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California Community College Real Estate Educators' Conference, Los Angeles, CA. 2013 Real Estate Economic Forecast presented by Sara Sutachan, Senior Research Fellow, California Association of Realtors.TRANSCRIPT
2013 HOUSING MARKET FORECASTFall 2012 Real Estate Educator’s Conference
Sara Sutachan, Senior Research Analyst
October 26, 2012
Recent Housing Headlines – Good News 1. NAR Aug 4.82M +9.3% YTY +7.8% MTM
2. US Aug new home sales: 372K, +25.3% YTY
3. Housing Prices on the rise
4. Mortgage rates at historic lows
5. Fed Initiates QE3 – Buying $40B/month in MBS for as long as it takes
6. “Bakersfield shows signs of boomtown again” (LA Times 9-9-12)
THE ECONOMY`
Gross Domestic Product: Growth is Stalling2011: 1.7%; 2012 Q2: 1.3%, Q3: 2.0%
2005
2006
2007
2008
2009
2010
2011 ----
Q1-
10
Q2-
10
Q3-
10
Q4-
10
Q1-
11
Q2-
11
Q3-
11
Q4-
11
Q1-
12
Q2-
12
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
ANNUAL QTRLY
2009 Largest Annual Drop since 1938 (-3.4%)
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
Unemployment: Cyclical & Structural Heading Down: At 3 year lows
SOURCE: CA Employment Development Division
Jan-
90
Jan-
92
Jan-
94
Jan-
96
Jan-
98
Jan-
00
Jan-
02
Jan-
04
Jan-
06
Jan-
08
Jan-
10
Jan-
120%
2%
4%
6%
8%
10%
12%
14%
CA US
CA Added ~300k Jobs in Aug-11 to Aug-12
Ja
n-0
8
Ma
r-0
8
Ma
y-0
8
Ju
l-0
8
Se
p-0
8
No
v-0
8
Ja
n-0
9
Ma
r-0
9
Ma
y-0
9
Ju
l-0
9
Se
p-0
9
No
v-0
9
Ja
n-1
0
Ma
r-1
0
Ma
y-1
0
Ju
l-1
0
Se
p-1
0
No
v-1
0
Ja
n-1
1
Ma
r-1
1
Ma
y-1
1
Ju
l-1
1
Se
p-1
1
No
v-1
1
Ja
n-1
2
Ma
r-1
2
Ma
y-1
2
Ju
l-1
2
-160000
-110000
-60000
-10000
40000
90000
SOURCE: CA Employment Development Division Month-to-Month Changes
Recession Job Losses: 1.3 millionSince Jan 2010: + 485,000
Job Trends by California Metro Area
Source: CA EDD, Labor Market Information Division, LAEDC
July 2012: CA +2.6%, +365.1 thousand Jobs
Annual Percentage Change in Nonfarm Jobs
VenturaModesto
Los AngelesOrange County
BakersfieldOakland
RiversideSacramento
San DiegoFresno
San JoseSan Francisco
Stockton
-2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%
-0.4%1.3%
1.6%2.0%2.1%2.1%
2.3%2.8%2.9%
3.1%3.5%
4.4%6.3%
Professional & Business Services Leading Sector
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Professional & Business Services
SOURCE: CA Employment Development Department
Construction Is Making a Comeback
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Construction
SOURCE: CA Employment Development Department
Manufacturing Stumbling but Worst is Over
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
Manufacturing
SOURCE: CA Employment Development Department
Consumer Confidence – Uneven But Things Are Getting Better
September 2012: 70.3
0
20
40
60
80
100
120INDEX, 100=1985
SOURCE: The Conference Board
CPI – Subdued for Now August 2012: All Items +1.7% YTY; Core +1.9% YTY
Jan-05 Jan-07 Jan-09 Jan-11-4%
-2%
0%
2%
4%
6%
8%
10% All Items Core
PERCENT CHANGE FROM A YEAR AGO
SOURCE: U.S. Bureau of Labor Statistics
CA Negative - Equity Mortgages
SOURCE: CoreLogic
29.0%
4.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Q4-2009
Q1-2010
Q2-2010
Q3-2010
Q4-2010
Q1-2011
Q2-2011
Q3-2011
Q4-2011
Q1-2012
Q2-2012
Negative Equity Share in CA Near Negative Equity Share in CA
California Borrowers: 29% Underwater15.6% of CA mortgages over 125% LTV
100%
to
104%
105%
to
109%
110%
to
114%
115%
to
119%
120%
to
124%
125
to 1
49%
150%
to
224%
225%
+
0%
2%
4%
6%
8%
10%
3.6% 3.0% 2.6% 2.3% 2.0%
7.3% 7.1%
1.2%
US CA
Loan-To-Value
SOURCE: CoreLogic
THE LENDING ENVIRONMENT
CA Housing Affordability at Record Highsbut Still Trails U.S.
Q1
20
05
Q2
20
05
Q3
20
05
Q4
20
05
Q1
20
06
Q2
20
06
Q3
20
06
Q4
20
06
Q1
20
07
Q2
20
07
Q3
20
07
Q4
20
07
Q1
20
08
Q2
20
08
Q3
20
08
Q4
20
08
Q1
20
09
Q2
20
09
Q3
20
09
Q4
20
09
Q1
20
10
Q2
20
10
Q3
20
10
Q4
20
10
Q1
20
11
Q2
20
11
Q3
20
11
Q4
20
11
Q1
20
12
Q2
20
12
0%
10%
20%
30%
40%
50%
60%
70%
80% CA US
% OF HOUSEHOLDS THAT CAN BUY
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SOURCE: Federal Home Loan Mortgage Corporation
Mortgage Rates at 50 Year LowsBut Credit is Tight: “Defensive Lending”
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-120%
1%
2%
3%
4%
5%
6%
7%
8%
FRM
ARM
Federal Funds
Average Credit Score Increased 26 points since 2005 For Purchase Loans
2005 2006 2007 2008 2009 2010 2011 2012*700
705
710
715
720
725
730
735
740
745
AVERAGE FICO PURCHASE LOANS
SOURCE: CoreLogic *2012 through Feb
Fannie & Freddie are the Market
Source: LPS CoreLogic
THE “G” FORCES
Caution: Fiscal Cliff Ahead
State & Local Government Finances
Future of Fannie and Freddie?
U.S. Economic Outlook
Indicator 2008 2009 2010 2011 2012p 2013f
US GDP -0.30% -3.50% 3.00% 1.70% 2.00% 2.30%
Nonfarm Job Growth -0.60% -4.40% -0.70% 1.20% 1.40% 1.60%
Unemployment 5.80% 9.30% 9.60% 9.00% 8.20% 8.00%
CPI 3.80% -0.40% 1.60% 3.20% 2.00% 2.10%Real Disposable Income, % Change 0.50% 0.90% 1.80% 1.30% 1.60% 1.60%
California Economic Outlook
Indicator 2008 2009 2010 2011 2012p 2013f
Nonfarm Job Growth -1.3% -6.0% -1.1% 0.9% 1.6% 1.6%
Unemployment Rate 7.2% 11.3% 12.4% 11.7% 10.7% 9.9%
Population Growth 0.8% 0.6% 0.7% 0.7% 0.8% 0.9%Real Disposable Income, % Change 1.0% -3.1% 1.8% 1.5% 0.3% 1.0%
THE CALIFORNIA RESIDENTIAL REAL ESTATE MARKET
THOUSANDS
C.A.R. Membership Off 50,000+ From Peak
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
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
0
50,000
100,000
150,000
200,000
250,000
Home Sales Membership1970-2011
Dollar Volume of Sales Slowly Improving Up 16.5% in 2012, Up 7.0% in 2013
2005 2006 2007 2008 2009 2010 2011 2012p 2013f$0
$50
$100
$150
$200
$250
$300
$350
$400
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
$327
$266
$194
$154 $150 $150 $142 $166 $178
$ Volume of Sales Percent Change
% Change$ in Billion
-54%
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA Sales of Existing Detached HomesSeptember 2012 Sales: 484,240 Units, Up 5.6% YTD, - 1.2% YTY
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-120
100,000
200,000
300,000
400,000
500,000
600,000
700,000
SalesUNITS
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®*Sales are seasonally adjusted and annualized
REOs; 12.3%
Short Sales; 24.3%
Other Distressed Sales (Not Speci-
fied); 0.4%
Equity Sales; 63.0%
Sep-12
Share of Distressed Sales to Total Sales(California)
SOURCE: California Association of REALTORS®
SOURCE: California Association of REALTORS®
0%
10%
20%
30%
40%
50%
60%
70%
63.0%
24.3%
12.3%
Equity Sales Short Sale REO
Share of Equity Sales Has Been Trending Upward Since Early 2012
SOURCE: California Association of REALTORS®
REO & Short Sales: Bay Area(Percent of Total Sales)
AlamedaContra Costa Marin
NapaSan Mateo
Santa Clara Solano
Sonoma
0%
20%
40%
60%
80%
100%
10% 10%8% 11%
7%4%
17%13%
18% 18%16%
26%
13% 18%
42%
24%
Sep 2012
Short Sales
REO Sales
SOURCE: California Association of REALTORS®
REO & Short Sales: Southern California(Percent of Total Sales)
Los AngelesOrange
RiversideSan
Bernardino San Diego
0%
20%
40%
60%
80%
100%
10%6% 14% 21%
7%
26%
19%
34% 24%
8%
Sep 2012
Short Sales
REO Sales
SOURCE: California Association of REALTORS®
REO & Short Sales: Central Valley(Percent of Total Sales)
FresnoKern
Kings
Madera
MercedPlacer
Sacramento
San Benito
San Joaquin
Stanislaus
0%
20%
40%
60%
80%
100%
23%18%
17%30%
13%10% 15% 20%
20%20%
29%
27%23%
17%
32%33% 34%
35%
32% 36%
Sep 2012
Short Sales
REOs
CA Median Price of Existing Detached HomesSeptember 2012: $345,000, Up 19.5% YTY
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000 P: May-07$594,530
T: Feb-09$245,230-59% frompeak
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CA Unsold Inventory: Nearing Record Lows September 2012: 3.7 Months
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-120
2
4
6
8
10
12
14
16
18
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.
Price Range (Thousand) Sep-11 Aug-12 Sep-12
$1,000K+ 9.9 6.1 7.7$750-1000K 6.1 4.0 4.7$500-750K 6.0 3.1 3.6$300-500K 5.4 3.0 3.3$0-300K 4.6 2.8 3.2
Unsold Inventory Index Months of Supply
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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.
Tight Supply of Inventory, Especially for REO Sales(California)
Equity Sales REO Sales Short Sales0
1
2
3
4
3.8
2.2
3.9
Sep-12Unsold In-ventory In-dex (Months)
SOURCE: California Association of REALTORS®
Extremely Low Levels of Active Listings at the State Level
Equity Sales REO Sales Short Sales0
1
2
3 2.4
1.1 1.1
Sep-12Unsold Inventory Index – Active List-ing Only (Months)
SOURCE: California Association of REALTORS®
Equity Sales and Short Sales Continued to Improved, While REO Sales Dropped
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Equity Sales Short Sales REO Sales-60%
-40%
-20%
0%
20%14.1%
3.6%
-59.0%
(% Change in Sales – Year to Year)
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Aug-11Sep-11 Oct-11 Nov-11Dec-11 Jan-12 Feb-12 Mar-12 Apr-12May-12Jun-12 Jul-12 Aug-120
1
2
3
4
5
6
7
8
9
Equity Sales REO Short Sales
Inventory Remained in Short SupplyUnsold Inventory Index (Months)
SOURCE: California Association of REALTORS®
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Equity Sales Short Sale REO
Low Inventory Pushing Prices Upward in REOs & Equity Sales
Shadow Inventory
How do you define “Shadow Inventory”?
• Everyone defines it differently• Bank owned?• In foreclosure?• Not making payments?• Underwater?
• Urban Myth: There will be a flood of foreclosures after the election
The CA Foreclosure Funnel:
8.6 Million Homes
6.8 Million Mortgages
2.07 Million Underwater
.com/CAR
18,000/684,000 = 38 months of Inventory
434,000 Delinquent
180,000 in Foreclosure
70,000 Bank Owned
18,000 Distressed Sales
.com/CAR
California Foreclosure Filings, Sep. 2012• NTS: 16,947, -21.0% YTD • NOD: 14,478, -18.6% YTD
Jan
-07
Ap
r-07
Jul-
07
Oct
-07
Jan
-08
Ap
r-08
Jul-
08
Oct
-08
Jan
-09
Ap
r-09
Jul-
09
Oct
-09
Jan
-10
Ap
r-10
Jul-
10
Oct
-10
Jan
-11
Ap
r-11
Jul-
11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Notice of Trustee Sale - Counts Notice of Defaults - Counts
SOURCE: ForeclosureRadar.com
6 Month Average:
NTSs: 16,669
NODs: 19,046
California Foreclosure Outcomes, Sep. 2012• REO: -51.4% YTD • 3rd Party: -2.0% YTD • Cancel: -24.8% YTDJa
n-0
7
Ap
r-07
Jul-
07
Oct
-07
Jan
-08
Ap
r-08
Jul-
08
Oct
-08
Jan
-09
Ap
r-09
Jul-
09
Oct
-09
Jan
-10
Ap
r-10
Jul-
10
Oct
-10
Jan
-11
Ap
r-11
Jul-
11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12
0
5,000
10,000
15,000
20,000
25,000
30,000
REOs Sold to 3rd Party Cancellations
SOURCE: ForeclosureRadar.com
6 Month Average:
REO: 4,761
3rd Party: 3,305
Cancelled: 9,868
California Foreclosure Inventories, Sep. 2012• Preforeclosure: -20.3% YTD • Schedule for Sale: -21.0% YTD •
• Bank Owned: -28.4% YTDJa
n-0
7
Ap
r-07
Jul-
07
Oct
-07
Jan
-08
Ap
r-08
Jul-
08
Oct
-08
Jan
-09
Ap
r-09
Jul-
09
Oct
-09
Jan
-10
Ap
r-10
Jul-
10
Oct
-10
Jan
-11
Ap
r-11
Jul-
11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Preforeclosure Scheduled for Sale Bank Owned
SOURCE: ForeclosureRadar.com
6 Month Average:
Preforeclosure: 91,014
Schedule for Sale: 85,022
Bank Owned: 68,690
Los Angeles CountyPreforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235
Source: ForeclosureRadar.com as of 10/12/12.
Los Angeles CountyPreforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235
Source: ForeclosureRadar.com as of 10/12/12.
Los Angeles CountyPreforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235
Source: ForeclosureRadar.com as of 10/12/12.
Los Angeles CountyPreforeclosure: 13,092 • Auction: 20,458 • Bank Owned: 3,235
Source: ForeclosureRadar.com as of 10/12/12.
LENDER SATISFACTION SURVEY
Overall Lender Performance Index Improving
2010 2011 20120
5
10
15
20
25
1617
23
SOURCE: California Association of REALTORS®
Majority of REALTORS® in California Dealt with Bank of America in Most Recent Short Sale Transaction
Other ; 14%
Citi Bank; 4%
JP Morgan Chase; 14%
Wells Fargo; 18%
Bank of America; 50%
Please indicate which lender/servicer you dealt with in your most recent transaction.
Difficulty in Closing Improved
Please rate the level of ease or difficulty you had in closing this transaction. 5 is extremely difficult, 1 is extremely easy.
Extremely Easy
Extremely Difficult
N=495
5
4
3
2
1
0% 10% 20% 30% 40% 50% 60%
34%
30%
17%
12%
7%
56%
21%
12%
7%
4%
2011
2012
Satisfaction Levels Slightly Improved in All Categories
The timeliness of responses to your inquiries
Knowledge/professionalism of the representative you worked with
Length of time to obtain approval/disapproval of the short sale transaction
Expectations of financial contrivuations from the seller at or after closing
Your overall satisfaction with this lender
1 2 3 4 5
2.5
2.9
2.2
3.0
2.5
2.1
2.4
1.8
2.4
1.9
2011
2012
With respect to your most recent transaction, please rate your satisfaction level with the lender/servicer in the following categories.
Very SatisfiedVery Dissatisfied
Overall Satisfaction With Lender During Short Sale Better Than a Year Ago
Not a
t all S
atisf
ied
Not S
atisf
ied
Neutra
l
Satisf
ied
Extre
mely
Sat
isfied
0%
20%
40%
60%
2012
2011
36%
23%
14% 16%12%
54%
21%9%
9% 7%
2012 2011
With respect to your most recent transaction, please rate your satisfaction level with the lender/servicer - Your overall satisfaction with this lender
Communications with Lenders Improving…
On average, what was the actual time it required for the lender's representative to return any form of communication to you?
n=510
More than 5 business days
Within 5 business days
Within 4 business days
Within 3 business days
Within 2 business days
Within 1 business day
Within 1 Hour
Instantly
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
30.4%
7.3%
4.9%
14.3%
16.1%
19.4%
6.5%
1.2%
43.0%
5.2%
4.6%
12.8%
14.7%
14.5%
4.1%
1.1%
2011
2012
…But Communication Problems with Lender Remain Obstacles to the Transaction
What were the obstacles you faced with this transaction? (Check all that apply)
Other
Problems qualifying the buyer
Lender foreclosed before the transaction completed
Seller in the short sale transaction not responsive
Problem with the appraisal
Problem with the second lien holder(s) in the short sale
Buyer backed out of the transaction/Long negotiations
Repeated requests for documentation
Poor communications with lender representative
Lender's response time to the short sale package
0% 10% 20% 30% 40% 50% 60% 70%
17%
4%
8%
11%
12%
23%
32%
50%
55%
67%
2011 2012
More REALTORS® Likely to Refer Lender to Future Buyers than in 2011
How likely are you to refer buyers to this lender for financing on a future home purchase?
Unsure
Not at all likely
Not likely
Likely
Very likely
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
8%
42%
23%
16%
11%
7%
60%
18%
7%
7%
2011 2012
n=557
Still, Nearly 2/3rds Not Happy With Lender
N=492
Very Unhappy Unhappy Neutral Happy Very Happy0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
44%
21%
11%15%
8%
Overall, how did working with this lender make you feel?
2012 ANNUAL HOUSING MARKET SURVEY
Equity Sales vs. REO vs. Short Sales(2012)
Equity Sales REO Sales Short Sales
Share of Total Sales 64.7% 12.3% 21.7%
Median Home Price $448,000 $185,000 $235,000
Square Footage 1,750 1,500 1,600
Price / SF $243 $116 $154
Sales-to-List Price Ratio 97.3% 100.0% 99.9%
% of Sales With Multiple Offers 50.9% 70.8% 66.1%
Avg. Number of Offers 4.0 4.2 4.3
% of All Cash Sales 27.3 43.1% 26.7%
Days on MLS 32 30 90
Days in Escrow 35 45 50
Equity Sales (2011 vs. 2012)
2012 2011
Share of Total Sales 64.7% 58.7%
Median Home Price $448,000 $431,000
Square Footage 1,750 1,783
Price / SF $243 $250
Sales-to-List Price Ratio 97.3% 95.9%
% of Sales With Multiple Offers 50.9% 35.2%
Avg. Number of Offers 4.0 3.0
% of All Cash Sales 27.3% 25.5%
Days on MLS 32 67
Days in Escrow 35 35
REO Sales (2011 vs. 2012)
2012 2011
Share of Total Sales 12.3% 19.7%
Median Home Price $185,000 $240,000
Square Footage 1,500 1,500
Price / SF $116 $112
Sales-to-List Price Ratio 100.0% 98.0%
% of Sales With Multiple Offers 70.8% 58.3%
Avg. Number of Offers 4.2 4.3
% of All Cash Sales 43.1% 34.0%
Days on MLS 30 50
Days in Escrow 45 35
Short Sales (2011 vs. 2012)
2012 2011
Share of Total Sales 21.7% 20.2%
Median Home Price $235,000 $287,000
Square Footage 1,600 1,600
Price / SF $154 $175
Sales-to-List Price Ratio 99.9% 95.9%
% of Sales With Multiple Offers 66.1% 57.5%
Avg. Number of Offers 4.3 3.6
% of All Cash Sales 26.7% 23.3%
Days on MLS 90 141
Days in Escrow 50 45
Demand for Investment & Second/ Vacation Homes Dips Slightly, But Remains Strong
2005 2006 2007 2008 2009 2010 2011 20120%
5%
10%
15%
20%
25%
Investment/Rental PropertyVacation/Second Home
7%
16%
For Those Who Purchased an Investment Property:
17%
83%
Investment to Flip
Rental Property
Share of International Buyers
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.?
2008 2009 2010 2011 20120%
1%
2%
3%
4%
5%
6%
7%
8%
9%
7.8%
6.0%5.3%
5.7% 5.8%
More Sellers Are Planning to Buy Another Home As the Market Slowly Recovers
Q. Is the seller planning on purchasing another home?
2005 2006 2007 2008 2009 2010 2011 20120%
10%
20%
30%
40%
50%
60%
70%
80%
40%
For Those Who Do Not Plan to Repurchase, Here Are Their Top 5 Reasons:
Seller is a lender/bank
Seller prefers to have less financial obligation
Poor credit background
Lack of cash for down payment
Decide to live with family/friends
0% 5% 10% 15% 20% 25%
15.3%
14.4%
8.8%
8.6%
8.1%
19.8%
11.4%
10.9%
5.7%
4.7%
2011 2012
CALIFORNIA HOUSING MARKET FORECAST
Forecast Report Card
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Forecast Date: October 2012 vs. September 2011
2011 Projected
September 2011 2011 Actual2012 Forecasted September 2011
2012 Projected
SFH Resales (000s) 491.1 497.9 496.2 523.3
% Change -0.1% 1.1% 1.0% 5.1%Median Price ($000s) $291.0 $286.0 $296.0 $317.0
% Change -4.0% -6.2% 1.7% 10.9%
California Housing Market Outlook
Indicator 2008 2009 2010 2011 2012p 2013f
SFH Resales (000s) 441.81 546.86 492.29 497.86 523.25 530
% Change 27.3% 23.8% -10.0% 1.1% 5.1% 1.3%Median Price ($000s) 348.5$ 275.0$ 305.0$ 286.0$ 317.0$ 335.0$
% Change -37.8% -21.1% 10.9% -6.2% 10.9% 5.7%
30-Yr FRM 6.0% 5.1% 4.7% 4.5% 3.8% 4.0%
1-Yr ARM 5.2% 4.7% 3.5% 3.0% 2.8% 2.8%
Recovery Will Continue in 2013, with Both Sales and the Median Price Up
Units (Thousand)
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2005
2006
2007
2008
2009
2010
2011
2012p
2013f
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
523,250.0530,000.0
Sales of Existing Detached Homes
2005
2006
2007
2008
2009
2010
2011
2012p
2013f
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$317,020
$335,000
Median Price
Price (Thousand)
CLOSING THOUGHTS
Housing Permits Improving…Slowly2012(p): 52,000 units, Up 10.4% from 2011
2005 2006 2007 2008 2009 2010 2011 2012P 0
50,000
100,000
150,000
200,000
250,000
Single Family Multi-Family
Household Growth: 220,000-250,000/yr
SOURCE: Construction Industry Research Board
First-time Buyers: Rent v. Buy? Do the Math!
Total Monthly Housing Costs
$0$500
$1,000$1,500$2,000$2,500$3,000$3,500$4,000$4,500$5,000
$1,560$1,949
$390
$4,680
Buying Renting Monthly Savings Annual Savings
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