Real Estate Market Update/ 2012 FORECAST

Transcription

Real Estate Market Update/ 2012 FORECAST
PFAR: Pasadena Foothills Association of Realtors
March 14, 2012
Leslie Appleton-Young, Chief Economist
Overview
US and California Economies
California Housing Market
Regional & Local Markets
2011 Annual Market Survey
2012 Housing Market Forecast
CA Buyers & Sellers in Today’s Housing Market
U.S. Economic Outlook
Gross Domestic Product
2010: 2.8%
2011: 1.7%
2011 Q4: 3.0%
ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
ANNUAL
QTRLY
Q3-11
Q1-11
----
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
2009 Largest Annual Drop since 1938 (-3.4%)
1970
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
Performance Targets for National Economy
Unemployment
US GDP
Nonfarm Job
Growth
CPI
SOURCE: California Association of REALTORS®
Current
Target
2011
6%
9.0%
3% or higher
1.7%
3%+ or
400K+/mo
1.0%
2.5%
3.2%
20
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
Jan-89
Jan-88
Consumer Confidence Index
February 2012: 70.8
INDEX, 100=1985
160
140
120
100
80
60
40
CA Underwater Mortgages
Reverse Wealth Effect v. Squatter Economy Negative Equity Share in CA
40%
Near Negative Equity Share in CA
35%
29.7%
30%
25%
20%
15%
10%
4.6%
5%
0%
Q3‐2011
Q2‐2011
Q1‐2011
Q4‐2010
Q3‐2010
Q2‐2010
Q1‐2010
Q4‐2009
SOURCE: CoreLogic
Unemployment: Heading Lower U.S. at 3 year low January 2012 California (11.1%) vs. United States (8.3%) 14%
CA
US
12%
10%
8%
6%
4%
2%
SOURCE: CA Employment Development Division
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
0%
Where are California’s Jobs? Employment Trends: Construction & Financial Sectors Biggest Losers
Industry
Mining and Logging
2005
Jul-11
Year to
Date
23,600
27,600
4,000
905,300
567,300
-338,000
Manufacturing
1,502,600
1,257,600
-245,000
Trade, 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
505,500
484,500
-21,000
2,420,200 2,380,200
14,802,500 14,074,700
-40,000
-727,800
Construction
Other Services
Government
TOTAL
CA New Housing Permits
2011: 47,015 units, Up 5.0% from 2010
300,000
Single Family
250,000
Multi-Family
Household Growth: 220,000-250,000/yr
200,000
150,000
100,000
50,000
SOURCE: CBIA
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
0
Classic Liquidity Trap: Consumers Deleveraging
Low Rates and Tight Credit
Fed easing through 2014
10%
9%
8%
7%
6%
5%
4%
3%
FRM
2%
ARM
1%
Federal Funds
SOURCE: Federal Home Loan Mortgage Corporation
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
0%
Federal Issues – Critical Concerns for the REALTOR Party
Future of Fannie and Freddie? FHA?
Tax Reform on the horizon – Mortgage Interest Deduction?
QRM (Qualified Residential Mortgage) 20% Down requirement ‐‐ Is the future of the 30 year mortgage in doubt?
Qualified Residential Mortgage (QRM)
On Average over last 12 years, Less than 1 in 5 Fannie/Freddie Loans Have Met QRM
% of Loans That Would Have Met QRM
50%
L/R Average
45%
40%
35%
30.5%
30%
25%
19.8%
20%
15%
10.7%
10%
5%
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0%
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% 2.6%
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: January 2012
California Housing Market
California’s Housing Cycles and Membership
1970-2011
THOUSANDS
Home Sales
Membership
250,000
700,000
600,000
200,000
500,000
150,000
400,000
300,000
100,000
200,000
50,000
100,000
0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0
Sales
UNITS
Consumer Confidence
INDEX
700,000
160
600,000
140
120
500,000
100
400,000
80
300,000
60
200,000
40
100,000
20
SOURCE: California Association of REALTORS®; The Conference Board
*Sales are seasonally adjusted and annualized
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
0
Jan-01
0
Jan-00
•
Sales of Existing Detached Homes and Pacific West Consumer Confidence
California, January 2012 Sales: 517,740 Units, Down 5.7% YTD, Down 5.7% YTY
Share of Distressed Sales to Total Sales
REO & Short Sales: Southern California
(Percent of Total Sales)
Median Price of Existing Detached Homes
California, January 2012: $268,280, Down 3.9% YTY
P: May-07
$594,530
$700,000
$600,000
T: Feb-09
$245,230
-59% from
peak
$500,000
$400,000
$300,000
$200,000
$100,000
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
$0
Trough vs. Current Price – January 2012
Bay Area
Trough
Month
Contra Costa (Central County) Jan-12
San Francisco County
Jan-12
Solano County
Jan-12
Sonoma County
Feb-09
San Mateo County
Jan-09
CALIFORNIA
Feb-09
San Francisco Bay Area
Feb-09
Marin County
Feb-11
Santa Clara County
Feb-09
Napa County
Apr-11
Alameda County
Jan-09
Region
Trough
Jan-12
% Chg From
Price
Median
Trough
0.0%
$476,470 $476,470
0.0%
$561,270 $561,270
0.0%
$184,440 $184,440
$312,338 $326,920
4.7%
$551,000 $578,500
5.0%
$245,230 $268,280
9.4%
$378,520 $415,120
9.7%
$632,580 $694,440
9.8%
$445,000 $495,000
11.2%
$306,820 $344,740
12.4%
$346,236 $395,830
14.3%
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
Jan-89
Jan-88
Unsold Inventory Index
California, January 2012: 5.5 Months
MONTHS
20
18
16
14
12
10
8
6
4
2
0
Tight Supply of Inventory for REO Sales
Unsold Inventory Index (Months)
Price Range (Thousand)
$1,000K+
$750-1000K
$500-750K
$300-500K
$0-300K
Jan-11 Dec-11 Jan-12
13.8
9.1
6.9
6.4
5.4
8.3
5.8
4.5
4.3
3.9
13.7
8.5
6.9
5.9
4.9
Q3 2011
Q1 2011
CA
Q3 2010
Q1 2010
Q3 2009
% OF HOUSEHOLDS THAT CAN BUY
Q1 2009
Q3 2008
Q1 2008
Q3 2007
Q1 2007
Q3 2006
Q1 2006
Q3 2005
Q1 2005
Q3 2004
Q1 2004
Q3 2003
Q1 2003
Q3 2002
Q1 2002
Q3 2001
Q1 2001
Q3 2000
Q1 2000
Housing Affordability Index
California Vs. U.S.
US
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Distressed Market:
Issues and Overview
Mortgage Settlement
The agreement settles state and federal investigations on banks’ robo‐signing and other foreclosure misconduct. According to the California Attorney General, California will receive up to $18 billion:
Principal Reduction : $12 B to fund short sales or write –
down loans over the next 3 years.
Refinancing: $849 M for refinancing borrowers who are underwater
Other forms of Financial Relief: $279 m as restitution for homeowners who were foreclosed; $1.1 B for unemployed homeowners, transitional assistance, blight repair; $3.5 B to extinguish unpaid loans remaining after foreclosure.
Mortgage Settlement (cont.)
•
•
•
If lenders fail to reduce principal balances by a minimum of $12
billion, they will be required to pay fines up to $800 million to the state
The actual settlement has not been released, but more details will be available in the next few weeks More information is available on the California Attorney General’s website at http://oag.ca.gov/nationalmortgagesettlement, or the National Mortgage Settlement website at http://www.nationalmortgagesettlement.com/
Mortgage Foreclosure & Delinquency Rates
California: Q4-2011
Delinquency Rate
Foreclosure Rate
12%
10%
7.2%
8%
Delinquencies: Long Run Average: 4.5%
6%
4%
3.5%
Foreclosure Rate: Long Run Average: 1.3%
2%
Q1/74
Q2/75
Q3/76
Q4/77
Q1/79
Q2/80
Q3/81
Q4/82
Q1/84
Q2/85
Q3/86
Q4/87
Q1/89
Q2/90
Q3/91
Q4/92
Q1/94
Q2/95
Q3/96
Q4/97
Q1/99
Q2/00
Q3/01
Q4/02
Q1/04
Q2/05
Q3/06
Q4/07
Q1/09
Q2/10
Q3/11
0%
SOURCE: Mortgage Bankers Association
California Foreclosure Inventories, Jan. 2012
Preforeclosure: -30.1% YTD • Schedule for Sale: -34.3% YTD •
Bank Owned: -11.9% YTD
Preforeclosure
Scheduled for Sale
Bank Owned
6 Month Average:
200,000
Preforeclosure: 104,364
Schedule for Sale: 87,112
Bank Owned: 98,851
150,000
100,000
50,000
SOURCE: ForeclosureRadar.com
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
0
Los Angeles County
Preforeclosure: 13,102 • Auction: 20,367 • Bank Owned: 5,223
Source: ForeclosureRadar.com as of 03/12/12.
Los Angeles County
Los Angeles County
Los Angeles County
Pasadena
Preforeclosure: 169 • Auction: 268 • Bank Owned: 61
South Pasadena
San Marino
La Cañada Flintridge
La Cresenta
Sacramento
Source: ForeclosureRadar.com as of 08/19/11
Sacramento
Sacramento
Local Market Conditions
Los Angeles County
Sales of Residential Homes
Los Angeles County, February 2012: 3,452 Units Up 4.0% MTM, Up 16.5% YTY
SOURCE: Clarus Market Metrics
Median Price of Residential Homes
Los Angeles County, February 2012: $315,000
Up 2.6% MTM, Down 7.4% YTY
For Sale Properties
Los Angeles County, February 2012: 26,521 Units
Down 3.9% MTM, Down 21.4% 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.
Month’s Supply of Inventory Los Angeles County, February 2012: 2.9 Months
Note: “Month’s Supply of Inventory” 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 “For Sale” on the last day of the month in question.
The inventory figure is then divided by the number of properties that went Under Contract during the month.
Market Metrics Inventory Calculation
Month’s Supply of Inventory: the number of
months it would take to sell the remaining
inventory for the month in question.
Inventory: the number of properties that were “For
Sale” (Active) on the last day of the month. Does
not include Pending or Contingent sales.
Inventory/Properties that went Under Contract
during the month.
Pasadena
Pasadena, February 2012: 87 Units Up 22.5% MTM, Up 42.6% YTY
Pasadena, February 2012: $448,000
For Sale Properties
Pasadena, February 2012: 678 Units
Month’s Supply of Inventory Pasadena, February 2012: 3.1 Months
South Pasadena
South Pasadena, February 2012: 16 Units Up 23.1% MTM, Even 0% YTY
South Pasadena, February 2012: $646,950
Down 2.0% MTM, Up 4.9% YTY
For Sale Properties
South Pasadena, February 2012: 50 Units
Month’s Supply of Inventory South Pasadena, February 2012: 1.6 Months
San Marino
San Marino, February 2012: 2 Units Down 66.7% MTM, Down 50.0% YTY
San Marino, February 2012: $2,575,000
Up 52.0% MTM, Up 68.0% YTY
For Sale Properties
San Marino, February 2012: 44 Units
Month’s Supply of Inventory San Marino, February 2012: 2.6 Months
La Cañada Flintridge
La Cañada Flintridge, February 2012: 11 Units Up 10.0% MTM, Down 26.7% YTY
La Cañada Flintridge, February 2012: $765,000
For Sale Properties
La Cañada Flintridge, February 2012: 104 Units
Month’s Supply of Inventory La Cañada Flintridge, February 2012: 2.2 Months
La Crescenta
La Crescenta, February 2012: 7 Units Down 30.0% MTM, Down 30.0% YTY
La Crescenta, February 2012: $390,000
For Sale Properties
La Crescenta, February 2012: 85 Units
Month’s Supply of Inventory La Crescenta, February 2012: 2.0 Months
2011 Annual Housing Market Survey
Equity vs. REO vs. Short Sales
Equity Sales
REO Sales
Short Sales
Share 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%
3.0
3.0
3.6
25.5%
34.0%
23.3%
Days on MLS
67
50
141
Days in Escrow
35
35
45
Avg. Number of Offers
% of All Cash Sales
Proportion of Sellers Planning to
Repurchase
Q. Is the seller planning on purchasing another home?
Reasons Sellers Not Planning to
Buy Another Home
19.8%
Seller is a lender/bank
Seller prefers to have less financial obligation
11.4%
Poor credit background
10.9%
Lack of cash for down payment
5.7%
Out of work/unemployment
4.9%
Decide to live with family/friends
4.7%
Waiting for market to bottom
0%
2.7%
10%
Q. Why is the seller not planning to purchase another home?
20%
30%
40%
50%
Reasons For Selling
All Home Sellers
Foreclosure/Short
Sale/Default
Change in Family Status
Retirement/Move to
Retirement Community
Investment/ Tax
Consderations
Desired Better Location
Desired Smaller Home
Changed Jobs
Desired Larger Home
Other
0%
5%
10%
15%
20%
Q. What was the single most important reason for selling/buying the property?
25%
30%
35%
Investments & Second/
Vacation Homes
Foreign Buyers
10%
% of Foreign Buyers
8%
8%
6%
6%
5%
6%
4%
2%
0%
2008
Q. Was the buyer a foreign buyer?
2009
2010
2011
California Housing Market Forecast
California Housing Market Outlook
2005
2006
2007
2008
2009
2010
2011
SFH
Resales
(000s)
625.0
477.5
346.9
441.8
546.9
492.3
497.9 502.8
% Change
0.03% -23.6% -27.3% 27.3% 23.8% -10.0% 1.1%
Median
Price
($000s)
$522.7 $556.4 $560.3 $348.5 $275.0 $305.0 $286.0 $290.9
% Change
16.0%
6.5%
0.7% -37.8% -21.1% 10.9% -6.2% 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%
Forecast Date: February 2012
Source: CALIFORNIA ASSOCIATION OF REALTORS®
2012f
1.0%
Buyers in Today’s Market: 2011 Survey of California Home Buyers
Quick Facts About Homebuyers

94% of buyers used an agent
58% of buyers found their agent online
56% of buyers interviewed at least 2 agents
51% Googled their agent
93% are receptive to receiving information via social media
54% would work with same agent again
80% would find agent ratings beneficial
The Buying Experience

Considered buying for over 4 months & investigated homes/neighborhoods for 2.5 months, on average, before contacting an agent
Viewed 12 homes in 8 weeks with agent
76% didn’t close escrow on time
49% owned previous home
Motivated by price decreases & mortgage interest and property tax deductions
80% found home through agent
How Buyers Found Home: 80% Agent
‐ 2011 ‐
Q. How did you find the home your purcahsed?
How Buyers Found Home: 90% Agent
‐ 2007 ‐
Q. How did you find the home your purcahsed?
Top 10 Websites Used
Real e
state
compa
ny web
site
Real estate agent website
Q. Which websites did you use as part of your home buying process?
Most Useful Websites
Real estate company website
Real estate agent website
Q. What was the most useful website that you visited during your home buying process?
# of Agents Interviewed
3
12%
8
19%
1
44%
2
36%
Q. How many agents did you interview prior to selecting the agent
you used in your recent home purchase?
Why Buyers Chose their Agent
1.
2.
3.
4.
5.
Most responsive (28%)
Worked with agent before (18%)
First to respond (17%)
Most aggressive (16%)
Most knowledgeable (6%)
Q. What was the single most important reason for selecting the agent that you
used in your recent home purchase?
Agent Response Time Is Very Important
‐ Rating on 1 to 5 Scale ‐
Q. Please rate the importance of the agent’s response time in the decision on your final selection on a scale of
one to five, with five being extremely important and one being not at all important.
Over 1/3 of Buyers Expect
Instant Response from Agent
- Up 50% from 2007 -
Q. What was the typical response time you expected from
your agent to return any form of communication to you?
Sellers in Today’s Market:
2011 Survey of California Home Sellers Quick Facts on Seller’s Transaction
Home was listed more than 7 months (median: 28 weeks) before opening escrow
Median escrow length was 1.5 months
Only 40% of sellers closed escrow on time
20% of sellers used electronic signature
Q: Was this your first experience in selling a house?
Share of First‐Time Sellers Increasing with Market Distress Reason
Percent of Sellers
1. Could not afford mortgage
22%
2. Job/income uncertainty
13%
3. Loss of household income
12%
4. Low prices allowed upgrade
7%
5. Mortgage is too expensive
7%
Q: Why did you sell your home?
Top 5 Reasons for Selling
Q: Was the home sold as a short sale?
Short Sales vs. Regular Sales
List vs Sale Price
Q: What was the initial listing price of your home? Selling price?
Reasons Escrow Did Not Close on Time
Loan did not fund on time
Lender did not approve terms
Paperwork not completed on time
Title company late with recording
Trouble with buyer’s loan approval
Problems / mistakes on loan documents
Walk-through changes not completed
Mistakes by other agent
Insurance problems
Escrow company mistake
Most Sellers Found their Agent on the Internet
Internet - listing on an aggregate
website
Referral from friends, relatives,
neighbors or other contacts
39%
11%
Internet - agent's website
11%
9%
Internet - real estate company's website
“For Sale” signs in the neighborhood
8%
Prior dealings with real estate agent
8%
Internet - social media website
Agent is a relative or friend
Agent's farming material
Q. How did you find your real estate agent?
7%
5%
4%
Reason Seller Selected Agent
Reason
Percentage of Sellers
1. First to respond
21%
2. Seemed most responsive
21%
3. Seemed most aggressive
19%
4. Worked with agent before
11%
5. Understanding of distressed properties
8%
Q: What was the single most important reason for selecting the agent you used in your
recent home sale?
Q: Did you initially list your home with an agent other than the one with whom you sold it?
Initially Listed Home With Another Agent
Q: Did you use social media in the home selling process?
Most Sellers Used Social Media in the Transaction
77% of All Sellers Used Social Media
Q: Which social media websites did you use to learn more about and communicate with
real estate agents and companies?
Q: What was the typical response time you EXPECTED from your agent to return any form of communication with you?
Q: On average, what was the ACTUAL time of your agent to return any form of communication to you?
Response Time is of the Essence
Closing Thoughts
Direction of Home Prices: Sellers Skeptical; Buyers Hopeful Q: Do you think home prices in your neighborhood will go up, down or stay flat in one year, five years and 10 years?
8 in 10 Americans Agree Buying a Home is the Best Investment One Can Make
SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
8 in 10 Renters Would Like to 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 or
because they cannot
afford to buy a home, just
24% say they
rent out of
choice.”
SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
Take ‐ Aways
1.
2.
3.
4.
5.
Worst of the recession is over but recovery will be slow
Rates should remain low through 2014 Biggest Wild Card: EuroZone Crisis Biggest Policy Issue: Future of Fannie, Freddie & FHA
3 distinct markets: REO, Short Sale, Equity Sales
Take ‐ Aways
1.
2.
3.
4.
5.
RE is LOCAL – use aggregate statistics to talk with clients about local market conditions
Talk to your clients about communication! Style? Channel? Frequency? Cut current response time in half!
Audit your own website. Google yourself. Google clients
Get Back to Basics – No Excuses!
Thank You
www.car.org/marketdata
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