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2010 California Real Estate Market Forecast Fresno AOR Sara Sutachan Senior Research Analyst California Association of REALTORS® December 11, 2009.

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Presentation on theme: "2010 California Real Estate Market Forecast Fresno AOR Sara Sutachan Senior Research Analyst California Association of REALTORS® December 11, 2009."— Presentation transcript:

1 2010 California Real Estate Market Forecast Fresno AOR Sara Sutachan Senior Research Analyst California Association of REALTORS® December 11, 2009

2  Economics  Speeches Speeches & Presentations

3 US and California Economic Conditions

4 QUARTERLY PERCENT CHANGE, ANNUAL RATE Gross Domestic Product 2009 Q3: 3.5% (advance estimate) SOURCE: US Dept of Commerce, Bureau of Economic Analysis

5 QUARTERLY PERCENT CHANGE Personal Consumption 2009 Q3: 3.4% SOURCE: US Dept of Commerce, Bureau of Economic Analysis

6 INDEX, 100=1985 Consumer Confidence Index: Better…Sort Of October 2009: 47.7 November 2009: 49.5

7 Unemployment Rate California (10/ %) vs. United States (11/ %) SOURCE: CA Employment Development Division

8 Unemployment Rate Fresno County, October 2009: 15.8% SOURCE: CA Employment Development Division

9 Consumer Price Index October 2009: All Items -0.2% YTY; Core 1.5% YTY PERCENT CHANGE FROM A YEAR AGO, 100=

10 Historic Fiscal Stimulus Fiscal Policy: “Spend Now – Worry Later” To date: $3 trillion in government spending MBS purchases ($693 billion) TARP ($372 billion) Obama stimulus package ($304 billion) Cash for Clunkers First-time Buyer Tax Credit Extension of Unemployment Benefits Tax Cuts Result: Federal budget deficit will reach 1.6 trillion this year

11 U.S. Economy SOURCE: California Association of REALTORS® Forecast Date: October 2009

12 California Economy SOURCE: California Association of REALTORS® Forecast Date: October 2009

13 New Housing Permits California, : Down 48.8% YTD SOURCE: Construction Industry Research Board

14 Distressed Commercial RE Growing billions Distressed properties include those that are in bankruptcy, foreclosures, those that have received lender forbearance, or lender REO.

15 Mortgage Financing – Still Challenging

16 SOURCE: Federal Home Loan Mortgage Corporation Mortgage Rates and Fed Funds Rate

17 SOURCE: Federal Home Loan Mortgage Corporation – 30-yr FRM Federal Reserve Board – 10-Year T-Bond 30-Year FRM vs. 10-Year T-Bond Above-Average Risk Premiums Associated With Mortgage Loans Average. Risk Premium: 1.6% Lower spread in FED purchases from Fannie and Freddie

18 FHA Loans in CA # of Total Loans in CA & US CA Tops All States with a 10% Market Share of all FHA Lending in US (Source: Inside FHA Lending) Source: HUD CA EndorsementsUS Endorsements

19 CA Mortgage Foreclosure & Delinquency Rates California: Q3-2009, NSA SOURCE: Mortgage Bankers Association Foreclosure Rate: Long Run Average: 1.0% Delinquencies: Long Run Average: 4.1%

20 NODs & Trustees Deeds Filed in California Source: DataQuick Information Systems No. of Defaults or TDs

21 California Real Estate Market

22 Sales Hit Bottom in 2007, Up in 2008 & 2009 UNITS/MEDIAN PRICE $ SOURCE: California Association of REALTORS® California Sales of Existing Homes and Median Price -61% -25% -44%

23 % Change$ in Billion Dollar Volume of Sales Peaked in ’05 Down 55% Thru ‘09 SOURCE: California Association of REALTORS® -55%

24 Sales of Existing Detached Homes and Pacific West Consumer Confidence California, October 2009 Sales: 562,400 Units, Up 28.9% YTD, Up 1.0% YTY INDEXUNITS SOURCE: California Association of REALTORS®; The Conference Board *Sales are seasonally adjusted and annualized

25 Median Price of Existing Detached Homes California, October 2009: $297,500, Down 1.0% YTY SOURCE: California Association of REALTORS®

26 Median Price Annual Comparison California, 2008: $346,410, Down 38.2% YTY SOURCE: California Association of REALTORS® MONTHLY ANNUAL

27 Sales By Price Range October 2004 – present SOURCE: Mortgage Bankers Association, C.A.R. Credit Freeze: 8/2007

28 Peak vs. Current Price - October 2009 SOURCE: California Association of REALTORS®

29 Unsold Inventory Index California, October 2009: 4.0 Months SOURCE: California Association of REALTORS® MONTHS

30 Unsold Inventory By Price Range California - Existing Homes October 2009 vs. October 2008 SOURCE: California Association of REALTORS®

31 Distressed Sales to Total Sales Ratio SOURCE: California Association of REALTORS®

32 Market Summary Sales - strong but off early-09 pace Median Price – bottom at $245K in Feb 09 September median at $296K Up 21% from Feb 09, but 50% below peak Have we hit bottom? Inventory – Well below 7 month average at 4.0 months in October Share of distressed properties sold, slightly down from March.

33 The Bottom Line: Great Time to be a First Time Buyer

34 PITI/Month Entry-Level Monthly House Payment including Interest, Taxes, & Insurance SOURCE: California Association of REALTORS® Peak 2007-Q2: $3,190/mo Latest 2009-Q3: $1,450/mo

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

36 Proportion of First-Time Homebuyers California Q. Was the buyer a first-time buyer?

37 Signs of Distress in Sellers Are Reacting to Financial Stress The Role of Market Conditions In the Decision to Sell SOURCE: C.A.R Survey of Home Sellers

38 While Buyers See Opportunities … The Role Of Market Conditions In The Decision To Buy SOURCE: C.A.R Survey of Home Buyers

39 FREE program designed to provide peace of mind to first-time buyers who are hesitant to enter the housing market due to concerns about potential job loss. Qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months to help pay the mortgage. To qualify for the Mortgage Protetion Program, applicants must: Be a first-time home buyer – someone who has not owned property in the last three years (includes co-buyer) Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009 (purchase agreement cannot be dated before April 2, 2009) Use a California REALTOR® in the transaction Purchase the property in California Be a W-2 employee (cannot be self-employed) Visit for application and additional program details

40 Fresno County

41 SOURCE: California Association of REALTORS®; The Conference Board INDEXUNITS Sales of Existing Detached Homes and Pacific West Consumer Confidence Fresno County, October 2009: 871 Units, Up 48.4% YTD, Down 2.4% YTY

42 Median Price of Existing Detached Homes Fresno County, October 2009: $152,840, Down 12.4% YTY SOURCE: California Association of REALTORS®

43 Median Price Annual Comparison Fresno County, 2008: $195,790, Down 29.6% YTY SOURCE: California Association of REALTORS® ANNUAL MONTHLY

44 Median Home Sales Price Fresno County SOURCE: C.A.R.; DataQuick Information Systems. The price statistics are derived from all types of home sales -- new and existing, condos and single-family.

45 First-time Buyer Housing Affordability Index Fresno County, 3 rd Quarter 2009: 76% SOURCE: California Association of REALTORS® % OF HOUSEHOLDS THAT CAN BUY

46 Housing Affordability Index Fresno, 3 rd Quarter 2009: 63% SOURCE: California Association of REALTORS® QTRLYMonthly

47 City of Fresno

48 Sales of Single-Family Detached Homes SOURCE: Clarus Market Metrics City of Fresno, Nov. 2009: 423, Down 19.9% MTM, Up 6.3% YTY

49 Median Price of Single-Family Detached Homes SOURCE: Clarus Market Metrics City of Fresno, Nov. 2009: $142,000, Down 4.9% MTM, Down 2.1% YTY

50 Months Supply of Inventory City of Fresno, Nov-09: 2.6 months SOURCE: Clarus Market Metrics

51 2010 Forecast

52 California Housing Market Outlook Source: CALIFORNIA ASSOCIATION OF REALTORS® Forecast Date: October 2009

53  Market Response Center

54  Economics  Speeches Speeches & Presentations The End - - Thank You


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