This document provides a forecast and analysis of the California housing market in 2016 and 2017 from the California Association of Realtors. Some key points:
- 2016 sales of existing single family homes are projected to be flat compared to 2015, while the median home price is projected to rise 6.2%
- Through September 2016, sales were flat year-over-year but the median price rose 6.1% year-over-year
- Inventory remains low across the state, hindering sales growth
- The forecast predicts a modest rise in home sales but continued growth in median prices in 2017
3. YTD 2016 CA Sales Flat Compared to 2015
Sept. 2016 Sales: 425,680 Units, -0.4% YTD, +0.8% 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
*Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sep-16:
425,680
Sep-15:
422,360
4. Median Price Highest since 2007
California, Sep. 2016: $514,320, -2.3% MTM, 6.1% 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
P: May-07
$594,530
T: Feb-09
$245,230
-59% from
peak
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sep-16:
$514,320
Sep-15:
$484,670
5. Peak vs. 6/16: Southern California
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region
Last Cyclical
Peak Month
Last Cyclical
Peak Price
Jun-16
Median
%Chg From
Peak
Orange County Jun-07 $775,420 $759,490 -2.1%
San Diego County May-06 $622,380 $594,430 -4.5%
Ventura Couty Aug-06 $710,910 $674,310 -5.1%
CALIFORNIA May-07 $594,530 $519,440 -12.6%
Riverside County Jun-06 $431,710 $357,810 -17.1%
Los Angeles Metro May-07 $578,700 $477,230 -17.5%
Inland Empire Jun-06 $389,380 $319,100 -18.0%
Los Angeles County Sep-07 $625,810 $502,190 -19.8%
San Bernardino County Aug-06 $350,290 $245,220 -30.0%
6. Peak vs. 6/16 Median: Central Valley
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region
Last Cyclical
Peak Month
Last Cyclical
Peak Price
Jun-16
Median
%Chg From
Peak
CALIFORNIA May-07 $594,530 $519,440 -12.6%
Madera County Feb-08 $275,000 $234,720 -14.6%
Sacramento County Aug-05 $394,450 $332,580 -15.7%
Placer County Aug-05 $527,990 $444,590 -15.8%
Kern (Bakersfield) County Jun-06 $299,920 $238,400 -20.5%
Kings County Mar-06 $268,050 $211,110 -21.2%
Tulare County Dec-05 $269,710 $211,820 -21.5%
Fresno County Jun-06 $313,510 $242,240 -22.7%
San Benito County May-05 $671,190 $511,500 -23.8%
Merced County Oct-05 $344,610 $207,580 -39.8%
7. Peak vs. 6/16 Median: Bay Area
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Region
Last Cyclical
Peak Month
Last Cyclical
Peak Price
Jun-16
Median
%Chg From
Cyclical Peak
San Francisco County May-07 $972,010 $1,350,000 38.9%
San Mateo County Oct-07 $1,020,000 $1,306,250 28.1%
Santa Clara County Apr-07 $865,000 $1,050,000 21.4%
Alameda County May-07 $709,420 $803,000 13.2%
San Francisco Bay Area May-07 $789,250 $841,960 6.7%
Marin County Jun-07 $1,149,390 $1,218,500 6.0%
Sonoma County Jan-06 $650,330 $608,000 -6.5%
CALIFORNIA May-07 $594,530 $519,440 -12.6%
Napa County Aug-06 $729,170 $619,000 -15.1%
Solano County Jun-06 $492,800 $390,000 -20.9%
Contra Costa County May-07 $923,150 $625,000 -32.3%
9. $496,930
6.1% YTY
-0.1% YTD
6.6% YTY
3.6 40.2 98.5%$281
UII
Months Days
MTM Price
Per Sq Ft
Sales
To List Ratio
Median PriceSales
Southern California
12. Sales of Existing Detached Homes
So.CA Sept-2016 Sales: 11,425 Units, +0.4% YTD, +3.4% YTY
0
5,000
10,000
15,000
20,000
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
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
SERIES: Sales of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
13. Median Price of Existing Detached Homes
Southern California, Sept-2016: $487,600, +5.6% YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
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
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
14. Sales of Existing Detached Homes
Southern California Region
LosAngeles 3,660 3,561 3,571 2.8% 2.5% -0.9%
Orange County 1,563 1,759 1,575 -11.1% -0.8% -0.9%
Riverside County 2,134 2,174 1,921 -1.8% 11.1% 4.3%
San Bernardino 1,309 1,337 1,263 -2.1% 3.6% 1.7%
San Diego 2,011 2,205 1,890 -8.8% 6.4% -0.2%
Ventura 536 596 625 -10.1% -14.2% -3.0%
Santa Barbara 212 233 205 -9.0% 3.4% 0.6%
Y-t-YCounty Sep-16 Aug-16 Sep-15 M-t-M Y-t-D
SERIES: Sales of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
15. Median Price of Existing Detached Homes
Southern California Region
LosAngeles $546,920 $517,400 $517,750 5.7% 5.6%
Orange County $739,000 $749,000 $705,000 -1.3% 4.8%
Riverside County $352,250 $355,000 $329,000 -0.8% 7.1%
San Bernardino $254,330 $243,370 $229,890 4.5% 10.6%
San Diego $569,000 $563,000 $525,000 1.1% 8.4%
Ventura $629,420 $652,330 $599,710 -3.5% 5.0%
Santa Barbara $732,500 $775,000 $745,000 -5.5% -1.7%
Y-t-YCounty Sep-16 Aug-16 Sep-15 M-t-M
SERIES: Median Price of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
16. Silicon Valley Leads Job Growth
0.7%
1.7%
1.8%
2.0%
2.3%
2.3%
2.4%
2.5%
2.6%
2.7%
2.7%
3.2%
3.6%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
Ventura
San Diego
Modesto
San Francisco
Sacramento
Stockton
San Jose
August 2016: CA +2.3%, +378,000 (YTY)
SERIES:Total Nonfarm Employment By Industry
SOURCE: US Bureau of Labor Statistics,CA Employment Development Division
17. The “New” Normal
• Lack of supply hinders sales
• High-end: discretionary & slowing
• Low/Moderate-end: demand continues unabated
• Urban coastal CA slowing
• Inland and Central and Northern CA growing
• Migration patterns mirror housing affordability and jobs
• Demographics is Destiny: Boomers aren’t moving, even when they
retire
18. Supply Remains an Issue;
Unsold Inventory Stays Below the Norm
August 2016: 3.4 Months, August 2015: 3.6 Months;
Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining
inventory for the month in question. The remaining inventory for the month is defined as the number of
properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the
number of “Sold” properties for the month in question.
0.0
5.0
10.0
15.0
20.0
SERIES: Unsold Inventory Index of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
19. Where is the inventory?
Long-Time Homeowners are not moving as in the past
Low rate on current mortgage
Low property taxes
Capital gains hit
Where can I afford to go?
Could not qualify for a mortgage today
Remodel and stay
Are we headed for the “European Model” where children inherit
the home of their parents?
One more thing…Secular decline in marriage
20. Fewer housing units being turned over
since the Great Recession
4.2%
4.8%
0%
2%
4%
6%
8%
10%
19701972197419761978198019821984198619881990199219941996199820002002200420062008201020122014
CA US
SERIES: Percent of existing single-family homes being sold
SOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.
Housing Turnover Rate
(Single-Family Homes only)
21. Owners Investing in Staying Put ?
$3.9 Billion
through July
0.0
1.0
2.0
3.0
4.0
5.0
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
$Billions
Year-to-Date Through July
Alterations/Additions Reach All-Time High & Gaining Steam
Up 16% from 2015 YTD levels
SOURCE: California Homebuilding Foundation (CHF)/Construction Industry Research Board (CIRB)
Downloaded from Moody’s Analytics
22. Boomers Not Moving as Often
0.9% 0.8%
1.9%
5.7%
10.7%
21.3%
24.0%
31.8%
24.4%
9.0%
11.0%
12.4%
14.2%
12.0%
8.9%
7.3%
0%
5%
10%
15%
20%
25%
30%
35%
1978 & Earlier 1979 to 1984 1985 to 1989 1990 to 1994 1995 to 1999 2000 to 2005 2005 to 2009 2010 to 2013
California Homeowners by Length of Tenure, 2013
Under 55 55+
SERIES: Distribution of Home Ownership by Year Moved In
SOURCE: U.S. Census Bureau, 2013 American Housing Survey
71% of Californian’s aged 55+ haven’t moved since 1999
23. More Single Family Units Now Rentals
6,919,164
1,940,607
6,527,730
2,674,808
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
SF Owners SF Renters
2000 2005 2010 2015
SOURCE: U.S. Census Bureau, Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS)
Downloaded from the National Bureau of Economic Research (NBER)
Potentially between 400,000 and 700,000 SF Rentals that Used to be Owner-Occupied
24. “Missing” 65,000 New Units Annually
SERIES: California New Housing Permits
SOURCE: Construction Industry Research Board
0
50000
100000
150000
200000
250000
300000
350000
Single Family Multi-Family
Household Growth:
165,000/yr.
2015: 95,822 (42,959 sf, 52,863 mf)
2016p: 98,300 total units
25. Most Underbuilt Counties in California
381,300
174,833 162,740
127,542 141,162
95,245 98,149 105,586
66,054
44,772
88,134
35,426 44,923
18,141
40,434
14,901 18,108 31,255
6,349 10,890
0
100,000
200,000
300,000
400,000
500,000
New Jobs vs. New Permits (2010-2015)
Jobs
Permits
SOURCE: California Employment Development Department, Construction Industry Research Board
29. Lack of
affordability,
56%
Lack of inventory,
28%
Mortagage rate
increase, 10%
Recession, 6%
2017 Challenges
Q2 - What will be the biggest challenge for the housing market in 2017?
30. 2017 Opportunities
• Up your game – Always a good option
• What business are YOU in?
• Educate first time-home buyers – talk to their parents
• Become well versed on down payment assistance programs,
debt management and improving credit to turn renters into
buyers.
• Don’t give up on international buyers
• Stay involved & stay current
• Get married!