2016 ECONOMIC AND HOUSING MARKET FORECAST

Transcription

1 2016 ECONOMIC AND HOUSING MARKET FORECAST April 06, 2016 San Francisco Association of REALTORS Oscar Wei, Senior Economist of C.A.R.

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

3 ECONOMIC OUTLOOK

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

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) $ 5% 4% 3% 2% 1% 0% -1% ANNUALLY QUARTERLY -2% -3% 2009 Largest Annual Drop since 1938 (-3.4%) -4% SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

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

7 UNEMPLOYMENT RATES AT 8-YEAR LOWS US 5.0% (Mar 2016), CA 5.5% (Feb 2016) 14% CA US 12% 10% 8% 6% 4% 2% 0% 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 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

8 EMPLOYMENT GROWTH, CALIFORNIA VS. U.S. ANNUAL PERCENT CHANGE 6 California US % 1.9% SERIES: Total Nonfarm Employment SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

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

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

11 CONSUMER CONFIDENCE INDEX March 2016: 96.2 INDEX, 100= 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 SERIES: Consumer Confidence SOURCE: The Conference Board

12 MORTGAGE RATES LOWER NOW THAN 2015 January 2009 March % 5% MONTHLY WEEKLY 4% 3% 2% FRM ARM 1% 0% SERIES: 30Yr FRM, 5Yr ARM SOURCE: Freddie Mac

13 WHERE ARE WE HEADED? - Fed takes a more dovish tone, leave interest rates unchanged, will gradually increase rates in 2016 and 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

14 U.S. ECONOMIC OUTLOOK f 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

15 CALIFORNIA ECONOMIC OUTLOOK f 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 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

16 CALIFORNIA HOUSING MARKET OUTLOOK

17 SALES OF EXISTING DETACHED HOMES California, Feb Sales: 393,340 Units, +7.6%YTD, +6.4% YTY 700, , , , , , ,000 - Feb-15: 369,620 Feb-16: 393,340 SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS *Sales are seasonally adjusted and annualized

18 HOUSEHOLD FORMATION REBOUNDING Millions SERIES: Household Formation SOURCE: U.S. Census Bureau, Housing Vacancy Survey Annual Household Growth

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

20 INVENTORY DIPPED SLIGHTLY FROM LAST YEAR 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. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

21 INVENTORY DROPPED SIGNIFICANTLY IN THE BAY AREA SINCE 2009 AND REMAINED TIGHT 9.0 Bay Area Central Valley So CA 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. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

22 DEMAND DECREASED IN THE BAY AREA AS SUPPLY CONTINUED TO DECLINE Feb Year-to-Year % Chg 10% Sales Active Listings 7% 1% 0% -5% -3% -4% -10% San Francisco Bay Area Southern California Central Valley -9% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

23 WHERE IS THE 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

24 FEWER MIDDLE-AGE ADULTS IN RECENT YEARS Source: Harvard Joint Center of Housing Studies, Census Bureau

25 DROP IN HOMEOWNERSHIP Source: Harvard Joint Center of Housing Studies, Census Bureau

26 DECLINE IN # OF TRADE UP BUYERS DUE TO POPULATION LOSS & DROP IN HOMEOWNERSHIP RATE Source: Harvard Joint Center of Housing Studies, Census Bureau

27 MISSING 100,000 UNITS ANNUALLY, AT LEAST 2015p: 98,500 (42,190 sf, 56,310 mf) 2016f: 124,600 total units Single Family Multi-Family Household Growth: 165,000/yr SERIES: New Housing Permits SOURCE: Construction Industry Research Board

28 HOUSING AFFORDABILITY PEAKED Q PRICES V. LOW RATES AND INCOME GROWTH California vs. U.S % OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME 80% CA US 70% 60% 50% 40% 30% 20% 10% 0% Annual Quarterly 58% 30% SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

29 HOUSING AFFORDABILITY IN CA: BY COUNTY 2015-Q4: % able to purchase median priced home SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

30 HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME California $120, Annual Mean Wage $119,970 $100,000 $80,000 $87,520 $89,250 $98,400 $96,642 $60,000 $69,990 $71,630 $40,000 $45,340 $20,000 $27,010 $0 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 SOURCE: Bureau of Labor Statistics, C.A.R.

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

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

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

34 FINANCIAL CHARACTERISTICS: MILLENNIALS VS. 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% SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

35 THE SHARE OF INTERNATIONAL BUYERS DROPPED TO THE LOWEST LEVEL IN 8 YEARS 9% 8% 7% 6% 5% 4% 4% 3% 2% 1% 0% 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.? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

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

37 ESTIMATE OF SALES TO INTERNATIONAL CLIENTS (IN BILLION DOLLARS) SERIES: 2015 Profile of International Home Buying Activity SOURCE: NATIONAL ASSOCIATION OF REALTORS

38 4 STATES ACCOUNTED FOR ½ OF INTERNATIONAL SALES SERIES: 2015 Profile of International Home Buying Activity SOURCE: NATIONAL ASSOCIATION OF REALTORS

39 COUNTRY OF INTERNATIONAL BUYER China (43%) Mexico (8%) South Korea (8%) SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

40 BAY AREA HOUSING MARKET

41 SALES OF EXISTING DETACHED HOMES Bay Area, Feb. 2016: 2,491 Units, +0.4% YTD, -5.5% YTY 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

42 SALES BOUNCED BACK AFTER DECLINING IN 2013 AND 2014 Bay Area, 2015: +5.1%, 2016 YTD: +0.4% SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

43 Bay Area Region NONFARM EMPLOYMENT Nonfarm Employment (Thousands) SERIES: Employment Growth SOURCE: US Bureau of Labor Statistics Change % Change Alameda/Contra Costa 1, , % Marin % Napa % San Francisco/San Mateo 1, % Santa Clara 1, % Solano % Sonoma % Bay Area 3, , %

44 SALES OF EXISTING DETACHED HOMES Bay Area Counties County Feb-16 Jan-16 Feb-15 M-t-M Y-t-Y Y-t-D Alameda % -6.7% -2.3% Contra-Costa % -8.9% -5.7% Marin % -12.1% -4.2% Napa % -21.4% -2.2% San Francisco % -18.9% -7.8% San Mateo % -6.1% 7.8% Santa Clara % -10.6% -1.2% Solano % 19.0% 12.8% Sonoma % 4.7% 11.0% SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

45 SUPPLY INDICATORS Bay Area 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. 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: Median Time of Market, Unsold Inventory Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

46 INVENTORY DROPPED SIGNIFICANTLY IN THE BAY AREA SINCE 2009 BUT REMAINED TIGHT 9.0 Bay Area Central Valley So CA 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. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

47 UNSOLD INVENTORY INDEX (MONTHS) Bay Area County Feb-16 Jan-16 Feb-15 Alameda Contra-Costa Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma S. F. Bay Area SERIES: Unsold Inventory Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

48 BAY AREA DEMAND AND SUPPLY CONTINUED TO DECLINE IN FEBRUARY Feb 2016 Year-to-Year % Chg Sales Active Listings 30% 20% 16% 16% 19% 10% 0% 2% 5% 4% -10% -20% -30% -7% -9% -13% -12% -5% -21% -8% -19% -6% -6% -11% -24% -3% -5% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

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

50 TIGHT SUPPLY CREATED MORE MARKET COMPETITION Percent with Multiple Offers Number of Multiple Offers San Francisco Bay Area 63% Southern California 56% 2 2 Other Counties in California 36% 1 1 0% 20% 40% 60% 80% SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS 0 San Francisco Bay Area Southern California Other Counties in California

51 MEDIAN PRICE OF EXISTING DETACHED HOMES Bay Area, February 2016: $696,430, Up 4.0% YTY $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

52 MEDIAN PRICE OF EXISTING DETACHED HOMES Bay Area Counties County Feb-16 Jan-16 Feb-15 M-t-M Y-t-Y Alameda $712,990 $711,900 $651, % 9.4% Contra-Costa $538,650 $499,550 $476, % 13.1% Marin $1,113,640 $955,360 $1,023, % 8.8% Napa $664,470 $610,000 $544, % 22.1% San Francisco $1,437,500 $1,173,610 $1,154, % 24.5% San Mateo $1,200,000 $1,077,500 $1,200, % 0.0% Santa Clara $942,500 $895,000 $915, % 3.0% Solano $365,620 $361,670 $337, % 8.3% Sonoma $554,610 $593,750 $489, % 13.3% SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

53 HOUSING DEMAND INCREASED IN MORE AFFORDABLE REGIONS Annual % Change in Sales County SERIES: Sales of Existing SFH SOURCE: CALIFORNIA ASSOCIATION OF REALTORS 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%

54 SAN FRANCISCO COUNTY

55 SALES OF EXISTING DETACHED HOMES San Francisco County, Feb. 2016: 99 Units, -7.8% YTD, -18.9% YTY SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

56 SALES DOWN TWO YEARS IN A ROW AFTER REACHING THE RECENT PEAK IN 2013 San Francisco, 2015: -8.2%, 2016 YTD: -7.8% SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

57 EMPLOYMENT GROWTH: CALIFORNIA VS. SAN FRANCISCO/SAN MATEO ANNUAL PERCENT CHANGE 8.0% California San Francisco/San Mateo 6.0% 4.0% 4.0% 2.8% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% SERIES: Total Nonfarm Employment SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

58 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. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

59 NEW HOUSING PERMITS San Francisco County, Feb. 2016: 635 Units, % YTD 1,200 Single Family Multi-Family 1, SERIES: New Housing Permits SOURCE: Construction Industry Research Board

60 SAN FRANCISCO NEW HOUSING PERMITS 2015: Single Family, +88.6%; Multi-Family, +18.7% 6000 Single Family Multi-Family SERIES: New Housing Permits SOURCE: Construction Industry Research Board

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

62 MEDIAN PRICE OF EXISTING DETACHED HOMES San Francisco County, Feb. 2016: $1,437,500, Up 24.5% YTY $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

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

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

65 HOUSING AFFORDABILITY INDEX San Francisco County, 4 th Quarter 2015: 11% % OF HOUSEHOLDS THAT CAN BUY 35% 30% 25% 20% 15% 10% 5% 0% SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

66 HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME San Francisco $300,000 $250,000 Annual Mean Wage $254,107 $200,000 $150,000 $124,980 $118,690 $100,000 $50,000 $30,340 $52,690 $49,230 $70,680 $88,390 $97,570 $0 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 SOURCE: Bureau of Labor Statistics, C.A.R.

67 OAKLAND

68 SALES OF SINGLE FAMILY HOMES Oakland, February 2016: 120 Units -1.1% 2015 YTD, +7.6% 2016 YTD, +6.2% YTY SOURCE: Clarus Market Metrics

69 MEDIAN PRICE OF SINGLE FAMILY HOMES Oakland, February 2016: $523,500 Down 4.8% MTM, Up 7.9% YTY SOURCE: Clarus Market Metrics

70 FOR SALE PROPERTIES Oakland, February 2016: 457 Units -9.5% 2015 YTD, -15.3% 2016 YTD, -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. SOURCE: Clarus Market Metrics

71 MARIN COUNTY

72 SALES OF SINGLE FAMILY HOMES Marin County, February 2016: 100 Units -3.5% 2015 YTD, -3.1% 2016 YTD, -9.1% YTY SOURCE: Clarus Market Metrics

73 MEDIAN PRICE OF SINGLE FAMILY HOMES Marin County, February 2016: $1,153,500 Up 19.5% MTM, Up 16.2% YTY SOURCE: Clarus Market Metrics

74 FOR SALE PROPERTIES Marin County, February 2016: 372 Units -8.9% 2015 YTD, -22.1% 2016 YTD, -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. SOURCE: Clarus Market Metrics

75 2016 FORECAST

76 CALIFORNIA HOUSING MARKET OUTLOOK f SFH Resales (000s) % 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 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

77 SALES UP FOR 2015 AND CONTINUE TO IMPROVE IN 2016; PRICE WILL GROW STEADILY THIS YEAR AND NEXT Units (Thousand) Sales of Existing Detached Homes Price (Thousand) Median Price $600 $500 $474 $ $400 $300 $200 $ SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS $ p

78 KEY TAKEAWAYS 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

79 Millennials MARKET OPPORTUNITIES 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

80 Minorities MARKET OPPORTUNITIES 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

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