Demographics, housing and economic outlook for Lake Elsinore prepared for the Economic Development Workforce Committee.

1. The Voice for Real Estate
Economic Development Workforce Committee

2. • Lake Elsinore Demographics
• Lake Elsinore Housing Market
• What Lies Ahead
• CA / National Trends
• A little politics
• Forecast
Lots to cover – Not enough time

4. 2015
Lake Elsinore Demographic Shift
2016
6%2%
7% 3%
2017
2018
3% 4%

5. Lake Elsinore Demographic Shift

7. Lake Elsinore Population Data

8. Lake Elsinore Population Data

9. Lake Elsinore Population Data

10. Lake Elsinore Population Data

11. Lake Elsinore Population Data
High paying jobs follow a highly educated workforce

12. Lake Elsinore Population Data
40% Commute
45 minutes or more
80% Drive Alone

13. Lake Elsinore Business Data

14. Let’s talk Housing!

15. Regional Housing Data
Southwest
California
Reporting
Period
Current
Month
Last
Month Year Ago
Change from
Last Month
Change from
Year Ago
Existing Home Sales
(SFR Detached)
August
2018
984 973 1103 1% 11%
Median Home Price $378,129 $378,155 $359,983 --- 5%
Unsold Inventory Index
(SFR Units)
2,828 2,700 1,848 5% 35%
Unsold Inventory Index
(Months)
2.9 2.8 1.8 3% 38%
Median Time on
Market (Days)
25.6 21.9 18.8 14% 27%
SW Market @ A Glance
Source: CRMLS

16. 0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Lake Elsinore 962 1,038 1,287 999 494 1,405 1,805 1,405 1,270 1,165 1,072 1,022 1,091 1,184 1,276 1,122
62%
12%
22%
Lake Elsinore Sales History

17. $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Lake Elsinore $230, $323, $391, $433, $377, $230, $174, $187, $180, $187, $247, $281, $300, $321, $346, $379,
47%
60%
54%
Lake Elsinore Median Price History

18. Lake Elsinore Median Price
August Median Price:
2017 2018 %
Temecula $468,950 $480,000 2%
Murrieta $425,000 $435,000 2%
Menifee $345,000 $370,000 7%
Lake Elsinore $355,000 $379,500 6%
Wildomar $409,950 $425,000 4%
Canyon Lake $414,950 $425,000 2%
Hemet $246,000 $272,000 10%
San Jacinto $268,000 $294,450 9%
Perris $307,000 $329,000 7%
August 2018 SFR Transaction Value*:
Lake Elsinore $34,409,375
* Revenue generated by single family residential transactions for the month.

19. Market Activity
0
500
1000
1500
2000
2500
3000
1/15 3/15 5/15 7/15 9/15 11/15 1/16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17 1/18 3/18 5/18 7/18
Inventory Sales Linear (Inventory) Linear (Sales)
Inventory v. Sales

20. City Median Sold $ Average Sold $ Average SqFt Bed Bath YrBlt
Temecula $480,000 $526,469 2,442 4 3 1998
Murrieta $435,000 $462,377 2,447 4 3 1998
Wildomar $425,000 $426,750 2,511 4 3 1999
Lake Elsinore $379,500 $382,326 2,206 4 3 1999
Menifee $370,000 $377,264 2,047 3 3 1996
Canyon Lake $425,000 $490,767 2,138 3 2 1987
Hemet $272,000 $264,712 1,701 3 2 1986
San Jacinto $294,450 $286,115 1,995 4 3 1999
Perris $329,000 $343,572 1,994 4 3 1997
Your 'Average' House, August 2018
By City
Source: CRMLS
Your ‘Average’ House, August 2018

21. What Lies Ahead?

22. What Lies Ahead?
The U.S. Housing Market Looks Headed for Its Worst Slowdown in Years
Southern California home sales crash, a warning sign to the nation
An Argument Against A Housing Market Correction In The Next 24 Months
2020 Vision: Experts Say Next Recession Looms at Decade's End
New-Home Sales May Be in Trouble

23. 4.1%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2005 2008 2011 2014 2017 Q1-11 Q4-11 Q3-12 Q2-13 Q1-14 Q4-14 Q3-15 Q2-16 Q1-17 Q4-17
AnnualPercentChange,
Chain-type(2009)$
GDP - 2017: 2.3%; 2018 Q2: 4.1%
ANNUALLY
QUARTERLY
2009 Largest Annual Drop since 1946 (-2.8%)
SERIES: GDP
SOURCE: US Dept. of Commerce, Bureau of Economic Analysis
GDP Growth – Is It Sustainable

24. 0
20
40
60
80
100
120
140
160 Jan-05
Sep-05
May-06
Jan-07
Sep-07
May-08
Jan-09
Sep-09
May-10
Jan-11
Sep-11
May-12
Jan-13
Sep-13
May-14
Jan-15
Sep-15
May-16
Jan-17
Sep-17
May-18
INDEX,100=1985
August 2018: 133.4
SERIES: Consumer Confidence
SOURCE: The Conference Board
Consumer Confidence Hits 18 Year High

25. 0
1
2
3
4
5
6
2010/01
2010/05
2010/09
2011/01
2011/05
2011/09
2012/01
2012/05
2012/09
2013/01
2013/05
2013/09
2014/01
2014/05
2014/09
2015/01
2015/05
2015/09
2016/01
2016/05
2016/09
2017/01
2017/05
2017/09
2018/01
2018/05
05.24.18
06.21.18
07.19.18
FRM ARM
4.60
3.93
4.53
3.84
MONTHLY
WEEKLY
SERIES: 30Yr FRM, 5Yr ARM
SOURCE: Freddie Mac
Mortgage Rates Up – But Still Low

26. 97.5%
1.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Equity Sales Short Sale REO
0.7%
Distressed Properties Lower Than Average

27. California, July 2018 Sales: 406,920 Units, -1.4% YTD, -3.4% YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000 Jan-05
Sep-05
May-06
Jan-07
Sep-07
May-08
Jan-09
Sep-09
May-10
Jan-11
Sep-11
May-12
Jan-13
Sep-13
May-14
Jan-15
Sep-15
May-16
Jan-17
Sep-17
May-18
Jul-18:
406,920
CA Sales Declined for 3rd Consecutive Month

28. 576,240
411,890
0
100,000
200,000
300,000
400,000
500,000
600,000
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
California Existing Single-Family Home Sales
CA Sales Significantly Below Prior Peaks
Sales have not increased
Yet our population has DOUBLED
1971 – 19.2 million 2017 - 39.54

29. California, July 2018: $591,460, -1.9% MTM, +7.6% YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Jan-05
Sep-05
May-06
Jan-07
Sep-07
May-08
Jan-09
Sep-09
May-10
Jan-11
Sep-11
May-12
Jan-13
Sep-13
May-14
Jan-15
Sep-15
May-16
Jan-17
Sep-17
May-18
P:May-07
$594,530
T: Feb-09
$245,230
-59% from
peak
Jul-18:
$591,460
Jul-17:
$549,47
0
CA Median Price: Record High in June $602,760

30. 5656
54
5252525150
48484747
4645
44444443424241
3938
36
343434
31
2928262625252423
212120
181817
1514
12
0
10
20
30
40
50
60
2018-Q1: % able to purchase median-priced home
Housing Affordability In CA: By County

31. 0
50000
100000
150000
200000
250000
300000
350000
Single Family Multi-Family
CA HCD Projected
Housing Needs:
180,000/yr.
2017: 112,886 (55,779 sf, 57,107 mf ) 2018f: 121,320 (61,360 sf, 59,960 mf)
“Missing” 60,000 New Units Annually

32. California Economic Outlook
SERIES: CA Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2013 2014 2015 2016 2017 2018p 2019f
Nonfarm Job Growth 3.0% 2.2% 2.7% 2.3% 1.6% 1.8% 1.8%
Unemployment 8.9% 7.5% 6.2% 5.5% 4.8% 4.5% 4.1%
CA Population (Million) 38.4 38.7 39.1 39.4 39.6 40.0 40.3
Population Growth 0.9% 0.9% 0.9% 0.9% 0.8% 0.9% 0.9%
Real Disposable Income,
% Change
-2.1% 5.6% 3.9% 1.6% 1.6% 2.4% 3.0%

33. California Housing Market Outlook
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2013 2014 2015 2016 2017 2018p 2019f
SFH Resales
(000s)
414.9 382.7 409.4 417.7 424.1 417.6 416.8
% Change -5.9% -7.8% 7.0% 2.0% 1.5% -1.5% -0.2%
Median Price
($000s)
$407.2 $446.9 $476.3 $502.3 $538.0 $582.2 $607.8
% Change 27.5% 9.8% 6.6% 5.4% 7.2% 8.2% 4.4%
Housing
Affordability
Index
36% 30% 31% 31% 29% 27% 24%
30-Yr FRM 4.0% 4.2% 3.9% 3.6% 4.0% 4.7% 5.2%

34. Let’s talk politics!

35. National Flood Insurance Program (NFIP)
Congress must reauthorize the NFIP for five years and include meaningful reforms that open the door to
private market flood insurance.
Residential Real Estate Finance
NAR believes that federal mortgage finance programs that have proven records for producing and
preserving homeownership opportunities must not only be preserved, but also continuously strengthened.
Fannie Mae and Freddie Mac (GSE) Reform
NAR supports the creation of a non-shareholder owned government authority subject to strict regulations
on product types, revenue generation and expenditures.
Fair Housing
Congress must amend the Fair Housing Act to prohibit discrimination based on sexual orientation and
gender identity.
New Tax Law
The Tax Cuts and Jobs Act (H.R.) was enacted in December 2017, and includes many changes to the tax
law that will affect residential and commercial real estate, as well as real estate professionals.
De-regulating the economy
Dismantling Dodd-Frank and other economic barriers to lending carry positives / concerns. Banks will
loosen up lending standards / Buyers could have more mortgage options
Federal Policies
Fed policy?
2 more increases this year, 3 next?

36. • Impact of ‘Gas Tax’
• Fiscal impact of Sanctuary State
• DIF & TUMF Fee Increases
• Housing ‘Fix’ Bills
• New Governor
• Super-Majority Continues?
California ‘Special’ Circumstances

37. Largest Number of Homelessness
SERIES: Estimates of Homeless People in January 2017
SOURCE: The U.S. Department of Housing & Urban Development
Estimates of Homeless Population – By State, 2017
Top 5 State with Largest Increases
(2016 – 2017)
• California 16,136/13.7%
• New York 3,151/3.6%
• Oregon 715/5.4%
• Nevada 435/5.9%
• Texas 426/1.8%

38. Based on our 2018 Strategic Initiatives, the Council has adopted the following
positions on the California State November 2018 ballot initiatives:
Proposition 1, the Housing Programs and Veterans' Loans Bond Vote NO
Proposition 2, the Use Millionaire's Tax Revenue for Homelessness Prevention Housing Bonds Measure NP
Proposition 3, the California Water Infrastructure and Watershed Conservation Bond Initiative Vote YES
Proposition 4, Children's Hospital Bonds Initiative (2018) Vote YES
Proposition 5, the Property Tax Transfer Initiative Vote YES
Proposition 6, the Voter Approval for Future Gas and Vehicle Taxes and 2017 Tax Repeal
‘Repeal the Gas Tax’ Vote YES
Proposition 7, the Permanent Daylight Saving Time Measure. NP
Proposition 8, the Limits on Dialysis Clinics' Revenue and Required Refunds Initiative Vote NO
Proposition 10, the Local Rent Control Initiative Vote NO
Proposition 11, the Ambulance Employees Paid On-Call Breaks, Training, and Mental Health Services Initiative
Vote YES
Proposition 12, the Farm Animal Confinement Initiative NP
2018 Ballot Propositions

41. https://tinyurl.com/EDWC2017