UNDERSTANDING CALIFORNIA HOMEBUYERS

Presented byCarmen Hirciag, MBASenior Research Analyst

Survey Methodology

700 telephone interviews and 567 online surveys conducted inFebruary April 2015

Respondents are home buyers who purchased a home Feb. 2014 Feb. 2015

THE BUYING EXPERIENCE

Residence Location

Q. County of most recent home purchase?

SoCal 54%

NorCal 14%

Other CA 32%

Distressed SalesContinue Decline

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2009 2010 2011 2012 2013 2014 2015

Regular/Equity REO/Bank Owned Short

Q. Was the home you recently bought a Regular Sale, REO/Bank Owned Property, Short Sale, or another type of sale?

Most Purchases are Single Family Homes

Q. Was the home ?

Single family87%

Condo/townhouse 13%

Vacation/2nd Home Purchases Increase

0%

20%

40%

60%

80%

100%

2010 2011 2012 2013 2014 2015

Primary residence Investment Vacation/2nd home

Q What was the intended use of the property?

Listing Price Declines 7.9%YTY

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

2013 2014 2015

$355,000$380,000

$350,000

Median

Q. What was the initial listing price of the home you purchased?

Sale/Listing Prices Equal

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Listing Purchase

$350,000 $350,000

Median

Q. What was the price of the home you purchased?

Many Listing > Purchase Prices

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015

60%49% 44%

4%

5%28%

36%45%

28%

Listing < Purchase

Listing = Purchase

Listing > Purchase

Q. What was the initial listing price of the home you purchased?

Q. What was the price of the home you purchased?

Many Homes are in the Suburbs

0% 10% 20% 30% 40% 50%

Rural

Close to public transportation

Within walking distance of supermarket

Within walking distance ofshopping/restaurants/entertainment

Urban

Suburban

15%

26%

26%

28%

34%

40%

Q. Please describe the location of the home. Select all that apply.

More Buyers Previously Lived with Parents

49%38%

50%59%

47%

48%54%

38%

40%

39%

3%7% 6%

2%12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015

Owned Rented Lived w/parents Other

Q. What was the living arrangement immediately before your recent home purchase?

Buyers Spending LessTime Considering PurchaseBefore ContactingAgent

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Q. How many weeks did you consider buying a home before contacting a real estate agent? (Asked if agent was used)

Average Weeks

Buyers Spending LessTime Investigating Homes &Neighborhoods BeforeContactingAgent

0

5

10

15

20

25

30

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Wee

ks

Q. How many weeks did you spend investigating homes and neighborhoods before contacting a real estate agent?

Average Weeks

The Home Search is Longer than Its Ever Been

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Average Weeks

Q. Once you found your agent, about how many weeks did you spend looking for a home with your agent? (Asked if agent was used)

Decrease in HomesViewed ReflectsTightInventory

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Q. How many different homes did you preview and visit with your agent prior to making a purchase?

Median

Top 5 Reasons for Buying

Desired better/other location

Changed jobs/relocated

Desired larger home

To have a place to live

Tired of renting

8.4%

11%

12%

14%

15%

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

Buyers Didnt Purchase Sooner Because

Q. Why didnt you buy a home sooner?

Difficulty qualifying for mortgage

Needed to sell current home

Needed to save for down payment

Waited to see when prices wouldstabilize

Not many good housing options

Waited until finances improved

No real buying urgency

5%

8%

12%

13%

13%

21%

22%

Most Buyers Feel their Home isWorth the Price Paid

Yes 85%

No, price toohigh 14%

No, price toolow 1.4%

Q. Do you feel the home you purchased is worth the price you paid?

Majority of Buyers Found Home throughAgent

Open house

For sale sign

Website

Agent

0%20%

40%60%

8.5%

11%

18%

55%

Q. How did you find the home you purchased?

Buyers Plan to Keep Homes Longer

Q. How long do you plan to keep the property?

0

5

10

15

20

25

2013 2014 2015

6

8.8

20

AverageYears

BuyersOptimisticAbout LongTerm Direction ofHome Prices

67%

24%

7%

3%

71%

13%

11%

4%

Up

Flat

Unsure

1 Year 5 Years

Down

Q Do you think home prices in the neighborhood where you purchased will go up, down, or stay flat in one year, in five years?

Fewer Buyers Believe PricesWill Rise in 5Years

Q Do you think home prices in the neighborhood where you purchased will go up in one year, in five years?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2009 2010 2011 2012 2013 2014 2015

Up in 1 Yr Up in 5 Yrs

Safety is Most Important in Choosing aNeighborhood

Q Please rate the importance of the following in your decision to purchase a home in the neighborhood where youpurchased. (Scale 1-10, 1=not at all important, 10=extremely important)

Category Rating

Safety 8.3Walkability 6.5Quality of schools 6.1Entertainment/cultural activities nearby 5.9Short commute to work 5.6Great restaurants nearby 5.5

Ideal Neighborhood is Suburban & Pedestrian-oriented for Majority of Buyers

Q 21. Please select which of the following characteristics describe your ideal neighborhood. Select all that apply.

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

Ethnic

Resort area

Urban core (downtown)

Urban pioneer (up & coming)

Historic

Rural

Gated community

Cul-de-sac

Pedestrian-oriented (high walkability)

Suburban

5.6%

11%

12%

15%

17%

19%

21%

21%

21%

34%

Majority of Buyers are Satisfied with Purchase

Q Are you satisfied with the home you purchased or do you feel like you had to compromise?

75%

13%

12%Satisfied

Selectd best house givenlimited supply in desiredneighborhood

Selected best house inaffordable neighborhood;prices too high inpreferred neighborhood

Technology Use

27

Zillow & Realtor.com are Most UsefulWebsites inBuying Process

10%

10%

13%

17%

33%

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

Q. What was the single most useful website that you visited during your home buying process?

Agent

Realtor.com & Zillow Most UsefulWebsites

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Zillow realtor.com Brokerage Redfin

Q. What was the single most useful website that you visited during your home buying process?

Most Buyers are Using Mobile Devices

85%91%

85%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015

Q. Did you use a mobile device in the home buying process?

85% of Buyers Used Mobile Device in Buying Process

95% Research homes

28% Communicate

20% Research neighborhoods

14% Take photos of homes/amenities/neighborhoods

13% Email

10% Make calls

Q. How did you use your mobile device in the home buying process? N = 1269

Zillow is Most Useful App

Q. What was the most useful app that you used during the home buying process? N = 1269

Zillow Remains Most Useful App

Q. What was the most useful app that you used during the home buying process?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2014 2015

Zillow realtor.com Trulia

BuyersWho Found Home Online Found it onZillow or Redfin

9.4%

13%

21%

29%

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

Q. On which website did you find your home?

Zillow Remains #1Website where Buyers FoundHome

0%

5%

10%

15%

20%

25%

30%

35%

2011 2012 2013 2014 2015

realtor.com Zillow Trulia Redfin

Q. On which website did you find your home?

Social Media Use Declines

0%

10%

20%

30%

40%

50%

60%

70%

80%

2011 2012 2013 2014 2015

52%

68%75% 77%

35%

Q. Did you use social media (such as Facebook, Twitter,YouTube, etc.) in your home buying process?

Social Media Used for Buying Info &Tips/Suggestions from Friends

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

Agents' YouTube

Agent's Facebook page

Agent referrals

Neighborhood info

Buying tips, suggestions from friends

Home buying info

17%

26%

27%

30%

31%

35%

Q. How did you use social media (such as Facebook, Twitter,YouTube, etc.) in your home buying process?

35% of Buyers Used Social Media in BuyingProcess

Q. Which social media websites did you use during your home buying process?

Facebook RemainsTop Social Media Site forBuyers

Q. Which social media websites did you use during your home buying process?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2014 2015

Facebook YouTube Twitter Yelp

64% of Buyers Didnt Search for Agent Ratings

0% 2% 4% 6% 8% 10% 12% 14% 16%

Trulia

Yelp

Zillow

9.1%

10%

14%

Q. On which agent rating sites did you search for your agents ratings?

62% of Buyers Didnt Rate theirAgent Online

0% 2% 4% 6% 8% 10% 12% 14% 16%

Trulia

Yelp

Zillow

8.5%

10%

14%

Q. On which agent rating sites did you rate your agent?

Fewer BuyersGoogling theirAgent

0%

10%

20%

30%

40%

50%

60%

70%

80%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Q. Did you Google your agent?

Financing

More BuyersObtained Financing

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013 2014 2015

100%94% 92% 96%

91%

74% 77%

Q. Did you obtain financing for your home purchase?

Nearly Buyers Paid Cash

Financing 77%

Cash 23%

Q. How did you pay for the home you purchased?

MostCash Buyers Used Personal Savings or Proceedsfrom Sale of Previous Residence

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

Inheritance

Sale of personal assets

Borrowed/gifted

Proceeds from sale/refi of anotherproperty

Proceeds from sale of previousresidence

Personal savings

12%

13%

17%

18%

28%

40%

Q. If all cash, where did the funds come from? N = 367

Average Down Payment RemainsAbove 20%

0%

5%

10%

15%

20%

25%

30%

35%

2009 2010 2011 2012 2013 2014 2015

Average

Q. What was your down payment for the home purchased, in percent of the home value?

Most BuyersObtain Fixed Rate Loans

Fixed 83%

Adjustable 13%

Other 1.1%

Unsure 3.5%

Q. What type of loan do you have?

Fixed Rate Loans Remain Majority

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013 2014 2015

69%79% 84%

93% 91% 92%83%

31% 15%16%

7% 8% 8%13%

Fixed Adjustable Other Unsure

Q. What type of loan do you have?

Loans are for 30Years

0%10%20%30%40%50%60%70%80%90%

100%

20112012

20132014

2015

85% 87%85% 86%

75%

15% 13% 15% 14%

17%

Unsure Other 15 Year 30 Year

Q. What was the duration of your loan?

Buyers Have Less DifficultyWith Financing

0.01.02.03.04.05.06.07.08.09.0

2009 2010 2011 2012 2013 2014 2015

8.1 8.5 8.0 8.5 8.6

7.1

4.1

Average

Q. Please rate how easy or difficult it was to obtain financing on a scale of 1 to 10 with 1 being very easy and 10 being very difficult.

MajorityThink Interest Rates Have Bottomed

Yes 63%

No 37%

Q. Do you think mortgage interest rates have bottomed?

BUYER/AGENT RELATIONSHIP

More Buyers Used an Agent

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Q. Did you use a real estate agent in your home buying process?

Most Buyers FindAgents through Relationship/Contacts

0%10%20%30%40%50%60%70%80%90%

100%

Relationships/Contacts Advertising Internet Other

Q. How did you find your real estate agent?

Majority of Buyers Interviewed > 1 Agent

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 2 3 4 5 6 7 8 9 10

42%

17%

12%9%

4%3% 3% 4% 3% 3%

# of Agents Interviewed

Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase?

BuyersContinue Interviewing MultipleAgents

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2.3 2.3 2.42.5 2.5 2.4

2.8

2.2

1.8

2.2

3.2 3.1

2.4

Average

Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase?

Being Responsive is Important to Buyers inSelecting an Agent

7%

8%

8%

10%

20%

Knowledgeable/experienced

Negotiating ability

Trustworthy

Previously used agent

Seemed most reponsive

Q. What was the single most important reason for selecting the agent that you used in your recent home purchase?.

Agents CommunicateAccording to BuyerPreference

Telephone EmailText Message

In PersonSocial media

49%

22%

12% 13%

2%

52%

21%

12% 13%

2%

Preferred Actual

Q. What was your preferred method of communicating with your agent?

Q. How did your agent actually communicate with you?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Q. What was the typical response time you expected from your agent to return any form of communication to you?

Fewer Buyers Expect Instant Response fromAgents

Agent ResponseTime Meets Buyer Expectations

0%

10%

20%

30%

40%

50%

60%

Instantly Within 1 hr. Within 2 hrs. Within 4 hrs. Within 1business day

26%

37%

11% 9.0%

16%

29%

42%

12%7%

10%

Expected Actual

Q. What was the typical response time you expected from your agent to return any form of communication to you?

Q. On average, what was the actual response time of your agent to return any form of communication to you?

Agent Satisfaction Ratings Improve-AverageRatingson1-5Scale-

2014 2015

Your real estate agents negotiating skills 3.4 4.3

Overall process of finding a home 3.3 4.1

Overall satisfaction with your real estate agent 3.3 4.4

Q. Please rate your degree of satisfaction with the following aspects of your home buying experience on a scale of 1-5, where 1 is leastsatisfied and 5 is most satisfied.

Buyer Satisfaction Improves

1

1.5

2

2.5

3

3.5

4

4.5

5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Process of Finding a Home Satisfaction with Agent

Q. Please rate your degree of satisfaction with the following aspects of your home buying experience on a scale of 1-5, where 1 is leastsatisfied and 5 is most satisfied.

Top 5 Reasons for SatisfactionWithAgent

Q. Why do you have that level of satisfaction with your agent?

Reasons for DissatisfactionWithAgent

Q. Why do you have that level of satisfaction with your agent?

Most BuyersWouldWork withAgentAgain

88% 87%

50%67% 61% 64%

72%54% 60% 52%

61%

85%

2% 3%

4%

3% 15% 13%11%

11%12% 22%

33%

11%10% 10%

46%30%

25%22% 17%

35% 28%26%

6% 4%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unsure No Yes

Q. Would you work with the same agent again?

Most BuyersWould RecommendAgent to Others

Q. Would you recommend your agent to others?

Yes 85%

No 11%Unsure 4%

WHO IS THE 2014 BUYER?Demographics

TypicalCA Home Buyer

TypicalCA Household

Percent of First-time Buyers Rebounds20

02

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

8% 7%

15%

25%25%

19%19%

38%

46%43%

54%

42%

12%

40%

Q. Was this your first home purchase?

Most Buyers have Not Experienced a DistressedSaleForeclosure 10%

Short sale 12%

Neither 78%

Q. Have you ever gone through a foreclosure or short sale?

79% of Distressed SalesOccurredAfter 2007

Q. What year was the foreclosure or short sale?

0

5

10

15

20

25

30

before2008

2008 2009 2010 2011 2012 2013

#of

Dis

tres

sed

Sale

s

Year

More Repeat Buyers Previously UnderWater

Q. Was the outstanding loan balance on your previous home higher than the sale price?

0%

5%

10%

15%

20%

25%

2013 2014 2015

12%

4%

23%

Buyer Gender

0%10%20%30%40%50%60%70%80%90%

100%

Male Female

Q. What is your gender?

Majority of Buyers are Over 35

0%

20%

40%

60%

80%

100%20

0220

0320

0420

0520

0620

07

2008

2009

2010

2011

2012

2013

2014

2015

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

Q. What is your age?

BuyerAge Slightly Declines

38 39 3940 41 39 39

37 36 35 35 36

4644

0

5

10

15

20

25

30

35

40

45

50

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Median Age

Q. What is your age?

Majority of Buyers areWhite

5%

7%

9%

15%

64%

Other

Black

Asian

Hispanic

White

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

Q. How would you describe your ethnic background?

Majority of Buyers are Married

married 70%

Single 18%

Other 12%

More than Half of Buyers haveCollege Degrees

HighSchool

SomeCollege

4-YearCollege

Grad

GraduateSchool

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

16%

28%

33%

22%

Q. What is the highest level of education you have completed?

Majority of Buyers haveAnnual Household Income> $75K

< $50,000

$50-000-$74,999

$75,000-$99,999

$100,000-$149,999

$150,000-$199,999

$200,000 +

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

18%

22%

18%

19%

7%

16%

Q. Which of the following categories best represents you total annual income from all sources?

SO WHAT?Key Conclusions & Opportunities

Buying Process Begins BeforeAgent isContacted

Safety is Most Important in Choosing aNeighborhood

Q Please rate the importance of the following in your decision to purchase a home in the neighborhood where youpurchased. (Scale 1-10, 1=not at all important, 10=extremely important)

Category Rating

Safety 8.3Walkability 6.5Quality of schools 6.1Entertainment/cultural activities nearby 5.9Short commute to work 5.6Great restaurants nearby 5.5

Buyers Need MostAgentAssistance in Negotiating

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

Determine comps

Determine affordability

Paperwork

Price negotiation

Find the right home

Negotiate terms of sale

11%

12%

15%

18%

22%

25%

Q. In which part(s) of the transaction did you need the most assistance from your agent?

Top 5 Reasons for Buying

Desired better/other location

Changed jobs/relocated

Desired larger home

To have a place to live

Tired of renting

8.4%

11%

12%

14%

15%

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

Communication

Important to buyersin agent selection

Responsive Trustworthy Negotiation skills Knowledge /

experience

Communicate better

Respondimmediately

Market skillseffectively

Communicateaccording toclient preference

What BuyersWould ChangeAbout the HomeBuying Experience

1. I would have a better market understanding (14%)

2. Process would be faster & easier (9.1%)

3. Id seek additional assistance with mortgage approval (7.5%)

4. Agent would negotiate better (6.7%)

5. Agent would respond faster (6.4%)

Q. If there was one thing you could change about the home buying experience, what would it be?

Advice to Agents from Buyers

Communicate better (17%)

Communicate according to client preference (12%)

Negotiate better (9.3%)

Understand market better (9%)

Respond faster (7.6%)

Q. What advice would you give to real estate agents to improve the process or the level of service?

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