10/9/2015

2016CALIFORNIA
ECONOMIC&
MARKET
FORECAST

October8,2015
EXPO SanJoseConventionCenter
LeslieAppletonYoung,VicePresident&ChiefEconomist

HOWDIDIDO?
LASTOCTOBERITOLDYOU

10/9/2015

2015FORECASTREPORTCARD
2014
Actual

2015
Forecast

2015
Projected

SFHResales (000s)

383.3

402.5

407.5

%Change

7.6%

5.8%

6.3%

Median Price($000s)

$447.0

$478.7

$476.3

%Change

9.8%

5.2%

6.5%

30YrFRM

4.2%

4.5%

3.9%

Housing AffordabilityIndex

30%

27%

31%

U.S. GrossDomesticProduct

2.4%

3.0%

2.4%

ForecastDate:October2015vs.October2014
SERIES:CAHousingMarketOutlook
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

ECONOMICOUTLOOK

10/9/2015

ECONOMYHASBEENGROWINGFOR68MONTHS
2014:2.4%;2015:2.4%;2016:2.6%
ANNUALPERCENTCHANGE,CHAINTYPE(2005)$

ANNUALLY

5%

QUARTERLY
3.9%

4%
3%
2%
1%
0%
1%
2%

2009LargestAnnualDropsince1938(3.4%)

3%

Q115

Q215

Q314

Q414

Q114

Q214

Q313

Q413

Q113

Q213

Q312

Q412

Q112

Q212

2016F

2015P

2013

2014

2011

2012

2010

2009

2007

2008

2005

2006

4%

SERIES:GDP
SOURCE:USDept.ofCommerce,BureauofEconomicAnalysis

KEYSECTORSOFMACROECONOMY

ConsumerSector
BusinessSector
Government
InternationalTrade

10/9/2015

EMPLOYMENTSTALLEDINSEPT:142K
198K/mo 2014avg
260K/mo 2015avg

ANNUALPERCENTCHANGE
6
4

California

US

3.0%

2.0%

0
2
United States

4
6

Change

Growth

2,752,000

2.0%

California

470,000

3.0%

NewYork

130,500

1.4%

Texas

217,700

1.9%
Jul15

Jul14

Jan15

Jul13

Jan14

Jul12

Jan13

Jul11

Jan12

Jul10

Jan11

Jan10

Jul09

Jan09

Jul08

Jan08

Jul07

Jan07

Jul06

Jan06

Jul05

Jan05

SERIES:TotalNonfarmEmployment
SOURCE:USBureauofLaborStatistics,CAEmploymentDevelopmentDivision

UNEMPLOYMENTRATEHOLDSSTEADY
September2015:US5.1%&August2015:CA6.1%
14%

USCA

CA

US

12%
10%
8%
6%
4%
2%
0%
2%
Jul15

Jan15

Jul14

Jan14

Jul13

Jan13

Jul12

Jan12

Jul11

Jan11

Jul10

Jan10

Jul09

Jan09

Jul08

Jan08

Jul07

Jan07

Jul06

Jan06

Jul05

Jan05

4%

SERIES:UnemploymentRateThe U-6 rate covers the unemployed, underemployed and those who are not looking but who want a job
SOURCE:USBureauofLaborStatistics,CAEmploymentDevelopmentDivision

10/9/2015

UNEMPLOYMENTRATES(U6VS.U3)
September2015=U3:5.1%,U6:10.0%
U3

18%

U6

16%
14%
12%
10%
8%
6%
4%
2%
Jul15

Jan15

Jul14

Jul13

Jan14

Jul12

Jan13

Jul11

Jan12

Jul10

Jan11

Jul09

Jan10

Jan09

Jul08

Jan08

Jul07

Jan07

Jul06

Jan06

Jul05

Jan05

0%

SERIES:UnemploymentRates
SOURCE:USBureauofLaborStatistics,CAEmploymentDevelopmentDivision

PARTICIPATIONDOWN:AGINGPOP&SLOWJOB
GROWTH&HIGHLONGTERMUNEMPLOYMENT
CA 62.5%(Dec.2014)vs.USA 62.7%(Dec.2014)
LaborForceRate
70%

US

CA

68%

66%

64%

62%

60%

SERIES:LaborForceParticipationRate
SOURCE:BLS,DataBuffet

10/9/2015

JOBTRENDSBYCALIFORNIAMETROAREA
August2015:CA+3.0%,+470,000
ANNUALPERCENTCHANGE
SanJose
SanFrancisco
OrangeCounty
SanDiego
InlandEmpire
Sacramento
FresnoMSA
StocktonMSA
Oakland
LosAngeles
Modesto
Ventura
Bakersfield

5.5%
4.6%
3.2%
3.1%
3.0%
2.8%
2.6%
2.0%
1.9%
1.8%
1.0%
0.9%
0.2%

1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

SERIES:TotalNonfarmEmployment
SOURCE:CAEmploymentDevelopmentDivision

CALIFORNIAJOBCHANGESBYINDUSTRY
August2015:CA+3.0%,+470,000
ANNUALPERCENTCHANGE
Professional,Scientific&TechnicalServices
Construction
Leisure&Hospitality
Transportation,Warehousing&Utilities
Admistrative&Support&WasteServices
RealEstate&Rental&Leasing
WholesaleTrade
HealthCare&SocialAssistance
Information
EducationalServices
RetailTrade
Government
DurableGoods
Finance&Insurance
NondurableGoods

6.8%
6.4%
4.3%
3.6%
3.5%
3.5%
3.0%
2.7%
2.6%
2.0%
2.0%
1.3%
0.5%
0.4%
1.0%

2% 1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

SERIES:TotalNonfarmEmploymentByIndustry
SOURCE:USBureauofLaborStatistics,CAEmploymentDevelopmentDivision

10/9/2015

NONFARMEMPLOYMENTBYREGION
NonfarmEmployment(Thousands)
Aug2015

Aug2014

Change

%Change

SouthernCalifornia

8,834.4

8,626.3

208.1

2.4%

BayArea

4,289.3

4,213.0

76.3

1.8%

CentralValley

1,540.9

1,492.4

48.5

3.2%

CentralCoast

1,318.4

1,280.0

38.4

3.0%

NorthCentral

1,391.4

1,349.0

42.4

3.1%

CALIFORNIA

294.4

291.9

2.5

0.9%

SERIES:TotalNonfarmEmployment
SOURCE:CAEmploymentDevelopmentDivision

JOBLOSSESINPRIORRECESSIONS
RECENTCYCLEWORSTBYFAR

10/9/2015

CONSUMERCONFIDENCEINDEX
September2015:103.0
INDEX,100=1985
120
100
80
60
40
20

Jul15

Jan15

Jul14

Jan14

Jul13

Jan13

Jul12

Jul11

Jan12

Jul10

Jan11

Jul09

Jan10

Jul08

Jan09

Jul07

Jan08

Jul06

Jan07

Jul05

Jan06

Jan05

SERIES:ConsumerConfidence
SOURCE:TheConferenceBoard

CONSUMERPRICEINDEX
August2015:AllItems0.2%YTY;Core+1.8%YTY
ANNUALPERCENTCHANGE
6%

AllItems

Core

5%
4%
3%
2%
1%
0%
1%
2%
Jul15

Jan15

Jul14

Jan14

Jul13

Jan13

Jul12

Jul11

Jan12

Jan11

Jul10

Jan10

Jul09

Jan09

Jul08

Jan08

Jul07

Jan07

Jul06

Jan06

Jul05

Jan05

3%

SERIES:ConsumerPriceIndex
SOURCE:USBureauofLaborStatistics

10/9/2015

ISITTIME?AHLETSWAITALITTLELONGER

MORTGAGERATES
January2009 October2015
6%

MONTHLY

WEEKLY

5%
4%
3%

FRM
ARM

2%
1%
0%

SERIES:30YrFRM,1YrARM
SOURCE:FederalHomeLoanMortgageCorporation

10/9/2015

RATEHIKEPOSTPONED,BUTNOTCANCELLED
Factorsforthedelay
Globaleconomicslowdown/Strongdollar
Emergingmarketsvulnerabletorisingrateenvironment

Heightenstockmarketvolatility
Negativewealtheffectcouldleadtoslowdownineconomicgrowth

AvoidarepeatofTaperTantrum
Fedhadnotarticulatedenoughonallthemovingpartsanddidnot
wanttogiveanysurprises

WHEREAREWEHEADED?
FedwilllikelybeginnormalizationinDecember(maybe)and
rateswillgraduallyincreasein2016and2017.Actionwillbe
datadetermined
Riskofratesincreasingtoofast:bringingeconomicgrowthto
ahalt
Riskofratesincreasingtooslow:zeroleveragewhennext
downturnhits

10

10/9/2015

MARKETDOWNSHARPLYFROMTHEPEAK
MONTHLYAVERAGE

S&P500Composite

Causesofthefinancialmarketturmoil

2150
2100

Highlyvaluedassetmarkets

2050

EconomicslowdowninChina

2000
1950
1,944.4

1900

U.S.monetarypolicynormalization

1850

Collapseinenergyandother
commodityprices

1800
1750
1700
Jul15

Sep15

May15

Jan15

Mar15

Nov14

Jul14

Sep14

May14

Jan14

Mar14

1650

CROSSCURRENTSNETOUT

$50bbl LowerOilPrices
50bpsLowerMortgageRates
15%$Appreciation
5%LowerStockPrices

11

10/9/2015

U.S.HOMESALESUPIN2015
U.S.,Aug2015Sales:4,690,000Units,+8.1%YTD,+6.1%YTY
7,000,000
6,000,000

4,690,000

5,000,000
4,000,000
3,000,000
2,000,000
1,000,000

SERIES:SalesofExistingSingleFamilyHomes
SOURCE:NATIONALASSOCIATIONOFREALTORS

Jul15

Jan15

Jul14

Jan14

Jul13

Jul12

Jan13

Jul11

Jan12

Jul10

Jan11

Jul09

Jan10

Jan09

Jul08

Jan08

Jul07

Jul06

Jan07

Jul05

Jan06

Jan05

*Salesareseasonallyadjustedandannualized

U.S.HOMEPRICEGAINSMODERATING
U.S.,Aug2015:$230,200,1.4%MTM,+5.1%YTY
$230,200

$250,000

$200,000

$150,000

$100,000

$50,000

Jul15

Jan15

Jul14

Jan14

Jul13

Jan13

Jul12

Jan12

Jul11

Jan11

Jul10

Jan10

Jul09

Jan09

Jul08

Jul07

Jan08

Jul06

Jan07

Jan06

Jul05

Jan05

SERIES:MedianPriceofExistingSingleFamilyHomes
SOURCE:NATIONALASSOCIATIONOFREALTORS

12

10/9/2015

U.S.COMMERCIALVACANCYRATES

CommercialR.E.

Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 2014

Office

15.1% 15.9% 15.8% 15.5% 15.3% 15.1% 14.9% 14.8% 16.0% 15.6% 15.0%

Industrial

11.3% 10.8% 10.3% 9.8% 9.4% 9.0%

Retail

13.7% 13.2% 13.0% 12.7% 12.3% 12.1% 11.9% 11.6% 13.8% 13.2% 12.0%

Multifamily

8.4% 6.6% 6.7%

8.5%

2015

2016

8.4% 12.0% 11.7% 8.8%

6.6% 6.6% 6.6% 6.6% 6.7%

6.6%

7.1%

7.1%

SOURCE:NATIONALASSOCIATIONOFREALTORS

CAMETROCOMMERCIALVACANCYRATES
2015Q2
MSA

Office

Industrial

Retail

MultiFamily

LosAngeles

14.8%

3.6%

5.7%

3.5%

OaklandEastBay

17.1%

8.2%

6.0%

2.8%

OrangeCounty

16.3%

3.4%

4.6%

3.3%

Sacramento

20.3%

11.1%

10.0%

2.6%

SanBernardino/Riverside

22.4%

7.2%

9.1%

2.5%

SanDiego

14.7%

6.4%

6.1%

2.8%

SanFrancisco

10.6%

10.4%

3.0%

3.8%

SanJose

16.3%

16.2%

4.6%

3.4%

Ventura

16.4%

8.5%

2.9%

SOURCE: National Association of REALTORS

13

10/9/2015

HOUSEHOLDGROWTHAFFECTEDBY
DEMOGRAPHICANDECONOMICFACTORS

HOUSEHOLDFORMATIONACCELERATESIN2015

14

10/9/2015

U.S.ECONOMICOUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

USGDP

2.4%

1.8%

2.3%

2.2%

2.4%

2.4%

2.7%

NonfarmJobGrowth

0.7%

1.2%

1.7%

1.7%

1.9%

2.1%

1.8%

Unemployment

9.6%

8.9%

8.1%

7.4%

6.2%

5.3%

5.0%

CPI
RealDisposable
Income,%Change

1.6%

3.1%

2.1%

1.5%

1.6%

0.2%

2.1%

1.0%

2.5%

3.0%

0.2%

2.5%

3.3%

2.7%

30YrFRM

4.7%

4.5%

3.7%

4.0%

4.2%

3.9%

4.5%

SERIES:U.S.EconomicOutlook
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

U.S.HOUSINGMARKETOUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

ExistingHomeSales(000s)

4,190

4,260

4,660

5,090

4,940

5,292

5,471

%Change

3.5%

1.7%

9.4%

9.2% 2.9%

7.1%

3.4%

$172.9 $166.1 $176.8 $197.1 $208.3

$221.4

$231.0

6.3%

4.3%

MedianPrice($000s)
%Change

0.2% 3.9%

6.4% 11.5%

5.7%

SERIES:U.S.Existinghomesalesofsinglefamilyhomesandcondo/coops
SOURCE:NATIONALASSOCIATIONOFREALTORS

15

10/9/2015

CALIFORNIAECONOMICOUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

NonfarmJobGrowth

1.1%

1.1%

2.4%

3.0%

2.2%

2.8%

2.3%

UnemploymentRate

12.3%

11.8%

10.4%

8.9%

7.5%

6.3%

5.5%

0.7%

0.7%

0.7%

0.9%

0.9%

0.9%

0.9%

0.9%

3.4%

4.7%

0.2%

3.0%

4.3%

4.5%

PopulationGrowth
RealDisposable
Income,%Change

SERIES:CAEconomicOutlook
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

CALIFORNIAHOUSINGMARKET
OUTLOOK

16

10/9/2015

MEMBERSHIPFOLLOWSSALES
WITH12YEARLAG
HomeSales

UnitsofHomeSold

Membership

#ofMembers

700,000

250,000

600,000

2015p:181,000
2016f:183,000

200,000

500,000
150,000

400,000
300,000

100,000

200,000
50,000
100,000

2015p

2011

2013

2007

2009

2003

2005

2001

1997

1999

1993

1995

1991

1987

1989

1983

1985

1981

1977

1979

1973

1975

0
1971

2015SALESDIDNOTDISAPPOINT
California,Aug2015Sales:431,800Units,+7.4%YTD,+9.3%YTY
700,000
600,000
Aug14: Aug15:
395,080 431,800

500,000
400,000
300,000
200,000
100,000

SERIES:SalesofExistingSingleFamilyHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

Jul15

Jan15

Jul14

Jan14

Jul13

Jan13

Jul12

Jan12

Jul11

Jan11

Jul10

Jan10

Jul09

Jan09

Jul08

Jan08

Jul07

Jan07

Jul06

Jan06

Jul05

Jan05

*Salesareseasonallyadjustedandannualized

17

10/9/2015

CASALESREGAINEDMOMENTUMIN2015
YearoverYear%Chg

6per.Mov.Avg.(YearoverYear%Chg)

20%
15%
10%
5%
0%
5%
10%
15%
20%
Jul15

Jan15

Apr15

Jul14

Oct14

Apr14

Jan14

Jul13

Oct13

Jan13

Apr13

Oct12

Jul12

Jan12

Apr12

Jul11

Oct11

Jan11

Apr11

Jul10

Oct10

Jan10

Apr10

25%

SERIES:SalesofExistingSingleFamilyHomes,SeasonallyAdjusted
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

HOMEPRICEGAINSHAVESLOWED
California,Aug2015:$493,420,1.0%MTM,+2.5%YTY
P:May07
$594,530

$700,000
$600,000

Aug14:
$481,250

$500,000

Aug15:
$493,420

T:Feb09
$245,230
59%from
peak

$400,000
$300,000
$200,000
$100,000

Jul15

Jan15

Jul14

Jan14

Jul13

Jan13

Jul12

Jan12

Jul11

Jan11

Jul10

Jul09

Jan10

Jul08

Jan09

Jul07

Jan08

Jul06

Jan07

Jan06

Jul05

Jan05

SERIES:MedianPriceofExistingSingleFamilyHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

18

10/9/2015

HOMEPRICEAPPRECIATIONSHAVE
MODERATEDSINCEMID2013
YTY%Chg.inPrice
50%

Condo

SingleFamilyHomes

40%
30%
20%
10%
0%
10%
20%
Jan10

Jul10

Jan11

Jul11

Jan12

Jul12

Jan13

Jul13

Jan14

Jul14

Jan15

Jul15

SERIES:SalesofSFHandCondoUnits
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

CALIFORNIAVS.U.S.MEDIANPRICES
19702015
$600,000

California

US

CAPriceTrend

$500,000
$400,000
$300,000
$200,000
$100,000

2012

2014

2010

2008

2004

2006

2002

1998

2000

1996

1992

1994

1988

1990

1986

1982

1984

1978

1980

1974

1976

1972

1970

SERIES:MedianPriceofExistingSingleFamilyHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS
SOURCE:
CALIFORNIA ASSOCIATION OF REALTORS

19

10/9/2015

2015 WHEREAREWE?
Housingmarkethasrecovered Welcome
tothenewnormal
Lowmortgagerates
Job&Incomegrowtharepositive

Andyet
Supplywellbelowlongrunaverage
ShareoffirsttimebuyersLOW
Affordabilitykeyconcernforeveryone

Itsnotaneasymarket/transactionfor
anyone.

UNDERWATERMORTGAGES
RISINGPRICESHAVEREVERSEDEQUITYLOSSES
40%

NegativeEquityShareinCA

NearNegativeEquityShareinCA

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

7.3%
1.7%

0%

SERIES:UnderwaterMortgages
SOURCE:CoreLogic

20

10/9/2015

INVENTORYCONTINUEDTO
DECLINEFROMLASTYEAR
Aug2014:4.0Months;Aug2015:3.6Months
18
16
14
12
10
8
6
4

Jul15

Jul14

Jan15

Jul13

Jan14

Jul12

Jan13

Jul11

Jan12

Jul10

Jan11

Jan10

Jan

Jul09

Jan

Jul08

Jul07

Jan07

Jan

Jul05

Jan05

Jul06

Note:UnsoldInventoryIndexrepresentsthenumberofmonthsitwouldtaketoselltheremaininginventoryforthemonthin question.The
remaininginventoryforthemonthisdefinedasthenumberofpropertiesthatwereActive,Pending,andContingent(whenavailable)and
dividethesumbythenumberofSoldpropertiesforthemonthinquestion.

SERIES:UnsoldInventoryIndexofExistingSingleFamilyHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

WHEREISTHEINVENTORY?
Affordabilitychallengeforrepeatbuyers
Lowrateoncurrentmortgage
Lowpropertytaxes
WhylistwhenthereisnowheretogoIcanafford?
Couldnotqualifyforamortgagetoday
Foreclosurepipelineisdry
Investorsrentinginsteadofflipping
NewconstructionrecoveringbutLOW
Measurementerror?Off MLS(akapocket)listingsnot
beingcountedinlistingstats
Demographics:Tradeupbuyerpoolissmaller

21

10/9/2015

FEWERMIDDLEAGEADULTSINRECENTYEARS

Source:HarvardJointCenterofHousingStudies,CensusBureau

DROPINHOMEOWNERSHIP

Source:HarvardJointCenterofHousingStudies,CensusBureau

22

10/9/2015

DECLINEIN#OFTRADEUPBUYERSDUETOPOPULATIONLOSS&
DROPINHOMEOWNERSHIPRATE

Source:HarvardJointCenterofHousingStudies,CensusBureau

REGIONALHOUSINGMARKETS

23

10/9/2015

CAAUG.2015MEDIANPRICES
YTY

SERIES:MedianPriceofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

CA2015YTDSALES

SERIES:YeartoDateSalesofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

24

10/9/2015

NORTHERNCALIFORNIAAUG2015

Sales

Median Price

$346,180

12% YTD
8% YTY
UII

4.6

Months

MTM

5% YTY

32.7
Days

Price

NA

Per Sq Ft

Sales

95.8%

To List Ratio

www.car.org/marketdata

NORTHERNCALIFORNIA
AUG.2015MEDIANPRICES

SERIES:MedianPriceofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

25

10/9/2015

NORTHERNCALIFORNIA
2015YTDSALES

SERIES:YeartoDateSalesofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

NORTHERNWINEAUG2015

Sales

6% YTD
14% YTY
UII

3.6

Months

MTM

46.1
Days

Median Price

$550,120
15% YTY
Price

Sales

Per Sq Ft

To List Ratio

NA

NA

www.car.org/marketdata

26

10/9/2015

NORTHERNWINE
AUG.2015MEDIANPRICES

SERIES:MedianPriceofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

NORTHERNWINE
2015YTDSALES

SERIES:YeartoDateSalesofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

27

10/9/2015

BAYAREAAUG2015

Sales

Median Price

$804,190

5% YTD
0.2% YTY
UII

2.3

Months

MTM

10% YTY

22.3
Days

Price

$509
Per Sq Ft

Sales

103.4%
To List Ratio

www.car.org/marketdata

BAYAREA
AUG.2015MEDIANPRICES

SERIES:MedianPriceofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

28

10/9/2015

BAYAREA
2015YTDSALES

SERIES:YeartoDateSalesofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

CENTRALVALLEYAUG2015

Sales

10% YTD
12% YTY
UII

3.6

Months

MTM

24.4
Days

Median Price

$276,900
7% YTY
Price

NA

Per Sq Ft

Sales

97.3%

To List Ratio

www.car.org/marketdata

29

10/9/2015

CENTRALVALLEY
AUG.2015MEDIANPRICES

SERIES:MedianPriceofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

CENTRALVALLEY
2015YTDSALES

SERIES:YeartoDateSalesofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

30

10/9/2015

CENTRALCOASTAUG2015

Sales

Median Price

$520,830

11% YTD
6% YTY
UII

3.9

Months

MTM

4% YTY

29.1
Days

Price

NA

Per Sq Ft

Sales

97.7%

To List Ratio

www.car.org/marketdata

CENTRALCOAST
AUG.2015MEDIANPRICES

SERIES:MedianPriceofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

31

10/9/2015

CENTRALCOAST
2015YTDSALES

SERIES:YeartoDateSalesofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

SOUTHERNCALIFORNIAAUG2015

Sales

9% YTD
7% YTY
UII

3.9

Months

MTM

41.9
Days

Median Price

$464,400
3% YTY
Price

NA

Per Sq Ft

Sales

98.6%

To List Ratio

www.car.org/marketdata

32

10/9/2015

SOUTHERNCALIFORNIA
AUG.2015MEDIANPRICES

SERIES:MedianPriceofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

SOUTHERNCALIFORNIA
2015YTDSALES

SERIES:YeartoDateSalesofExistingDetachedHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

33

10/9/2015

ANNUALHOUSINGMARKET
SURVEY:
2015FINDINGS

SHAREOFSECOND/VACATIONHOMESHIGHER
AFTERTWOYEARSOFDECLINE
%toTotalSales
8%
7%
6%

5.3%
5%
4%
3%
2%
1%
0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

34

10/9/2015

SHAREOFINVESTMENTPROPERTIESDROPSTOTHE
LOWESTLEVELSINCE2009
%toTotalSales
20%
18%
16%
14%

13.1%

12%
10%
8%
6%
4%
2%
0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

FIRSTTIMEBUYERSFINDINGITHARDTOBUY
%FirstTimeHomeBuyers

LongRunAverage

50%

40%

LongRunAverage=38%

29.5%

30%

20%

10%

0%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

35

10/9/2015

SHAREOFCASHBUYERS
LOWESTSINCE2009
Almostonefourthofbuyerspaidwithallcash
Theshareofallcashbuyersisthelowestinthelast6years
%ofAllCashSales

35%
30%
25%

21%

20%
15%
10%
5%
0%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

THESHAREOFINTERNATIONALBUYERS
LOWESTIN8YEARS
9%
8%
7%
6%
5%
4%

4%

3%
2%
1%
0%
2008
2009
2010
2011
2012
2013
2014
2015
Q.Wasthebuyeraninternationalbuyer apersonwhowasacitizenofanothercountrywhowishedto
purchaseresidentialrealestateintheU.S.?
SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

36

10/9/2015

23%OFCAREALTORSWORKEDWITHAN
INTERNATIONALBUYERINTHEPAST12MONTHS
#ofPropertiesSoldtoInternationalBuyersintheLast12Months
%WhoSoldtoInternationalBuyers
90%
80%

77%
71% 72%

2013

70%

2014

60%

2015

50%
40%
30%
20%

14%

10%

12% 9%

6% 6% 5%

4% 3% 3%

2% 2% 1%

4% 5% 4%

5ormore

0%
0

Q.Howmanypropertieshaveyousoldtoaninternationalbuyerinthelast12months?
SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

COUNTRYOFINTERNATIONALBUYER

50%
45%
40%
35%

43%

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

8%

8%

Mexico

SouthKorea

0%
China
SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

37

10/9/2015

THEMEDIANDOWNPAYMENTINCHEDUPFROM2014

MedianDownPayment

%ofDownPaymenttoPrice

$90,000

25%

$80,000

20%
20%

$70,000
$60,000

$74,500
15%

$50,000
$40,000

10%

$30,000
$20,000

5%

$10,000
0%

$0
2005 2006 2007 2008
Q.Whatwastheamountofdownpayment?

2009

2010

2011

2012

2013

2014

2015

SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

MARKETCOMPETITIONCOOLSDOWN
AFTERPEAKINGIN2013
%withMultipleOffers

80%

#ofMultipleoffers(Average)

70%

60%

53%

53%

50%

4.3

40%

4.0
3

30%
2

20%

10%

0%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

38

10/9/2015

YEARSOWNEDHOMEBEFORESELLING
AllSellers

12

10

10
8
6
4
2
0

SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

NETCASHGAINTOSELLERSHIGHESTSINCE2007
$250,000

$200,000

$150,000

$120,000
$100,000

$50,000

$0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Q.Whatwasthenetcashgainornetlosstothesellerasaresultofthissale?
SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

39

10/9/2015

HOUSINGAFFORDABILITY:
CRISISBREWING

CALIFORNIAPRICESMOREVOLATILEANDMUCH
HIGHERTHANTHENATION
19702015
2015DollarValue
$700,000

California

US

$600,000
$500,000

ThedifferencebetweenCaliforniaspricesandnationalhomepricesincreased
from$10Kin1970to$255Ktoday

$400,000
$300,000
$200,000
$100,000
$

SERIES:MedianPriceofExistingSingleFamilyHomes
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS
SOURCE:
CALIFORNIA ASSOCIATION OF REALTORS

40

10/9/2015

HOUSINGAFFORDABILITYPEAKEDQ12012
PRICESV.LOWRATESANDINCOMEGROWTH
Californiavs.U.S. 19842015
%OFHOUSEHOLDSTHATCANBUY
AMEDIANPRICEDHOME
80%

CA

US

Annual

70%
60%

71%

Quarterly

56%
57%

50%
40%
30%

30%

20%
10%
0%

SERIES:HousingAffordabilityIndexofTraditionalBuyers
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

HOUSINGAFFORDABILITYINCA:BYCOUNTY
%abletopurchasemedianpricedhome
70

2015Q2

62
60
50
40

57 56
55 54
50 50

47 46

44

41 40

37

30
20
10

30 30

28 27

25 25 25

23

21 20
19 18 18
17 16

13

10

SERIES:HousingAffordabilityIndex
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

41

10/9/2015

AFFORDABLEINVENTORYAVAILABLETO
MEDIANINCOMEHOUSEHOLDS
2015Q2
80%
70% 67.2%
60%
50%
40%
28.5%
30%
20%
10%

2.1%

0%

SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

HOWWAGESMEASUREDAGAINSTINCOME
REQUIREDTOBUYAHOME
California
$120,000

2014AnnualMeanWage

$119,970

$100,000
$98,400
$87,520

$80,000
$69,990

$71,630

Retail
Chefsand Elementary
Salespersons HeadCooks
School
Teachers

Firefighters

$60,000
$40,000
$20,000
$0

$95,978

$89,250

$45,340
$27,010

Policeand
Computer
Registered
Software
Min.Inc
Sherriff's Programmers
Nurses
Developers Requiredto
Patrol
(Applications) BuyaMed.
Officers
Home

SOURCE:BureauofLaborStatistics,C.A.R.

42

10/9/2015

HOWWAGESMEASUREDAGAINSTINCOME
REQUIREDTOBUYAHOME
SanFrancisco
$300,000

2014AnnualMeanWage
$267,783

$250,000
$200,000
$150,000
$124,980 $118,690

$100,000
$88,390
$70,680

$50,000
$0

$97,570

$52,690

$49,230

$30,340
Retail
Auto.
Salespersons Mechanics

Chefsand Elementary
HeadCooks
School
Teachers

Firefighters

Computer
Registered
Programmers
Nurses

Software
Min.Inc
Developers Requiredto
(Applications) BuyaMed.
Home

SOURCE:BureauofLaborStatistics,C.A.R.

HOWWAGESMEASUREDAGAINSTINCOME
REQUIREDTOBUYAHOME
Sacramento
$120,000

2014AnnualMeanWage

$100,000

$105,390 $103,730

$80,000
$75,980
$67,300

$60,000

$58,520

$40,000
$20,000
$0

$46,790

$57,581

$50,730

$26,610

Retail
Auto.
Salespersons Mechanics

Chefsand Elementary
HeadCooks
School
Teachers

Firefighters

Computer
Registered
Programmers
Nurses

Software
Min.Inc
Developers Requiredto
(Applications) BuyaMed.
Home

SOURCE:BureauofLaborStatistics,C.A.R.

43

10/9/2015

HOWWAGESMEASUREDAGAINSTINCOME
REQUIREDTOBUYAHOME
LosAngeles
$120,000

2014AnnualMeanWage

$100,000

$103,790
$93,180

$80,000

$82,830

$40,000

$0

$88,082

$72,720

$60,000

$20,000

$86,840

$42,610

$44,330

$26,870

Retail
Auto.
Salespersons Mechanics

Chefsand Elementary
HeadCooks
School
Teachers

Firefighters

Computer
Registered
Programmers
Nurses

Software
Min.Inc
Developers Requiredto
(Applications) BuyaMed.
Home

SOURCE:BureauofLaborStatistics,C.A.R.

CALIFORNIASMAJORMETROSARELESS
AFFORDABLETHANTHEAVERAGEU.S.METRO

SOURCE:LegislativeAnalystsOffice

44

10/9/2015

SHAREOFFIRSTTIMEBUYERSREMAINS
BELOWLONGRUNAVERAGE
%FirstTimeHomeBuyers

LongRunAverage

50%

40%

LongRunAverage=38%
29.5%

30%

20%

10%

0%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

HOMEOWNERSHIPRATES
CaliforniaVs.U.S.
75%

CA

Peak:69.0%

70%
65%

US

64.5%

64.8%

60%

Peak:60.2%
55%

53.7%

54.9%

50%
45%
40%

SERIES:HomeownershipRates
SOURCE:U.S.CensusBureau

45

10/9/2015

MISSING100,000UNITSANNUALLY,ATLEAST
2015p:98,500(42,190sf,56,310mf)
2016f:124,600totalunits
350000
300000

SingleFamily

MultiFamily

250000

HouseholdGrowth:
200000

165,000/yr

150000
100000
50000
0

SERIES:NewHousingPermits
SOURCE:ConstructionIndustryResearchBoard

THEBOOMERSAND
THEIRNEXTMOVE

46

10/9/2015

THEBOOMERSAND
THEIRNEXTMOVE

BOOMERS BORNBETWEEN19461964
8%
Average:
59

7%
6%
5%
4%
3%
2%
1%
0%
50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

Age(Years)
Whatisyourage?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

47

10/9/2015

MAJORITYAREMARRIED

Other18%
Married56%

Single26%

Whatisyourmaritalstatus?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

BABYBOOMERSLESSDIVERSETHANMILLENNIALS
Boomers

Millennials

79%
80%
70%
60%
50%
40%
30%
20%
10%
0%

38%

35%
18%
9%
4%

Caucasian/
White

Asian

7%

African
American/
Black

4%

Hispanic/
Latino

4% 4%
Other

Whatisyourethnicbackground?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

48

10/9/2015

3/4BABYBOOMERSAREHOMEOWNERS
Other3%
Rent22%

Own75%

Whatisyourcurrentlivingsituation?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

HOMEOWNERSHIPRATENEARLY4TIMESHIGHER
AMONGBOOMERS
BabyBoomers

Millennials

3%
22%

39%

20%

Own

Own

Rent

Rent

Other

Other

75%

41%

Whatisyourcurrentlivingsituation?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

49

10/9/2015

MOSTHAVEEQUITYINTHEIRHOME
No,8%

Yes,92%

Doyouhaveequityinyourhome?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

MOSTDONTPLANTOUSEHOMEEQUITYFOR
INCOMEDURINGRETIREMENT

Yes,23%

No,77%

Areyouplanningonusingthisequityforincomeduringretirement?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

50

10/9/2015

MAJORITYDONOTPLANTOSELLHOME
WHENTHEYRETIRE
Yes,10%

Don'tknow/
unsure,32%

No,59%

Doyouplantosellyourcurrenthomewhenyouretire?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

MAJORITYWONTSELLBECAUSETHEYLIKETHEIR
HOME
5%
8%

Ilikemyhome

10%

Icannotaffordtobuyanother
retirementhome
Iplantogivethehometomy
child(ren)
Anotherreason

78%

Whydoyounotplantosellyourcurrenthomewhenyouretire?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

51

10/9/2015

POSTPONEDRETIREMENTBECAUSE
14%

Didnotsaveenoughmoneyyetforretirement

9%

Lossofemployment

7%

Lossofassets/incomedueto2008economicrecession

4%

Other

3%

Lossofretirementincome
Lossofhome

2%

Medicalbills

2%

Lossofpension

1%

Deathofsignificantother

1%
0%

2%

4%

6%

8%

10%

12%

14%

Didyouhavetopostponeyourdateofretirementduetoanyofthefollowing?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

>DONOTFEELTHEYHAVESAVEDENOUGHMONEY
TORETIRECOMFORTABLY

Yes,46%
No,54%

Doyoufeelyouhavesavedenoughmoneytoretirecomfortably?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

52

10/9/2015

MAJORITYWORRYABOUTCHILDRENSABILITYTO
BECOMEHOMEOWNERS

No,45%
Yes,55%

Doyouworryaboutyourchildrensabilitytobecomehomeownersinthefuture?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

2/5PLANTOHELPCHILDRENWITHDOWNPAYMENT

No,57%
Yes,43%

Doyouplantohelpyourchildrenwiththeirdownpaymenttopurchaseahome?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

53

10/9/2015

WHATFINANCIALDECISION
WOULDBOOMERSCHANGE?
22%

Savingmore/spendingless

19%

Betterinvestmentdecisions

8%

Investinrealestate

7%

Seekbetterjob

5%

Retiringprematurely

4%

Carrylessdebt/poorcredit

2%

Cashout/openIRA

1%

Movingtothewronglocation

0%

5%

10%

15%

20%

25%

Ifyoucouldchangeonefinancialdecisionthatyoumadewithinthepast10years,whatwoulditbe?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

WHATKEEPSBOOMERSUPATNIGHT?
39%

Nothing

13%

Bills/finances

6%

Stress/anxiety
Familyissues

4%

Work

4%

Jobsecurity

4%

Ache/pain

4%

Insomnia

3%

Healthconcerns

3%
2%

TV/internet

2%

Worldpolitics

1%

Economy

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Whatkeepsyouupatnight?
SERIES:2014BabyBoomerSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

54

10/9/2015

CRAFTSMANBUNGALOWISDREAMHOMEFOR
1/3HOMEOWNERS
craftsmanbungalow

neocolonial

dreammansion

32%

desertmodernism

FrankLloydWright

19%

14%

artnouveau/artmoderne

8.5%

moderntownhome

12%

downtownloft

5.1%

5.7%

2.6%

brickurbanrowhome

1.6%

Q. Which of the following is your dream home?

2/3HOMEOWNERSPREFERANIGHTINWITH
FAMILY/FRIENDSFORFUN
65%

Aquietnightinwithfriends/family
AtriptoParis

57%

AtriptoNewYorkCity

56%

Afantasticmovie

53%

Aconcertwithyourfavoriteartist

52%
37%

Aweekcamping/fishing
21%

A"Hangover"weekendinVegas

16%

Woodstockin1969

10%

BurningMan
0%

10%

20%

30%

40%

50% 60%

70%

Q. In which of the following activities would you like to participate? Select all that apply.

55

10/9/2015

DIVERSITYINHOMEOWNERSHIP

SHAREOFMINORITYHOMEBUYERS
HASGROWNOVERTIME
1995

2005

2015

80%
70%
60%

68.5%
55.8% 56.3%

50%
40%
30%
19.9%

20%

14.1%

10%

16.5%

14.0%

12.5%
7.5%

5.0% 4.2% 3.6%

0%
White/NonHispanic

AfricanAmerican

Hispanic

Asian

Q.Whatwastherace/ethnicityoftheheadofhouseholdbuyingtheproperty
SERIES:2015HousingMarketSurvey
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

56

10/9/2015

HOUSINGDEMANDWILLINCREASE,
LARGELYDRIVENBYMINORITIES
Netnewhouseholds,millions

14
12

Projectedhouseholdgrowth,20102010
20102020

100%

Projectedhouseholdgrowth,20202030

10

100%
77%

88%

6
39%

46%

4
23%

19% 18%
12%

2.7

4.6

1.3

4.8

2.2

1.9

18%

2.1

24%

2.5

8.9

9.1

11.6 10.4

0
White

Hispanic

Black,NonHispanic Other,NonHispanic

TotalMinority

Total

SOURCE:UrbanInstitute

IMMIGRANTSHAREOFGROWTHIN
HOMEOWNERS
20102020

100%
90%

West

Midwest

South

Northeast

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

Source:DowellMyersandJohnPitkin,ImmigrantContributionstotheHousing
MarketRIHA,MortgageBankersAssociation,2013

57

10/9/2015

2016FORECAST

58

10/9/2015

CALIFORNIAHOUSINGMARKETOUTLOOK

2010 2011 2012 2013 2014 2015p 2016f

SFHResales(000s)

416.5

422.6

439.8

414.9

383.3

407.5

433.0

12.3%

1.4%

4.1%

5.9%

7.6%

6.3%

6.3%

MedianPrice($000s) $305.0 $286.0

$319.3

$407.2

$447.0

$476.3

$491.3

%Change
10.9%
HousingAffordability
Index
48%

6.2%

11.6%

27.5%

9.8%

6.5%

3.2%

53%

51%

36%

30%

31%

27%

4.5%

3.7%

4.0%

4.2%

3.9%

4.5%

%Change

30YrFRM

4.7%

SERIES:CAHousingMarketOutlook
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

SALESUPFOR2015ANDCONTINUETOIMPROVEIN2015;
PRICEWILLGROWSTEADILYTHISYEARANDNEXT
SalesofExistingDetachedHomes
Units
(Thousand)

MedianPrice
Price
(Thousand)

700

$600

600

$476

$500

500
407

433

$491

$400

400
$300
300
$200

200

$100

100

$0

0
2005

2007

2009

2011

2013

2015p

2005

2007

2009

2011

2013

2015p

SERIES:CAHousingMarketOutlook
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

59

10/9/2015

CA:DOLLARVOLUME
UP13.3%IN2015,UP9.6%IN2016
$inBillion

%Change

$400

$VolumeofSales

30%

PercentChange

$350
$300

20%
$301
10%

$244

$250

60%

$200

$194
$169

$164
$133

$150

$131

$127

$121

$213

$171

0%
10%

$140

20%

$100

30%

$50

40%

$0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015p 2016f

SERIES:CAHousingMarketOutlook
SOURCE:CALIFORNIAASSOCIATIONOFREALTORS

WILDCARDS
Stockmarketvolatility
Slowergrowth:China
Furthercollapseinenergy/commodityprices
Geopoliticaltensions
Terrorism
ElNino/WaterShortage
2016Presidentialelection

60

10/9/2015

MARKETOPPORTUNITIESIN2016

MARKETOPPORTUNITIES
Millennials
Turnrentersintofirsttimebuyers
Firsttimebuyerswhoboughtwithtaxcreditbackin2009
arereadytotradeup
UnderstandthedifferencesinneedsbetweenMillennial
firsttimebuyersandMillennialtradeupbuyers
BabyBoomers
Readytodownsize
UnderstandBoomerspriorities:investmentandretirement
IfwecantkeeptheminCA,helpthemfindaplaceoutof
state.NetworkwithREALTORSoutsideofCA

61

10/9/2015

MARKETOPPORTUNITIES
Minorities
Minoritieshavegrowninhomebuyershareovertime
Surgeinthenumberofminorityhouseholdswillplayabig
roleintheincreaseinhousingdemandinthenext10years
Developprogramsandmarketingmaterialtailoredtowards
minorityhomebuyersofdifferentethnicity
Investorsellers
Investorbuyerswhopurchasedbargainpropertiesafew
yearsagoarereadytosellashomepricesstartlevelingoff
Everyoneelse
Lowinterestrateswillbeherealittlelonger

MOSTMILLENNIALSUNCERTAIN/DOUBTFULTHAT
THEYCOULDOBTAINAMORTGAGE
NOW?AMILLENNIAL ETHNICITY
Yes22%

Don'tknow
45%

No33%

SOURCE:C.A.R.2014MillennialSurvey
Q:Couldyouobtainamortgageifyouappliednow?

62

10/9/2015

#TBTC.A.R.110

63

10/9/2015

#TBT.SACRAMENTO110YEARSAGO

730NStreet

#TBT.SANFRANCISCO110YEARSAGO

500blockofLibertyStreet

64

10/9/2015

#TBT.FRESNO110YEARSAGO

BrixMansion2844FresnoSt

#TBT.SUMMEROFLOVE

65

10/9/2015

THANKYOU!
www.car.org/marketdata
lesliea@car.org
Facebook:CARResearchgroup
Twitter:CARResearchInfo
Thispresentationcanbefoundon
www.car.org/marketdata
Speeches&Presentations

66