1. 2016 Annual Housing Market Survey

2. Methodology
C.A.R. has conducted the Annual Housing Market Survey since The questions and methodology have stayed essentially the same throughout that time.
The survey was sent via to a random sample of 26,430 REALTORS® throughout California. The sample represented the geographical distribution of C.A.R. membership across the state. The survey asked REALTORS® to provide information from their most recent sales transaction that closed escrow in the second quarter of 2016.
The survey instrument was a questionnaire with both multiple choice and open-ended questions. There were 1,582 valid survey responses, equivalent to a response rate of 6.0 percent. The margin of error for this survey was +/- 2.4 percent at a 95 percent confidence level.

3. Investor Buyers? Dropping But Still Have Demand
Demand for Investment Properties remained near lowest level since 2009
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 3

4. Investors : Still Buying to Rent
2014: 30%
2015: 26%
2016: 20%
2014: 70%
2015: 74%
2016: 80%
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 4

5. International Buyers Dropping
The share of international buyers dropped to the lowest level in 9 years
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.?
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

6. REALTORS® Worked with International Buyers in the Past 12 Months
# of Properties Sold to International Buyers in the Last 12 Months
% Who Sold to International Buyers
Q. How many properties have you sold to an international buyer in the last 12 months?
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

7. Country of International Buyer
China (53%)
Mexico (10%)
India (10%)
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

8. Intended Use For property? homeQ7
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

9. Share of First-Time Buyers remains Below Long-Run Average
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

10. Reasons For Buying First-Time vs. Repeat
Q. What was the single most important reason for selling/buying the property?
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

11. Characteristics of Homes: First-Time vs. Repeat (2016)
First-time Buyers
Repeat Buyers
All Buyers
Median Sales Price
$437,000
$585,000
$533,500
Median Square Footage
1,479
1,800
1,700
% of Detached Single-Family
76.8%
77.3%
76.5%
% of Condo/Townhome
19.9%
14.3%
16.0%
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

12. Financial Characteristics: First-Time vs. Repeat (2015)
First-time Buyers
Repeat Buyers
All Buyers
Median Household Income
$97,500
$140,000
$120,000
Median Monthly Mortgage Payment
$1,582
$1,694
$1,669
Median Downpayment (in $$)
$39,500
$96,000
$74,500
Median Downpayment (in % to Price)
10%
20%
19.6%
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

13. Financial Characteristics I: First-Time vs. Repeat (2016)
First-time Buyers
Repeat Buyers
All Buyers
Median Household Income
$100,000
$140,000
$120,000
Median Monthly Mortgage Payment
$1,265
$1,441
$1,280
Median Downpayment (in $$)
$25,000
$78,000
Median Downpayment (in % to Price)
7.0%
20%
18.5%
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

14. Financial characteristics II: First-Time vs. Repeat (2016)
First-time Buyers
Repeat Buyers
All Buyers
% of buyers with zero down payment
10.4%
5.2%
7.2%
% of cash buyers
8.7%
25.5%
20.8%
% of home buyers with a second mortgage
4.8%
5.1%
% with FHA Loan
31.4%
10.2%
17.3%
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

15. Percent of Buyers with Zero Down Payment
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

16. Proportion of Transactions With Second Mortgages
Q. In addition to the first mortgage or assumption, was there a second mortgage?
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

17. Percent of Buyers with Second Mortgage
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

18. FHA/VA made up nearly a quarter of all loans
Q. Please indicate the type of mortgage.
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

19. First-Time Buyer Generation Breakdown
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

20. Many Millennials Are First-Time Buyers
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

21. Buyers Generation Breakdown
31%
Millennials
19 – 36
39%
Gen X
37 – 51
26%
Baby Boomers
52 – 70 4%
Silent Gen
71 and older
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

22. Millennials: American Dream is still Important
Q. How important is fulfilling the 'American Dream' to you?
SERIES: 2016 Generations / Millennials Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

23. …And Homeownership is part of it
SERIES: 2016 Generations / Millennials Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q. Which factors contribute to your ideal of the `American Dream`

24. Many Millennials Also Believe Buying a Home Is a Safe Investment
Do you think home purchase is still a safe investment?
SERIES: 2016 Generations / Millennials Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

25. Reasons for Delay in Home Buying
SERIES: 2016 Student Loan Debt and Housing Report
SOURCE: National Association of Realtors®

26. Many Non-Homeowners Delayed Buying a Home Because of Student Debt
% of Loan borrowers (non-homeowners only)
SERIES: 2016 Student Loan Debt and Housing Report
SOURCE: National Association of Realtors®

27. Affordability Is a Down Payment Issue, But Also a Monthly Mortgage Payment Issue
Highest Down Pmt. in $ Since 2005, but lowest down pmt. in % in last 7 yrs.
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®

28. Share of Cash Buyers Remains near the Lowest Level Since 2009
One-fifth of buyers paid with all cash
The share of all cash buyers is virtually flat in the last 6 years
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®

29. Housing Affordability peaked q1 2012 prices v
Housing Affordability peaked q prices v. low rates and income growth
California vs. U.S. –
Annual
Quarterly
C.A.R.’s traditional Housing Affordability Index (HAI) was replaced with the First-Time Buyer Housing Affordability Index (FTB-HAI) in 2006.
Note this slide takes the average of the 3 months in each of the quarters.
C.A.R. began producing its Housing Affordability Index (HAI) in At that time, fixed-rate mortgages were the prevailing form of financing a home purchase, while the calculations used to produce the HAI reflected a 20 percent down payment. The methodology also assumed a monthly payment for principal, interest, taxes and insurance that was no more than 30 percent of a household’s income. In the more than two decades since the CALIFORNIA ASSOCIATION OF REALTORS® first conceived the HAI, the mortgage finance landscape has changed dramatically. The range of mortgage products available to buyers as well as underwriting criteria has changed. C.A.R. developed the new index measuring affordability for first-time home buyers to better reflect the realities of today’s real estate market.
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

30. Median Monthly Mortgage Payment - CA
What Will Happen When Mortgage Rates Increase?
MONTHLY MORTGAGE
Q Median Price $515,940
20% Downpayment
INTEREST RATE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

31. Minimum Qualifying Income - CA
What Will Happen When Mortgage Rates Increase?
Q Median Price $515,940
20% Downpayment
Minimum Qualifying Income
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INTEREST RATE

32. Housing Affordability Index - CA
What Will Happen When Mortgage Rates Increase?
% OF HOUSEHOLDS THAT CAN BUY,
ALL ELSE CONSTANT
Q Median Price $515,940
20% Downpayment
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
INTEREST RATE

33. Reasons for Changing County
All Buyers
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®

34. Tight Supply Pushed up Home Prices, as one-third of Homes Were Sold above the Asking Price
Long Run Average = 20%
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

35. Market remained Competitive, as inventory level continued to be low
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

36. Sellers with Net Cash Loss Dropped to the Lowest Level in the last 10 years
Long Run Average = 11.6%
Q. What was the net cash gain or net loss to the seller as a result of this sale?
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®

37. Net Cash Gain to Sellers Highest since 2007
Q. What was the net cash gain or net loss to the seller as a result of this sale?
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

38. UII remained at low levels; Decreasing from last year
Oct. 2015: 3.6 Months; Oct. 2016: 3.4 Months
Range since 1988:
Low: 1.3 months in April 2004
High: 18.8 months in Feb 1991
Long-run average: 6.9 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®

39. Years Owned Home Before Selling
Long-Time Homeowners are not moving as in the past because:
Low rate on current mortgage
Low property taxes
Capital gains hit
Where can I afford to go?
Remodel and stay
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

40. Sellers Generation Breakdown
Median Age: 52 8%
Millennials
19 – 36
31%
Gen X
37 – 51
47%
Baby Boomers
52 – 70
14%
Silent Gen
71 and older
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

41. Seller Generation Breakdown: Past & Present
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

42. Reasons For Selling
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q. What was the single most important reason for selling the property?

43. Sellers - More than Half of All Sellers Plan to Buy Another Home
SERIES: 2016 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

44. More Sellers Moving out of County, Even out of California
Location of Seller’s New Home
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Within the same county
38%
41%
37%
45%
47%
42%
49%
46%
44%
40%
In another county in California
23%
18%
24%
17%
21%
19%
20%
In another state
31%
28%
29%
27%
22%
25%
Out of US 1% 2% 0%
Don't Know/Not sure 7%
11% 9%
10%
12%
16%
15%
13%
Total
100%
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®

45. Reasons for Changing County for Sellers
Top Five Reasons
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®

46. More investors selling their investment properties
Long Run Average = 19.5%
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®

47. Repair Costs/Price Adjustments
Q. Did the seller repair items, make adjustments to the purchase price, or make any other concessions during escrow due to discovered defects?
SERIES: 2016 Annual Housing Market Survey
SOURCE: California Association of REALTORS®