Partners Trust La Cañada Grand Opening: 2014-2015 California Economic Outlook presented by Leslie Appleton-Young, Chief Economist of the California Association of Realtors®

2014 - 2015 CALIFORNIA ECONOMIC & MARKET

OUTLOOKNovember 20,2014

Partner’s Trust La Canada

Appleton-Young, Chief Economist

OVERVIEW

• Economic Outlook

• California Housing Market Outlook

• Housing Affordability

• Regional Market

• 2015 Forecast

ECONOMIC OUTLOOK

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14 P

Q2

-10

Q3-

10

Q4

-10

Q1-

11

Q2

-11

Q3-

11

Q4

-11

Q1-

12

Q2

-12

Q3-

12

Q4

-12

Q1-

13

Q2

-13

Q3-

13

Q4

-13

Q1-

14

Q2

-14

Q3-

14

ECONOMY: GAINING MOMENTUM

2013: 1.9%; 2014: 2.2%; 2015: 3.0%; 2014 Q3: 3.5% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $

ANNUALLY QUARTERLY

2009 Largest Annual Drop since 1938 (-3.4%)

SERIES: GDPSOURCE: US Dept. of Commerce, Bureau of Economic Analysis

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

10 Q

2

20

10 Q

3

20

10 Q

4

20

11 Q

1

20

11 Q

2

20

11 Q

3

20

11 Q

4

20

12 Q

1

20

12 Q

2

20

12 Q

3

20

12 Q

4

20

13 Q

1

20

13 Q

2

20

13 Q

3

20

13 Q

4

20

14 Q

1

20

14 Q

2

20

14 Q

3

CONSUMER SPENDING POSITIVE

2013: 2.0%; 2014 Q3: 1.8%

ANNUAL PERCENT CHANGE

ANNUALLY QUARTERLY

SERIES: Personal ConsumptionSOURCE: US Dept. of Commerce, Bureau of Economic Analysis

US UNEMPLOYMENT RATE BELOW 6%

CA - 7.3% (Sep. 2014) vs. US - 5.9% (Sep. 2014)

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14% US-CA CA US

SERIES: Unemployment RateSOURCE: US Bureau of Labor Statistics, CA Employment Development Division

EMPLOYMENT GROWTH, CA VS. U.S.

-8

-6

-4

-2

0

2

4 California US


SERIES: Total Nonfarm EmploymentSOURCE: US Bureau of Labor Statistics, CA Employment Development Division

JOB LOSSES IN PRIOR RECESSIONS RECENT CYCLE WORST BY FAR

ALERT: ALIENS ARE TAKING THE JOBS OF AMERICANS!

• They work long hours without complaint.

• They are happy with low pay.

• They don’t care about working conditions.

• They aren’t interested in joining unions.

• Who are they?

Source: U.C.L.A. Ed Leamer

CALIFORNIA JOB CHANGES BY INDUSTRY

-2.2%

-1.7%

-0.3%

0.9%

1.3%

1.4%

1.5%

1.5%

2.1%

2.3%

3.3%

4.7%

4.9%

5.3%

6.2%

-3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7%

Nondurable Goods

Finance & Insurance

Government

Durable Goods

Educational Services

Wholesale Trade

Retail Trade

Transportation, Warehousing & Utilities

Real Estate & Rental & Leasing

Leisure & Hospitality

Health Care & Social Assistance

Professional, Scientific & Technical Services

Information

Admistrative & Support & Waste Services

Construction

SERIES: Total Nonfarm Employment By IndustrySOURCE: US Bureau of Labor Statistics, CA Employment Development Division

September 2014: CA +2.3%, +390,600ANNUAL PERCENT CHANGE

JOB TRENDS BY CALIFORNIA METRO AREA

1.1%

1.3%

1.7%

1.8%

1.9%

2.0%

2.0%

2.1%

2.5%

2.5%

3.5%

3.7%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

Modesto

Stockton MSA

Bakersfield

Los Angeles

Orange…

Ventura

Oakland

Sacramento

Fresno MSA

San Diego

San Jose

San Francisco

SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

AN

NU

AL

PE

RC

EN

T C

HA

NG

E

September 2014: CA +2.3%, +390,600

CONSUMER PRICE INDEX

September 2014: All Items +1.7% YTY; Core +1.7% YTY

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6% All Items Core


SERIES: Consumer Price IndexSOURCE: US Bureau of Labor Statistics

CONFIDENCE: UNEVEN TRENDING UP

October 2014: 94.5 INDEX, 100=1985

SERIES: Consumer ConfidenceSOURCE: The Conference Board

0

20

40

60

80

100

120

MORTGAGE RATES + 1% SPRING 2013ACTUAL TAPERING? WHAT IMPACT?

0%

1%

2%

3%

4%

5%

6%

7%

8% FRM ARM Federal Funds

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

0%

1%

2%

3%

4%

5%

6%

20

09

/01

20

09

/04

20

09

/07

20

09

/10

20

10/0

1

20

10/0

4

20

10/0

7

20

10/1

0

20

11/0

1

20

11/0

4

20

11/0

7

20

11/1

0

20

12/0

1

20

12/0

4

20

12/0

7

20

12/1

0

20

13/0

1

20

13/0

4

20

13/0

7

20

13/1

0

20

14/0

1

20

14/0

4

20

14/0

7

8.2

8.1

4

9.1

8.1

4

FRM

ARM

MORTGAGE RATES HAVE NOT RISEN -YET

January 2009 – October 2014

MONTHLY WEEKLY

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

U.S. DEPOSITORY INSTITUTIONS:HIGH LEVEL OF EXCESS RESERVES SINCE 9/08

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

SERIES: Excess Reserves of Depository Institutions SOURCE: Federal Reserve Bank of Saint Louis

$ BILLIONS

FORECASTERS HAVE BEEN EXPECTING RATES TO RISE

Percent

0

1

2

3

4

5

6

0

1

2

3

4

5

6

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Actual 10-year Treasury yield (solid black line)

Predictions out to five quarters ahead of professional forecasters (hatched lines)

Percent

SERIES: Loan Officer SurveySOURCE: Philadelphia Federal Reserve Survey of Professional Forecasters, Bloomberg

U.S. ECONOMIC FORECAST

Gross Domestic Product

Nonfarm Job Growth

Unemployment Rate

Consumer Price Index

Real Disposable Income, % Change

2011

1.8%

1.2%

8.9%

3.1%

1.3%

2012

2.8%

1.7%

8.1%

2.1%

1.5%

2013

1.9%

1.7%

7.4%

1.5%

0.7%

2014 P

2.2%

1.8%

6.2%

2.0%

2.6%

2015 F

3.0%

2.2%

5.8%

2.2%

2.6%

SERIES: U.S. Economic OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CALIFORNIA ECONOMIC FORECAST

SERIES: CA Economic OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Nonfarm Job Growth

Unemployment Rate

Population Growth

Real Disposable Income, % Change

2011

1.1%

11.8%

0.7%

1.9%

2012

2.4%

10.4%

0.7%

1.1%

2013

3.0%

8.9%

0.9%

0.9%

2014 P

2.2%

7.5%

0.9%

3.0%

2015 F

2.4%

6.7%

0.9%

3.8%

CALIFORNIA HOUSING MARKET OUTLOOK

TODAY’S MARKET

• Clearly well on the road to recovering - Bay Area strongest regional market; Upper end most active

• Volume – Down, still reliant on investment sales

• Prices gains slowing in most markets

• Inventory remains tight but better than last year

• Pent-up/unrealized demand not yet translating into sales

• Affordability challenges emerging once again…

CA SALES FLAT FOR LAST 5 MONTHS

California, Oct. 2014 Sales: 396,220 Units, -8.8% YTD, -1.9% YTY

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

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

MULTIPLE OFFERS DECLINE WITH LESS INTENSE MARKET COMPETITION

AFTER PEAKING IN 2013

72%

53%5.7

4.3

0

1

2

3

4

5

6

7

0%

10%

20%

30%

40%

50%

60%

70%

80%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

% with Multiple Offers # of Multiple offers (Average)

SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

49 % SOLD BELOW ASKING IN 2014

7%

11%

28%

54%

0% 20% 40% 60%

20% or more

10% to 19.99%

5% to 9.99%

Less than 5%

% of Price Reduction(Properties Sold Below Asking Price)

49%

18%

33%

Sale Price to Asking Price

Below Asking Price At Asking Price Above Asking Price


Median Reduction:4.5% of List Price

50%

33%

0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

% of Sales above Asking Price

Long Run Average = 19%

FEWER HOMES SOLD ABOVE THE ASKING PRICE MARKET COMPETITION COOLED IN 2014

0

2

4

6

8

10

12

14

16

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Med. Price Discount

Med. Weeks on MLS

0%, 2.1

weeks

Median Price Discount & Weeks on Market

QUESTION: 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?SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

INVESTMENT BUYERS DROPPING : 15% MARKET SHARE

19%

15%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Long Run Average: 12 %


BUYING TO RENT V. FLIP; CHANGE IN PREFERRED INVESTMENT STRATEGY

Investment to Flip

Rental Property


WE’VE COME A LONG WAY SINCE 2009:EQUITY SALES: 9 OUT OF 10 TRANSACTIONS

91.0%

4.6%

4.0%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-10

Jul-

10

Oct

-10

Jan

-11

Ap

r-11

Jul-

11

Oct

-11

Jan

-12

Ap

r-12

Jul-

12

Oct

-12

Jan

-13

Ap

r-13

Jul-

13

Oct

-13

Jan

-14

Ap

r-14

Jul-

14

Equity Sales Short Sale REO

SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SALES GROWING IN UPPER PRICE RANGES

SERIES: Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

-22.9%

-0.7%-2.9%

4.9% 5.9%2.8%

18.5%

28.3%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Sep-14Year-over-Year % Chg. in Sales

CHANGE IN SALES BY PRICE RANGE

(Year-to-Year)

-22.9%

9.0%

-0.7%

-2.9%

4.9%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

$0 - $200k $500k+ $200 - $300k $300 - $400k $400 - $500k

SERIES: Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CA MEDIAN PRICE GAINS SLOWING

California, Oct. 2014: $450,620, Up 5.4% YTY

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

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

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

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

PRICE GAINS HAVE MODERATED SINCE MID 2013

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50% Condo Single-Family Homes

SERIES: Sales of SFH and Condo UnitsSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

YTY% Chg. in Price

REO & SHORT SALES: SO CAL

Percent of Total Sales; Sep 2014

2%1%

4%

6%

2%

6%

3%

5%

5%

3%

0%

2%

4%

6%

8%

10%

12%

14%

Los Angeles Orange Riverside San Bernardino San Diego

REO Sales Short Sales

SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

LOS ANGELES COUNTY

Preforeclosure: 5,210 • Auction: 4,788 • Bank Owned: 1,015

SOURCE: PropertyRadar on 11/13/14

LOS ANGELES COUNTY



LOS ANGELES COUNTY



LA CANADA FLINTRIDGE

Preforeclosure: 19 • Auction: 8 • Bank Owned: 0


GLENDALE



LA CRESCENTA



$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000 California US

CA PRICES UPWARD MARCH WILL SLOW

1970-2014

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

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

INVENTORY IMPROVING FROM LAST YEAR

Sept 2013: 3.6 Months; Sept 2014: 4.2 Months

Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question.

0

2

4

6

8

10

12

14

16

18

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

INVENTORY MOSTLY HIGHER

Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question.

Price Range (Thousand) Oct-14 Sep-14 Oct-13

$1,000K+ 4.9 5.5 5.3

$750-999K 3.7 4.3 3.5

$500-749K 3.8 3.9 3.2

$400-499K 3.6 3.9 3.1

$300-399K 3.6 4.1 3.1

$200-299K 3.8 4.0 3.2

$0-199K 3.5 3.9 3.0

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

HOUSING AFFORDABILITY

HOUSING AFFORDABILITY DOWNSHARPLY SINCE Q1 2012

% OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME

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

0%

10%

20%

30%

40%

50%

60%

70%

80% CA US

California vs. U.S. – 1984-2014

Annual Quarterly

INCOME REQUIRED TO BUY A MEDIAN-PRICED HOME IN CA: (PEAK VS. CURRENT)

$56,324

$93,593

$0

$20,000

$40,000

$60,000

$80,000

$100,000

2012 Q1 2014 Q2

• Change in minimum required income: $37,269

• Increase in income attributed to interest rate increase: $836 (2.2% of total change)

• Increase in income attributed to price increase : $36,433 (97.8% of total change)

SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

HOMEOWNERSHIP RATE LOWER IN CA

California Vs. U.S.

40%

45%

50%

55%

60%

65%

70%

75% CA US

SERIES: Homeownership RatesSOURCE: U.S. Census Bureau

HOMEOWNERSHIP RATE BY AGE OF HOUSEHOLDER

SOURCE: Census Bureau

STUDENT DEBT: DRAGS ON HOME SALES

CA PERMITS UP BUT MORE UNITS NEEDED

2013: 57,496 Units, Up 43.0% from 2012

SERIES: New Housing PermitsSOURCE: Construction Industry Research Board

0

50000

100000

150000

200000

250000

300000

350000 Single Family Multi-Family

Household Growth: 220,000-250,000/yr

REGIONAL HOUSING MARKETS

LOS ANGELES COUNTY

SALES OF RESIDENTIAL HOMES

Los Angeles County, October 2014: 4,052 Units

Up 6.0% MTM, Up 4.2% YTY

SOURCE: Clarus Market Metrics

MEDIAN PRICE OF RESIDENTIAL HOMES

Los Angeles County, October 2014: $435,000

Up 1.2% MTM, Up 6.1% YTY


FOR SALE PROPERTIES

Los Angeles County, October 2014: 18,135 Units

Down 3.7% MTM, Down 2.6% YTY

Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month.


MONTH’S SUPPLY OF INVENTORY

• Los Angeles County, October 2014: 2.5 Months

Note: “Month’s Supply of Inventory” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “For Sale” on the last day of the month in question. The inventory figure is then divided by the number of properties that went Under Contract during the month.


LA CAÑADA


La Cañada, October 2014: 15

Up 36.4% MTM, Down 6.3% YTY



La Cañada, October 2014: $1,688,888

Up 30.9% MTM, Up 35.7% YTY


FOR SALE PROPERTIES

La Cañada, October 2014: 80 Units

Up 3.9% MTM, Down 23.1% YTY




La Cañada, October 2014: 1.4 Months



PASADENA


Pasadena, October 2014: 81 Units




Pasadena, October 2014: $655,000

Down 7.7% MTM, Up 4.0% YTY


FOR SALE PROPERTIES

Pasadena, October 2014: 355 Units





Pasadena, October 2014: 2.3Months



LA CRESCENTA


La Crescenta, October 2014: 17 Units




La Crescenta, October 2014: $599,000



FOR SALE PROPERTIES

La Crescenta, October 2014: 65 Units





La Crescenta, October 2014: 1.5 Months



2015 FORECAST

CALIFORNIA HOUSING MARKET FORECAST

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

SFH Resales (000s)

% Change

Median Price ($000s)

% Change

Housing Affordability Index

30-Yr FRM

2011

422.6

1.4%

$286.0

-6.2%

53%

4.5%

2012

439.8

4.1%

$319.3

11.6%

51%

3.7%

2013

413.3

-5.8%

$407.2

27.5%

36%

4.0%

2014 P

380.5

-8.2%

$455.0

11.8%

30%

4.3%

2015 F

402.5

5.8%

$478.7

5.2%

27%

4.5%

CALIFORNIA HOUSING MARKET OUTLOOK

Sales Down for 2014 but will Improve in 2015; Price Gains Slowing

Units (Thousand)

380 403

0

100

200

300

400

500

600

700

2005 2007 2009 2011 2013 2015f

Th

ou

san

ds

Sales of Existing Detached Homes

$455

$479

$0

$100

$200

$300

$400

$500

$600

2005 2007 2009 2011 2013 2015f

Th

ou

san

ds

Median PricePrice

(Thousand)


CA: DOLLAR VOLUME UP FOR 4TH YEAR

$301

$244

$164

$133 $131 $127 $121 $140

$169 $173 $193

-40%

-30%

-20%

-10%

0%

10%

20%

30%

$0

$50

$100

$150

$200

$250

$300

$350

$400

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014p 2015f

$ Volume of Sales Percent Change

% Change$ in Billion

-60%


Up 2.7% in 2014, Up 11.3% in 2015

WHERE ARE ALL THE FIRST-TIME BUYERS?

SHARE OF FIRST-TIME BUYERS UP BUT STILL BELOW LONG-RUN AVERAGE

28.1%30.5%

0%

10%

20%

30%

40%

50%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

% First-Time Home Buyers Long Run Average

Long Run Average = 38%

QUESTION: Was the buyer a first-time buyer?SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

AVERAGE AGE OF BUYERS RISING

40 41 41 4144

41 4038 37 36 35

38

48

0

10

20

30

40

50

60

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Average Age

Q. What is your age?

SHARE OF YOUNGER BUYERS DOWN

0%

20%

40%

60%

80%

100%

20102011

20122013

2014

Under 25 25-34 35-44 45-54 55-64 65+ Refused

Q. What is your age?

SERIES: 2014 Home Buyer SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CA BUYERS: MINORITIES THE MAJORITY

White 36%

Hispanic 26%

Black 12%

Asian/Pacific Islander 26%

Q. How would you describe your ethnic background?

WHY BUY NOW?

Change in family

Long term appreciation

Desired larger home

Investment/Tax advantage

Desired better/other location

Favorable price/financing

Low interest rates

Promotion/raise

Price decreases

8%

9%

13%

15%

16%

17%

29%

34%

54%

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


BUYERS DIDN’T PURCHASE SOONER BECAUSE…

57% • Not many good housing options

53% • Waited to see when prices would stabilize

36% • No real buying urgency

30% • Difficulty qualifying for mortgage

21% • Needed to sell existing home

20% • Needed to save for down payment

15% • Waited until finances improved

Q. Why didn’t you buy a home sooner?


RENTERS: POTENTIAL HOME OWNERS?

REASONS FOR RENTING INSTEAD OF BUYING

44%

9%

6%

6%

6%

5%

5%

3%

2%

Can't afford to buy

Poor credit / Can't qualify

Renting is easier

Young/Starting out/Not ready

Flexibility/Freedom if renting

Cost/Upkeep/Responsibility

Plan to / Saving for down

Never considered it/No interest

Disabled/On disability

Q. Why do you rent instead of buying?

SERIES: 2013 Renter SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

RENTERS EXPECT TO BUY A HOME IN THE FUTURE

Q. Do you expect to buy a home in the future?

yes52%

no31%

don’t know17%


REASONS FOR NOT PLANNING TO BUY A HOME

41%

14%

7%

6%

6%

3%

3%

2%

Can't Afford to Buy

Prefer to Rent

Economic Uncertainty

Lack of Down Payment

Renting is Less Expensive

Job Uncertainty

Don't Know

Housing Market Uncertainty

Q. Why don’t you expect to buy a home in the future?


INTERNATIONAL BUYERSMAKE THEIR MARK

1/3 FROM CHINA

Please tell us about your last closed transaction with an international client. What is your client’s country of permanent residence?

3.8%

4.7%

8.3%

14%

35%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

India

Japan

Mexico

Canada

China/Hong Kong

WHY THE UNITED STATES?

6.6%

8.2%

17.2%

21.3%

26.2%

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

Safety and security

Investment potential

Location and climate

To be closer to friends and family

Employment

Why did your last international buyer choose to purchase in the U.S. as opposed to the other countries he/she/they considered?

OTHER COUNTRIES CONSIDERED

Germany

Singapore

China

Mexico

Canada

France

Sweden

In which other countries did your last international buyer consider purchasing real estate?

WHY INTERNATIONAL CLIENTS BUY

5%

5%

5%

7%

12%

14%

18%

0% 5% 10% 15% 20%

Investment to acquire legalpermenant U.S. resident…

Tired of renting

Affordable price

Desired a better/otherlocation

Changed jobs/relocated

To rent out property

Investment/tax advantagesin U.S.

What was your clients’ main reason for buying/selling now in your last closed transaction with an international client?

WHY U.S. CLIENTS BUY

7.0%

7.0%

9.0%

10.0%

12.0%

38.0%

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

Promotion/raise

Tired of renting

Investment/Tax advantage

Desired better/other location

Favorable price/financing

Price decreases

What was your clients’ main reason for buying/selling now in your last closed transaction with an international client?

INTENDED USE FOR PROPERTY?

4%

27%

38%

30%

0%

2%

7%

91%

0% 20% 40% 60% 80% 100%

Other

Vacation/Second Home

Investment/Rental Property

Primary Residence

US Buyer

International Buyer

What was the intended use of the property in your last closed transaction with an international client?

ALL CASH INTERNATIONAL BUYERS

0%

20%

40%

60%

80%

100%

International buyers Traditional buyers

69%

27%

31%

73%

All cash Obtained financing

SOURCE: 2013 International Client Survey, 2013 Annual Housing Market SurveyHow did your last international buyer pay for the property?

MILLENNIALS: TOMORROW’S HOME

OWNERS?

NEARLY 2/5 MILLENNIALS STILLLIVE WITH THEIR PARENTS

What is your current living situation?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

I rent I live with myparents

I own I live in a dorm Other:

41%

36%

20%

1%1%

SERIES: 2014 Millennials SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY RENT BECAUSE THEY CAN’T AFFORD TO BUY

Why do you rent instead of buying?

2%

4%

7%

9%

10%

15%

16%

17%

20%

24%

37%

67%

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

Other

Believe housing market will decline in the near future

No interest in buying

Don't want the responsibility of owning

Don't have a job

Enjoy the flexibility/freedom of renting

Too costly to maintain property as owner

Can't qualify for a mortgage

Don't have a down payment

It's easier to rent

Not ready to buy

Can't afford to buy


½ HAVE STUDENT DEBT

What is the balance of your outstanding student debt?

0%

5%

10%

15%

20%

25%

$1-10K $10K-20K $20K-50K $50K-100K >$100K

21%

12% 12%

3%2%

Student Debt (In Thousands)


MOST EXPECT TO BUY A HOME WITHIN 5 YEARS

When do you expect to buy a home?

0%

5%

10%

15%

20%

25%

30%

35%

Within ayear

In 1-3years

In 3-5years

When Iget

married

When Ihave achild

Never Other Don'tknow

18-26

27-34

All


MILLENNIALS’ BIGGEST CONCERNS

What are your biggest concerns about home ownership?

Price/Affordability (45%)

Problems with Credit, Mortgages, or Taxes (19%)

Maintenance/Upkeep (14%)

Satisfaction with Home/Location (7%)

Responsibility (4%)


MOST MILLENNIALS UNCERTAIN/DOUBTFUL THAT THEY COULD OBTAIN A MORTGAGE NOW?AMILLENNIAL ETHNICITY

SOURCE: C.A.R. 2014 Millennial SurveyQ: Could you obtain a mortgage if you applied now ?

Yes 22%

No 33%

Don't know45%

PEOPLE WOULD PREFER THE FOLLOWING OVER GOING THROUGH THE HOME MORTGAGE PROCESS AGAIN:

SOURCE: Guaranteed Rate Mortgage Survey of 1,000 adults 25 and older USA Today April 2014

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