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It’s   The Economy,
       Stupid


       January 25, 2012



                           With your host…
                          Gene Wunderlich
2011: A Year of Economic Wild Cards
                                    Political
                                    Change
                                       on
                   Oil Price Spikes Capitol
                                      Hill


                                            Arab Spring
      Sovereign
        Debt
       Crisis in
      EuroZone


Debt Limit
                         Stock
 Ceiling &               Market
Downgrade               Volatility
of US Debt
•   Lenders
                              •   Short Sales
                              •   Interest Rates
•   Federal Economic Policy
                              •   Inflation
•   Regulations
                              •   Shadow Inventory
•   Unemployment
                              •   Global Economy
•   Foreclosures
•   Mortgage Interest Deduction
•   Strategic Foreclosures
Economy   Housing




 Fraud    Politics
Economy

Government's view of the economy could be
summed up in a few short phrases: If it moves,
tax it. If it keeps moving, regulate it. And if it
stops moving, subsidize it.
                                            Ronald Reagan
                                            American President
1 canyon lake
Consumer Confidence?
                                                                                                 Highest Since April
                                                                                                         November 2011: 64.5
                                                                                                                                                                                                                              Overall, 62 percent of those
160                                                                                                                                                                                                                           surveyed say they’re optimistic
                                                    INDEX,
                                                                                                                                                                                                                              about what 2012 will bring for the
                                                   100=1985                                                                                                                                                                   country,    according    to    the
140
                                                                                                                                                                                                                              Associated Press-GfK survey. And
                                                                                                                                                                                                                              for themselves and their families,
120                                                                                                                                                                                                                           Americans are even more positive,
                                                                                                                                                                                                                              with 78 percent telling pollsters
100                                                                                                                                                                                                                           they are personally hopeful about
                                                                                                                                                                                                                              the year ahead.

 80


 60


 40


 20
               Jul-00


                                 Jul-01


                                                   Jul-02


                                                                     Jul-03


                                                                                       Jul-04


                                                                                                         Jul-05


                                                                                                                           Jul-06


                                                                                                                                             Jul-07


                                                                                                                                                               Jul-08


                                                                                                                                                                                 Jul-09


                                                                                                                                                                                                   Jul-10


                                                                                                                                                                                                                     Jul-11
      Jan-00


                        Jan-01


                                          Jan-02


                                                            Jan-03


                                                                              Jan-04


                                                                                                Jan-05


                                                                                                                  Jan-06


                                                                                                                                    Jan-07


                                                                                                                                                      Jan-08


                                                                                                                                                                        Jan-09


                                                                                                                                                                                          Jan-10


                                                                                                                                                                                                            Jan-11
Gross Domestic Product: Stall Speed
                     2010: 2.8%; 2011 Q1: 0.4% Q2: 1.0% 2011 Q3: 2.5%
  8%
  7%
  6%
                                                                             ANNUAL                                                                               QTRLY
  5%
  4%
  3%
  2%
  1%
  0%
 -1%
 -2%
 -3%
 -4%
 -5%
 -6%
                2009 Largest Annual Drop since 1938 (-3.4%)
 -7%
 -8%
       1970
              1972
                     1974
                            1976
                                   1978
                                          1980
                                                 1982
                                                        1984
                                                               1986
                                                                      1988
                                                                             1990
                                                                                    1992
                                                                                           1994
                                                                                                  1996
                                                                                                         1998
                                                                                                                2000
                                                                                                                       2002
                                                                                                                              2004
                                                                                                                                     2006
                                                                                                                                            2008
                                                                                                                                                   2010
                                                                                                                                                          Q1-09
                                                                                                                                                                  Q3-09
                                                                                                                                                                          Q1-10
                                                                                                                                                                                  Q3-10
                                                                                                                                                                                          Q1-11
                                                                                                                                                                                                  Q3-11
Unemployment Stubbornly High
                November 2011
  California (11.3%) vs. United States (8.6%)

14%
                                                      CA               US

12%


10%


8%


6%


4%


2%


0%
      Jan-00




                                                                                                         Jan-11
               Jan-01



                        Jan-02



                                 Jan-03



                                          Jan-04



                                                   Jan-05



                                                            Jan-06



                                                                     Jan-07



                                                                              Jan-08



                                                                                       Jan-09



                                                                                                Jan-10
  SOURCE: CA Employment Development Division
Total Payroll Jobs in the U.S.
(same as in 2000, but with 30 million more people)
How Many Years to Get Job
  Market Back to Normal?
Jobs added per month Assumed new jobs       How many years?
                     needed for growing
                     population per month


100,000              100,000                Treading water and
                                            never back to normal

200,000              100,000                6.3 years

300,000              100,000                3.2 years

400,000              100,000                2.1 years
Housing


The housing market will get
worse before it gets better.
                      James Wilson
                     American Politician
                       (1742 – 1798)
Wall Street Journal

“Home Forecast Calls For PAIN.”
        Prices to stumble through 2015
Market at a Glance
Sales of Existing Detached Homes: California
    October 2011 Sales: 493,240 Units, Up 1.1% YTD, Up 8.5% YTY

UNITS                                                                                  Sales                        Consumer Confidence                                                                                             INDEX

 700,000                                                                                                                                                                                                                             160

 600,000                                                                                                                                                                                                                             140

                                                                                                                                                                                                                                     120
 500,000
                                                                                                                                                                                                                                     100
 400,000
                                                                                                                                                                                                                                     80
 300,000
                                                                                                                                                                                                                                     60
 200,000
                                                                                                                                                                                                                                     40

 100,000                                                                                                                                                                                                                             20

        0                                                                                                                                                                                                                            0




                                                                                                                                                                                                                           Jul-11
                     Jul-00


                                       Jul-01


                                                         Jul-02


                                                                           Jul-03


                                                                                             Jul-04


                                                                                                               Jul-05


                                                                                                                                 Jul-06


                                                                                                                                                   Jul-07


                                                                                                                                                                     Jul-08


                                                                                                                                                                                       Jul-09


                                                                                                                                                                                                         Jul-10
                                                                                                                                                                                                                  Jan-11
            Jan-00


                              Jan-01


                                                Jan-02


                                                                  Jan-03


                                                                                    Jan-04


                                                                                                      Jan-05


                                                                                                                        Jan-06


                                                                                                                                          Jan-07


                                                                                                                                                            Jan-08


                                                                                                                                                                              Jan-09


                                                                                                                                                                                                Jan-10
                                                                           *Sales are seasonally adjusted and annualized




                                                                                                                                                                                                SOURCE: The Conference Board
Median Price of Existing Detached Homes
   California, October 2011: $278,060, Down 8.9% YTY

$700,000                                                                                                                                 P: May-07
                                                                                                                                         $594,530
$600,000


$500,000
                                                                                                                                                                     T: Feb-09
                                                                                                                                                                      $245,230
$400,000                                                                                                                                                             -59% from
                                                                                                                                                                        peak
$300,000


$200,000


$100,000


     $0
                    Jul-00


                                      Jul-01


                                                        Jul-02


                                                                          Jul-03


                                                                                            Jul-04


                                                                                                              Jul-05


                                                                                                                                Jul-06


                                                                                                                                                  Jul-07


                                                                                                                                                                    Jul-08


                                                                                                                                                                                      Jul-09


                                                                                                                                                                                                        Jul-10


                                                                                                                                                                                                                          Jul-11
           Jan-00


                             Jan-01


                                               Jan-02


                                                                 Jan-03


                                                                                   Jan-04


                                                                                                     Jan-05


                                                                                                                       Jan-06


                                                                                                                                         Jan-07


                                                                                                                                                           Jan-08


                                                                                                                                                                             Jan-09


                                                                                                                                                                                               Jan-10


                                                                                                                                                                                                                 Jan-11
                                                                                                                                                                                             SOURCE: California
                                                                                                                                                                                      Association of REALTORS®
California Sales of Existing Homes
         and Median Price
       Housing Cycle Comparisons 1970- 2011
                                              Sales of Existing Detached Homes                                Median Price
UNITS/MEDIAN PRICE $
 700,000
                                                                                                                                           -44%
 600,000

 500,000
                                                  -61%                             -25%
 400,000

 300,000

 200,000

 100,000

      0
           1970

                  1972
                         1974
                                1976
                                       1978
                                               1980
                                                      1982
                                                             1984
                                                                    1986
                                                                           1988
                                                                                  1990
                                                                                         1992
                                                                                                1994
                                                                                                       1996
                                                                                                               1998
                                                                                                                      2000
                                                                                                                             2002
                                                                                                                                    2004
                                                                                                                                           2006
                                                                                                                                                  2008
                                                                                                                                                         2010
                                                                                                                 California Association of REALTORS®
Canyon Lake Median Price
$800,000



                                                     $696,385
$700,000




$600,000




$500,000
                                                                                 Peak to trough
                                                                               -77% in 24 months
$400,000




$300,000




$200,000



                                                                                     $158,489
$100,000




     $0
           3/04



                  9/04



                         3/05



                                9/05



                                       3/06



                                              9/06



                                                        3/07



                                                                9/07



                                                                       3/08



                                                                              9/08



                                                                                        3/09



                                                                                                9/09



                                                                                                       3/10



                                                                                                              9/10



                                                                                                                     3/11
California vs. U.S. Median Price
           US Median Price   CA Median Price
$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

     $0




                                               California Association of REALTORS®
Median Price & Affordability Index
0%
                                                     10%
                                                           20%
                                                                 30%
                                                                       40%
                                                                             50%
                                                                                   60%
                                                                                         70%
                                                                                               80%
                                                                                                     90%
                                                                                                                                      100%
                                      Q1 2000
                                      Q3 2000
                                      Q1 2001
                                      Q3 2001

                                      Q1 2002
                                      Q3 2002
                                      Q1 2003

                                      Q3 2003
                                      Q1 2004
                                      Q3 2004

                                      Q1 2005
                                      Q3 2005
                                      Q1 2006

                                      Q3 2006
                                      Q1 2007
                                      Q3 2007
                                                                                                                                         California Vs. U.S.
                                                                                                       % OF HOUSEHOLDS THAT CAN BUY




                                      Q1 2008
                                                                                                                                                                  Records Highs




                                      Q3 2008
                                                                                                                                                  CA




                                      Q1 2009
                                      Q3 2009

                                      Q1 2010
                                                                                                                                                               Housing Affordability:

                                                                                                                                                  US




                                      Q3 2010
                                      Q1 2011
California Association of REALTORS®
0.00%
                  1.00%
                          2.00%
                                  3.00%
                                                    4.00%
                                                            5.00%
                                                                             6.00%
2009.01

2009.04

2009.07

2009.10

2010.01
                                          MONTHLY



2010.04
                                                                                     FRM




2010.07

2010.10
                                                                                     ARM




2011.01

2011.04

2011.07

 8.4.11

8.25.11
                                                                    WEEKLY




9.15.11
                                                                                           Mortgage Rates @ Historical Lows
Compelling Affordability
Monthly Mortgage to buy a Median Priced Home


              2005 Q2      2011 Q2

San Diego     $ 2,833      $ 1,564

Miami         $ 1,726      $ 853

Milwaukee     $ 1,014      $ 797

Kansas City   $ 735        $ 600
CA New Housing Permits:
                                 Opportunity
300,000

                                        Single Family       Multi-Family
250,000
                  Average 1988-09: 138,000
200,000


150,000


100,000


 50,000


     0
          1988


                 1990


                          1992


                                 1994


                                           1996


                                                     1998


                                                             2000


                                                                    2002


                                                                           2004


                                                                                     2006


                                                                                            2008


                                                                                                    2010
                        2009: 36,200              2010: 39,000        2011: ??


                                                                                  SOURCE: CBIA. Forecast: C.A. R.
CA Underwater Mortgages:
                        Reverse Wealth Effect
          Negative Equity Share in CA         Near Negative Equity Share in CA
40%
35%
                                                                            30.2%
30%
25%
20%
15%
10%
                                                                                        4.6%
5%
0%
      Q4-2009




                   Q1-2010




                               Q2-2010




                                         Q3-2010




                                                       Q4-2010




                                                                  Q1-2011




                                                                              Q2-2011
Proportion of Sellers
      Planning to Repurchase
80%

70%

60%

50%

40%

30%

20%

10%

0%
      2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
               Q. Is the seller planning on purchasing another home?




                                                                       California Association of REALTORS®
Sellers with a Net Cash Loss
35%

30%

25%
                                                                                              21.8%
20%
                 Long Run Average = 11.2%
15%

10%

5%

0%


                                                               2008




                                                                                       2011
       2000

              2001

                     2002

                            2003

                                   2004

                                          2005

                                                 2006

                                                        2007




                                                                         2009

                                                                                2010
      What was the net cash gain or net loss to the seller as a result of this sale?



                                                                      California Association of REALTORS®
Net Cash to Sellers
                                             Median

$250,000


$200,000


$150,000


$100,000                                                                                       $75,000

 $50,000


     $0
           2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
           Q. What was the net cash gain or net loss to the seller as a result of this sale?




                                                                            California Association of REALTORS®
8 in 10 Americans (STILL) Agree:
Buying a Home is the Best Investment One Can Make




 SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
Direction of Home Prices:
Sellers Skeptical/Buyers Hopeful
                   Down   Flat   Unsure      Up




  100%
   90%
   80%
   70%
   60%
   50%
   40%
   30%
   20%
   10%
    0%
         Sellers                          Buyers

                                                   California Association of REALTORS®
Regional Housing Summary
                Temecula, Murrieta, Lake Elsinore, Menifee, Wildomar, Canyon Lake
                            Single Family Residential - Full Value Sales
                                     Prepared by GeneWunderlich@srcar.org
                  2004          2005           2006           2007           2008           2009           2010           2011
Temecula
       # Sales  1,975           1,742         1,141          805            1,569          1,334         1,987           1,902
     Median $ $437,159        $484,978      $526,237       $475,522       $337,732       $289,857       $300,234       $301,279
   Gross Sales
     Revenue $863,389,025    $844,831,676   $600,436,417   $382,795,210   $529,901,508   $386,669,238   $596,564,958   $573,032,658


Murrieta
       # Sales  1,679           1,661         1,252          687            2,054          1,666         2,236           1,978
     Median $ $432,511        $488,757      $530,912       $473,562       $304,466       $271,107       $270,878       $269,948
   Gross Sales
     Revenue $726,185,969    $811,825,377   $664,701,824   $325,337,094   $625,373,164   $451,664,262   $605,683,208   $533,957,144


Wildomar
       # Sales   361            327           317            218            473            287            398            388
     Median $ $393,540        $442,018      $463,920       $435,608       $296,054       $225,739       $220,745       $224,634
   Gross Sales
     Revenue $142,067,940    $144,539,886   $147,062,640   $94,962,544    $140,033,542   $64,787,093    $87,856,510    $87,157,992



Lake Elsinore
        # Sales   914           1,054         700            335            1,154          959           1,387           1,237
     Median $ $306,607        $363,543      $431,158       $366,358       $183,819       $179,965       $182,925       $176,353
   Gross Sales
      Revenue $280,238,798   $383,174,322   $301,810,600   $122,729,930   $212,127,126   $172,586,435   $253,716,975   $218,148,661


Menifee
       # Sales   820            763           520            498            1,005          651            1,142         1,672
     Median $ $323,138        $364,695      $418,974       $370,671       $259,504       $201,866       $206,414       $185,131
   Gross Sales
     Revenue $264,973,160    $278,262,285   $217,866,480   $184,594,158   $260,801,520   $131,414,766   $235,724,788   $309,539,032


Canyon Lake
       # Sales   468            342           286            133            330            306            379            281
     Median $ $443,384        $480,200      $567,071       $548,205       $300,561       $241,416       $251,006       $256,420
   Gross Sales
     Revenue $207,503,712    $164,228,400   $162,182,306   $72,911,265    $99,185,130    $73,873,296    $95,131,274    $72,054,020
Sales by Type
Median Price
$400,000



$350,000



$300,000



$250,000



$200,000



$150,000



$100,000
                                          Up 2% over 2010
 $50,000
                                          Up 6% over 2009

     $0
               3/09




                      6/09




                                  9/09




                                                         3/10




                                                                          6/10




                                                                                    9/10




                                                                                                        3/11




                                                                                                                6/11




                                                                                                                            9/11
                                               12/09




                                                                                            12/10




                                                                                                                                     12/11
           Temecula    Murrieta          Lake Elsinore          Menifee          Wildomar      Canyon Lake     Poly. (Canyon Lake)
60
                                                                    Canyon Lake
                                                                  Sales by Price Break
50
                                                      Least expensive: $30,000 on Lake Drive
                                                     Most expensive: $2,999,000 on San Joaquin

40




30




20

                                                                          Price point in 2006
10




0
     <100   100-200   200-300   300-400   400-500   500-600   600-700     700-800   800-900   900-1,000   1,000+

                                           Active     Pending      Sold

                                                                                          Data courtesy of CRMLS
Demand Chart - December
500

       4 3
450              4
       7 9
                 6
       3 1
                 5
400


350          2
             9
             4                    2
300                                         2
                                2 4
                                            3
                                2 7
250                                         3          1
                                5
                                      1                8 1
                                      7                5 7                                                          1
200                                                            1
                                      0                  0                                                          4 1 1
                     1                                         3                     1
                                                             1                                                      5 3 2       1
                     0                                         7                     1                                0
150                                                          0                                                                  0
                                                                             9 9                                        1
                     9                                       8                   8 8 4                                        9 8 9
                         8                                                   7 7       7                                          7
                                                                                 8 7                                          2
100                      0                        5                                    4
                                                3 5                 2 3                          2 2 2 3 4 2
 50                                             0                   7 1                          . . . . . .
                                                                                                 6 3 7 4 0 6
  0
      On Market (Supply)            Pending            Closed (Demand)       Days on Market       Months Supply     Absorption rate *

                                 Murrieta       Temecula   Lake Elsininore   Menifee   Canyon Lake    Wildomar
                             * Absorption rate - # of new listings for the month/# of sold listings for the month
2012 Preview : State
 Accelerated 3% withholding
 4% flat tax – including services
 Point of sale mandates
 Mortgage interest deduction
 40+ ballot propositions
 Taxes, taxes, Texas
Federal Issues – Critical Concerns

• High-cost Loan Limits - expired 10/1/11 (except
  FHA)

• Future of Fannie and Freddie?   FHA?

• Tax Reform on the horizon

  Mortgage Interest Deduction?

  Capital Gains?

• QRM (Qualified Residential Mortgage) 20% Down

     Is the future of the 30 year mortgage in doubt?
2012 – What’s Ahead
•   Stable to increasing home sales
•   Stable median price
•   Declining inventory of resale homes
•   Rising rents
•   Lack of new home inventory
•   Compelling affordability
•   Record low interest rates

         Pent up demand
It’s Time To Buy Again

“Forget stocks. Don't bet on
gold. After four years of
plunging home prices, the
most attractive asset class
in America is housing.”

 SOURCE: “Real estate: It’s time to buy again”
 Fortune Magazine’s 3/28/11 article written by Shawn Tully
Thank You.
 Any questions?

    GAD@SRCAR.ORG

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1 canyon lake

  • 1. It’s The Economy, Stupid January 25, 2012 With your host… Gene Wunderlich
  • 2. 2011: A Year of Economic Wild Cards Political Change on Oil Price Spikes Capitol Hill Arab Spring Sovereign Debt Crisis in EuroZone Debt Limit Stock Ceiling & Market Downgrade Volatility of US Debt
  • 3. Lenders • Short Sales • Interest Rates • Federal Economic Policy • Inflation • Regulations • Shadow Inventory • Unemployment • Global Economy • Foreclosures • Mortgage Interest Deduction • Strategic Foreclosures
  • 4. Economy Housing Fraud Politics
  • 5. Economy Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. Ronald Reagan American President
  • 7. Consumer Confidence? Highest Since April November 2011: 64.5 Overall, 62 percent of those 160 surveyed say they’re optimistic INDEX, about what 2012 will bring for the 100=1985 country, according to the 140 Associated Press-GfK survey. And for themselves and their families, 120 Americans are even more positive, with 78 percent telling pollsters 100 they are personally hopeful about the year ahead. 80 60 40 20 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
  • 8. Gross Domestic Product: Stall Speed 2010: 2.8%; 2011 Q1: 0.4% Q2: 1.0% 2011 Q3: 2.5% 8% 7% 6% ANNUAL QTRLY 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% 2009 Largest Annual Drop since 1938 (-3.4%) -7% -8% 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11
  • 9. Unemployment Stubbornly High November 2011 California (11.3%) vs. United States (8.6%) 14% CA US 12% 10% 8% 6% 4% 2% 0% Jan-00 Jan-11 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 SOURCE: CA Employment Development Division
  • 10. Total Payroll Jobs in the U.S. (same as in 2000, but with 30 million more people)
  • 11. How Many Years to Get Job Market Back to Normal? Jobs added per month Assumed new jobs How many years? needed for growing population per month 100,000 100,000 Treading water and never back to normal 200,000 100,000 6.3 years 300,000 100,000 3.2 years 400,000 100,000 2.1 years
  • 12. Housing The housing market will get worse before it gets better. James Wilson American Politician (1742 – 1798)
  • 13. Wall Street Journal “Home Forecast Calls For PAIN.” Prices to stumble through 2015
  • 14. Market at a Glance
  • 15. Sales of Existing Detached Homes: California October 2011 Sales: 493,240 Units, Up 1.1% YTD, Up 8.5% YTY UNITS Sales Consumer Confidence INDEX 700,000 160 600,000 140 120 500,000 100 400,000 80 300,000 60 200,000 40 100,000 20 0 0 Jul-11 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 *Sales are seasonally adjusted and annualized SOURCE: The Conference Board
  • 16. Median Price of Existing Detached Homes California, October 2011: $278,060, Down 8.9% YTY $700,000 P: May-07 $594,530 $600,000 $500,000 T: Feb-09 $245,230 $400,000 -59% from peak $300,000 $200,000 $100,000 $0 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 SOURCE: California Association of REALTORS®
  • 17. California Sales of Existing Homes and Median Price Housing Cycle Comparisons 1970- 2011 Sales of Existing Detached Homes Median Price UNITS/MEDIAN PRICE $ 700,000 -44% 600,000 500,000 -61% -25% 400,000 300,000 200,000 100,000 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 California Association of REALTORS®
  • 18. Canyon Lake Median Price $800,000 $696,385 $700,000 $600,000 $500,000 Peak to trough -77% in 24 months $400,000 $300,000 $200,000 $158,489 $100,000 $0 3/04 9/04 3/05 9/05 3/06 9/06 3/07 9/07 3/08 9/08 3/09 9/09 3/10 9/10 3/11
  • 19. California vs. U.S. Median Price US Median Price CA Median Price $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 California Association of REALTORS®
  • 20. Median Price & Affordability Index
  • 21. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 California Vs. U.S. % OF HOUSEHOLDS THAT CAN BUY Q1 2008 Records Highs Q3 2008 CA Q1 2009 Q3 2009 Q1 2010 Housing Affordability: US Q3 2010 Q1 2011 California Association of REALTORS®
  • 22. 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2009.01 2009.04 2009.07 2009.10 2010.01 MONTHLY 2010.04 FRM 2010.07 2010.10 ARM 2011.01 2011.04 2011.07 8.4.11 8.25.11 WEEKLY 9.15.11 Mortgage Rates @ Historical Lows
  • 23. Compelling Affordability Monthly Mortgage to buy a Median Priced Home 2005 Q2 2011 Q2 San Diego $ 2,833 $ 1,564 Miami $ 1,726 $ 853 Milwaukee $ 1,014 $ 797 Kansas City $ 735 $ 600
  • 24. CA New Housing Permits: Opportunity 300,000 Single Family Multi-Family 250,000 Average 1988-09: 138,000 200,000 150,000 100,000 50,000 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2009: 36,200 2010: 39,000 2011: ?? SOURCE: CBIA. Forecast: C.A. R.
  • 25. CA Underwater Mortgages: Reverse Wealth Effect Negative Equity Share in CA Near Negative Equity Share in CA 40% 35% 30.2% 30% 25% 20% 15% 10% 4.6% 5% 0% Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011
  • 26. Proportion of Sellers Planning to Repurchase 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. Is the seller planning on purchasing another home? California Association of REALTORS®
  • 27. Sellers with a Net Cash Loss 35% 30% 25% 21.8% 20% Long Run Average = 11.2% 15% 10% 5% 0% 2008 2011 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010 What was the net cash gain or net loss to the seller as a result of this sale? California Association of REALTORS®
  • 28. Net Cash to Sellers Median $250,000 $200,000 $150,000 $100,000 $75,000 $50,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q. What was the net cash gain or net loss to the seller as a result of this sale? California Association of REALTORS®
  • 29. 8 in 10 Americans (STILL) Agree: Buying a Home is the Best Investment One Can Make SOURCE: Pew Research Center’s “Home Sweet Home. Still. Five Years After the Bubble Burst”
  • 30. Direction of Home Prices: Sellers Skeptical/Buyers Hopeful Down Flat Unsure Up 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sellers Buyers California Association of REALTORS®
  • 31. Regional Housing Summary Temecula, Murrieta, Lake Elsinore, Menifee, Wildomar, Canyon Lake Single Family Residential - Full Value Sales Prepared by GeneWunderlich@srcar.org 2004 2005 2006 2007 2008 2009 2010 2011 Temecula # Sales 1,975 1,742 1,141 805 1,569 1,334 1,987 1,902 Median $ $437,159 $484,978 $526,237 $475,522 $337,732 $289,857 $300,234 $301,279 Gross Sales Revenue $863,389,025 $844,831,676 $600,436,417 $382,795,210 $529,901,508 $386,669,238 $596,564,958 $573,032,658 Murrieta # Sales 1,679 1,661 1,252 687 2,054 1,666 2,236 1,978 Median $ $432,511 $488,757 $530,912 $473,562 $304,466 $271,107 $270,878 $269,948 Gross Sales Revenue $726,185,969 $811,825,377 $664,701,824 $325,337,094 $625,373,164 $451,664,262 $605,683,208 $533,957,144 Wildomar # Sales 361 327 317 218 473 287 398 388 Median $ $393,540 $442,018 $463,920 $435,608 $296,054 $225,739 $220,745 $224,634 Gross Sales Revenue $142,067,940 $144,539,886 $147,062,640 $94,962,544 $140,033,542 $64,787,093 $87,856,510 $87,157,992 Lake Elsinore # Sales 914 1,054 700 335 1,154 959 1,387 1,237 Median $ $306,607 $363,543 $431,158 $366,358 $183,819 $179,965 $182,925 $176,353 Gross Sales Revenue $280,238,798 $383,174,322 $301,810,600 $122,729,930 $212,127,126 $172,586,435 $253,716,975 $218,148,661 Menifee # Sales 820 763 520 498 1,005 651 1,142 1,672 Median $ $323,138 $364,695 $418,974 $370,671 $259,504 $201,866 $206,414 $185,131 Gross Sales Revenue $264,973,160 $278,262,285 $217,866,480 $184,594,158 $260,801,520 $131,414,766 $235,724,788 $309,539,032 Canyon Lake # Sales 468 342 286 133 330 306 379 281 Median $ $443,384 $480,200 $567,071 $548,205 $300,561 $241,416 $251,006 $256,420 Gross Sales Revenue $207,503,712 $164,228,400 $162,182,306 $72,911,265 $99,185,130 $73,873,296 $95,131,274 $72,054,020
  • 33. Median Price $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 Up 2% over 2010 $50,000 Up 6% over 2009 $0 3/09 6/09 9/09 3/10 6/10 9/10 3/11 6/11 9/11 12/09 12/10 12/11 Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake Poly. (Canyon Lake)
  • 34. 60 Canyon Lake Sales by Price Break 50 Least expensive: $30,000 on Lake Drive Most expensive: $2,999,000 on San Joaquin 40 30 20 Price point in 2006 10 0 <100 100-200 200-300 300-400 400-500 500-600 600-700 700-800 800-900 900-1,000 1,000+ Active Pending Sold Data courtesy of CRMLS
  • 35. Demand Chart - December 500 4 3 450 4 7 9 6 3 1 5 400 350 2 9 4 2 300 2 2 4 3 2 7 250 3 1 5 1 8 1 7 5 7 1 200 1 0 0 4 1 1 1 3 1 1 5 3 2 1 0 7 1 0 150 0 0 9 9 1 9 8 8 8 4 9 8 9 8 7 7 7 7 8 7 2 100 0 5 4 3 5 2 3 2 2 2 3 4 2 50 0 7 1 . . . . . . 6 3 7 4 0 6 0 On Market (Supply) Pending Closed (Demand) Days on Market Months Supply Absorption rate * Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar * Absorption rate - # of new listings for the month/# of sold listings for the month
  • 36. 2012 Preview : State  Accelerated 3% withholding  4% flat tax – including services  Point of sale mandates  Mortgage interest deduction  40+ ballot propositions  Taxes, taxes, Texas
  • 37. Federal Issues – Critical Concerns • High-cost Loan Limits - expired 10/1/11 (except FHA) • Future of Fannie and Freddie? FHA? • Tax Reform on the horizon Mortgage Interest Deduction? Capital Gains? • QRM (Qualified Residential Mortgage) 20% Down Is the future of the 30 year mortgage in doubt?
  • 38. 2012 – What’s Ahead • Stable to increasing home sales • Stable median price • Declining inventory of resale homes • Rising rents • Lack of new home inventory • Compelling affordability • Record low interest rates Pent up demand
  • 39. It’s Time To Buy Again “Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.” SOURCE: “Real estate: It’s time to buy again” Fortune Magazine’s 3/28/11 article written by Shawn Tully
  • 40. Thank You. Any questions? GAD@SRCAR.ORG