March housing update for Southwest California.

1. Mixed Messages On Recovery
March was generally a good news month for the local housing market – and a much needed
boost for both sales and prices. We hope it’s the beginning of a recovery, or a trend, or at least
a few months of good news.
However, the general outlook is more mixed as you’ll see in some of the attached articles. The
first article points to stalled consumer housing sentiment while the second article, by the same
author the next day, points to a surge in demand. How do you make sense of that? Esmael
Adibi, Director of the Gary Anderson Center for Economic Research at Chapman University says
the first quarter was ‘way below expectations’ but overall ‘not too bad’. He believes we’ll see
much better numbers for the economy the rest of the year. If bad numbers are ‘not too bad’,
would better numbers be ‘not too good’?
And based primarily on job growth reports, you’d have to agree that certainly part of the
economy was recovering nicely even if that had not yet translated to a strong housing market.
But then March job numbers came out and poked some holes in that recovery. Turns out job
growth had not been as strong as reported in the previous months (the dreaded ‘downward
revisions’) and March was not only dismal but again, ‘way below expectations’, jolting a number
of rosy forecasts. In fact when you look at the real numbers under the reported 5.5%
unemployment statistic, you realize that actual labor force participation dropped again by nearly
100,000 jobs, leaving job force participation at just 62%, its lowest level since the 1970’s.
So people feel a little optimism when unemployment declines but then get even more
pessimistic when they realize those numbers are bogus, especially if they’re out of work and
have given up trying. And then the Fed steps in hinting that interest rates will finally rise off the
floor maybe about mid-year and that sends the market into another funk. It’s a funny thing that
the market only looks strong enough to raise interest rates when people don’t think they will. As
soon as it looks like rates will rise, the economy stumbles and the Fed has to back off.
I can tell you that after a dismal January and a slightly stronger February, March home sales
jumped by over 30% locally. For the region we sold 614 single family homes in January, 636 in
February and 934 in March. Sales were up in almost every city with Temecula enjoying its best
month since July of 2013. For the quarter regional sales were up 2% (2,146/2,184) and prices
edged up 3% over Q1 2014 ($289,868/$299,130).
Between a drop in inventory and the increase in sales, demand jumped 32%, homes remained
on the market fewer days and inventory of available homes fell from 4 months to 2.7. That
should put us directly in the center of a strong Sellers market, but your average Seller is just
not aware of that and most Buyers still think they’re in the drivers seat. It’s a funny market.
Demographics tell us we’re in a good place. Our region is adding jobs, we’re still an affordable
oasis bordering several faster appreciating areas (buying a median price home in Manhattan
Beach requires an income over $300,000), the cost of gas should stay low all summer, perhaps
encouraging people to buy here while working there, and our cities and schools continue to perform
well (at least most of them).
But one good month does not make a trend any more than one bad one, so we’ll hold off judgment
for at least another month or two and see where this market takes us. The wild card today is
WATER. Increases in water rates could offset savings on fuel costs and any impact on the nascent
building industry could rock our market.
Figuring that out is way above my pay grade.

2. SW Market @ A Glance
Southwest
California
Reporting
Period
Current
Period
Last
Period
Year
Ago
Change
from
Last
Period
Change
from
Year
Ago
Existing Home
Sales (SFR
Detached)
March
2014
934 636 872 32% 7%
Median Home
Price
$302,569 $300,847 $294,120 1% 3%
Unsold Inventory
Index (SFR Units)
2,294 2,378 2,105 4% 8%
Unsold Inventory
Index (Months)
2.7 4 2.8 32% 4%
Median Time on
Market (Days)
78 83 72 6% 8%
Source: CRMLS

3. March Median Price:
2014 2015 %
Temecula $426,256 $431,543 1%
Murrieta $379,234 $374,619 1%
Menifee $254,949 $284,426 11%
Lake Elsinore $285,043 $288,231 1%
Wildomar $323,501 $335,944 4%
Canyon Lake $419,653 $355,613 15%
Hemet $183,401 $196,419 7%
San Jacinto $191,126 $201,867 5%
Perris $237,185 $254,461 7%
March 2015 Transaction Value*:
Temecula $85,013,873 Lake Elsinore $28,246,598
Murrieta $61,812,092 Wildomar $9,070,499
Menifee $40,104,130 Canyon Lake $8,543,700
Hemet $28,087,914 San Jacinto $12,112,018
Perris $20,102,435 Perris $20,102,435
* Revenue generated by single family residential transactions for the month.
February 2015 Transaction Value*:
Temecula $46,792,747 Lake Elsinore $16,407,892
Murrieta $45,373,088 Wildomar $7,618,900
Menifee $28,859,814 Canyon Lake $6,727,400
Hemet $19,820,010 San Jacinto $7,687,700
Perris $16,495,454 Total $195,783,005
* Revenue generated by single family residential transactions for the month.

4. 0
50
100
150
200
250
3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15
Southwest California I-15 Corridor
Single Family Home Sales
Temecula Murrieta Lake Elsinore Wildomar
0
20
40
60
80
100
120
140
160
180
200
3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15
Southwest California Homes I-215 Corridor
Single Family Sales
Menifee Canyon Lake Hemet San Jacinto Perris

5. $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14
Southwest California Homes I-15 Corridor
Single Family Homes
Median Price
Temecula Murrieta Lake Elsinore Wildomar
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14
Southwest California Homes I-215 Corridor
Single Family Homes
Median Price
Menifee Canyon Lake Hemet San Jacinto Perris

6. 0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015
Temecula Murrieta Menifee Lake Elsinore Wildomar Canyon Lake Hemet San Jacinto Perris
1st Quarter Run Rate
SFR Sales
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
2010 2011 2012 2013 2014 2015
Temecula Murrieta Menifee Lake Elsinore Wildomar
Canyon Lake Hemet San Jacinto Perris
1st Quarter Run Rate
Median Price

7. 0
50
100
150
200
250
300
350
400
450
On Market
(Supply)
Pending Closed (Demand) Days on Market Months Supply Absorption rate *
4
0
2
1
8
3
1
6
5
7
8
2
.
4
1
0
6
%
4
2
2
2
0
2
1
9
7
7
5
2
.
1
1
1
2
%
4
1
0
2
0
4
1
4
3
7
7
2
.
9
9
1
%
3
4
3
1
9
4
1
4
1
6
6
2
.
4
1
0
1
%
2
2
9
1
1
3 9
8
9
1
2
.
3
1
1
3
%
1
4
5
9
3
6
0
7
2
2
.
4
1
2
2
%
1
1
4
3
0
2
4
1
0
7
4
.
8
5
9
%
7
2
4
4 2
7
5
8
2
.
7
7
3
%
Murrieta Temecula Hemet Menifee Lake Elsininore San Jacinto Canyon Lake Wildomar
* Absorption rate - # of new listings for the month/# of sold listings for the month
March Demand
On Market -4%
Pending 11%
Closed 32%
Days on Market 6%
Months Inventory 32%
Absorption 32%
Month over Month
Demand surged in March back to numbers we haven’t seen in months as more homes sold than were listed
during the month. For every new listing that came on the market, 1.06 homes sold in Temecula, 1.12 in
Murrieta and 1.22 in San Jacinto. That lead to a 4% drop in inventory and a reduction in both days on market
and months of active inventory.
In addition to strong closings, pending sales, that precursor of future sales, were also up.
I’m hearing from a few agents that the market is ‘HOT’ right now. Of course there are always a few agents for
whom the market is hot.
There are also a few agents who will tell you the market is hot whether they mean it or not. They buy into the
notion that you ‘fake it until you make it’ so if they convince themselves the market is hot, sooner or later
their production will follow suit.
The agents who are selling nothing aren’t saying much either way. But in an area with some 5,000 Realtors,
not counting those from Orange, LA or San Diego County that carpetbag, 900 sales produces 1,800 paychecks.
You do the math.
But enough about the plight of Realtors – it’s definitely better news for homeowners hoping to sell. And with
prices edging up, more and more homeowners are seeing some equity build up in their home. The number of
distressed properties dropped back to 10% but we’ll still be watching for that number to climb some as loan
modifications reset to higher interest and/or interest PLUS principle . That will be a real jolt for some
homeowners and as many as 63% of those with loan modifications are still underwater. Time will tell.

8. 0
500
1000
1500
2000
2500
1/12
2/12
3/12
4/12
5/12
6/12
7/12
8/12
9/12
10/12
11/12
12/12
1/13
2/13
3/13
4/13
5/13
6/13
7/13
8/13
9/13
10/13
11/13
12/13
1/14
2/14
3/14
4/14
5/15
6/14
7/14
8/14
9/14
10/14
11/14
12/14
1/15
2/15
Inventory Sales
Inventory v. Sales
March Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale
Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT
Temecula 397 94% 176 89% 11 3% 7 4% 7 2% 11 6%
Murrieta 367 91% 149 90% 16 4% 5 3% 5 1% 7 4%
Wildomar 67 93% 23 85% 3 4% 3 11% 3 4% 1 4%
Lake Elsinore 204 89% 82 84% 4 2% 5 5% 5 2% 7 7%
Menifee 310 90% 120 85% 8 2% 8 6% 8 2% 7 5%
Canyon Lake 109 96% 23 96% 2 2% 0 0% 0 0% 0 0%
Hemet 365 89% 122 85% 19 5% 13 9% 13 3% 5 3%
San Jacinto 117 81% 57 95% 8 6% 5 8% 5 3% 6 10%
Perris 133 85% 66 84% 6 4% 10 13% 10 6% 1 1%
Regional
Average
2069 90% 818 88% 77 3% 56 6% 56 2% 45 5%

9. Fannie Mae: Slow Wage Growth Stalls Consumer Housing Sentiment
Author: Brian Honea April 7, 2015
The optimism expressed by consumers toward the economy and the housing market at the beginning of the year has stalled as
consumers' attitudes toward personal finances and wage growth have taken a step backward, according to Fannie Mae'sMarch 2015
Housing Survey released Tuesday.
Whereas February's survey showed that consumer optimism toward the economy was at an all-time high, March's survey painted a
different picture. The March employment summary released last week by the Bureau of Labor Statistics (BLS) showed only 126,000 jobs
added for the month, which was less than half of the monthly average (266,000) for the 12 previous months, may have played a role in
the lack of growth in consumer optimism. That same BLS March employment summary reported an average wage gain of just 2.1
percent year-over-year up to $24.86 per hour.
“Consumers are being patient prior to entering the housing market. Our March survey results emphasize how critical attitudes about
income growth are to consumers’ outlook on housing,” said Doug Duncan, SVP and chief economist at Fannie Mae. “We've seen modest
improvement in total compensation resulting from a strengthened labor market. However, income growth perceptions and personal
financial expectations both eased off of recent highs, consistent with Friday’s weak jobs report."
Housing Data Shows Surge in Demand, Median List Prices
Author: Brian Honea April 8, 2015
An early look at the realtor.com national monthly housing data, which is based on the first three weeks of March, showed that housing
demand is surging and median list prices are rising faster.
The median age of inventory declined by 13 percent month-over-month in March despite a 2 percent increase in inventory for that same
period, according to realtor.com. Meanwhile, the median list price for a home rose nationally by 3 percent month-over-month and 11
percent year-over-year up to $220,000 for March.
“It’s still a seller’s market,” said Jonathan Smoke, realtor.com chief economist. “Realtor.com data shows that supply is not keeping pace
with surging demand. We expect rising prices to persuade those who may be on the fence about listing their homes to do so in the
coming months, leading to closer parity between supply and demand.”
The realtor.com data concurred with Fannie Mae's March 2015 Housing Survey, which also showed signs of a seller's market. The
percentage of respondents in Fannie Mae's survey who said they believe now is a good time to sell reached an all-time survey high of 46
percent while the percentage of people surveyed who said now is a good time to buy declined slightly to 20 percent, possibly indicating a
move toward a more balanced housing market.
Smoke determined the 20 hottest housing markets in the nation based on the number of listing views relative to the number of listings
when looking at March data and website traffic. Realtor.com said these markets should see plenty of activity in the next few months as
homebuying season gets underway. The top 20 markets were: 1. Waco, Texas; 2. New Orleans-Metairie, Louisiana; 3. Ann Arbor,
Michigan; 4. Denver-Aurora-Lakewood, Colorado; 5. Santa Rosa, California; 6. Fort Wayne, Indiana; 7. Vallejo-Fairfield, California; 8. San
Diego-Carlsbad, California; 9. Columbus, Ohio; 10. Detroit-Warren-Dearborn, Michigan; 11. Manchester-Nashua, New Hampshire; 12.
Boston-Cambridge-Newton, Massachusetts-New Hampshire; 13. Austin-Round Rock, Texas; 14. Boulder, Colorado; 15. Springfield, Illinois;
16. Charleston, West Virginia; 17. Pittsburgh, Pennsylvania; 18. Tampa-St. Petersburg-Clearwater, Florida; 19. College Station-Bryan,
Texas; and 20. Lansing-East Lansing, Michigan.
A dip or a blip? The jobs boom went bust in March*
Matt O’Brien The Washington Post
It's been a tale of two recoveries the past few months. The jobs numbers said the economy was still strong, but all the
other data said it wasn't. So you'd either think we were in the middle of one of the best years since the late 1990s if you
only looked at the booming jobs reports, or in the middle of the same, slow slog we've been stuck in since the recession
ended if you looked at consumer spending or durable goods orders. Well, after the economy added a disappointing
126,000 jobs in March, it's only looking like one recovery now. A weaker one.
It was pretty bad news all around. It wasn't just that the economy added 126,000 jobs in March when we'd been
expecting 245,000. It was also that we lost 69,000 jobs in revisions to previous months. These tend to mark turning points
in the economy. So the depressing message is that things weren't as good as we thought they were. Now, despite all this,
the unemployment rate was unchanged at 5.5 percent, but, again, this wasn't cheery news. It was because the labor force
shrank by 96,000. The total number of hours people worked also fell. About the only silver lining—and it might not be
much of one—is that wages increased 0.3 percent. But you have to squint really hard to see any kind of pattern in the
two-steps-forward, two-steps-back wage growth that we've had the past year or so. Over the last 12 months, wages have
still only risen 2.1 percent.

10. Year's slow start should pick up pace
ORANGE COUNTY REGISTER EDITORIAL
Published: April 6, 2015 Updated: 4:46 p.m.
How bad was the economic slowdown in this year’s first quarter? Fortunately, not too bad, Esmael Adibi told us; he’s the
director of the A. Gary Anderson Center for Economic Research at Chapman University.
According to the Bureau of Labor Statistics’ new report, nonfarm payroll employment increased by just 126,000 in March,
about half the 245,000 jobs expected. March unemployment remained stuck at 5.5 percent.
For California, the unemployment rate for February, the latest month recorded, was 6.7 percent, the third-worst among the
states, ahead of Mississippi, at 7 percent, and Nevada, at 7.1 percent. On the positive side, California created 498,000 jobs for
the year ending Jan. 31, the most for any state.
Mr. Adibi said the top reason for the first quarter being “way below expectations” was that given by may economists: the bad
weather in most U.S. states, which especially hurt consumer purchases. He added other reasons were the West Coast port
strike, which “created a hiccup in deliveries”; and the strong U.S. dollar, which “slammed exports.”
The good news is the weather is better, the port strike is over, and the dollar is weakening a bit. “We should be getting much
better numbers the rest of this year,” he said.
Some areas of the economy are especially troubling. Labor-force participation dropped to 62.7 percent in March, the lowest
level since the “stagflation” (stagnation plus inflation) of the late 1970s. That means millions of working-age people have just
given up looking for work. And a record 12.2 million blacks are not in the labor force.
This recovery, although certainly better than a recession, remains the weakest since World War II. We urge the Republican
majority in Congress, especially the Inland Empire’s contingent in the House, to advance bold tax-cut and other ideas to get
the economy moving faster. They also need to rein in deficit spending, projected to be $458 billion this year.
Packing them in*
BY JOEL KOTKIN / Staff columnist
What kind of urban future is in the offing for Southern California? Well, if you look at both what planners want and current market
trends, here’s the best forecast: congested, with higher prices and an ever more degraded quality of life. As the acerbic author of
the “Dr. Housing Bubble” blog puts it, we are looking at becoming “los sardines” with a future marked by both relentless cramming
and out-of-sight prices.
Market forces – overseas investment, a strong buyer preference for single-family homes and a limited number of well-performing
school districts – are part of, but hardly all, the story. More important may be the increasingly heavy hand of California’s planning
regime, which favors ever-denser development at the expense of single-family housing in the state’s interior.
The biggest losers, as usual, will be those people – working and middle-class families as well as minorities – who have looked to the
periphery for housing opportunities and a chance for a better life. Los Angeles County is already a majority-renting community, and
attempts to force densification in other counties could bring this reality to Orange, San Bernardino, Riverside and Ventura counties
as well.
Where minorities can thrive
Until recently, the periphery has offered housing salvation for younger middle-income homeowners, particularly families.
Homeownership rates are more than 25 percent higher in the Riverside-San Bernardino area than in the Los Angeles-Orange County
area. Minorities also do much better. The homeownership rate inland is a quarter higher among African American and Asian
households. The rate for Hispanics is nealy half again higher than in Los Angeles-Orange.
Some of the logic behind densification was based on the perception that the suburban dream is dead. Yet, despite persistent claims
by planners and pundits, this turned out to be less a matter of altered market preferences than of temporary effects of the Great
Recession. Roughly 80 percent of Americans still prefer single-family homes. So do Californians: In the past decade, single-family
units represented the vast majority of all new homes built in the state.
Densification might well increase over time as some people prefer more urban lifestyles. But the opportunity to own a single-family
home should not be limited to the very rich, or to aging baby boomers, by Sacramento bureaucrats and unelected regional planning
agencies. Yet, precisely this is the inevitable result of the massive attempt at social engineering now advancing throughout the
region and state.
* Excerpts only. For the full article please follow the title link.

11. Including distressed sales, the U.S. has experienced 36 consecutive months of year-over-year increases;
however, the national increase is no longer posting double digits.