August housing statistics for Menifee CA

1. So much news, so little time. I just returned from Dr. John Husing’s forecast delivered to the EWDC
entitled ‘Start of the Recovery’. You can read all 56 pages by clicking the link but I’ve included a
couple charts I found most interesting. Dr. Husing’s take? There are lots of little bits of positive news
– but very little bits. It’s likely to be 2012 before we start to feel ‘normal’ again as a country, and the
Inland Empire might even lag that a little.
First, some good news. As I’ve pointed out in past months, our housing affordability is at an all time
high in the region. From a low of about 15% in 2005-2006, we’ve quadrupled that to over 62% today.
Had that increase come from a plethora of high paying jobs moving into the region that would have
been spectacular. Unfortunately the increase is the result of our dramatic decline in housing prices,
as we’re all aware. Still, housing affordability is a good thing.
Poised for growth, the region continues to offer significant home price advantages over neighboring
markets. That disparity, plus the attraction to first-time buyers, will continue to drive demand in our
region that doesn’t necessarily exist in other areas. While building and new permits continues to lag,
we are seeing some uptick in new home construction in virtually every city in the region.
One of his most disturbing slides illustrates that EVERY wage and salary job created in California
since 1998 has been lost! Talk about a lost decade. During that time we’ve added about 5 million
residents to the state so the imbalance of unemployment is exacerbated. And while August
unemployment in the US stood at 9.6%, and California weighed in at 12.8%, the Inland Empire is
currently 15.1%, second only to Detroit for unemployment in regions over 1 million population.
The IE created 42.3% of California's jobs from 2000-2007 but we are actively chasing those jobs away
as the legislature seeks to grow ‘green’ jobs and other tech jobs to the detriment of the kind of blue
collar manufacturing, construction & logistics jobs that grew our region and state during the last
boom. We need to focus on our own jobs base and creation because Sacramento is not going to help
us.
I’ve also included a complete run-down of foreclosure data for your city. Dr. Husing noted the portent
of a shadow inventory and the potential for additional downward price pressure from a large release
of REO properties. IF such a thing exists, and IF the banks are foolish enough to release everything
at once instead of trickling them onto the market, I still believe between our anemic inventory levels
and strong demand, we would see minimal, if any, impact to our median price in the region.
Now to some local news. I read an article in one of the local papers last week where the reporter said
local sales ‘plummeted’ in August. You may recall last month when I chuckled at national writers
using the terms ‘plummeted’ and ‘plunged’ to describe the last two months of housing sales. That’s
certainly not the case here in Southwest California so I can only ascribe our local writers trepidations
to reading too much AP. As you can see, single family sales remained strong posting moderate gains
over July in 4 of 6 cities. Sales are well ahead of January figures and up even stronger over last
August.
Prices also maintained their stagger – up here, down there – nothing spectacular. I would also remind
you that the unit sales presented here are single family home sale only. They do not include condo’s,
mobile homes or 3rd party auction sales. Murrieta recorded 34 condo sales last month, Temecula 11.
By any measure, our demand remains good. Perhaps not as strong as 6 months ago but still healthy.
Many buyers have grown frustrated with the short sale process and are simply sitting on the sidelines
until a return of REO’s or a return to standard sales. Well priced standard sales are in great demand
and multiple bids for them and REO’s is still common.
As you have questions, please don’t hesitate to call.

2. Slide courtesy of Dr. John Husing
$600,000 Home Price Advantage: $525,000
Median price SWCA YTD v. Adjacent markets
$500,000 SWCA Price Advantage
$382,000
$291,000
$400,000 $349,000
$139,000
$106,000
$300,000
$200,000
$234,364
$234,364
$234,364
$234,364
$189,000
$100,000
$0
Inland Empire Southwest California Los Angeles San Diego Orange County

3. Slide courtesy of Dr. John Husing
Slide courtesy of Dr. John Husing

4. 250
Southwest California
Single Family Unit Sales
200
150
100
50
0
3/09 6/09 9/09 12/09 3/10 6/10
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
Southwest California
Median Price
$0
3/09 6/09 9/09 12/09 3/10 6/10
Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake

5. 6
700 7
6 August Demand Chart
600
4
7
500 0 4
0
2 3
400 2 3 3
9 6 0
9
6
300 2 1
1
0 1
9 9
1 6 8
3 4
3 0 1 1
200
1
5 9 0
8 7 8
3 5 6 1 6 6 6 8 5 6 5 6 4 6
7 4 3 2 3 2 5
100 8 9 2 3 2 6 3 9 1 1 3 8 0
2 . . . . .
4 1
5 6 4 9 6 3
0
On Market Pending Closed (Demand) Days on Market % Selling Months Supply
(Supply)
Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar
August Market Activity by Sales Type
%
Active Closed Failed In Escrow Activity
Bank Owned 21% 39% 7% 30% 25%
Short Sales 48% 32% 71% 51% 49%
Standard Sales 31% 29% 21% 19% 26%
Other 1% 1% 2% 1% 1%
Nearly 3 out of 4 short sale attempts fail. Add to this the equally abysmal
record of success for loan modification attempts and it is inevitable that at
some point we will see an increase in REO levels again. With 13 out of 14
REO’s resulting in a closed transaction, that would help absorb inventory
and hasten our return to market stability.

7. WOW! Look at all those new homes. Older cities tend to be more spread across age groups although both
Murrieta and Lake Elsinore have similar hockey-stick graphs.

8. Note the discrepancy caused by decining home bvalues. Market values range from 100,000-300,000 while
loan balances remain at 300,000-500,000.