2016 ECONOMIC AND HOUSING MARKET FORECAST

2016 ECONOMIC AND
HOUSING MARKET
FORECAST
April 06, 2016
San FranciscoAssociation of REALTORS®
OscarWei, Senior Economist of C.A.R.

OVERVIEW
• Economic Outlook
• California Housing Market Outlook
• Regional Housing Market Outlook
• 2016 Forecast

MACRO ECONOMY SUMMARY
1.4%
GDP 2015-Q4
1.9%
Job Growth
2016-02
5.0%
Unemployment
2016-03
2.2%
Consumption
2015-Q4

-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
US GDP: AT RISK FROM WEAK GLOBAL GROWTH?
2015: 2.4%; 2015 Q4: 1.4%; 2016 (F): 2.7%
ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
ANNUALLY QUARTERLY
2009 Largest Annual Drop since 1938 (-3.4%)
SERIES: GDP
SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

PROGRESS CONTINUES, UNIMPRESSIVELY
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
19,000
Q1-00
Q4-00
Q3-01
Q2-02
Q1-03
Q4-03
Q3-04
Q2-05
Q1-06
Q4-06
Q3-07
Q2-08
Q1-09
Q4-09
Q3-10
Q2-11
Q1-12
Q4-12
Q3-13
Q2-14
Q1-15
Q4-15
$Billions
Actual Trend
SERIES: U.S. Real Gross Domestic Product (GDP)
SOURCE: U.S. Bureau of Economic Analysis
24 Consecutive quarters of yty growth, but still below long-run trend

UNEMPLOYMENT RATES AT 8-YEAR LOWS
US 5.0% (Mar 2016), CA 5.5% (Feb 2016)
0%
2%
4%
6%
8%
10%
12%
14%
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
CA US
SERIES: Unemployment Rate The U-6 rate covers the unemployed, underemployed and those who are not looking but who want a job
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

EMPLOYMENTGROWTH, CALIFORNIAVS. U.S.
2.8%
1.9%
-8
-6
-4
-2
0
2
4
6 California US
ANNUAL PERCENTCHANGE
SERIES:Total Nonfarm Employment

UNEMPLOYMENT RATE BY CALIFORNIA METRO AREA
10.9%
10.5%
9.4%
8.8%
5.8%
5.5%
5.4%
5.1%
4.7%
4.3%
4.3%
4.0%
3.9%
3.2%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Bakersfield
Fresno MSA
Modesto
Stockton MSA
Inland Empire
Los Angeles
Sacramento
Ventura
San Diego
Oakland
San Luis Obispo
Orange County
San Jose/ Santa Clara
San Francisco/San Mateo*
SERIES: Unemployment Rate
SOURCE: CA Employment Development Division
* San Francisco and San Mateo unemployment rate is not seasonally adjusted.
February 2016: California 5.5%

OIL’S DRAG COMINGTO CLOSE? MAYBE…
Dollars per Barrel
$0
$20
$40
$60
$80
$100
$120
$140
$160
SERIES: Crude Oil Prices: West Texas Intermediate
SOURCE: U.S. Energy Information Administration
3rd Week of March: $38.32; 5th consecutive week of growth
74%
Drop

CONSUMER CONFIDENCE INDEX
March 2016: 96.2
0
20
40
60
80
100
120
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
INDEX, 100=1985
SERIES:Consumer Confidence
SOURCE: The Conference Board

MORTGAGE RATES LOWER NOWTHAN 2015
January 2009 – March 2016
0%
1%
2%
3%
4%
5%
6%
FRM
ARM
MONTHLY WEEKLY
SERIES: 30Yr FRM, 5Yr ARM
SOURCE: Freddie Mac

WHEREAREWEHEADED?
- Fed takes a more dovish tone, leave interest rates unchanged,
will gradually increase rates in 2016 and 2017. Action will be
“data determined”
- Risk of rates increasing too fast: bringing economic growth to
a halt
- Risk of rates increasing too slow: zero leverage when next
downturn hits

U.S. ECONOMIC OUTLOOK
2010 2011 2012 2013 2014 2015 2016f
US GDP 2.4% 1.8% 2.3% 2.2% 2.4% 2.4% 2.7%
Nonfarm Job Growth -0.7% 1.2% 1.7% 1.7% 1.9% 2.1% 1.8%
Unemployment 9.6% 8.9% 8.1% 7.4% 6.2% 5.3% 5.0%
CPI 1.6% 3.1% 2.1% 1.5% 1.6% 0.1% 2.1%
Real Disposable
Income, % Change 1.0% 2.5% 3.1% -1.4% 2.7% 3.5% 2.7%
30-Yr FRM 4.7% 4.5% 3.7% 4.0% 4.2% 3.9% 4.5%
SERIES: U.S. Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CALIFORNIA ECONOMIC OUTLOOK
2010 2011 2012 2013 2014 2015 2016f
Nonfarm Job Growth -1.1% 1.1% 2.4% 3.2% 3.1% 3.0% 2.3%
Unemployment Rate 12.3% 11.8% 10.4% 8.9% 7.5% 6.2% 5.5%
Population Growth 0.7% 0.7% 0.7% 0.9% 0.9% 0.9% 0.9%
Real Disposable
Income, % Change 0.9% 3.4% 4.7% 0.2% 3.0% 4.3% 4.5%
SERIES:CA Economic Outlook

CALIFORNIA HOUSING MARKET
OUTLOOK

SALES OF EXISTING DETACHED HOMES
California, Feb. 2016 Sales: 393,340 Units, +7.6%YTD, +6.4%YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
*Sales are seasonally adjusted and annualized
SERIES: Sales of Existing Single Family Homes
Feb-16:
393,340
Feb-15:
369,620

HOUSEHOLD FORMATION REBOUNDING
SERIES: Household Formation
SOURCE: U.S. Census Bureau, HousingVacancy Survey
1.5
1.9
1.2
0.6
0.4
0.6 0.6 0.6
0.9
0.7
1.0
1.3
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Annual Household GrowthMillions

MEDIAN PRICE OF EXISTING DETACHED HOMES
California, Feb. 2016: $446,460, -4.7% MTM, +3.8%YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000 P: May-07
$594,530
T: Feb-09
$245,230
-59% from
peak
SERIES: Median Price of Existing Single Family Homes
Feb-16:
$446,460
Feb-15:
$429,930

INVENTORY DIPPED SLIGHTLY
FROM LASTYEAR
Feb. 2015: 4.9 Months; Feb. 2016: 4.6 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
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
SERIES: Unsold Inventory Index of Existing Single Family Homes

INVENTORY DROPPED SIGNIFICANTLY
INTHE BAY AREA SINCE 2009 AND REMAINEDTIGHT
3.2
4.2
5.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0 Bay Area Central Valley So CA

DEMAND DECREASED INTHE BAY AREA
AS SUPPLY CONTINUEDTO DECLINE
-5%
1%
7%
-3%
-4%
-9%-10%
0%
10%
San Francisco Bay Area Southern California Central Valley
Sales Active ListingsYear-to-Year % Chg
Feb. 2016

WHERE ISTHE INVENTORY?
– Affordability challenge for repeat buyers
• Low rate on current mortgage
• Low property taxes
• Concerned with capital gains
• Why list when there is nowhere to go I can
afford?
• Could not qualify for a mortgage today
– New construction recovering but LOW
– Demographics:Trade-up buyer pool is smaller
– Measurement error? Off- MLS (aka “pocket’)
listings not being counted in listing stats

FEWER MIDDLE-AGEADULTS IN RECENTYEARS
Source: Harvard Joint Center of Housing Studies,Census Bureau

DROP IN HOMEOWNERSHIP

DECLINE IN # OFTRADE UP BUYERS DUETO POPULATION LOSS &
DROP IN HOMEOWNERSHIP RATE

“MISSING” 100,000 UNITS ANNUALLY,AT LEAST
2015p: 98,500 (42,190 sf, 56,310 mf)
2016f: 124,600 total units
SERIES: 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

HOUSING AFFORDABILITY PEAKED Q1 2012
PRICESV. LOW RATES AND INCOME GROWTH
California vs. U.S. – 1984-2015
% OF HOUSEHOLDSTHAT CAN BUY
A MEDIAN-PRICED HOME
SERIES: Housing Affordability Index ofTraditional Buyers
30%
58%
0%
10%
20%
30%
40%
50%
60%
70%
80% CA US
Annual Quarterly

61
58
55 54 53
49 48
46 45 44
40 39 38 37
30
27 26 26 26 25 25
23 22 21 21 21 20
17
14
11
0
10
20
30
40
50
60
70
HOUSING AFFORDABILITY IN CA: BY COUNTY
SERIES: Housing Affordability Index
2015-Q4: % able to purchase median priced home

$27,010
$45,340
$69,990 $71,630
$87,520 $89,250
$98,400
$119,970
$96,642
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Retail
Salespersons
Chefs and
Head Cooks
Elementary
School
Teachers
Firefighters Police and
Sherriff's
Patrol
Officers
Computer
Programmers
Registered
Nurses
Software
Developers
(Applications)
Min. Inc
Required to
Buy a Med.
Home
HOWWAGES MEASURED AGAINST INCOME
REQUIREDTO BUY A HOME
SOURCE: Bureau of Labor Statistics, C.A.R.
2014 Annual Mean Wage
California

SHARE OF FIRST-TIME BUYERS REMAINS
BELOW LONG-RUNAVERAGE
29.5%
0%
10%
20%
30%
40%
50%
% First-Time Home Buyers Long Run Average
Long Run Average = 38%
SERIES: 2015 Housing Market Survey

HOME OWNERSHIP RATE NEARLY 4TIMES HIGHER
AMONG BOOMERS
Baby Boomers
75%
22%
3%
Own
Rent
Other
Millennials
20%
41%
39%
Own
Rent
Other
Q.What is your current living situation?
SERIES: 2014 Baby Boomer Survey

BOOMERS HAVE LESS DEBTTHAN MILLENNIALS
THAT PREVENTS BUYINGA HOME
Q.What type of debt do you have that would make it difficult to buy a home?
35%
12%
7%
2%
11%
53%
41%
17%
8%
7%
4%
43%
0% 10% 20% 30% 40% 50% 60%
Credit cards
Auto loan
Consolidated personal loan
Private loan from friend/ relative
Other
None
Millennials
Boomers
SERIES: 2014 Baby Boomer Survey

FINANCIAL CHARACTERISTICS:
MILLENNIALSVS. BABY BOOMERS
Millennials Baby Boomers
Median Household Income $100,000 $130,000
Median Home Price $470,000 $505,000
Median Monthly Mortgage Payment $1,538 $1,516
Median Downpayment (in $$) $50,000 $79,500
Median Downpayment (in % to Price) 13.1% 20%

THE SHARE OF INTERNATIONAL BUYERS DROPPED
TOTHE LOWEST LEVEL IN 8YEARS
4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2008 2009 2010 2011 2012 2013 2014 2015
Q.Was the buyer an international buyer – a person who was a citizen of another country who wished to
purchase residential real estate in the U.S.?

ESTIMATE OF SALES BY COUNTRY
SERIES: 2015 Profile of International Home Buying Activity
SOURCE: NATIONAL ASSOCIATION OF REALTORS®

ESTIMATE OF SALESTO INTERNATIONALCLIENTS
(IN BILLION DOLLARS)

4 STATESACCOUNTED FOR ½ OF
INTERNATIONAL SALES

COUNTRY OF INTERNATIONAL BUYER
• China (43%)
• Mexico (8%)
• South Korea (8%)

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Bay Area, Feb. 2016: 2,491 Units, +0.4%YTD, -5.5%YTY
SERIES: Sales of Existing Detached Homes

0
10000
20000
30000
40000
50000
60000
70000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SALES BOUNCED BACKAFTER
DECLINING IN 2013 AND 2014
Bay Area, 2015: +5.1%, 2016YTD: +0.4%

NONFARM EMPLOYMENT
Bay Area Region
SERIES: Employment Growth
SOURCE: US Bureau of Labor Statistics
2015 2007 Change % Change
Alameda/Contra Costa 1,095.1 1,064.3 30.8 2.9%
Marin 113.0 106.9 6.1 5.7%
Napa 70.8 64.6 6.2 9.6%
San Francisco/San Mateo 1,051.1 899.3 151.8 16.9%
Santa Clara 1,042.8 921.1 121.7 13.2%
Solano 132.3 130.1 2.2 1.7%
Sonoma 197.0 189.9 7.1 3.7%
Bay Area 3,702.1 3,376.2 325.9 9.7%
Nonfarm Employment (Thousands)

Bay Area Counties
Alameda 447 495 479 -9.7% -6.7% -2.3%
Contra-Costa 541 539 594 0.4% -8.9% -5.7%
Marin 94 90 107 4.4% -12.1% -4.2%
Napa 55 78 70 -29.5% -21.4% -2.2%
San Francisco 99 101 122 -2.0% -18.9% -7.8%
San Mateo 199 215 212 -7.4% -6.1% 7.8%
Santa Clara 488 529 546 -7.8% -10.6% -1.2%
Solano 325 267 273 21.7% 19.0% 12.8%
Sonoma 243 251 232 -3.2% 4.7% 11.0%
Y-t-YCounty Feb-16 Jan-16 Feb-15 M-t-M Y-t-D

February
2016
January
2016
February
2015
Median Time on the
Market
25.5 Days 28.1Days 24.8 Days
Unsold Inventory Index
3.2 Mos. 2.4 Mos. 2.8 Mos.
SUPPLY INDICATORS
Bay Area
Note: The Unsold Inventory Index represents the number of months it would take to deplete the remaining inventory at the end of a particular
month with the sales rate of the month in consideration. Inventory includes listings with “Active”, “Pending”, and “Contingent” (when available)
statuses.
SERIES: MedianTime of Market, Unsold Inventory Index

INVENTORY DROPPED SIGNIFICANTLY
INTHE BAY AREA SINCE 2009 BUT REMAINEDTIGHT
3.2
4.2
5.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0 Bay Area Central Valley So CA

UNSOLD INVENTORY INDEX (MONTHS)
Bay Area
SERIES: Unsold Inventory Index
County Feb-16 Jan-16 Feb-15
Alameda 3.0 2.0 2.9
Contra-Costa 3.0 2.5 1.5
Marin 3.8 2.8 3.9
Napa 6.5 4.1 5.6
San Francisco 3.3 2.3 2.5
San Mateo 2.7 1.9 2.8
Santa Clara 2.9 1.9 2.6
Solano 2.8 3.4 4.2
Sonoma 3.9 3.2 4.1
S. F. Bay Area 3.2 2.4 2.8

BAY AREA DEMANDAND SUPPLY CONTINUEDTO
DECLINE IN FEBRUARY
-7%
-9%
-12%
-21%
-19%
-6%
-11%
19%
5%
-5%
2%
-13%
-5%
-8%
16%
-6%
16%
-24%
4%
-3%
-30%
-20%
-10%
0%
10%
20%
30%
Sales Active Listings
Year-to-Year % Chg
Feb 2016

MASSIVE HOUSING SHORTAGE
Metro
Job Creation
2010-2015
New Home
Construction
2010-2015
Ratio
San Francisco-
Oakland
234,000 30,000 7.8
Grand Rapids 46,000 6,000 7.8
San Jose 118,000 23,000 5.1
San Diego 101,000 21,000 4.9
Miami-Ft.
Lauderdale
191,000 48,000 3.9
Salt Lake City 57,000 15,000 3.9
New York City 400,000 114,000 3.5

TIGHT SUPPLY CREATED MORE MARKET COMPETITION
4
3 3
0
1
1
2
2
3
3
4
4
5
San Francisco
Bay Area
Southern
California
Other Counties in
California
Number of Multiple Offers
36%
56%
63%
0% 20% 40% 60% 80%
Other Counties in
California
Southern California
San Francisco Bay
Area
Percent with Multiple Offers

Bay Area, February 2016: $696,430, Up 4.0%YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
SERIES: Median Price of Existing Detached Homes

Bay Area Counties
•
Alameda $712,990 $711,900 $651,950 0.2% 9.4%
Contra-Costa $538,650 $499,550 $476,340 7.8% 13.1%
Marin $1,113,640 $955,360 $1,023,440 16.6% 8.8%
Napa $664,470 $610,000 $544,120 8.9% 22.1%
San Francisco $1,437,500 $1,173,610 $1,154,760 22.5% 24.5%
San Mateo $1,200,000 $1,077,500 $1,200,000 11.4% 0.0%
Santa Clara $942,500 $895,000 $915,130 5.3% 3.0%
Solano $365,620 $361,670 $337,500 1.1% 8.3%
Sonoma $554,610 $593,750 $489,330 -6.6% 13.3%
Y-t-YCounty Feb-16 Jan-16 Feb-15 M-t-M
SERIES: Median Price of Existing Detached Homes

HOUSING DEMAND INCREASED IN MORE
AFFORDABLE REGIONS
Annual % Change in Sales
SERIES: Sales of Existing SFH
County 2015 (yty% chg.)
Alameda -0.7%
Contra-Costa 7.9%
Marin -3.8%
Napa 10.5%
San Francisco -8.2%
San Mateo -6.4%
Santa Clara 6.0%
Solano 18.6%
Sonoma 2.8%
S. F. Bay Area 3.5%

0
50
100
150
200
250
300
350
400
450
San Francisco County, Feb. 2016: 99 Units, -7.8%YTD, -18.9%YTY
SERIES: Sales of Existing Single Family Homes

0
500
1000
1500
2000
2500
3000
3500
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SALES DOWNTWOYEARS IN A ROW
AFTER REACHINGTHE RECENT PEAK IN 2013
San Francisco, 2015: -8.2%, 2016YTD: -7.8%

EMPLOYMENTGROWTH:
CALIFORNIAVS. SAN FRANCISCO/SAN MATEO
2.8%
4.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0% California San Francisco/San Mateo
SERIES:Total Nonfarm Employment

UNSOLD INVENTORY INDEX
San Francisco County, February 2016: 3.3 Months
Note: The Unsold Inventory Index represents the number of months it would take to deplete the remaining inventory at the end of a particular
month with the sales rate of the month in consideration. Inventory includes listings with “Active”, “Pending”, and “Contingent” (when available)
statuses.
0
2
4
6
8
10
12

NEW HOUSING PERMITS
San Francisco County, Feb. 2016: 635 Units, +101.8%YTD
0
200
400
600
800
1,000
1,200 Single Family Multi-Family

0
1000
2000
3000
4000
5000
6000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Single Family Multi-Family
SAN FRANCISCO NEW HOUSING PERMITS
2015: Single Family, +88.6%; Multi-Family, +18.7%

San Francisco County, Feb. 2016: $1,437,500, Up 24.5%YTY
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
SERIES: Median Price of Existing Single Family Homes

ASKING RENTS FOR CLASS A&B APARTMENTS
San Francisco MSA, 2015 Q4: $3,146 , Up 8.2%YTY
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Q4 2005 to Q4 2010: Up 17.3%
SERIES: Asking Rents
SOURCE: Realfacts
Q4 2010 to Q4 2015: Up 65.5%

0%
1%
2%
3%
4%
5%
6%
7%
VACANCY RATES FOR CLASS A&B APARTMENTS
San Francisco MSA, 2015 Q4: 5.6%
SERIES: Vacancy Rates
SOURCE: Realfacts

HOUSING AFFORDABILITY INDEX
San Francisco County, 4th Quarter 2015: 11%
% OF HOUSEHOLDSTHAT CAN BUY
0%
5%
10%
15%
20%
25%
30%
35%
SERIES: Housing Affordability Index ofTraditional Buyers

$30,340
$52,690 $49,230
$70,680
$88,390
$97,570
$124,980 $118,690
$254,107
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Retail
Salespersons
Auto.
Mechanics
Chefs and
Head Cooks
Elementary
School
Teachers
Firefighters Computer
Programmers
Registered
Nurses
Software
Developers
(Applications)
Min. Inc
Required to
Buy a Med.
Home
HOWWAGES MEASURED AGAINST INCOME
REQUIREDTO BUY A HOME
SOURCE: Bureau of Labor Statistics, C.A.R.
Annual Mean Wage
San Francisco

SALESOFSINGLEFAMILYHOMES
Oakland, February 2016: 120 Units
-1.1% 2015YTD, +7.6% 2016YTD, +6.2%YTY
SOURCE: Clarus Market Metrics

MEDIANPRICEOFSINGLEFAMILYHOMES
Oakland, February 2016: $523,500
Down 4.8% MTM, Up 7.9%YTY

FORSALEPROPERTIES
Oakland, February 2016: 457 Units
-9.5% 2015YTD, -15.3% 2016YTD, -12.3%YTY
Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any
point in time during the month.

SALESOFSINGLEFAMILYHOMES
Marin County, February 2016: 100 Units
-3.5% 2015YTD, -3.1% 2016YTD, -9.1%YTY

MEDIANPRICEOFSINGLEFAMILYHOMES
Marin County, February 2016: $1,153,500
Up 19.5% MTM, Up 16.2%YTY

FORSALEPROPERTIES
Marin County, February 2016: 372 Units
-8.9% 2015YTD, -22.1% 2016YTD, -17.3%YTY
Note: “For Sale Properties” represents the overall supply that exist throughout the entire month, including any listings that appear as “Active” any
point in time during the month.

CALIFORNIA HOUSING MARKET OUTLOOK
2010 2011 2012 2013 2014 2015 2016f
SFH Resales (000s) 416.5 422.6 439.8 414.9 382.7 407.1 432.6
% Change -12.3% 1.4% 4.1% -5.9% -7.8% 6.4% 6.3%
Median Price ($000s) $305.0 $286.0 $319.3 $407.2 $446.9 $474.4 $489.4
% Change 10.9% -6.2% 11.6% 27.5% 9.8% 6.2% 3.2%
Housing Affordability
Index 48% 53% 51% 36% 30% 31% 28%
30-Yr FRM 4.7% 4.5% 3.7% 4.0% 4.2% 3.9% 4.5%
SERIES:CA Housing Market Outlook

SALES UP FOR 2015 AND CONTINUETO IMPROVE IN 2016;
PRICEWILL GROW STEADILYTHISYEAR AND NEXT
Units
(Thousand)
407.1
432.6
0
100
200
300
400
500
600
700
2005 2007 2009 2011 2013 2015
Sales of Existing Detached Homes
$474
$489
$0
$100
$200
$300
$400
$500
$600
2005 2007 2009 2011 2013 2015p
Median Price
Price
(Thousand)
SERIES:CA Housing Market Outlook

• Both CA home sales and prices will be up mid -
single digits in 2016
• Fundamental demand drivers (jobs; rates;
household formation) are strong
• Housing affordability an insurmountable hurdle
for many
• Trading up/down is too expensive for Boomers
• CA will see accelerating out-migration of
Millennials in search of housing they can afford
KEYTAKEAWAYS

MARKETOPPORTUNITIES
– Millennials
• Turn renters into first-time buyers
• First-time buyers who bought with tax credit back in 2009
are ready to trade-up
• Understand the differences in needs between Millennial
first-time buyers and Millennial trade-up buyers
– Baby Boomers
• Ready to downsize
• Understand Boomers’ priorities: investment and retirement
• If we can’t keep them in CA, help them find a place out of
state. Network with REALTORS® outside of CA

MARKETOPPORTUNITIES
– Minorities
• Minorities have grown in homebuyer share over time
• Surge in the number of minority households will play a big
role in the increase in housing demand in the next 10 years
• Develop programs and marketing material tailored towards
minority home buyers of different ethnicity
– Investor sellers
• Investor buyers who purchased bargain properties a few
years ago are ready to sell as home prices start leveling off
– Everyone else…
• Low interest rates will be here a little longer

STAY CONNECTEDWITH RESEARCH
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On.car.org/CARResearch
Housingmatters.car.org

THANKYOU!
www.car.org/marketdata
oscarw@car.org
This presentation can be found on
www.car.org/marketdata
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