2019 economic & market forecast - top producer® website · 10/11/2018 · 2019 economic &...

2019 Economic & MarketForecast

REImagine

October 11, 2018

Leslie Appleton-Young

SVP & Chief Economist

Note: Not including transactions in foreclosure.

The CA Housing Market Recovery

Equity Sales (Aug 2018)= 98.4%

Short Sales (Aug 2018)= 0.3%

REO Sales (Aug 2018)= 0.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Equity Sales Short Sale REO

Equity Sales Vs. Distressed Sales

SERIES: Distressed Sales, Not Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Assault onHomeownership

California Vs. U.S. – 9.5% gap in 2017

Homeownership Rates

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

CA: Ownership Rebound?

54.3

64.4

50

55

60

65

70

75

Homeownership Rate

CA U.S.

California Homeownership Rates by Race and Ethnicity (2010-2014 Average)

… Homeownership Varies Sharply by Ethnicity

SERIES: Homeownership rate by ethnicitySOURCE: CA HCD, PolicyLink, USC Program for Environmental and Regional Equity

CA: Majority Renter State by 2025

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

42 of 142 Big Cities ALREADY Majority Renter

50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ha

wth

orn

eG

len

da

leLo

sA

ng

ele

sElC

ajo

nC

ost

aM

esa

Bu

rba

nk

Sa

nta

Ba

rba

raSa

nta

Cla

raLy

nw

oo

dA

lam

ed

aSa

nta

Cru

zSu

nn

yva

leSa

nD

ieg

oSa

cra

me

nto

Sto

ckto

nR

ed

wo

od

City

We

stm

inst

er

Co

mp

ton

Sa

nM

ate

oP

alo

Alto

Re

dd

ing

Ba

ldw

inP

ark

Lan

ca

ste

rP

itts

bu

rgC

itru

sH

eig

hts

Ca

rmic

ha

el

Sa

nLe

an

dro

Ch

ula

Vis

taD

aly

City

Ne

wp

ort

Be

ac

hW

hittie

rV

isa

liaH

em

et

Co

nc

ord

Clo

vis

Tem

ec

ula

Sa

nM

arc

os

Lake

Els

ino

reSa

nC

lem

en

teW

aln

ut

Cre

ek

Fon

tan

aH

esp

eria

Sim

iVa

lley

Lake

wo

od

Live

rmo

reC

ast

roV

alle

yM

en

ife

eY

orb

aLi

nd

a

2017 California Renter Rate by City

Majority Renter Cities

76.0%

50.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ha

wth

orn

e

Sa

nta

Mo

nic

a

Ea

stLo

sA

ng

ele

s

Gle

nd

ale

Ing

lew

oo

d

Sa

nFr

an

cis

co

Los

An

ge

les

Be

llflo

we

r

Alh

am

bra

ElC

ajo

n

Flo

ren

ce

-Gra

ha

m

Oa

kla

nd

Co

sta

Me

sa

Me

rce

d

Lon

gB

ea

ch

Bu

rba

nk

Ard

en

-Arc

ad

e

Mo

un

tain

Vie

w

Sa

nta

Ba

rba

ra

ElM

on

te

Pa

sad

en

a

Sa

nta

Cla

ra

So

uth

Ga

te

Ch

ico

Lyn

wo

od

Be

rke

ley

An

ah

eim

Ala

me

da

Sa

lina

s

Sa

nta

An

a

Sa

nta

Cru

z

Da

vis

Ma

de

ra

Su

nn

yva

le

Irv

ine

Tust

in

Sa

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ieg

o

Fre

sno

Lod

i

Sa

cra

me

nto

Sa

nB

ern

ard

ino

Esc

on

did

o

2017 California Renter Rate by City

Where will our childrenlive?

Izzy Come Back!

4.2%

GDP 2018-Q2

1.7%

Job GrowthSeptember 2018

3.7%

UnemploymentSeptember 2018

Consumption2018-Q2

Core CPIAugust 2018

2.2%3.8%

U.S. Economy Our Biggest Strength

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-1

2

Se

p-1

2

Feb

-13

Jul-1

3

De

c-1

3

Ma

y-1

4

Oc

t-14

Ma

r-15

Au

g-1

5

Jan

-16

Jun

-16

No

v-1

6

Ap

r-1

7

Se

p-1

7

Feb

-18

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

Feb

-01

Ma

r-02

Ap

r-0

3

Ma

y-0

4

Jun

-05

Jul-0

6

Au

g-0

7

Se

p-0

8

Oc

t-09

No

v-1

0

De

c-1

1

Jan

-13

Feb

-14

Ma

r-15

Ap

r-1

6

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.

September 2018: 138.4

Consumer ConfidenceHighest in 18 Years

138.4

0

20

40

60

80

100

120

140

160

IND

EX

,1

00

=1

98

5

SERIES: Consumer ConfidenceSOURCE: The Conference Board

August 2018: All Items 2.7% YTY; Core +2.2% YTY

Inflation Remains Low

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

An

nu

alP

erc

en

tC

ha

ng

e

All Items Core

SERIES: Consumer Price IndexSOURCE: US Bureau of Labor Statistics

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)

Down831 pts

30 Yr. FRM Hit 5%, 1st Time since Early 2011

SERIES: Average 30 Yr. Fixed Mortgage RatesSOURCE: 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 timesince mid-2006

SERIES: 30Yr FRM, 5Yr ARM, Fed Funds Rate (Target Rate)SOURCE: Freddie Mac, St. Louis Fed

MONTHLY WEEKLY

Rates Rising Recently, but Keep Perspective

SERIES: 30Yr FRM, 5Yr ARMSOURCE: Freddie Mac

0

2

4

6

8

10

12

14

16

18

20

30-Year Fixed Rate Mortgage

Higher Rates Hurt Affordabiity

Q2-2018 Median Price $596,730

20% Down-payment

INTEREST RATE

MONTHLY MORTGAGE

SERIES: Housing Affordability IndexSOURCE: 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%

II. California HousingMarket

California, August 2018 Sales: 399,600 Units, -2.1% YTD, -6.6% YTY

Market Off 2.1% YTD – 4 Months of YTY Declines

-

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 HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Aug-18:399,600

Aug-17:427,630

Statewide Home Sales Off 5.5% YOY

*Sales are seasonally adjusted and annualized

SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

11.8%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18

Year-over-Year % Chg

Avg. year-over-year% chg. = -5.5%

Last 4+ consecutive mo. with decline:Avg. year-over-year % chg. = -1.9%

California, August 2018: $596,410, +0.8% MTM, +5.5% YTY

Price Growth Also Slowing Down

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000 Peak: May-07$594,530

Trough: Feb-09$245,230

-59% frompeak

Aug-18:$596,410Aug-17:

$565,320

SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

YTY

%C

hg

.in

Pric

e

Condo Single-Family Homes

Price Gains Slowing Across the State

SERIES: Median Price of Existing Condo/TownhomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Price Gains Slowing Across the State


0%

2%

4%

6%

8%

10%

12%

14%

YTY

%C

hg

.in

Pric

e

Condo Single-Family Homes

DeceleratingGrowth

So Cal: Orange & SD Above Prior Peak

SERIES: Median Price of Existing Detached HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

RegionPeak

MonthPeakPrice

Aug-18%Chg Fr

Peak

Orange Jun-07 $775,420 $838,500 8.1%

San Diego May-06 $622,380 $660,000 6.0%

Los Angeles Sep-07 $625,812 $607,490 -2.9%

So CA Jun-07 $589,710 $555,000 -5.9%

Ventura Aug-06 $710,910 $660,000 -7.2%

Riverside Jun-06 $431,710 $400,750 -7.2%

San Bernardino Aug-06 $350,290 $290,000 -17.2%

Central Coast: SC & SLO


RegionPeak

Month

Peak

PriceAug-18

%Chg Fr

Peak

Santa Cruz Oct-07 $865,000 $917,500 6.1%

San Luis Obispo Oct-05 $619,950 $630,000 1.6%

Monterey Aug-07 $777,000 $599,000 -22.9%

Santa Barbara Jul-07 $878,120 $572,500 -34.8%

Central Valley: All Below Prior Peak


RegionPeak

Month

Peak

PriceAug-18

%Chg Fr

PeakSacramento County Aug-05 $394,450 $369,950 -6.2%

Madera County Feb-08 $275,000 $254,900 -7.3%

Placer County Aug-05 $527,990 $475,000 -10.0%

Fresno County Jun-06 $313,500 $280,000 -10.7%

San Joaquin County Jun-06 $426,830 $380,000 -11.0%

Tulare County Dec-05 $269,710 $239,000 -11.4%

Stanislaus County Sep-05 $370,100 $319,900 -13.6%

San Benito County May-05 $671,190 $575,000 -14.3%

Kings County Mar-06 $268,050 $227,750 -15.0%

Merced County Oct-05 $344,610 $288,396 -16.3%

Kern County Jun-06 $299,920 $247,000 -17.6%

Glenn County Feb-07 $312,500 $225,500 -27.8%

Bay Area: All But Contra Costa & Solano


Region

Peak

Month

Peak

Price Aug-18%Chg Fr

Peak

San Francisco May-07 $972,010 $1,550,000 59.5%

Santa Clara Oct-07 $865,000 $1,295,000 49.7%

San Mateo Oct-07 $1,020,000 $1,500,000 47.1%

Alameda May-07 $709,420 $960,000 35.3%

Bay Area May-07 $789,250 $935,000 18.5%

Marin Jun-07 $1,149,390 $1,222,500 6.4%

Napa Jun-07 $729,170 $752,500 3.2%

Sonoma Jan-06 $650,330 $670,000 3.0%

Contra Costa May-07 $698,420 $650,000 -6.9%

Solano Jun-07 $492,800 $455,000 -7.7%

III. Shift

CA Consumer Poll: Sept 2018

SERIES: 2018 Google Consumer PollSOURCE: 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 ahome in California?

57%

43%

Yes No

Do you think it's a good time to sell ahome in California?

Inventory is Growing

SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

3.3

0

2

4

6

8

10

12

14

16

18

Jan

-05

Jun

-05

No

v-0

5

Ap

r-0

6

Se

p-0

6

Feb

-07

Jul-0

7

De

c-0

7

Ma

y-0

8

Oc

t-08

Ma

r-09

Au

g-0

9

Jan

-10

Jun

-10

No

v-1

0

Ap

r-1

1

Se

p-1

1

Feb

-12

Jul-1

2

De

c-1

2

Ma

y-1

3

Oc

t-13

Ma

r-14

Au

g-1

4

Jan

-15

Jun

-15

No

v-1

5

Ap

r-1

6

Se

p-1

6

Feb

-17

Jul-1

7

De

c-1

7

Ma

y-1

8

Shift Started in January 2018; Tipped in April

SERIES: Growth in Active ListingsSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

17.2%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

+ 17.2 % Active Listings in August

Biggest Gains At Low End

SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

7.0%

8.0%

7.0%

3.5%2.9%

2.4%

0.5%0.0%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Under $300K $300-$500K $500-750K $750-1000K $1-1.5M $1.5-2M $2-$3M $3M +

Active Listings Growth

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

Listings Taking Longer to Sell

SERIES: Median Time of Market of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

20

0

10

20

30

40

50

60

70

80

1/1

/200

5

7/1

/200

5

1/1

/200

6

7/1

/200

6

1/1

/200

7

7/1

/200

7

1/1

/200

8

7/1

/200

8

1/1

/200

9

7/1

/200

9

1/1

/201

0

7/1

/201

0

1/1

/201

1

7/1

/201

1

1/1

/201

2

7/1

/201

2

1/1

/201

3

7/1

/201

3

1/1

/201

4

7/1

/201

4

1/1

/201

5

7/1

/201

5

1/1

/201

6

7/1

/201

6

1/1

/201

7

7/1

/201

7

1/1

/201

8

7/1

/201

8

Median Time on Market (Days)

More Listings With Price Reductions

SERIES: Listing Price of Existing Single Family HomesSOURCE: 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


-4.5%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

200

70

12

00

70

42

00

70

72

00

71

02

00

80

12

00

80

42

00

80

72

00

81

02

00

90

12

00

90

42

00

90

72

00

91

02

01

00

12

01

00

42

01

00

72

01

01

02

01

10

12

01

10

42

01

10

72

01

11

02

01

20

12

01

20

42

01

20

72

01

21

02

01

30

12

01

30

42

01

30

72

01

31

02

01

40

12

01

40

42

01

40

72

01

41

02

01

50

12

01

50

42

01

50

72

01

51

02

01

60

12

01

60

42

01

60

72

01

61

02

01

70

12

01

70

42

01

70

72

01

71

02

01

80

12

01

80

42

01

80

7

California $1M Homes: Sales vs. List Price GrowthTypically 4-6 month lag

List Price Sales Price

State of the Housing Market -Study of Housing: Insight, Forecast, Trends (S.H.I.F.T)

• C.A.R. has conducted the Annual Housing Market Survey since 1981.

• E-mailed to a random sample of 30,355 REALTORS® throughout CA

• Asked about their most recent transaction (Q2 2018).

• 1,492 valid survey responses, 4.9 percent response rate.

• The margin of error +/- 2.5 percent at a 95 percent confidence level.

Methodology

Case Study: First-Time Buyer in San Francisco

SERIES: 2018 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Buyer’s ProfileAge: 45Marital Status: Married with dependentsIncome: $120,000Down Payment: $150,000Down Payment Source: Sales of personal assets

(other than real property)Reason to Buy: Tired of Renting

Characteristics of HomeSize: 1,200 sq. ftProperty Type: CondominiumLocation: San Francisco CountyPrice: $755,000

“Have you looked into the housingmarket into the Bay Area? It is

RIDICULOUSLY impossiblycompetitive.”*

*Quotes from first-time buyers from the 2018 State of the Consumer Report

“Finding a home I could afford[was the most difficult part ofthe process] – the worst part

about the buying process is thatthe list prices are fake.”*

First Time Buyers: Below LT Trend

34.8%

0%

10%

20%

30%

40%

50%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% First-Time Home Buyers Long Run Average

Long Run Average = 37.4%


Affordability: Big Problem for First-Time Buyers

SERIES: 2018 Annual Housing Market SurveySOURCE: 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

Q: Primary reason for changing county?

International Buyers: Flat for 3 Years

8%

6%

5%6% 6%

8%

6%

4%

3% 3%3%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Q. Was the buyer an international buyer – a person who was a citizen ofanother country who wished to purchase residential real estate in the U.S.?


The share of international buyers dropped to the lowest level in at least ten years

Case Study: Seller Leaving California


Seller’s ProfileAge: 56Marital Status: Married Couple with DependentsIncome: $200,000Yrs. Owned: 25Net cash gain: $1,050,000Reason for selling: Desired larger homeState moving to: Utah

Characteristics of HomeSize: 1,948 sq. ftProperty Type: Single-Family HomeLocation: Los Angeles CountyPrice: $1,175,000

“We doubled the size of our houseand lowered our mortgage

payment.”*

*Lopez, S. (2017) ‘They’re leaving California for Las Vegas for find middle-class lifethat eluded them’. Los Angles Times, 3 December

“L.A would have been my firstchoice, and I didn’t want to have

to leave California. I couldn’tafford to stay there”*

Sellers Aren’t Not Moving

11.5

0

2

4

6

8

10

12

14Years Owned Home Before Selling

Long-Time Homeowners are notmoving as in the past because:

• Low rate on current mortgage• Low property taxes• Capital gains hit• Where can I afford to go?• Why not remodel and stay?


29% Of Sellers Moving Out of CaliforniaUp 10% from 2013

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 inCalifornia

23% 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


IV. New Housing Supply

Permits: CA Not Building Enough

SERIES: California New Housing PermitsSOURCE: 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: Less new housing per capita thanother 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 Added1,000 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 AddedNumber

270

309

327

328

348

362

378

California

Texas

Oregon

Washington

New York

Nevada

Arizona

Ratio of Housing Units Added toPopulation AddedUnits per 1,000 People

+40%

VI. What Are theConsequences?

1. CA is NOT Affordable

California, 1984-2018

Housing Affordability is Off Sharply

SERIES: Housing Affordability Index of Traditional BuyersSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

26%

53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

%O

FH

OU

SEH

OLD

STH

AT

CA

NB

UY

AM

ED

IAN

-PR

ICED

HO

ME

Annual Quarterly

Only Lassen County Beats US Affordability

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 BuyersSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

• Los Angeles

• San Diego

• San Jose

• Oxnard

• San Francisco

Realtor.com 4/18/2018

Least Affordable Metros are in CA

2. CA is Home toRecord Number of

Homeless

#2: Largest Number of Homelessness

SERIES: Estimates of Homeless People in January 2017SOURCE: The U.S. Department of Housing & Urban Development

Estimates of Homeless People – By State, 2017

Top 5 State with Largest Increases(2016 – 2017)

• California 16,136/13.7%

• New York 3,151/3.6%

• Oregon 715/5.4%

• Nevada 435/5.9%

• Texas 426/1.8%

3. CA is Losing Workersto 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

SantaBarbara

Colorado Oregon Washington Kern Nevada (ST) Arizona Texas SanBernardino

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 NorthCarolina

Utah Georgia Kern County Arizona Texas

Inland Empire Out Migration(2010-2016)

Elsewhere in CA

Another State

4. CA soon to be amajority renter state

54.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ne

wY

ork

Ca

lifo

rnia

Ne

va

da

Ha

wa

ii

Rh

od

eIs

lan

d

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ssa

ch

use

tts

Texa

s

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go

n

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rth

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ko

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Ge

org

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shin

gto

n

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do

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rid

a

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rse

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na

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an

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io

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ska

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sylv

an

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Okla

ho

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De

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are

Ind

ian

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inia

Homeownership Rate

California: 2nd lowest in nation

SERIES: Homeownership RatesSOURCE: U.S. Census Bureau (Current Population Survey)

5. CA is pricing itself outof its future

Q: What needs to bedone?

A: Build More Housing

Lakewood CA 1950

Global Capitals Do Density

#10 Shanghai

#69 Paris

#27 Mexico City#35 Rio de Janerio

#43 London

Source: citymayors.com

#90 Los Angeles

#104 San Francisco/Oakland

#107 San Jose

#119 Honolulu

#120 Las Vegas

#121 Miami

U.S. Cities Ranked by Density

Global Ranking 1-125www.citymayors.com

The Forecast

What do YOU think?

• E-mail survey to 866 members of the Board of Directors.

• There were 451 survey responses, equivalent to a response rate of52.1%.

• The margin of error for this survey was ±3.2% at a 95% confidence level.

• Field dates: October 1- 8, 2018

Methodology

SERIES: 2018 Director’s SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Which choice best applies to your one-year outlookfor California home values? (n=441)


One-Year Outlook

25%

38%

37%

There is risk to the upside

There is risk to the downside

The risk is balanced

Which choice best applies to yourfive-year outlook for California home values? (C.A.R.n=437, Pulsenomics n=112)


5-Year Outlook: Directors more optimistic

25%

40%

34%

17%

55%

28%

There is risk to the upside

There is risk to the downside

The risk is balanced

C.A.R. DirectorsPulsenomics Experts

What’s your outlook for the number oftransactions in California next year? (n=443)


2019 Sales Forecast?

3%

37%

29%27%

4%

Down downdown

Down slightly Flat Up slightly Up a lot

When do you expect Californiahousing market conditions to shift decidedlyin favor of home buyers? (C.A.R. n=438, Pulsenomics US n= 98, West n=91)


When Will Market Conditions Shift?

30%

8%

27%23%

6%

1%4%

2%6%

8%

14%

28%

20%

14%

10%

5%7%

13%

43%

18%

6%9%

Shiftedalready

Prior toyear-end

2018

2019 2020 2021 2022 Sometimeafter 2022

Never

C.A.R. Directors

Pulsenomics West

Pulsenomics United States

What is the price of an entry-level homein your market? (n=438)


Entry Level Home Price

5%

16%

25%28%

17%

10%

The prevailing rate for a 30-year fixed rate mortgage is 4.75. What do you expect it to beOne year from now? (C.A.R. n=425, Pulsenomics n=100)At the time you expect the current business cycle will reach its peak?(C.A.R. n=374, Pulsenomics n=94)


Expected Rate for a 30-Year FRM

1 year:C.A.R. Directors: 5.25%Pulsenomics Experts: 5.00%

At cycle peak:C.A.R. Directors: 6.00%Pulsenomics Experts: 5.25%

U.S. Economic Outlook

SERIES: U.S. Economic OutlookSOURCE: 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 OutlookSOURCE: 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 OutlookSOURCE: 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 AffordabilityIndex

36% 30% 31% 31% 29% 28% 25%

30-Yr FRM 4.0% 4.2% 3.9% 3.6% 4.0% 4.7% 5.2%

• Listings are up & prices are favorable for sellers

• Call frustrated potential buyers and tell them the goodnews

• Rates are rising – don’t wait

• Provide sellers a teachable moment

• Know where people are moving and why and work yourreferral network

• Get involved in the political process – this is your future

Opportunities

Read This: California’s Housing Future

2019 economic & market forecast - top producer® website · 10/11/2018 · 2019 economic &...

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