1. June 19, 2012
With your host…
Gene Wunderlich

2. It’s The Economy,
Stupid
June 19, 2012
With your host…
Gene Wunderlich

3. 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

4. • Lenders
• Short Sales
• Interest Rates
• Federal Economic Policy
• Inflation
• Regulations
• Shadow Inventory
• Unemployment
• Global Economy
• Foreclosures
• Mortgage Interest Deduction
• Strategic Foreclosures

5. 250
Southwest California Homes
Single Family Homes
Unit Sales
200
150
100
Year to date sales are up 10% over last year (2,945/3,276) and up 3% from their
50
previous high watermark in 2010 (3,179/3,276).
0
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake

6. $400,000
Southwest California Homes
$350,000
Single Family Homes
Median Price
$300,000
$250,000
$200,000
$150,000
Median price was up 9% over last May ($232,084/$255,199).
$100,000
Year-to-date we are up 3% (231,240/$239,152) over 2011 and a
whopping 2% over 2010 ($235,622/$239,152).
$50,000 Wow! A $3,500 jump in 2 years.
Remember when they were appreciating that much every week?
$0
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake

7. 400
May Demand Chart
Since January
350 3
3 5
Sales increased 30%
3
3 9 Active Inventory decreased 67% (2,240/974)
300 5
0 2
4 2 2 2
3 2 2
2 2 2 2
250 1 2 0
2 4 0 3
5 1 0
4 9 9 9
3 8
200 2 1 5 1
3
5
4 1
9
9 1 3
150 1 0
6
8 8 9 8
7 7 7 2 8
100 7 4 8
6 6 4 8 5
4 0 5
3 7
8
50 2 5 1 1 1 1 4 1
1 . . . . . .
1 2 3 1 1 4
0
On Market Pending Closed (Demand) Days on Market Months Supply Absorption rate *
(Supply)
Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar
* Absorption rate - # of new listings for the month/# of sold listings for the month

8. May Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale
Acti % of % of Acti % of % of Acti % of % of
ve MKT Sold MKT ve MKT Sold MKT ve MKT Sold MKT
Temecula 179 74% 106 51% 1 0% 40 19% 46 19% 60 29%
Murrieta 163 62% 120 52% 18 7% 40 17% 68 26% 68 29%
Wildomar 19 40% 16 46% 7 15% 8 23% 19 40% 10 29%
Lake
Elsinore 75 50% 35 30% 21 14% 49 42% 46 31% 30 26%
Menifee 94 48% 79 43% 19 10% 42 23% 75 38% 54 30%
Canyon
Lake 57 66% 10 48% 9 10% 6 29% 20 23% 5 24%
Regional
Average 587 57% 366 45% 75 9% 185 26% 274 29% 227 28%
62% 247% 83%

13. Risks to Forecast: State
• Accelerated 3% withholding
• 4% flat tax – including services
• Point of sale mandates
• Mortgage interest deduction
• 40+ ballot propositions
• Taxes, taxes, & BLT’s
• Attorney General’s Nevada Suite

14. AB 1590 (Campos) Assessment Appeals Boards – The Brown Act requires that local government meetings be properly noticed and prohibits
those which have not been. A 1996 attorney general’s opinion found that local assessment appeals boards are not required to comply with the Brown
Act. C.A.R. is sponsoring AB 1590 to clarify that property tax assessment appeals boards are subject to the Brown Act. This legislation also includes
provisions specifying that deliberations may be held in closed session.
Status: Assembly Appropriations Committee
AB 1711 (Galgiani) Burdensome Retrofit Standards – This measure defines "unreasonable and unnecessary" in terms of energy efficiency audit and
retrofit requirements at "point of sale" as prescribed by AB 758 of 2009. C.A.R. was able to negotiate an agreement with the author of AB 758,
obtaining a commitment that if regulators propose point of sale requirements in the AB 758 regulatory process legislation will be pursued to achieve
the objectives of AB 1711 to make clear that retrofits must recover their cost over the useful life, and not delay or impose costs at point of sale. With
that commitment C.A.R. will not be advancing AB 1711 at this time. C.A.R. will continue to work with regulators on the development of the AB 758
regulations.
Status: Assembly Utilities and Commerce Committee
AB 1718 (Hill) Degree Brokers – Under current law an applicant for a brokers’ license must have either two years of active real estate experience or
have graduated from a four-year college or university with a specialization in real estate. The Department of Real Estate (DRE) has interpreted the
“degree” provisions to mean any four-year degree. C.A.R. is sponsoring AB 1718 to clarify the law to require "degree brokers" to have an
undergraduate degree with either a major or a minor in real estate in order to claim the experience exemption.
Status: Senate Business, Professions, and Economic Development Committee
AB 1745 (Torres) Dual Tracking – Currently, the banks’ ability to simultaneously process a short sale and a foreclosure on a single property has
resulted in the foreclosure sale of homes which have an approved short sale pending. C.A.R. is sponsoring AB 1745 to prohibit a lender from
proceeding to a foreclosure sale against a property if that property has been approved for a short sale. This measure will still allow the mortgagee to
withdraw its short sale approval due to a change in the conditions under which the approval was granted. The lien holder would be required to
provide a written notice at least 3 days before the withdrawal of approval explaining the reason for the retraction.
Status: Senate
AB 2225 (Perea) Debt Forgiveness Income Tax - The federal government enacted the Mortgage Debt Relief Act of 2007 that permitted 3 years of
mortgage debt relief by not requiring borrowers to pay income tax on debt forgiven in a “short” sale. In late 2008 the federal government extended
this relief through December 31, 2012. In 2008, California enacted and C.A.R. supported SB 1055 (Machado) which provided conformity with the
federal statute for the 2007 and 2008 tax years and, in 2010, C.A.R. supported and California enacted SB 401 (Wolk) which extended the income tax
debt forgiveness until December 31, 2012, conforming to the federal law. C.A.R.is sponsoring AB 2225, to conform state tax law to federal law, when
the federal government extends the mortgage debt forgiveness sunset date; AB 2225 will be amended to do so when appropriate.
Status: Senate GUTTED – now a bill about erroneous charges from the State Board of Equalization.

18. Risks to Forecast: Federal
Washington Policy
• 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
• CFPB & other Dodd-Frank rules
• FHFA Bulk Sale Pilot
Fiscal cliff on January 1, 2013 if no new budget compromise…
• Sequestration – deep cuts to military & domestic spending
• End of the Bush era tax model – higher taxes
• 3% shaved of GDP.

20. Realtor Rally
Washington Monument
14,000 Realtors®
May 17, 2012

21. Realtor Home
Washington DC