2013 understanding california home seller webinar

5/26/2018 2013 Understanding California Home Seller Webinar

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UNDERSTANDING CALIFORNIA

HOME SELLERS

January 30, 2014Oscar Wei, Senior Research Analyst


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Methodology

Telephone surveys conducted in August/Septemberof 600 randomly selected home sellers who sold in

the past 6 months.

Maximum sampling error: 4.0 percent at twostandard deviations (a 95% confidence level).(Subsets of the total sample will have a higher

sampling error.)


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Sales of Existing Detached Homes California, Dec. 2013 Sales: 361,890 Units, -5.9% YTD, -18.6% YTY

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

*Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS


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Median Price of Existing Detached Homes

California, December 2013: $438,040, Up 19.7% 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% frompeak

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


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Share of Equity Sales Decreased for theFirst Time Since December 2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Equity Sales Short Sale REO

SERIES: Distressed SalesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS


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Unsold Inventory Index

California, December 2013: 3.0 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 (whe n available) and divide

the sum by the number of Sold properties for the month in question.

0

2

4

6

8

10

12

14

16

18

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


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Short Sales Market Shrank as Home Prices Surged

56%

88%

44%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013

Equity Sale Short Sale

Q: Was the home sold as a short sale?


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Mortgage Rates: Heading Higher as EconomyImproves and Fed Tapers January 2009 December 2013

0%

1%

2%

3%

4%

5%

6%

FRM

ARM

MONTHLY WEEKLY

SERIES: 30Yr FRM, 1Yr ARMSOURCE: Federal Home Loan Mortgage Corporation


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Sellers Received 5.9 Offers on Average

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2012 2013

3.1

5.9

Q: How many offers did you receive from buyers?


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98% of Sellers Received Multiple Offers

0%

5%

10%

15%

20%

25%

30%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

2%3%

22%

14%

30%

5%

2%1%

5%

8%

2%1%

0%

3% 3%

1%

Q: How many offers did you receive from buyers?


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26%

50%

0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013

% of Sales above Asking Price

Long Run Average = 18%

Market Competition Leads to More Sales withAbove Asking Price


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19%

46%

34%

43%

30%

57%

0%

10%

20%

30%

40%

50%

60%

2008 2009 2010 2011 2012 2013

% of Sales Above Asking Price

All Equity Sales REO Short Sales

Market Competition Leads to More Sales withAbove Asking Price


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Sellers Are Optimistic About Future Home Prices

37%

19%10%

21%

23%

17%

43%

58%74%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 Year 5 Years 10 Years

Down Flat Up

Q: Do you think home prices in your neighborhood will go up, down, or stay flat?


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Sellers More Optimistic About Future Home Prices

16%20%

35%

13% 14%

26%

9%

12%

20%

43%

58%

74%

In 1 Year In 5 Years In 10 Years

2010 2011 2012 2013

Q: Do you think home prices in your neighborhood will go up?


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Moving up is #1 Reason for Selling in 2013

Q: Why did you sell your home?

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

Other

Jos loss

Home worth more now

Home not worth what we owe

Changed jobs/relocation

Desired larger home

Could get maximum price/ value for our home

Financial difficulties/Cannot afford to keep the house

Interest rate are not going to get any better

Time/Price was right to move up

7%

2%

4%

6%

8%

9%

13%

14%

14%

23%

*Financial difficulties include: couldnt afford mortgage, moved to less expensive market, loss of household income, income not

keeping up with expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.


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Reasons to Sell Changed as Market ConditionsImproved


*Financial difficulties include: couldnt afford mortgage, moved to less expensive market, loss of household income, income not

keeping up with expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.

23% Time to move up

14%

Interest rates notimproving

14% Financial difficulties

58% Financial difficulties

17%

Job/Incomeuncertainty

7% Underwater

2013 2012


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Moving up is #1 Reason for Selling for Both First-Time Sellers and Repeat Sellers


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

Other

Desired larger home

Could get maximum price/ value for our home

Financial difficulties/Cannot afford to keep thehouse

Interest rate are not going to get any better

Time/Price was right to move up

7%

7%

12%

14%

14%

23%

8%

9%

13%

14%

16%

22%

Repeat First-Time

*Financial difficulties include: couldnt afford mortgage, moved to less expensive market, loss of household income, income not keeping up with

expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.


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Most Sellers Currently Own

Own 69%

Rent 31%

Q: Do you own or rent your current home?


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More Sellers Are Repurchasing

55%42%

12%

47%

69%

45%58%

88%

53%

31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013

Own Rent



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Short Seller Are More Likely to Rent

Own

75%

Rent

25%

Equity Sale Homeowners

Own

25%

Rent

75%

Short Sale Homeowners



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Most Sellers Own

Own

69%

Not buying

another home

30%

Buying

another home

70%

Rent

31%



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For Renters Who Do Not Plan to Repurchase, HereAre Their Reasons:

25%

25%

24%

11%

5%

2%

27%

40%

15%

3%

12%

3%

0% 10% 20% 30% 40% 50%

Credit problems

Insufficient down payment

Renting is more affordable

Uncertainty about income

Insufficient income

Pessimistic about home price appreciation

2013 2012

SERIES: 2013 California Home Seller SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS


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ABOUT THE SELLER


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Gen X and Y Dominate Seller Population

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013

Gen Y (1980-1999) Gen X (1965-1979) Boomers (1946-1964) Seniors (before 1946)

Q: What is your age?



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Age

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


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Median Age: 46

11%

32%

27%

24%

7%

25-3435-44

45-54

55-64

65+



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Half of All Sellers are Married

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Single Married Other

Q:What was the marital status the head of your household at the time of the sale?


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Ethnic Background

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Other

Black

Asian

Hispanic

White

Q: How would you describe your ethnic background?


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Minorities are the Majority

36%

26%

25%

12%

White

Hispanic

Asian

African American

Q: How would you describe your ethnic background?


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Annual Household Income

0%

10%

20%30%

40%

50%

60%

70%80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

< $50,000 $50,000-$74,999 $75,000-$99,999

$100,000-$149,999 $150,000-$199,999 $200,000+

Q: Which of the following categories best describes your total annual household income from all sources?


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Household Income

3%

26%

27%

26%

18%< $50,000

$50,000-$74,999

$75,000-$99,999

$100,000-$149,999

$150,000-$199,999

$200,000+

Q: Which of the following categories best describes your total annual household income from all sources?


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First-time Sellers

21%

16%

20%18% 17%

15%

33%

44%47% 48%

57%

35%

0%

10%

20%

30%

40%

50%

60%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Q: Was this your first experience in selling a house?


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Length of Ownership Spiked

2.6 2.3

3.33.0

3.3

8.0

0

1

2

3

4

5

6

7

8

9

10

2008 2009 2010 2011 2012 2013

Median Years Mean Years

Q: Length of time home was owned prior to sale.


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Length of homeownership surgedImplication: Sellers who bought during the peakdecided to sell as price increases minimized losses

0

20

40

60

80

100

120

1st-time Seller Repeat Seller

3944

104 103

Average Months

2012 2013

Q: Length of time home was owned prior to sale.


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THE SELLING PROCESS


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A Typical Home Owner Considered Selling for a YearBefore Actually Doing So

6%

17%

10%

17%

4%

16%

14%

5% 5%

2%

1%

2%

1%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

4 8 10 12 16 24 36 48 60 72 96 108 120

Months

Q: How long did you consider selling before actually doing so?


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The Time It Took to Consider Selling Has BeenConsistent in the Last Few Years

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2011 2012 2013

12

10

12


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Decline in Average Weeks on Market Reflects TightInventory

1.0

6.0

11.0

16.0

21.0

26.0

31.0

2005 2006 2007 2008 2009 2010 2011 2012 2013

3.3

10.7

14.0

20.5

25.627.4

29.2

26.0

8.5

Q: How many weeks was your home listed on the market prior to the opening of a successful escrow?


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Half of All Homes Were on the Market for 6 Weeksor Less

0%

5%

10%

15%

20%

25%

30%

1-3 4-6 7-9 10-12 13+

25% 25%

10%12%

28%

Weeks on Market

Q: How many weeks was your home listed on the market prior to the opening of a successful escrow?


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of Sellers Closed Escrow Within 60 Days

0%

5%

10%

15%

20%

25%

30%

35%

40%

30 45 60 75 90 120

17%

36%

21%

16%

9%

1%

Days

Q: How long was your home in escrow?


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Average Days in Escrow

1

11

21

31

41

51

61

2011 2012 2013

5855 55




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How Property Was Marketed?

Marketing Method % of Sellers

MLS 98%

Internet 95%

Open houses 67%

Virtual tours 59%

Featured on social media 49%


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Most Important Websites for Sellers (Top 3)

68%

24%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2008 2009 2010 2011 2012 2013

Realtor.com Zillow.com Yahoo! Real Estate Trulia


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Most Sellers Used Social Media

0%

10%

20%

30%

40%

50%

60%

70%

80%

2010 2011 2012 2013

24%

77% 74% 74%

Q: Did you use social media in the home selling process?


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74% of All Sellers Used Social Media

Q: Which social media websites did you use to learn more about and communicate with real estate agentsand companies?

83%

52%39%

24%

19%


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What Sellers Would Change About the Sale

Q: If there was one thing you could change about your recent home sale, what would it be?

40% Improve communication

39% Sell for higher price

5% Market more aggressively

4% Respond faster

4% Better initial pricing

2013 2012

37% Sell for higher price

34% Sell faster

10% Market more aggressively

9% Improve communication

6% Negotiate harder


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SELLER/AGENTRELATIONSHIP


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More than Half of Sellers Found Agent Online

0% 10% 20% 30% 40% 50% 60%

Friend or relative

Farming material

Referral

"For Sale" sign

Previous client

Internet

3%

4%

7%

8%

26%

51%

Q. How did you find your real estate agent?


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Over of Sellers Interviewed at Least 3 Agents

0%

5%

10%

15%

20%

25%

30%

1 2 3 4 5 6

10%12%

28%

25%

14%

11%

Q: How many agents did you interview prior to selecting the agent you used in your recent home sellingprocess?


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Sellers Interviewed Fewer Agents

2 2

3

4 4

5

6

5

3

44

0

1

2

3

4

5

6

7

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Median Average

Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?


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Most Buyers and Sellers InterviewedMultiple Agents before Selecting One

Q. How many agents did you interview prior to selecting the agent you used in your recent home

purchase?

1 agent,

19%

2 agent,

26%

3 agent,

12%

4 agent,

21%

5 agents,

11%

6 or

more

agents,11%

Buyers

Source: C.A.R. 2013 Buyer and Seller Surveys

1 agent,

10%

2 agents,

12%

3 agents,

28%4 agents,

25%

5 agents,

14%

6 or

more

agents,11%

Seller


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Reason Seller Selected Agent

Appeared most responsive (29%)

Used agent before (19%)

Appeared most aggressive (18%)

First agent to response (12%)

Most qualified (8%)

Q: What was the single most important reason for selecting the agent you used in your recent home sale?

R Ti i M I i A


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Response Time is Most Important in AgentSelection

Category 2011 2012 2013

First agent to respond to my inquiry/quickest response time 4.2 4.3 4.3

Agent offered the best deal, lowest commission rate 4.1 4.3 4.1

Agent offered best marketing proposal 4.1 3.9 4.0

Agent was a REALTOR N/A 3.8 3.9

Agent was the most knowledgeable in the market area

where the property was located3.8 3.8 3.8

Agent's knowledge of handling foreclosures, short sales,

other distressed properties2.9 3.0 2.5

Agent was referred by relative/friends/co-workers 3.1 2.9 3.0

Q: Please rate the following factors by their importance in your decision on selecting the agent you used for yourhome selling process on a scale from 1 to 5, where 5 is Extremely important and 1 is Not at all important.


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96% of Sellers Expect Response Within 1 Hour

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Instantly Within 30Minutes

Within 1Hour

Within 2Hours

Within 4Hours

Same day 1 businessday

> 1business

day

14%11%

4%

32%

19%

14%

5%

1%

43%

34%

19%

2% 1%

Actual Expected

Q: On average, what was the ACTUAL time of your agent to return any form of communication to you?Q: What was the typical response time you EXPECTED from your agent to return any form of communication with you?


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44%

43%

0%

5%10%

15%

20%

25%30%

35%

40%

45%

50%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Buyers Sellers

Q. What was the typical response time you expected from your agent to return any form of communication to you?

More Buyers and Sellers Expect Instant Responsefrom Agent


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Gap in Phone & Text Communication

13%

47%

32%

5%

44%

49%

1% 3%

Telephone Email Text Message In Person

Preferred Actual

Q. What was your preferred method of communicating with your agent?

Q. How did your agent actually communicate with you?


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Agent Satisfaction Ratings Relatively Unchanged

Category 2011 2012 2013

Marketing the home 3.6 3.4 3.5

Setting the price 3.4 3.3 3.3

Preparing the home for sale 3.1 3.2 3.1

Assuring the buyer is qualified 3.1 3.0 3.0Value received for what you paid your real estate agent 3.1 3.0 3.0

Negotiating the transaction 3.0 3.0 3.0

Overall satisfaction with the real estate agent 2.8 2.8 2.7

Overall satisfaction with the home selling process 2.6 2.5 2.6

Q: Please rate your degree of satisfaction with your agent for each of the following

aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.


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Seller Satisfaction Declining

0

1

2

3

4

5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Agent Selling process

S ll S ti f ti ithA t i C l t dt S l


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Seller Satisfaction with Agent is Correlated to SalePrice

1. Negotiated good deal(57%)

2. Got best price (48%)

3. Worked hard on sellersbehalf (39%)

1. Ineffectivecommunication (54%)

2. House took too long tosell (39%)

3. Slow response (34%)

Q: Please explain why you had that level of satisfaction with your agent.


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Seller Advice to Agents

59% Improve communication speed

49% Sell home faster

42% Negotiate more aggressively

29% Improve communication quality

26% Listen to needs better

Q: What advice would you give to real estate agents to improve the process or level of service?


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CONCLUDING REMARKS


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The Takeaway

Sellers are optimistic about the futurehousing market

Most sellers interview multiple agents; there

is an opportunity to gain a new client Most sellers want better communication


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Understanding California Luxury

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C.A.R. Finance Helpline

Finance.car.org

(213) 739-8383Get one-on-one assistance withshort sales,

funding, REOs, Deeds in Lieu, and closingtransactions.


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2013 understanding california home seller webinar

Documents

selected home sellers

home prices surged56

sales withabove

short sales market

share of equity sales

theremaining inventory

equity sale short saleq

number of properties