Southwest California Housing numbers for May 2013.

1. Halfway Back Already?
At the end of this report I have attached a letter of SUPPORT for SB 30 from Sen. Joel Anderson, the co-author of
the bill. As I mentioned last month, SB 30 would provide relief to struggling homeowners by shielding them from
taxes on forgiven mortgage debt after a "short sale," and bring California law into conformity with federal tax
law. Unfortunately, hostile amendments "linked" SB 30 with Senate Bill 391, a bill that would impose a new $75
tax on specified real estate documents. "Linked" means that if SB 391 fails, SB 30 fails. It is important that SB 30
and SB 391 stay separate and receive up-or-down votes on their individual merits. It is unfair to use struggling
Californians as leverage to pass a new tax increase that presents a new barrier to the American dream of home
ownership. Please take a minute to print the letter, sign it and fax or email it to the Senator.
Last month in DC it was my privilege to listen to our mid-year forecast from NAR Chief Economist, Dr. Lawrence
Yun. This year Dr. Yun was joined by LaVaughn Henry, vice president and senior regional officer at the Cincinnati
branch of the Federal Reserve Bank of Cleveland. Lawrence Yun said a multiyear housing recovery is likely.
“Steady job creation and household formation have been helping to unleash a pent-up demand in the housing
market,” he said. “Lagging housing starts and a continuing housing shortage mean home prices are primed to
rise further, by 13 percent cumulatively in 2013 and 2014, which will add more than $2 trillion to household
wealth over this period.”
Existing-home sales continue to improve, although Yun said inventory constraints are preventing stronger
growth. After four years of relatively flat activity from 2008 through 2011, existing home sales across the country
rose 9.4 percent to almost 4.3 million in 2012 and are forecast to increase to nearly 5.0 million this year; he
projects 5.3 million sales for 2014 and 5.7 million in 2015.
Realtors from around the country are reporting shortage of inventory even in previously stagnant markets. Some
markets like Las Vegas and Phoenix have become even more super-heated than our own, but even areas of the
mid-west and Eastern seaboard that couldn’t give homes away last year are feeling the comeback. It appears
sustainable but more on that in The Last Word.
If you only care about the local market, there’s good news here as well. After breaching the $300,000 ceiling last
March, Temecula’s prices have marched inexorably upward and in May cracked through the $400,000 level for
the first time since February 2008. Murrieta’s median of $359,998 is their highest since March 2008. These
prices helped drive the region to it’s first monthly median over $300,000 since April 2008, before it dropped to
$210,317 in April 2009.
Murrieta lead the year-over-year median price increase posting a 23% bump ($276,095/$355,998). Temecula
prices increased 18% ($339,228/$415,852), the regional median was up 17% ($255,199/$307,440), Wildomar
and Lake Elsinore increased 22% and Menifee was up 20%. Canyon Lake was down 1%. The region is up 32%
over our 4/09 trough, Murrieta is up 30% and Temecula is up 36%. At just 28% off it’s peak price, Temecula has
made back more than half of the value lost during 2007-2008. Murrieta is close but still lags by 38% and the
region is improving but still 39% off the peak.
Inventory, or lack thereof, continues to be the story of the day. Current active regional inventory of homes to sell
stands at 677. That’s up about 6% from the prior month but down 30% from May 2012 (974) and down 68%
from May 2011 (2,087). Inventories stand at just 1.1 months. In Wildomar it’s just a weeks worth. We’re selling
nearly 2.45 homes for every new home that comes on the market for the region with Wildomar selling 4 to 1,
Menifee selling 3.3 to 1, Murrieta selling 2.6 to 1 and Temecula selling 2 to 1.
Buy now! Ride the Next Wave in Style!

2. 0
50
100
150
200
250
3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
Southwest California Homes
Single Family Homes
Unit Sales
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
Southwest California Homes
Single Family Homes
Median Price
May Transaction Value:
Temecula $87,744,795 Lake Elsinore $21,210,801
Murrieta $59,039,620 Wildomar $7,824,196
Menifee $35,179,435 Canyon Lake $11,055,396

3. $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
3/12 6/12 9/12 12/12 3/13
Southwest California Murrieta Temecula
Southwest California Homes
Single Family Homes
Year-Over-Year Median Price
May Median Price:
2012 2013 %
Temecula $339,228 $415,852 18%
Murrieta $276,095 $355,998 23%
Menifee $177,462 $221,254 20%
Lake Elsinore $180,976 $233,086 22%
Wildomar $217,104 $279,436 22%
Canyon Lake $340,331 $335,012 2%

4. SW Market @ A Glance
Southwest
California
Reporting
Period
Current
Month
Previous
Month
Prior
Year
Change
from Last
Month
Change
from Year
Ago
Existing Home
Sales (SFR
Detached)
May-13 686 639 796 7% 14%
Median Home Price May-13 $307,440 $293,386 $255,199 5% 17%
Unsold Inventory
Index (Months) May-13 1.1 1.1 1.7 35%
Average Time on
Market (Days) May-13 48 53 84 9% 43%
Source: CRMLS
May 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 204 92% 163 77% 8 4% 9 4% 7 3% 34 16%
Murrieta 157 92% 112 68% 8 5% 9 5% 4 2% 39 24%
Wildomar 20 77% 23 82% 4 15% 2 7% 1 4% 3 11%
Lake Elsinore 83 84% 51 56% 7 7% 12 13% 7 7% 19 21%
Menifee 80 86% 116 73% 5 5% 11 7% 7 8% 25 16%
Canyon Lake 61 90% 26 79% 3 4% 2 6% 2 3% 5 15%
Regional
Average 605 87% 491 72% 35 8% 45 7% 28 4% 125 18%
Standard sales accounted for 87% of the Active Inventory in May and nearly ¾ of the sales.
Distressed properties make up just 12% of the Active market but still represent 25% of sales.
Short sales are disappearing as a result of several factors – confusion over last year’s
Homeowners Bill of Rights legislation and this years concerns over short sale debt forgiveness
in SB30. Of course rising property values means fewer homes underwater, reduced
opportunities for short sales ands even fewer foreclosures. The jury is still our as to whether
or not there is a significant ‘shadow inventory’.
Here’s another fun fact – rather than selling at 15 – 20% discounts from asking price, homes
today are selling within 1% of their asking price. Temecula asking price $418,373 / selling
price $415,852. Murrieta asking $360,801 / selling $359,998. Lake Elsinore homes are selling
over asking price – asking $231,348 / selling $233,086.

5. 0
50
100
150
200
250
300
350
400
On Market
(Supply)
Pending Closed (Demand) Days on Market Months Supply Absorption rate *
1
7
0
2
7
3
1
6
4
4
5 1
.
0
2
.
6
2
2
1
2
4
5
2
1
1
5
2 1
.
0
1
.
9
9
9
1
5
1
9
1
5
1 1
.
1
2
1
7
9
3
2
6
3
1
5
9
3
7
0
.
6
3
.
3
6
8
3
2
3
3
7
2
2
.
1
1
.
2
2
6
5
5 2
8
3
2
0
.
9
4
.
0
Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar
* Absorption rate - # of new listings for the month/# of sold listings for the month
May Demand Chart
0
500
1000
1500
2000
2500
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4
1
4
6
2
1
4
4
6
1
7
6
7 1
4
6
9
1
5
6
2
1
7
4
4
1
7
9
4
1
9
6
3
2
0
7
2
2
1
9
7
2
1
5
4
2
1
7
1
2
2
2
4
2
2
4
0
2
0
4
5
2
1
2
0
2
0
8
7
2
0
0
9
1
9
9
7
2
0
0
9
1
9
7
8
2
1
3
2 1
8
8
2
1
8
1
2
1
9
9
7
2
2
4
0
1
4
1
9
1
1
8
8 9
7
4
8
6
2
8
4
1
7
9
5
7
7
8
7
2
5
7
8
2 5
8
1
6
7
9
6
1
7
6
0
2
6
3
9
6
7
7
Regional
Inventory

6. The Last Word…
Last month we talked about AB 30, the Calderon/Anderson bill providing debt forgiveness as a
result of short sale. These bills would keep California in conformity with federal law regarding taxes
due on the phantom income generated by forgiven debt from a short sale. Since 2007, a short-seller
would not have to pay the IRS on this debt. Same in California until 2013. With the 2012 year-end
expiration of California’s law, in-state short-sellers would now have to pay state tax. And since the
measures involve tax income that the legislature would dearly love to spend, passage is by no means
assured.
The bill passed out of committee but in a cruel jape at California Homeowners, the committee has
decided to ‘link’ the bill to SB 391, a bill that would raise the document fees for certain real estate
documents, from current $3 - $10 levels to $75. Some people will do anything to get a tax increase
passed so they are holding thousands of California Homeowners hostage by this linkage. Please take
a minute to affix your John Hancock to the letter from Sen. Anderson. This is some petty politics.
What’s new?
As you might imagine, the tax code dominated much of the conversation at our mid-year meetings
in DC a couple weeks ago. Specifically, building the coalition to defend the Mortgage Interest
Deduction. Our Exec’s have been busy testifying before various committees on the benefits of
homeownership, the positive impact on the economy. But while there has been great wind and
noise, it remains to be seen whether there is any real political will for a comprehensive tax overhaul
this year.
Meetings with local Congressmen Calvert and Hunter were generally upbeat with the widespread
opinion that housing is improving nationwide, which will help spur jobs. The rest of the economy is
still sputtering along but shows signs of improvement.
But as one of our speakers said – “The Government does two things exceptionally well, nothing, and
overreact.”
Finally, there is a growing discussion as to whether or not we’re building another bubble in real
estate.
•Some claim we aren’t and can’t because we ‘learned our lesson last time’. I just gave a whole
speech on ‘lessons learned’ and came up with zilch.
•Others claim there’s a bubble a’building but there are elements in the market which will temper it
before the bust – things like increasing the interest rate, more homes, either standard or REO coming
onto the market to lessen upward price pressure, and buyers getting priced back out of the market.
•Yet others claim we are building another bubble, it’s just a matter of time until it peaks – hopefully at
least another 5 years down the road.
I don’t have the answer for you. I just gave a whole speech on ‘lessons learned from the foreclosure crisis’
and came up with exactly zilch. We’re already starting to repeat the same behaviors that got us into trouble
last time. Also, given California’s history, another bubble is almost inevitable. We’re not a ‘normal’ market,
whatever that is, and our real estate roller coaster is an acknowledged by-product of the attraction California
has to many folks across the country. On top of the current demand there is a significant pent-up demand
caused by relocation, people who are finally able to sell and move up and people who lost their homes in
2007-2009 who are now able to re-enter the housing market.
While our year-over-year appreciation of 20% is not the 30%+ of our go-go years, it’s still an unsustainable
rate which will top out sooner rather than later. If we can moderate that back to 8% or 10% or even 12%,
we’ll be able to sustain the curve a decade or more until the next fiscal or political crisis send it plummeting
again.
You know it’s going to happen – the only question is did YOU learn anything from the foreclosure crisis and
how well are you prepared to deal with the next one? Good luck.

7. Dear Friends,
I wanted to inform you of a Legislative measure that may be of interest to you. Senate Bill 30, a bill I co-authored, would
provide relief to struggling homeowners by shielding them from taxes on forgiven mortgage debt after a "short sale," and bring
California law into conformity with federal tax law.
Unfortunately, hostile amendments "linked" SB 30 with Senate Bill 391, a bill that would impose a new $75 tax on specified
real estate documents. "Linked" means that if SB 391 fails, SB 30 fails.
It is important that SB 30 and SB 391 stay separate and receive up-or-down votes on their individual merits. It is unfair to
use struggling Californians as leverage to pass a new tax increase that presents a new barrier to the American dream of
home ownership.
That is why I have introduced amendments to cut the link between SB 30 and SB 391 so that relief is delivered to
struggling homeowners, regardless of what happens to the SB 391 tax increase.
If you agree, would you be willing to send a letter of support today for the amendments I have introduced? Please send your
letter of support as soon as possible to Senator.Anderson@senate.ca.gov. There is still time to act, but I need your help quickly
since this bill will be voted on this week.
Joel Anderson
Senator, 36th District.
Yes, I will support Senator Anderson’s Amendments to cut the link between SB 30 and SB 391.
Name (Please print) Signature
Address Email Phone
Please return to Senator Anderson’s staff or you may email a scanned copy to Senator.Anderson@sen.ca.gov or fax to 916-447-
9008.

9. Tired of politics & real estate? Come out and see a play.