1. Spring Ahead?
The Southwest California housing market is hoping for a little spring in the
market over the next few months. Sales have been declining steadily and
prices slid again last month after rising slightly in January. Since peaking in
September at $445,514, Temecula has dropped 9% to $406,918 this
month. Murrieta topped out at $399,908 in November dropping 13% to
$347,206 last month. Region-wide our median fell 4% while the rest of the
state was off 6%. But we’re still 15% ahead of last February, so that’s
good.
Single family resales are down 7% from a year ago but if you look at the
sales chart on page 5 you’ll see we experienced a 4 month rally starting in
March in each of the past two years. Pending sales don’t indicate that kind
of increase starting soon but the traditional spring buying season is upon us
so we’ll see how sustainable this recovery has been.
The drop-off in investor purchases and first time buyers is evident in the
market but the biggest problem continues to be buyer qualifications. In an
already tough regulatory environment, lenders are also grappling with the
implementation of the QM (Qualified Mortgage) and QRM (Qualified
Residential Mortgage) rules and making sure they comply with new edicts
from the CFPB (Consumer Financial Protection Bureau). (You’re probably
already aware that the recently formed CFPB essentially answers to no one
and is financed by the fines they levy. Yeah, that’ll work.)
You’re probably also aware that California Legislators believe we need over
2,000 new bills to help us cope with life in this harsh environment. Many of
those will impact housing and private property rights in some way while
several more seek to modify Prop 13 homeowner protections.
The California Association of Realtors is sponsoring a few bills ourselves
including AB 513 (Fox), a bill which makes it easier for homeowners and
law enforcement to remove ‘unauthorized residents’ (i.e. Squatters) from a
property. While the bulk of distressed properties are behind us (we hope),
this is still a problem often leading to rental fraud and other criminal
activity. No statute currently exists to assist property owners.
And speaking of distressed properties, the share for the region remains
fairly constant at about 15% of our market but in Temecula last month just
6% of sales were distressed.

2. Realtors® Oppose Tax Plan to Limit Mortgage Interest
Deduction, Real Estate Provisions
WASHINGTON (February 26, 2014) – The following is a statement by
National Association of Realtors® President Steve Brown:
“NAR supports reforms that promote economic growth, but we strongly
oppose severely altering the rules that govern ownership and investment
in real estate. Real estate powers almost one-fifth of the U.S. economy,
employs more than 17 million Americans, and contributes a quarter of all
federal and state tax revenue and as much as 70 percent of local taxes.
“We are extremely disappointed with several of the provisions contained
in U.S. House Ways and Means Chairman Dave Camp’s tax reform draft
released today, namely proposed limits on the mortgage interest
deduction and capital gains, and the repeal of deductions for state and
local property taxes. These proposed changes to the taxation of real
estate will impact every single American, either directly or indirectly.
“NAR will carefully analyze the details of the Chairman’s plan so we can
best educate Congress and the public about how this plan would impact
the owners, consumers, and producers of both residential and
commercial real estate.”
The National Association of Realtors®, “The Voice for Real Estate,” is
America’s largest trade association, representing 1 million members
involved in all aspects of the residential and commercial real estate
industries.

3. 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)
February
2014
469 454 505 3% 7%
Median Home Price $323,522
$335,052
$275,305
4% 15%
Unsold Inventory Index
(SFR Units)
1,507 1,448 617 4% 59%
Unsold Inventory Index
(Months)
3.5 3.7 1.4 5% 60%
Median Time on Market
(Days)
68 62 57 9% 16%
Source: CRMLS

4. February Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale
Active
% of
MKT Sold
% of
MKT Active
%
of
MKTSold
% of
MKT Active
% of
MKT Sold
% of
MKT
Temecula 367 92%108 93% 15 4% 2 2% 14 4% 5 4%
Murrieta 340 90%105 82% 14 4% 8 6% 23 6% 13 10%
Wildomar 61 88% 29 85% 4 6% 2 6% 4 6% 3 9%
Lake
Elsinore
190 84% 46 79% 7 3% 4 7% 27 12% 6 10%
Menifee 299 87% 90 78% 15 4% 10 9% 23 7% 11 9%
Canyon
Lake
91 97% 13 76% 0 0% 1 6% 3 3% 1 6%
Hemet 340 84% 81 81% 30 7% 10 10% 33 8% 5 5%
San Jacinto 127 83% 23 70% 7 5% 4 12% 16 10% 6 18%
Regional
Average
181588%495 82% 92 4% 41 7% 143 7% 50 8%
27% 45% 35%

5. 0
50
100
150
200
250
3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
Southwest California Homes
Single Family Homes
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
Southwest California Homes
Single Family Homes
Median Price
February Transaction Value:
Temecula $57,546,654 Lake Elsinore $15,187,609
Murrieta $44,442,312 Wildomar $9,587,481
Menifee $28,331,544 Canyon Lake $6,703,700

6. 0
20
40
60
80
100
120
140
160
180
200
13-1 13-2 13-3 13-4 13-5 13-6 13-7 13-8 13-9 13-10 13-11 13-12 14-1 14-2
Hemet/San Jacinto 2013 Unit Sales
Single Family Residential
Hemet San Jacinto
$0
$50,000
$100,000
$150,000
$200,000
$250,000
13-1 13-2 13-3 13-4 13-5 13-6 13-7 13-8 13-9 13-10 13-11 13-12 14-1 14-2
Hemet/San Jacinto 2013
Single Family Residential Median Price
Hemet San Jacinto
February Transaction Value:
(Gross revenue from SFR Residential transactions in the city)
Hemet $15,557,700 San Jacinto $5,997,250

7. $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 6/13 9/13 12/13
Southwest California Murrieta Temecula
February Median Price:
2013 2014 %
Temecula $358,763 $406,917 12%
Murrieta $325,815 $347,206 6%
Menifee $200,637 $244,237 18%
Lake Elsinore $216,880 $266,449 19%
Wildomar $245,726 $281,985 13%
Canyon Lake $306,625 $394,335 22%
Southwest California $275,306 $323,522 15%
Hemet $150,606 $155,571 3%
San Jacinto $155,584 $181,735 14%
Southwest California Median Price

8. 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
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
8
6
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1
0
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8
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2
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5
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3
4
5
1
4
4
8
1
5
0
7
0
50
100
150
200
250
300
350
400
450
On Market
(Supply)
Pending Closed (Demand) Days on Market Months Supply Absorption rate *
3
7
9
1
5
9
1
2
8
5
7
3
.
0
.
8
4
3
9
8
1
5
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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
February Demand Chart
Inventory up 4% month-over-month
3% month over m-o-m sales increase
Pending sales moderate
Days on Market up 9%
Months supply up to 3.5 months (avg). Still shy of
the 6 – 7 months considered a ‘balanced’ market
A year ago we were selling 2-3 homes for every
new listing. (absorption)
2012 2013
Southwest California Inventory