110,000 1,125,000 1,130,000San Francisco MSA 964,200 955,400 979,600 1,026,400 1,074,300 1,121,300 1,179,400 1,166,300 1,186,300 1,196,300 1,191,300San Jose MSA 867,900 865,200 885,900 921,000 960,800 1,004,300 1,062,800 1,059,300 1,094,300 1,114,300 1,109,300Aggregate Total 2,817,000 2,784,900 2,838,200 2,949,500 3,072,600 3,190,600 3,328,100 3,315,600 3,390,600 3,435,600 3,430,600

Aggregate Change -167,600 -32,100 53,300 111,300 123,100 118,000 126,100 125,000 75,000 45,000 -5,000Aggregate Change Rate -5.6% -1.1% 1.9% 3.9% 4.2% 2.9% 4.1% 3.9% 2.3% 1.4% -0.1%

Source: U.S. Department of Labor

Employment Trends and Projections - Bay Area

Sales 2009 2010 2011 2012 2013 2014 Current 2015P 2016P 2017P 2018PEast Bay MSA 34,368 31,254 31,420 34,068 32,542 30,302 31,987 32,500 33,100 33,600 33,800San Francisco MSA 13,864 14,438 14,949 18,024 18,167 16,704 16,136 16,300 16,600 16,800 16,900San Jose MSA 19,533 18,641 18,612 20,679 20,120 18,277 18,786 18,800 20,000 20,500 20,900Aggregate Total 67,765 64,333 64,981 72,771 70,829 65,283 66,909 67,600 69,700 70,900 71,600

Aggregate Change 10,430 -3,432 648 7,790 -1,942 -4,369 1,626 691 2,100 1,200 700Aggregate Change Rate 18.2% -5.1% 1.0% 12.0% -2.7% -6.1% 2.5% 1.0% 3.1% 1.7% 1.0%

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

East Bay MSA $292,000 $332,800 $313,300 $349,000 $457,700 $529,200 $582,900 10.9% 5.1% 3.2% 1.7%San Francisco MSA $664,500 $698,900 $663,600 $711,400 $841,900 $958,300 $1,082,300 15.2% 7.2% 3.0% 0.0%San Jose MSA $477,900 $536,600 $518,300 $574,900 $698,500 $775,100 $898,300 13.0% 5.4% 3.3% 0.0%

Source: John Burns Real Estate Consulting; CoreLogic

Existing Home Sales Trends and Projections - Bay Area

Source: John Burns Real Estate Consulting; CoreLogic

Existing Home Pricing Trends and BHVI Projections - Bay Area

pacificunion.com

http://docs.pacunion.com/2015q4/tahoe_jbrec_1.pdf

http://docs.pacunion.com/2015q4/tahoe_jbrec_2-3.pdf


DEMOGRAPHICS

Steady Growth Ahead: Lake Tahoe has just over 45,000 residents in about 19,300 households. The area’s population has declined through the 2000s at a rate of -1.0 percent per year but is forecast to grow over the next five years and approximate its 2000 level by 2020.

Households: Growth projections for the next five years translate into about 500 new residents annually in the Lake Tahoe area or about 250 new households each year. Household growth at a higher rate than population growth is common in major secondary markets like Lake Tahoe.

THE HOUSING MARKET

Prices Rising: The median sales price for existing homes in the Lake Tahoe area has generally been increasing in recent years. Single-family home prices are up 4.3 percent year over year, but condominium pricing is currently down 8.3 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: There are a considerable amount of homes on the market in Lake Tahoe, typically ranging from five to eight months of supply. This is relatively high in terms of larger market standards, but is the norm – if not somewhat tight – for high-end, second-home-oriented markets.

Longer 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

Developers and Conservationists Strike a Deal: Officials of Placer County have recently approved a deal that would transfer development rights for a major new home project in Martis Valley. Property owners Sierra Pacific Industries and developers Mountainside Partners intend to develop up to 1,360 homes east of state Route 267. This prospect, however, was worrisome to some conservationist groups including Trust for Public Land and Truckee Donner Land Trust. As of October, the parties have reached an agreement whereby Mountainside Partners would transfer their development rights to now develop 760 residential units, as well as 6.6 acres of commercial use, to the west of state Route 267. This agreement will help end a seemingly endless stalemate while protecting up to 50,000 acres of Martis Valley.

2000 2010 2015 2020PPopulation Total 47,629 42,740 45,268 47,925 Annualized Change Rate - -1.0% 1.2% 1.2%Household Total 18,929 18,026 19,300 20,564 Avg. HH Size 2.50 2.34 2.31 2.30

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

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

Median Sales Price Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 YoY %

Single-Family Homes $587,000 $607,342 $740,000 $572,000 $725,000 $611,250 $650,000 $535,000 $530,500 $560,000 $585,000 $580,000 $612,500 4.3% Condominiums $385,000 $416,000 $392,500 $370,250 $290,000 $359,500 $362,500 $281,000 $339,000 $385,000 $356,000 $427,500 $353,000 -8.3%Months of Supply Single-Family Homes 7.2 6.0 5.2 4.7 6.6 8.4 6.2 7.0 8.5 6.8 6.7 7.8 5.2 -27.8% Condominiums 6.5 6.2 6.2 9.9 14.5 11.3 9.3 19.2 9.3 12.5 8.8 8.2 12.5 92.3%Avg Days on the Market Single-Family Homes 86 91 127 118 110 143 183 102 83 60 81 80 96 11.6% Condominiums 197 154 101 120 122 138 112 100 73 42 107 55 109 -44.7%

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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