2016 MARKET UPDATE September 20 2016 Glendale AOR
2016 MARKET UPDATE September 20, 2016 Glendale AOR Leslie Appleton-Young, C. A. R. Chief Economist
SAVE THE DATE! Hope to See You in Long Beach! REGISTRATION OPENS MAY 18 expo. car. org
EXPO HIGHLIGHTS
EXPO HIGHLIGHTS TUESDAY WEDNESDAY THURSDAY Tech Tuesday is back in So. Cal! Full-day Broker Conference Full-day Conference Ha More FREE EXPO educational sessions Hall opens at 2 pm with over 200 exhibitor booths Half-day YPN Evolve Conference CE Course Credit available 30+ FREE EXPO educational sessions across 3 days New, exciting session formats Networking, prizes and EXPO Treasure Hunt David Pogue Captain Mark Kelly Keynote Lunch Speaker Leslie Appleton-Young Keynote Lunch Speaker
ECONOMIC OUTLOOK
BREXIT: MARKETS WERE SURPRISED
BREXIT’S DIRECT EFFECTS FOR THE U. S. ECONOMY ARE LIMITED • The UK accounted for less than 4 percent of American exports of goods in 2015, equivalent to 0. 4 percent of U. S. GDP • Direct economic impact on the U. S. would be small, even if the UK economy slipped into recession. SOURCE: Wells Fargo
INDIRECT EFFECTS ARE MORE SIGNIFICANT Financial markets meltdown after the Brexit vote S & P 500 Composite Adjusted Closed 2140 2 113, 32 2120 2100 2080 -3. 6% 2060 2040 2 037, 30 2020 2000 SOURCE: Yahoo Finance . 2 4. 16 6 06 7. 1. 1 06 06 . 1 0. 16 16 3. . 0 06 05 . 2 7. 1 6 6 0. 1 05 . 2 16 3. . 1 05 05 . 0 6. 16 16 9. . 2 04 04 . 2 2. 16 16 04 . 1 5. 16 8. . 0 04 04 . 0 1. 16 1980
SILVER LINING FOR ECONOMIC WEAKNESS AND UNCERTAINTY … 18 • Treasury yield dropped to fresh low amid global bond rally Treasury Yield - 10 Yr. 16 Treasury Yield - 30 Yr. 14 • Fed may raise rate once or twice in the second half of 2016, but longterm rates will remain low as foreign cash flood into U. S. bond 12 10 8 06/24/16: 10 Yr. – 1. 57% 30 Yr. – 2. 43% 6 4 2 SERIES: Treasury Yield 10 Yr. , Treasury Yield 30 Yr. SOURCE: Yahoo Finance янв-16 янв-13 янв-10 янв-07 янв-04 янв-01 янв-98 янв-95 янв-92 янв-89 янв-86 янв-83 янв-80 янв-77 янв-74 янв-71 янв-68 янв-65 янв-62 0
FED MEETS TOMORROW – HAVE RATE HIKE ODDS “WEAKENED”? OR HAVE THEY?
RATES HEADING UP SLIGHTLY: 3 MO HIGH Today’s rates: FRM 3. 64% ARM 2. 91% Bond market sell-off last few weeks 6 WEEKLY MONTHLY 5 4 3 FRM ARM 2 1 07. 28 . 1 6 7 /0 1 20 16 /0 20 16 5/ 07 1 20 1 /0 7 20 15 /0 1 20 14 /0 7 20 14 /0 1 20 13 /0 7 20 13 /0 1 20 12 /0 7 SERIES: 30 Yr FRM, 5 Yr ARM SOURCE: Freddie Mac 20 12 /0 1 20 11 /0 7 20 11 /0 20 10 /0 1 0
HOW WILL HOUSING FARE?
MACRO ECONOMY SUMMARY AUGUST RETAIL SALES WEAK -. 3% 1. 2% 4. 2% GDP 2016 -Q 2 Consumption 2016 -Q 2 4. 9% 1. 7% Unemployment 2016 -07 Job Growth 2016 -07
US GDP: POOR START FOR THE 1 ST HALF PCE RECOVERED IN Q 2, BUT INVESTMENT STILL WEAK 2015: 2. 6%; 2016 Q 2: 1. 2%; 2016 (P): 1. 6%; 2017(F): 2. 2% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2009) $ ANNUALLY 6% QUARTERLY 5% 4% 3% 2% 1% 0% -1% -2% 2009 Largest Annual Drop since 1946 (-2. 8%) -3% 09 20 11 20 13 20 15 20 17 F Q 111 Q 311 Q 112 Q 312 Q 113 Q 313 Q 114 Q 314 Q 115 Q 315 Q 116 20 07 20 20 05 -4% SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
WEAK GLOBAL ECONOMIC GROWTH PERSISTS IN 2016 … World Export & Industrial Production Volume Year-over-Year % Chg. Weak growth in global industrial production and world exports Softer-than expected growth in advanced economies Decline in commodity prices Heightened political uncertainties (e. g. BREXIT) Volatile equity markets Central banks on hold EU and Japan held policy steady after monetary easing U. S. Fed paused its rate hike SOURCE: Wells Fargo Securities
CRUDE OIL PRICES Dollars per Barrel $160 $140 $120 $100 $80 $60 $40 $20 $0 янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 SERIES: Crude Oil Prices: West Texas Intermediate SOURCE: U. S. Energy Information Administration
PERSONAL CONSUMPTION 2015: 2. 6%; 2016 Q 2: 4. 4% ANNUAL PERCENT CHANGE 5% QUARTERLY ANNUALLY 4% 3% 2% 1% 0% -1% SERIES: Personal Consumption SOURCE: US Dept. of Commerce, Bureau of Economic Analysis 2016 Q 1 2015 Q 3 2015 Q 1 2014 Q 3 2014 Q 1 2013 Q 3 2013 Q 1 2012 Q 3 2012 Q 1 2015 2013 2011 2009 2007 -3% 2005 -2%
COMPONENTS OF GDP ANNUAL PERCENT CHANGE 3, 5 3, 0 Q 3 2015 2, 9 Q 4 2015 2, 5 Q 1 2016 2, 0 Q 2 2016 1, 5 1, 0 0, 5 0, 1 0, 0 -0, 1 -0, 5 -0, 3 -1, 0 Consumption Fixed Nonres. Investment SERIES: Components of GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis Net Exports Government
UNEMPLOYMENT RATES NEAR 8 -YEAR LOW US 4. 9% (August 2016), CA 5. 5% (July 2016) 14% CA US 12% 10% 8% 6% 4% 2% 0% янв-июлянв-июлянв-июлянв-июлянв-июлянв-июл 05 -05 06 -06 07 -07 08 -08 09 -09 10 -10 11 -11 12 -12 13 -13 14 -14 15 -15 16 -16 SERIES: Unemployment Rate SOURCE: US Bureau of Labor Statistics, CA Employment Development Division
UNEMPLOYMENT RATE BY CALIFORNIA METRO AREA July 2016: California 5. 5% Bakersfield 10, 3% Fresno MSA 9, 4% 8, 9% Modesto Stockton MSA 8, 5% Inland Empire 6, 9% Sacramento 5, 8% Ventura 5, 8% Los Angeles 5, 5% 5, 3% San Diego 4, 9% Oakland San Luis Obispo 4, 7% San Jose 4, 3% San Francisco 0, 0% 3, 6% 2, 0% SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division 4, 0% 6, 0% 8, 0% 10, 0% 12, 0%
JUNE & JULY GAINS OF 250 K+; 151, 000 IN AUGUST AVG. 186 K IN 2016, 228 K IN 2015 Recession Job Losses: 8. 8 million Since Jan’ 10: +14. 0 million MONTH TO MONTH CHANGE 800 000 600 000 400 000 200 0 -200 000 -400 000 -600 000 -800 000 -1 000 янв- июл- янв- июл- янв- июл 08 08 09 09 10 10 11 11 12 12 13 13 14 14 15 15 16 16 SERIES: Employment Growth SOURCE: US Bureau of Labor Statistics
CA JOBS GROWING FASTER THAN NATION ANNUAL PERCENT CHANGE 6 California US 4 2. 3 2 0 -2 -4 -6 -8 янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 SERIES: Total Nonfarm Employment SOURCE: US Bureau of Labor Statistics, CA Employment Development Division 1, 7
JOB TRENDS BY CALIFORNIA METRO AREA July 2016: CA +2. 3%, +374, 600 last 12 months ANNUAL PERCENT CHANGE Stockton 3, 4% Fresno MSA 3, 2% San Jose 3, 0% Modesto 3, 0% Oakland 2, 9% Orange 2, 7% Bakersfield 2, 6% San Francisco 2, 6% Inland Empire 2, 4% San Luis Obispo 2, 1% Sacramento 1, 9% Los Angeles 1, 8% Ventura 0, 0% 1, 4% 0, 5% 1, 0% SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division 1, 5% 2, 0% 2, 5% 3, 0% 3, 5% 4, 0%
CALIFORNIA JOB CHANGES BY INDUSTRY July 2016: CA +2. 3%, +374, 600 last 12 months ANNUAL PERCENT CHANGE Educational Services Professional, Scientific & Technical. . . Construction Leisure & Hospitality Real Estate & Rental & Leasing Health Care & Social Assistance Wholesale Trade Government Information Admistrative & Support & Waste. . . Retail Trade Transportation, Warehousing & Utilities Finance & Insurance Nondurable Goods -0, 4% Durable Goods -0, 4% -2% 9, 4% 4, 2% 3, 7% 3, 5% 3, 0% 2, 7% 2, 2% 2, 1% 1, 9% 1, 3% 0, 2% 0% 2% SERIES: Total Nonfarm Employment By Industry SOURCE: US Bureau of Labor Statistics, CA Employment Development Division 4% 6% 8% 10%
CONSUMER CONFIDENCE INDEX August 2016: 101. 1 INDEX, 100=1985 120 100 80 60 40 20 0 янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 SERIES: Consumer Confidence SOURCE: The Conference Board
U. S. ECONOMIC OUTLOOK SERIES: U. S. Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CALIFORNIA ECONOMIC OUTLOOK SERIES: CA Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CALIFORNIA HOUSING MARKET OUTLOOK
CA SALES STUCK SINCE IN NEUTRAL 2010 California 2015 Sales: 407, 060 Units, Up 6. 4% YTY ANNUALLY 700 000 600 000 500 000 407 060 400 000 300 000 200 000 100 0 7 199 9 199 1 200 3 200 SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 5 200 7 200 9 200 1 201 3 201 5 *Sales are seasonally adjusted annualized
SALES OF EXISTING DETACHED HOMES California, August 2016 Sales: 420, 360 Units, -0. 4% YTD, -2. 2% YTY 700 000 600 000 Aug-15: 429, 900 Aug-16: 420, 360 500 000 400 000 300 000 200 000 100 000 янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® *Sales are seasonally adjusted annualized
CALIFORNIA SALES (JAN 2000 – PRESENT) Year-over-Year % Chg 6 per. Mov. Avg. (Year-over-Year % Chg) 140% 120% 100% 80% 60% 40% 20% 0% -20% -40% -60% янв- янв- янв- янв- янв 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 SERIES: Sales of Existing Single Family Homes, Not Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
CALIFORNIA SALES (JAN 2010 – PRESENT) Year-over-Year % Chg 6 per. Mov. Avg. (Year-over-Year % Chg) 15% 10% 5% 0% -5% -10% -15% -20% -25% янв- май- сен- янв- май- сен- янв- май 10 10 10 11 11 11 12 12 12 13 13 13 14 14 14 15 15 15 16 16 SERIES: Sales of Existing Single Family Homes, Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MEDIAN PRICE OF EXISTING DETACHED HOMES California, Aug. 2016: $526, 580, +1. 7% MTM, +5. 8% YTY $ 700 000 P: May-07 $594, 530 Aug-16: Aug-15: $526, 580 $497, 520 $ 600 000 $ 500 000 $ 400 000 T: Feb-09 $245, 230 -59% from peak $ 300 000 $ 200 000 $ 100 000 $янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HOME PRICE APPRECIATIONS HAVE MODERATED SINCE MID 2013 YTY% Chg. in Price 50% Condo Single-Family Homes 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 SERIES: Sales of SFH and Condo Units SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
PRICE PER SQUARE FOOT August 2016: $246, Down 0. 4% MTM, Up 4. 7% YTY PRICE PER SQ. FT. $400 $350 Aug-15: $235 $300 Aug-16: $246 $250 $200 $150 $100 $50 $0 янв- июл янв- июл янв- июл 07 -07 08 -08 09 -09 10 -10 11 -11 12 -12 13 -13 14 -14 15 -15 16 -16 SERIES: Median Price Per Square Feet SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INVENTORY BELOW LAST YEAR August 2016: 3. 4 Months; August 2015: 3. 6 Months 18, 0 16, 0 14, 0 12, 0 10, 0 8, 0 6, 0 4, 0 2, 0 0, 0 янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 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” (when available) and divide the sum by the number of “Sold” properties for the month in question. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
WHERE IS THE INVENTORY? – Affordability challenge for repeat buyers • Low rate on current mortgage • Low property taxes • Capital gains hit is onerous • Why sell when there is nowhere to go I can afford? • Could not qualify for a mortgage today • Headed for the “European Model” where children inherit the home of their parents? – One more thing… • Secular decline in marriage
FEWER HOUSING UNITS BEING TURNED OVER SINCE THE GREAT RECESSION Housing Turnover Rate (Single-Family Homes only) 10% CA 9% US 8% 7% 6% 4, 8% 5% 4, 2% 4% 3% 2% 1% SERIES: Percent of existing single-family homes being sold SOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C. A. R. 06 20 08 20 10 20 12 20 14 20 02 20 00 20 98 19 96 19 94 19 92 19 90 19 88 19 86 19 84 19 82 19 80 19 78 19 76 19 74 19 72 19 19 70 0%
YEARS OWNED BEFORE SALE HIGHEST IN 30 YEARS All Sellers 12 10 10 8 6 4 2 Q: How long had the seller lived in their home? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 15 20 3 20 1 1 20 1 09 20 7 20 0 5 20 0 03 20 1 20 0 99 19 97 19 95 19 93 19 91 19 89 19 87 19 19 85 0
“MISSING” 66, 000 NEW UNITS ANNUALLY 2015: 95, 822 (42, 959 sf, 52, 863 mf) 2016 f: 98, 301 total units 350000 300000 Single Family Multi-Family 250000 Household Growth: 200000 165, 000/yr 150000 100000 50000 0 0 8 19 83 19 86 19 89 19 92 19 SERIES: New Housing Permits SOURCE: Construction Industry Research Board 95 19 98 19 01 20 04 20 07 20 0 1 20 13 20 f 16 20
HOUSEHOLD FORMATION REBOUNDING Annual Household Growth Millions 2, 0 1, 9 1, 8 1, 6 1, 4 1, 2 1, 5 1, 3 1, 2 1, 0 0, 8 0, 6 0, 4 1, 0 0, 9 0, 6 0, 4 0, 6 0, 7 0, 2 0, 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SERIES: Household Formation SOURCE: U. S. Census Bureau, Housing Vacancy Survey
HOUSING AFFORDABILITY PEAKED Q 1 2012 PRICES V. LOW RATES AND INCOME GROWTH California vs. U. S. – 1984 -2016 % OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME Annual 80% CA Quarterly US 70% 57% 60% 50% 40% 31% 30% 20% 10% 0% 84 19 19 87 90 993 996 999 002 005 008 011 014 012 013 014 015 1 1 2 2 12 42 32 22 12 42 19 1 2 2 2 Q Q Q SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
U S Be Ki n rn gs ar di no Ke M rn er c M ed ad e Fr ra es no St Tula an re is la Pl us ac Sa So er c la Sa ram no n en Jo to a R q C iv uin on er tra sid -C e C os Lo alif ta s orn An ia ge Sa n V les Lu en is tu O ra b So ispo Sa no n ma D ie g N o M ap on a te O rey ra Sa Al ng a nt m e a B ed Sa ar a nt bar a a C la r Sa M a nt ari n Sa a C Sa n ru n M z Fr at an eo ci sc o n Sa HOUSING AFFORDABILITY IN CA: BY COUNTY 2016 -Q 2: % able to purchase median-priced home 60 57 56 56 50 54 52 50 50 50 48 46 45 45 45 41 40 32 30 20 SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 31 30 29 27 26 26 25 25 22 20 20 19 18 17 14 13 10 0
HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME California $130 000 2015 Annual Mean Wage $126 560 $110 000 $101 260 $90 000 $93 550 $72 360 $70 000 $50 000 $30 000 $10 000 $92 170 $92 571 $67 920 $45 810 $28 430 Retail Salespersons Chefs and. Elementary Head Cooks. School Teachers Firefighters Police and Sherriff's Computer Patrol Officers Programmers Registered Software Nurses Developers Min. Inc Required (Applications) to Buy a Med. Home SOURCE: Bureau of Labor Statistics, C. A. R.
SHARE OF FIRST-TIME BUYERS REMAINS BELOW LONG-RUN AVERAGE % First-Time Home Buyers Long Run Average 50% 40% 30% Long Run Average = 38% 29, 5% 20% 10% 0% 20052006200720082009201020112012201320142015 SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
REGIONAL MARKETS: LOS ANGELES COUNTY
LOS ANGELES COUNTY EMPLOYMENT SHOULD CONTINUE TO GROW IN 2016 & 2017
HOUSEHOLD FORMATION REBOUNDING 30 000 25 000 20 000 15 000 13 752 11 285 10 000 5 000 3 300 94 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 19 19 92 93 0 SERIES: Household Formation, Los Angeles County SOURCE: California Department of Finance, E 5 Housing Estimates
HOME SALES SLIGHTLY BEHIND LAST YEAR Los Angeles County, 2015: +4. 1%, 2016 YTD: -2. 3% 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
JULY SALES DROPPED PRIMARILY BECAUSE OF SEASONALITY LA County, July-16 Sales: 3, 469 Units, -2. 3% YTD, -13. 3% YTY 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MEDIAN PRICE OF EXISTING DETACHED HOMES $400 000 $300 000 $200 000 $100 000 $0 $0 в 1 ян ян в- в 0 ян ян в- 5 $500 000 13 $500 000 11 $600 09 $600 000 7 $700 05 $700 000 SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Los Angeles County, Jul. 2016: $513, 700, Up 4. 8% YTY Los Angeles County, 2015: $476, 830, Up 6. 1%
UNSOLD INVENTORY INDEX Los Angeles County, July 2016: 3. 6 Months 25, 0 20, 0 15, 0 10, 0 5, 0 0, 0 янв- сен- май- янв- сен- май- янв- сен- май 05 05 06 07 07 08 09 09 10 11 11 12 13 13 14 15 15 16 Note: The Unsold Inventory Index represents the number of months it would take to deplete the remaining inventory at the end of a particular month with the sales rate of the month in consideration. Inventory includes listings with “Active”, “Pending”, and “Contingent” (when available) statuses. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
GLENDALE
SALES OF SINGLE FAMILY HOMES Glendale, August 2016: 58 Units +6. 1% 2015, -11. 9% 2016 YTD, -28. 4% YTY SOURCE: Clarus Market Metrics
MEDIAN PRICE OF SINGLE FAMILY HOMES Glendale, August 2016: $854, 000 Down 5. 1% MTM, Up 10. 9% YTY SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES Glendale, August 2016: 291 Units -2. 9% 2015, -4. 8% 2016 YTD, +2. 8% YTY Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month. SOURCE: Clarus Market Metrics
BURBANK
SALES OF SINGLE FAMILY HOMES Burbank, August 2016: 58 Units +2. 8% 2015, -5. 0% 2016 YTD, +5. 5% YTY SOURCE: Clarus Market Metrics
MEDIAN PRICE OF SINGLE FAMILY HOMES Burbank, August 2016: $757, 500 Up 3. 0% MTM, Up 7. 4% YTY SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES Burbank, August 2016: 208 Units +13. 2% 2015, -1. 3% 2016 YTD, +3. 0% YTY Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month. SOURCE: Clarus Market Metrics
PASADENA
SALES OF SINGLE FAMILY HOMES Pasadena, August 2016: 81 Units +8. 3% 2015, -8. 1% 2016 YTD, -5. 8% YTY SOURCE: Clarus Market Metrics
MEDIAN PRICE OF SINGLE FAMILY HOMES Pasadena, August 2016: $842, 000 Up 2. 1% MTM, Up 8. 6% YTY SOURCE: Clarus Market Metrics
FOR SALE PROPERTIES Pasadena, August 2016: 373 Units +5. 5% 2015, -0. 8% 2016 YTD, -6. 8% YTY Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any point in time during the month. SOURCE: Clarus Market Metrics
MIGRATION AND AFFORDABILITY The Cases of Southern California & the San Francisco Bay Area
AFFORDABILITY & MIGRATION ARE CLOSELY LINKED • Home price-to-income ratio = absolute affordability – That relates to the question of home ownership • Premium/discount of one region over another – This is a region’s RELATIVE affordability – Relates to question of where to live within region • As premium of living in a “core market” grows, migration picks up in affordable, adjacent areas – In Southern California, this is the Inland Empire – In the Bay Area, this is primarily the East Bay/Delta • Relative affordability isn’t only story: JOBS still matter – But, as the labor market tightens, affordability will become a more important driver of migration
RIVERSIDE COUNTY As costal premium increased, in-migration to Riverside responded 1 -2 years later Less response with job losses, shift happening now 200% 70 000 60 000 160% 50 000 140% 120% 40 000 100% 30 000 80% 60% 20 000 40% 10 000 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20% Net Domestic Migration Los Angeles Orange SOURCE: California Department of Finance and California Association of REALTORS® San Diego 0 Net Domestic Migration "Core" Housing Price Premium 180%
MORE INBOUND COMMUTERS TO SOCAL CORE Number of Jobs Filled by Inbound Commuters 500 000 Los Angeles Orange 470 535 450 000 400 000 350 000 324 522 300 000 250 000 2005 2006 2007 2008 2009 SERIES: Number of Local Jobs Filled by Inbound Commuters SOURCE: U. S. Census Bureau, American Community Survey 2010 2011 2012 2013 2014
INLAND EMPIRE RESIDENTS INCREASINGLY CROSSING COUNTY LINES FOR WORK Number of Residents Commuting Outside County for Work 300 000 Riverside San Bernardino 277 549 280 000 260 000 244 908 240 000 220 000 2005 2006 2007 2008 2009 2010 2011 SERIES: Number of Local Residents Commuting to Jobs Located Outside of Home County SOURCE: U. S. Census Bureau, American Community Survey 2012 2013 2014
2014 LOS ANGELES COUNTY MIGRATION NET LOSS TO SAN BERNARDINO San Bernardino -17 230 -7 816 Kern Orange -7 548 Riverside -7 524 -2 754 Santa Barbara Butte 184 Contra Costa 417 Shasta 461 Solano 1 219 San Diego -20 000 1 676 -15 000 SOURCE: U. S. Census Bureau, American Community Survey -10 000 -5 000 0 5 000
2014 SAN BERNARDINO COUNTY MIGRATION NET LOSS TO RIVERSIDE Riverside -3 189 Fresno -612 Lake & Mendocino -490 San Luis Obispo -480 Santa Barbara -383 San Joaquin 391 Madera 972 Orange 1 470 San Diego 2 262 Los Angeles -5 000 17 230 0 SOURCE: U. S. Census Bureau, American Community Survey 5 000 10 000 15 000 20 000
2014 ORANGE COUNTY MIGRATION NET LOSS TO RIVERSIDE Riverside -5 933 -1 470 San Bernardino Santa Clara -1 221 Santa Barbara -1 143 -647 San Luis Obispo Ventura 248 Napa 311 San Diego 404 Alameda 471 Los Angeles -10 000 7 548 -5 000 SOURCE: U. S. Census Bureau, American Community Survey 0 5 000 10 000
2014 RIVERSIDE COUNTY MIGRATION NET LOSS TO SACRAMENTO Sacramento Santa Clara -2 038 -936 Solano -544 Contra Costa -465 Stanislaus -392 Imperial 1 270 San Bernardino 3 189 San Diego 3 463 Orange 5 933 Los Angeles -4 000 7 524 -2 000 0 SOURCE: U. S. Census Bureau, American Community Survey 2 000 4 000 6 000 8 000 10 000
2014 SAN DIEGO COUNTY MIGRATION NET LOSS TO LOS ANGELES Los Angeles -1 676 Yolo -1 496 Santa Clara Kings Yolo -1 223 -1 006 -932 Imperial 331 Solano 355 Monterey & San Benito 409 Alameda 428 Stanislaus -2 000 1 373 -1 000 SOURCE: U. S. Census Bureau, American Community Survey 0 1 000 2 000
2014 VENTURA COUNTY MIGRATION NET LOSS TO SANTA BARBARA Santa Barbara-1 326 Yolo -1 084 -560 San Luis Obispo -489 Santa Clara -327 San Bernardino Alameda 91 Solano 131 Del Norte, Lassen, Modoc, Plumas & Siskiyou 233 Santa Cruz 334 Kern -1 500 SOURCE: U. S. Census Bureau, American Community Survey 383 -1 000 -500 0 500
The Boomers and their Next Move
The Boomers and their Next Move
OLDER GENERATIONS IN PARTICULAR ARE NOT MOVING AS OFTEN 71% of Californian’s aged 55+ haven’t moved since 1999 California Homeowners by Length of Tenure, 2013 35% Under 55 55+ 31, 8% 30% 25% 24, 4% 24, 0% 21, 3% 20% 15% 11, 0% 12, 4% 9, 0% 14, 2% 10, 7% 12, 0% 8, 9% 5, 7% 5% 0, 9% 0, 8% 7, 3% 1, 9% 0% 1978 & Earlier 1979 to 1984 1985 to 1989 1990 to 1994 1995 to 1999 SERIES: Distribution of Home Ownership by Year Moved In SOURCE: U. S. Census Bureau, 2013 American Housing Survey 2000 to 2005 to 2009 2010 to 2013
OLDER GENERATIONS IN PARTICULAR ARE NOT MOVING AS OFTEN Almost half have been in their homes for at least 25 years California Homeowners by Length of Tenure, 2013 35% Under 55 55+ 31, 8% 30% 25% 24, 4% 24, 0% 21, 3% 20% 15% 11, 0% 12, 4% 9, 0% 14, 2% 10, 7% 12, 0% 8, 9% 5, 7% 5% 0, 9% 0, 8% 7, 3% 1, 9% 0% 1978 & Earlier 1979 to 1984 1985 to 1989 1990 to 1994 1995 to 1999 SERIES: Distribution of Home Ownership by Year Moved In SOURCE: U. S. Census Bureau, 2013 American Housing Survey 2000 to 2005 to 2009 2010 to 2013
BOOMERS – BORN BETWEEN 1946 -1965 8% Average: 59 7% 6% 5% 4% 3% 2% 1% 0% 51 52 53 54 55 56 57 58 59 60 61 Age (Years) What is your age? SERIES: 2016 Generations / Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 62 63 64 65 66 67 68 69
MAJORITY ARE MARRIED Other 18% Married 56% Single 26% What is your marital status? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
3/4 BABY BOOMERS ARE HOME OWNERS Other 3% Rent 22% Own 75% What is your current living situation? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MOST HAVE EQUITY IN THEIR HOME No; 8% Yes; 92% Do you have equity in your home? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MAJORITY DO NOT PLAN TO SELL HOME WHEN THEY RETIRE Yes; 10% Don't know/ unsure; 32% No; 59% Do you plan to sell your current home when you retire? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
MAJORITY WORRY ABOUT CHILDRENS’ ABILITY TO BECOME HOME OWNERS No; 45% Yes; 55% Do you worry about your children’s ability to become home owners in the future? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
TIME TO TALK: 2/5 PLAN TO HELP CHILDREN WITH DOWN PAYMENT No; 57% Yes; 43% Do you plan to help your children with their down payment to purchase a home? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
WHAT KEEPS BOOMERS UP AT NIGHT? 39% Nothing 13% Bills/ finances 6% Stress/ anxiety Family issues 4% Work 4% Job security 4% Ache/ pain 4% Insomnia 3% Health concerns 3% TV/ internet 2% World politics 2% 1% Economy 0% 5% 10% Q: What keeps you up at night? 15% SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 20% 25% 30% 35% 40% 45%
MILLENNIALS: TOMORROW’S HOME OWNERS?
MASLOW’S HIERARCHY OF NEEDS: REVISED
OVER 1/3 LIVE WITH THEIR PARENTS 41% 36% 45% 40% 35% 20% 30% 25% 20% 15% 1% 10% 5% 1% 0% I rent I live with my parents I own I live in a dorm Q: What is your current living situation? SERIES: 2014 Millennials Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Other:
ATTITUDE TOWARD THE HOME BUYING PROCESS – MIXED RESULTS 60% 50% 34% 40% 30% 8% 20% 4% 4% 10% 0% Positive Negative Neutral N/A Other SOURCE: How would you describe your attitude towards the home buying process? C. A. R. 2014 Millennial Survey
MOST MILLENNIALS UNCERTAIN/DOUBTFUL THAT THEY COULD OBTAIN A MORTGAGE NOW? AMILLENNIAL ETHNICITY Yes 22% Don't know 45% No 33% SOURCE: C. A. R. 2014 Millennial Survey Q: Could you obtain a mortgage if you applied now ?
PEOPLE WOULD PREFER THE FOLLOWING OVER GOING THROUGH THE HOME MORTGAGE PROCESS AGAIN: SOURCE: Guaranteed Rate Mortgage Survey of 1, 000 adults 25 and older USA Today April 2014
2016 FORECAST
CALIFORNIA HOUSING MARKET OUTLOOK SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
TAKE 5: 2016 MARKET 1. CA home sales flat with prices up mid - single digits in 2016 2. Fundamental demand drivers (jobs; rates; household formation) are strong 3. Housing affordability an insurmountable hurdle for many Millennials 4. Trading up/down is too expensive for Boomers 5. CA will see accelerating out-migration of Millennials in search of housing they can afford
Book Recommendations
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THANK YOU! www. car. org/marketdata lesliea@car. org This presentation can be found on www. car. org/marketdata Speeches & Presentations
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