1. 2015 Annual housing market survey
October 29, 2015
Oscar Wei, Senior Economist

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 25,350 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 2015.
The survey instrument was a questionnaire with both multiple choice and open-ended questions. There were 1,465 valid survey responses, equivalent to a response rate of 5.8 percent. The margin of error for this survey was +/- 2.5 percent at a 95 percent confidence level.

3. Market remained Competitive, as inventory level continued to be low
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

4. One-third of Homes Sold above the Asking Price
Long Run Average = 19%
While the California housing market has become less competitive in the last two years when compared to the peak attained in 2013, one-third of all sales were being sold above their listing price. Historically, 19 percent of all homes sold above their asking price. In 2015, despite a decline from its recent peak, the share of home sold above the asking price is still significantly above the long-run average.
A typical home sold with no discount in 2015, on par with what we have seen in the last couple years. The price discount remained at the lowest level since 2005, and was lower than the long run average of 2.8 percent.
After the median time on MLS reached its lowest level since 2004, it bounced back to 2.1 weeks in 2014 from 1.6 weeks in Historically, a property stayed on the market for an average of 6.0 weeks.
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

5. Median Reduction = 5.3% of List Price
Fewer Homes Sold above the Asking Price as Market Competition Cooled in 2014
Median Reduction = 5.3% of List Price
While the California housing market has become less competitive in the last two years when compared to the peak attained in 2013, one-third of all sales were being sold above their listing price. Historically, 19 percent of all homes sold above their asking price. In 2015, despite a decline from its recent peak, the share of home sold above the asking price is still significantly above the long-run average.
A typical home sold with no discount in 2015, on par with what we have seen in the last couple years. The price discount remained at the lowest level since 2005, and was lower than the long run average of 2.8 percent.
After the median time on MLS reached its lowest level since 2004, it bounced back to 2.1 weeks in 2014 from 1.6 weeks in Historically, a property stayed on the market for an average of 6.0 weeks.
For a home sold with a price below its original asking price, the median price reduction from the list price was 5.3 percent.
SERIES: 2014 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

6. Price Reduction Prior to an Offer Being Made
Avg. Reduction $ = $15,000
Three quarters of sellers made an adjustment to their list price prior to an offer was being made to their property. Less than 30 percent of them reduced their list price by $1,000 or less, 18 percent made a price reduction between $1,000 to $10,000, and more than half lowered the list price by more than $10,000. The average price reduction made in 2015 was $15,000, which was $5,000 more than in that in 2014.
Q. Was there any price reduction made to the list price prior to an offer being made to the property?
Q. How much was the price reduction?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

7. Tight supply created more market Competition in the Bay Area
Update with average multiple offers
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

8. Imbalance between supply and demand bid up home prices, particularly in the Bay Area
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

9. Reasons For Buying
Q. What was the single most important reason for buying the property?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

10. Demand for Investment & Second/ Vacation Homes Dropped to the Lowest level since 20095%
Long Run Average: 12 %
With home prices increasing at double-digit rates for two consecutive years and housing inventory continued to deplete, more investors decided to pull out of the housing market. As such, the demand for investment properties in 2015 dropped again to the lowest level since 2010.
Thirteen percent of all sales went to investors (as compared to 15 percent in 2014), and five percent went to second or vacation homebuyers (as compared to 6 percent in 2013). In 2000, they were 7 percent and 5 percent respectively.
While the share of investor sales in 2015 dropped to the lowest level in the last four years, it was still higher than the long-run average of 12 percent recorded since 1999.
13%
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 10

11. Investor Strategy: Still Buying to Rent
2013: 18%
2014: 30%
2015: 26%
Investment to Flip
2013: 82%
2014: 70%
2015: 74%
For those who purchased an investment property, 70 percent bought it as a rental property and the rest of them bought it as an investment to flip. Investors who bought their investment property to flip jumped from 18 percent in 2013, but still significantly lower than those who bought the property to rent it out.
Rental Property

12. Share of Cash Buyers Is the Lowest Since 2009
One-fifth of buyers paid with all cash
The share of all cash buyers is the lowest in the last 6 years
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

13. The Share of International Buyers Dropped to the lowest level in 8 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: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

14. All Cash International Buyers
Q33
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

15. Intended Use For property? homeQ7
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

16. 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: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

17. Country of International Buyer
China (43%)
Mexico (8%)
South Korea (8%)
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

18. Reasons to Buy in California
Mild year-around weather
Advanced Educational Opportunities
System
# of Campuses
Examples
University of California 10
University of California, Berkeley
University of California, Los Angeles
University of California, Riverside
University of California, San Diego
California State University 23
Cal State University, Fullerton
Cal State University, Northridge
Cal State Polytechnic University, Pomona
California Community College
109+
Santa Monica College
Pasadena City College
Private University
Hundreds
California Institute of Technology
Pepperdine University
Stanford University
University of Southern California
Amazing outdoor environment
You can't beat the south and central California coast for pleasant temperatures year round. Long Beach, Los Angeles, San Diego, Santa Barbara and Santa Maria all have average daily highs no lower than the mid-60s for any month of the year. Nor does it get really hot. Temperatures in summer generally stay around 85 degrees. Plus there's little rain, typically fewer than 20 inches a year.
For most Californians the ocean is very close. It is one of the reasons that the weather is so mild and nice throughout the year.
The ocean also provides lots of opportunities for recreation. Activities like swimming, sunbathing, surfing, scuba diving, snorkeling, sailing, riding jet skis, body boarding, and a host of other activities.
Along with the ocean, California also has many other features that make recreational activities possible. There are mountains, lakes, and rivers, deserts, flatlands, among others. These afford visitors with access to hiking, biking, rock climbing, running, rock climbing, and many other activities.
California is a great place for postsecondary education as there are many prestigious colleges/universities reside in the state, including Stanford, UC Berkeley, UCLA, and USC.

19. Share of First-Time Buyers remains Below Long-Run Average
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

20. Financial characteristics: First-Time vs. Repeat (2014)
First-time Buyers
Repeat Buyers
All Buyers
Median Household Income
$80,000
$120,000
$100,000
Median Monthly Mortgage Payment
$1,477
$1,868
$1,800
Median Downpayment (in $$)
$32,500
$70,000
Median Downpayment (in % to Price)
10%
20%
19.7%
C.A.R.’s 2014 Annual Housing Market Survey shows that first-time homebuyers have lower annual median incomes -- $80,000 versus $120,000, when compared to repeat buyers. They also make significantly smaller median downpayments than repeat buyers do -- $32,500 against $100,000. The median loan-to-value (LTV) ratio faced by first-time homebuyers is higher at 90 percent, as compared to the 79 percent loan-to-value ratio faced by repeat buyers. The higher LTV ratio could also place first-timers in a higher risk category, which is typically discounted with a higher mortgage rate. Factoring in the higher loan-to-value ratio, many first-time homebuyers have to shoulder a large monthly financial burden.
SERIES: 2014 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

21. 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®

22. Reasons For Buying First-Time vs. Repeat
Q. What was the single most important reason for selling/buying the property?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

23. The Median Down Payment Highest Since 2005
Q. What was the amount of down payment?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

24. Percent of Buyers with Zero Down Payment
After hitting a recent high in 2014 at 11.3 percent, the share of first-time buyers who put zero down payment declined to 6.4 percent. The drop is a sign that indicates home buyers are putting more equity when buying a home and are not taking as much as those who purchased last year. The decline could be attributed at least partly to a better labor market and a better economy.
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

25. Proportion of Transactions With Second Mortgages
Very few home buyers are using a second mortgage to finance their new property, partly because of the decline in home prices from the peak years and partly because of tighter lending standards. Since 2006, the percent of home sales with second mortgage has dropped from 43.4% to 4.1% in 2015.
Q. In addition to the first mortgage or assumption, was there a second mortgage?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

26. Percent of Buyers with Second Mortgage
The impact was more pronounced to first-time buyers than to repeat buyers. First-time buyers with second mortgage declined from 62.8 percent in 2006 to 6.4 percent in 2015, while repeat buyers declined from 35.0 percent in 2006 to 3.7 percent.
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

27. While the Share of FHA increased from the recent low, It was Still much lower than 2009
After the housing market collapsed in 2008, the popularity of FHA loans grew markedly as conventional loans became more difficult to obtain. FHA and VA loans have become more favorable to home buyers since late 2007 as a result of the changing environment in the financial market. FHA loans generally require a lower down payment and have less-rigid credit-qualifying guidelines than conventional loans. Because of these advantages, there has been an increase in the demand for FHA loans since FHA loans as a first mortgage accounted for just one percent of total mortgages between , but has jumped from 1.2 percent of all loans in 2007 to 16 percent in After it peaked in 2009 though, the share of FHA had declined for the next five years. While the share of FHA in 2015 increased from 2014, it was still significantly below the 2009 level.
Q. Please indicate the type of mortgage.
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

28. Years Owned Home Before Selling
Why aren’t they selling sooner?
Affordability challenge:
Low rate on current mortgage
Low property taxes
Concerned with capital gains
Why list when there is nowhere to go I can afford?
Could not qualify for a mortgage today
Demographics
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

29. 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: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

30. Sellers with Net Cash Loss Dropped to the Lowest Level in the last 9 years
Long Run Average = 11.9%
Q. What was the net cash gain or net loss to the seller as a result of this sale?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

31. 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: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

32. More investors selling their investment properties
Long Run Average = 19.1%
Q. How was the property occupied?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

33. More than Half of All Sellers Are Planning to Buy Another Home
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

34. Location of Seller’s New Home
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Within the same county
38%
41%
37%
45%
47%
42%
49%
46%
44%
In another county in California
23%
18%
24%
17%
21%
19%
20%
In another state
31%
28%
29%
27%
22%
Out of US 1% 2% 0%
Don't Know/Not sure 7%
11% 9%
10%
12%
16%
15%
13%
Total
100%

35. Reasons for Changing County All Buyers (2014 vs. 2015)
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

36. Buyers by Generation 32% 40% 24% 5% Millennials 18 – 35 Gen X 36 – 50
Baby Boomers
51 – 69 5%
Silent Gen
70 and older
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

37. Home Ownership Rate Nearly 4 Times Higher Among Boomers
Baby Boomers
Millennials Q3
Q. What is your current living situation?
SERIES: 2014 Baby Boomer Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

38. Reasons For Buying millennials vs. Baby Boomers
Q. What was the single most important reason for selling/buying the property?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

39. Boomers Have Less Debt than Millennials that Prevents Buying a Home
Q. What type of debt do you have that would make it difficult to buy a home?
SERIES: 2014 Baby Boomer Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

40. Financial Characteristics: millennials vs. Baby Boomers
Millennials
Baby Boomers
Median Household Income
$100,000
$130,000
Median Home Price
$470,000
$505,000
Median Monthly Mortgage Payment
$1,538
$1,516
Median Downpayment (in $$)
$50,000
$79,500
Median Downpayment (in % to Price)
13.1%
20%
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

41. Use of Property Q. How will the property be occupied?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

42. What Millennials and Baby Boomers want?
Millennials
Baby Boomers
All Buyers
Median Sales Price
$470,000
$505,000
$495,000
Median Square Footage
1,600
1,779
1,707
Median Age of Structure 36 33 35
% of Detached Single-Family
75.6%
71.6%
76.6%
% of Condo/Townhome
19.8%
17.5%
15.5%
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

43. Demographics: Ethnicity
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

44. Housing demand will increase, largely driven by minorities
SOURCE: Urban Institute

45. Share of minority Home Buyers Has Grown Over Time …
Q. What was the race/ethnicity of the head of household buying the property
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

46. Share of minority Home SEllers also Has Grown Over Time …
Q. What was the race/ethnicity of the head of household buying the property
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

47. Reasons For Buying Minority buyers vs. all buyers
Q. What was the single most important reason for selling/buying the property?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

48. Reasons For Buying Hispanic Buyers vs. Asian Buyers
Q. What was the single most important reason for selling/buying the property?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

49. Share of First-Time Buyers Up
Q. Was the buyer a first-time buyer?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

50. Use of Property Q. How will the property be occupied?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

51. Characteristics of Homes
Minority Buyers
Hispanic Buyers
Asian
Buyers
All Buyers
Median Sales Price
$467,000
$324,000
$675,000
$495,000
Median Square Footage
1,700
1,600
1,783
1,707
Median Age of Structure 35 30
% of Detached Single-Family
78.7%
85.0%
75.6%
76.6%
% of Condo/Townhome
14.8%
9.8%
18.0%
15.5%
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

52. Buyers’ Financial Profile I
Minority Buyers
Hispanic Buyers
Asian
Buyers
All Buyers
Median Household Income
$100,000
$80,000
$170,000
$120,000
Median Monthly Mortgage Payment
$1,673
$1,443
$1,969
$1,669
Median Downpayment (in $$)
$60,500
$13,875
$74,500
Median Downpayment (in % to Price)
18.4%
5.0%
20.2%
19.6%
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

53. Buyers’ Financial Profile II
Minority Buyers
Hispanic Buyers
Asian
Buyers
All Buyers
% of buyers with zero down payment
4.2%
7.4%
2.1%
4.4%
% of cash buyers
17.6%
11.3%
25.7%
21.0%
% of home buyers with a second mortgage
4.1%
3.9%
4.5%
% with FHA Loan
25.9%
46.3%
8.6%
19.3%
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

54. Reasons for Changing County (All Buyers vs. Minority Buyers)
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

55. Reasons for Changing County Minority Buyers (2014 vs. 2015)
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

56. How Client Found Their Agent
Q. How did your client find and select you to represent them?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

57. How Client Found Their Agent
Q. How did your client find and select you to represent them?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

58. How Client Found Their Agent
Q. How did your client find and select you to represent them?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

59. How Client Found Their Agent
Q. How did your client find and select you to represent them?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

60. Buyers Need Most Help with finding the Right Home
Q: In what part of the transaction buyer/seller needed the most assistance?
SERIES: 2015 Annual Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

61. Sellers Need Most Help with Negotiating terms of sale
Q: In what part of the transaction buyer/seller needed the most assistance?
SERIES: 2015 Annual Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

62. … regardless of whether the Buyer is a Millennial or a Baby Boomer
Q: In what part of the transaction buyer/seller needed the most assistance?