2013 California Real Estate Market Update

2013 Housing Market Forecast

October 3, 2012

Leslie Appleton-Young, Vice President & Chief Economist

What we saw from the roof…..

C.A.R.

NAR

THE ECONOMY

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)

Gross Domestic Product: Growth is Stalling 2011: 1.7%; 2012 Q1: 2.0% Q2: 1.3%

-8%-7%-6%-5%-4%-3%-2%-1%0%1%2%3%4%5%6%7%8%

20

05

20

07

20

09

20

11

Q1

-10

Q3

-10

Q1

-11

Q3

-11

Q1

-12

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

0%

2%

4%

6%

8%

10%

12%

14%

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

CA US

CA Added ~300k Jobs in Aug-11 to Aug-12

-160000

-110000

-60000

-10000

40000

90000

Ja

n-0

8

Ap

r-0

8

Ju

l-0

8

Oct-

08

Ja

n-0

9

Ap

r-0

9

Ju

l-0

9

Oct-

09

Ja

n-1

0

Ap

r-1

0

Ju

l-1

0

Oct-

10

Ja

n-1

1

Ap

r-1

1

Ju

l-1

1

Oct-

11

Ja

n-1

2

Ap

r-1

2

Ju

l-1

2

SOURCE: CA Employment Development Division Month-to-Month Changes

Recession Job Losses: 1.3 million

Since 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

-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%

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

VenturaModesto

Los AngelesOrange County

BakersfieldOakland

RiversideSacramento

San DiegoFresno

San JoseSan Francisco

Stockton

Professional & Business Services

Leading Sector

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%


Professional & Business Services

SOURCE: CA Employment Development Department

Construction Is Making a Comeback

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%


Construction


Manufacturing Stumbling but

Worst is Over

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%


Manufacturing


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

-4%

-2%

0%

2%

4%

6%

8%

10%

Jan-05 Jan-07 Jan-09 Jan-11

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%

Q4-2

009

Q1-2

010

Q2-2

010

Q3-2

010

Q4-2

010

Q1-2

011

Q2-2

011

Q3-2

011

Q4-2

011

Q1-2

012

Q2-2

012

Negative Equity Share in CA Near Negative Equity Share in CA

California Borrowers: 29% Underwater

15.6% of CA mortgages over 125% LTV

3.6% 3.0% 2.6% 2.3% 2.0%

7.3% 7.1%

1.2%

0%1%2%3%4%5%6%7%8%9%

10%

100%

to

104%

105%

to

109%

110%

to

114%

115%

to

119%

120%

to

124%

125 to 1

49%

150%

to

224%

22

5%

+

Loan-To-Value

US CA

SOURCE: CoreLogic

COMMERCIAL REAL ESTATE

Commercial Markets Recovering Albeit Slowly

• Positive fundamentals supporting commercial markets, but

economic factors slowing growth

• Stronger regional economies seeing more robust demand

• Multi-Family leading the commercial market – future

household growth will lead to lower vacancy & higher rents.

• Industrial and warehouse space is holding on better

because imports and exports to Far East and South America

& Canada.

• Difficulty securing commercial real estate loans tempering

demand.

• Vacancy rates are marginally declining and rents are

modestly rising in all of the sectors –

Commercial Vacancy Rates

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2011 2012P 2013F

Office Industrial Retail Multi-Family

SOURCE: National Association of REALTORS®

Commercial Space Rental Rate Growth

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2011 2012P 2013F



Metro Commercial Space Vacancy Rates 2012.Q3



Los Angeles 15.1 4.8 6.1 3.1

Oakland – East Bay 18.2 10.9 6 2.8

Orange County 18.7 4.6 5.3 3.5

Sacramento 19.8 13.6 11.6 3.5

San Bernardino – Riverside 24.5 8.3 10.3 4

San Diego 16.7 8.6 6.1 2.6

San Francisco 13.4 12.4 3.8 2.8

San Jose 20.5 17.4 5.9 2.4

Ventura County 15.1 - 8.9 3.1

THE LENDING

ENVIRONMENT

US -- CA Prices Over-Shot Trend Line

Snapping Back Slowly (1970-2013)

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

California

US

CA Price Trend

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CA Housing Affordability at Record Highs

but Still Trails U.S.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q1 2

005

Q3 2

005

Q1 2

006

Q3

20

06

Q1 2

007

Q3 2

007

Q1 2

008

Q3 2

008

Q1

20

09

Q3 2

009

Q1 2

010

Q3 2

010

Q1 2

011

Q3 2

011

Q1 2

012

CA US

% OF HOUSEHOLDS THAT CAN BUY

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SOURCE: Federal Home Loan Mortgage Corporation

Mortgage Rates at 50 Year Lows

But Credit is Tight: “Defensive Lending”

0%

1%

2%

3%

4%

5%

6%

7%

8%


FRM

ARM

Federal Funds

Mortgages Reached 16-Year Low Last Year

Average Credit Score Increased 26 points

since 2005 For Purchase Loans

700

705

710

715

720

725

730

735

740

745

2005 2006 2007 2008 2009 2010 2011 2012*

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

$327

$266

$194

$154 $150 $150 $142 $166

$178

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

$0

$50

$100

$150

$200

$250

$300

$350

$400

2005 2006 2007 2008 2009 2010 2011 2012p 2013f

$ Volume of Sales Percent Change

% Change $ in Billion

-54%


Sales of Existing Detached Homes California, August 2012 Sales: 511,240 Units, Up 6.5% YTD, Up 2.3% YTY

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000


Sales UNITS

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® *Sales are seasonally adjusted and annualized

REOs, 14.4%

Short Sales, 23.0%

Other Distressed Sales (Not

Specified), 0.4%

Equity Sales, 62.2%

Aug-12

Share of Distressed Sales to Total Sales


0%

10%

20%

30%

40%

50%

60%

70%

Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12

Equity Sales Short Sale REO

Share of Equity Sales Has Been

Trending Upward Since Early 2012


Median Price of Existing Detached Homes California, August 2012: $343,820, Up 15.5% YTY

$-

$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% from

peak


Unsold Inventory: Nearing Record Lows California, August 2012: 3.2 Months


0

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) Aug-11 Jul-12 Aug-12

$1,000K+ 9.1 6.4 6.1

$750-1000K 6.3 4.1 4.0

$500-750K 5.6 3.5 3.1

$300-500K 5.2 3.3 3.0

$0-300K 4.6 3.0 2.8

Unsold Inventory:

Shortage Across All Price Ranges





Unsold Inventory By Price Range

0

5

10

15

20

25

30

$0 - 300K

$300-500K

$500-750K

$750-1000K

$1,000K+-

All

MONTHS





Tight Supply of Inventory:

Especially for REO Listings

0

1

2

3

4

Equity Sales REO Sales Short Sales

3.3

1.6

3.7

Aug-12Unsold

Inventory Index

(Months)


Extremely Low Levels of Active Listings

at the State Level …

0

1

2

3

4


2.1

0.8 1.0

Aug-12Unsold Inventory Index-

Active Listings Only

(Months)






0

1

2

3

4

5

6

7

8

9

Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12

Equity Sales REO Short Sales

Inventory Remained in Short Supply

Unsold Inventory

Index (Months)

Low Inventory Pushing Prices Upward in

REOs & Equity Sales


-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12

Equity Sales Short Sale REO

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, Aug. 2012 NTS: 15,389, -22.7% YTD • NOD: 16,590, -15.3% YTD

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Ja

n-0

7

Ap

r-07

Ju

l-07

Oc

t-0

7

Ja

n-0

8

Ap

r-08

Ju

l-08

Oc

t-0

8

Ja

n-0

9

Ap

r-09

Ju

l-09

Oc

t-0

9

Ja

n-1

0

Ap

r-10

Ju

l-10

Oc

t-1

0

Ja

n-1

1

Ap

r-11

Ju

l-11

Oc

t-1

1

Ja

n-1

2

Ap

r-12

Ju

l-12

Notice of Trustee Sale - Counts Notice of Defaults - Counts

SOURCE: ForeclosureRadar.com

6 Month Average:

NTSs: 16,965

NODs: 20,282

California Foreclosure Outcomes, Aug. 2012 REO: -52.3% YTD • 3rd Party: -2.3% YTD • Cancel: -25.2% YTD

0

5,000

10,000

15,000

20,000

25,000

30,000

Ja

n-0

7

Ap

r-07

Ju

l-0

7

Oc

t-07

Ja

n-0

8

Ap

r-08

Ju

l-0

8

Oc

t-08

Ja

n-0

9

Ap

r-09

Ju

l-0

9

Oc

t-09

Ja

n-1

0

Ap

r-10

Ju

l-1

0

Oc

t-10

Ja

n-1

1

Ap

r-11

Ju

l-1

1

Oc

t-11

Ja

n-1

2

Ap

r-12

Ju

l-1

2

REOs Sold to 3rd Party Cancellations


6 Month Average:

REO: 4,809

3rd Party: 3,314

Cancelled: 9,885

California Foreclosure Inventories, Aug. 2012

Preforeclosure: -20.3% YTD • Schedule for Sale: -22.2% YTD •

Bank Owned: -27.1% YTD

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Jan

-07

Ap

r-07

Ju

l-07

Oc

t-0

7

Jan

-08

Ap

r-08

Ju

l-08

Oc

t-0

8

Jan

-09

Ap

r-09

Ju

l-09

Oc

t-0

9

Jan

-10

Ap

r-10

Ju

l-10

Oc

t-1

0

Jan

-11

Ap

r-11

Ju

l-11

Oc

t-1

1

Jan

-12

Ap

r-12

Ju

l-12

Preforeclosure Scheduled for Sale Bank Owned


6 Month Average:

Preforeclosure: 92,557

Schedule for Sale: 86,194

Bank Owned: 72,774

2012 ANNUAL HOUSING

MARKET SURVEY

Equity Sales vs. REO vs. Short Sales

(2012)


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




Price / SF $116 $112





Days on MLS 30 50


Short Sales (2011 vs. 2012)

2012 2011




Price / SF $154 $175





Days on MLS 90 141


59%

0%

20%

40%

60%

80%

100%

2005 2007 2009 2011

% of Sales with Price Discount

Long Run Average = 68%

Market Competition Leads to

Fewer Sales with Price Discount

0

2

4

6

8

10

12

14

16

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2005 2007 2009 2011

Med. Price Discount

Med. Weeks on MLS 2.1%, 5

weeks

Median Price Discount & Weeks on Market

Q. What was the original list sales price of the property? What was the final sales price of the property?

How many weeks did the property remain on the MLS?

…as Sellers with Net Cash Loss

Hit a Record High

Q. What was the net cash gain or net loss to the seller as a result of this sale?

33.5%

0%

5%

10%

15%

20%

25%

30%

35%

2005 2006 2007 2008 2009 2010 2011 2012

Long Run Average = 12.3%

57%

4.2

0

1

2

3

4

5

6

0%

10%

20%

30%

40%

50%

60%

2005 2007 2009 2011

% with Multiple Offers # of Multiple offers (Average)

• Share of home sales with multiple offers is the

highest in at least the last 12 years

With An Imbalance Between Supply and

Demand, Home Buyers Have Been Fiercely

Competing With Each Other

Share of First-Time Buyers Remains

Below Average But Improves from 2011

Q. Was the buyer a first-time buyer?

36%

39%

0%

10%

20%

30%

40%

50%

2005 2007 2009 2011

% First-Time Home Buyers Long Run Average

$65,000

20%

0%

5%

10%

15%

20%

25%

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

2005 2006 2007 2008 2009 2010 2011 2012

Median Down Payment % of Down Payment to Price

Q. What was the amount of downpayment?

The Median Down Payment Up 24 Percent

from 2011, as Home Prices Increase

Q. Please indicate the type of mortgage

Share of FHA Still Significantly Higher than

2007, but is the Lowest in 4 Years (First Mortgage)

24%

4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2005 2007 2009 2011

FHA VA

Demand for Investment & Second/ Vacation

Homes Dips Slightly, But Remains Strong

0%

5%

10%

15%

20%

25%

Vacation/Second Home

Investment/Rental Property

7%

16%

For Those Who Purchased

an Investment Property:

Investment to Flip

Rental Property

More Buyers Are Purchasing with Cash

0%

5%

10%

15%

20%

25%

30%

2005

2006

2007

2008

2009

2010

20

11

2012

30%

% of All Cash Sales

• Almost one-third of buyers paid with all cash

• The share of all cash buyers has been on the rise since 2006

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.?

7.8%

6.0%

5.3% 5.7% 5.8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2008 2009 2010 2011 2012

One of Five REALTORS® Worked with An

International Buyer in the Past 12 Months

Q. How many properties have you sold to an international buyer in the last 12 months?

79%

9% 5% 3% 1% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0 1 2 3 4 5+ # of Properties

% Who Sold to International Buyers

# of Properties Sold to International Buyers in the Last 12 Months

More Sellers Are Planning to Buy Another

Home As the Market Slowly Recovers

Q. Is the seller planning on purchasing another home?

0%

10%

20%

30%

40%

50%

60%

70%

80%

2005 2006 2007 2008 2009 2010 2011 2012

40%

For Those Who Do Not Plan to Repurchase, Here

Are Their Top 5 Reasons:

15.3%

14.4%

8.8%

8.6%

8.1%

19.8%

11.4%

10.9%

5.7%

4.7%

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

Seller is a lender/bank

Seller prefers to have less financialobligation

Poor credit background

Lack of cash for down payment

Decide to live with family/friends

2012 2011

REGIONAL HOUSING MARKETS

Northern California

Sales of Existing Detached Homes Northern CA, August 2012: 1,328 Units, Up 11.2% YTD, Up 5.0% YTY

SOURCE: California Association of REALTORS®;

The Conference Board

0

200

400

600

800

1,000

1,200

1,400

1,600


Sales UNITS


Home Sales in Northern California

0

100

200

300

400

500

600 August-11 August-12

SOURCE: California Association of REALTORS® SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®, Clarus MarketMetrics

Median Price of Existing Detached Homes Northern CA, August 2012: $239,250, Up 6.4% YTY

SOURCE: California Association of REALTORS®

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000



County Aug-11 Jul-12 Aug-12 M-t-M Y-t-Y

Butte $201,320 $215,740 $226,090 4.8% 12.3%

Del Norte* $117,740 $144,450 $199,000 37.8% 69.0%

Glenn $95,000 $127,250 $155,000 21.8% 63.2%

Humbolt $226,860 $229,690 $218,750 -4.8% -3.6%

Lake $123,640 $135,450 $125,560 -7.3% 1.6%

Lassen $115,000 $90,000 $71,000 -21.1% -38.3%

Nevada** $220,000 $229,000 $232,000 1.3% 5.5%

Placer $264,690 $291,670 $288,030 -1.2% 8.8%

Shasta $162,920 $161,430 $165,480 2.5% 1.6%

Siskiyou $116,670 $132,500 $127,270 -3.9% 9.1%

Tehama $123,330 $95,000 $89,170 -6.1% -27.7%

Yolo $233,040 $255,560 $264,580 3.5% 13.5%

Median Price of Existing Detached Homes Northern California

SOURCE: California Association of REALTORS® SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®, Clarus MarketMetrics

REO & Short Sales: Northern California (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

16% 21% 20%

45%

27% 45%

12%

12% 21%

7%

18%

4%

13%

23%

Aug 2012

Short Sales

REOs


Supply of Inventory in Northern CA

0

1

2

3

4


3.5

1.2 1.0

UII – Active Only

Northern Wine Country

Sales of Existing Detached Homes Northern Wine Country, Aug-11: 680 Units, Up 18.6% YTD, Up 9.7% YTY

0

100

200

300

400

500

600

700

800

900


Sales UNITS


Home Sales in Northern Wine Country

0

50

100

150

200

250

300

350

400

450

500

Mendocino Napa Sonoma

August-11 August-12


Median Price of Existing Detached Homes Northern Wine Country, Aug. 2012: $375,690, Up 13.8% YTY

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000



Median Price of Existing Detached Homes Northern Wine Country


Mendocino $201,920 $235,000 $206,250 -12.2% 2.1%

Napa $354,760 $419,230 $385,710 -8.0% 8.7%

Sonoma $339,200 $352,780 $385,610 9.3% 13.7%


Bay Area

Sales of Existing Detached Homes Bay Area, August 2012: 4,255 Units, Up 9.3% YTD, Up 9.2% YTY

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


Sales UNITS

Home Sales in Bay Area Counties


0

200

400

600

800

1000

1200

Alameda ContraCosta

(CentralCounty)

Marin Napa SanFrancisco

SanMateo

SantaClara

Solano Sonoma

August-11 August-12

Median Price of Existing Detached Homes Bay Area, August 2012: $567,900, Up 14.0% YTY


$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000


Median Price of Existing Detached Homes Bay Area Counties



Alameda $468,900 $537,800 $539,820 0.4% 15.1%

Contra Costa (Central County) $607,310 $649,800 $628,290 -3.3% 3.5%

Marin $806,550 $845,980 $806,450 -4.7% 0.0%

Napa $354,760 $419,230 $385,710 -8.0% 8.7%

San Francisco $632,270 $728,690 $692,980 -4.9% 9.6%

San Mateo $742,000 $801,500 $777,500 -3.0% 4.8%

Santa Clara $595,000 $690,000 $666,750 -3.4% 12.1%

Solano $197,880 $196,110 $202,240 3.1% 2.2%

Sonoma $339,200 $352,780 $385,610 9.3% 13.7%

REO & Short Sales: Bay Area (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

AlamedaContraCosta

MarinNapa

SanMateo

SantaClara Solano

Sonoma

9% 8% 9% 12%

5% 5%

25%

12%

15% 14% 16%

24%

10% 16%

35%

20%

Aug 2012

Short Sales

REO Sales


Supply of Inventory in Bay Area

0

1

2

3


1.5

0.8

0.6

UII – Active Only

Central Valley Region

Sales of Existing Detached Homes Central Valley, Aug. 2012: 5,064 Units, Down 3.9% YTD, Down 7.0% YTY

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12

Sales UNITS

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Am

ad

or

Ca

lavara

s

Fre

sn

o

Ke

rn(B

ake

rsfie

ld)

Kin

gs C

ou

nty

Ma

de

ra

Me

rce

d

Mo

no

*

Pla

ce

r

Sa

cra

me

nto

Sa

n B

en

ito

Sa

n J

oa

quin

Sta

nis

lau

s

Tu

lare

Tu

olu

me

August-11 August-12

Home Sales in Central Valley Region

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®, Clarus MarketMetrics

Median Price of Existing Detached Homes Central Valley, August 2012: $163,260, Up 7.9% YTY


$130,000

$135,000

$140,000

$145,000

$150,000

$155,000

$160,000

$165,000

$170,000

Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®, Clarus MarketMetrics

Median Price of Existing Detached Homes Central Valley Regions


Amador $145,000 $200,000 $175,000 -12.5% 20.7%

Calavaras $165,750 $197,000 $159,000 -19.3% -4.1%

Fresno $141,500 $149,060 $151,110 1.4% 6.8%

Kern (Bakersfield) $133,950 $142,000 $155,000 9.2% 15.7%

Kings County $130,000 $141,110 $155,710 10.3% 19.8%

Madera $128,750 $118,330 $127,500 7.7% -1.0%

Merced $126,670 $133,330 $123,330 -7.5% -2.6%

Mono* $510,000 $431,000 $625,000 45.0% 22.5%

Placer County $264,690 $291,670 $288,030 -1.2% 8.8%

Sacramento $166,680 $176,500 $184,000 4.2% 10.4%

San Benito $239,900 $272,000 $335,000 23.2% 39.6%

San Joaquin $159,320 $168,170 $168,120 0.0% 5.5%

Stanislaus $140,540 $143,100 $147,850 3.3% 5.2%

Tulare $124,680 $121,820 $130,800 7.4% 4.9%

Tuolumne $161,110 $186,670 $204,690 9.7% 27.0%

REO & Short Sales: Central Valley (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

24% 19%

33% 35%

22%

12% 17% 21% 21% 23%

23% 28%

19% 14% 36%

30% 35%

38%

35% 34%

Aug 2012

Short Sales

REOs


Supply of Inventory in Central Valley

0

1

2

3


1.8

0.8 0.8

UII – Active Only

Central Coast

Sales of Existing Detached Homes Central Coast, Aug. 2012 Sales: 780 Units, Up 4.5% YTD, Up 0.6% YTY


0

200

400

600

800

1,000

1,200


Sales UNITS

Home Sales in Central Coast Region


0

50

100

150

200

250

300

350

Monterey San Luis Obispo Santa Barbara Santa Cruz

August-11 August-12

Median Price of Existing Detached Homes Central Coast, August 2012: $381,200, Up 13.5% YTY

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000



Median Price of Existing Detached Homes Central Coast Regions


Monterey $252,000 $280,750 $317,500 13.1% 26.0%

San Luis Obispo $352,310 $423,530 $386,180 -8.8% 9.6%

Santa Barbara $421,430 $533,850 $515,240 -3.5% 22.3%

Santa Cruz $490,000 $575,000 $540,000 -6.1% 10.2%


REO & Short Sales: Central Coast (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

17%

15%

11%

27%

15%

18%

Aug 2012

Short Sales

REOs


Supply of Inventory in Central Coast

0

1

2

3

4


3.7

0.9 0.8

UII – Active Only

Southern California Region

Sales of Existing Detached Homes Southern California Aug. 2012 Sales: 12,487 Units, Up 8.6% YTD, Up 11.2% YTY

UNITS


-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000


Sales

Home Sales in Southern CA Regions

0

500

1000

1500

2000

2500

3000

3500

4000

Imperial Los Angeles Orange Riverside San Bernardino San Diego Ventura

August-11 August-12


Median Price of Existing Detached Homes Southern CA, August 2012: $336,310, Up 14.3% YTY


$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000


Median Price of Existing Detached Homes Southern California Region



Imperial $132,000 $129,000 $136,000 5.4% 3.0%

Los Angeles $312,900 $334,190 $344,770 3.2% 10.2%

Orange $508,910 $551,160 $567,710 3.0% 11.6%

Riverside $202,060 $223,740 $227,740 1.8% 12.7%

San Bernardino $135,030 $145,710 $143,470 -1.5% 6.3%

San Diego $369,390 $392,380 $389,540 -0.7% 5.5%

Ventura $424,400 $425,480 $437,880 2.9% 3.2%

Santa Barbara $421,430 $533,850 $515,240 -3.5% 22.3%

REO & Short Sales: Southern California (Percent of Total Sales)

0%

20%

40%

60%

80%

100%

Los AngelesOrange

RiversideSan

Bernardino San Diego

12%

7% 19% 26%

8%

24%

20%

32% 22%

9%

Aug 2012

Short Sales

REO Sales


Supply of Inventory in Southern CA

0

1

2

3


2.0

0.7

1.2

UII – Active Only

CALIFORNIA HOUSING

MARKET FORECAST

2013 Forecast

Forecast Report Card

Source: CALIFORNIA ASSOCIATION OF REALTORS®

Forecast Date: October 2012 vs. September 2011

2011 Projected

September 2011 2011 Actual

2012 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)


523.3 530.0

0

100

200

300

400

500

600

700

2005 2007 2009 2011 2013f

Th

ou

sa

nd

s

Sales of Existing Detached Homes

$317

$335

$0

$100

$200

$300

$400

$500

$600

2005 2007 2009 2011 2013f

Th

ou

sa

nd

s

Median Price

Price

(Thousand)

CLOSING THOUGHTS

Pent-Up Housing Demand is Looming

11,400

11,600

11,800

12,000

12,200

12,400

12,600

12,800

13,000

13,200

13,400

30,000

31,000

32,000

33,000

34,000

35,000

36,000

37,000

38,000

2000-2001 2003-2004 2006-2007 2009-2010

In t

ho

usan

ds

Total Population, California

Number of Households, California (rightaxis)

377

575

Housing Permits Improving…Slowly 2012(p): 52,000 units, Up 10.4% from 2011

0

50,000

100,000

150,000

200,000

250,000

2005 2006 2007 2008 2009 2010 2011 2012P

Single Family Multi-Family

Household Growth: 220,000-250,000/yr

SOURCE: Construction Industry Research Board

Buyers More Optimistic than Sellers About

Future Home Prices

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyers Sellers

25% 9%

0%

49% 49%

23% 27%

0%

Unsure

Flat

Down

Up

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

MARKET OPPORTUNITIES 2013

Rates at Historic Lows

0%

1%

2%

3%

4%

5%

6%

7%

8%


Fixed Rate Mortgage

Home Prices Rising but Still Very Attractive California Statewide Median Price

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000


First-time Buyers: Rent v. Buy? Do the Math!

$0

$500

$1,000

$1,500

$2,000

Total Monthly Housing Costs

$1,560

$1,949

$390

Buying Renting Monthly Savings

Investment Opportunities

Now is the time to get…

Take Flight in 2013!

THANK YOU!

WWW.CAR.ORG/MARKETDATA

[email protected]

Documents

2013 California Real Estate Market Update