Economic and Market Outlook Sacramento Association of REALTORS® November 2, 2010 Robert A. Kleinhenz, Ph.D. Deputy Chief Economist California Association of REALTORS®
Market Data Speeches Speeches & Presentations
Overview US and California Economy California Housing Market Local/Regional Housing Market California Forecast Opportunities
US and California Economic Conditions
Gross Domestic Product 2009: -2.6%; 2010 Q2: +1.7% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ ANNUALQTRLY 2009 Largest Annual Drop since 1938 (-3.4%)
SOURCE: CA Employment Development Division Unemployment Rate California vs. United States
U.S. Non-farm Job Growth SOURCE: US Dept of Labor, Bureau of Labor Statistics Month-to-Month Changes
California Non-farm Job Growth SOURCE: CA Employment Development Division Month-to-Month Changes
California Employment Trends by Industry SOURCE: California Association of REALTORS®
Consumer Price Index September 2010: All Items 1.1% YTY; Core 0.8% YTY PERCENT CHANGE FROM A YEAR AGO, 100=
U.S. Economic Outlook SOURCE: California Association of REALTORS® Forecast Date: October 1, 2010
California Economic Outlook SOURCE: California Association of REALTORS® Forecast Date: October 1, 2010
Economic Snapshot Recession over, slow recovery expected Government support in first half of 2010 Private sector economy must accelerate thereafter Business, Global Trade, Consumers Labor market: mixed signals, job growth in late ’10 Inflation: in check through 2011 Monetary policy: no rate hikes until 2011
California Housing Market
Sales of Existing Detached Homes and Pacific West Consumer Confidence California, September 2010 Sales: 466,580 Units, -12.2% YTY, -8.8% YTD INDEXUNITS SOURCE: California Association of REALTORS®; The Conference Board *Sales are seasonally adjusted and annualized
CA Sales Back to Pre-Peak Levels by mid ‘08 California Vs. U.S Present SOURCE: California Association of REALTORS® Seasonally Adjusted Sales Index (Jan 2004=100)
Median Price of Existing Detached Homes California, September 2010: $309,900, Up 4.5% YTY SOURCE: California Association of REALTORS®
Trough vs. Current Price – Sep 2010 SOURCE: California Association of REALTORS®
Unsold Inventory Index California, September 2010: 6.2 Months SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® MONTHS
Unsold Inventory Index (Months) SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Distressed Sales to Total Sales Ratio SOURCE: California Association of REALTORS®
Distressed Sales Breakdown (Aug 2010)
Price Differential by Type of Sale REO, Short-Sale, Regular SOURCE: C.A.R. Median Price
California Foreclosure Filings, Sept NOD: 31,594, -36.3% YTD NTS: 26,039, -7.6% YTD SOURCE: ForeclosureRadar.com 6 Month Average: NODs: 28,329 NTSs: 30,338
California Foreclosure Outcomes, Sept REO: -7.1% YTD 3 rd Party: +67.7% YTD Cancel: % YTD SOURCE: ForeclosureRadar.com 6 Month Average: REO: 13,319 3 rd Party: 3,520 Cancelled: 18,072
First-time Buyer Housing Affordability Index California Vs. U.S % OF HOUSEHOLDS THAT CAN BUY SOURCE: California Association of REALTORS®
SOURCE: Federal Home Loan Mortgage Corporation Mortgage Rates
Median Price to Median HH Income Ratio California SOURCE: California Association of REALTORS® Average Over Years Shown: 6:1 Ratio
Market Snapshot Has Market Hit Bottom? State sales hit bottom in late ’07 State median price hit bottom in early ’09 Some parts of state still looking for bottom but are close Inventory Marginally Higher but Lean More MLS inventory at higher price ranges Distressed properties at steady pace, more short sales Looking Ahead This Year: Sales down 10%, Price up 11% Next Year: Sales up 2%, Price up 2% Supply: More discretionary sellers Historic Opportunity for Qualified Buyers
Sacramento Area Housing Market
Sacramento County Profile CharacteristicStatisticState Rank 2007 Population Estimate1,408,3328 % Population Change %23 % Population Change %19 % White % % Hispanic % % Black % % Asian & Pacific Islander % 2007 Per Capita Income$26, Median Household Income$56, Median Age34.3 Land Area Square Miles Total Establishments25, Civilian Employment695,406
Unemployment Rate SOURCE: CA Employment Development Division Sacramento County, September 2010: 13.0%
Nonfarm Employment Sacramento-Arden Arcade-Roseville MSA, August 2010: Down 3.0% YTY SOURCE: CA Employment Development Division Y-T-Y PERCENT CHANGE
Sales of Existing Detached Homes Sacramento County, 2009: 19,983 Units, Up 3.5% YTY UNITS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sales of Existing Detached Homes and Pacific West Consumer Confidence Sacramento County, Sept. 2010: 1,430 Units, Down 13.3% YTD, Down 12.3% YTY INDEXUNITS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
Sales of Existing Detached Homes Placer County, 2009: 4,112 Units, Up 1.0% YTY UNITS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sales of Existing Detached Homes and Pacific West Consumer Confidence Placer County, Sept. 2010: 408 Units, Up 15.2% YTD, Up 4.9% YTY INDEXUNITS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; The Conference Board
Annual Median Price Sacramento County, 2009: $180,543, Down 16.7% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Sacramento County, Sept. 2010: $181,780, Down 1.3% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Annual Median Price Placer County, 2009: $296,478, Down 15.1% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Placer County, Sept. 2010: $281,820, Down 4.8% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Home Sales Price Sacramento 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.
Unsold Inventory Index Sacramento County, August 2010: 3.4 Months MONTHS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Foreclosure Filings – Sacramento County SOURCE: ForeclosureRadar.com
Foreclosure Outcomes – Sacramento County SOURCE: ForeclosureRadar.com
Foreclosure Inventories-Sacramento County SOURCE: ForeclosureRadar.com
Sources of Population Growth Sacramento County ( ) THOUSANDS SOURCE: CA Department of Finance
Where are new Sacramento County households coming from? Placer (3,207) Yolo (2,017) El Dorado (1,297) Alameda County (1,060) San Joaquin (1,041) Los Angeles (947) Total incoming for 2008: 27,700 Total outgoing for 2008: 28,228 Source: NAR Relocation Report 2008 – IRS Data; Item
New Housing Permits Sacramento County, August 2010: 65 Units, Up 28.0% YTD SOURCE: Construction Industry Research Board
Asking Rents for Class A&B Apartments Sacramento MSA, 2010 Q2: $928, Down 2.2% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; REALFACTS
Vacancy Rates for Class A&B Apartments Sacramento MSA, 2010 Q2: 6.9% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; REALFACTS VACANCY RATE
Sales of Existing Detached Homes Bay Area Counties SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median Price of Existing Detached Homes Bay Area Counties SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Market Cycle – Sacramento County SOURCE: California Association of REALTORS®
Market Cycle – Sacramento County SOURCE: California Association of REALTORS®
First-time Buyer Housing Affordability Index Sacramento County, 2 nd Quarter 2010: 80% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® % OF HOUSEHOLDS THAT CAN BUY
Forecasts
California Housing Market Outlook Source: CALIFORNIA ASSOCIATION OF REALTORS® Forecast Date: October 1, 2010
% Change$ in Billion California Housing Market Dollar Volume Up Marginally in 2010, Better in 2011 SOURCE: California Association of REALTORS® -54%
Market Opportunities in 2011 Improved Affordability/Responsible Ownership –First-Time Buyers in Driver’s Seat –Repeat Buyers: More for Money Financing –Know Fannie/Freddie terms –FHA for first time buyers –Qualifying is Key –FRM-ARM Spread Narrow REOs/Loan Mods –REOs/Short Sales –HAFA Programs – Fannie Mae, Freddie Mac, Lenders
How’s Your Competitive Edge? Consumers are more connected, more mobile than ever. Are you… –Utilizing mobile technology: laptops, etc? –Going wireless? –Capitalizing on Internet marketing? –Measuring your return on time/investment with respect to social media?
Thinking About Next Year … Education/Training Buyers is all shapes/sizes Changing landscape of distressed sales Capitalize on technology Information & insights Public policy: GSE reform, loan limits, local/state
Market Data Speeches Speeches & Presentations The End - - Thank You