car 2011 market forecast

8/3/2019 CAR 2011 Market Forecast

1/118


2/118

Overview

US and California Economies

California Housing Market

Regional & Local Markets

2011 Annual Market Survey2012 Housing Market Forecast


3/118

U.S. Economic Outlook


4/118


5/118

SovereignDebtCrisis inEuroZone

Oil Price Spikes

2011: A Year of Wild Cards

Arab Uprising

PoliticalChangeonCapitolHill

Debt LimitCeiling &Downgradeof US Debt

StockMarketVolatility


6/118

Gross Domestic Product: Stall Speed

2010: 2.8%; 2011 Q1: 0.4% Q2: 1.0%ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $

-8%

-7%

-6%

-5%

-4%-3%

-2%

-1%

0%

1%

2%

3%4%

5%

6%

7%

8%

2

000

2

002

2

004

2

006

2

008

2

010

Q2

-10

Q4

-10

Q2

-11

ANNUAL QTRLY


7/118

SOURCE: US Dept of Commerce, Bureau of Economic Analysis

Components of GDP:Consumer Spending Weak; Govt Sector Down

Quarterly Percent Change

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Consumption Fixed Nonres.

Investment

Net Exports Government

Q3 2010

Q4 2010

Q1 2011

Q2 2011


8/118

QUARTERLY PERCENT CHANGE

Consumers Pulling BackHome Equity & Reverse Wealth Effect

Consumer Spending 2011 Q1: 2.7% Q2: 0.4%

SOURCE: US Dept of Commerce, Bureau of Economic Analysis

-4%

-2%

0%

2%

4%

6%

8%

1Q-2000

1Q-2001

1Q-2002

1Q-2003

1Q-2004

1Q-2005

1Q-2006

1Q-2007

1Q-2008

1Q-2009

1Q-2010

1Q-2011


9/118

Unemployment Stubbornly HighAugust 2011

SOURCE: CA Employment Development Division

0%

2%

4%

6%

8%

10%

12%

14%

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

CA US

California (12.1%) vs. United States (9.1%)


10/118

U.S. Job Growth: Flat in August

SOURCE: US Dept of Labor, Bureau of Labor Statistics

Month-to-MonthChanges

Recession Job Losses: 8.4 million

Since Jan10: +1.8 million

-900,000

-800,000

-700,000-600,000

-500,000

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

500,000

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11


11/118

California Job Growth Faltering


Month-to-Month ChangesRecession Job Losses: 1.3 million

Since Jan10: +188,100

-160000

-140000

-120000

-100000

-80000

-60000

-40000

-20000

0

20000

40000

60000

80000

100000

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11


12/118

Where are Californias Jobs?

Employment Trends:Construction & Financial Sectors Biggest Losers

SOURCE: California Association of REALTORS

Industry 2005 Jul-11Year to

Date

Mining and Logging 23,600 27,600 4,000

Construction 905,300 567,300 -338,000

Manufacturing 1,502,600 1,257,600 -245,000Trade, Transportation & Utilities 2,822,100 2,641,500 -180,600

Information 473,600 455,400 -18,200

Financial Activities 920,300 755,800 -164,500

Professional & Business Services 2,160,700 2,136,200 -24,500

Educational & Health Services 1,593,400 1,837,000 243,600

Leisure & Hospitality 1,475,200 1,531,600 56,400

Other Services 505,500 484,500 -21,000

Government 2,420,200 2,380,200 -40,000

TOTAL 14,802,500 14,074,700 -727,800


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Nonfarm EmploymentSacramento-Arden Arcade-Roseville MSA, August 2011: Up 0.3% YTY

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11


Y-T-Y PERCENT CHANGE


14/118

Unemployment Rate

2%

4%

6%

8%

10%

12%

14%

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Sacramento Metropolitan Area, August 2011 11.9%



15/118

New Housing PermitsSacramento MSA August 2011: 255 Units, Down 12.7% YTD

0

500

1000

1500

2000

2500

3000

Jan-88

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Single Family Multi-Family

SOURCE: Construction Industry Research Board


16/118

Unemployment RateSacramento County August 2011

SOURCE: CA Employment Development Department

CCD Census County DivisionCDP Census Designated Place

Area Name Labor Force Rate

Arden Arcade CDP 55,800 12.3%

Carmichael CDP 28,800 9.6%

Citrus Heights city 49,500 8.7%

Elk Grove CDP 34,700 10.1%

Fair Oaks CDP 16,800 6.7%

Florin CDP 12,700 19.1%Folsom city 26,500 5.7%

Foothill Farms CDP 9,600 16.8%

Galt city 10,800 19.8%

Gold River CDP 4,700 2.4%

Isleton city 400 16.2%

La Riviera CDP 6,800 7.4%Laguna CDP 20,100 6.8%


17/118

Unemployment RateSacramento County August 2011

SOURCE: CA Employment Development Department

CCD Census County DivisionCDP Census Designated Place

Area Name Labor Force Rate

Laguna West Lakeside CD 5,200 8.9%

North Highlands CDP 22,500 19.0%

Orangevale CDP 15,600 8.5%

Parkway South Sacramento 16,000 21.4%

Rancho Cordova City 30,600 14.1%

Rancho Murieta CDP 2,200 4.1%Rio Linda CDP 5,800 19.2%

Rosemont CDP 13,700 10.4%

Sacramento city 213,600 14.4%

Vineyard CDP 5,800 6.4%

Walnut Grove CDP 500 29.3%

Wilton CDP 2,700 8.5%Sacramento County 671,200 12.4%


18/118

INDEX, 100=1985

Consumer Confidence SlippingMarginal Gains in September

September 2011: 45.4

20

40

60

80

100

120

140

160

Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11


19/118

Source: National Federation of Independent Business

Crisis of Confidence:Small Business Optimism Down


20/118

Consumer Prices Low but Heading Higher

CPI August 2011: All Items +3.8% YTY; Core +2.0% YTY

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

All Items

Core

PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984


21/118

Monetary Policy


22/118

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2009.01

2009.04

2009.07

2009.10

2010.01

2010.04

2010.07

2010.10

2011.01

2011.04

2011.07

8.4.11

8.25.11

9.15.11

FRM ARM

MONTHLY WEEKLY

Mortgage Rates @ Historical LowsDebt Down Grade Ignited Flight to Quality


23/118

SOURCE: Federal Home Loan Mortgage Corporation

Classic Liquidity Trap: Consumers DeleveragingLow Rates and Low Borrowing

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

FRM

ARM

Federal Funds


24/118

Fiscal Policy


25/118

US Deficit Highest in Decades2010: 11% of GDP (Revenues Expenses)

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Deficit as a % of GDP

Source: US Treasury, BEA, compiled by C.A.R.

Note: Positive = Surplus


26/118

US Debt Jumped as GovernmentResponded to Financial Crisis

2010: 93% of GDP

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%60.0%

70.0%

80.0%

90.0%

100.0%

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Debt as a % of GDP

Source: US Treasury, compiled by C.A.R.


27/118

Obama Jobs Proposal

What:$450 Billion stimulus: Tax cuts ($250B) and infrastructure

spending ($200B)

Why:

Economy is stalled/Avoid double-dip

Zero job growth in August/high unemployment

Stabilize confidence: consumer, business, investor

How:

Increase taxes on the richEntitlement Reform

Tax Reform


28/118

Housing


29/118


California vs. U.S. Sales

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

US Home Sales CA Home Sales


30/118


California vs. U.S. Median Price

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

US Median Price CA Median Price


31/118

Housing Affordability: Records Highs

California Vs. U.S.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q12000

Q32000

Q12001

Q32001

Q12002

Q32002

Q12003

Q32003

Q12004

Q32004

Q12005

Q32005

Q12006

Q32006

Q12007

Q32007

Q12008

Q32008

Q12009

Q32009

Q12010

Q32010

Q12011

CA US

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

% OF HOUSEHOLDS THAT CAN BUY


32/118

CA Underwater Mortgages

SOURCE: CoreLogic

30.2%

4.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Q4-2009

Q1-2010

Q2-2010

Q3-2010

Q4-2010

Q1-2011

Q2-2011

Negative Equity Share in CA Near Negative Equity Share in CA

M O i i i 1990 2010


33/118

0

100

200

300

400

500

600

700

800

900

Q1/90

Q1/91

Q1/92

Q1/93

Q1/94

Q1/95

Q1/96

Q1/97

Q1/98

Q1/99

Q1/00

Q1/01

Q1/02

Q1/03

Q1/04

Q1/05

Q1/06

Q1/07

Q1/08

Q1/09

Q1/10

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%Refinance Originations (Bil $)Purchase Originations (Bil $)Fixed Rate Mortgage

ORIGINATION (BIL $) 30-YR FIXED RATE MORTGAGE

Mortgage Originations: 1990-2010

Source: Mortgage Bankers Association of America

Refinance vs. Purchase


34/118

What Happened?


35/118


36/118

1872 W. Admiral, 92801

3 bd, 2.5 ba, built in 1982Purchased in Sept 2005for $594,000 with 30%down.In April 2006, added asecond for $57,000.In Oct 2006, refinancedthe second into a newsecond for $100,000.Defaulted in 2010Zestimate of current value= $364,000.


37/118

1572 W. Orangewood, 92802

3 bd, 2 ba, 2,016 sq ftbuilt in 1977.Purchased in June 2003for $455,000 with 30%down.March 2004: added asecond for $75,000;added a third for $90,500;added a fourth for$80,000.Within one year ofpurchase, the property had$565,000 in debt on it!Defaulted in 2010.Zestimate of current value= $442,000.


38/118

8871 Regal, 92804

3 bd, 2 ba, 1,314 sq ftbuilt in 1956.Purchased as REO in2007 for $417,000 withzero down.Had previously sold for$568,000 in 2005.Defaulted in 2010.Zestimate of currentvalue = $367,500.


39/118

2414 E. Underhill, 92806

3 bd, 2 ba, 1,459 sq ftbuilt in 1957.Purchased for $640,000in July 2006 withpiggyback financing:$500,000 first and$140,000 second, i.e.zero down.Defaulted in 2010.Zestimate of currentvalue = $387,000.


40/118

Conclusions

Excessive borrowing against home equity is theuntold part of the foreclosure story. House Prices, Home Equity-Based Borrowing, and

the U.S. Household Leverage Crisis by Mian andSufi: American Economic Review : 39% of new defaults from 2006 to 2008 attributable to home equity borrowing


41/118

Understanding theFinancial Crisis


42/118

Federal Issues Critical Concerns

High-cost Loan Limit - expires 10/1/11

Future of Fannie and Freddie in flux - Increase

guarantee fee likelyFHA targeted for market share drop

Tax Reform on the horizon MID?

QRM (Qualified Residential Mortgage)

20% Down Is the future of the 30 year

mortgage in doubt?


43/118

U.S. Economic Outlook

2005 2006 2007 2008 2009 2010 2011f 2012f

US GDP 3.1% 2.7% 2.0% 0.0% -2.6% 2.9% 1.7% 2.0%

Nonfarm Job

Growth 1.7% 1.8% 1.1% -0.6% -4.4% -0.7% 1.0% 0.9%

Unemployment 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 9.0% 8.9%

CPI 3.4% 3.2% 2.8% 3.8% -0.4% 1.6% 3.2% 2.3%

Real Disposable

Income, %

Change

1.3% 4.0% 2.2% 0.5% 0.9% 1.4% 1.7% 1.5%


Forecast Date: September 2011


44/118

California Economic Outlook

2005 2006 2007 2008 2009 2010 2011f 2012f

Nonfarm Job

Growth1.8% 1.7% 0.8% -1.3% -6.0% -1.4% 1.5% 2.1%

Unemployment

Rate 5.4% 4.9% 5.4% 7.2% 11.4% 12.4% 12.0% 11.2%

Population

Growth1.2% 1.1% 1.1% 1.2% 1.1% 0.9% 0.9% 0.9%

Real Disposable

Income, %Change

1.3% 3.4% 1.5% 0.1% -2.2% 1.6% 1.5% 2.0%




45/118

California Housing Market


46/118

California Sales of Existing Homesand Median Price

Housing Cycle Comparisons 1970- 2011UNITS/MEDIAN PRICE $


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Sales of Existing Detached Homes Median Price

-61% -25%

-44%


47/118

Dollar Volume of SalesDown 5% in 2011, Up 3% in 2012

$129

$327

$150 $143 $147

26%

16%

-19%

-27%

-22%

-2% -1.0%-5%

3%

24%

37%

2%

$0

$50

$100

$150

$200

$250

$300

$350

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

$ Volume of Sales Percent Change % Change$ in Billion



48/118

Sales of Existing Detached Homes andPacific West Consumer Confidence

California, August 2011 Sales: 497,390 Units, Down 0.4% YTD, Up 10.2% YTY

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

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


49/118

Median Price of ExistingDetached Homes

P: May-07

$594,530

T: Feb-09

$245,230

-59% frompeak

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

California, August 2011: $297,060, Down 7.4% YTY


U ld I t I d


50/118

Unsold Inventory Index

California, August 2011: 5.0 Months

0

2

4

6

8

10

12

14

16

18

20

Jan-88

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11


MONTHS


51/118

Price Range (Thousand) Aug-10 Jul-11 Aug-11

$1,000K+ 11.1 9.2 9.1

$750-1000K 7.0 6.9 6.2

$500-750K 6.4 6.3 5.6

$300-500K 5.7 5.6 5.2

$0-300K 4.8 5.1 4.6

Unsold Inventory Index (Months)



52/118

Unsold Inventory By Price Range

Jan 2005 August 2011

0

5

10

15

20

25

30

Jan-05

Apr-05

Jul-05

Oct-05

Jan-06

Apr-06

Jul-06

Oct-06

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

$0 - 300K

$300-500K

$500-750K

$750-1000K

$1,000K+-

All


MONTHS


53/118

Market Breakdown:

Equity v. DistressedSales


54/118


24.7%

19.3%

44.5%

25.2%

17.5%

42.9%

24.4%

18.9%

43.7%

0%

20%

40%

60%

REOs Short Sales Distressed Sales

Aug-10 Jul-11 Aug-11

Share of Distressed Sales to Total Sales


55/118

Tight Supply of Inventoryfor REO Sales

0

12

3

4

5

67

8

9

Equity Sales REO Sales Short Sales

5.7

2.6

8.1

Aug-11UnsoldInventory Index(Months)


56/118


REO & Short Sales: Central Valley(Percent of Total Sales)

0%

20%

40%

60%

80%

100%

MaderaMerced

San BenitoSacramento

Kern

67%

36%37%

38% 41%

7%

23% 30%24% 19%

Aug 2011

Short Sales

REO Sales


57/118


58/118


REO & Short Sales: SouthernCalifornia(Percent of Total Sales)

0%

20%

40%

60%

80%

100%

LosAngeles Orange Riverside

SanBernardino San Diego

20%

12%35% 49%

19%

24%

20%

26% 14%

8%

Aug 2011

Short Sales

REO Sales


59/118


REO & Short Sales: Rest of California(Percent of Total Sales)

0%

20%

40%

60%

80%

100%

48%

34%25%

57%

36%32%

15%

39% 51%

11%

8%

7%

7%

25%

13%

20%

9%5%

Aug 2011

Short Sales

REOs


60/118


61/118


62/118

REO: -12.2% YTD 3rd

Party: -4.1% YTD Cancel: -19.7% YTD

0

5,000

10,000

15,000

20,000

25,000

30,000

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

REOs Sold to 3rd Party Cancellations

SOURCE: ForeclosureRadar.com

6 Month Average:

REO: 10,8803rd Party: 3,616

Cancelled: 14,447

CA Foreclosure OutcomesAugust 2011

CA Foreclosure Inventories


63/118

CA Foreclosure InventoriesAugust 2011

Preforeclosure: -17.5% YTD Schedule for Sale: -17.8% YTD

Bank Owned: 7.0% YTD

0

50,000

100,000

150,000

200,000

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

Preforeclosure Scheduled for Sale Bank Owned

SOURCE: ForeclosureRadar.com

6 Month Average:

Preforeclosure: 115,742Schedule for Sale:

105,138

Bank Owned: 108,635

Sacramento


64/118

Preforeclosure: 2,667 Auction: 1,792 Bank Owned: 1,281

Source: ForeclosureRadar.com as of 10/03/11

Sacramento


65/118



Sacramento


66/118



Sacramento


67/118



RosevilleP f l A i B k O d


68/118

Preforeclosure: 394 Auction: 322 Bank Owned: 162


Citrus HeightsP f l 324 A i 208 B k O d 149


69/118



OrangevaleP f l 112 A ti 94 B k O d 67


70/118




71/118

Regional Housing

Markets

Homes Sales and Consumer Confidence


72/118

Sacramento County, August 2011: 1,707 Units, Up 5.4% YTD, Up 14.3% YTY

0

200400

600

800

1000

1200

1400

1600

1800

2000

2200

24002600

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

0

20

40

60

80

100

120

140

160

Sales Consumer ConfidenceINDEXUNITS

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS; The Conference BoardHome sales: Existing Single Family Detached

Sales of Existing Detached HomesS C 2010 17 420 U i D 12 8%


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Sacramento County, 2010: 17,420 Units, Down 12.8%YTY

UNITS


0

5,000

10,000

15,000

20,000

25,000

1989

1992

1995

1998

2001

2004

2007

2010 0

500

1,000

1,500

2,000

2,500

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

2008

2009

2010

2011

ANNUAL MONTHLY

Median Price of Existing Detached Homes


74/118

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Sacramento County, August 2011: $167,040, Down 10.6% YTY


Median Price Annual Comparison


75/118

Sacramento County, 2010: $184,170, Up 2.0% YTY


$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

1989

1992

1995

1998

2001

2004

2007

2010

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

2008

2009

2010

2011

ANNUAL MONTHLY

Median Home Sales PriceS t C t


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Sacramento County

SOURCE: DataQuick Information Systems. The price statistics are derived fromall types of home sales -- new and existing, condos and single-family.

Aug-10 Aug-11Yearly %

Change

ANTELOPE $176,500 $160,000 -9.4%

CARMICHAEL $240,000 $187,100 -22.0%

CITRUS HEIGHTS $165,000 $138,000 -16.4%ELK GROVE $230,000 $211,500 -8.0%

ELVERTA $111,000 $131,000 18.0%

FAIR OAKS $260,000 $219,000 -15.8%

FOLSOM $330,000 $284,000 -13.9%

GALT $155,000 $135,250 -12.7%

Median Home Sales PriceS t C t


77/118

Sacramento County

SOURCE: DataQuick Information Systems. The price statistics are derived fromall types of home sales -- new and existing, condos and single-family.

Aug-10 Aug-11 Yearly %Change

MATHER $182,500 $160,500 -12.1%

NORTH HIGHLANDS $90,000 $80,000 -11.1%

ORANGEVALE $206,500 $177,000 -14.3%

RANCHO CORDOVA $211,250 $195,000 -7.7%

RIO LINDA $151,000 $114,000 -24.5%

SACRAMENTO $139,000 $131,500 -5.4%

SLOUGHHOUSE $214,000 $340,000 58.9%

WILTON $444,500 $330,000 -25.8%

SACRAMENTO COUNTY $172,000 $159,000 -7.6%

Unsold Inventory IndexS t C t A t 2011 2 3 M th


78/118

Sacramento County, August 2011: 2.3 Months

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

MONTHS


Median Time on the MarketSacramento A g st 2011 38 6 Da s


79/118

Sacramento, August 2011: 38.6 Days

0

10

20

30

40

50

60

70

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11


Asking Rents for Class A&B ApartmentsSacramento MSA 2011 Q2: $952 Up 2 6% YTY


80/118

Sacramento MSA, 2011 Q2: $952, Up 2.6% 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

Q3/09

Q2/10

Q1/11

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS;

REALFACTS

Vacancy Rates for Class A&B ApartmentsSacramento MSA 2011 Q2: 6 4%


81/118

Sacramento MSA, 2011 Q2: 6.4%

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS; REALFACTS

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

1990

1992

1994

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

Q1/09

Q3/09

Q1/10

Q3/10

Q1/11

VACANCY RATE


82/118

Sacramento

Sales of Single Family Homes


83/118

g ySacramento, August 2011: 620 Units

, Up 20.6% MTM, Up 15.9% YTY

SOURCE: SACRAMENTO ASSOCIATION of REALTORS

0

100

200

300

400

500

600

700

Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11

Median Price of SF Homes


84/118

Sacramento, August 2011: $131,000

Down 3.0% MTM, Down 5.8% YTY

$0

$50,000

$100,000

$150,000

$200,000




85/118

Roseville



86/118

g yRoseville, August 2011: 231 Units

, Up 40.9% MTM, Up 33.5% YTY

0

50

100

150

200

250





87/118

Roseville, August 2011: $251,000

Up 3.8% MTM, Down 6.0% YTY

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000




88/118

Citrus Heights



89/118

Citrus Heights, August 2011: 102 Units

Down 3.8% MTM, Up 13.3% YTY

0

20

40

60

80

100

120

140





90/118

Citrus Heights, August 2011: $140,050


$0

$50,000

$100,000

$150,000

$200,000




91/118

Orangevale



92/118

Orangevale, August 2011: 43 Units,

Up 19.4% MTM, Up 7.5% YTY

0

10

20

30

40

50

60





93/118

Orangevale, August 2011: $179,000,


$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000




94/118

2011 Annual Housing

Market Survey

2 in 5 Homes Sold Were


95/118

20% 20%

59%

0%

20%

40%

60%

REOs Short Sales Equity Sales

2008 2009 2010 2011

Q. Was the property purchased/sold as a

foreclosure, REO, short sale, or none of the above?

Distressed Properties


96/118

Equity vs. REO vs. Short Sales

Equity Sales REO Sales Short SalesShare of Total Sales 58.7% 19.7% 20.2%

Median Home Price $431,000 $240,000 $287,000

Square Footage 1,783 1,500 1,600

Price / SF $250 $112 $175

Sales-to-List Price Ratio 95.9% 98.0% 95.9%

% of Sales With Multiple Offers 35.2% 58.3% 57.5%

Avg. Number of Offers 3.0 3.0 3.6

% of All Cash Sales 25.5% 34.0% 23.3%

Days on MLS 67 50 141

Days in Escrow 35 35 45

1 in 3 Sellers Sold Because They


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1 in 3 Sellers Sold Because TheyWere in Distress

0%

5%

10%

15%

20%

25%

30%

35%

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

30%Sold due to foreclosure/Short sale/Default

Q. What was the single most important reason for

selling/buying the property?


98/118

Sellers with a Net Cash Loss

21.8%

0%

5%

10%

15%20%

25%

30%

35%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Q. What was the net cash gain or net loss to

the seller as a result of this sale?

Long Run Average = 11.2%


99/118

Median Price Discount &


100/118

0%

1%

2%

3%

4%5%

6%

7%

8%

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

0

2

4

6

810

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?

3.9%, 10.5 weeks

Weeks On Market


101/118

Multiple Offers

0%

10%

20%

30%

40%

50%

60%

2000 2002 2004 2006 2008 2010

0

1

2

3

4

5

6

%with Mult ip le Offers # of Mult ip le offers (Average)


102/118

Proportion of Sellers Planning toRepurchase

0%

10%

20%

30%

40%

50%

60%

70%

80%

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

Q. Is the seller planning on purchasing another home?

Reasons Sellers Not Planning to


103/118

gBuy Another Home

Q. Why is the seller not planning to purchase another home?

40.0%

2.7%

4.7%

4.9%

5.7%

10.9%

11.4%

19.8%

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

Seller is a lender/bank

Seller prefers to have less financial obligation

Poor credit background

Lack of cash for down payment

Out of work/unemployment

Decide to live with family/friends

Waiting for market to bottom

Other

Reasons For Selling


104/118

All Home Sellers

0% 5% 10% 15% 20% 25% 30% 35%

Foreclosure/Short

Sale/Default

Change in Family Status

Retirement/Move to

Retirement Community

Investment/ TaxConsderations

Desired Better Location

Desired Smaller Home

Changed Jobs

Desired Larger Home

Other

Q. What was the single most important reason for selling/buying the property?

C h S l th Ri


105/118

Cash Sales on the Rise

0%

5%

10%

15%20%

25%

30%

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

% of All Sales

I t t & S d/


106/118

Investments & Second/Vacation Homes

0%

5%

10%

15%

20%

25%

17%

7%

Investment/Rental Property Vacation/Second Home

F i B


107/118

Foreign Buyers

8%

5%

6%6%

0%

2%

4%

6%

8%

10%

2008 2009 2010 2011

% of Foreign Buyers

Q. Was the buyer a foreign buyer?

Years Owned Home Before Selling


108/118

7.06.0

0

2

4

6

8

10

12

14

All Sellers Second Home and Investment Home Sellers

Years Owned Home Before Selling

(All Sellers and Second Home/Investment Home Sellers


109/118

California Housing

Market Forecast


110/118

Forecast Progress Report

2010

Projected

October

2010

2010 Actual

2011

Forecast

October

2010

2011

Projected

SFH Resales(000s)

492.0 491.5 502.0 491.1

% Change -10.0% -10.1% 2.0% -0.1%

Median Price

($000s)$306.5 $303.1 $312.5 $291.0

% Change 11.5% 10.2% 2.0% -4.0%

Source: CALIFORNIA ASSOCIATION OF REALTORS

Forecast Date: September 2011 vs October 2010

C lif i H i M k t O tl k


111/118

California Housing Market Outlook

2005 2006 2007 2008 2009 2010 2011f 2012f

SFH Resales

(000s)625.0 477.5 346.9 441.8 546.9 491.5 491.1 496.2

% Change 0.03% -23.6% -27.3% 27.3% 23.8% -10.1% -0.1% 1.0%

MedianPrice

($000s)$522.7 $556.4 $560.3 $348.5 $275.0 $303.1 $291.0 $296.0

% Change 16.0% 6.5% 0.7% -37.8% -21.1% 10.2% -4.0% 1.7%

30-Yr FRM 5.9% 6.4% 6.3% 6.0% 5.1% 4.7% 4.5% 4.7%

1-Yr ARM 4.5% 5.5% 5.6% 5.2% 4.7% 3.5% 3.0% 3.1%

Source: CALIFORNIA ASSOCIATION OF REALTORS



112/118

Closing Thoughts

Direction of Home Prices: Sellers


113/118

Direction of Home Prices: SellersSkeptical; Buyers Hopeful

0%

20%

40%

60%

80%

100%

Sellers Buyers

Down Flat Unsure Up

Q: Do you think home prices in your neighborhood will go up, down or stay flat in one year, five years and 10 years?

Real Estate: Its Time To Buy Again


114/118

Real Estate: It s Time To Buy Again

SOURCE: Real estate: Its time to buy again Fortune Magazines 3/28/11 article written by Shawn Tully

Forget stocks. Don't bet on gold.After four years of plunging home

prices, the most attractive assetclass in America is housing.

8 in 10 Americans Agree Buying a Home is


115/118

g y gthe Best Investment One Can Make

SOURCE: Pew Research Centers Home Sweet Home. Still. Five Years After the Bubble Burst

8 in 10 Renters Would Like toB i h F


116/118

Buy in the Future

renters are hardly

immune to the allure of

homeownership, even in

the face of the five-year

decline in prices. Asked if

they rent out of choice orbecause they cannot

afford to buy a home, just

24% say they

rent out ofchoice.

SOURCE: Pew Research Centers Home Sweet Home. Still. Five Years After the Bubble Burst

C.A.R. Strategic Planning Book Pics


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