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California Real Estate Market Update
Senate Transportation Committee
March 7, 2012
Leslie Appleton-Young, Chief Economist
California Housing Market
Sales Hit Bottom in 2007, Median Price in 2009California Sales of Existing Homes and Median Price
UNITS/MEDIAN PRICE $
SOURCE: California Association of REALTORS®
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
Sales of Existing Detached Homes Median Price
-61% -25%
-44%
Sales of Existing Detached Homes and Pacific West Consumer Confidence• California, January 2012 Sales: 517,740 Units, Down 5.7% YTD, Down 5.7% YTY
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Ja
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0
Ja
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Ja
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Ja
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Ja
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Ja
n-0
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Ja
n-0
8
Ja
n-0
9
Ja
n-1
0
Ja
n-1
1
Ja
n-1
2
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence INDEXUNITS
SOURCE: California Association of REALTORS®; The Conference Board
*Sales are seasonally adjusted and annualized
Share of Distressed Sales to Total Sales
SOURCE: California Association of REALTORS®
SOURCE: California Association of REALTORS®
REO & Short Sales: Bay Area(Percent of Total Sales)
MarinNapa
San MateoSanta Clara
SolanoSonoma
0%
20%
40%
60%
80%
100%
20% 26%
19%15%
37%
28%
19%
36%
20%26%
37%
29%
Jan 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%
22%
15%31%
49%
20%
29%
27%
30%
20%
10%
Jan 2012
Short Sales
REO Sales
SOURCE: California Association of REALTORS®
REO & Short Sales: Central Valley(Percent of Total Sales)
MaderaMerced
San BenitoSacramento
Kern
0%
20%
40%
60%
80%
100%
65%
36%
22% 33%35%
0%
29%55% 33% 29%
Jan 2012Short Sales
REO Sales
SOURCE: California Association of REALTORS®
REO & Short Sales: Rest of California(Percent of Total Sales)
AmadorButte
HumboldtLake
Monterey
San Luis Obispo
Santa Cruz
Siskiyou
South Lake Tahoe
Mendocino
Tehama
0%
20%
40%
60%
80%
100%
42%
25% 26%
55%
30%28% 29%
67%
50%44% 53%
8%
18%8%
17%
27%21% 25%
4%
20%
5%
12%
Jan 2012
Short Sales
REOs
P: May-07$594,530
T: Feb-09$245,230
-59% frompeak
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000Ja
n-0
0
Jan
-01
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
Jan
-10
Jan
-11
Jan
-12
Median Price of Existing Detached HomesCalifornia, January 2012: $268,280, Down 3.9% YTY
SOURCE: California Association of REALTORS®
Trough vs. Current Price – January 2012
RegionTrough Month
Trough Price
Jan-12 Median
% Chg From Trough
Contra Costa (Central County) Jan-12 $476,470 $476,470 0.0%
San Francisco County Jan-12 $561,270 $561,270 0.0%
Solano County Jan-12 $184,440 $184,440 0.0%
Sonoma County Feb-09 $312,338 $326,920 4.7%
San Mateo County Jan-09 $551,000 $578,500 5.0%
CALIFORNIA Feb-09 $245,230 $268,280 9.4%
San Francisco Bay Area Feb-09 $378,520 $415,120 9.7%
Marin County Feb-11 $632,580 $694,440 9.8%
Santa Clara County Feb-09 $445,000 $495,000 11.2%
Napa County Apr-11 $306,820 $344,740 12.4%
Alameda County Jan-09 $346,236 $395,830 14.3%
SOURCE: California Association of REALTORS®
Bay Area
Trough vs. Current Price – January 2012Central Valley
RegionTrough Month
Trough Price
Jan-12 Median
% Chg From Trough
Fresno County Jan-12 $131,070 $131,070 0.0%
Sacramento County Jan-12 $162,290 $162,290 0.0%
Placer County Mar-11 $253,750 $258,210 1.8%
Tulare County Apr-11 $111,600 $116,670 4.5%
San Benito County Jul-09 $239,000 $260,000 8.8%
CALIFORNIA Feb-09 $245,230 $268,280 9.4%
Kern (Bakersfield) County Apr-09 $115,000 $130,000 13.0%
Merced County Jan-10 $96,670 $112,000 15.9%
Madera County Jul-11 $92,500 $113,750 23.0%
Kings County Jul-11 $114,290 $145,710 27.5%
SOURCE: California Association of REALTORS®
Trough vs. Current Price – January 2012Southern California
RegionTrough Month
Trough Price
Jan-12 Median
% Chg From Trough
Palm Springs/Lower Desert Apr-09 $150,140 $157,610 5.0%
San Diego County Mar-09 $326,830 $350,680 7.3%
Ventura Couty Feb-09 $359,630 $386,870 7.6%
San Bernardino County May-09 $120,410 $129,920 7.9%
Orange County Jan-09 $442,170 $483,510 9.3%
CALIFORNIA Feb-09 $245,230 $268,280 9.4%
Inland Empire Apr-09 $150,860 $169,280 12.2%
Southern California Apr-09 $246,063 $276,580 12.4%
Los Angeles Metro Apr-09 $227,370 $256,000 12.6%
Riverside County Apr-09 $171,480 $196,050 14.3%
Los Angeles County May-09 $248,850 $290,890 16.9%
SOURCE: California Association of REALTORS®
Unsold Inventory IndexCalifornia, January 2012: 5.5 Months
0
2
4
6
8
10
12
14
16
18
20
Ja
n-8
8
Ja
n-8
9
Ja
n-9
0
Ja
n-9
1
Ja
n-9
2
Ja
n-9
3
Ja
n-9
4
Ja
n-9
5
Ja
n-9
6
Ja
n-9
7
Ja
n-9
8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
n-0
3
Ja
n-0
4
Ja
n-0
5
Ja
n-0
6
Ja
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7
Ja
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8
Ja
n-0
9
Ja
n-1
0
Ja
n-1
1
Ja
n-1
2
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MONTHS
Price Range (Thousand) Jan-11 Dec-11 Jan-12
$1,000K+ 13.8 8.3 13.7$750-1000K 9.1 5.8 8.5$500-750K 6.9 4.5 6.9$300-500K 6.4 4.3 5.9$0-300K 5.4 3.9 4.9
Unsold Inventory Index (Months)
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Tight Supply of Inventory for REO Sales
SOURCE: California Association of REALTORS®
Housing Affordability IndexCalifornia Vs. U.S.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1
20
00
Q3
20
00
Q1
20
01
Q3
20
01
Q1
20
02
Q3
20
02
Q1
20
03
Q3
20
03
Q1
20
04
Q3
20
04
Q1
20
05
Q3
20
05
Q1
20
06
Q3
20
06
Q1
20
07
Q3
20
07
Q1
20
08
Q3
20
08
Q1
20
09
Q3
20
09
Q1
20
10
Q3
20
10
Q1
20
11
Q3
20
11
CA US
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
% OF HOUSEHOLDS THAT CAN BUY
CA Underwater MortgagesReverse Wealth Effect v. Squatter Economy
SOURCE: CoreLogic
29.7%
4.6%
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
Negative Equity Share in CA Near Negative Equity Share in CA
Distressed Market:Issues and Overview
7.2%
3.5%
0%
2%
4%
6%
8%
10%
12%
Q1
/74
Q2
/75
Q3
/76
Q4
/77
Q1
/79
Q2
/80
Q3
/81
Q4
/82
Q1
/84
Q2
/85
Q3
/86
Q4
/87
Q1
/89
Q2
/90
Q3
/91
Q4
/92
Q1
/94
Q2
/95
Q3
/96
Q4
/97
Q1
/99
Q2
/00
Q3
/01
Q4
/02
Q1
/04
Q2
/05
Q3
/06
Q4
/07
Q1
/09
Q2
/10
Q3
/11
Delinquency Rate Foreclosure Rate
Mortgage Foreclosure & Delinquency RatesCalifornia: Q4-2011
SOURCE: Mortgage Bankers Association
Delinquencies: Long Run Average: 4.5%
Foreclosure Rate: Long Run Average: 1.3%
California Foreclosure Inventories, Jan. 2012Preforeclosure: -30.1% YTD • Schedule for Sale: -34.3% YTD •
Bank Owned: -11.9% YTD
0
50,000
100,000
150,000
200,000
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7
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Preforeclosure Scheduled for Sale Bank Owned
SOURCE: ForeclosureRadar.com
6 Month Average:
Preforeclosure: 104,364
Schedule for Sale: 87,112
Bank Owned: 98,851
Los Angeles CountyPreforeclosure: 13,793
Source: ForeclosureRadar.com as of 02/23/12.
Los Angeles CountyAuction: 19,444
Source: ForeclosureRadar.com as of 02/23/12.
Los Angeles CountyBank Owned: 5,490
Source: ForeclosureRadar.com as of 02/23/12.
San Gabriel
Preforeclosure: 30 • Auction: 46 • Bank Owned: 10
Source: ForeclosureRadar.com as of 02/23/12.
SaratogaPreforeclosure: 19 • Auction: 25 • Bank Owned: 2
Source: ForeclosureRadar.com as of 01/30/2012.
Palo AltoPreforeclosure: 8 • Auction: 13 • Bank Owned: 0
Source: ForeclosureRadar.com as of 01/30/2012.
San JosePreforeclosure: 1,243 • Auction: 1,873 • Bank Owned: 441
Source: ForeclosureRadar.com as of 01/30/2012.
San Diego CountyPreforeclosure: 4,916
Source: ForeclosureRadar.com as of 03/02/12.
San Diego CountyAuction: 5,921
Source: ForeclosureRadar.com as of 03/02/12.
San Diego CountyBank Owned: 1,826
Source: ForeclosureRadar.com as of 03/02/12.
Sacramento• Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560
Source: ForeclosureRadar.com as of 08/19/11
Sacramento• Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560
Source: ForeclosureRadar.com as of 08/19/11
Sacramento• Preforeclosure: 2,216 • Auction: 1,905 • Bank Owned: 1,560
Source: ForeclosureRadar.com as of 08/19/11
2011 Annual Housing Market Survey
Equity vs. REO vs. Short Sales
Equity Sales REO Sales Short Sales
Share of Total Sales 58.7% 19.7% 20.2%
Median Home Price $431,000 $240,000 $287,000
Square Footage 1,783 1,500 1,600
Price / SF $250 $112 $175
Sales-to-List Price Ratio 95.9% 98.0% 95.9%
% of Sales With Multiple Offers 35.2% 58.3% 57.5%
Avg. Number of Offers 3.0 3.0 3.6
% of All Cash Sales 25.5% 34.0% 23.3%
Days on MLS 67 50 141
Days in Escrow 35 35 45
Proportion of Sellers Planning to Repurchase
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110%
10%
20%
30%
40%
50%
60%
70%
80%
Q. Is the seller planning on purchasing another home?
Reasons Sellers Not Planning to Buy Another Home
Q. Why is the seller not planning to purchase another home?
2.7%
4.7%
4.9%
5.7%
10.9%
11.4%
19.8%
0% 10% 20% 30% 40% 50%
Seller is a lender/bank
Seller prefers to have less financial obligation
Poor credit background
Lack of cash for down payment
Out of work/unemployment
Decide to live with family/friends
Waiting for market to bottom
Reasons For SellingAll Home Sellers
0% 5% 10% 15% 20% 25% 30% 35%
Foreclosure/ShortSale/Default
Change in Family Status
Retirement/Move toRetirement Community
Investment/ TaxConsderations
Desired Better Location
Desired Smaller Home
Changed Jobs
Desired Larger Home
Other
Q. What was the single most important reason for selling/buying the property?
Investments & Second/Vacation Homes
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110%
5%
10%
15%
20%
25%
17%
7%
Investment/Rental Property Vacation/Second Home
Foreign Buyers
8%
5%6%6%
0%
2%
4%
6%
8%
10%
2008 2009 2010 2011
% of Foreign Buyers
Q. Was the buyer a foreign buyer?
California Housing Market Forecast
California Housing Market Outlook
2005 2006 2007 2008 2009 2010 2011 2012f
SFH Resales (000s)
625.0 477.5 346.9 441.8 546.9 492.3 497.9 502.8
% Change 0.03% -23.6% -27.3% 27.3% 23.8% -10.0% 1.1% 1.0%Median Price ($000s)
$522.7 $556.4 $560.3 $348.5 $275.0 $305.0 $286.0 $290.9
% Change 16.0% 6.5% 0.7% -37.8% -21.1% 10.9% -6.2% 1.7%
30-Yr FRM 5.9% 6.4% 6.3% 6.0% 5.1% 4.7% 4.5% 4.7%
1-Yr ARM 4.5% 5.5% 5.6% 5.2% 4.7% 3.5% 3.0% 3.1%
•
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Forecast Date: February 2012