2019 housing market forecast - ccartoday
TRANSCRIPT
2019 Housing Market Forecast
Contra Costa Association of REALTORS®
October 24, 2018
Joel Singer
Chief Executive Officer
Economic Update
4.2%
GDP 2018-Q2
1.7%
Job Growth
September 2018
3.7%
Unemployment
September 2018
Consumption
2018-Q2Core CPI
August 2018
2.2%3.8%
U.S. Economy Our Biggest Strength
4.2%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2005 2008 2011 2014 2017 Q1-11 Q4-11 Q3-12 Q2-13 Q1-14 Q4-14 Q3-15 Q2-16 Q1-17 Q4-17
An
nu
al P
erc
en
t C
ha
ng
e,
Ch
ain
-typ
e (
20
09
) $
GDP - 2017: 2.3%; 2018 Q2: 4.2%
Growth Up Strong due to Fiscal Stimulus
ANNUALLY QUARTERLY
2009 Largest Annual Drop since 1946 (-2.8%)
SERIES: GDP
SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
Employment: All-Time High
2.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Jan
-11
Jun
-11
No
v-1
1
Ap
r-12
Se
p-1
2
Fe
b-1
3
Jul-1
3
De
c-1
3
Ma
y-1
4
Oc
t-1
4
Ma
r-15
Au
g-1
5
Jan
-16
Jun
-16
No
v-1
6
Ap
r-17
Se
p-1
7
Fe
b-1
8
Jul-1
8
Nonfarm Employment Growth
California U.S.
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
Jan
-00
Fe
b-0
1
Ma
r-02
Ap
r-03
Ma
y-0
4
Jun
-05
Jul-0
6
Au
g-0
7
Se
p-0
8
Oc
t-0
9
No
v-1
0
De
c-1
1
Jan
-13
Fe
b-1
4
Ma
r-15
Ap
r-16
Ma
y-1
7
Jun
-18
California Nonfarm Employment
Unemployment Lowest in 40+ Years
2.4%
9.3%
0% 2% 4% 6% 8% 10%
San Francisco
South Bay
Sonoma
Orange County
San Diego
Ventura
Solano
Los Angeles
Monterey
Chico
Stanislaus
Modesto
Fresno
Merced
Tulare
0
2
4
6
8
10
12
14
Jan
-76
Ma
r-78
Ma
y-8
0
Jul-8
2
Se
p-8
4
No
v-8
6
Jan
-89
Ma
r-91
Ma
y-9
3
Jul-9
5
Se
p-9
7
No
v-9
9
Jan
-02
Ma
r-04
Ma
y-0
6
Jul-0
8
Se
p-1
0
No
v-1
2
Jan
-15
Ma
r-17
Unemployment Rate
California U.S.
Wild Card – Financial Markets
SERIES: Dow 30SOURCE: Yahoo Finance
21000
22000
23000
24000
25000
26000
27000
(Jan 2018 – Oct 2018)
24800
25000
25200
25400
25600
25800
26000
26200
26400
26600
26800
27000
(9/1/18 – 10/10/18)
Down 831 pts
30 Yr. FRM Hit 5%, 1st Time since Early 2011
SERIES: Average 30 Yr. Fixed Mortgage Rates
SOURCE: Mortgage News Daily
Oct 10: 5.00%
January 2012 – October 2018
Fed Has Raised rates 8x Since Dec 2015
4.63 4.71
3.94 4.01
2.00 2.25
0
1
1
2
2
3
3
4
4
5
5
FRM
ARM
Fed Funds Rate
Fed Raise Ratethe 1st time since mid-2006
SERIES: 30Yr FRM, 5Yr ARM, Fed Funds Rate (Target Rate)
SOURCE: Freddie Mac, St. Louis Fed
MONTHLY WEEKLY
September 2018: All Items 2.3% YTY; Core +2.2% YTY
Inflation at Fed’s Target Range
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
An
nu
al P
erc
en
t C
ha
ng
e
All Items Core
SERIES: Consumer Price Index
SOURCE: US Bureau of Labor Statistics
Wild Card - How Tariffs Threaten the Economy
SOURCES: US Chamber
The Impact of Trade Tariffs
• Slow down world trade activities and
global economic growth
• Result in exchange rate fluctuation
• Increase inflationary pressure and put
upward pressure on interest rates
• Increase costs of construction
• Disrupt local economic activities in
areas/businesses that rely heavily on
import/export
California Housing Market Outlook
CA Consumer Poll: Sept 2018
SERIES: 2018 Google Consumer Poll
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Do you think it's a good time to buy a home in California? (n=300)
Do you think it's a good time to sell a home in California? (n=300)
22%
78%
Yes No
Do you think it's a good time to buy a
home in California?
57%
43%
Yes No
Do you think it's a good time to sell a
home in California?
September 2018 Sales: 382,550 Units, -3.3% YTD, -12.4% YTY
CA Sales Had the Largest Decline since March 2014
-
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 Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sep-18:
382,550Sep-17:
427,460
September 2018 (Year-to-Year)
Sales Declined in Every Segment
-33.2%
-21.1%
-16.9% -16.8% -16.2%
-11.5%
-3.9%
-11.7%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
SERIES: Sales of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
September 2017: 3.2 Months; September 2018: 4.2 Months
Inventory Index Reached the Highest Level in 31 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.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
SERIES: Unsold Inventory Index of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Active Listings Continued to Increase for the 6th Consecutive Month
SERIES: Active Listing of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
20.4%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Year-over-Year % Chg
Housing Supply Improved across the Board, Except for the Sub-$200k Price Segment
Sept 2018
SERIES: Active Listings of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
-12.7%
11.2%
23.9%
33.6%
26.4%21.6%
7.1%
20.4%
-20%
-10%
0%
10%
20%
30%
40%
Active Listing
Active Listings Increased in All Regions
-16%-18%
-14% -15%
44%
23%
13%
4%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
San Francisco Bay
Area
Southern California Central Valley Central Coast
Ye
ar-
to-Y
ea
r %
Ch
gSales Active Listings
Sept 2018
SERIES: Sales and Listings of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Discrepancies Point to Weaker DemandWhere did the buyers go?
7.0% 8.0% 7.0%
3.5% 2.9% 2.4%0.5% 0.0%
-21.1%
-7.3% -7.0%
0.9%
10.2%8.2%
-1.1%
8.6%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Under $300K $300-$500K $500-750K $750-1000K $1-1.5M $1.5-2M $2-$3M $3M +
Sales vs. Active Listings Growth
Listings Sales
California, September 2018: 24.0 Days
Listings Taking Longer to Sell
0
10
20
30
40
50
60
70
80
DA
YS O
N M
AR
KET
SERIES: Median Time of Market of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
More Listings With Price Reductions
SERIES: Listing Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
39.9%
4.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018
Reduced-Price Listings
Share Reduced Median Reduction
Listing & Sale Prices Dropping > $1M
SERIES: Median Price of Existing Condo/Townhomes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
-4.5%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
200
7 0
1
200
7 0
4
200
7 0
7
200
7 1
0
200
8 0
1
200
8 0
4
200
8 0
7
200
8 1
0
200
9 0
1
200
9 0
4
200
9 0
7
200
9 1
0
201
0 0
1
201
0 0
4
201
0 0
7
201
0 1
0
201
1 0
1
201
1 0
4
201
1 0
7
201
1 1
0
201
2 0
1
201
2 0
4
201
2 0
7
201
2 1
0
201
3 0
1
201
3 0
4
201
3 0
7
201
3 1
0
201
4 0
1
201
4 0
4
201
4 0
7
201
4 1
0
201
5 0
1
201
5 0
4
201
5 0
7
201
5 1
0
201
6 0
1
201
6 0
4
201
6 0
7
201
6 1
0
201
7 0
1
201
7 0
4
201
7 0
7
201
7 1
0
201
8 0
1
201
8 0
4
201
8 0
7
California $1M Homes: Sales vs. List Price Growth
Typically 4-6 month lag
List Price Sales Price
Despite the uptake in inventory, fewer units have been turned over since the Great Recession
SERIES: Percent of existing single-family homes being sold
SOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.
Housing Turnover Rate
(Single-Family Homes only)
4.6%
5.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
CA US Linear (CA)
CA turnover rate trend
Long-Time Homeowners are not
moving as in the past because:
• Demographic shift
• Low rate on current mortgage
• Low property taxes
• Capital gains hit
• Where can I afford to go?
Sellers Are Not Moving as Often as Before
11.5
0
2
4
6
8
10
12
14Years Owned Home Before Selling
SERIES: 2018 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5
8
15
30
0 20 40
Millennials
Gen X's
Baby Boomers
Silent
Generations
Older Generations Don’t Move As Often As
Younger Generations
And California Is Not Building Enough
SERIES: California New Housing Permits
SOURCE: Construction Industry Research Board
0
50000
100000
150000
200000
250000
300000
350000
Single Family Multi-FamilyCA HCD Projected
Housing Needs:
180,000/yr.
2017: 112,886 (55,779 sf, 57,107 mf )
2018f: 127,780 (64,900 sf, 62,880 mf)
CA has produced less housing per capita than other states (2005 – 2016)
SOURCE: U.S. Census Bureau, C.A.R.
3,971
5,592
533
1,142
1,090
559
1,101
California
Texas
Oregon
Washington
New York
Nevada
Arizona
Population Added
1,000 People
1,072,121
1,728,257
174,466
374,157
379,019
202,332
416,330
California
Texas
Oregon
Washington
New York
Nevada
Arizona
Housing Units Added
Number
270
309
327
328
348
362
378
California
Texas
Oregon
Washington
New York
Nevada
Arizona
Ratio of Housing Units Added to
Population Added
Units per 1,000 People
+40%
Housing Supply Gap Will Be Over 2 Million at Current Construction Pace
-1.02
-2.34
-3.36
1.34
-2.02
since 2005 Additional
Demand
Total
Demand
New supply Gap to fill
California Housing Supply Gap
(in millions)
SERIES: Housing Supply Gap
SOURCE: Calculation by CALIFORNIA ASSOCIATION OF REALTORS®
• With housing needs increasing
at a rate of 180,000 every year,
California will need more than
3.3 million units by 2030 to fill the
housing demand and bring it
back to 2005 level.
• At the current construction
pace, however, California will
have a backlog of over 2 million
by 2030
•Community Resistance – Blocking/delaying new housing
•Project Reviews and CEQA
• Land Availability/Bias Toward Commercial Development
California Not Building Enough Because
• Shortage of Land: • Production shortfall greatest in cities where need is most critical
• High Costs of Development• Fees in most California communities are higher than elsewhere in
US
• Infill development costs higher than suburban development costs
• Environmental policies, etc increase costs
• Lengthy permitting process increases cost per unit produced and favors deep pockets
Why the production shortfall?
Building in California is expensive
SERIES: Homeownership RateSOURCE: CA Legislative Analyst Office
• 2 to 4 times higher on California (CA) Coasts
• High land costs usually mean more units being
built on each plot of land, but not the case in
CA’s coastal metros
• During the 2000’s housing density of a typical
neighborhood in CA’s coastal metro rose only
4%, considerably less than the 11% average
increase in the comparison group
• The new housing unit in the comparison group
was also 40% more dense than that built in CA.
Land Costs Building Costs
• $50k to $75 higher in California (CA)
• Include labor, building material and
government fees, all higher in CA than other
states
• Development fees are higher in California than the rest of the country. A 2012 national
survey found that the average development
fee levied by California local governments
(excluding water-related fees) was $22,000
per single family home, as compared to the
$6,000 per single-family home in the rest of the country.
Case Study: Restrictive Zoning in L.A.
SERIES: Los Angeles Zoned Residential CapacitySOURCE: Morrow (2016), the White House: Housing Development Toolkit
• Los Angeles was zoned to
accommodate 10 million people
in 1960
• Today, the city is zoned for only
4.3 million people after decades
of population growth and
increase in housing demand.
Los Angeles Zoned Residential Capacity
The More “Underbuilding”, the higher the price growth
-2
0
2
4
6
8
10
12
-40% -20% 0% 20% 40% 60% 80% 100% 120%
Un
de
rbu
ildin
g
(Ne
w J
ob
s/N
ew
Pe
rmits)
Price Growth (%)
CA Underbuilding and Price Growth (2010-2015)
SERIES: Nonfarm Job Growth, New Housing Permits, Existing Median Prices
SOURCE: CA EDD, C.A.R., Construction Industry Research Board
California, September 2018: $578,850, -2.9% MTM, +4.2% YTY
CA Median Price Continued to Grow but Had the Smallest Increase since Dec 2012
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000P:May-07
$594,530
T: Feb-09
$245,230
-59% from
peak
Sept-18: $578,850Sept-17:
$555,400
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Housing Affordability Peaked at Q1 2012
California, 1984-2018
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
26%
53%
0%
10%
20%
30%
40%
50%
60%
70%
80%
% O
F H
OU
SEH
OLD
S T
HA
T C
AN
BU
Y A
MED
IAN
-PR
ICED
HO
ME
Annual Quarterly
Housing Affordability In CA: By County
64
535352515049484847464545454443434242414139383838383737333332302928262625
2322222020201918161614141412
0
10
20
30
40
50
60
70
2018-Q2: % able to purchase median-priced home
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Minimum Annual Income Required During Affordability Peak vs. Current
SERIES: Housing Affordability Index of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region 2012 Q1 2018 Q2 % CHG
CA SFH $56,320 $126,490 124.6%
CA Condo/Townhomes $44,440 $101,270 127.9%
Los Angeles Metropolitan Area $53,780 $112,340 108.9%
Inland Empire $35,170 $76,310 117.0%
S.F. Bay Area $90,370 $219,380 142.8%
US $32,000 $269,000 740.6%
Higher Rates Hurt Affordability
Q2-2018 Median Price $596,730
20% Down-payment
INTEREST RATE
MONTHLY MORTGAGE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Minimum Qualifying Income
INTEREST RATE
$2,013$2,144
$2,279$2,419
$2,563$2,711
$2,862$3,017
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
$2,800
$3,200
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
$107,956$113,196
$118,614$124,203
$129,958$135,871
$141,936$148,145
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
Housing Affordability Still the Main Reason for Outmigration
SERIES: 2018 Annual Housing Market Survey
SOURCE: California Association of REALTORS®
28%
16%
12%
8%
7%
5%
5%
5%
1%
15%
21%
14%
11%
5%
9%
9%
8%
6%
1%
18%
0% 5% 10% 15% 20% 25% 30%
Housing affordability
Quality of life
Closer to family/relative
Second home
Job change
Shorter commute to work/school
Quality of school
Retired
Quality of community services
Other
2018 2017
All Buyers
Q. What was the primary reason for changing county?
It’s a Much Bigger Problem for First-Time Buyers
SERIES: 2018 Annual Housing Market Survey
SOURCE: California Association of REALTORS®
49%
19%
11%
1%
5%
2%
5%
0%
1%
8%
18%
14%
12%
12%
7%
5%
5%
7%
1%
18%
0% 10% 20% 30% 40% 50% 60%
Housing affordability
Quality of life
Closer to family/relative
Second home
Job change
Shorter commute to work/school
Quality of school
Retired
Quality of community services
Other
First-Time Buyers Repeat Buyers
California Vs. U.S. – 9.5% gap in 2017
Homeownership update – CA inched up from 2016 but remained at low level
53.7%
Peak: 60.2%54.4%
64.5%
Peak: 69.0%
63.9%
45%
50%
55%
60%
65%
70%
75% CA US
SERIES: Homeownership RatesSOURCE: U.S. Census Bureau
54.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Ne
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Ca
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Ge
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Wis
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sylv
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Okla
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Ala
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De
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Ind
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We
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Homeownership Rate
California still ranked the 2nd lowest amongst all states
SERIES: Homeownership RatesSOURCE: U.S. Census Bureau (Current Population Survey)
Homeownership will deteriorate further if the trend continues
SERIES: Homeownership RateSOURCE: U.S. Census Bureau, American Community Survey, C.A.R. projection
57.1%
59.7%
56.1%
41.0%
47.3%
44.2%
30%
40%
50%
60%
70%
2000 2005 2010 2015 2020 2025 2030 2035 2040
California Homeownership Rate
Fast Slow Avearge
Despite the slight bounce back,
homeownership will remain low in
the next couple years due to:
• Interest rate hike
• Price growth
• Low turn-over rates
• Lack of new constructions
• Short-term Costa-Hawkins Repeal
Impact
More Sellers Continue to Move out of California; Highest since 2007
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Within the same county 38% 41% 37% 45% 47% 42% 49% 49% 46% 44% 44% 40% 38% 36%
In another county in
California23% 18% 24% 17% 21% 21% 19% 18% 20% 21% 20% 21% 20% 21%
In another state 31% 28% 29% 27% 19% 20% 20% 22% 19% 22% 22% 25% 28% 29%
Out of US 1% 2% 1% 1% 2% 1% 1% 1% 0% 1% 1% 1% 1% 1%
Don't Know/Not sure 7% 11% 9% 10% 12% 16% 10% 10% 15% 13% 13% 13% 14% 13%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Location of Seller’s New Home
SERIES: 2018 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Case Study: Seller Leaving California
SERIES: 2018 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Seller’s Profile
Age: 56
Marital Status: Married Couple with Dependents
Income: $200,000
Yrs. Owned: 25
Net cash gain: $1,050,000
Reason for selling: Desired larger home
State moving to: Utah
Characteristics of Home
Size: 1,948 sq. ft
Property Type: Single-Family Home
Location: Los Angeles County
Price: $1,175,000
“We doubled the size of our house
and lowered our mortgage
payment.”*
*Lopez, S. (2017) ‘They’re leaving California for Las Vegas for find middle-class life
that eluded them’. Los Angles Times, 3 December
“L.A would have been my first
choice, and I didn’t want to have
to leave California. I couldn’t
afford to stay there”*
CA is Losing Workers to More Affordable States:
Two Step
~750K People Have Left Since 2010
-169,336
-57,563
-24,972
-60,839
-41,362
-104,317
-163,922
-105,210
-180,000
-160,000
-140,000
-120,000
-100,000
-80,000
-60,000
-40,000
-20,000
0
2010 2011 2012 2013 2014 2015 2016 2017
California Net Domestic Migration
Step 1: Coastal to Cheaper Markets
-19,854-21,935
-34,217 -40,361-42,503
-48,609
-65,534
-79,132
-101,914
-124,148
Santa
Barbara
Colorado Oregon Washington Kern Nevada (ST) Arizona Texas San
Bernardino
Riverside
Coastal Southern California Out Migration (2010-2016)
Elsewhere in CA
Another State
Step 2: Pricing Prior Residents Out of State
-3,575
-5,117
-7,732 -7,970 -8,344
-10,604-10,680
-10,699
-16,374
-17,859
Hawaii Colorado Nevada (ST) Idaho North
Carolina
Utah Georgia Kern County Arizona Texas
Inland Empire Out Migration
(2010-2016)
Elsewhere in CA
Another State
Regional Housing Market Update
Contra Costa
0
200
400
600
800
1,000
1,200
1,400
Contra Costa County, Sep. 2018: 765 Units, -1.5% YTD, -17.3% YTY
County YTD Sales Turned Negative as of Sept 2018
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Contra Costa County, Sep. 2018: $650,000, Up 7.4% YTY
Price Growth Decelerated but Remained Solid
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Jan
-05
Jul-0
5
Jan
-06
Jul-0
6
Jan
-07
Jul-0
7
Jan
-08
Jul-0
8
Jan
-09
Jul-0
9
Jan
-10
Jul-1
0
Jan
-11
Jul-1
1
Jan
-12
Jul-1
2
Jan
-13
Jul-1
3
Jan
-14
Jul-1
4
Jan
-15
Jul-1
5
Jan
-16
Jul-1
6
Jan
-17
Jul-1
7
Jan
-18
Jul-1
8
Contra Costa County, September 2018: 2.9 Months
Inventory Started Rising but Remained Low
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.
SERIES: Unsold Inventory Index of Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sales Dropped Big in Some Cities
SERIES: Sales of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
City Sep-18 Aug-18 Sep-17 MTM% Chg YTY% Chg
Antioch 80 127 96 -37.0% -16.7%
Corcord 94 110 91 -14.5% 3.3%
Walnut Creek 32 46 47 -30.4% -31.9%
Sales of Existing Single-Family Homes
Price Appreciation Losing Steam
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
City Sep-18 Aug-18 Sep-17 MTM%Chg YTY%Chg
Antioch $450,000 $457,000 $430,500 -1.5% 4.5%
Corcord $616,000 $635,250 $599,000 -3.0% 2.8%
Walnut Creek $1,090,000 $1,052,500 $1,175,000 3.6% -7.2%
Median Price of Existing Single-Family Homes
Inventory Condition Improved in All Areas
SERIES: Active Listing of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
City Sep-18 Aug-18 Sep-17 MTM%Chg YTY%Chg
Antioch 318 320 177 -0.6% 79.7%
Corcord 198 207 124 -4.3% 59.7%
Walnut Creek 182 170 162 7.1% 12.3%
Active Listing of Existing Single-Family Homes
Listings Continued to Have Short Shelf Life
SERIES: Days on Market of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
County Sep-18 Aug-18 Sep-17
Antioch 15 14 12
Corcord 16 16 12
Walnut Creek 16 13 12
Days on Market of Existing Single-Family Homes
The Forecast
U.S. Economic Outlook
SERIES: U.S. Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2013 2014 2015 2016 2017 2018p 2019f
US GDP 1.7% 2.4% 2.6% 1.6% 2.3% 3.0% 2.4%
Nonfarm Job Growth 1.7% 1.9% 2.1% 1.8% 1.4% 1.6% 1.3%
Unemployment 7.4% 6.2% 5.3% 4.9% 4.4% 3.9% 3.7%
CPI 1.5% 1.6% 0.1% 1.4% 2.0% 2.5% 2.4%
Real Disposable Income, % Change -1.4% 2.7% 3.4% 2.7% 2.1% 2.8% 2.6%
30-Yr FRM 4.0% 4.2% 3.9% 3.6% 4.0% 4.7% 5.2%
California Economic Outlook
SERIES: CA Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2013 2014 2015 2016 2017 2018p 2019f
Nonfarm Job Growth 3.0% 2.2% 2.7% 2.3% 1.6% 2.0% 1.4%
Unemployment 8.9% 7.5% 6.2% 5.5% 4.8% 4.3% 4.3%
CA Population (Million) 38.4 38.7 39.1 39.4 39.6 39.9 40.2
Population Growth 0.9% 1.0% 0.8% 0.6% 0.8% 0.7% 0.7%
Real Disposable Income, % Change -2.1% 5.6% 3.9% 1.6% 1.6% 2.4% 3.0%
California Housing Market Outlook
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2013 2014 2015 2016 2017 2018p 2019f
SFH Resales (000s) 414.9 382.7 409.4 417.7 424.1 410.5 396.8
% Change -5.9% -7.8% 7.0% 2.0% 1.5% -3.2% -3.3%
Median Price ($000s) $407.2 $446.9 $476.3 $502.3 $538.0 $575.8 $593.4
% Change 27.5% 9.8% 6.6% 5.4% 7.2% 7.0% 3.1%
Housing Affordability
Index36% 30% 31% 31% 29% 28% 25%
30-Yr FRM 4.0% 4.2% 3.9% 3.6% 4.0% 4.7% 5.2%
• The market shift is underway with sales down and price softening
• High level of economic and market uncertainty is affecting home buying decisions and putting buyers on the sideline.
• While the fundamentals are still solid, the ride in the next 12 months will be bumpy
• Despite an improvement in housing supply, affordability remains an issue and will lead to further outmigration and lower homeownership rate.
Key Takeaways
Help Pass Prop 5 and Defeat Prop 10
Property Tax Fairness Initiative
The Problem:
Seniors and the disabled are stuck in homes ill-suited to their needs because they can’t afford to pay higher property taxes.
Prop 5
Property Tax Fairness Initiative
The Background:
Prop 13 keeps property taxes from escalating with home values, but when someone sells and buys a new home, they can end up paying
more in property taxes. Seniors and the disabled often can’t afford the new taxes and are stuck where they are.
We call these increased taxes a “moving penalty.”
Those on fixed incomes can’t afford to pay it.
Prop 5
Property Tax Fairness Initiative
The Solution:
Prop 5, C.A.R’s Tax Fairness Initiative• Allows seniors, the disabled and natural disaster victims to transfer
some of their property tax savings to a new home.• Also creates homeownership opportunities for other families.
VOTE YES ON PROP 5
Prop 5
Repeal of Costa-Hawkins Limitations on Rent Control
Current Law (Costa-Hawkins)
Local governments can enact rent control laws with these limitations:
• Can’t apply to new buildings;
• Can’t apply to single-family homes; and
• When a unit is voluntarily vacated, the rent can be reset to market value.
Prop 10
Repeal of Costa-Hawkins Limitations on Rent Control
What Prop 10 will do:
It removes all these limitations.
• Local governments will be able to set rents on single-family homes.
• They will be able to apply rent control to new buildings.
• And rents could be controlled without limit.
Prop 10
Repeal of Costa-Hawkins Limitations on Rent Control
The Consequences of Prop 10
There will be fewer rental units available:• Owners will convert their units or take them off the market.
New rental units won’t be built• Builders will have little incentive to create rental housing if they may
not even be able to break even.
Prop 10
Repeal of Costa-Hawkins Limitations on Rent Control
VOTE NO ON PROP 10
Prop 10
Register to Vote
Vote YES on Prop 5 and NO on Prop 10
Volunteer to Help at your local association
Help spread the word
How You Can Help
Thank You
This presentation can be found on
www.car.org/marketdata
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