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April 18-19, 2009 HOMEBUYERS FAIR Leslie Appleton-Young C.A.R. Vice President and Chief Economist 2009 California Real Estate: Opportunities for First.

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Presentation on theme: "April 18-19, 2009 HOMEBUYERS FAIR Leslie Appleton-Young C.A.R. Vice President and Chief Economist 2009 California Real Estate: Opportunities for First."— Presentation transcript:

1 April 18-19, 2009 HOMEBUYERS FAIR Leslie Appleton-Young C.A.R. Vice President and Chief Economist 2009 California Real Estate: Opportunities for First Time-Buyers

2 California Real Estate Market Update

3 Sales Hit Bottom in 2007, Up in 2008 UNITS/MEDIAN PRICE $ SOURCE: California Association of REALTORS® California Sales of Existing Homes and Median Price -61% -25% -44%

4 Sales of Existing Detached Homes, California 2008: 439,740 units, Up 26.7% UNITS SOURCE: California Association of REALTORS®

5 Sales of Existing Detached Homes and Pacific West Consumer Confidence California, Feb Sales: 620,410 Units, Up 91.6% YTD, Up 83.0% YTY INDEXUNITS SOURCE: California Association of REALTORS®; The Conference Board *Sales are seasonally adjusted and annualized

6 US Sales and Median Price Feb Sales: Down 3.6% YTY, Median Price: Down 15.0% YTY

7 Median Price of Existing Detached Homes California, February 2009: $247,590, Down 40.8% YTY SOURCE: California Association of REALTORS®

8 Sales By Price Range SOURCE: Mortgage Bankers Association, C.A.R. Financial Turmoil: 8/07-Now

9 Peak vs Current Price - February 2009

10 Unsold Inventory Index California, February 2009: 6.5 Months SOURCE: California Association of REALTORS® MONTHS

11 Distressed Sales to Total Sales Ratio Bi-Furcated Marketplace

12 Proportion of First-Time Home Buyers 2008: 35.9% Q. Was the buyer a first-time buyer?

13 % ChangePITI/Month Entry-Level Monthly House Payment and Payment as Share of Median Household Income SOURCE: California Association of REALTORS® Peak 2007-Q2: $3,380/mo Latest 2008-Q4: $1,630/mo

14 First-time Buyer Housing Affordability Index California Vs. U.S % OF HOUSEHOLDS THAT CAN BUY SOURCE: California Association of REALTORS®

15 Buyers See Opportunities in This Market… The Role Of Market Conditions In The Decision To Buy

16 Southern California Region Economic Profile

17 Home Sales in Southern California Regions SOURCE: California Association of REALTORS®

18 Sales of Existing Detached Homes SOURCE: California Association of REALTORS® Southern California Regions

19 Sales of Existing Detached Homes Los Angeles County, 2008 Sales: 40,913 Units, Up 16.3% YTY SOURCE: California Association of REALTORS® UNITS ANNUAL MONTHLY

20 Unsold Inventory Index (Months) SOURCE: California Association of REALTORS®

21 Sales of Existing Detached Homes and Pacific West Consumer Confidence Los Angeles County, Feb Sales: 3,374 Units, Up 76.2% YTD, Up 69.3% YTY SOURCE: California Association of REALTORS®; The Conference Board INDEXUNITS

22 Median Price of Existing Detached Homes Southern California Regions SOURCE: California Association of REALTORS®

23 Median Price of Existing Detached Homes Southern California, Feb. 2009: $261,810 Down 39.6% YTY SOURCE: California Association of REALTORS®

24 Median Price Annual Comparison Los Angeles County, 2008: $402,110, Down 32.3% YTY SOURCE: California Association of REALTORS® MONTHLY ANNUAL

25 Unsold Inventory Index Los Angeles County, February 2009: 7.7 Months MONTHS SOURCE: California Association of REALTORS®

26 Foreclosures SOURCE: Real Estate Research Council THOUSANDS Los Angeles County

27 2009 Forecast

28 California Housing Market Summary SOURCE: California Association of REALTORS® April 2009

29 First-Time Buyer Housing Affordability Index

30 First-Time Buyer Housing Affordability Median Price: The First-time Buyer (FTB) purchases a home at the entry-level price, which is 85 percent of the median home price for the area. Down payment: The FTB is assumed to make a 10 percent downpayment. The Monthly Payment Including Taxes and Insurance (PITI) is calculated according to the above underlying assumptions: –10 percent down payment –Effective Composite ARM mortgage rate –1.038 percent assumed insurance costs and property taxes. 40% Qualifying Ratio: It is then assumed that the monthly PITI can be no more than 40 percent of a household's income. Methodology/Assumptions

31 First-time Buyer Housing Affordability Southern California - 4th Quarter 2008 SOURCE: California Association of REALTORS®

32 To Rent or Buy in 2009

33 Household renting a 3bedroom 2 bath apartment at the prevailing rent of $1,855 per month and purchases rental insurance for $20 per month. The household considers the purchase of anentry-level home: priced at $248,000, or 85 percent of the prevailing median- priced home of $291,800. The monthly payment including taxes and insurance (PITI) is $1,630, assuming: –10 percent down payment –40 percent qualifying ratio –Prevailing one-year ARM mortgage rate, –1.038 percent for insurance costs and property taxes –$8,000 First-time buyer tax credit Assumptions

34 Renting Versus Buying in Year Tax Savings Outlook SOURCE: C.A.R. First-time Buyer Purchasing in 2009 saves over $11k in 5 Years under these assumptions

35 Renting Versus Buying in 2009 Out-of-Pocket Cost Analysis – 10% Downpayment SOURCE: C.A.R. Assumes all pmts/costs remain constant

36 Renting Versus Buying in 2009 Out-of-Pocket Cost Analysis – 20% Downpayment SOURCE: C.A.R. Using the same assumptions, EXCEPT: Increasing the Down Payment to 20%(instead of 10%): Monthly Savings Increase by $150 Annual Savings Increase by$1,800 5-Year Savings Increase by $9,000 Note: 5-Yr Tax Savings goes down to $10,355, a $1,038 drop due to lower interest payments.

37 Renting Versus Buying in 2009 Out-of-Pocket Cost Analysis –Entry-level Condo SOURCE: C.A.R. Using the same assumptions, EXCEPT: Using Entry-Level Median Priced Condo at $210,830 with 10% Downpayment: Note: 5-Yr Tax Savings goes down to $9,700, a $1,741 drop due to lower interest payments.

38 Loan Availability FHA Borrower Eligibility Requirements

39 Market Share by Loan Type Jumbo Vs Conforming SOURCE: C.A.R. CA Existing Single-Family Home Sales *Down Payment Source: C.A.R.’s Annual Housing Market Survey

40 Source: C.A.R State of the California Housing Market Report FHA and VA Mortgages (First Mortgage)

41 FHA Eligibility Requirements Must occupy home as primary residence Must be legal resident: –US Citizen –Lawful permanent resident aliens –Non-permanent resident aliens Must have valid SSN. (T.I.N. unacceptable) Only allowed 1 FHA loan Borrowers can hold title in Living Trust Can be/have co-borrowers/co-signers For more info contact your REALTOR® Call-FHA ( ) Borrower Eligibility

42 FHA Eligibility Requirements 1 – 4 Unit Dwellings SFR, PUD, Condo – (Attached, Detached, High/Low rise) Manufactured Homes Existing or New Construction Must Meet HUD Minimum Property Requirements Owner Occupancy Required For more info contact your REALTOR® Call-FHA ( ) Property Eligibility

43 Condos vs Single-Family Detached

44 Median Price of Existing Homes Condos vs. Single-Family Detached SOURCE: California Association of REALTORS®

45 First-Time Buyer Housing Affordability Condos vs. Single-Family Detached SOURCE: California Association of REALTORS®

46 2008 First Time Home Buyer Study California Association of REALTORS 

47 Methodology 500 telephone surveys with California consumers who had purchased a home in Surveys results are projectable at two standard deviations (a 95%) confidence level which yields a maximum sampling error of +/-4.5%.

48 Home Purchased

49 Type Of Home Purchased

50 Share of Distressed Sales

51 Homes Listed on MLS

52 Square Footage Of The Home Purchased Mean = 1,678; Median = 1,700

53 Mean = 6.9; Median = 6.0 Months Spent Looking for a Home Prior to Finding The Home You Bought

54

55 “The” Primary Reason For Buying Your Home

56 Role Market Conditions Played In Your Decision To Buy Your Home

57 Direction of Home Prices In Your Neighborhood

58 Mean = 43.6 months; Median = 42 months Length of Time Planned to Stay at Current Home Before Selling It

59 Mean = 15%, Median = 15% Down Payment As a Percent of Home Price

60 Mean = 15%, Median = 15%

61 Type Of Mortgage Loan

62 Do you know the terms of your loan?

63 Source of Housing Finance Assistance

64 Mean = 8.15 Median = 9 Scale: “1” = very easy, “10” = very difficult Level of Difficulty to Obtain Financing

65 Had you made an offer on other homes before finding and buying this one? # of Offers Before This Purchase Mean = 3.11 Median = 3

66 Reasons Offers Made Prior To Current Purchase Not Successful

67 Use a Real Estate Agent

68 Single Most Important Reason For Selecting Agent

69 Areas Needed The Most Help From Agent

70 Reasons for Overall Satisfaction with Your Agent

71 One Thing You Would Like To Change About Your Home Buying Experience

72 Gender of First-Time Buyers

73 Age of First-Time Buyers Mean = 35.7 Median = 35

74 Marital Status

75 Income Category


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