2020 california housing market forecast...2020 california housing market forecast leslie...
TRANSCRIPT
![Page 1: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/1.jpg)
2020 California Housing Market Forecast
Leslie Appleton-Young Chief Economist + SVP California Association of
REALTORS®
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CALIFORNIA ASSOCIATION OF REALTORS®
Where is the market data?
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2
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CALIFORNIA ASSOCIATION OF REALTORS®
Housing
Matters
Podcast
page
4
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There is no such thing as a bad market. Markets go up and down. Plan for it and you will succeed.
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Macro Economic Outlook
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UNCERTAINTY
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CALIFORNIA ASSOCIATION OF REALTORS®
What is everyone worried about? Everything.
page
8
Recession
No deal
BrexitGSE PatchImpeachment
Global
economic
slowdown
Stock market
correction
Fed Misses
the Mark
Trade War
Inconsistent
Policies
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CALIFORNIA ASSOCIATION OF REALTORS® page
9
Aren’t we due for a
recession in 2020?
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CALIFORNIA ASSOCIATION OF REALTORS® page
10
Joel: There will be a recession sometime before 2035.
Dave/Spike: We don’t need any more “receptions”.
Cardinal Rule of Forecasting: Never give a number and a date in the same sentence.
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CALIFORNIA ASSOCIATION OF REALTORS®
Recent Headline – Can 100+ Economists be Wrong?
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11
Experts Say Next Recession Will Begin in 2020
The most likely triggers for the next recession are trade
policy, a stock market correction or geopolitical crisis.
Housing demand will decrease, but a housing
slowdown is not expected to cause the recession.
Jul 25, 2019
Pulsenomics
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CALIFORNIA ASSOCIATION OF REALTORS®
Aren’t we due for a recession in 2020?
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12
• 10th year of economic growth
• Yield curved inverted in August
• Q: What will drive the downturn when it comes ?
a) Global economic slowdown
b) Trade War
c) Geo-political crisis
d) Stock market correction
• Answer: All of the above (& none are housing)
• Bonus Answer: No timetable for recession
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Business Leaders are concerned about the current environment
page
13SERIES: U.S. Business Confidence Index
SOURCE: Organization for Economic Co-operation and Development (OECD)
Trade War
Govt.
Shutdown
Tax Reform
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Stock market major jitters
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14
27,349
25,718
26,378
25,479
24500
25000
25500
26000
26500
27000
27500
28000
(7/15/19 – 8/15/19)
20000
21000
22000
23000
24000
25000
26000
27000
28000
(8/13/18 – 8/15/19)
SERIES: Dow 30
SOURCE: Yahoo! Finance
Down 16.1%
Down 6.4%
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JP Morgan Volfefe Index: Tweets & Market Volatility
page
15SERIES: Volfefe Index, President’s Trump tweets
SOURCE: JP Morgan, Bloomberg
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0
20
40
60
80
100
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140
160
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IND
EX
, 1
00
=1
98
5Consumer Confidence dropped 9 points in September
page
16
September 2019 125.1
SERIES: Consumer Confidence
SOURCE: The Conference Board
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CALIFORNIA ASSOCIATION OF REALTORS®
The Conference Board: September News Release
page
17
“While confidence could continue hovering
around current levels for months to come, at
some point this continued uncertainty will
begin to diminish consumers' confidence in the
expansion."
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C.A.R. Google Consumer Poll: September 2019Good time to buy? 22% Good time to sell? 46%
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18
57%56%51%
46%48%50%53%48%45%
51%49%52%
46%
Se
p-1
8
Oc
t-1
8
No
v-1
8
De
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8
Ja
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Fe
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Ma
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Ap
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Ju
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Ju
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Au
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22%21%27%25%22%25%24%22%22%
26%23%23%22%
Se
p-1
8
Oc
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8
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Do you think it’s a good time to sell a
home in California?N=300
Do you think it’s a good time to buy a
home in California?N=300
SERIES: 2018/2019 Google Consumer Poll
SOURCE: NATIONAL ASSOCIATION OF REALTORS®
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Properties falling out of escrow because buyer was unsure
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19
Q. Had the property fallen out of escrow prior to this sale?
15%
0%
10%
20%
2013 2014 2015 2016 2017 2018 2019
% of Properties Fallen out of
Escrow
47%
6%
6%
4%
1%
1%
1%
35%
0% 20% 40% 60%
Buyer changed mind and decided not to buy
Buyer did not qualify for a mortgage on terms
acceptable to the buyer
Buyers could not secure a mortgage because
of his/her credit background
Buyers could not come up with the
downpayment
Lender's delay in approving the short sale
Buyers could not secure a mortgage because
the appraised value was too low
Sellers decided not to sell
Other
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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CALIFORNIA ASSOCIATION OF REALTORS® page
20
STOP THE NOISE –Let’s look at the data
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Fundamentals appear solid and sustainable if not spectacular…
page
21SOURCE: Bureau of Labor Statistics & Bureau of Economic Analysis
GDP 2.0%2019-Q2
Consumption 4.7%2019-Q2
Unemployment 3.7%August 2019
Core CPI 2.4%August 2019
Job Growth 1.4%August 2019
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2.4%
1.7%
2.0%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
An
nu
al Pe
rce
nt
Ch
an
ge
,
Ch
ain
-ty
pe
(20
09
) $
Growth slowed from 3.1% in Q1 to 2.0% in Q2
page
22
GDP: 2018: 2.9% 2019p: 2.4% 2020f: 1.7%
ANNUALLY QUARTERLY
SERIES: GDP
SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
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CALIFORNIA ASSOCIATION OF REALTORS®
Unemployment at lowest rate in 50 years
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23
0
2
4
6
8
10
12
14
Se
p-7
6Se
p-7
8Se
p-8
0Se
p-8
2Se
p-8
4Se
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6Se
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8Se
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0Se
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2Se
p-9
4Se
p-9
6Se
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8Se
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US California
2.2%
4.5%
9.8%
0% 5% 10% 15%
San Francisco
South Bay
Orange County
Napa
San Diego
Ventura
Solano
Los Angeles
Santa Cruz
Stanislaus
Monterey
Madera
Bakersfield
Merced
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Rates remain at historic lows – will move lower in 2020
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24
January 2012 – April 2019
3.623.73
3.36 3.49
2.25 2
0
1
2
3
4
5
6
FRM
ARM
Fed Funds Rate
MONTHLY WEEKLY
January 2012 – September 2019
SERIES: 30Yr FRM, 5Yr ARM, Fed Funds Rate (Target Rate)
SOURCE: Freddie Mac, St. Louis Fed
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CALIFORNIA ASSOCIATION OF REALTORS®
U.S. economic outlook
page
25SERIES: U.S. Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2015 2016 2017 2018 2019p 2020f
US GDP 2.6% 1.6% 2.3% 2.9% 2.2% 1.6%
Nonfarm Job Growth 2.1% 1.8% 1.4% 1.6% 1.3% 0.8%
Unemployment 5.3% 4.9% 4.4% 3.9% 3.7% 3.9%
CPI 0.1% 1.4% 2.0% 2.4% 2.0% 2.0%
Real Disposable Income, %
Change3.4% 2.7% 2.1% 2.9% 2.8% 2.5%
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CALIFORNIA ASSOCIATION OF REALTORS®
California economic outlook
page
26SERIES: U.S. Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2015 2016 2017 2018 2019p 2020f
Nonfarm Job Growth 2.7% 2.3% 1.6% 2.0% 1.5% 1.0%
Unemployment 6.2% 5.5% 4.8% 4.2% 4.3% 4.5%
CA Population (Million) 39.0 39.2 39.5 39.7 39.9 40.1
Population Growth 0.9% 0.7% 0.7% 0.6% 0.5% 0.4%
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California Housing Market
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Doing Better: Sales dip slightly from July,but remain above 400k
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28
California, August 2019 Sales: 406,100 Units, -4.1% YTD, 1.6% YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
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SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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First back-to-back yearly sales gain since April 2018
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-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Year-over-Year % Chg 6 per. Mov. Avg. (Year-over-Year % Chg)
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Sales constrained by tight supply, particularly at the low end
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30
August 2019 (YTY% Chg.)
-15.0%
-2.3%
2.9%
6.6%
3.1%
-6.6%
1.5%
-20%
-15%
-10%
-5%
0%
5%
10%
12.5%
15.8%
14.0%
25.6%
12.2%
12.4%
3.5%
0% 10% 20% 30%
$0 - $299k
$300 - $399k
$400 - $499k
$500 - $749k
$750 - $999k
$1,000 - $1,999k
$2,000k+
Share by Price Segment
SERIES: Sales of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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CALIFORNIA ASSOCIATION OF REALTORS®
Sales by Region
page
31
-2.3%
-3.8%
-0.4%
-6.4%
-1.9%
-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
August 2019 YTY Sales Growth
by Region (NSA)
Central
Valley
23%
S.F. Bay
Area
19%
Southern
California
46%
Central
Coast
4%
Other Counties
8%
August 2019 Home Sales by Region
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California median price at all-time high for August
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32
California, August 2019: $617,410, 1.5% MTM, 3.6% YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Ja
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SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Single-family homes had the largest price gain in 10 months
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-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%Ja
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YTY
% C
hg
. in
Pric
e
Condo Single-Family Homes
SERIES: Median Price of Existing Condo/Townhomes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Price/Square Foot slightly downfrom last month and inched up from last year
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August 2019: $287, -1.0% MTM, 1.4% YTY
$0
$50
$100
$150
$200
$250
$300
$350
$400Ja
n-0
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PR
ICE P
ER
SQ
. FT.
SERIES: Median Price Per Square Feet of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Top percentile saw decline in price growth - uncertainty
page
35SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
6.3%5.5%
2.9%
0.0%
-1.9%-2.5%
-1.6%
0.3%
-1.3%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
0-20 20-40 40-60 60-80 80-100 80-85 86-90 91-95 96-100
Percentile
California Year-over-Year Price Growth by Quintile (August 2019)
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Inventory index down due primarily to drop in active listings
page
36
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
SERIES: Unsold Inventory Index of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
August 2018: 3.3 Months; August 2019: 3.2 Months
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Supply improved only at the upper end of the market
page
37
August 2019
-17.5%-14.3% -12.8%
-3.8%
4.5%
10.8%
-8.9%
-20%
-10%
0%
10%
20%
Active Listing
SERIES: Active Listings of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Regional inventory mostly flat
page
38
2.5
3.3
2.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Ja
n-0
9
Ju
l-0
9
Ja
n-1
0
Ju
l-1
0
Ja
n-1
1
Ju
l-1
1
Ja
n-1
2
Ju
l-1
2
Ja
n-1
3
Ju
l-1
3
Ja
n-1
4
Ju
l-1
4
Ja
n-1
5
Ju
l-1
5
Ja
n-1
6
Ju
l-1
6
Ja
n-1
7
Ju
l-1
7
Ja
n-1
8
Ju
l-1
8
Ja
n-1
9
Ju
l-1
9
Bay Area So CA Central Valley
SERIES: Unsold Inventory Index of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Active listings in August 2019 had the largest drop since Dec 2017
page
39
-8.9%
-20%
-10%
0%
10%
20%
30%
40%
Ja
n-1
5
Ma
r-1
5
Ma
y-1
5
Ju
l-1
5
Se
p-1
5
No
v-1
5
Ja
n-1
6
Ma
r-1
6
Ma
y-1
6
Ju
l-1
6
Se
p-1
6
No
v-1
6
Ja
n-1
7
Ma
r-1
7
Ma
y-1
7
Ju
l-1
7
Se
p-1
7
No
v-1
7
Ja
n-1
8
Ma
r-1
8
Ma
y-1
8
Ju
l-1
8
Se
p-1
8
No
v-1
8
Ja
n-1
9
Ma
r-1
9
Ma
y-1
9
Ju
l-1
9
Year-over-Year % Chg
SERIES: Active Listing of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Time on market up as market ends its peak season
page
40
California, August 2019: 23.0 Days
0
10
20
30
40
50
60
70
80
Ja
n-0
5
Se
p-0
5
Ma
y-0
6
Ja
n-0
7
Se
p-0
7
Ma
y-0
8
Ja
n-0
9
Se
p-0
9
Ma
y-1
0
Ja
n-1
1
Se
p-1
1
Ma
y-1
2
Ja
n-1
3
Se
p-1
3
Ma
y-1
4
Ja
n-1
5
Se
p-1
5
Ma
y-1
6
Ja
n-1
7
Se
p-1
7
Ma
y-1
8
Ja
n-1
9
DA
YS O
N M
AR
KET
SERIES: Median Time of Market of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Reduced-Price Listings Rising
page
41
Share of Listings with a Reduced Price: 41.0%; Median Reduction Amount: -4.3%
-10%-9%-8%-7%-6%-5%-4%-3%-2%-1%0%
0%5%
10%15%20%25%30%35%40%45%50%
1/1
/20
10
5/1
/20
10
9/1
/20
10
1/1
/20
11
5/1
/20
11
9/1
/20
11
1/1
/20
12
5/1
/20
12
9/1
/20
12
1/1
/20
13
5/1
/20
13
9/1
/20
13
1/1
/20
14
5/1
/20
14
9/1
/20
14
1/1
/20
15
5/1
/20
15
9/1
/20
15
1/1
/20
16
5/1
/20
16
9/1
/20
16
1/1
/20
17
5/1
/20
17
9/1
/20
17
1/1
/20
18
5/1
/20
18
9/1
/20
18
1/1
/20
19
5/1
/20
19
Share Reduced Median Reduction
SERIES: Listing Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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One more look at the last 15 years: flat sales with a very strong economy & low rates & pop growth
page
42
California, August 2019 Sales: 406,100 Units, -4.1% YTD, 1.6% YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Ja
n-0
5
Se
p-0
5
Ma
y-0
6
Ja
n-0
7
Se
p-0
7
Ma
y-0
8
Ja
n-0
9
Se
p-0
9
Ma
y-1
0
Ja
n-1
1
Se
p-1
1
Ma
y-1
2
Ja
n-1
3
Se
p-1
3
Ma
y-1
4
Ja
n-1
5
Se
p-1
5
Ma
y-1
6
Ja
n-1
7
Se
p-1
7
Ma
y-1
8
Ja
n-1
9
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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How Did We Get Here?
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CALIFORNIA ASSOCIATION OF REALTORS®
More of everything, except…
page
44
27,052,000
39,740,508
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
California Population
1986 2018
112,491
205,074
0
50,000
100,000
150,000
200,000
250,000
California REALTORS®
1986 2018
393,983402,750
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
California Home Sales
1986 2018
255,559
114,370
0
50,000
100,000
150,000
200,000
250,000
300,000
California Permits
1988* 2018
![Page 45: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/45.jpg)
This Photo by Unknown Author is licensed under CC BY-SA-NC
3.5
Million
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CALIFORNIA ASSOCIATION OF REALTORS®
Number of new housing units off by all measures…
page
46
114,370
HCD Estimated
Need: 180,000
0
50,000
100,000
150,000
200,000
250,000
300,0001
98
8
19
89
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
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
California Housing Permits
Permits HCD Estimate
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CALIFORNIA ASSOCIATION OF REALTORS®
LAO agrees
page
47
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So does the data…
page
48
1,424,208
845,833
386,467
111,792
379,967
183,111 134,437
28,670
SoCal Bay Area Central Valley Central Coast
California New Jobs vs. New Construction
2010-2018
New Jobs Permits
SERIES: Nonfarm Job Growth & New Housing Permits
SOURCE: CA EDD, Construction Industry Research Board
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CALIFORNIA ASSOCIATION OF REALTORS®
And so do the cities, really…(RHNA = Regional Housing Needs Assessment)
page
49
CHULA VISTA, 3,209
KERN COUNTY, 4,888 SAN FRANCISCO,
6,234
RIVERSIDE, 7,173
FRESNO, 7,859SAN JOSE, 9,233
LOS ANGELES, 20,427
SAN DIEGO, 21,977
0
5,000
10,000
15,000
20,000
25,000
0 50 100 150 200 250 300 350 400
Current RHNA Allocations
![Page 50: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/50.jpg)
CALIFORNIA ASSOCIATION OF REALTORS®
Most cities are failing…
page
50
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
WESTM
INSTE
R
RA
NC
HO
ST.
MA
RG
AR
ITA
YO
UN
TVIL
LE
SA
INT
HELE
NA
LOM
ITA
WEST
HO
LLY
WO
OD
MO
NTE
SER
EN
O
SO
LAN
O C
OU
NTY
SH
ASTA
LA
KE
CA
RP
INTE
RIA
MIS
SIO
N V
IEJO
HA
LF M
OO
N B
AY
IMP
ER
IAL
BEA
CH
NO
RW
ALK
PIN
OLE
AR
CA
TA
CU
DA
HY
LAK
EW
OO
D
BELM
ON
T
PA
SO
RO
BLE
S
PA
RA
DIS
E
SA
RA
TOG
A
SA
NTA
BA
RB
AR
A C
OU
NTY
NEV
AD
A C
OU
NTY
MIL
LBR
AE
YU
CC
A V
ALL
EY
HER
CU
LES
SA
N R
AFA
EL
BELL
FLO
WER
OA
KLE
Y
RIV
ER
BA
NK
CU
PER
TIN
O
WO
OD
LAN
D
DA
LY C
ITY
RIC
HM
ON
D
GLE
ND
ALE
STA
NIS
LAU
S C
OU
NTY
WIL
DO
MA
R
IND
IO
FA
IRFIE
LD
SA
N M
ATE
O
SA
NTA
RO
SA
MIL
PIT
AS
SA
N M
AR
CO
S
AN
AH
EIM
FO
NTA
NA
SU
NN
YV
ALE
RO
SEV
ILLE
CH
ULA
VIS
TA
SA
N J
OSE
Normalized RHNA Progress
![Page 51: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/51.jpg)
CALIFORNIA ASSOCIATION OF REALTORS®
In fact, 91% are behind…
page
51
Behind
91%
On
Track
9%
Normalized RHNA Progress
Average: • 28.6% Behind
Worst Performer:• 58.3% Behind
(6-Way Tie, all SD)
Best Performer:• 74.1% Ahead
(Parlier in Fresno
County)
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How It Hurts
California Right Now
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CALIFORNIA ASSOCIATION OF REALTORS®
Prices have grown much faster than incomes
page
54
10.2
4.1
7.5
Avg. 5.0
0
2
4
6
8
10
12
Q1
-90
Q4
-90
Q3
-91
Q2
-92
Q1
-93
Q4
-93
Q3
-94
Q2
-95
Q1
-96
Q4
-96
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
Q3
-09
Q2
-10
Q1
-11
Q4
-11
Q3
-12
Q2
-13
Q1
-14
Q4
-14
Q3
-15
Q2
-16
Q1
-17
Q4
-17
Q3
-18
Q2
-19
California Price/Income Ratio
![Page 55: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/55.jpg)
Minimum Annual Income Required During Affordability Peak vs. Current
page
55
Region 2012 Q1 2019 Q2 % CHG
CA SFH $56,320 $122,960 118.3%
CA
Condo/Townhomes$44,440 $95,960 115.9%
Los Angeles
Metropolitan Area$53,780 $109,090 102.8%
Inland Empire $35,170 $76,760 118.3%
S.F. Bay Area $90,370 $197,970 119.1%
US $32,000 $56,480 76.5%
SERIES: Housing Affordability Index of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
![Page 56: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/56.jpg)
Mortgage payment continued to drop;rates lowest in 34 months
page
56
-7.35%-10%
-5%
0%
5%
10%
15%
20%
Ja
n-1
6
Ma
r-16
Ma
y-1
6
Ju
l-1
6
Se
p-1
6
No
v-1
6
Ja
n-1
7
Ma
r-17
Ma
y-1
7
Ju
l-1
7
Se
p-1
7
No
v-1
7
Ja
n-1
8
Ma
r-18
Ma
y-1
8
Ju
l-1
8
Se
p-1
8
No
v-1
8
Ja
n-1
9
Ma
r-19
Ma
y-1
9
Ju
l-1
9
YTY
% C
hg
.
California Median Price vs. Mortgage Payment
Price Growth Mortgage Pmt Growth
SERIES: Price Growth vs. Mortgage Payment Growth
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
![Page 57: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/57.jpg)
CALIFORNIA ASSOCIATION OF REALTORS®
Buyers aren’t responding like they used to …
page
57
-30
-20
-10
0
10
20
30
40
50
60
70
1/4/2019 2/1/2019 3/1/2019 3/29/2019 4/26/2019 5/24/2019 6/21/2019 7/19/2019
We
ekly
% C
ha
ng
e
Purchase Mortgage Applications
![Page 58: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/58.jpg)
CALIFORNIA ASSOCIATION OF REALTORS®
Why rates aren’tspurring even more sales
page
58
• Home prices at all time highs
• Big down payments
• Inventory is tight
• Market still competitive
• 1st time buyers have limited options
• Tax reform: FTBs and Trade-ups
• Rates aren’t everything
![Page 59: 2020 California Housing Market Forecast...2020 California Housing Market Forecast Leslie Appleton-Young Chief Economist + SVP California Association of REALTORS®](https://reader030.vdocuments.us/reader030/viewer/2022041019/5ece2bc6ee11c142a623d92b/html5/thumbnails/59.jpg)
CALIFORNIA ASSOCIATION OF REALTORS®
California has no money left over
page
59
43.2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Pu
ert
o R
ico
Ne
bra
ska
Wyo
min
g
So
uth
Da
ko
ta
No
rth
Da
ko
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st V
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rolin
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sota
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law
are
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exic
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hig
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uth
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rolin
a
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ois
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ch
use
tts
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w J
ers
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ork
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wa
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Ca
lifo
rnia
Flo
rid
a
Cost Burdened
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Housing affordability peaked at Q2-2012
page
60
California, 1984-2019
CA, 30%
US, 55%
0%
10%
20%
30%
40%
50%
60%
70%
80%
% O
F H
OU
SEH
OLD
S T
HA
T C
AN
BU
Y A
MED
IAN
-PR
ICED
HO
ME Annual Quarterly
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Many simply can’t afford to buy
page
61SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
63%57%
32%
10%
0%
10%
20%
30%
40%
50%
60%
70%2019-Q1: % able to purchase median-priced home
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How It Hurts
California Later
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CALIFORNIA ASSOCIATION OF REALTORS®
Homeownership is not rebounding
page
63
59.9
53.250
55
60
65
70
75
Homeownership Rate
CA U.S.
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CALIFORNIA ASSOCIATION OF REALTORS®
We’re in questionable company now
page
64
53.2
0
10
20
30
40
50
60
70
80
Q2-19 Homeownership Rate
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By 2025: CA majority Renter State
page
65
76.0%
50.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Ha
wth
orn
e
Sa
nta
Mo
nic
a
Ea
st L
os
An
ge
les
Gle
nd
ale
Ing
lew
oo
d
Sa
n F
ran
cis
co
Los
An
ge
les
Be
llflo
we
r
Alh
am
bra
El C
ajo
n
Flo
ren
ce
-Gra
ha
m
Oa
kla
nd
Co
sta
Me
sa
Me
rce
d
Lon
g B
ea
ch
Bu
rba
nk
Ard
en
-Arc
ad
e
Mo
un
tain
Vie
w
Sa
nta
Ba
rba
ra
El M
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
Irvin
e
Tust
in
Sa
n D
ieg
o
Fre
sno
Lod
i
Sa
cra
me
nto
Sa
n B
ern
ard
ino
Esc
on
did
o
2017 California Renter Rate by City
SERIES: Homeownership Rates
SOURCE: U.S. Census Bureau
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CALIFORNIA ASSOCIATION OF REALTORS®
Homeownership still aspirational
page
66
8%
13%
29%27%
23%
0%
10%
20%
30%
Perc
ent
n: 1663
How important is homeownership to you?
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CALIFORNIA ASSOCIATION OF REALTORS®
Population growth slowing
page
67
0.4%0%
2%
4%
6%
8%
10%
12%
19
01
19
06
19
11
19
16
19
21
19
26
19
31
19
36
19
41
19
46
19
51
19
56
19
61
19
66
19
71
19
76
19
81
19
86
19
91
19
96
20
01
20
06
20
11
20
16
California Population Growth
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CALIFORNIA ASSOCIATION OF REALTORS®
NOT our “job creators”
page
68
-33,491 -34,887-37,853
1,678 566
-40,000
-35,000
-30,000
-25,000
-20,000
-15,000
-10,000
-5,000
0
5,000
$25K or Less $25-$50K $50-$100K $100-$200K $200K +
Net Migration by Income
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CALIFORNIA ASSOCIATION OF REALTORS®
Hitting us economically
page
69
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Ja
n-1
0
Ma
y-1
0
Se
p-1
0
Ja
n-1
1
Ma
y-1
1
Se
p-1
1
Ja
n-1
2
Ma
y-1
2
Se
p-1
2
Ja
n-1
3
Ma
y-1
3
Se
p-1
3
Ja
n-1
4
Ma
y-1
4
Se
p-1
4
Ja
n-1
5
Ma
y-1
5
Se
p-1
5
Ja
n-1
6
Ma
y-1
6
Se
p-1
6
Ja
n-1
7
Ma
y-1
7
Se
p-1
7
Ja
n-1
8
Ma
y-1
8
Se
p-1
8
Ja
n-1
9
Ma
y-1
9
CA vs. US Job Growth
CA US
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Losing the workers we need
page
70-15,865
-13,220
-9,526
-8,019
-7,854
-7,504
-5,646
-5,103
-3,510
-2,685
-2,474
-2,403
-2,039
-1,938
-523
-167
639
869
1,259
1,503
3,481
3,604
3,900
4,067
Office & Administrative Support
Transportation & Material Moving
Sales & Related
Building & Grounds Cleaning & Maintenance
Construction & Extraction
Production
Management
Food Preparation & Serving Related
Installation, Maintenance, & Repair
Personal Care & Service
Educational Instruction & Library
Protective Service
Unemployed
Healthcare Support
Community & Social Service
Farming, Fishing, & Forestry
Life, Physical, & Social Science
Arts, Design, Entertainment, Sports, & Media
Legal
Healthcare Practitioners & Technical
Business & Financial Operations
Architecture & Engineering
Military Specific
Computer & Mathematical
Net Domestic Migration by Occupation
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Conclusion:
A downshift driven by
supply & affordability
constraints
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Annual Housing
Market Survey
2019: A shift is afoot
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27%
0%
10%
20%
30%
40%
50%
60%% of Sales above Asking Price
Long Run Average = 20%
Market not as Competitive as Prior Years
page
73
0
2
4
6
8
10
12
14
16
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%Med. Price Discount
Med. Weeks on MLS
1.3%,
2.4 wks.
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price Discount & Weeks on Market
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Less than Half of Sales Received Multiple Offers
page
74
48%
3.7
0
1
2
3
4
5
6
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
% with Multiple Offers# of Multiple offers (Average)
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Record Home Prices Pushed up Down Payments
page
75
$100,000
19.8%
0%
5%
10%
15%
20%
25%
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Median Down Payment
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Housing Affordability Still the Main Reason for Outmigration
page
76
21%
20%
14%
9%
8%
6%
6%
4%
1%
12%
28%
16%
12%
8%
7%
5%
5%
5%
1%
15%
0% 5% 10% 15% 20% 25% 30%
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
2019 2018
All BuyersQ. What was the primary reason
for changing county?
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Housing Affordability Has Been a Consistent Issue for First-Time Buyers over the Last Few Years
page
77
26%
49%
32%
45%49% 48%
0%
10%
20%
30%
40%
50%
60%
2014 2015 2016 2017 2018 2019
% of First-Time Buyers who Changed County
Because of Housing Affordability
Q. What was the primary reason for changing county?
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Share of First Time Buyers Dipped after Reaching Highest Level since 2012
page
78
32.0%
0%
10%
20%
30%
40%
50%
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
% First-Time Home Buyers Long Run Average
Long Run Average = 37.2%
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
1
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Investor Buyers Share Dropped to the Lowest since 2008; Fewer Flippers in the Market
page
79
11.8%
4.7%
0%
5%
10%
15%
20%
25%
30%
Vacation/Second Home
Investment/Rental
Property
% to Total Sales
Flip
Rent
2014: 30%
2015: 26%
2016: 20%
2017: 24%
2018: 26%
2019: 18%
2014: 70%
2015: 74%
2016: 80%
2017: 76%
2018: 74%
2019: 82%
Vs.
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Investor Buyers Have the Financial Advantage over First-Time Buyers
page
80
First-time Buyers Investor Buyers
Median Sales Price $516,500 $495,000
Median Square Footage 1,500 1,400
Median Household Income $90,000 $200,000
Median Downpayment (in $$) $35,500 $100,000
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Fewer Investors Selling Their properties; 4 out of 5 Are Landlords
page
81
20% 19%
0%
5%
10%
15%
20%
25%
30%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sellers Who Owned the Property
as an InvestmentLong Run Average = 20%
Q. How was the property occupied?
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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International Buyers Bounced back from 2018 Low
page
82
7.8%
6.0%5.3%
5.7% 5.8%
8.0%
6.2%
3.7%
2.9% 3.1%2.7%
3.8%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Sellers staying put: owned for a median of 11 years
page
83
11
0
2
4
6
8
10
12
14Years Owned Home Before Selling
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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…Especially for older generations (with consumer survey definition)
page
84
4
8
15
25
0 10 20 30
Millennials
Gen X's
Baby Boomers
Silent Generations
Years Owned Home Before Selling
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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More Sellers Continue to Move out of California; Highest since 2005
page
85
2005 2009 2015 2019
Within the same county 38% 47% 44% 35%
In another county in California 23% 21% 20% 20%
In another state 31% 19% 22% 30%
Out of US 1% 2% 1% 0%
Don't Know/Not sure 7% 12% 13% 14%
Total 100% 100% 100% 100%
Location of Seller’s New Home
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Share of cash buyers lowest in 10 years
page
86
19.7%
0%
5%
10%
15%
20%
25%
30%
35%
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
% of All Cash Sales
• One-fifth of buyers paid
with all cash
• The share of all cash buyers
dipped below 20% for the
1st time since 2009
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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Where is
everyone going?
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CALIFORNIA ASSOCIATION OF REALTORS®
1841: Westward Ho!
page
88
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CALIFORNIA ASSOCIATION OF REALTORS®
2010: Eastward Ho!
page
89
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CALIFORNIA ASSOCIATION OF REALTORS®
~750k people have left since 2010
page
90
-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
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CALIFORNIA ASSOCIATION OF REALTORS®
Step 1: SF Bay to Cheaper Markets
page
91
-8,559 -9,005
-11,659-12,408
-13,053-15,244
-17,697
-25,843
-30,268
-42,777
Merced Solano Washington Stanislaus Santa Cruz Texas Nevada (ST) Oregon San Joaquin Sacramento
MSA
Core San Francisco Bay Area Out Migration (2010-2016)
Another StateElsewhere in CA
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CALIFORNIA ASSOCIATION OF REALTORS®
Step 2: Pricing Prior Residents Out of State
page
92
-2,260-2,715 -2,917
-3,596-4,002 -4,029 -4,179
-5,020 -5,127
-8,166
Kentucky Santa Cruz Oklahoma Colorado Sutter &
Yuba
San Luis
Obispo
San
Bernardino
Oregon Idaho Nevada (ST)
Sacramento MSA Out Migration
(2010-2016)
Elsewhere in CAAnother State
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CALIFORNIA ASSOCIATION OF REALTORS®
Step 1: SoCal coastal to cheaper markets
page
93
-19,854-21,935
-34,217 -40,361-42,503
-48,609-65,534
-79,132
-101,914
-124,148
Coastal Southern California Out Migration (2010-2016)
Elsewhere in CA
Another State
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CALIFORNIA ASSOCIATION OF REALTORS®
Step 2: pricing prior residents out of state
page
94
-3,575-5,117
-7,732 -7,970 -8,344
-10,604-10,680
-10,699
-16,374-17,859
Inland Empire Out Migration
(2010-2016)
Elsewhere in CA
Another State
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Best performing cities are
everywhere Milken Institute Annual Report 2018
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Top 10 best performing large cities
page
96
Provo-Orem,
UT MSA
Change: Steady
San Jose-
Sunnyvale-Santa
Clara, CA MSA
Change: +9
Austin-Round
Rock, TX MSA
Change: +6
San Francisco-
Redwood City-
South SF, CA MD
Change: Steady
Dallas-Plano-
Irving, TX MD
Change: -2
1 2 3 4 5
6 7 8 9 10
Raleigh, NC
MSA
Change: -4
Orlando-
Kissimmee-
Sanford, FL MSA
Change: Steady
Seattle
Bellevue-
Everett, WA MD
Change: +9
Fort Collins,
CO MSA
Change: -4
Salt Lake City,
UT MSA
Change: Steady
SOURCE: Milken Institute
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Top 10 best performing small cities
page
97
1 2 3 4 5
6 7 8 9 10
Gainseville,
GA MSA
Change: Steady
Coeur
d’Alene, ID
MSA
Change: +24
Medford, OR
MSA
Change: +21
Albany, OR
MSA
Change: +13
Logan, UT-ID
MSA
Change: +14
Bend-
Redmond,
OR MSA
Change: Steady
St. George,
UT MSA
Change: Steady
Elkhart-
Goshen, IN
MSA
Change: +2
Athens-Clark
County, GA
MSA
Change: +34
San Rafael,
CA MSA
Change: -2
SOURCE: Milken Institute
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35
35
35
36
36
48
49
52
54
56
Trenton, NJ MSA
Tallahassee, FL MSA
Albuquerque, NM MSA
Kennewick-Richland, WA MSA
Scranton-Wilkes-Barre-Hazleton, PA MSA
Myrtle Beach-Conway-North Myrtle Beach, SC-…
Lansing-East Lansing, MI MSA
Tucson, AZ MSA
Norwich-New London, CT MSA
Merced, CA MSA
Biggest gainers 2017-2018
page
98
38
123
102
89
51
85
148
66
82
125
Metr
op
olita
n S
tati
sti
cal A
rea (
MS
A)/
Metr
op
olita
n D
ivis
ion
(M
D)
2018 Rank Change
SOURCE: Milken Institute
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Forecast
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2019 Forecast Report Card
Q. How did your client find and select you to represent them?
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® page
100
SFH Resales (000s)
% Change
Median Price ($000s)
% Change
30-Yr FRM
Housing Affordability Index
U.S. Gross Domestic Product
2018
Actual
402.8
-5.2%
$570.0
6.0%
4.5%
28%
2.9%
2019
Forecast
396.8
-3.3%
$593.4
3.1%
5.2%
25%
2.4%
2019
Projected
390.2
-3.1%
$593.2
4.1%
3.9%
32%
2.2%
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CALIFORNIA ASSOCIATION OF REALTORS®
2020 California Housing Market Forecast
2015 2016 2017 2018 2019p 2020f
SFH Resales (000s) 409.4 417.7 424.9 402.8 390.2 393.5
% Change 7.0% 2.0% 1.7% -5.2% -3.1% 0.8%
Median Price ($000s) $476.3 $502.3 $537.9 $570.0 $593.2 $607.9
% Change 6.6% 5.4% 7.1% 6.0% 4.1% 2.5%
Housing Affordability
Index31% 31% 29% 28% 32% 32%
30-Yr FRM 3.9% 3.6% 4.0% 4.5% 3.9% 3.7%
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
page
101
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Q: Thanks for the forecast
but what do I DO NOW?
A: You need a plan.
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CALIFORNIA ASSOCIATION OF REALTORS®
2020 Success Strategies
page
103
• Listings need to be priced right – work on your powers of
persuasion & always use data not opinion
• People are moving within and outside of CA – work and
expand your relocation network
• Financial Literacy is a scarce commodity – become an expert
and share your knowledge. Show interested buyers the #’s
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CALIFORNIA ASSOCIATION OF REALTORS®
2020 Success Strategies
page
104
• Rates are at historic lows & some of your past clients would
benefit from a refinance – keep in touch
• Listings need to be beautiful – the “HGTV Effect” is REAL. Buyer
expectations are high especially for millennials. If your
company has a concierge program – use it! Stage EVERYTHING.
• Know what people are looking for – smart homes, home offices,
pet amenities etc.
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CALIFORNIA ASSOCIATION OF REALTORS®
Find Your Niche
page
105
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In Closing
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How Client Found Their Agent? We asked You.77% Found You Through a Relationship
page
107
Q. How did your client find and select you to represent them?
20.8%20.8%
14.1%12.0%
7.5%4.6%
3.2%2.5%
1.6%
1.0%
0.9%
0.5%
0.2%7.5%
0% 5% 10% 15% 20% 25%
Represented Them in Previous Home Transaction
Client was Friend/Relative/NeighborReferral from a client
Recommendations of Friends
Refferal from Business AssociatesOpen House
Web page/Internet
Door-to-Door FarmingRelocation Referral
Direct Mail Marketing
Walk in /Floor CallListing Agent for Home Purchased
Yard SignsTelephone Marketing
Social MediaMobile App
Print Ads/Newspaper & MagazineOther
SERIES: 2019 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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CALIFORNIA ASSOCIATION OF REALTORS®
2020 Broker Conference - Opportunities
page
108
• Your brand is your promise – Kofi Nartey
• Be fierce about your data and market knowledge – Steve Murray
• Does your calendar match your priorities? - Ryan Gorman
• We get what we focus on – Tami Bonnell
• Relationships are a marathon not a sprint – Georgia Perez
• Following your why leads you to your LOVE – Taunee English
• Stars will win (and I see a room full of stars) – Joel Singer
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Thank You