11. page
11
Fiscal Policy: Quick Action + Bottlenecks
SOURCE: California Association of REALTORS®
• Coronavirus Preparedness & Response Supplemental
Appropriations Act (3/6)
• Families First Coronavirus Response Act (3/18)
• Coronavirus Aid, Relief, and Economic Security Act
($2.2T CARES Act) (3/27)
• Paycheck Protection Program & Health Care
Enhancement Act (4/24)
12. page
12
Monetary Policy: Fed takes unprecedented action
SOURCE: California Association of REALTORS®
• Cut fed funds rate: 0% - 0.25%
• Forward guidance: “rates will remain low”
• Lowered discount window rate to 0.25%
• Open-ended Securities purchases (QE)- Treasuries, MBS’s
• Direct lending to banks, major corporate employers
• Temporary relaxation of regulatory requirements
• Expanded repo operations
13. CALIFORNIA ASSOCIATION OF REALTORS®
Unemployment rate peaked in April & May
coming down: 8.4% in August
16.4 16.4
14.9
13.5
11.4
14.7
13.3
11.1
10.2
8.4
0
2
4
6
8
10
12
14
16
18
1/1/2020 2/1/2020 3/1/2020 4/1/2020 5/1/2020 6/1/2020 7/1/2020 8/1/2020
Unemployment Rates
CA US
14. page
14
Jobless claims inched up from prior week
SOURCE: Department of Labor
217
3,307
6,867
866 870
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Thousands
U.S. Initial Unemployment Insurance Claims (SA)
15. CALIFORNIA ASSOCIATION OF REALTORS®
Job losses in March & April
Gains have moderated since June
29.1 21.0
-210.5
-2,405.3
148.9
551.4
83.5 101.9
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0
500
1,000
1/1/2020 2/1/2020 3/1/2020 4/1/2020 5/1/2020 6/1/2020 7/1/2020 8/1/2020
California Nonfarm Job Growth
16. Consumer Confidence Building Back
101.8 in September
page
16
SERIES: Consumer Confidence – Composite Index
SOURCE: The Conference Board
17. CALIFORNIA ASSOCIATION OF REALTORS®
Consumers spending hits all-time highs in August
300,000
350,000
400,000
450,000
500,000
550,000
1/1/2020 2/1/2020 3/1/2020 4/1/2020 5/1/2020 6/1/2020 7/1/2020 8/1/2020
U.S. Retail Sales
Retail Retail (xFood/Auto)
18. CALIFORNIA ASSOCIATION OF REALTORS®
Why consumer spending matters so much
Consumption
63%
Government
16%
Equipment/Software
6%
Intellectual Property
5%
Residential Construction
3%
Nonresidential Construction
3%
Inventories
-0%
Net Exports
-4%
Other
37%
U.S. Real GDP by Component
24. CALIFORNIA ASSOCIATION OF REALTORS®
Job losses concentrated in lower-wage industries
1,768,500 , 71%
708,100 , 29%
California Job Losses by Wage Category
Under $1,100/week Over $1,100/week
Industry Avg. Weekly Wage
Jobs Lost
(Feb.-Apr.)
Total Nonfarm $ 1,368 2,625,500
Accom./Food Svcs. $ 513 825,700
Health Care $ 1,030 285,700
Retail $ 733 279,400
Other Svcs. $ 813 172,700
Admin. Support $ 924 161,800
Arts/Entertainment $ 1,190 156,700
Construction $ 1,410 150,000
Manufacturing $ 1,889 133,800
Prof./Sci./Tech. Svcs. $ 2,459 84,400
Information $ 3,678 78,700
Wholesale $ 1,557 66,200
Education $ 1,082 42,200
Real Estate $ 1,403 23,400
Management $ 2,604 13,400
Finance/Insurance $ 2,599 1,500
NR/Mining $ 774 1,000
25. Disparate Impact: Unemployment rates by ethnicity
(U.S.)
page
25
SERIES: Unemployment rates by race and Hispanic or Latino ethnicity (seasonally adjusted 1990-2020)
SOURCE:U.S. Bureau of Labor Statistics/Current Population Survey
Updated with May 2020 data
26. Financial Hardship Greatest for Latinos,
Blacks, Native Americans
page
26
SOURCE: NPR, the Robert Wood Johnson Foundation, and Harvard’s T.H. Chan School of Public Health
Survey of 3,454 U.S. adults between July 1 and August 3
29. September 2020: Is it a good time to buy & sell?
46%
54%
58%
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
22%
33%34%
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Do you think it’s a good time to sell a
home in California?
Do you think it’s a good time to buy a
home in California?
page
29
SERIES: Google Consumer Poll
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
30. CALIFORNIA ASSOCIATION OF REALTORS®
Interest rates have NEVER been lower
My Dad:
16.21
2.90
0
2
4
6
8
10
12
14
16
18
20
Selected Interest Rates
10-Year 30-Year FRM
31. CALIFORNIA ASSOCIATION OF REALTORS®
Buyers fueling strong demand for mortgages
13.41
-20
-15
-10
-5
0
5
10
15
20
3/6
3/13
3/20
3/27
4/3
4/10
4/17
4/24
5/1
5/8
5/15
5/22
5/29
6/5
6/12
6/19
6/26
7/3
7/10
7/17
7/24
7/31
8/7
8/14
8/21
8/28
9/4
9/11
9/18
Weekly Change in New Mortgage Purchase Applications
All Purchase Loans Conventional Government
25.5%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
3/6 3/20 4/3 4/17 5/1 5/15 5/29 6/12 6/26 7/10 7/24 8/7 8/21 9/4 9/18
Year-to-Year Change in New Mortgage Purchase Applications
32. CALIFORNIA ASSOCIATION OF REALTORS®
Job losses haven’t hit potential homebuyers as hard
Retail
279,400
Information
78,700
Healthcare
285,700
Hotels/Bars/Restaurants
825,700
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Jobs
Lost
(Feb.
–
Apr.
2020)
2019 Avg. Weekly Wage
California Jobs Losses vs. 2019 Avg. Weekly Wage by Industry
33. Existing Home Sales
% change
-41.4% YTY
CA May Market Snapshot
Sales down sharply, Median price down, Supply up
page
033
Price
$588,070
-3.7% Y2Y
Unsold
Inventory Index
4.3 months
34.4% Y2Y
Median Days
on Market
17 days
-5.6% Y2Y
Sales Price to
List Price Ratio
99.7%
0.4% Y2Y
May 2020
CALIFORNIA ASSOCIATION OF REALTORS®
-12.9% YTD
34. Existing Home Sales
% change
+14.6% YTY
CA August Market Snapshot:
Sales up, Prices up, Supply down
page
034
Price
$706,900
+14.5% Y2Y
Unsold
Inventory Index
2.1 months
-34.4% Y2Y
Median Days
on Market
13 days
-43.5% Y2Y
Sales Price to
List Price Ratio
100.0%
+1.3% Y2Y
August 2020
CALIFORNIA ASSOCIATION OF REALTORS®
-6.8% YTD
35. Sales momentum continues – highest in over 10 years.
page
35
California, August 2020 Sales: 465,400 Units, -6.8% YTD, +14.6% YTY, +6.3% MTM
-
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
Jan-17
Sep-17
May-18
Jan-19
Sep-19
May-20
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
36. CALIFORNIA ASSOCIATION OF REALTORS®
Sales by Region
page
36
0.5%
10.8%
5.5%
15.4%
8.6%
33.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
August 2020 Home Sales Growth
by Region
Central
Valley
21%
S.F. Bay
Area
19%
Southern
California
46%
Central
Coast
4%
Far North
3%
Other
Counties
7%
August 2020
Home Sales by Region
37. Low supply hampers sales of affordable homes
Strong sales gains from $750K+
page
37
August 2020
(YTY% Chg.)
-26.0%
-4.8% -1.8%
8.7%
22.8%
40.9%
71.3%
-40%
-20%
0%
20%
40%
60%
80% 38%
40%
22%
46%
38%
16%
$0 - $499k
$500 - $999k
$1M+
Share by Price Segment
2020
2019
SERIES: Sales of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
38. What lies ahead: Pending sales slowing
page
38
-1.1%
-40%
-20%
0%
20%
40%
60%
80%
MTM
%
Chg.
in
Pending
Sales
SERIES: Percent Change in Pending Sales
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
39. $706,900 -- CA median price reaches all-time high
page
39
August 2020: $706,900, +6.1% MTM, +14.5% YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
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
Jan-17
Sep-17
May-18
Jan-19
Sep-19
May-20
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
40. Price growth up by double digits in all percentiles;
strongest gain in the top end
page
40
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
13.7% 14.3% 15.1%
18.6%
26.6% 27.5%
25.0%
28.2%
34.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0-20 20-40 40-60 60-80 80-100 80-85 86-90 91-95 96-100
Percentile
Year-over-Year Price Growth
41. Inventory down as sales improved and fewer new
listings being added
page
41
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
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
Jan-17
Sep-17
May-18
Jan-19
Sep-19
May-20
Months
of
Supply
SERIES: Unsold Inventory Index of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Aug 2019: 3.2 Months; Aug 2020: 2.1 Months
42. Active listings plunged as pent up demand
remained robust
page
42
-50.3%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Year-over-Year % Chg
SERIES: Active Listing of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
61. Share of First Time Buyers Highest in 10 years
38.4%
0%
10%
20%
30%
40%
50%
% First-Time Home Buyers Long Run Average
Long Run Average = 37.2%
SERIES: 2020 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
page
61
1
62. Housing affordability improved in 2020 but still an issue
26%
49%
32%
45%
49% 48%
37%
0%
10%
20%
30%
40%
50%
60%
2014 2015 2016 2017 2018 2019 2020
% of First-Time Buyers who Changed County
Because of Housing Affordability
Q. What was the primary reason for changing county?
SERIES: 2020 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
page
62
63. Investor Buyers lowest since 2001
Vacation/Second Home share up
8.1%
6.0%
0%
5%
10%
15%
20%
25%
30%
19992001200320052007200920112013201520172019
Vacation/Second Home
Investment/Rental Property
% to Total Sales
SERIES: 2020 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Rent
page
63
Flip
2014: 30%
2015: 26%
2016: 20%
2017: 24%
2018: 26%
2019: 18%
2020: 27%
2014: 70%
2015: 74%
2016: 80%
2017: 76%
2018: 74%
2019: 82%
2020: 73%
VS.
65. Quality of life overtook housing affordability
as buyer’s main reason for relocating
22.2%
21.0%
15.5%
12.3%
8.1%
5.7%
5.5%
4.9%
4.5%
2.9%
1.4%
0% 5% 10% 15% 20% 25%
Quality of life
Housing affordability
Closer to family/relative
Other
Second home
Job change
Shorter commute to work/school
Ability to work from home
Quality of school
Retired
Quality of community services
2020 2019
Q. What was the primary reason for changing county?
SERIES: 2020 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
page
65
66. More Sellers Continue to Move out of California;
Highest since 2005
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Within the same county 38% 41% 37% 45% 47% 42% 49% 49% 46% 44% 44% 40% 38% 36% 35% 36%
In another county in
California
23% 18% 24% 17% 21% 21% 19% 18% 20% 21% 20% 21% 20% 21% 20% 18%
In another state 31% 28% 29% 27% 19% 20% 20% 22% 19% 22% 22% 25% 28% 29% 30% 30%
Out of US 1% 2% 1% 1% 2% 1% 1% 1% 0% 1% 1% 1% 1% 1% 0% 1%
Don't Know/Not sure 7% 11% 9% 10% 12% 16% 10% 10% 15% 13% 13% 13% 14% 13% 14% 15%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Location of Seller’s New Home
SERIES: 2020 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
page
66
68. Housing affordability peaked at Q2-2012
page
68
California, 1984-2020
CA, Q2 2020, 33%
US, Q2 2020, 57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
%
OF
HOUSEHOLDS
THAT
CAN
BUY
A
MEDIAN-PRICED
HOME
Annual Quarterly
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
69. Housing Affordability in CA
by county
page
69
2020-Q2: % able to purchase median-priced home
68%
57%
33%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
70. CALIFORNIA ASSOCIATION OF REALTORS®
More of everything, except…
page
70
27,102,237
39,512,223
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
California Population
1986 2019
115,212
206,974
0
50,000
100,000
150,000
200,000
250,000
California REALTORS®
1986 2,019
393,983 397,910
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
California Home Sales
1986 2,019
255,559
111,870
0
50,000
100,000
150,000
200,000
250,000
300,000
California Permits
1988* 2019
71. CALIFORNIA ASSOCIATION OF REALTORS®
46 of 143 largest cities already majority renter
72%
50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Santa
Monica
Hawthorne
Glendale
Inglewood
Los
Angeles
San
Francisco
Bellflower
Davis
El
Monte
Santa
Barbara
East
Los
Angeles
Pasadena
Costa
Mesa
Long
Beach
Santa
Cruz
Florence-Graham
Mountain
View
Arden-Arcade
Burbank
El
Cajon
Oakland
Santa
Clara
Berkeley
South
Gate
Santa
Ana
Irvine
Richmond
Sunnyvale
Alhambra
Merced
Salinas
Redwood
City
Chico
Vista
Anaheim
Fresno
Alameda
Downey
San
Diego
Westminster
Madera
San
Bernardino
Sacramento
Escondido
Stockton
San
Mateo
2019 California Renter Rate by City
73. CALIFORNIA ASSOCIATION OF REALTORS®
Step 1: Core Bay Area to Cheaper Counties
-76,431
-18,613
-12,705
-8,630 -7,140
-5,074
-8,364 -7,950 -7,714
-90,000
-80,000
-70,000
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
East Bay Sacramento
MSA
Sonoma
County
San Joaquin
County
Washington Oregon Nevada (ST) Santa
Barbara
County
Sierra
Nevadas
San Francisco-Marin-San Mateo Net Domestic Migration
2010-2018 (Cumulative) - Top 10 Destinations
In State Out of State
74. CALIFORNIA ASSOCIATION OF REALTORS®
Step 2: Cheaper Counties Leaving the State
-5,375
-4,995
-8,920
-7,035
-6,537
-5,478
-3,819
-3,374
-3,071
-2,644
-10,000
-9,000
-8,000
-7,000
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
0
Nevada (ST) Idaho Oregon Colorado San Luis
Obispo
County
Sutter & Yuba
Counties
Oklahoma Utah Arizona Washington
Sacramento MSA Net Domestic Migration
2010-2018 (Cumulative) - Top 10 Destinations
In State Out of State
76. CALIFORNIA ASSOCIATION OF REALTORS®
Step 1: Los Angeles mostly to the Inland Empire
-199,327
-80,270
-44,375
-19,182 -18,922
-61,164
-53,073
-44,532
-27,760 -25,529
-250,000
-200,000
-150,000
-100,000
-50,000
0
Inland Empire Orange
County
Texas Nevada (ST) Arizona Kern County Oregon Washington Ventura
County
Santa
Barbara
County
Los Angeles County Net Domestic Migration
2010-2018 (Cumulative) - Top 10 Destinations
In State Out of State
77. CALIFORNIA ASSOCIATION OF REALTORS®
Step 2: Inland Empire mostly out of state
-9,307
-27,434
-23,704
-13,254
-12,183
-9,845 -9,397 -9,102
-5,634 -4,988
-30,000
-25,000
-20,000
-15,000
-10,000
-5,000
0
Arizona Texas Utah Nevada (ST) Georgia Idaho Kern County North
Carolina
Colorado Oregon
Inland Empire Net Domestic Migration
2010-2018 (Cumulative) - Top 10 Destinations
In State Out of State
78. Climate change will lead to more and bigger
wildfires in the future
page
78
SOURCE: The New York Times Magazine: How Climate Migration Will Reshape America
By 2070, some 28 million people
across the country could face
Manhattan-size megafires. In
Northern California , they could
become an annual event.
85. CALIFORNIA ASSOCIATION OF REALTORS®
Coronavirus remains the biggest wildcard
12,807
3,146
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
California Daily New Cases
95
0
50
100
150
200
250
1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep
California Coronavirus Deaths
Deaths Smoothed
86. page
86
~24 million Americans still receiving unemployment
SOURCE: U.S. Dept. of Labor
2,057
22,794
12,441
7,793
11,511
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Thousands
U.S. Continuing Unemployment Insurance Claims + PUA Claims (NSA)
US UI Claims US PUA Claims
87. CALIFORNIA ASSOCIATION OF REALTORS®
U.S. economic outlook: ongoing recovery, but slower pace
SERIES: U.S. Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2015 2016 2017 2018 2019 2020p 2021f
US GDP 2.6% 1.6% 2.3% 3.0% 2.2% -5.0% 4.2%
Nonfarm Job Growth 2.1% 1.8% 1.6% 1.6% 1.3% -6.5% 3.0%
Unemployment 5.3% 4.9% 4.4% 3.9% 3.7% 8.8% 7.1%
CPI 0.1% 1.4% 2.1% 2.4% 1.8% 0.6% 1.7%
Real Disposable Income, % Change 3.4% 2.7% 2.9% 4.0% 2.9% 3.8% -1.6%
page
87
88. CALIFORNIA ASSOCIATION OF REALTORS®
Foreclosures could become a problem,
size of impact will be more like 2015 than 2008
The Bad News:
• Potentially 600,000 foreclosures nationwide
• That suggests 60,000 in California
• Currently a moratorium through end of 2020
• Eventually delinquencies will be reckoned with
• Serious delinquencies up a lot in June
• Could impact prices (but single digit impacts)
Reasons to Be Hopeful:
• Government on board this time
• 5-year + workouts
• Lots of home equity/minimal cashing out
• No NINJA loans/option ARMs
89. CALIFORNIA ASSOCIATION OF REALTORS®
Many homeowners still have skin in the game
$348.4
$134.2
$0
$50
$100
$150
$200
$250
$300
$350
$400
Combined Volume of Cash-out and 2nd Mortgages/HELOC Consolidation
90. CALIFORNIA ASSOCIATION OF REALTORS®
Not as many fundamental problems in mortgage market
27.4%
24.0%
33.5%
5.0%
7.0% 6.6% 7.1%
33.8%
37.6%
47.3%
8.6%
16.2%
14.5% 15.6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1995 2000 2005 2010 2015 2018 2019
U.S. ARM Lending
% of Applications % of Volume
91. CALIFORNIA ASSOCIATION OF REALTORS®
Household balance sheets were in much better shape
8
10
12
14
16
18
20
Q1-80
Q1-81
Q1-82
Q1-83
Q1-84
Q1-85
Q1-86
Q1-87
Q1-88
Q1-89
Q1-90
Q1-91
Q1-92
Q1-93
Q1-94
Q1-95
Q1-96
Q1-97
Q1-98
Q1-99
Q1-00
Q1-01
Q1-02
Q1-03
Q1-04
Q1-05
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Q1-19
Q1-20
Household Debt and Financial Obligations
Debt Service Ratio Financial Obligations Ratio
92. CALIFORNIA ASSOCIATION OF REALTORS®
Prices weren’t as inflated as they were in 2005
72.6%
43.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
California Median Mortgage Payment to Income Ratio
Payment/Income Historical Avg.
93. CALIFORNIA ASSOCIATION OF REALTORS®
California housing market outlook (baseline)
2015 2016 2017 2018 2019 2020p 2021f
SFH Resales (000s) 409.4 417.7 424.9 402.6 398.0 398.8 411.9
% Change 7.0% 2.0% 1.7% -5.2% -1.2% 0.2% 3.3%
Median Price ($000s) $476.3 $502.3 $537.9 $569.5 $592.4 $661.1 $690.3
% Change 6.6% 5.4% 7.1% 5.9% 4.0% 11.6% 4.4%
Housing Affordability Index 31% 31% 29% 28% 31% 32% 31%
30-Yr FRM 3.9% 3.6% 4.0% 4.5% 3.9% 3.2% 3.1%
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
page
93
94. CALIFORNIA ASSOCIATION OF REALTORS®
Baseline housing forecast key assumptions
• Vaccine available in H121
• No COVID surge this flu season (modest rise)
• GDP growth rate at 4.2% in 2021
• Household income growth at 3.3% in 2021
• Interest rates near record low (3.1% in 2021)
• 2021 inventory unchanged from 2020
• Foreclosures at low level (< 8% of sales in 2021)
• Foreclosures average <10% discount
95. CALIFORNIA ASSOCIATION OF REALTORS®
Worst case housing forecast key assumptions
• Vaccine not available until H221
• Flu season resurgence in COVID
• California shut down for (2 months +)
• Zero growth in GDP in 2021
• Household income drops 4.2% in 2021
• No new federal stimulus in 2021
• Interest rates rise slightly (>3% in 2021)
• Inventory increases (+20-25% from 2020)
• Foreclosures at 2009-2010 (30% of all sales)
• Foreclosures average 40% discount
96. CALIFORNIA ASSOCIATION OF REALTORS®
California housing market outlook (worst case)
2015 2016 2017 2018 2019 2020p 2021f
SFH Resales (000s) 409.4 417.7 424.9 402.6 398.0 377.0 330.0
% Change 7.0% 2.0% 1.7% -5.2% -1.2% -5.3% -12.5%
Median Price ($000s) $476.3 $502.3 $537.9 $569.5 $592.4 $620.6 $518.8
% Change 6.6% 5.4% 7.1% 5.9% 4.0% 4.8% -16.4%
Housing Affordability Index 31% 31% 29% 28% 31% 33% 41%
30-Yr FRM 3.9% 3.6% 4.0% 4.5% 3.9% 3.2% 3.2%
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
page
96
97. CALIFORNIA ASSOCIATION OF REALTORS®
Potential REO scenarios
60%
8%
30%
5%
60%
10%
40%
5%
0%
10%
20%
30%
40%
50%
60%
70%
Jan-09 Baseline Worst Case Best Csae
California REO Market
REO Market Share and Typical Discount (Relative to Market)
REO Share of Market Typical REO Discount
98. CALIFORNIA ASSOCIATION OF REALTORS®
Still bullish on California long term
5th Largest
Economy
25 Million
International
Arrivals Annually
Top Global
Universities
$175 Billion
In Annual Exports
99.
100. Thank You
This presentation can be found on
www.car.org/marketdata
Speeches & Presentations
jordanl@car.org