Presentation is loading. Please wait.

Presentation is loading. Please wait.

2014 HOUSING MARKET FORECAST REOMAC Sheraton Gateway LAX December 5, 2013 Leslie Appleton-Young, Vice President & Chief Economist.

Similar presentations


Presentation on theme: "2014 HOUSING MARKET FORECAST REOMAC Sheraton Gateway LAX December 5, 2013 Leslie Appleton-Young, Vice President & Chief Economist."— Presentation transcript:

1 2014 HOUSING MARKET FORECAST REOMAC Sheraton Gateway LAX December 5, 2013 Leslie Appleton-Young, Vice President & Chief Economist

2 BREAKING NEWS FROM C.A.R.

3 C.A.R. Finance Helpline Finance.car.org (213) Get one-on-one assistance with short sales, funding, REOs, Deeds in Lieu, and closing transactions. NEW C.A.R. Member Benefit for 2013!

4 THE ECONOMY

5 So many wildcards...Where to begin? Jan 15, 2014 – FY2014 continuing resolution expires Feb 7, $16.7 Trillion borrowing cap reinstated Fed will likely begin “Tapering” early next year Future of Fannie and Freddie? Viability/relevance of FHA Tax Reform: Mortgage Interest Deduction

6 Gross Domestic Product 2012: 2.2%; 2013 Q3: 2.8% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ ANNUALLYQUARTERLY 2009 Largest Annual Drop since 1938 (-3.4%) SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

7 SERIES: Components of GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis Components of GDP ANNUAL PERCENT CHANGE

8 Unemployment: Cyclical & Structural Heading Down: Lowest since 2008 SERIES: Unemployment Rate SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

9 CA Added ~250k Jobs Aug-12 to Aug-13 Recession Job Losses: 1.3 million Since Jan’10: +805,700; -500,000 deficit MONTH TO MONTH CHANGES SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

10 Job Trends by California Metro Area SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division ANNUAL PERCENT CHANGE October 2013: CA +1.4%, +207,300

11 California Job Changes by Industry SERIES: Total Nonfarm Employment By Industry SOURCE: US Bureau of Labor Statistics, CA Employment Development Division October 2013: CA +1.4%, +207,300 ANNUAL PERCENT CHANGE

12 Nonfarm Employment By Region SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

13 Metro Commercial Space Vacancy Rates SOURCE: National Association of REALTORS® 2013 Q3

14 Consumer Confidence: Declining November 2013: 70.4 INDEX, 100=1985 SERIES: Consumer Confidence SOURCE: The Conference Board

15 Consumer Price Index: Sub-dued October 2013: All Items +0.9% YTY; Core +1.7% YTY ANNUAL PERCENT CHANGE SERIES: Consumer Price Index SOURCE: US Bureau of Labor Statistics

16 HOUSING & MORTGAGE FINANCE

17 Mortgage Rates Up 1% Since May Tapering in 2014? SERIES: 30Yr FRM, 1Yr ARM, Federal Funds SOURCE: Federal Home Loan Mortgage Corporation

18 Sales of Existing Homes US, Oct Sales: 5,120,000 Units, +11.1% YTD, +6.0% YTY SERIES: Existing Home Sales SOURCE: NATIONAL ASSOCIATION OF REALTORS®

19 Median Price of Existing Homes US, October 2013: $199,500, Up 12.8% YTY SERIES: Existing Home Sales SOURCE: NATIONAL ASSOCIATION OF REALTORS®

20 California vs. U.S. Median Prices SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

21 Housing Affordability Hit by Mortgage Rate and Price Gains But Still Attractive % OF HOUSEHOLDS THAT CAN BUY SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

22 Mortgage Originations: Refinance Share Dropping with Higher Rates REFINANCE/PURCHASE SHARE30YR FRM SERIES: Mortgage Originations SOURCE: Mortgage Bankers Association of America

23

24 THE CALIFORNIA RESIDENTIAL REAL ESTATE MARKET

25 CA: Dollar Volume Steadily Improving Up 25.3% in 2013, Up 9.3% in 2014 % Change$ in Billion -60% SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

26 California’s Housing Cycles and Membership SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® *Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

27 Sales of Existing Detached Homes California, Oct Sales: 401,170 Units, -4.0% YTD, -11.1% YTY *Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

28 More than Four of Five Sales Were Equity Sales SERIES: Distressed Sales SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® California: Oct 2013

29 REO & Short Sales Percent of Total Sales, Southern California: October 2013 SERIES: Distressed Sales SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

30 Share of Equity Sales Has Increased Sharply Since Early 2012 SERIES: Distressed Sales SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

31 Sales Share by Price Range SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

32 Median Price of Existing Detached Homes California, October 2013: $427,290, Up 25.3% YTY SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

33 Unsold Inventory Index California, October 2013: 3.4 Months 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®

34 Unsold Inventory Index (Months) 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®

35 Supply of Inventory Remains Tight, But Continues to Improve SERIES: Distressed Unsold Inventory Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® UNSOLD INVENTORY INDEX (MONTHS) California: October 2013

36 Extremely Low Levels of Active Listings at the State Level SERIES: Distressed Unsold Inventory Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® UNSOLD INVENTORY INDEX (MONTHS)

37 Why is Inventory so Low? Demand Side Housing affordability is at historic highs Low rates impacting other investment alternatives Supply Side Little new construction for last 5 years Underwater homeowners are stuck Foreclosure pipeline drying up in non- judicial states Investors are renting instead of flipping Off-market (aka “pocket’) listings growing

38 CA New Housing Permits Still Falling Short Household Growth: 220, ,000/yr SERIES: New Housing Permits SOURCE: Construction Industry Research Board

39 CA Underwater Mortgages Dropping Sharply SERIES: Underwater Mortgages SOURCE: CoreLogic

40 Mortgage Foreclosure & Delinquency Rates California: Q Delinquencies: Long Run Average: 4.5% Foreclosure Rate: Long Run Average: 1.3% SERIES: Mortgage Foreclosure & Delinquency Rates SOURCE: Mortgage Bankers Association

41 Foreclosures Southern California THOUSANDS SERIES: Trustee Deeds Recorded SOURCE: Real Estate Research Council

42 Notices of Default – CA Q Houses and Condos * Includes additional counties SERIES: Notices of Default SOURCE: DataQuick Information Systems

43 Foreclosures (Trustee Deeds Recorded)- CA Q Houses and Condos * Includes additional counties SERIES: Trustee Deeds Recorded SOURCE: DataQuick Information Systems

44

45 Preforeclosure: -48% YTD Schedule for Sale: -63% YTD Bank Owned: -36% YTD California Foreclosure Inventories, Sept Month Average: Preforeclosure: 45,572 Schedule for Sale: 26,058 Bank Owned: 44,665 SERIES: Foreclosure Inventories SOURCE: ForeclosureRadar.com

46 Preforeclosure: 6,063 Auction: 5,454 Bank Owned: 1,041 Los Angeles County SOURCE: PropertyRadar.com as of 11/05/13

47 Preforeclosure: 6,063 Auction: 5,454 Bank Owned: 1,041 Los Angeles County SOURCE: PropertyRadar.com as of 11/05/13

48 Preforeclosure: 6,063 Auction: 5,454 Bank Owned: 1,041 Los Angeles County SOURCE: PropertyRadar.com as of 11/05/13

49 Preforeclosure: 1,199 Auction: 1,120 Bank Owned: 213 City of Los Angeles SOURCE: PropertyRadar.com as of 11/18/13

50 Preforeclosure: 1,475 Auction: 1,381 Bank Owned: 205 Orange County SOURCE: PropertyRadar.com as of 11/14/13

51 Preforeclosure: 1,475 Auction: 1,381 Bank Owned: 205 Orange County SOURCE: PropertyRadar.com as of 11/14/13

52 Preforeclosure: 1,475 Auction: 1,381 Bank Owned: 205 Orange County SOURCE: PropertyRadar.com as of 11/14/13

53 Preforeclosure: 162 Auction: 117 Bank Owned: 19 San Francisco SOURCE: PropertyRadar.com as of 11/19/13

54 Preforeclosure: 162 Auction: 117 Bank Owned: 19 San Francisco SOURCE: PropertyRadar.com as of 11/19/13

55 Preforeclosure: 162 Auction: 117 Bank Owned: 19 San Francisco SOURCE: PropertyRadar.com as of 11/19/13

56 2013 ANNUAL HOUSING MARKET SURVEY

57 Stiff Market Competition Leads to Fewer Sales with Price Discount & Less Time on the Market 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?

58 Multiple Offers at Record Highs Share of home sales with multiple offers highest in at least the last 15 years SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

59 Q. What was the net cash gain or net loss to the seller as a result of this sale? Median Net Cash Gain to Sellers Rebounding SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

60 More Sellers Planning to Repurchase Repeat Buyers are Back Q. Is the seller planning on purchasing another home? SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

61 Share of Sellers with Net Cash Loss: Lowest Since 2007 Q. What was the net cash gain or net loss to the seller as a result of this sale? Long Run Average = 12.8% SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

62 Investment & Second/ Vacation Homes : 25% Market Share 6% 19% SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

63 Buying to Rent: Winning Investment Strategy 18% 82% Investment to Flip Rental Property SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

64 Share of Cash Buyers decreases for the first time after 7 years of continuous Increase Almost one-third of buyers paid with all cash The share of all cash buyers has been on the rise since 2006 SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

65 Q. Please indicate the type of mortgage. Share of FHA Lowest in 6 Years SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

66 Share of First-Time Buyers is the Lowest Since 2006 Q. Was the buyer a first-time buyer? Long Run Average = 38% SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

67 Share of International Buyers is Growing 36% All Cash Q. Was the buyer an international buyer – a person who was a citizen of another country who wished to purchase residential real estate in the U.S.?

68 Country of International Buyer China (30%) Canada (9%) India (6%) Mexico (13%)

69 More than ¼ of Investors are Foreigners Q: What is your client’s country of origin? Source: C.A.R Investor Survey

70 REGIONAL HOUSING MARKETS

71

72 LOS ANGELES COUNTY

73 Sales of Residential Homes Los Angeles County, October 2013: 4,451 Units Up 2.2% MTM, Down 10.6% YTY SOURCE: Clarus Market Metrics

74 Median Price of Residential Homes Los Angeles County, October 2013: $471,000 Up 2.4% MTM, Up 30.1% YTY SOURCE: Clarus Market Metrics

75 For Sale Properties Los Angeles County, October 2013: 19,243 Units Down 2.8% MTM, Down 16.6% 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

76 Month’s Supply of Inventory Los Angeles County, October 2013: 2.2 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. SOURCE: Clarus Market Metrics

77 CITY OF LOS ANGELES

78 Sales of Residential Homes City of Los Angeles, October 2013: 895 Units Up 9.3% MTM, Up 1.6% YTY SOURCE: Clarus Market Metrics

79 Median Price of Residential Homes City of Los Angeles, October 2013: $585,000 Up 8.3% MTM, Up 48.1% YTY SOURCE: Clarus Market Metrics

80 For Sale Properties City of Los Angeles, October 2013: 4,258 Units Down 1.4% MTM, Down 7.5% 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

81 Month’s Supply of Inventory City of Los Angeles, October 2013: 2.7 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. SOURCE: Clarus Market Metrics

82 2014 FORECAST

83 2014 Economic Forecast

84 U.S. Economic Forecast 2014 SERIES: U.S. Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

85 California Economic Forecast 2014 SERIES: CA Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

86

87 California Housing Market Forecast SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

88 Sales Bounce back in 2014, as Price Continues to Grow Units (Thousand) Price (Thousand) SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

89 HOW CAN I USE THIS INFORMATION ?

90 FACT: MORTGAGE RATES WILL BE HIGHER IN 2014 Message: Don’t miss the current window of opportunity

91 CA Housing Affordability Index What Will Happen When Mortgage Rates Increase? Q Median Price $415,770 20% Downpayment INTEREST RATE % OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

92 CA Median Monthly Mortgage Payment What Will Happen When Mortgage Rates Increase? Q Median Price $415,770 20% Downpayment INTEREST RATE MONTHLY MORTGAGE SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

93 CA Minimum Qualifying Income What Will Happen When Mortgage Rates Increase? Q Median Price $415,770 20% Downpayment INTEREST RATE MONTHLY MORTGAGE SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

94 FACT: FIRST-TIME BUYERS CAN’T COMPETE Message: I can be your trusted advisor and help make homeownership a reality for you

95 Share of First-Time Buyers is the Lowest Since 2006 Q. Was the buyer a first-time buyer? Long Run Average = 38% SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

96 2013: 6 out of 10 Buyers Said They Found Their Home through Agent Q. How did you find the home you purchased?

97 2007: Almost 9 out of 10 Buyers Said They Found Their Home through Agent Q. How did you find the home you purchased?

98 First-time Buyers Need YOUR Help Connect EARLY and OFTEN Financial Literacy: How to manage their finances What about student-loan debt? How to save for a down payment and how much? What programs are available? Use readily available tools to find out – Downpayment Resource on car.org

99 Proprietary and Confidential © , Workforce Resource, LLC California Mortgage Resource Directory Savings Gift 401K Loan DPA 76% 14% 11% 5% >1%

100 Proprietary and Confidential © , Workforce Resource, LLC

101 FACT: MOST SELLERS & BUYERS INTERVIEW MULTIPLE AGENTS Message: I have an opportunity to gain a new client

102 Most Buyers and Sellers Interviewed Multiple Agents before Selecting One Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase? Source: C.A.R Buyer and Seller Surveys

103 FACT: MOST SELLERS & BUYERS WANT “BETTER” COMMUNICATION Message: I will exceed your expectations

104 Response Time is Important to Buyers in Selecting Agent Q. What was the single most important reason for selecting the agent that you used in your recent home purchase?.

105 Gap in Phone & Text Communication Q. What was your preferred method of communicating with your agent? Q. How did your agent actually communicate with you?

106 Q. What was the typical response time you expected from your agent to return any form of communication to you? More Buyers and Sellers Expect Instant Response from Agent

107 Have the “DTR” conversation with your clients

108

109 MARKET OPPORTUNITIES 2014

110 2014: Many Market Opportunities First-time Buyers Formerly “Underwater” Homeowners Property Management International Clients New Construction Embrace Learning

111

112 THANK YOU!


Download ppt "2014 HOUSING MARKET FORECAST REOMAC Sheraton Gateway LAX December 5, 2013 Leslie Appleton-Young, Vice President & Chief Economist."

Similar presentations


Ads by Google