2009 California & Bay Area Real Estate Market Outlook

Transcription

1 2009 California & Bay Area Real Estate Market Outlook November 24, 2008 Fairmont Hotel Leslie Appleton-Young C.A.R. Vice President and Chief Economist

2 California Real Estate Market: 2008

3 California s Housing Cycles and Membership THOUSANDS Home Sales Membership 700, , , , , , , , , , ,000 50,000 0

4 Sales Hit Bottom in 2007, Up in 2008 California Sales of Existing Homes and Median Price UNITS/MEDIAN PRICE $ Sales of Existing Detached Homes Median Price 700, ,000-44% 500, ,000-61% -25% 300, , ,000 0 SOURCE: California Association of REALTORS

5 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 Fed Funds, FRM and ARM Rates: FF Rate reduced from 6.5% to 1% between ; Fueled housing boom 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% FRM ARM Federal Funds 0% SOURCE: Federal Home Loan Mortgage Corporation

6 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 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 Sales of Existing Detached Homes and Pacific West Consumer Confidence California, September 2008 Sales: 502,190 Units, Up 2.7% YTD, Up 96.7% YTY UNITS Sales Consumer Confidence INDEX 700, , , , , , , , SOURCE: California Association of REALTORS ; The Conference Board

7 Median Price of Existing Detached Homes California, September 2008: $316,480, Down 40.9% Y-T-Y 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 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 SOURCE: California Association of REALTORS

8 Lower Price Ranges Hit Hardest, but Percentage Change in Sales YTY Aug-07 Sep-07 0% -10% Below $500,000 $500, ,999 Over $1 Million -3.4% -20% -30% -40% -50% -60% -27.7% -36.4% -32.5% -52.4% -26.4% Credit Crunch hit the market over $500K from September forward SOURCE: California Association of REALTORS

9 Sales By Price Range % 80% 70% 60% 50% 40% 30% 20% 10% 0% Under to Mil + Crunch: 8/07-Now 76% SOURCE: Mortgage Bankers Association, C.A.R.

10 Jan-88 Jul-88 Jan-89 Jul-89 Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 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 Unsold Inventory Index California, September 2008: 6.5 Months MONTHS Long Run Average: 7 months SOURCE: California Association of REALTORS

11 Listings by Month, Selected Years California ( Average=100) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec SOURCE: California Association of REALTORS

12 First-time Buyer Housing Affordability Index California Vs. U.S Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q % OF HOUSEHOLDS THAT CAN BUY 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% CA US 24% Improvement YTY SOURCE: California Association of REALTORS

13 Buyers See Opportunities in This Market The Role Of Market Conditions In The Decision To Buy Price decreases motivated us 67% Low interest rates helped us move to a better location, neighborhood 39% Likelihood that interest rates will move up motivated us 22% Low interest rates helped us buy a larger home Moved to an area where it was more affordable 10% 9%

14 While Sellers Are Reacting to Financial Stress 80% 70% 60% 50% 40% 30% 20% 10% 0% 55% 42% Desired larger home The Role of Market Conditions In the Decision to Sell 20% 14% 16% 16% 7% Desired better/other location % 20% 5% 0% 0% 0% 0% 0% Mortgage payment went up (reindex) Signs of Distress in 2008 Moved to rental to save money Trouble making mortgage payments

15 Type of Mortgages Among Sellers Adjustable Rate Mortgage (ARM) - 2 YR Fixed Period (2/28 ARM) 32% Adjustable Rate Mortgage (ARM) -3 YR Fixed Period (3/27 ARM) 28% Fixed-rate loan (FRM) 14% Interest Only 12% Other ARM 15%

16 Regional Markets

17 Peak vs Current Price-September 2008 Peak Region Month Peak Price Sep-08 % Chg Median From Peak Monterey Region Aug-07 $798,210 $347, % High Desert Apr-06 $334,860 $159, % Sacramento Aug-05 $394,450 $195, % Palm Springs/Lower Desert Jun-05 $393,370 $199, % Riverside San Bernardino Jan-07 $415,160 $217, % CALIFORNIA May-07 $594,530 $316, % Northern Wine Country Jan-06 $645,080 $369, % San Diego May-06 $622,380 $373, % San Luis Obispo Jun-06 $620,540 $375, % Ventura Aug-06 $710,910 $431, % Los Angeles Aug-07 $605,300 $376, % San Francisco May-07 $853,910 $554, % Orange County Apr-07 $747,260 $498, % Santa Clara Apr-07 $868,410 $600, % Northern California Aug-05 $440,420 $321, %

18 Source: Foreclosure Radar Stockton: A Tale of Two Cities Foreclosure Mapping

19 Stockton: A Tale of Two Cities

20 Bay Area Economic Profile

21 Nonfarm Employment Bay Area Region Nonfarm Employment (Thousands) Sep 2008 Sep 2007 Change % Change San Francisco % Oakland 1, , % San Jose % Napa/Solano % Sonoma % Total 3, , % SOURCE: California Economic Development Dept.

22 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 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 Sales of Existing Detached Homes and Pacific West Consumer Confidence Bay Area, Sept. 2008: 2,959 Units, Down 7.4% YTD, Up 60.3% YTY UNITS 7,000 Sales Consumer Confidence INDEX 160 6, , ,000 3, , , SOURCE: California Association of REALTORS ; The Conference Board

23 Home Sales in Bay Area Counties Sep-07 Sep Alameda Contra Costa Marin San San Mateo Santa Francisco Clara Santa Cruz Solano Sonoma SOURCE: California Association of REALTORS

24 Sales of Existing Detached Homes Bay Area Counties County Sep-08 Aug-08 Sep-07 M-t-M Y-t-Y Y-t-D Alameda % 56.9% -9.0% Contra Costa % 53.0% -18.2% Marin % 36.1% -21.4% San Francisco % 29.4% -4.1% San Mateo % 7.1% -14.4% Santa Clara % 68.7% -11.1% Santa Cruz % 61.1% -13.8% Solano % 201.3% 46.3% Sonoma % 100.9% 8.2% SOURCE: California Association of REALTORS

25 Median Price of Existing Detached Homes Bay Area, September 2008: $554,730, Down 29.2% YTY Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 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 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 SOURCE: California Association of REALTORS

26 Sales By Price Range Bay Area Existing Homes September 2008 vs. Sept Price Range (Thousands) Over 1 Million Percent of Sales By Year Sep-07 Sep % 7% 13% 20% 27% 33% 40% SOURCE: California Association of REALTORS

27 Median Price of Existing Detached Homes Bay Area Counties County Sep-08 Aug-08 Sep-07 M-t-M Y-t-Y Alameda $ 468,367 $ 514,974 $ 669, % -30.1% Contra Costa $ 699,561 $ 701,298 $ 795, % -12.1% Marin $ 899,390 $ 929,999 $ 1,019, % -11.8% San Francisco $ 698,597 $ 789,773 $ 839, % -16.8% San Mateo $ 752,625 $ 787,500 $ 908, % -17.2% Santa Clara $ 600,000 $ 650,000 $ 845, % -29.0% Santa Cruz $ 475,000 $ 582,000 $ 702, % -32.4% Solano $ 264,935 $ 267,592 $ 407, % -35.0% Sonoma $ 362,773 $ 382,945 $ 580, % -37.5% SOURCE: California Association of REALTORS

28 Supply Indicators Bay Area September 2008 August 2008 September 2007 Median Time on the Market 53.0 Days 52.6 Days 42.6 Days Unsold Inventory Index 6.3 Mos. 6.0 Mos Mos. SOURCE: California Association of REALTORS

29 Notices of Default Bay Area Houses and Condos County/Region 2008Q3 2008Q2 2007Q3 QTQ%Chg YTY%Chg San Francisco % 40.1% Alameda 3,482 3,812 2, % 63.8% Contra Costa 4,103 5,046 3, % 27.6% Santa Clara 2,814 3,751 1, % 70.0% San Mateo 797 1, % 37.2% Marin % 50.0% Solano 1,934 2,427 1, % 27.8% Sonoma 1,021 1, % 36.3% Napa % 62.6% Bay Area 15,027 18,516 10, % 44.1% SOURCE: Data Quick Information Systems

30 Non-Residential Permits Valuations 9 Bay-Area Counties ( ) YTD Millions of Dollars Industrial Bldgs Retail Bldgs Office Bldgs Other(Gap to Non Res Total) SOURCE:U.S. Real Estate Research Council of Northern California

31 2008 Housing Market Survey

32 Median Price Discount and Weeks on Market 2008: Discount 7.5%, Time on Market: 8.6 weeks Median Price Discount 8% Med. Price Discount 7% Med. Weeks on MLS 6% 5% 4% 3% 2% 1% Weeks on MLS % 0 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?

33 Percent of Homes Sold with Price Discount 100% 80% 60% Long Run Average = 68% 80% 40% 20% 0% Q. What was the original list sales price of the property? What was the final sales price of the property?

34 Median Net Cash To Sellers $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 $100,000 Q. What was the net cash gain or net loss to the seller as a result of this sale?

35 Percent of Loans Below the Maximum Conforming Loan Limit (New First Mortgage) 100% 90% 80% 70% 60% All Home Buyers Loan Limit 2008 Limit: $729,750 92% $800,000 $700,000 $600,000 $500,000 50% $400,000 40% 30% 20% 10% $300,000 $200,000 $100,000 0% $0

36 Proportion of First-Time Home Buyers 2008: 35.9% 60% 50% % First-Time Home Buyers Long Run Average 40% 38.3% 30% 20% 10% 0% Q. Was the buyer a first-time buyer?

37 Percent of Buyers with Zero Downpayment First-Time Buyers vs. Repeat Buyers: % 40% All Home Buyers First-Tim e Buyers Repeat Buyers 30% 20% 10% 0% % 3.4% 2.0% Source: C.A.R Annual Housing Market Survey

38 2009 Forecast

39 California Housing Market Forecast SFH Resales (000s) e 2009f % Change 5.1% 3.8% 0.04% -23.6% -26.0% 12.0% 12.5% Median Price ($000s) $372.7 $450.8 $524.0 $556.6 $558.1 $ % Change 17.9% 20.9% 16.2% 6.2% 0.3% -31.7% -6.0% 30-Yr FRM 5.8% 5.8% 5.9% 6.4% 6.3% 5.9% 6.2% 1-Yr ARM 3.8% 3.9% 4.5% 5.5% 5.6% 5.2% 5.3% Forecast Date: October 2008 SOURCE: California Association of REALTORS

40 Thank You