HOUSING AND LABOR MARKET TRENDS: CALIFORNIA

Community Development ResearchFederal Reserve Bank of San Francisco

May 2011

National Trends

Unemployment dips below 9%

Source: Bureau of Labor Statistics, November 2010

0

2

4

6

8

10

12

Recession

U.S. Unemployment Rate

Une

mpl

oym

entR

ate

Recovery, particularly in labor market, remains elusive

Source: Bureau of Labor Statistics, December 2010

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48

Perc

ent D

eclin

e in

Em

ploy

men

t fro

m P

eak

Months Since Start of Recession to Employment Recovery

1980 1974 1981 1990

2007

Case-Shiller Index shows continued softness in housing market

Source: Case - Shiller Home Price Index

100

120

140

160

180

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Case-Shiller National House Price Index(2000 = 100, Quarterly)

FHFA House Price Index Dips Again at End of 2010

FHFA

Hou

se P

rice

Inde

x20

00=

100

Source: Federal Housing Finance Agency (formerly OFHEO), includes refinancing and is not seasonally adjusted

90

100

110

120

130

140

150

160

170

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA (formerly OFHEO) House Price Index (2000=100, quarterly)

Nationally, delinquencies drop in 2010, but still more than 4.5 million homes in distress

Source: Mortgage Bankers Association, National Delinquency Survey

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Num

ber o

f M

ortg

ages

All Mortgages Past Due Loans in Foreclosure

Despite improvement, high rates of delinquency remain concentrated in western and southern states

Source: Lender Processing Service Inc. Applied Analytics, November 2010

HAMP modifications down; borrowers still face challenges in obtaining permanent modifications

Source: HAMP Service Performance Report Through January 2011

0

20,000

40,000

60,000

80,000

100,000

120,000

February March April May June July August September October November December January

Mod

ifica

tions

New HAMP Trials Started New Permanent Modifications Started2011

Composition of distressed sales

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Arizona and

Nevada

California Florida Industrial Midwest

Pacific NW South Northeast Rocky Mountain

Damaged REO Move-In Ready REO Short Sale

Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions, Feb 2011

Neighborhood stabilization: concerns over investor purchases of distressed properties

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Damaged REO

Move-In Ready REO

Short Sale Non-Distressed

Investor

First-Time Homebuyer

Current Homeowner

Perc

ent

of P

rope

rty

Type

Who Is Buying Properties?─February 2011

Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions, Feb 2011

30%

11%

75%20% 55%

2%

19%

14%

5%

4%

5%28%

16% 18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Current Homeowners

First-Time Homebuyers

Investors

All Other Financing

VA

Fannie/Freddie

FHA

CashPerc

ent

of B

uyer

-Sid

e Tr

ansa

ctio

nsFinancing for home purchases

Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions, Feb 2011

Many states within 12th District face severe budget shortfalls

Total End-of-Year Shortfall as Percentage of 2010 Budget

Source: Data from Center for Budget and Policy Priorities

California Trends

California’s unemployment still well above national average

Source: Bureau of Labor Statistics

0

2

4

6

8

10

12

14

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Recession

Une

mpl

oym

ent R

ate

United States

California

Unemployment rates particularly high in Central Valley and northern counties

Source: Bureau of Labor Statistics, February 2011

California house prices appear to be stabilizing

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

se P

rice

Inde

x20

00=

100

90

110

130

150

170

190

210

230

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA (formerly OFHEO) House Price Index(2000=100, quarterly)

California

United States

Northern California house prices steady

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

se P

rice

Inde

x20

00=

100

90

110

130

150

170

190

210

230

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA House Price Index: Northern California(2000 = 100)

Oakland

Sacramento

San Francisco

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

se P

rice

Inde

x20

00=

100

Southern California MSA house prices also seem to be stabilizing

90

110

130

150

170

190

210

230

250

270

290

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA House Price Index: Southern California(2000 = 100, quarterly)

San Diego

Inland Empire

Los Angeles

Housing markets in the Central Valley saw greatest declines, but also starting to stabilize

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

se P

rice

Inde

x20

00=

100

90

110

130

150

170

190

210

230

250

270

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA (formerly OFHEO) House Price Index: Central California(2000 = 100, quarterly)

Fresno

Merced

Stockton

Visalia

Number of delinquent mortgages and properties in foreclosure dropped throughout 2010

Source: Mortgage Bankers Association, National Delinquency Survey

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2005 2006 2007 2008 2009 2010

Num

ber o

f M

ortg

ages

Loans in Foreclosure All Mortgages Past Due

State & Local Data Maps

Northern California Data Maps

Source: Lender Processing Services Inc. Applied Analytics

Areas Affected by Concentrated ForeclosuresFebruary 2011

Northern California Data Maps

Source: Lender Processing Services Inc. Applied Analytics

Areas At Risk of Additional ForeclosuresFebruary 2011

Northern California Data Maps

Changes in House Prices Since 2007 PeakFebruary 2011

Source: CoreLogic Home Price Index and FRBSF CD Calculations

Central California Data Maps

Source: Lender Processing Services Inc. Applied Analytics

Areas Affected by Concentrated ForeclosuresFebruary 2011

Central California Data Maps

Source: Lender Processing Services Inc. Applied Analytics

Areas At Risk of Additional ForeclosuresFebruary 2011

Central California Data Maps

Changes in House Prices Since 2007 PeakFebruary 2011

Source: CoreLogic Home Price Index and FRBSF CD Calculations

Southern California Data Maps

Source: Lender Processing Services Inc. Applied Analytics

Areas Affected by Concentrated ForeclosuresFebruary 2011

Northern California Data Maps

Source: Lender Processing Services Inc. Applied Analytics

Areas At Risk of Additional ForeclosuresFebruary 2011

Southern California Data Maps

Source: CoreLogic Home Price Index and FRBSF CD Calculations

Changes in House Prices Since 2007 PeakFebruary 2011

Conclusions

For More Information: FRBSF Community Development Website

Links to other resources and research on foreclosure trends and mitigation strategies

All publications, presentations available on our website

Conference materials also posted shortly after events

http://www.frbsf.org/community/