2016 california housing market outlook - … california housing market outlook october 27,2015 oscar...
TRANSCRIPT
OVERVIEW
• Economic Outlook
• California Housing Market Outlook
• Regional Housing Market Outlook
• 2016 Forecast
• Market Opportunities in 2016
-4%
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-2%
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ECONOMY HAS BEEN GROWING FOR 68 MONTHS
2014: 2.4%; 2015p: 2.4%; 2016f: 2.7%
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
3.9%
UNEMPLOYMENT RATES AT 7-YEAR LOWS
September 2015: US 5.1% & September 2015:CA 5.9%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Jan
-05
Jul-
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Jan
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Jul-
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Jan
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Jul-
15
US-CA CA US
SERIES: Unemployment Rate The U-6 rate covers the unemployed, underemployed and those who are not looking but who want a job
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
EMPLOYMENT STALLED IN SEPT:142K
3.0%
2.…
-8
-6
-4
-2
0
2
4
6
Jan
-05
Jul-
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-15
Jul-
15
California USANNUAL PERCENT CHANGE
SERIES: Total Nonfarm EmploymentSOURCE: US Bureau of Labor Statistics, CA Employment Development Division
Change Growth
United States 2,752,000 2.0%
California 470,000 3.0%
New York 130,500 1.4%
Texas 217,700 1.9%
198K/mo 2015 avg260K/mo 2014 avg
JOB TRENDS BY CALIFORNIA METRO AREA
0.0%
1.0%
2.1%
2.1%
2.4%
2.7%
2.9%
3.2%
3.2%
3.5%
4.7%
4.7%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
Bakersfield
Ventura
Los Angeles
Oakland MSA
Sacramento
Inland Empire
Orange County
Santa Barbara
Fresno MSA
San Diego
San Jose
San Francisco
SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division
ANNUAL PERCENT CHANGE
September 2015: CA +2.8%, +444,300
CONSUMER CONFIDENCE INDEX
September 2015: 103.0
0
20
40
60
80
100
120
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
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Jan
-15
Jul-
15
INDEX, 100=1985
SERIES: Consumer ConfidenceSOURCE: The Conference Board
MORTGAGE RATES
January 2009 – October 2015
0%
1%
2%
3%
4%
5%
6%
FRM
ARM
MONTHLY WEEKLY
SERIES: 30Yr FRM, 1Yr ARMSOURCE: Federal Home Loan Mortgage Corporation
RATE HIKE POSTPONED, BUT NOT CANCELLED
Factors for the delay
- Global economic slowdown/Strong dollar• Emerging markets vulnerable to rising rate environment
- Heighten stock market volatility• Negative wealth effect could lead to slowdown in economic growth
- Avoid a repeat of Taper Tantrum• Fed had not articulated enough on all the moving parts and did not
want to give any surprises
WHERE ARE WE HEADED?
- Fed will likely begin normalization in early 2016 and rates will gradually increase in 2016 and 2017. Action will be “data determined”
- Risk of rates increasing too fast: bringing economic growth to a halt
- Risk of rates increasing too slow: zero leverage when next downturn hits
MARKET DOWN SHARPLY FROM THE PEAK
1,944.4
1650
1700
1750
1800
1850
1900
1950
2000
2050
2100
2150
Jan
-14
Mar
-14
May
-14
Jul-
14
Sep
-14
No
v-14
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep
-15
S & P 500 Composite
MONTHLY AVERAGE
Causes of the financial market turmoil
- Highly valued asset markets
- Economic slowdown in China
- U.S. monetary policy normalization
- Collapse in energy and other commodity prices
ECONOMIC CONSEQUENCES OF THE MARKET TURMOIL
Negative Impact:
- Decline in stock prices lowers consumer spending due to adverse wealth effect
- Strong $ weakens international trade- Emerging markets struggle to adjust to lower commodity prices
Positive Impact:
- Lower interest rate environment supports housing and refinancing activity
- Lower energy prices benefit consumers in the long run, with consumer spending more than offset the hit to the energy sector
- Reduces over-valuation in asset markets and minimizes risk for a shaper downturn. Allows Fed to raise rates more slowly
U.S. ECONOMIC OUTLOOK
2010 2011 2012 2013 2014 2015p 2016f
US GDP 2.4% 1.8% 2.3% 2.2% 2.4% 2.4% 2.7%
Nonfarm Job Growth -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 1.6% 3.1% 2.1% 1.5% 1.6% 0.2% 2.1%
Real Disposable
Income, % Change 1.0% 2.5% 3.0% -0.2% 2.5% 3.3% 2.7%
30-Yr FRM 4.7% 4.5% 3.7% 4.0% 4.2% 3.9% 4.5%
SERIES: U.S. Economic OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CALIFORNIA ECONOMIC OUTLOOK
2010 2011 2012 2013 2014 2015p 2016f
Nonfarm Job Growth -1.1% 1.1% 2.4% 3.0% 2.2% 2.8% 2.3%
Unemployment Rate 12.3% 11.8% 10.4% 8.9% 7.5% 6.3% 5.5%
Population Growth 0.7% 0.7% 0.7% 0.9% 0.9% 0.9% 0.9%
Real Disposable
Income, % Change 0.9% 3.4% 4.7% 0.2% 3.0% 4.3% 4.5%
SERIES: CA Economic OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SALES HAVE BEEN STRONG AFTER A WEAK START
California, Sep 2015 Sales: 425,030 Units, +7.3% YTD, +6.9% YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
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Jan
-09
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Jul-
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Jan
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Jan
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Jul-
14
Jan
-15
Jul-
15
*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sep-15: 425,030
Sep-14: 397,490
SALES LOOKING POSITIVE FOR ‘15
SERIES: Sales of Existing Single Family Homes, Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Jan
-10
Ap
r-10
Jul-
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-10
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r-11
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Jan
-15
Ap
r-15
Jul-
15
Year-over-Year % Chg 6 per. Mov. Avg. (Year-over-Year % Chg)
First sign of leveling off since early 2014
CALIFORNIA PENDING HOME SALES INDEX
110.8
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
Jan
-08
Ap
r-0
8
Jul-
08
Oct
-08
Jan
-09
Ap
r-0
9
Jul-
09
Oct
-09
Jan
-10
Ap
r-10
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-10
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Ap
r-11
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-11
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r-12
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r-13
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-13
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-14
Ap
r-14
Jul-
14
Oct
-14
Jan
-15
Ap
r-15
Jul-
15
SERIES: Pending Home Sales IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
California: September 2015
PENDING HOME SALES BY REGION(YEAR-TO-YEAR % CHG.)
(Year-to-Year)
4.6%
10.2%
14.1%
10.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
SF Bay Area Southern California Central Valley California
Sep-15
SERIES: Sales of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MEDIAN PRICE - ANNUAL % GAINS REMAIN SUBDUED
California, Sep 2015: $482,150, -2.3% MTM, +4.3% YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
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Jan
-09
Jul-
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Jan
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Jan
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13
Jan
-14
Jul-
14
Jan
-15
Jul-
15
P: May-07$594,530
T: Feb-09$245,230-59% frompeak
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sep-15: $482,150
Sep-14: $462,380
-20%
-10%
0%
10%
20%
30%
40%
50%
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
Condo Single-Family Homes
HOME PRICE APPRECIATIONS HAVE MODERATED SINCE MID 2013
SERIES: Sales of SFH and Condo UnitsSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
YTY% Chg. in Price
PRICE PER SQUARE FOOT
Sep 2015: $236, Up 0.3% MTM, Up 2.5% YTY
$0
$50
$100
$150
$200
$250
$300
$350
$400
Jan
-07
Ap
r-0
7Ju
l-0
7O
ct-0
7Ja
n-0
8A
pr-
08
Jul-
08
Oct
-08
Jan
-09
Ap
r-0
9Ju
l-0
9O
ct-0
9Ja
n-1
0A
pr-
10Ju
l-10
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Ap
r-11
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11O
ct-1
1Ja
n-1
2A
pr-
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r-13
Jul-
13O
ct-1
3Ja
n-1
4A
pr-
14Ju
l-14
Oct
-14
Jan
-15
Ap
r-15
Jul-
15
PRICE PER SQ. FT.
SERIES: Median Price Per Square FeetSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CALIFORNIA VS. U.S. MEDIAN PRICES
1970-2015
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
California US CA Price Trend
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INVENTORY CONTINUED TO DECLINE FROM LAST YEAR
Sep 2014: 4.2 Months; Sep 2015: 3.7 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
Jan
-05
Jul-
05
Jan
-…
Jul-
06
Jan
-07
Jul-
07
Jan
-…
Jul-
08
Jan
-…
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
Jul-
15
SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DEMAND OUTPACING SUPPLY
0%
10%
13%
-6%-7%
-4%
-10%
0%
10%
20%
San Francisco Bay Area Southern California Central Valley
Sales Active ListingsYear-to-Year % Chg
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sep 2015
HOUSING DEMAND OUTPACED SUPPLY IN SO CAL
10%
14%10% 9%
5%
35%
3%
10%
-9%
-4% -3% -4%
-15%
-7%
3%
-7%
-20%
-10%
0%
10%
20%
30%
40%
Sales Active ListingsYear-to-Year % Chg
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sep 2015
WHERE IS THE INVENTORY?
– Affordability challenge for repeat buyers• Low rate on current mortgage • Low property taxes• Concerned with capital gains• Why list when there is nowhere to go I can afford?• Could not qualify for a mortgage today
– Foreclosure pipeline is dry – Investors renting instead of flipping– New construction recovering but LOW– Demographics: Trade-up buyer pool is smaller– Measurement error? Off- MLS (aka “pocket’) listings not
being counted in listing stats
FEWER MIDDLE-AGE ADULTS IN RECENT YEARS
Source: Harvard Joint Center of Housing Studies, Census Bureau
DECLINE IN # OF TRADE UP BUYERS DUE TO POPULATION LOSS & DROP IN HOMEOWNERSHIP RATE
Source: Harvard Joint Center of Housing Studies, Census Bureau
“MISSING” 100,000 UNITS ANNUALLY, AT LEAST
2015p: 98,500 (42,190 sf, 56,310 mf)
2016f: 124,600 total units
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
0
50000
100000
150000
200000
250000
300000
350000
Single Family Multi-Family
Household Growth:
165,000/yr
HOUSING AFFORDABILITY PEAKED Q1 2012PRICES V. LOW RATES AND INCOME GROWTH
California vs. U.S. – 1984-2015% OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME
SERIES: Housing Affordability Index of Traditional BuyersSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
56%
30%
71%
57%
0%
10%
20%
30%
40%
50%
60%
70%
80% CA USAnnual Quarterly
HOUSING AFFORDABILITY IN CA: BY COUNTY
62
57 56 55 5450 50
47 4644
41 4037
30 3028 27
25 25 2523
21 20 19 18 18 17 1613
10
0
10
20
30
40
50
60
70 2015 Q2
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
% able to purchase median priced home
$27,010
$45,340
$69,990 $71,630
$87,520 $89,250
$98,400
$119,970
$95,978
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
RetailSalespersons
Chefs andHead Cooks
ElementarySchool
Teachers
Firefighters Police andSherriff's
PatrolOfficers
ComputerProgrammers
RegisteredNurses
SoftwareDevelopers
(Applications)
Min. IncRequired toBuy a Med.
Home
HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME
SOURCE: Bureau of Labor Statistics, C.A.R.
2014 Annual Mean Wage
California
$27,050
$45,440
$74,740$81,790 $81,790
$89,520
$103,200
$141,112
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
RetailSalespersons
Chefs and HeadCooks
ElementarySchool
Teachers
Police andSherriff's Patrol
Officers
ComputerProgrammers
RegisteredNurses
SoftwareDevelopers,Applications
Min. IncRequired toBuy a Med.
Home
HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME
SOURCE: Bureau of Labor Statistics, C.A.R.
2014 Annual Mean Wage
Orange
CALIFORNIA’S MAJOR METROS ARE LESS AFFORDABLE THAN THE AVERAGE U.S. METRO
SOURCE: Legislative Analyst’s Office
AFFORDABLE INVENTORY AVAILABLE TO MEDIAN-INCOME HOUSEHOLDS
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
67.2%
28.5%
10.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2015 Q2
SHARE OF FIRST-TIME BUYERS REMAINS BELOW LONG-RUN AVERAGE
29.5%
0%
10%
20%
30%
40%
50%
% First-Time Home Buyers Long Run Average
Long Run Average = 38%
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
… AS AN INCREASING NUMBER OF THEM STILL LIVE WITH THEIR PARENTS
SOURCE: U.S. Dept. of Commerce, Wells Fargo Securities LLC
MANY OF THEM, HOWEVER, PLAN TO LEAVE THE NEST BY 2018
SOURCE: 2013 Demand Institute Housing & Community Survey; 2013 Demand Institute Housing Forecasts
MILLENNIALS PUT OFF MARRIAGE, BUT IT IS STILL IN THEIR PLAN
SOURCE: American Community Survey; 2013 Demand Institute Housing & Community Survey
HOME OWNERSHIP RATE NEARLY 4 TIMES HIGHER AMONG BOOMERS
Baby Boomers
75%
22%
3%
Own
Rent
Other
Millennials
20%
41%
39%
Own
Rent
Other
Q. What is your current living situation?SERIES: 2014 Baby Boomer SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
REASONS FOR BUYING MILLENNIALS VS. BABY BOOMERS
Q. What was the single most important reason for selling/buying the property?
41%
18%
11%
10%
6%
6%
0%
0%
1%
7%
13%
13%
18%
16%
5%
3%
10%
7%
0%
14%
0% 10% 20% 30% 40% 50%
Tired of Renting
Desired Larger Home
Desired Better Location
Investment/ Tax Considerations
Change in Family Status
Changed Jobs
Retirement/Move to Retirement Community
Desired Smaller Home
Foreclosure/Short Sale/Default
Other
Millennials
Baby Boomers
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MAJORITY WORRY ABOUT CHILDRENS’ ABILITY TO BECOME HOME OWNERS
Do you worry about your children’s ability to become home owners in the future?
Yes, 55%
No, 45%
SERIES: 2014 Baby Boomer SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2/5 PLAN TO HELP CHILDREN WITH DOWN PAYMENT
Do you plan to help your children with their down payment to purchase a home?
Yes, 43%
No, 57%
SERIES: 2014 Baby Boomer SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF INVESTMENT PROPERTIES DROPS TO THE LOWEST LEVEL SINCE 2009
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
13.1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
199
9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
% to Total Sales
SHARE OF SECOND/ VACATION HOMES HIGHERAFTER TWO YEARS’ OF DECLINE
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% to Total Sales
SHARE OF CASH BUYERSLOWEST SINCE 2009
21%
0%
5%
10%
15%
20%
25%
30%
35%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% of All Cash Sales
• Almost one-fourth of buyers paid with all cash
• The share of all cash buyers is the lowest in the last 6 years
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
THE SHARE OF INTERNATIONAL BUYERS LOWEST IN 8 YEARS
4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2008 2009 2010 2011 2012 2013 2014 2015
Q. Was the buyer an international buyer – a person who was a citizen of another country who wished to purchase residential real estate in the U.S.?
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
43%
8% 8%0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
China Mexico South Korea
COUNTRY OF INTERNATIONAL BUYER
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DEMOGRAPHICS OF BUYERS: ETHNICITY
56%
17%
14%
10%4%
White
Asian
Hispanic
Other
Black
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF MINORITY HOME BUYERS HAS GROWN OVER TIME …
Q. What was the race/ethnicity of the head of household buying the property
68.5%
5.0%
14.1%
7.5%
55.8%
4.2%
19.9%
12.5%
56.3%
3.6%
14.0%16.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
White/Non-Hispanic African-American Hispanic Asian
1995 2005 2015
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HOUSING DEMAND WILL INCREASE, LARGELY DRIVEN BY MINORITIES
SOURCE: Urban Institute
2.7 4.6 2.2 2.18.9 11.6
1.34.8 1.9 2.5
9.1 10.4
0
2
4
6
8
10
12
14
White Hispanic Black, Non-Hispanic
Other, Non-Hispanic
Total Minority Total
Projected household growth, 2010-2010
Projected household growth, 2020-2030
Net new households, millions
23%
46%39%
18%
12%
18%19%
100%
100%
88%77%
24%
2010-2020
0
500
1,000
1,500
2,000
2,500
3,000
Jan
-05
Jul-
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SALES OF EXISTING DETACHED HOMES
Orange County, Sept. 2015: 1,575 Units, +11.0% YTD, +13.8% YTY
SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MEDIAN PRICE OF EXISTING DETACHED HOMES
Orange County, Sept 2015: $707,700, Up 1.7% YTY
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SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
UNSOLD INVENTORY INDEX
Orange County, September 2015: 3.7 Months
Note: The Unsold Inventory Index represents the number of months it would take to deplete the remaining inventory at the end of a particular month with the sales rate of the month in consideration. Inventory includes listings with “Active”, “Pending”, and “Contingent” (when available) statuses.
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SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SALES OF RESIDENTIAL HOMES
Newport Beach, September 2015: 94 Units
Up 9.3% MTM, Up 40.3% YTY
SOURCE: Clarus Market Metrics
MEDIAN PRICE OF RESIDENTIAL HOMES
Newport Beach, September 2015: $1,387,500
Down 14.2% MTM, Up 0.9% YTY
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
Newport Beach, September 2015: 453 Units
Down 1.5% MTM, Down 10.1% YTY
SOURCE: Clarus Market Metrics
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
Newport Beach, September 2015: 4.8 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.
SOURCE: Clarus Market Metrics
SALES OF RESIDENTIAL HOMES
Irvine, September 2015: 264 Units
Up 29.4% MTM, Up 42.7% YTY
SOURCE: Clarus Market Metrics
MEDIAN PRICE OF RESIDENTIAL HOMES
Irvine, September 2015: $718,450
Down 3.5% MTM, Up 1.9% YTY
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
Irvine, September 2015: 982 Units
Down 7.0% MTM, Down 14.1% 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.
SOURCE: Clarus Market Metrics
MONTH’S SUPPLY OF INVENTORY
Irvine, September 2015: 2.7 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.
SOURCE: Clarus Market Metrics
SALES OF RESIDENTIAL HOMES
San Clemente, September 2015: 59 Units
Down 33.0% MTM, Down 29.8% YTY
SOURCE: Clarus Market Metrics
MEDIAN PRICE OF RESIDENTIAL HOMES
San Clemente, September 2015: $860,000
Down 1.7% MTM, Up 14.3% YTY
SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES
San Clemente, September 2015: 395 Units
Down 4.1% MTM, Down 19.1% YTY
SOURCE: Clarus Market Metrics
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
San Clemente, September 2015: 4.1 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.
SOURCE: Clarus Market Metrics
U.S. HOUSING MARKET OUTLOOK
2010 2011 2012 2013 2014 2015p 2016f
Existing Home Sales (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%
Median Price ($000s) $172.9 $166.1 $176.8 $197.1 $208.3 $221.4 $231.0
% Change 0.2% -3.9% 6.4% 11.5% 5.7% 6.3% 4.3%
SERIES: U.S. Existing home sales of single-family homes and condo/coopsSOURCE: NATIONAL ASSOCIATION OF REALTORS®
CALIFORNIA HOUSING MARKET OUTLOOK
2010 2011 2012 2013 2014 2015p 2016f
SFH Resales (000s) 416.5 422.6 439.8 414.9 383.3 407.5 433.0
% Change -12.3% 1.4% 4.1% -5.9% -7.6% 6.3% 6.3%
Median Price ($000s) $305.0 $286.0 $319.3 $407.2 $447.0 $476.3 $491.3
% Change 10.9% -6.2% 11.6% 27.5% 9.8% 6.5% 3.2%
Housing Affordability
Index 48% 53% 51% 36% 30% 31% 27%
30-Yr FRM 4.7% 4.5% 3.7% 4.0% 4.2% 3.9% 4.5%
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SALES UP FOR 2015 AND CONTINUE TO IMPROVE IN 2015; PRICE WILL GROW STEADILY THIS YEAR AND NEXT
Units (Thousand)
407433
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2005 2007 2009 2011 2013 2015p
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Sales of Existing Detached Homes
$476 $491
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Median Price
Price (Thousand)
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA: DOLLAR VOLUME UP 13.3% IN 2015, UP 9.6% IN 2016
$301
$244
$164
$133 $131 $127 $121 $140
$169 $171 $194
$213
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015p 2016f
$ Volume of Sales Percent Change
% Change$ in Billion
-60%
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
WILD CARDS
– Stock market volatility
– Slower growth: China
– Further collapse in energy/commodity prices
– Geo-political tensions
– Terrorism
– El Nino/Water Shortage
– 2016 Presidential election
MARKET OPPORTUNITIES
– Millennials
• Turn renters into first-time buyers
• First-time buyers who bought with tax credit back in 2009 are ready to trade-up
• Understand the differences in needs between Millennial first-time buyers and Millennial trade-up buyers
– Baby Boomers
• Ready to downsize
• Understand Boomers’ priorities: investment and retirement
• If we can’t keep them in CA, help them find a place out of state. Network with REALTORS® outside of CA
MARKET OPPORTUNITIES
– Minorities
• Minorities have grown in homebuyer share over time
• Surge in the number of minority households will play a big role in the increase in housing demand in the next 10 years
• Develop programs and marketing material tailored towards minority home buyers of different ethnicity
– Investor sellers
• Investor buyers who purchased bargain properties a few years ago are ready to sell as home prices start leveling off
– Everyone else…
• Low interest rates will be here a little longer