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California real estate market analysis by Leslie Appleton-Young, C.A.R. Vice President and Chief Economist
Citation preview
October 22, 2009
California Desert AOR
Leslie Appleton-Young
C.A.R. Vice President and Chief Economist
2010 California Real Estate Market Forecast
California Real Estate Market
THOUSANDS
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
19
70
19
72
19
74
19
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19
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19
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19
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20
00
20
02
20
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20
06
20
08
20
10
0
50,000
100,000
150,000
200,000
250,000
Home Sales Membership
California’s Housing Cycles and Membership1970-2009
Sales Hit Bottom in 2007, Up in 2008 & 2009
UNITS/MEDIAN PRICE $
SOURCE: California Association of REALTORS®
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
19
70
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19
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20
00
20
02
20
04
20
06
20
08
Sales of Existing Detached Homes Median Price
California Sales of Existing Homes and Median Price
-61% -25%
-44%
California vs U.S. Median Prices 1970-2009 1970: CA $24,640 US $23,000
2009: CA $271,000 US $172,600
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,00019
70
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
California
US
CA Price Trend
SOURCE: California Association of REALTORS®SOURCE: California Association of REALTORS®
129 132
181
224
282
327
266
194
152 146 148
26%
16%
-19%
-27%-22%
-4%1%
37%
2%
24%
0
50
100
150
200
250
300
350
400
20
00
20
01
20
02
20
03
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07
20
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P
20
10
F
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
$ Volume of Sales Percent Change% Change$ in Billion
Dollar Volume of Sales Peaked in ’05Down 55% Thru ‘09
SOURCE: California Association of REALTORS®
-55%
Sales of Existing Detached Homes and Pacific West Consumer Confidence
California, August 2009 Sales: 526,970 Units, Up 38.2% YTD, Up 9.0% YTY
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Ja
n-0
0A
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00
Ju
l-0
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Ja
n-0
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6O
ct-
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pr-
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ct-
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Ja
n-0
9A
pr-
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Ju
l-0
9
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence INDEXUNITS
SOURCE: California Association of REALTORS®; The Conference Board
*Sales are seasonally adjusted and annualized
Median Price of Existing Detached HomesCalifornia, August 2009: $292,960, Down 16.9% YTY
SOURCE: California Association of REALTORS®
T: Feb-09$245,170
-59% frompeak
P: May-07$594,530
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000J
an
-00
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
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Ju
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4
Ja
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5
Ju
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5
Ja
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6
Ju
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6
Ja
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7
Ju
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7
Ja
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8
Ju
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8
Ja
n-0
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Ju
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9
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
20
04
.10
20
05
.01
20
05
.04
20
05
.07
20
05
.10
20
06
.01
20
06
.04
20
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.07
20
06
.10
20
07
.01
20
07
.04
20
07
.07
20
07
.10
20
08
.01
20
08
.04
20
08
.07
20
08
.10
20
09
.01
20
09
.04
20
09
.07
Under 500 500 to 999 1 Mil +
Sales By Price RangeOctober 2004 – present
SOURCE: Mortgage Bankers Association, C.A.R.
Credit Freeze: 8/2007
Peak vs Current Price - August 2009
RegionPeak
MonthPeak Price
Aug-09 Median
% Chg From Peak
High Desert Apr-06 $334,860 $111,770 -66.6%
Monterey Region Aug-07 $798,210 $298,940 -62.5%
Riverside/San Bernardino Jan-07 $415,160 $166,600 -59.9%
Palm Springs/Lower Desert Jun-05 $393,370 $169,080 -57.0%
Sacramento Aug-05 $394,450 $192,050 -51.3%
CALIFORNIA May-07 $594,530 $292,960 -50.7%
Northern Wine Country Jan-06 $645,080 $347,920 -46.1%
Los Angeles Aug-07 $605,300 $339,980 -43.8%
Northern California Aug-05 $440,420 $255,600 -42.0%
San Diego May-06 $622,380 $375,710 -39.6%
San Luis Obispo Jun-06 $620,540 $382,560 -38.4%
San Francisco Bay Area May-07 $853,910 $531,580 -37.7%
Santa Clara Apr-07 $868,410 $555,000 -36.1%
Ventura Aug-06 $710,910 $466,200 -34.4%
Orange County Apr-07 $747,260 $499,440 -33.2%
SOURCE: California Association of REALTORS®
Unsold Inventory IndexCalifornia, August 2009: 4.3 Months
0
2
4
6
8
10
12
14
16
18
20
Ja
n-8
8J
ul-
88
Ja
n-8
9J
ul-
89
Ja
n-9
0J
ul-
90
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
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Ja
n-9
4J
ul-
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Ja
n-9
5J
ul-
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Ja
n-9
6J
ul-
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Ja
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7J
ul-
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Ja
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8J
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Ja
n-9
9J
ul-
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Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
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Ja
n-0
2J
ul-
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Ja
n-0
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Ja
n-0
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Ja
n-0
5J
ul-
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Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
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Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
SOURCE: California Association of REALTORS®
MONTHS
Price Range (Thousand) Aug-09 Jul-09 Aug-08
$1,000K+ 12.8 9.6 10.8$750-1000K 6.1 5.2 7.6$500-750K 4.2 3.9 6.5$300-500K 3.9 3.5 6.3$0-300K 2.9 3.1 6.4Total 4.3 3.9 7.0
Unsold Inventory Index (Months)
SOURCE: California Association of REALTORS®
Unsold Inventory Index: Over & Under $500K
0
5
10
15
20
25
30
35
Jan
-90
Jul-
90Ja
n-9
1Ju
l-91
Jan
-92
Jul-
92Ja
n-9
3Ju
l-93
Jan
-94
Jul-
94Ja
n-9
5Ju
l-95
Jan
-96
Jul-
96Ja
n-9
7Ju
l-97
Jan
-98
Jul-
98Ja
n-9
9Ju
l-99
Jan
-00
Jul-
00Ja
n-0
1Ju
l-01
Jan
-02
Jul-
02Ja
n-0
3Ju
l-03
Jan
-04
Jul-
04Ja
n-0
5Ju
l-05
Jan
-06
Jul-
06Ja
n-0
7Ju
l-07
Jan
-08
Jul-
08Ja
n-0
9Ju
l-09
UII - Over $500k
UII - Under $500k
SOURCE: California Association of REALTORS®SOURCE: California Association of REALTORS®
California – A Tale of Two Markets
26%36%
40% 41%
51%56% 58%
66%73%
78% 80%
0%
20%
40%
60%
80%
100%
Ma
rin
Sa
n L
uis
Ob
isp
o
Me
nd
oci
no
Ora
ng
e
So
no
ma
Na
pa
Lo
s A
ng
ele
s
Sa
cra
me
nto
Ke
rn
So
lan
o
Riv
ers
ide
/Sa
nB
ern
ard
ino
Distressed Sales to Total Sales Ratio(Aug 2009)
SOURCE: California Association of REALTORS®
County/Region Mar-09 Jun-09 Jul-09 Aug-09
Marin 33.1% 21.6% 26.9% 26.4%San Luis Obispo 50.5% 41.8% 38.4% 35.5%Mendocino 41.9% 51.1% 40.0% 40.0%Orange 56.7% 44.5% 40.6% 41.4%Sonoma 67.1% 56.6% 46.8% 51.3%Napa 69.4% 51.9% 52.0% 55.7%Los Angeles 69.2% 61.2% 58.9% 57.6%Sacramento 70.5% 70.6% 65.9% 66.4%Kern 83.5% 76.9% 73.7% 72.9%Solano 88.4% 84.0% 83.3% 78.1%Riverside/San Bernardino 87.1% 83.5% 82.2% 79.5%
Distressed Sales to Total Sales Ratio
SOURCE: California Association of REALTORS®
Distressed Sales vs. Non Distressed Sales
DistressedNon-Distressed
Median Home Price $250,000 $485,000
Price/SF $154 $277
Percent of Sales with Multiple Offers 68.1% 44.7%
Number of Offers (Average) 6.1 4.0
Percent of All Cash Sales 22.4% 17.1%
Number of Days on MLS 43 50
Number of Days in Escrow 45 35
Percent of Sales with Net Cash Loss 68.9% 17.9%
Net Cash Gain/Net Cash Loss to Seller -$100,000 $85,000
Source: C.A.R. 2009 Housing Market Survey
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
20
05
.10
20
06
.01
20
06
.04
20
06
.07
20
06
.10
20
07
.01
20
07
.04
20
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.07
20
07
.10
20
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.01
20
08
.04
20
08
.07
20
08
.10
20
09
.01
20
09
.04
20
09
.07
Under 500 500 to 999 1 Mil + Total
Year-to-Year Percent Change in Sales
SOURCE: Mortgage Bankers Association, C.A.R.
By Price Interval
SOURCE: California Association of REALTORS®
-15%
-10%
-5%
0%
5%
10%
15%
20
05
.10
20
06
.01
20
06
.04
20
06
.07
20
06
.10
20
07
.01
20
07
.04
20
07
.07
20
07
.10
20
08
.01
20
08
.04
20
08
.07
20
08
.10
20
09
.01
20
09
.04
20
09
.07
Under 500 500 to 999 1 Mil +
Year-to-Year Percent Change in Median Price
SOURCE: Mortgage Bankers Association, C.A.R.
Within Price Interval
SOURCE: California Association of REALTORS®
Regional Markets
Home Sales in Southern California Regions
0
500
1000
1500
2000
2500
3000
3500
4000
4500
High Desert Los Angeles Orange PalmSprings
Riverside/SB San Diego Sta. BarbaraArea
Ventura
Aug-08
Aug-09
SOURCE: California Association of REALTORS®
High Desert 111,771$ 110,653$ 169,203$ 1.0% -33.9%Los Angeles 339,982$ 339,432$ 394,869$ 0.2% -13.9%
499,437$ 500,212$ 511,268$ -0.2% -2.3%Palm Springs 169,076$ 163,077$ 221,944$ 3.7% -23.8%
166,601$ 165,465$ 225,394$ 0.7% -26.1%375,706$ 372,645$ 388,712$ 0.8% -3.3%828,750$ 882,500$ 1,000,000$ -6.1% -17.1%
Sta. Barbara-North Cnty. 244,047$ 243,477$ 266,666$ 0.2% -8.5%466,197$ 456,435$ 478,408$ 2.1% -2.6%
Riverside/SB
Ventura
Sta. Barbara-So. Coast
Y-t-Y
San Diego
County Aug-09 Jul-09 Aug-08 M-t-M
Orange
Median Price of Existing Detached HomesSouthern California Regions
SOURCE: California Association of REALTORS®
Riverside County
Economic Profile
Riverside County Profile
Characteristic Statistic State Rank
2007 Population Estimate 2,061,597 4
% Population Change 1990-2000 32.0% 4
% Population Change 1980-1990 76.48% 1
% White 2007 46.7%
% Hispanic 2007 40.3%
% Black 2007 6.3%
% Asian & Pacific Islander 2007 4.5%
2007 Per Capita Income $24,885
2007 Median Household Income $58,145
2007 Median Age 31.5
Land Area Square Miles 7,207 4
2000 Total Establishments 26,565 8
2007 Civilian Employment 977,980
Sales of Existing Detached Homes and Pacific West Consumer Confidence
Riverside County, August 2009: 1,645 Units, Up 48.1% YTD, Down 1.6% YTY
SOURCE: California Association of REALTORS®; The Conference Board
INDEXUNITS
0
500
1000
1500
2000
2500
Ja
n-9
0J
ul-
90
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
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93
Ja
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Ja
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Ja
n-9
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Ja
n-9
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Ja
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Ja
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Ja
n-0
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Ja
n-0
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Ja
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Ja
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Ja
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Ja
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Ja
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Ja
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8J
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Ja
n-0
9J
ul-
09
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence
Sales of Existing Detached HomesRiverside County, 2008: 17,271 Units, Up 91.4% YTY
SOURCE: California Association of REALTORS®
UNITS
0
5,000
10,000
15,000
20,000
25,000
19
89
19
92
19
95
19
98
20
01
20
04
20
07 0
500
1,000
1,500
2,000
2,500
Ja
n
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
Ju
l
Au
g
Se
pt
Oc
t
No
v
De
c
2006200720082009
ANNUAL MONTHLY
Median Price of Existing Detached HomesRiverside County, August 2009: $173,510, Down 24.4% YTY
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000J
an
-90
Ju
l-9
0J
an
-91
Ju
l-9
1J
an
-92
Ju
l-9
2J
an
-93
Ju
l-9
3J
an
-94
Ju
l-9
4J
an
-95
Ju
l-9
5J
an
-96
Ju
l-9
6J
an
-97
Ju
l-9
7J
an
-98
Ju
l-9
8J
an
-99
Ju
l-9
9J
an
-00
Ju
l-0
0J
an
-01
Ju
l-0
1J
an
-02
Ju
l-0
2J
an
-03
Ju
l-0
3J
an
-04
Ju
l-0
4J
an
-05
Ju
l-0
5J
an
-06
Ju
l-0
6J
an
-07
Ju
l-0
7J
an
-08
Ju
l-0
8J
an
-09
Ju
l-0
9
SOURCE: California Association of REALTORS®
Median Price Annual ComparisonRiverside County, 2008: $238,984, Down 39.7% YTY
SOURCE: California Association of REALTORS®
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,0001
98
9
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Ja
n
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
Ju
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Au
g
Se
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Oc
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No
v
De
c
2006200720082009
MONTHLYANNUAL
Aug-09 Aug-08Yearly %Change
Riverside County $190,000 $247,000 -23.1%
Banning $115,000 $157,500 -27.0%
Beaumont $207,000 $261,000 -20.7%
Cathedral City $150,000 $217,500 -31.0%
Corona $307,545 $350,000 -12.1%
Desert Hot Springs $91,500 $135,000 -32.2%
Hemet $118,000 $174,000 -32.2%
Indio $180,000 $240,000 -25.0%
La Quinta $275,000 $377,000 -27.1%
Lake Elsinore $175,000 $220,000 -20.5%
Menifee $195,000 $255,000 -23.5%
Mira Loma $315,000 $359,000 -12.3%
Moreno Valley $140,000 $183,000 -23.5%
Median Home Sales PriceRiverside County
SOURCE: C.A.R.; DataQuick Information Systems. The price statistics are derived from all types of home sales -- new and existing, condos and single-family.
Median Home Sales PriceRiverside County
Aug-09 Aug-08Yearly %Change
Murrieta $236,000 $280,000 -15.7%
Norco $307,000 $445,000 -31.0%
Palm Desert $255,000 $335,000 -23.9%
Palm Springs $133,000 $277,000 -52.0%
Perris $140,000 $185,000 -24.3%
Rancho Mirage $460,000 $465,000 -1.1%
Riverside $230,000 $242,000 -5.0%
San Jacinto $138,000 $185,000 -25.4%
Sun City $155,000 $215,000 -27.9%
Temecula $261,000 $325,000 -19.7%
Wildomar $236,477 $300,000 -21.2%
Winchester $232,000 $280,000 -17.1%
SOURCE: C.A.R.; DataQuick Information Systems. The price statistics are derived from all types of home sales -- new and existing, condos and single-family.
Unsold Inventory IndexRiverside and San Bernardino Counties, August 2009: 2.7 Months
SOURCE: California Association of REALTORS®
MONTHS
0
5
10
15
20
25
30
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
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06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
Inland Empire Riverside & San Bernardino
Median Time on the MarketSingle-Family Homes – Riverside, August 2009: 28.9 Days
0
20
40
60
80
100
120
140
Ja
n-8
9
Ja
n-9
0
Ja
n-9
1
Ja
n-9
2
Ja
n-9
3
Ja
n-9
4
Ja
n-9
5
Ja
n-9
6
Ja
n-9
7
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
SOURCE: California Association of REALTORS®
New Housing PermitsRiverside County, August 2009: 370 Units, Down 38.9% YTD
SOURCE: Construction Industry Research Board
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Jan-
88
Jan-
89
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Single Family Multi-Family
Median Price for New HomesRiverside County 2Q09 Detached: $299,900, Attached: $242,990
SOURCE: California Association of REALTORS®;Hanley Wood
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000Q
1/8
8
Q1
/89
Q1
/90
Q1
/91
Q1
/92
Q1
/93
Q1
/94
Q1
/95
Q1
/96
Q1
/97
Q1
/98
Q1
/99
Q1
/00
Q1
/01
Q1
/02
Q1
/03
Q1
/04
Q1
/05
Q1
/06
Q1
/07
Q1
/08
Q1
/09
Detached
Attached
ForeclosuresRiverside County
SOURCE: Real Estate Research Council
0
2000
4000
6000
8000
10000
12000
14000Q
1/89
Q1/
90
Q1/
91
Q1/
92
Q1/
93
Q1/
94
Q1/
95
Q1/
96
Q1/
97
Q1/
98
Q1/
99
Q1/
00
Q1/
01
Q1/
02
Q1/
03
Q1/
04
Q1/
05
Q1/
06
Q1/
07
Q1/
08
Q1/
09
Riverside: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Riverside: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
Palm Springs: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Palm Springs: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
Desert Hot Springs: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Indio: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Desert Hot Springs: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
Indio: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
2009 Housing Market Survey
0%
1%
2%
3%
4%
5%
6%
7%
8%
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
0
2
4
6
8
10
12
14
16Med. Price DiscountMed. Weeks on MLS
Median Price Discount And Weeks On Market
Q. What was the original list sales price of the property? What was the final sales price of the property? How many weeks did the property remain on the MLS?
4.6%, 6.4 weeks
69%
0%
20%
40%
60%
80%
100%
Percent with Price DiscountSelling price below listing price
Long Run Average = 68%
Q. What was the original list sales price of the property? What was the final sales price of the property?
$220,640
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
$220,000
$240,000
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
Median Net Cash To Sellers2005: $220K 2009: $50K
Q. What was the net cash gain or net loss to the seller as a result of this sale?
$50,000
Sellers Reporting a Net Cash LossPercent of All Sellers
32.9%
0%
5%
10%
15%
20%
25%
30%
35%
Q. What was the net cash gain or net loss to the seller as a result of this sale?
Long Run Average = 9.3%
Proportion of Home Sellers Planning to Repurchase
39.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
89 90 91 92 93 94 95 96 97 98 00 01 02 03 04 05 06 07 08 09
Q. Is the seller planning on purchasing another home?
Proportion of First-Time HomebuyersCalifornia
47.0%
38.6%
0%
10%
20%
30%
40%
50%
60%
81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
% First-Time Home Buyers Long Run Average
Q. Was the buyer a first-time buyer?
FHA and VA Mortgages(First Mortgage)
Q. Please indicate the type of mortgage
32.0%
4.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2001 2002 2003 2004 2005 2006 2007 2008 2009
FHA VA
FHA Loans in CA# of Total Loans in CA & US
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Oc
t-0
6
De
c-0
6
Fe
b-0
7
Ap
r-0
7
Ju
n-0
7
Au
g-0
7
Oc
t-0
7
De
c-0
7
Fe
b-0
8
Ap
r-0
8
Ju
n-0
8
Au
g-0
8
No
v-0
8
Ja
n-0
9
Ma
r-0
9
Ma
y-0
9
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
CA Total US Total
CA Tops All States with a 10% Market Share of all FHA Lending in US (Source: Inside FHA Lending)
Source: HUD
CA Endorsements US Endorsements
FHA vs. Conventional(New First Mortgages)
FHA Conventional
Median Home Price $261,500 $455,000
Median Down Payment (Dollar) $9,888 $92,000
Median Down Payment (% to Price) 3.5% 20.0%
Share of All Home Sales 32.0% 63.3%Percent of Mortgages with Distressed Property 62.6% 37.4%
Percent of First-Time Buyers 75.8% 40.2%
55.4%
5.14
0%
10%
20%
30%
40%
50%
60%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0
1
2
3
4
5
6% with Multiple Offers
# of Multiple offers (Average)
Multiple Offers:Over 1/2 homes sold 2009 had multiple offers
0%
10%
20%
30%
40%
50%
1998 2000 2002 2004 2006 2008
All Hombuyers First-Time BuyersRepeat Buyers
Percent of Buyers with Zero Down PaymentFirst-Time Buyers vs. Repeat Buyers
5.0%
3.7%
2.8%
19.6%
0%
2%4%
6%8%
10%12%
14%16%
18%20%
22%
Percent of All Cash Sales
12.1%
5.2%
0%
5%
10%
15%
20%
1998 2000 2002 2004 2006 2008
Investment/Rental Property Vacation/Second Home
Buyer Use of Property(All Homes)
20%
0% 0% 0%0% 0%
19% 20%
8%
18%
30%
0%
55%
0%5%
16%
42%
14% 16%
7%3%
0%
15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Desiredlarger home
Desiredbetter/other
location
Mortgagepaymentwent up(reindex)
Moved torental to
save money
Job loss Troublemaking
mortgagepayments
2006 2007 2008 2009
Signs of Distress in 2008-2009
Sellers Are Reacting to Financial Stress
The Role of Market Conditions In the Decision to Sell
SOURCE: C.A.R. 2009 Survey of Home Sellers
While Buyers See Opportunities …
10%
9%
67%
22%
39%
Price decreases motivated us
Low interest rates helped us move toa better location, neighborhood
Likelihood that interest rates will moveup motivated us
Low interest rates helped us buy alarger home
Moved to an area where it was moreaffordable
The Role Of Market ConditionsIn The Decision To Buy
SOURCE: C.A.R. 2009 Survey of Home Buyers
The Bottom Line: Great Time to be a First Time Buyer
First-time Buyer Housing Affordability IndexCalifornia Vs. U.S. 2000-2009
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
00
Q1
20
00
Q3
20
01
Q1
20
01
Q3
20
02
Q1
20
02
Q3
20
03
Q1
20
03
Q3
20
04
Q1
20
04
Q3
20
05
Q1
20
05
Q3
20
06
Q1
20
06
Q3
20
07
Q1
20
07
Q3
20
08
Q1
20
08
Q3
20
09
Q1
CA US
% OF HOUSEHOLDS THAT CAN BUY
SOURCE: California Association of REALTORS®
Federal First-Time Buyer Tax Credit
• Legislation Passed February 2009
• Retroactive to January 1, 2009
• Extended/modified version of 2008 Tax Credit– Current expiration November 30, 2009– 6 month extension under deliberation
• National Impact – 1.4 million families in US (IRS)
• California Results – 39% of first-timers would not have bought in 2009 w/o tax credit (C.A.R. Survey)
Bought Home Regardless of Federal First-Time Home Buyer Tax Credit?
Q. Would you have bought a home if there were not a Federal First-Time Home Buyer Tax Credit, or if you knew you did not qualify for the credit? CAR Telephone Survey 2009
39%
52%
26%
11%
17%
6%
51%
68%
31%
Total (N = 200)
Income Under $100K(N = 96)
Income $100K andover (N = 104)
Yes No Unsure
0% 0% 0%
5%
8%9% 9%
10%
31%
27%
0%
5%
10%
15%
20%
25%
30%
35%
1 2 3 4 5 6 7 8 9 10
Mean = 8.1 Median = 9
Scale: “1” = very easy, “10” = very difficult
Level of Difficulty to Obtain Financing(All Buyers)
Q. Please rate how easy of difficult it was to obtain financing on a scale of 1 to 10, with 1 being very easy and 10 being very difficult.
Buyers Who Know the Terms of Their Loan
93%
88%
68%
81%
76%
79%
3%
1%
2%
2%
2%
7%
9%
30%
17%
22%
19%
0% 20% 40% 60% 80% 100%
Short Sale
REO
Regular MarketSales
Repeat Buyers
First-Time Buyers
All Buyers
Yes No Unsure
Q. Do you know the term of your loan?
9.4%
5.8%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Q1
-19
79
Q2
-19
80
Q3
-19
81
Q4
-19
82
Q1
-19
84
Q2
-19
85
Q3
-19
86
Q4
-19
87
Q1
-19
89
Q2
-19
90
Q3
-19
91
Q4
-19
92
Q1
-19
94
Q2
-19
95
Q3
-19
96
Q4
-19
97
Q1
-19
99
Q2
-20
00
Q3
-20
01
Q4
-20
02
Q1
-20
04
Q2
-20
05
Q3
-20
06
Q4
-20
07
Q1
-20
09
Delinquency Rate - CA Foreclosure Rate - CA
CA Mortgage Foreclosure & Delinquency RatesCalifornia: Q2-2009, NSA
SOURCE: Mortgage Bankers Association
Delinquencies: Long Run Average: 4.1%
Foreclosure Rate: Long Run Average: 1.0%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
Se
p-0
6
Oc
t-0
6
No
v-0
6
De
c-0
6J
an
-07
Fe
b-0
7
Ma
r-0
7A
pr-
07
Ma
y-0
7
Ju
n-0
7
Ju
l-0
7A
ug
-07
Se
p-0
7
Oc
t-0
7N
ov
-07
De
c-0
7
Ja
n-0
8
Fe
b-0
8M
ar-
08
Ap
r-0
8
Ma
y-0
8
Ju
n-0
8J
ul-
08
Au
g-0
8
Se
p-0
8O
ct-
08
No
v-0
8
De
c-0
8
Ja
n-0
9F
eb
-09
Ma
r-0
9
Ap
r-0
9M
ay
-09
Ju
n-0
9
Ju
l-0
9
Au
g-0
9
Notice of DefaultsNotice of Trustee SaleREO
California Foreclosure Activity 09/06 - Present
SOURCE: ForeclosureRadar.com
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
Ja
n-0
8
Fe
b-0
8
Ma
r-0
8
Ap
r-0
8
Ma
y-0
8
Ju
n-0
8
Ju
l-0
8
Au
g-0
8
Se
p-0
8
Oc
t-0
8
No
v-0
8
De
c-0
8
Ja
n-0
9
Fe
b-0
9
Ma
r-0
9
Ap
r-0
9
Ma
y-0
9
Ju
n-0
9
Ju
l-0
9
Au
g-0
9
Notice of Defaults - CountsNotice of Trustee SaleREO
California Foreclosure Activity 2008 - present
September 2008: CA SB 1137 Takes Effect
September 18, 2008: Paulson asks For TARP Funds
Government Intervention
SOURCE: ForeclosureRadar.com
February 11 2009:Frank’s Moratorium Request
February 20, 2009: CA Foreclosure Prevention Act
March 4, 2009:Making Home Affordable/HAMP
US and California Economic Conditions
Historic Fiscal Stimulus
Fiscal Policy: “Spend Now – Worry Later”
To date: $3 trillion in government spending
MBS purchases ($693 billion)
TARP ($372 billion)
Obama stimulus package ($304 billion)
Cash for Clunkers
First-time Buyer Tax Credit
Extension of Unemployment Benefits
Tax Cuts
Result: Federal budget deficit will reach 1.6 trillion this year
Gross Domestic Product
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
Q3
-08
Q4
-08
Q1
-09
Q2
-09
2008: +0.4%; 2009P -2.6%; Q2: -0.7%
ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
ANNUAL QTRLY
QUARTERLY PERCENT CHANGE
-4
-2
0
2
4
6
8
1Q
-19
90
1Q
-19
91
1Q
-19
92
1Q
-19
93
1Q
-19
94
1Q
-19
95
1Q
-19
96
1Q
-19
97
1Q
-19
98
1Q
-19
99
1Q
-20
00
1Q
-20
01
1Q
-20
02
1Q
-20
03
1Q
-20
04
1Q
-20
05
1Q
-20
06
1Q
-20
07
1Q
-20
08
1Q
-20
09
Personal Consumption2009 Q2: -0.87%
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Q1
-19
60
Q1
-19
62
Q1
-19
64
Q1
-19
66
Q1
-19
68
Q1
-19
70
Q1
-19
72
Q1
-19
74
Q1
-19
76
Q1
-19
78
Q1
-19
80
Q1
-19
82
Q1
-19
84
Q1
-19
86
Q1
-19
88
Q1
-19
90
Q1
-19
92
Q1
-19
94
Q1
-19
96
Q1
-19
98
Q1
-20
00
Q1
-20
02
Q1
-20
04
Q1
-20
06
Q1
-20
08
SOURCES: BEA S&P 500
U.S. Savings Rate: 1960 – 2009Is increase Permanent or Temporary?
Consumer Behavior: Permanent Change or Temporary Hiatus From Spending?
“Credit impaired lower income consumers can’t spend the way they used to and wealth impaired affluent consumers won’t.”
UCLA Forecast 9/09
Consumer Price IndexAugust 2009: All Items -1.4% YTY; Core 1.5% YTY
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Ja
n-8
0
Ja
n-8
1
Ja
n-8
2
Ja
n-8
3
Ja
n-8
4
Ja
n-8
5
Ja
n-8
6
Ja
n-8
7
Ja
n-8
8
Ja
n-8
9
Ja
n-9
0
Ja
n-9
1
Ja
n-9
2
Ja
n-9
3
Ja
n-9
4
Ja
n-9
5
Ja
n-9
6
Ja
n-9
7
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
All Items
Core
PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984
Historic Monetary Stimulus
SOURCE: Federal Home Loan Mortgage Corporation
Mortgage Rates and Monetary Policy“Whatever it Takes”
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
FRM
ARM
Federal Funds
SOURCE: Federal Home Loan Mortgage Corporation – 30-yr FRMFederal Reserve Board – 10-Year T-Bond
30-Year FRM vs. 10-Year T-Bond Above-Average Risk Premiums Associated With Mortgage Loans
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
FRM
10-YearT-Bond
RiskPrem
Average. Risk
Premium: 1.6%
Lower spread in 2009 - FED purchasesfrom Fannie and Freddie
Distressed Commercial RE Growing
billions
Distressed properties include those that are in bankruptcy, foreclosures, those that have received lender forbearance, or lender REO.
Distressed properties include those that are in bankruptcy, foreclosures, those that have received lender forbearance, or lender REO.
Commercial Debt Crisis Ahead
billions
Commercial MBS Market
billions
INDEX, 100=1985
Consumer Confidence Index: Better…Sort OfAugust 2009: 54.5 September 2009: 53.1
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
Ja
n-8
8
Ja
n-8
9
Ja
n-9
0
Ja
n-9
1
Ja
n-9
2
Ja
n-9
3
Ja
n-9
4
Ja
n-9
5
Ja
n-9
6
Ja
n-9
7
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
DJIMonthly
Avg.
Dow Jones Stock Price and Consumer Confidence30 Industrial Index vs. Consumer Confidence Index 1987-2009
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Ja
n-8
7J
ul-
87
Ja
n-8
8J
ul-
88
Ja
n-8
9J
ul-
89
Ja
n-9
0J
ul-
90
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
0
20
40
60
80
100
120
140
160
Dow Jones 30 Industrials Consumer Confidence Index Cons. Conf.
Unemployment RateCalifornia (8/09 12.2%) vs. United States (9/09 9.8%)
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Ja
n-9
0J
ul-
90
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
US-CA CA US
SOURCE: CA Employment Development Division
Employment Growth, California vs. U.S. 8/09 CA: -4.9% YTY 9/09 US: -4.2% YTY
YEAR TO YEAR % CHANGE
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
California US
SOURCE: CA Employment Development Division
Nonfarm Employment By Region
SOURCE: CA Employment Development Division
Nonfarm NonfarmEmployment Employment Percent
Aug-09 Aug-08 Change ChangeSouthern California 7,918.8 8,289.4 -370.6 -4.5%
Bay Area 3,088.7 3,243.6 -154.9 -4.8%
Central Valley 1,906.2 1,990.4 -84.2 -4.2%
Central Coast 478.0 492.0 -14 -2.8%
North Central 131.6 137.9 -6.3 -4.6%
CALIFORNIA 14,234.1 14,975.6 -741.5 -5.0%
(Thousands)
Nonfarm EmploymentRiverside/San Bernardino Metropolitan Area, August 2009: Down 6.0% YTY
SOURCE: CA Employment Development Division
Y-T-Y PERCENT CHANGE
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
Unemployment RateRiverside County, August 2009: 15.0%
SOURCE: CA Employment Development Division
0%
2%
4%
6%
8%
10%
12%
14%
16%
Ja
n-9
0J
ul-
90
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9J
ul-
09
Employment by Sector
-20%
-15%
-10%
-5%
0%
5%
To
tal N
on
farm
Co
ns
tru
cti
on
Ma
nu
fac
turi
ng
Wh
ole
sa
le
Re
tail
Tra
ns
& U
til
Fin
& In
s
Re
al E
sta
teR
en
tal/
Le
as
ing
Pro
f S
ci &
Te
ch
Sv
cs
Ed
uc
Sv
cs
He
alt
h C
are
an
d S
oc
ial
As
st
2008 2009 2010
% Change
YTY % Changes in California 2008-2010
SOURCE: CA EDD, LAEDC
New Housing PermitsCalifornia, 1988-2009: Down 48.8% YTD
0
50,000
100,000
150,000
200,000
250,000
300,0001
98
8
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
YT
D
Single Family Multi-Family
SOURCE: Construction Industry Research Board
2010 Forecast
U.S. Economy
2004 2005 2006 2007 2008 2009f 2010f
US GDP 3.6% 3.1% 2.7% 2.1% 0.4% -2.6% 1.9%
Nonfarm Job Growth
1.1% 1.7% 1.8% 1.1% -0.4% -3.7% -1.0%
Unemployment 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 10.0%
CPI 2.7% 3.4% 3.2% 2.8% 3.8% -0.5% 1.9%
Real Disposable Income, % Change
3.4% 1.3% 4.0% 2.2% 0.5% 0.8% 2.1%
SOURCE: California Association of REALTORS®
Forecast Date: October 2009
California Economy
2004 2005 2006 2007 2008 2009f 2010f
Nonfarm Job Growth
1.0% 1.8% 1.7% 0.8% -1.2% -4.3% -1.1%
Unemployment Rate
6.2% 5.4% 4.9% 5.4% 7.2% 11.6% 12.1%
Population Growth
1.4% 1.2% 1.1% 1.1% 1.2% 1.1% 1.1%
Real Disposable Income, % Change
3.6% 1.3% 3.4% 1.5% 0.1% -0.4% 0.1%
SOURCE: California Association of REALTORS®
Forecast Date: October 2009
California Housing Market Outlook
2003 2004 2005 2006 2007 2008 2009F 2010F
SFH Resales (000s)
601.8 624.7 625.0 477.5 346.9 439.8 540.0 527.5
% Change 5.1% 3.8% 0.03% -23.6% -27.3% 26.8% 22.8% -2.3%
Median Price ($000s)
$371.5 $450.8 $522.7 $556.4 $560.3 $346.4 $271.0 $280.0
% Change 17.5% 21.3% 16.0% 6.5% 0.7% -38.2% -21.8% 3.3%
30-Yr FRM 5.8% 5.8% 5.9% 6.4% 6.3% 6.0% 5.2% 5.6%
1-Yr ARM 3.8% 3.9% 4.5% 5.5% 5.6% 5.2% 4.8% 5.2%
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Forecast Date: October 2009
Forecast Wild Cards
• First-time Buyer Tax Credit
• Additional Stimulus – Job Creation ?
• Foreclosure Pipeline
• Commercial Defaults – Impact on Credit Market
• Inflation - Will Fed monetize the deficit?
• H1N1 (Stock tip: Purell)
Market Opportunities
• First time buyers: Growing share of the market
• Connect with past clients: Valuable information to share
and receive (LISTEN)
• Educate clients: What is Responsible Homeownership?
• Educate yourself: Professional Development is Critical
In Closing….
www.car.org Economics
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