march 3, 2009 sacramento aor leslie appleton-young c.a.r. vice president and chief economist 2009...
TRANSCRIPT
March 3, 2009
SACRAMENTO AORLeslie Appleton-Young
C.A.R. Vice President and Chief Economist
2009 California Real Estate Market Forecast
Economic Fundamentals
U.S. & CaliforniaEconomic Update
Gross Domestic Product
-8%-7%-6%-5%
-4%-3%-2%
-1%0%1%
2%3%4%
5%6%7%
8%
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
f
----
Q4
-07
Q1
-08
Q2
-08
Q3
-08
Q4
-08
Year 2007: +2.0%; 2008 Q3: -0.5%; Q4 -6.2%
ANNUAL PERCENT CHANGE, CHAIN-TYPE (2000) $
ANNUAL QTRLY
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
Components of GDPPercent Change
-20
-15
-10
-5
0
5
10
Consumption FixedNonres.
Investment
Exports Imports Government
2008 Q4
2008 Q3
2007 Q4
INDEX, 100=1985
30
40
50
60
70
80
90
100
110
120
130
140
150
160
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Consumer Confidence IndexAll time low: January 2009: 37.7
DJIMonthly
Avg.
Dow Jones Stock Price and Consumer Confidence30 Industrial Index vs. Consumer Confidence Index 1987-2009
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Ja
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7J
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87
Ja
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Ja
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9J
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Ja
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0J
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90
Ja
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1J
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91
Ja
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2J
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92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
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96
Ja
n-9
7J
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97
Ja
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8J
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Ja
n-9
9J
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Ja
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0J
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Ja
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1J
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2J
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6J
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Ja
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0
20
40
60
80
100
120
140
160
Dow Jones 30 Industrials Consumer Confidence Index Cons. Conf.
QUARTERLY PERCENT CHANGE
-8
-6
-4
-2
0
2
4
6
8
1Q
-19
90
1Q
-19
91
1Q
-19
92
1Q
-19
93
1Q
-19
94
1Q
-19
95
1Q
-19
96
1Q
-19
97
1Q
-19
98
1Q
-19
99
1Q
-20
00
1Q
-20
01
1Q
-20
02
1Q
-20
03
1Q
-20
04
1Q
-20
05
1Q
-20
06
1Q
-20
07
1Q
-20
08
Personal Consumption
2008 Q3: -3.8% Q4: -3.5%
SOURCE: US Dept of Commerce, Bureau of Economic Analysis
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
7,000,000J
an
-89
Ju
l-8
9J
an
-90
Ju
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0J
an
-91
Ju
l-9
1J
an
-92
Ju
l-9
2J
an
-93
Ju
l-9
3J
an
-94
Ju
l-9
4J
an
-95
Ju
l-9
5J
an
-96
Ju
l-9
6J
an
-97
Ju
l-9
7J
an
-98
Ju
l-9
8J
an
-99
Ju
l-9
9J
an
-00
Ju
l-0
0J
an
-01
Ju
l-0
1J
an
-02
Ju
l-0
2J
an
-03
Ju
l-0
3J
an
-04
Ju
l-0
4J
an
-05
Ju
l-0
5J
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-06
Ju
l-0
6J
an
-07
Ju
l-0
7J
an
-08
Ju
l-0
8
$80,000
$90,000
$100,000
$110,000
$120,000
$130,000
$140,000
$150,000
$160,000
$170,000
$180,000
$190,000
$200,000
$210,000
$220,000
$230,000
$240,000
Existing Single-Family Home Sales Median Price
Existing Single-Family Home SalesSales 4.192m in 2008 Down 13.1 from 5.652m in 2007 (lowest since 1997)
Median Price: $174,500 Down 15.3% YTY (2008 down 9.3% - lowest since 2004)
Unemployment RateCalifornia vs. United States
-4%
-2%
0%
2%
4%
6%
8%
10%
Ja
n-9
0J
ul-
90
Ja
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1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
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03
Ja
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4J
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Ja
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5J
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Ja
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6J
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06
Ja
n-0
7J
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Ja
n-0
8J
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08
Ja
n-0
9
US-CA CA US
SOURCE: CA Employment Development Division
Employment Growth, California vs. U.S.
YEAR TO YEAR % CHANGE
-3
-2
-1
0
1
2
3
4
5
Ja
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1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
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00
Ja
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1J
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Ja
n-0
2J
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Ja
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3J
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Ja
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4J
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California US
SOURCE: CA Employment Development Division
U.S. Cumulative Job Loss
NONFARM JOB LOSS, MILLIONS
-4
-3
-2
-1
0
1
De
c-0
7
Ja
n-0
8
Fe
b-0
8
Ma
r-0
8
Ap
r-0
8
Ma
y-0
8
Ju
n-0
8
Ju
l-0
8
Au
g-0
8
Se
p-0
8
Oc
t-0
8
No
v-0
8
De
c-0
8
Ja
n-0
9
December 2007 – January 2009
SOURCE: Bureau of Labor Statistics
California Cumulative Job Loss
NONFARM JOB LOSS, THOUSANDS
-250
-200
-150
-100
-50
0
De
c-0
7
Ja
n-0
8
Fe
b-0
8
Ma
r-0
8
Ap
r-0
8
Ma
y-0
8
Ju
n-0
8
Ju
l-0
8
Au
g-0
8
Se
p-0
8
Oc
t-0
8
No
v-0
8
De
c-0
8
December 2007 – December 2008
SOURCE: Bureau of Labor Statistics
Nonfarm Employment By Region
SOURCE: CA Employment Development Division
Nonfarm NonfarmEmployment Employment Percent
December-08 December-07 Change ChangeSouthern California 8,396.4 8,544.4 -148 -1.7%
Bay Area 3,241.6 3,298.9 -57.3 -1.7%
Central Valley 2,012.2 2,052.6 -40.4 -2.0%
Central Coast 501.9 508.2 -6.3 -1.2%
North Central 138.8 143.5 -4.7 -3.3%
CALIFORNIA 14,913.6 15,171.0 -257.4 -1.7%
(Thousands)
Nonfarm EmploymentSacramento-Arden Arcade-Roseville MSA, Dec. 2008: Down 2.6% YTY
SOURCE: CA Employment Development Division
Y-T-Y PERCENT CHANGE
-4%
-2%
0%
2%
4%
6%
8%
Ja
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1J
ul-
91
Ja
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2J
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Ja
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3J
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93
Ja
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4J
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Ja
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5J
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Ja
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6J
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Ja
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Ja
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8J
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Ja
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9J
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Ja
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0J
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00
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1J
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6J
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Ja
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Ja
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08
Unemployment RateSacramento Metropolitan Area, December 2008: 8.7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%J
an
-90
Ju
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0J
an
-91
Ju
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1J
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-92
Ju
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2J
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-93
Ju
l-9
3J
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-94
Ju
l-9
4J
an
-95
Ju
l-9
5J
an
-96
Ju
l-9
6J
an
-97
Ju
l-9
7J
an
-98
Ju
l-9
8J
an
-99
Ju
l-9
9J
an
-00
Ju
l-0
0J
an
-01
Ju
l-0
1J
an
-02
Ju
l-0
2J
an
-03
Ju
l-0
3J
an
-04
Ju
l-0
4J
an
-05
Ju
l-0
5J
an
-06
Ju
l-0
6J
an
-07
Ju
l-0
7J
an
-08
Ju
l-0
8
SOURCE: CA Employment Development Division
Taxable SalesSacramento County
-10%
-5%
0%
5%
10%
15%
20%
Q1
/89
Q3
/89
Q1
/90
Q3
/90
Q1
/91
Q3
/91
Q1
/92
Q3
/92
Q1
/93
Q3
/93
Q1
/94
Q3
/94
Q1
/95
Q3
/95
Q1
/96
Q3
/96
Q1
/97
Q3
/97
Q1
/98
Q3
/98
Q1
/99
Q3
/99
Q1
/00
Q3
/00
Q1
/01
Q3
/01
Q1
/02
Q3
/02
Q1
/03
Q3
/03
Q1
/04
Q3
/04
Q1
/05
Q3
/05
Q1
/06
Q3
/06
Q1
/07
Q3
/07
ANNUAL PERCENT CHANGE
SOURCE: CA State Board of Equalization
PERCENT CHANGE FROM A YEAR AGO
Industrial ProductionDecember 2008: Down 7.4% YTY
-10%
-5%
0%
5%
10%
15%
Ja
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0
Ja
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1
Ja
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Ja
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Ja
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Ja
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Ja
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7
Ja
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8
Ja
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9
Ja
n-9
0
Ja
n-9
1
Ja
n-9
2
Ja
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3
Ja
n-9
4
Ja
n-9
5
Ja
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6
Ja
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7
Ja
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8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
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3
Ja
n-0
4
Ja
n-0
5
Ja
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6
Ja
n-0
7
Ja
n-0
8
SOURCE: Federal Reserve Board
SA, PERCENT OF CAPACITY
Capacity Utilization RateDecember 2008: 73.6%
70%
75%
80%
85%
90%
Ja
n-8
0
Au
g-8
2
Ma
r-8
5
Oc
t-8
7
Ma
y-9
0
De
c-9
2
Ju
l-9
5
Fe
b-9
8
Se
p-0
0
Ap
r-0
3
No
v-0
5
Ju
n-0
8
PERCENT CHANGE FROM A YEAR AGO
Retail SalesDecember 2008 Down 10.8% YTY
-15%
-10%
-5%
0%
5%
10%
15%
Ja
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3J
ul-
93
Ja
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4J
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Ja
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5J
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95
Ja
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6J
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Ja
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Ja
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9J
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Ja
n-0
0J
ul-
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Ja
n-0
1J
ul-
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Ja
n-0
2J
ul-
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Ja
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3J
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Ja
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4J
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Ja
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Ja
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ul-
08
Retail Sales 6 per. Mov. Avg. (Retail Sales)
Consumer Price IndexDecember 2008: All Items -0.1% YTY; Core 1.7% YTY
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Ja
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0
Ja
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1
Ja
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3
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Ja
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Ja
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Ja
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0
Ja
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Ja
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Ja
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4
Ja
n-9
5
Ja
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6
Ja
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7
Ja
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8
Ja
n-9
9
Ja
n-0
0
Ja
n-0
1
Ja
n-0
2
Ja
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3
Ja
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Ja
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All Items
Core
PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984
SOURCE: Federal Home Loan Mortgage Corporation
Fed Funds and Mortgage RatesEasing: 2000-2004; 2007-2008
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Jan
-91
Jul-
91Ja
n-9
2Ju
l-92
Jan
-93
Jul-
93Ja
n-9
4Ju
l-94
Jan
-95
Jul-
95Ja
n-9
6Ju
l-96
Jan
-97
Jul-
97Ja
n-9
8Ju
l-98
Jan
-99
Jul-
99Ja
n-0
0Ju
l-00
Jan
-01
Jul-
01Ja
n-0
2Ju
l-02
Jan
-03
Jul-
03Ja
n-0
4Ju
l-04
Jan
-05
Jul-
05Ja
n-0
6Ju
l-06
Jan
-07
Jul-
07Ja
n-0
8Ju
l-08
FRM
ARM
FederalFunds
SOURCE: Federal Home Loan Mortgage Corporation – 30-yr FRMFederal Reserve Board – 10-Year T-Bond
30-Year FRM vs. 10-Year T-Bond Above-Average Risk Premiums Associated With Mortgage Loans
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
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05
Ja
n-0
6J
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06
Ja
n-0
7J
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07
Ja
n-0
8J
ul-
08
FRM
10-YearT-Bond
RiskPrem
Average. Risk
Premium: 1.6%
California Real Estate
Market Update
THOUSANDS
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
0
50,000
100,000
150,000
200,000
250,000
Home Sales Membership
California’s Housing Cycles and Membership1970-2009
Licensee Numbers Dropping
FY 2007/2008
Sales Hit Bottom in 2007, Up in 2008
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
Sales of Existing Detached Homes Median Price
California Sales of Existing Homes and Median Price
-61% -25%
-44%
Sales of Existing Detached Homes, California2008: 439,740 units, Up 26.7%
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,00019
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
UNITS
SOURCE: California Association of REALTORS®
Sales of Existing Detached Homes and Pacific West Consumer Confidence
California, Jan. 2009 Sales: 624,940 Units, Up 100.8% YTD, Up 100.8% YTY
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Ja
n-0
0A
pr-
00
Ju
l-0
0O
ct-
00
Ja
n-0
1A
pr-
01
Ju
l-0
1O
ct-
01
Ja
n-0
2A
pr-
02
Ju
l-0
2O
ct-
02
Ja
n-0
3A
pr-
03
Ju
l-0
3O
ct-
03
Ja
n-0
4A
pr-
04
Ju
l-0
4O
ct-
04
Ja
n-0
5A
pr-
05
Ju
l-0
5O
ct-
05
Ja
n-0
6A
pr-
06
Ju
l-0
6O
ct-
06
Ja
n-0
7A
pr-
07
Ju
l-0
7O
ct-
07
Ja
n-0
8A
pr-
08
Ju
l-0
8O
ct-
08
Ja
n-0
9
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
0
200
400
600
800
1000
1200
1400
1600
Jan-08
Jan-09
Home Sales in Central Valley Region
SOURCE: California Association of REALTORS®
539 660 240 -18.3% 124.6% 124.6%809 827 369 -2.2% 119.2% 119.2%215 253 57 -15.0% 277.2% 277.2%
1,542 1,934 739 -20.3% 108.7% 108.7%
Jan-09 Dec-08 Y-t-DY-t-YJan-08 M-t-M
Bakersfield
Fresno
County
Sacramento
Merced
Sales of Existing Detached HomesCentral Valley Regions
SOURCE: California Association of REALTORS®
Median Price of Existing Detached HomesCalifornia, January 2009: $254,350, Down 40.5% YTY
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000J
an
-00
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
n-0
5
Ju
l-0
5
Ja
n-0
6
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l-0
6
Ja
n-0
7
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7
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8
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8
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9
SOURCE: California Association of REALTORS®
125,000$ 147,750$ 230,000$ -15.4% -45.7%145,200$ 157,499$ 239,285$ -7.8% -39.3%114,137$ 115,333$ 220,312$ -1.0% -48.2%169,666$ 181,655$ 258,230$ -6.6% -34.3%Sacramento
Y-t-Y
Merced
County Jan-09 Dec-08 Jan-08 M-t-M
Bakersfield
Fresno
Median Price of Existing Detached HomesCentral Valley Regions
SOURCE: California Association of REALTORS®
-27.7%-32.5%
-36.4%
-52.4%
-26.4%
-3.4%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Below $500,000 $500,000-999,999 Over $1 Million
Aug-07 Sep-07
Lower Price Ranges Hit Hardest, but…Percentage Change in Sales YTY
SOURCE: California Association of REALTORS®
…Credit Crunch hit the market over $500K from September forward
Peak vs Current Price - December 2008
RegionPeak
MonthPeak Price
Dec-08 Median
% Chg From Peak
Monterey Region Aug-07 $798,210 $290,070 -63.7%High Desert Apr-06 $334,860 $137,560 -58.9%Palm Springs/Lower Desert Jun-05 $393,370 $169,730 -56.9%Riverside San Bernardino Jan-07 $415,160 $190,840 -54.0%Sacramento Aug-05 $394,450 $181,660 -53.9%
CALIFORNIA May-07 $594,530 $281,100 -52.7%Ventura Aug-06 $710,910 $370,750 -47.8%Northern Wine Country Jan-06 $645,080 $344,180 -46.6%San Diego May-06 $622,380 $333,030 -46.5%San Francisco May-07 $853,910 $465,640 -45.5%Los Angeles Aug-07 $605,300 $336,980 -44.3%Santa Clara Apr-07 $868,410 $512,450 -41.0%Orange County Apr-07 $747,260 $442,640 -40.8%San Luis Obispo Jun-06 $620,540 $374,320 -39.7%Northern California Aug-05 $440,420 $276,060 -37.3%
82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
20
04
.10
20
05
.01
20
05
.04
20
05
.07
20
05
.10
20
06
.01
20
06
.04
20
06
.07
20
06
.10
20
07
.01
20
07
.04
20
07
.07
20
07
.10
20
08
.01
20
08
.04
20
08
.07
20
08
.10
Under 500 500 to 999 1 Mil +
Sales By Price Range
SOURCE: Mortgage Bankers Association, C.A.R.
Financial Turmoil: 8/07-Now
Unsold Inventory IndexCalifornia, January 2009: 6.7 Months
0123456789
101112131415161718
Ja
n-0
0
Ju
l-0
0
Ja
n-0
1
Ju
l-0
1
Ja
n-0
2
Ju
l-0
2
Ja
n-0
3
Ju
l-0
3
Ja
n-0
4
Ju
l-0
4
Ja
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5
Ju
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5
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Ju
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Ja
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Ju
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7
Ja
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8
Ju
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8
Ja
n-0
9
MONTHS
Average Since 1/88: 7.2 months
SOURCE: California Association of REALTORS®
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
20
00
Q1
20
01
Q1
20
02
Q1
20
03
Q1
20
04
Q1
20
05
Q1
20
06
Q1
20
07
Q1
20
08
Q1
0%
10%
20%
30%
40%
50%
60%
70%
80%
PITI Payment as Share of Income % ChangePITI/Month
Entry-Level Monthly House Payment and Payment as Share of Median Household Income
SOURCE: California Association of REALTORS®
Peak 2007-Q2: $3,380/moLatest 2008-Q4: $1,630/mo
Buyers See Opportunities in This Market…
10%
9%
67%
22%
39%
Price decreases motivated us
Low interest rates helped us move to abetter location, neighborhood
Likelihood that interest rates will move upmotivated us
Low interest rates helped us buy a largerhome
Moved to an area where it was moreaffordable
The Role Of Market ConditionsIn The Decision To Buy
…While Sellers Are Reacting to Financial Stress
55%
20%
0% 0% 0%0% 0%
14% 16% 19% 20%
5%
16%
42%
7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Desiredlarger home
Desiredbetter/other
location
Mortgagepaymentwent up(reindex)
Moved torental to
save money
Troublemaking
mortgagepayments
2006 2007 2008
Signs of Distress in 2008
The Role of Market Conditions In the Decision to Sell
Sacramento County
Economic Profile
Sales of Existing Detached Homes and Pacific West Consumer Confidence
Sacramento County, Jan. 2009: 1,542 Units, Up 108.7% YTD, Up 108.7% YTY
INDEXUNITS
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
2400
2600
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9
0
20
40
60
80
100
120
140
160
Sales Consumer Confidence
SOURCE: California Association of REALTORS®; The Conference Board
Sales of Existing Detached HomesSacramento County, 2008: 19,299 Units, Up 88.9% YTY
UNITS
SOURCE: California Association of REALTORS®
0
5,000
10,000
15,000
20,000
25,000
19
89
19
92
19
95
19
98
20
01
20
04
20
07 0
500
1,000
1,500
2,000
2,500
Jan
Feb
Mar
Ap
r
May
Jun
Jul
Au
g
Sep
t
Oct
No
v
Dec
2006200720082009
ANNUAL MONTHLY
Median Price of Existing Detached Homes
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000J
an
-89
Ju
l-8
9J
an
-90
Ju
l-9
0J
an
-91
Ju
l-9
1J
an
-92
Ju
l-9
2J
an
-93
Ju
l-9
3J
an
-94
Ju
l-9
4J
an
-95
Ju
l-9
5J
an
-96
Ju
l-9
6J
an
-97
Ju
l-9
7J
an
-98
Ju
l-9
8J
an
-99
Ju
l-9
9J
an
-00
Ju
l-0
0J
an
-01
Ju
l-0
1J
an
-02
Ju
l-0
2J
an
-03
Ju
l-0
3J
an
-04
Ju
l-0
4J
an
-05
Ju
l-0
5J
an
-06
Ju
l-0
6J
an
-07
Ju
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7J
an
-08
Ju
l-0
8J
an
-09
Sacramento County, January 2009: $169,670, Down 34.3% YTY
SOURCE: California Association of REALTORS®
Median Price Annual ComparisonSacramento County, 2008: $216,660, Down 36.8% YTY
SOURCE: California Association of REALTORS®
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
19
89
19
92
19
95
19
98
20
01
20
04
20
07
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Ja
n
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
Ju
l
Au
g
Se
pt
Oc
t
No
v
De
c
2006200720082009
ANNUAL MONTHLY
Jan-09 Jan-08Yearly % Change
Sacramento County $165,000 $255,000 -35.3%
Antelope $212,000 $242,500 -12.6%
Carmichael $228,250 $281,500 -18.9%
Citrus Heights $170,000 $231,250 -26.5%
Elk Grove $245,000 $301,000 -18.6%
Fair Oaks $194,500 $300,000 -35.2%
Folsom $320,500 $403,750 -20.6%
Galt $134,250 $255,250 -47.4%
North Highlands $97,000 $130,000 -25.4%
Rancho Cordova $251,000 $290,000 -13.4%
Sacramento $130,000 $230,000 -43.5%
Median Home Sales PriceSacramento County
SOURCE: C.A.R.; DataQuick Information Systems. The price statistics are derived from all types of home sales -- new and existing, condos and single-family.
Unsold Inventory IndexSacramento County, January 2009: 3.8 Months
MONTHS
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9
SOURCE: California Association of REALTORS®
First-time Buyer Housing Affordability IndexSacramento County, 4th Quarter 2008: 74%
SOURCE: California Association of REALTORS®
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Q
1/03
Q2/
03Q
3/03
Q4/
03Q
1/04
Q2/
04Q
3/04
Q4/
04Q
1/05
Q2/
05Q
3/05
Q4/
05Q
1/06
Q2/
06Q
3/06
Q4/
06Q
1/07
Q2/
07Q
3/07
Q4/
07Q
1/08
Q2/
08Q
3/08
Q4/
08
% OF HOUSEHOLDS THAT CAN BUY
New Housing PermitsSacramento Metropolitan Area, January 2009: 179 Units, Down 26.6%
YTD
0
500
1000
1500
2000
2500
3000
Ja
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8J
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88
Ja
n-8
9J
ul-
89
Ja
n-9
0J
ul-
90
Ja
n-9
1J
ul-
91
Ja
n-9
2J
ul-
92
Ja
n-9
3J
ul-
93
Ja
n-9
4J
ul-
94
Ja
n-9
5J
ul-
95
Ja
n-9
6J
ul-
96
Ja
n-9
7J
ul-
97
Ja
n-9
8J
ul-
98
Ja
n-9
9J
ul-
99
Ja
n-0
0J
ul-
00
Ja
n-0
1J
ul-
01
Ja
n-0
2J
ul-
02
Ja
n-0
3J
ul-
03
Ja
n-0
4J
ul-
04
Ja
n-0
5J
ul-
05
Ja
n-0
6J
ul-
06
Ja
n-0
7J
ul-
07
Ja
n-0
8J
ul-
08
Ja
n-0
9
Single Family Multi-Family
SOURCE: Construction Industry Research Board
New Home SalesSacramento MSA (Detached), 2008 Q4 Sales: 471 Units
SOURCE: California Association of REALTORS®; Hanley Wood
0
1000
2000
3000
4000
5000
6000Q
2/9
3
Q1
/94
Q4
/94
Q3
/95
Q2
/96
Q1
/97
Q4
/97
Q3
/98
Q2
/99
Q1
/00
Q4
/00
Q3
/01
Q2
/02
Q1
/03
Q4
/03
Q3
/04
Q2
/05
Q1
/06
Q4
/06
Q3
/07
Q2
/08
Asking Rents for Class A&B ApartmentsSacramento MSA, 2008 Q4: $966, Up 0.4% YTY
$0
$200
$400
$600
$800
$1,000
Q3
/97
Q2
/98
Q1
/99
Q4
/99
Q3
/00
Q2
/01
Q1
/02
Q4
/02
Q3
/03
Q2
/04
Q1
/05
Q4
/05
Q3
/06
Q2
/07
Q1
/08
Q4
/08
SOURCE: California Association of REALTORS®; REALFACTS
Vacancy Rates for Class A&B ApartmentsSacramento MSA, 2008 Q4: 7.2%
SOURCE: California Association of REALTORS®; REALFACTS
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
19
90
19
92
19
94
Q4
/95
Q4
/96
Q3
/97
Q1
/98
Q3
/98
Q1
/99
Q3
/99
Q1
/00
Q3
/00
Q1
/01
Q3
/01
Q1
/02
Q3
/02
Q1
/03
Q3
/03
Q1
/04
Q3
/04
Q1
/05
Q3
/05
Q1
/06
Q3
/06
Q1
/07
Q3
/07
Q1
/08
Q3
/08
VACANCY RATE
Where are new Sacramento County households coming from?
• Placer (3284)• Yolo (2042)• Alameda (1493)• Santa Clara (1424)• San Joaquin (1378)• Total incoming for 2006: 29,000• Total outgoing for 2006: 30,499
Source: NAR Relocation Report 2006 – IRS Data; Item 187-06061
Top 10 Home Buyer SurnamesSacramento County
0 20 40 60 80 100 120
Number of Buyers
SINGH
SMITH
JOHNSON
LEE
NGUYEN
WILLIAMS
GARCIA
JONES
MILLER
LOPEZ
SOURCE: DataQuick Information Systems
2008 Housing Market Survey
0%
1%
2%
3%
4%
5%
6%
7%
8%
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
0
2
4
6
8
10
12
14
16Med. Price DiscountMed. Weeks on MLS
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?
Weeks on MLSMedian Price Discount
Median Price Discount and Weeks on Market2008: Discount 7.5%, Time on Market: 8.6 weeks
80%
0%
20%
40%
60%
80%
100%
1992
1994
1996
1998
2000
2002
2004
2006
2008
Percent of Homes Sold with Price Discount
Long Run Average = 68%
Q. What was the original list sales price of the property? What was the final sales price of the property?
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
$220,000
$240,000
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Median Net Cash To Sellers
Q. What was the net cash gain or net loss to the seller as a result of this sale?
$100,000
92%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000All Home Buyers Loan Limit
2008 Limit: $729,750
Percent of Loans Below the Maximum Conforming Loan Limit
(New First Mortgage)
Proportion of First-Time Home Buyers2008: 35.9%
38.3%
0%
10%
20%
30%
40%
50%
60%
81 83 85 87 89 91 93 95 97 99 01 03 05 07
% First-Time Home Buyers Long Run Average
Q. Was the buyer a first-time buyer?
First-time Buyer Housing Affordability Index
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
03
Q1
20
04
Q2
20
04
Q3
20
04
Q4
20
04
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
CA US
SOURCE: California Association of REALTORS®
% OF HOUSEHOLDS THAT CAN BUY
California Vs. U.S.
0%
10%
20%
30%
40%
50%
1998 2000 2002 2004 2006 2008
All Home BuyersFirst-Time BuyersRepeat Buyers
5.7%
3.4%
2.0%
Percent of Buyers with Zero DownpaymentFirst-Time Buyers vs. Repeat Buyers: 1998 - 2008
Source: C.A.R. 2008 Annual Housing Market Survey
Real Estate Finance
78%
12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1
/98
Q4
/98
Q3
/99
Q2
/00
Q1
/01
Q4
/01
Q3
/02
Q2
/03
Q1
/04
Q4
/04
Q3
/05
Q2
/06
Q1
/07
Q4
/07
Conventional Prime Conventional SubPrime FHA/VA/Other
Prime, Sub-Prime, & Other LoansQ2-2008 As a Percentage of All Loans Outstanding in United States
SOURCE: Mortgage Bankers Association, C.A.R.SOURCE: Mortgage Bankers Association
Adjustable Rate Mortgage Reset Schedule
Source: Credit Suisse, as reported by IMF
Alt-A & Option ARM Peak 2010 &2011
Sub-Prime ARM* Resets Peak in 2008Selected Counties in CA
CA Rank (% Sub-Prime Loans to total
hsg units) County
Num of Subprime
ARMs
% Total SP share of total hsg
units
% Already Reset
% to Reset in
2008
% to Reset in
2009
% to Reset in 2010+
1 San Bernardino 37,300 9.0% 23% 47% 23% 7%2 Riverside 36,700 8.7% 28% 46% 20% 7%3 San Joaquin 12,300 8.4% 34% 43% 18% 5%4 Merced 4,200 8.3% 33% 43% 19% 5%5 Kern 12,400 8.1% 23% 48% 24% 6%
15 Sacramento 21,300 6.0% 40% 39% 15% 5%22 Los Angeles 79,200 3.7% 23% 45% 24% 8%32 San Diego 21,500 2.9% 39% 35% 17% 9%34 Orange 17,900 2.7% 29% 43% 20% 8%49 San Mateo 2,400 1.5% 33% 42% 17% 8%51 San Francisco 1,400 0.7% 36% 36% 21% 7%
TOTAL CALIFORNIA** 364,800 4.1% 23% 44% 17% 7%
SOURCE: FirstAmerican CoreLogic, LoanPerformance Data, U.S. Census Bureau, and Federal Reserve Bank of New York
**CA – Based on January 2008 data, counties based on December 2007 data
*Sub-Prime ARMs = 347,300/500,100 = 69% of all Sub-Prime Loans in CA (as of Dec 2007)
Alt-A ARM Resets – Resets in 2010Selected Counties in CA
Rank (Highest Prop. Alt-A
loans) countyNum Alt A
ARMS
% Alt-A share of total hsg
units
% Already Reset
% Resetting in 2008
% Resetting in 2009
% Resetting in 2010+
1 San Benito 1,100 9.1% 60% 0% 0% 40%2 San Joaquin 11,600 9.0% 58% 4% 4% 34%3 Solano 7,900 8.8% 54% 4% 5% 37%4 Merced 3,500 8.8% 58% 6% 6% 31%5 Riverside 28,900 8.4% 47% 4% 3% 45%9 San Bernardino 23,900 7.3% 48% 3% 3% 46%
14 Sacramento 18,500 6.9% 54% 5% 5% 37%17 San Diego 39,700 6.3% 46% 5% 5% 44%24 Kern 5,200 5.7% 46% 6% 4% 44%27 Orange 32,200 5.5% 46% 3% 4% 47%30 Los Angeles 102,100 5.3% 44% 3% 4% 50%44 San Francisco 6,000 3.3% 40% 5% 7% 48%
SOURCE: FirstAmerican CoreLogic, LoanPerformance Data, U.S. Census Bureau, and Federal Reserve Bank of New York
*Alt-A ARMs = 427,300/ 732,100 = 58% of all Alt-A Loans in CA (Dec 2007)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Q1
-19
98
Q1
-19
99
Q1
-20
00
Q1
-20
01
Q1
-20
02
Q1
-20
03
Q1
-20
04
Q1
-20
05
Q1
-20
06
Q1
-20
07
Q1
-20
08
Conventional Prime: Past Due Conventional Subprime: Past Due
California Q3-2008
Prime Versus Sub-Prime Past Due
SOURCE: Mortgage Bankers Association
Sub-Prime Past Due: LR Avg: 8.2%
Prime Past Due: LR Avg: 2.0%
California Subprime & Alt A Loans
Sub-Prime Alt-A
Num of All Loans 445,678 699,337
% share of total hsg units 3.6% 5.7%
Num of ARMs 319,105 495,131
% ARMS 71.6% 70.8%
% Already Reset 47.4% 36.4%
% to Reset through Aug 2009 40.3% 4.6%
% to Reset Aug 2009 through Aug 2010 6.1% 6.6%
% to Reset After Aug 2010 6.3% 52.4%
Current Picture August 2008
SOURCE: FirstAmerican CoreLogic, LoanPerformance Data, U.S. Census Bureau, and Federal Reserve Bank of New York, compiled by C.A.R.
Notices of Default – CA Q4-2008Houses and Condos
SOURCE: Data Quick Information Systems
* Includes additional counties
Region 2008-Q4 2008-Q3 2007-Q4QTQ
%Chg YTY
%Chg
SoCal 42,826 52,895 43,146 -19.0% -0.7%
Bay Area 11,157 15,027 12,704 -25.8% -12.2%
Central Valley 17,888 22,072 21,946 -19.0% -18.5%
Statewide* 75,230 94,240 81,550 -20.2% -7.7%
NOTES:
•SB1137 imposed a 30-day Notice of Intent to File NOD, effective 9/08
•NODs peaked in 2008-Q2 at 121,342 filings
7.0%
3.9%
0%
1%
2%
3%
4%
5%
6%
7%
8%
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
Delinquency Rate Foreclosure Rate
Mortgage Foreclosure & Delinquency Rates
SOURCE: Mortgage Bankers Association
Delinquencies: Long Run Average: 3.9%
Foreclosure Rate: Long Run Average: 0.9%
• Comprehensive tools to manage and analyze foreclosure business• Generate more leads from your website • Get listings priced to sell and buyers off the fence• Get short sale and REO transactions approved • Find more Short sale and REO business • Featured in 60 minutes, Forbes, Bloomberg, LA Times, etc.
Visit www.foreclosureradar.com and
Enter promo code SWATØ9 for a FREE 7 Day Trial and an exclusive C.A.R. 10% discount.
For more information visit theC.A.R. Business Product Table in the Foyer
Stockton: A Tale of Two CitiesForeclosure Mapping
Source: Foreclosure Radar
Stockton: A Tale of Two Citieshttp://www.foreclosureradar.com/
Sacramento: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Sacramento: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
Live Oak: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Live Oak: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
Marysville: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Marysville: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
Olivehurst: Hybrid MapForeclosure Mapping
Source: ForeclosureRadar.com
Live Oak: Street MapForeclosure Mapping
Source: ForeclosureRadar.com
• Comprehensive tools to manage and analyze foreclosure business• Generate more leads from your website • Get listings priced to sell and buyers off the fence• Get short sale and REO transactions approved • Find more Short sale and REO business • Featured in 60 minutes, Forbes, Bloomberg, LA Times, etc.
Visit www.foreclosureradar.com and
Enter promo code SWATØ9 for a FREE 7 Day Trial and an exclusive C.A.R. 10% discount.
For more information visit theC.A.R. Business Product Table in the Foyer
From Sub-Prime to Credit Crisis
0
100
200
300
400
500
600
700
800
900
Q1
/00
Q4
/00
Q3
/01
Q2
/02
Q1
/03
Q4
/03
Q3
/04
Q2
/05
Q1
/06
Q4
/06
Q3
/07
Q2
/08
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%Refinance Originations (Bil $)Purchase Originations (Bil $)Fixed Rate Mortgage
ORIGINATION (BIL $) 30-YR FIXED RATE MORTGAGE
Mortgage OriginationRefinance vs. Purchase
Source: Mortgage Bankers Association of America
“The Perfect Storm”
Lack of personal financial accountability
Exotic loan products and cash-out refi craze
Wall St. Innovation: Bundled Debt + MBS/Mortgages
Derivatives, Collateralized Debt Obligation’s (CDO’s)
Credit Default Swaps (CDS) aka “weapons of mass desrtruction”Wall St. Leverage
Inaccurate pricing of risk – rating agencies
Trade and Budget Deficits – Huge global pool of money seeking high returns
Low interest rate environment in US
Behavioral assumptions based on past history
…September 14-19, 2008 Downward Spiral
Treasury Yield Curve
4.17
3.69
2.41
1.21
0.77
0.15
4.14
3.98
2.75
1.58
0.81
0.18
4.60
4.22
3.75
3.403.63
3.27
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
3 m
on
th
6 m
on
th
2 y
ea
r
5 y
ea
r
10
ye
ar
30
ye
ar
12-Nov-08
13-Oct-08
12-Nov-07`
SOURCE: Bloomberg L.P.
Then…and Now
2009 Forecast
California Housing Market Summary
2003 2004 2005 2006 2007 2008 2009F
SFH Resales (000s)
601.8 624.7 625.0 477.5 346.9 439.7 475.0
% Change 5.1% 3.8% 0.03% -23.6% -27.3% 26.7% 8.0%
Median Price ($000s)
$371.5 $450.8 $522.7 $556.4 $560.3 $346.8 $281.1
% Change 17.5% 21.3% 16.0% 6.5% 0.7% -38.1% -18.9%
30-Yr FRM 5.8% 5.8% 5.9% 6.4% 6.3% 6.1% 5.1%
1-Yr ARM 3.8% 3.9% 4.5% 5.5% 5.5% 5.2% 4.8%
SOURCE: California Association of REALTORS®
February 2009
The American Recovery and Reinvestment Act
($787 Billion Stimulus)
GSE and FHA Loan Limits
The American Recovery and Reinvestment Act reinstates the 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans through December 31, 2009.
These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply.
Changes to the Homebuyer Tax Credit
The tax credit is 10% of the purchase price, capped at $7,500.
The tax credit does need to be repaid, therefore working more as an interest free loan. The credit is repaid out of your taxes over 15-
years.
You cannot get the credit if the property is financed by a tax exempt
qualified mortgage issue/bond.
The tax credit is 10% of the purchase price, capped at $8,000.
The tax credit does not need to be repaid – the only exception being if
the property is sold within 3-years of purchase.
You can get the credit if the property is financed by a tax exempt qualified
mortgage issue/bond.
If the home was purchased between April 8, 2008 and
December 31, 2008
If the home was purchased between January 1, 2009 and
November 30, 2009
Neighborhood Stabilization Program
The American Recovery and Reinvestment Act provided $2 Billion in additional funding for the Neighborhood Stabilization Program (NSP).
The funds can be used to purchase, manage, repair, and resell
foreclosed and abandoned properties. Funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties.
Real Estate Related Provisions
Low-Income Housing - Allows states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to
finance the construction or rehabilitation of low-income housing.
Energy Efficienct Upgrades - Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases
of new furnaces, windows and insulation. There is also $5 billion for weatherization assistance for low income households.
TARP II($350 Billion)
Treasury Plan: TARP 2.0 Announced 2/10/09“This strategy will cost money, involve risk, and take time."
• Wall St Disappointed by lack of specifics• Committing $50 Billion to reduce mortgage payments and mitigate
foreclosure• Asking for foreclosure moratorium until details of loan modification plan
are known• Term Asset-Backed Securities Loan Facility (TALF)
– Amount: Lending to hit $1 Trillion– Concept: Fed lends to investors who use the money to buy securities
backed by consumer loans – Goal: Liquefy the markets for consumer debt – Uncertain: Types of assets the Fed will finance
» Auto, card, student loans, residential MBS’s » Will commercial MBS’s be included?» Issued since 1/09 and AAA rating only» Risk of taking on these assets
Homeowner Affordability and Stability Plan
1. Help homeowners suffering from falling home prices refinance.
2. Help modify mortgages for homeowners at risk of foreclosure.
3. Lower mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.
Announced February by Treasury Secretary Geithner to help stabilize the housing market and prevent families from losing their homes to foreclosure. Three components:
Homeowner Affordability and Stability Plan
Helping Homeowners Refinance
• Target is homeowners who’ve lost equity in their home because of falling home prices.
• Homeowners with existing Freddie Mac and Fannie Mae loans can refinance up to 105 percent loan-to-value.
• Objective: Help 4 to 5 million homeowners.
Helping Homeowners Who are at Risk of Foreclosure through Loan Modification
• Brings together lenders, servicers, and the government to share in the cost of the modification.
• Homeowners do not have to be delinquent.• Monthly payments not to exceed a 38 percent debt-to-
income ratio; bring down to this ratio at cost to lender. • Further reduction to 31 percent DTI; cost split between
lender and government.• Accomplished by reducing the interest rate on the loan.
New rate locked for five years and then adjusted upward to conforming rate at time of modification.
• Lenders may reduce mortgage principal with government helping to offset some costs.
1. Incentives: Servicers receive $1,000 for every eligible modification - guidelines to be released by March 4.
2. Mortgage holders receive $1,500 and servicers $500, for modifications on loans that are non-delinquent but at risk of imminent default.
3. Homeowners with modified loan may receive $1,000 towards their principle every year they are current on their payments. Good for the first five-years.
4. Administration will work with federal agencies, banking and credit union regulators, and the private sector to develop loan modification guidelines to implement across mortgage market.
5. Guidelines are voluntary unless the institution receives Financial Stability Plan assistance after this announcement.
6. The cost is expected to be $75 billion, with 3 to 4 million homeowners to benefit.
Helping Homeowners Who are at Risk of Foreclosure to Modify Their Loans (Cont.)
Supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac
• Treasury to increase Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac from $100 billion (currently) to $200 billion each.
• Treasury will continue purchasing Fannie and Freddie mortgage-back securities.
• Fannie and Freddie may increase portfolios $50 billion to $900 billion.
• Fannie and Freddie will support state housing finance agencies, such as CalFHA.
STAY INFORMED
www.car.orgNewsstandMarket Matters
www.realtors.orgwww. recovery.orgwww.federalreserve.govhttp://federalreserve.gov/monetraypolicy/bst.htm
Technology
2008 Home Buyer Survey
Internet Buyers Vs. Traditional BuyersPercentage of All Homebuyers Surveyed
72%78%
28%22%
62%70%
56%
45%41%37%
28%
38%30%
72%63%
59%55%
44%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Internet Buyers Traditional Buyers
Weeks Considered Buying A HomeBefore Contacting Agent
6.35.8 5.8 5.9 5.8 5.8
8.2
2.2 2.1 2.1 2.1 2.1 2.0
3.6
7.6
4.0
0
1
2
3
4
5
6
7
8
9
10
2001 2002 2003 2004 2005 2006 2007 2008
Internet Buyers Traditional Buyers
Weeks Spent Looking For Home With Agent
2.1 2.0 2.0 1.9 2.0 2.2
5.2
8.3
6.4 6.6 6.7 7.1 7.0 7.18.0
10.3
0
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006 2007 2008
Internet Buyers Traditional Buyers
Number Of Homes Previewed with Agent
7.9 7.5 7.1 6.1 6.2 6.7
9.3
12.715.1 15.2 15.2 15.4 14.4 15.4
20.2
23.3
0
5
10
15
20
25
30
2001 2002 2003 2004 2005 2006 2007 2008
Internet Buyers Traditional Buyers
Internet Sites Visited As Part OfHome Buying Process
87%
82%
62%
36%
34%
32%
13%
10%
9%
7%
4%
65%
Realtor.com
Individual real estate agent's web siteInternet listing of a home that I was interested
inReal estate company web sites
Zillow
Craigslist
Yahoo! Real Estate
HouseValues.com
Newspaper web sites
ca.realtor.com
MSN Real Estate
First Web Site Visited During theHome Buying Process
40%
28%
8%
5%
4%
3%
13%
Realtor.com
Unsure
Yahoo! Real Estate
Zillow
Internet listing of a home that I wasinterested in
Craigslist
Internet Buyers
Percent of Homebuyers Who “Google” Agent Before Final Selection
2%
20%
16%All Internet Buyers
Internet Buyers Who WereFirst-Time Buyers
Internet Buyers Who WereRepeat Buyers
Most Useful Web Site Visited During theHome Buying Process
33%
23%
11%
8%
4%
22%
Individual real estate agent's web site
Realtor.com
Internet listing of a home that I wasinterested in
Zillow
Real estate company web sites
Yahoo! Real Estate
All Internet Buyers
How Did You Find Your Real Estate Agent?Unaided Multiple Responses
90%
9%
1%
0%
27%
28%
32%
14%
0%
0%Internet
For Sale signs in neighborhood
Agent's farming materials
Previous transaction with real estate agent
Referral from friends, relatives, neighbors,or other contacts
Internet Buyers Traditional Buyers
How Did You First See The Home You Purchased?
84%
16%
4%
96%
Real estateagent
On your own
Internet Buyers Traditional Buyers
77% saw home on the Internet
Means Of Communication With Real Estate Agent
92%
0%
32%
2%
0%
39%
0%
98%
Telephonecalls
In person
Fax
Internet BuyersTraditional Buyers
Typical Response Time Expected from Agent
31%
22%
15%
15%
13%
2%
2%
0%
0%
59%
13%
13%
14%
1%
Instantly
Within 30 Minutes
Within 1 Hour
Within 2 Hours
Within 4 Hours
Same day
1 business day
Internet Buyers Traditional Buyers
Importance Of Agent’s Response TimeIn the Selection Process
71%
20%
9%
0%
0%
41%
21%
25%
13%
0%
ExtremelyImportant
Very Important
ModeratelyImportant
Not VeryImportant
Not At AllImportant
Internet Buyers Traditional Buyers
Satisfaction With Real Estate Agent’sResponse Time
3.2
2.8
Internet Buyers
TraditionalBuyers
Mean Score On A 5-point Scale
5 Is “Well Surpassed Expectations” And 1 Is “Fell Way Below Expectations”
Single Most Important ReasonsFor Selecting An Agent
19%
20%
5%
3%
17%
11%
3%
9%
44%
43%
22%
4%
Seemed like he/she would be the mostresponsive
Seemed like he/she would be the mostaggressive on my behalf
Most qualified
Most knowledgeable
First agent to respond to my inquiry/quickest.response time
Agent was in the market area where I wanted to.move
Internet Buyers Traditional Buyers
Unaided Responses
The Role Of Market ConditionsIn The Decision To Purchase A Home
10%
9%
67%
22%
39%
Price decreases motivated us
Low interest rates helped us move to a betterlocation, neighborhood
Likelihood that interest rates will move up motivatedus
Low interest rates helped us buy a larger home
Moved to an area where it was more affordable
2008
All Buyers
Homebuyers Who Looked at Newspaper/Magazine Ads to Search for a Home
15%
35%
20%All buyers
Internet buyers
Traditionalbuyers
Publication Used to Search for a HomeRespondents Who Looked at Newspaper/Magazine Ads to Search for a Home
31%
8%
1%
22%
75%Local newspaperfor open houses
Homes for saleguide/ magazine
Local newspaperfor homes for sale
Local newspaperin general
Don't recall
All Buyers
Advice to Give to OtherFirst-Time Home Buyers
All Homes Resale Homes New Homes
Do your own homework on the Internet 50% 49% 50%Get a good understanding of the type of mortgage you are getting 44% 44% 44%
Check the agent's references 40% 33% 47%Make sure the agent pre-qualifies homes before showing them to you 39% 32% 48%
Get pre-qualified for a mortgage by more than one lender 34% 25% 52%Find out how frequently the agent is going to be in contact with you 19% 19% 14%
Don't use the seller's agent 18% 20% 14%
Make any agent you use prove they will negotitate hard for you 16% 20% 13%
Get your financing locked in as soon as possible 12% 18% 0%
Find out how fast the agent is going to get back to you 9% 9% 11%
Get the most experienced agent possible 3% 4% 0%
Advice to Give to Real Estate Agentsto Improve Their Service
All Homes Resale Home New Home
Improve the quality of communications 52% 51% 53%
Provide references for lenders who will perform 33% 33% 31%
Provide “buyer” references 32% 35% 27%
Show how you can negotiate aggressively for the buyer 29% 18% 49%Provide references for lenders who will recommend the best product for me 29% 40% 8%
Improve the speed of communications 26% 27% 23%
Listen to my needs better 24% 24% 27%
Provide quality information on where the market is going and why 19% 19% 19%
Find out about listings before I do 15% 15% 14%
Pre-qualify homes before showing them 9% 8% 11%
Provide information on where interest rates are going 7% 4% 11%
From the bookshelf…
March 4 - Oakland Marriott City Center April 16 - Glendale HiltonMarch 10 - Holiday Inn Chico April 28 - San Diego TBD
http://www.realtorswat.com
Next Week: Ventura on Wed., Feb. 24!
www.car.org Economics
Here we go!
Thank [email protected]