June housing report for Southwest California

1. The recession might be over,
but we’re not necessarily over the recession.
“It’s been more than seven years since the housing market last experienced the increase
that we saw in May, with indications that the summer months will continue to see
significant gains. As we approach the half-way point of 2013, home prices continue to
respond positively to the reduction in home inventory thus far,” according to Mark
Fleming, Chief Economist for CoreLogic, a leading property information and analytics firm.
Indeed by CoreLogic’s HPI calculations, 97 of the largest metropolitan areas in the country
posted year over year increases with 33 metro areas showing double digit increases. For
May, Nevada posted the highest year-over-year home price appreciation at 26%, with
California 2nd at 20.2%, Arizona coming in at 16.9%, Hawaii at 16.1% and Oregon
rounding out the top 5 with 15.5%. Just two states posted year-over-year price declines,
Alabama at -0.1% and Delaware at -0.6%. At 18%, the Riverside/San Bernardino/Ontario
metropolitan area was 3rd in the nation for appreciation, just behind Phoenix at 18.3%
and LA/Long Beach at 19.8%.
Utilizing their own proprietary analytics, Case-Shiller reports the nationwide housing price
index up 10.2%, with their select 20 city index up 12.5%.
Whether by a little or a lot, it would appear the housing market is finally out of the
doldrums. We can discuss the myriad reasons this has come about and we can debate
whether it is sustainable and for how long, but for the time being it’s upon us.
Certainly in Southwest California our cities are performing well with the region showing a
22% median price increase over June of 2012. We’ve posted month over month
gains every month this year and our June median of $325,088 for the region is the
highest we’ve recorded since March 2008.
If you were prescient enough to buy a home in April of 2009, when our prices troughed at
$210,317, you’ve seen your property value appreciate 35%. That appreciation in value is
one reason foreclosure filings are down nearly 55% from a year ago and why the
inventory of bank owned homes is down some 35% across the state.
Unfortunately if you bought earlier, like when we peaked in March 2007 at $508,559,
you’re still 36% underwater but getting better. At $416,271, Temecula has made back
slightly more than half their equity loss ($575,935 in 6/06 - $263,118 in 1/09) and the
other cities are moving up as well.
How long can this drive continue? Well, there is still significant pent-up demand, interest
rates, though climbing, are still attractively low and a lack of inventory is driving a sellers
market. But national uncertainty over tax reform, healthcare and other issues are serving
to keep the jobs market from flourishing and until employment improves, we won’t see
the full potential of this housing market. In fact, could see some dampening of demand if
economic concerns linger.
For more on that see The Last Word…

2. 0
50
100
150
200
250
3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
Southwest California Homes
Single Family Homes
Unit Sales
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
Southwest California Homes
Single Family Homes
Median Price
June Transaction Value:
Temecula $79,507,795 Lake Elsinore $21,937,938
Murrieta $65,328,373 Wildomar $10,678,997
Menifee $39,377,470 Canyon Lake $13,658,210

3. $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
3/12 6/12 9/12 12/12 3/13 6/13
Southwest California Murrieta Temecula
June Median Price:
2012 2013 %
Temecula $304,994 $416,271 27%
Murrieta $303,196 $355,046 15%
Menifee $182,861 $223,087 24%
Lake Elsinore $190,820 $243,755 22%
Wildomar $219,150 $305,114 29%
Canyon Lake $329,125 $390,235 16%
Southwest California $255,024 $325,088 22%
Southwest California Homes
Single Family Homes
Year-Over-Year Median Price

4. SW Market @ A Glance
Reporting
Period
Current
Period Last Period Y ear Ago
Change
from Last
Period
Change
from Year
Ago
Existing Home Sales
(SFR Detached) June -13 700 686 757 2% 8%
Median Home Price
June -13 $325,088 $307,440 $255,024 6% 22%
Unsold Inventory
Index (Months) June -13 1.3 1.1 1.3 16%
Median Time on
Market (Days) June -13 52 48 87 8% 40%
Source: CRMLS
June Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale
Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT
Temecula 232 92% 154 81% 11 4% 10 5% 6 2% 24 13%
Murrieta 203 91% 133 72% 5 2% 8 4% 9 4% 39 21%
Wildomar 32 84% 23 64% 3 8% 0 0% 2 5% 11 31%
Lake Elsinore 113 88% 55 61% 6 5% 7 8% 6 5% 19 21%
Menifee 125 86% 116 71% 6 4% 11 7% 10 7% 33 20%
Canyon Lake 71 95% 27 77% 3 4% 2 6% 0 0% 5 14%
Southwest
California 776 89% 508 73% 34 8% 38 5% 33 4% 131 19%
Remember just a few short years ago when banks ruled the market? When we had a 22 month
inventory of homes for sale and 92% of those were foreclosures? When I suggested that if we
could only reduce that percentage of distressed homes to under 50% or maybe 30%, we
would be back to a ‘normal market’?
Well, we’re there. Distressed properties made up just 12% of the active market last month and
24% of solds. Yet the market is far from normal – or maybe it’s just California normal – which is
certainly different from normal in most places.
From my January 2010 report to you, Murrieta had 387 bank owned homes, Temecula had
276 and Lake Elsinore had 333. Today those numbers are 5, 11 and 6.
Normal? I can tell you where the market has been and where it is today. But where it’s going? I
don’t make nearly enough to know that.
Not only is our median price up 22% over last year, it’s up 19% just since January.
If the 2nd half of the year is as crazy as the 1st half…

5. 0
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On Market
(Supply)
Pending Closed (Demand) Days on Market Months Supply Absorption rate *
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Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar
* Absorption rate - # of new listings for the month/# of sold listings for the month
June Demand Chart
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Inventory
2010 2011 2012 2013
Some other numbers are also heading in the right direction. Sales are holding steady, off
8% from last June but the highest volume yet for 2013. Keeping resale demand in the
700 range is a healthy target for this region given the paucity of inventory. Inventory
jumped 22% to its highest level since last June, which bumped available inventory to 1.3
months from 1.1. Absorption also blessedly dropped from an average of 2.5 homes sold
for every new listing to 1.6, the lowest level since March of last year. Still troubling but
seemingly trending positively for the market.

6. ‘Housing Market: A decade of boom, bust and recovery.’
From wildly gyrating markets like California and Florida to relatively stable states like Virginia,
you can chart the progress of our housing market over the past decade.
Courtesy of CoreLogic

7. WOW! Wasn’t that fun?
(Eeeeeh, not so much)

8. The Last Word…
Two items for your consideration today – the first being the proposed re-instatement of
Prop 90 for Riverside County. Prop 90 is a constitutional amendment that allows senior
citizens, under certain circumstances, to transfer a property’s base tax value from an
existing residence sold in one county to a replacement residence in another county –
usually resulting in substantial tax savings. Riverside County offered Prop 90 until 1995
when it allowed the measure to sunset based on specious arguments from the
Recorder/Assessor at the time. Currently 8 other counties offer this incentive for seniors
including our neighbors in LA, Orange and San Diego. This gives them a decided
advantage in attracting more fiscally stable senior home buyers with disposable income.
Supervisors Kevin Jeffries and John Benoit have re-introduced the measure as a
way to encourage seniors to consider Riverside County. I have attached a Q & A for you
and would encourage you individually as well as your city to consider adding your
support to the measure. The County Auditor/Controller has conducted a cost analysis
(based on 1995 data) that shows the county (and subsidiary agencies including cities)
could lose as much as $4.7 million annually from lower tax assessments on these homes
(your City Manager has a copy of that). Not included in that analysis was data from a
Harvard Center for Housing study or studies from both the National and California
Association of Realtors® showing that Riverside County could also benefit by gaining
almost $220,000,000 in economic benefits and 1,150 new jobs. Our current
Assessor/Recorder Larry Ward is a supporter of the measure.
A decision by the Supervisors has been delayed until July 30 to allow for public input on
the issue. Supervisor Stone is currently the only Supervisor to have stated opposition.
I indicated on Page 1 that there are still several items that have the potential to derail
the current housing recovery including tax reform, lack of job growth and economic
uncertainty. In California one additional item that is having a deleterious impact is the
result of last years Homeowners Bill of Rights, a measure championed by Attorney
General Kamala Harris and passed with great fanfare by a Democratic majority in
Sacramento.
Realtors® opposed the measure and decried the overreaching knee-jerk elements of the
bill warning that the unintended consequences could negatively impact our market in
ways similar to that of a bill passed in Nevada the previous year. We managed to effect
a few changes but it passed substantively unchanged and we are now left to deal with
those anticipated and unanticipated consequences.
One immediate impact has been on the rate of banks foreclosing on properties which,
on the one hand has been positive but on the other hand has significantly reduced
inventories while not addressing the underlying problem. There are still numbers of
vacant homes and homeowners who have not made a payment for years – the so-called
‘shadow inventory’, that will need to be dealt with at some point. But due to the
potential for criminal charges being brought for any mis-step by the bank during the
foreclosure process, the tap has been turned off since last November.
The Wall Street Journal recently carried a front page article ‘Foreclosure Squeeze Crimps
Vegas Market’ detailing the negative impact the bill has had on the Nevada housing
market after being in place for 2 years. We are seeing the same results in California
after just a few months. Is it enough to derail the housing recovery? No, but it is one of
the issues contributing to the inventory shortage and the unsustainable run-up in prices
we are seeing throughout our market.

9. Restore Prop 90
What is Proposition 90?
Proposition 90 is constitutional amendments passed by California voters that provides property tax
relief for persons aged 55 and over. It allows these persons, under certain conditions, to transfer a
property's base year value from an existing residence in one county to a replacement residence in
another county. The provisions of Propositions 90 may result in substantial tax savings since it allows
the adjusted base year value of the original (sold) property to be transferred to the newly purchased or
constructed home if eligibility requirements are met. One critical requirement is that the county where
the new home is being purchased or constructed must allow Proposition 90 transfers. A separate
amendment, authorized by Proposition 60, allows similar property value transfers between properties
within a county.
Detailed information and answers to Frequently Asked Questions about Proposition 60 and 90 are
available from the California Board of Equalization at:
http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1
Is Proposition 90 in effect in Riverside County?
Not at the present time. Proposition 90 transfers were permitted in Riverside County until 1995 but the
law allowing them was not renewed.
Will Proposition 90 be reauthorized in Riverside County?
The Riverside County Board of Supervisors will conduct a public hearing on that question on
July 30, 2013 and will vote at the conclusion of that hearing on a proposed ordinance, Ordinance 920, to
extend Proposition 90 for five years.
Why wouldn’t the Supervisors vote to approve Proposition 90?
The County Auditor Controller has conducted a cost analysis of Proposition 90 which concluded that
public agencies in the county could lose up to $4.7 Million annually from the lower assessments on
homes purchased through Proposition 90. Supervisor Stone is currently the only Supervisor with a
stated opposition to the measure.

10. Prop 90 would cause a little property tax loss but aren’t there economic benefits for the county from the
new residents who would move to Riverside County?
Yes. A study conducted jointly by the Bureau of Economic Analysis, the Harvard Center for Housing Studies
and the National Association of REALTORS®, updated in March 2013, found that every new home sale in
California produced approximately $95,000 in local economic benefits. Those benefits derive from all the
goods and services typically associated with a home purchased and the income earned by those who sell the
good and perform the services. Other studies show that one permanent job is created from every two home
sales. The Auditor Controller estimates that 2300 home sales per year in Riverside County would come under
Proposition 90. Applying the Harvard/NAR formula means that by authorizing Prop 90 our county gains
almost $220,000,000 in economic benefits and potentially 1150 new jobs.
Harvard/NAR Economic Impact of Housing Sale:
http://www.realtor.org/sites/default/files/reports/2013/Economic%20Impact/eco nomic-impact-real-estate-
activity-california-2013-03.pdf
Home Sale Impact on Job Creation:
http://www.realtor.org/topics/home-ownership-matters/jobs-impact-of-an- existing-home-purchase
Some might argue that the many of those using Prop 90 benefits would have moved to
Riverside anyway so Prop 90 is just a giveaway.
The California Association of REALTOR® conducted a survey that found that at least 52% of those using Prop
90 in other counties based their purchase decision primarily on the availability of Proposition 90 tax benefits.
Again applying the Harvard/NAR economic benefit formula, Riverside County would annually reap over
$114,000,000 in benefit and almost 600 permanent jobs just from those whose primary reason for choosing
Riverside County over another county is the existence of Prop 90.
Do any other counties allow Prop 90?
Yes, eight other counties currently allow Prop 90 assessment transfers. Most importantly, our neighbor
counties of Los Angles, San Diego and Orange, all provide Prop 90 benefits, giving them an edge in the
competition to attract new permanent residents.
What can I do to help assure the passage of Ordinance 920 to allow Proposition 90 benefits in Riverside
County?
1. Email, call or write your Riverside County Supervisor. Here’s a link to their contact information
http://www.countyofriverside.us/government/boardofsupervisors.html
2. Sign and send the attached letter.
3. Sign and circulate the attached petition.
4. Attend the public hearing on July 30 at 9:00AM at the Riverside County Administrative
Center at 4080 Lemon Street, Riverside, California.

11. Print Name:
Signature:
City:
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City:
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RESTORE PROPOSTION 90
A petition supporting proposed Riverside County Ordinance 920.
Riverside County Supervisors:
The undersigned, residents and voters in Riverside County, urge you to vote YES on Proposed Ordinance 920 when it comes
before you for a vote. This measure would authorize one-time, inter-county transfers of property assessments to Riverside
County pursuant to the California Constitution as amended by Proposition 90. Under Proposition 90, counties may allow 55+
primary home purchasers to transfer their property tax base value once from one county to another.
By restoring Proposition 90 benefits, Riverside County will encourage thousands of 55+ home buyers to choose Riverside
County for their new, permanent home. And, Riverside County will annually gain over $100 Million in economic benefits,
create over 1,000 jobs and attract thousands of new residents who contribute much to their neighborhoods and demand little from
government.
Supervisors, Please vote Yes on Proposed Ordinance 920 to authorize Proposition 90 transfers in Riverside County
Fax completed Petition to SRCAR at 951-864-2572
OR
Email completed Petitions to GAD@srcar.org

12. Riverside County Board of Supervisors
4080 Lemon Street
Riverside, California 92501
Re: Proposed Ordinance 920: Authorizing Proposition 90, inter-
county property assessment transfers.
Dear Supervisor:
I write to express my support for proposed Ordinance 920. This
important measure would authorize 55+ home buyers to purchase a
home in our county and transfer their property tax base from their
prior residence in another county as allowed by the California
Constitution (Proposition 90).
Studies by the Harvard Center for Housing Studies and the National
Association of REALTORS® show that every home purchase generates
nearly $95,000.00 in local economic benefits. Every two sales create
one new permanent job. Applying the Harvard/NAR impact formula to
the County Auditor Controller’s analysis of Ordinance 920,
demonstrates that our county could annually reap over $200,000,000
in economic benefits and gain over 1,000 jobs from the implementation
of Ordinance 920..
Riverside County could gain in other ways from adoption of Ordinance
920. The typical home buyer using Proposition 90 are financially
secure individuals who will become valued, long-term residents of our
community, contributing much to their neighborhoods and imposing
little or no cost on public services. The County’s adoption of
Ordinance 920 provides the classic “Win/Win”. At very small cost in
property tax foregone, the county gains hundreds of million dollars in
economic benefits, potentially thousands of new jobs, no additional
costs and thousands of wonderful new, contributing neighbors.
Please vote to help 55+ home buyers make Riverside County home.
Please vote to grow our county’s economy. Please vote yes on proposed
Ordinance 920 when it comes before you on July 30.
Sincerely,