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Economic and Market Outlook 2010-11 Sacramento Association of REALTORS® November 2, 2010 Robert A. Kleinhenz, Ph.D. Deputy Chief Economist California Association.

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Presentation on theme: "Economic and Market Outlook 2010-11 Sacramento Association of REALTORS® November 2, 2010 Robert A. Kleinhenz, Ph.D. Deputy Chief Economist California Association."— Presentation transcript:

1 Economic and Market Outlook 2010-11 Sacramento Association of REALTORS® November 2, 2010 Robert A. Kleinhenz, Ph.D. Deputy Chief Economist California Association of REALTORS®

2 www.car.org  Market Data  Speeches Speeches & Presentations

3 Overview  US and California Economy  California Housing Market  Local/Regional Housing Market  California Forecast  Opportunities

4 US and California Economic Conditions

5 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%)

6 SOURCE: CA Employment Development Division Unemployment Rate California vs. United States

7 U.S. Non-farm Job Growth SOURCE: US Dept of Labor, Bureau of Labor Statistics Month-to-Month Changes

8 California Non-farm Job Growth SOURCE: CA Employment Development Division Month-to-Month Changes

9 California Employment Trends by Industry SOURCE: California Association of REALTORS®

10 Consumer Price Index September 2010: All Items 1.1% YTY; Core 0.8% YTY PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984

11 U.S. Economic Outlook SOURCE: California Association of REALTORS® Forecast Date: October 1, 2010

12 California Economic Outlook SOURCE: California Association of REALTORS® Forecast Date: October 1, 2010

13 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

14 California Housing Market

15 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

16 CA Sales Back to Pre-Peak Levels by mid ‘08 California Vs. U.S. 2000-Present SOURCE: California Association of REALTORS® Seasonally Adjusted Sales Index (Jan 2004=100)

17 Median Price of Existing Detached Homes California, September 2010: $309,900, Up 4.5% YTY SOURCE: California Association of REALTORS®

18 Trough vs. Current Price – Sep 2010 SOURCE: California Association of REALTORS®

19 Unsold Inventory Index California, September 2010: 6.2 Months SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® MONTHS

20 Unsold Inventory Index (Months) SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

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

22 Distressed Sales Breakdown (Aug 2010)

23 Price Differential by Type of Sale REO, Short-Sale, Regular SOURCE: C.A.R. Median Price

24 California Foreclosure Filings, Sept. 2010 NOD: 31,594, -36.3% YTD NTS: 26,039, -7.6% YTD SOURCE: ForeclosureRadar.com 6 Month Average: NODs: 28,329 NTSs: 30,338

25 California Foreclosure Outcomes, Sept. 2010 REO: -7.1% YTD 3 rd Party: +67.7% YTD Cancel: +111.8% YTD SOURCE: ForeclosureRadar.com 6 Month Average: REO: 13,319 3 rd Party: 3,520 Cancelled: 18,072

26 First-time Buyer Housing Affordability Index California Vs. U.S. 2000-2010 % OF HOUSEHOLDS THAT CAN BUY SOURCE: California Association of REALTORS®

27 SOURCE: Federal Home Loan Mortgage Corporation Mortgage Rates

28 Median Price to Median HH Income Ratio California SOURCE: California Association of REALTORS® Average Over Years Shown: 6:1 Ratio

29 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

30 Sacramento Area Housing Market

31 Sacramento County Profile CharacteristicStatisticState Rank 2007 Population Estimate1,408,3328 % Population Change 1990-200017.5%23 % Population Change 1980-199032.91%19 % White 200752.7% % Hispanic 200719.8% % Black 20079.3% % Asian & Pacific Islander 200713.2% 2007 Per Capita Income$26,817 2007 Median Household Income$56,987 2007 Median Age34.3 Land Area Square Miles96643 2000 Total Establishments25,7229 2007 Civilian Employment695,406

32 Unemployment Rate SOURCE: CA Employment Development Division Sacramento County, September 2010: 13.0%

33 Nonfarm Employment Sacramento-Arden Arcade-Roseville MSA, August 2010: Down 3.0% YTY SOURCE: CA Employment Development Division Y-T-Y PERCENT CHANGE

34 Sales of Existing Detached Homes Sacramento County, 2009: 19,983 Units, Up 3.5% YTY UNITS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

35 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

36 Sales of Existing Detached Homes Placer County, 2009: 4,112 Units, Up 1.0% YTY UNITS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

37 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

38 Annual Median Price Sacramento County, 2009: $180,543, Down 16.7% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

39 Median Price of Existing Detached Homes Sacramento County, Sept. 2010: $181,780, Down 1.3% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

40 Annual Median Price Placer County, 2009: $296,478, Down 15.1% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

41 Median Price of Existing Detached Homes Placer County, Sept. 2010: $281,820, Down 4.8% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

42 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.

43 Unsold Inventory Index Sacramento County, August 2010: 3.4 Months MONTHS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

44 Foreclosure Filings – Sacramento County SOURCE: ForeclosureRadar.com

45 Foreclosure Outcomes – Sacramento County SOURCE: ForeclosureRadar.com

46 Foreclosure Inventories-Sacramento County SOURCE: ForeclosureRadar.com

47 Sources of Population Growth Sacramento County (1981-2008) THOUSANDS SOURCE: CA Department of Finance

48 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 187-06067

49 New Housing Permits Sacramento County, August 2010: 65 Units, Up 28.0% YTD SOURCE: Construction Industry Research Board

50 Asking Rents for Class A&B Apartments Sacramento MSA, 2010 Q2: $928, Down 2.2% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; REALFACTS

51 Vacancy Rates for Class A&B Apartments Sacramento MSA, 2010 Q2: 6.9% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®; REALFACTS VACANCY RATE

52 Sales of Existing Detached Homes Bay Area Counties SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

53 Median Price of Existing Detached Homes Bay Area Counties SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

54 Market Cycle – Sacramento County SOURCE: California Association of REALTORS®

55 Market Cycle – Sacramento County SOURCE: California Association of REALTORS®

56 First-time Buyer Housing Affordability Index Sacramento County, 2 nd Quarter 2010: 80% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® % OF HOUSEHOLDS THAT CAN BUY

57 Forecasts

58 California Housing Market Outlook Source: CALIFORNIA ASSOCIATION OF REALTORS® Forecast Date: October 1, 2010

59 % Change$ in Billion California Housing Market Dollar Volume Up Marginally in 2010, Better in 2011 SOURCE: California Association of REALTORS® -54%

60 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

61 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?

62 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

63 www.car.org  Market Data  Speeches Speeches & Presentations The End - - Thank You


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