UNDERSTANDING CALIFORNIA HOME SELLERS

September 24,2015Oscar Wei, Senior Economist

CALIFORNIA HOUSING MARKET OUTLOOK

SALES OF EXISTING DETACHED HOMES

California, Aug 2015 Sales: 431,800 Units, +7.4% YTD, +9.3% YTY

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5 -

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 HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Aug-15: 431,800

Aug-14: 395,080

CALIFORNIA SALES

SERIES: Sales of Existing Single Family Homes, Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Jan-

10

Apr-1

0

Jul-1

0

Oct-1

0

Jan-

11

Apr-1

1

Jul-1

1

Oct-1

1

Jan-

12

Apr-1

2

Jul-1

2

Oct-1

2

Jan-

13

Apr-1

3

Jul-1

3

Oct-1

3

Jan-

14

Apr-1

4

Jul-1

4

Oct-1

4

Jan-

15

Apr-1

5

Jul-1

5-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Year-over-Year % ChgMoving average (Year-over-Year % Chg)

MEDIAN PRICE OF EXISTING DETACHED HOMES

California, Aug 2015: $493,420, 1.0% MTM, +2.5% YTY

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5 $-

$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% frompeak

SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Aug-15: $493,420Aug-14:

$481,250

INVENTORY CONTINUED TO DECLINE FROM LAST YEAR

Aug 2014: 4.0 Months; Aug 2015: 3.6 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

2

4

6

8

10

12

14

16

18

SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

DEMAND OUTPACING SUPPLY

San Francisco Bay Area Southern California Central Valley-20%

-10%

0%

10%

20%

0%

7%

13%

-12%

-7%

-1%

Sales Active ListingsYear-to-Year % Chg

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Aug 2015

WHERE IS THE INVENTORY?

– Investors renting instead of flipping–Mortgage Lock-In Effect–Where will I go?–Foreclosure pipeline is dry –New construction recovering but

LOW–Off-market (aka “pocket’) listings

not being counted in listing stats

SHORT SALES CONTINUED SHRINKING

2012 2013 2014 20150%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

56%

88% 93% 96%

44%

12% 6.0% 4.0%

Equity Sale Short Sale

Q: Was the home sold as a short sale?

YEARS OWNED HOME BEFORE SELLING

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

0

2

4

6

8

10

12

10All Sellers

SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FEWER MIDDLE-AGE ADULTS IN RECENT YEARS

Source: Harvard Joint Center of Housing Studies, Census Bureau

DROP IN HOMEOWNERSHIP

Source: Harvard Joint Center of Housing Studies, Census Bureau

DECLINE IN # OF TRADE UP BUYERS DUE TO POPULATION LOSS & DROP IN HOMEOWNERSHIP RATE

Source: Harvard Joint Center of Housing Studies, Census Bureau

FEWER HOMEOWNERS IN THEIR 30’S, 40’S LED TO RECENT DECLINE IN TRADE UP BUYERS

Source: Harvard Joint Center of Housing Studies, Census Bureau

ABOUT THE SELLER

SELLERS ARE YOUNGER

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

10

20

30

40

50

60

70

4346 47 46 46 46

4137

40

3537

46

63

52

Median Age

Average Age

Q: What is your age?

SELLERS BY GENERATION

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Gen Y (1980-1999) Gen X (1965-1979) Boomers (1946-1964)

Seniors (before 1946)

Q: What is your age?

FIRST-TIME SELLERS

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%

10%

20%

30%

40%

50%

60%

21%

16%

20%18% 17%

15%

33%

44%47% 48%

57%

35%

25%

40%

Q: Was this your first experience in selling a house?

FIRST-TIME SELLERS

Gen Y Gen X Boomers Silent All0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%91%

53%

24%

9%

40%

Q: Was this your first experience in selling a house?

MOST SELLERS ARE MARRIED

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%

20%

40%

60%

80%

100%

120%

24%13%

39% 37% 36%30% 34% 37% 35% 32% 33% 32%

12% 17%

76%87%

61% 63% 64%

53% 50% 48% 50%46% 47% 48%

71%71%

17% 17% 16% 16%22% 20% 19% 12%

13%

Single Married Other

Q:What was the marital status the head of your household at the time of the sale?

MEDIAN HOUSEHOLD INCOME: $100,000

< $50,000

$50,000-$74,999

$75,000-$99,999

$100,000-$149,999

$150,000-$199,999

$200,000+

0% 5% 10% 15% 20% 25%

23%

14%

11%

24%

13%

15%

Q: What is your annual household income?

MEDIAN ANNUAL INCOME HAS INCREASED

Q: What is your annual household income? (Please enter only numbers, no characters --- ie. $, periods, or commas)

2014 20150

20,000

40,000

60,000

80,000

100,000

120,000

$81,918

$100,000

MEDIAN HOUSEHOLD INCOME: $100,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

< $50,000 $50,000-$74,999 $75,000-$99,999$100,000-$149,999 $150,000-$199,999 $200,000+

Q: What is your total annual household income

TOP REASON TO SELL: MOVING TO A BETTER LOCATION

Q: What was your primary reason for selling your home?

Other

I lost my job

I am an empty nester

I was retiring

I had a change in family status (i.e. marriage, child birth, divorce, etc.)

I wanted a larger home

0% 5% 10% 15% 20%

11.8%2.3%2.5%2.8%2.9%4.6%

7.9%9.8%10.8%12.1%

14.1%18.5%

TOP 5 REASONS FOR SELLING THEIR HOME (FIRST TIME VS. REPEAT)

Q: What was your primary reason for selling your home?

I wanted to downsize

I had to relocate for work

I had a change in family status (i.e. marriage, child birth, divorce, etc.)

I wanted to move to a better location

I wanted a larger home

7%

9%

14%

20%

22%

First Time Sellers

I wanted a larger home

I had to relocate for work

I was retiring

I wanted to downsize

I wanted to move to a better location

9%

10%

12%

16%

17%

Repeat Sellers

REASONS FOR MOVING DIFFER ACROSS GENERATIONS

Q: What was your primary reason for selling your home?

All Gen Y Gen X Boomers

Silent

Desired better location

19% 25% 20% 20% 4.5%

Wanted larger home 13% 25% 24% 3.3% 2.3%

Downsizing 12% 1.6% 6.6% 14% 32%

Change in family status

11% 16% 13% 7.6% 9.1%

Relocating for work 11% 14% 16% 8.1% 0%

I was retiring 8.0% 0% 0.6% 17% 5%

Trouble making mortgage payment

4.3% 4.7% 5.4% 2.9% 7.0%

I am an empty nester 3.3% 0% o% 7.1% 2.3%

I lost my job 2.9% 3.1% 1.8% 4.3% 0%

For the investment advantages

2.1% 1.6% 3.0% 0.5% 6.8%

TECHNOLOGY USE

THERE IS A 7% INCREASE IN INTERNET USAGE

Gen Y Gen X Boomers Silent All0%

10%

20%

30%

40%

50%

60%

70%

80% 72% 71%

63%

35%

57%

78% 75%

60%

32%

64%

2014 2015

¼ SELLERS LIST ZILLOW AS MOST USEFUL WEBSITE

Q: What was the most useful website you visited during your home selling process?

25%

14%

14%

4%

GOOD VARIETY IN MARKETING PROPERTIES

Social media

Online

Virtual tour

Privately marketed to agent's network

Open house

MLS

0% 20% 40% 60% 80%

13%

27%

33%

41%

63%

80%

Q: How was your property marketed?

SELLERS’ BIGGEST CONCERN: GETTING A GOOD PRICE

Finding qualified buyer

Selling house

Finding new house

Selling quickly

Getting good price

0% 5% 10%

15%

20%

25%

30%

35%

40%

45%

50%

8%

13%

13%

17%

47%

Q: What were your biggest concerns as a home seller?

67% OF SELLERS RECEIVED MULTIPLE OFFERS

1 2 3 4 5+0%

5%

10%

15%

20%

25%

30%

35% 33%

23%

20%

8%

16%

Q: How many offers did you receive from buyers?

SELLERS RECEIVING FEWER OFFERS

2012 2013 2014 20150.0

1.0

2.0

3.0

4.0

5.0

6.0

3.1

5.9

3.33.1

Average

Nu

mb

er

of

Off

ers

Q: How many offers did you receive from buyers?

MAJORITY OF SELLERS ACCEPTED HIGHEST OFFER

Q: Which offer did you accept?

Other

All cash

1st received

Personal letter/appeal from buyer

Buyer's ability to close fastest

No contingencies

Highest

0% 10% 20% 30% 40% 50% 60%

9%

6%

7%

8%

16%

16%

52%

MAJORITY OF SELLERS ACCEPTED HIGHEST OFFER

Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

Category All Gen Y Gen X Boomers Silent

Highest 52% 49% 55% 52% 52%

Buyer's ability to close fastest 16% 21% 16% 18% 4%

No contingencies 16% 13% 17% 16% 16%

Personal letter/appeal from buyer 8% 10% 9% 7% 12%

1st received 7% 1% 7% 8% 4%

All cash 6% 8% 5% 4% 20%

Other 9% 13% 7% 9% 12%

Q: Which offer did you accept?

NET CASH GAIN TO SELLERS HIGHEST SINCE 2007

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015$0

$50,000

$100,000

$150,000

$200,000

$250,000

$120,000

SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Q. What was the net cash gain or net loss to the seller as a result of this sale?

SELLERS ARE OPTIMISTIC ABOUT FUTURE HOME PRICES

1 Year 5 Years0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

3.4%9.1%

23%15%

66% 60%

Down Flat Up

Q: Do you think home prices in your neighborhood will go up, down, or stay flat in 1 year? …in 5 years?

SELLERS OUTLOOK ABOUT FUTURE HOME PRICES

Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

Category All Gen Y Gen X Boomers Silent

Up in 1 year 65% 63% 67% 65% 64%

Up in 5 years 59% 59% 58% 59% 61%

Down in 1 year 3.5% 4.7% 0.6% 4.8% 6.8%

Down in 5 years 10% 13% 8.4% 9.0% 14%

Unsure in 1 year 7% 6% 5% 8% 11%

Unsure in 5 years 16% 13% 17% 17% 16%

Q: Do you think home prices in your neighborhood will go up, down, or stay flat in 1 year? …in 5 years?

MORE THAN HALF OF ALL SELLERS ARE PLANNING TO BUY ANOTHER HOME

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%

10%

20%

30%

40%

50%

60%

70%

80%

53%

SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FEWER SELLERS MOVED OUT OF STATE

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20150%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

5% 6% 6%

15%

23%

34%

28%

34%

44% 44%

21%

Q. In which county is your current residence located?

TOP STATES WHERE CA SELLERS HAVE RELOCATED

Florida

Idaho

Colorado

Oregon

Washington

Nevada

Texas

Arizona

0% 2% 4% 6% 8% 10% 12%

4.3%

4.3%

5.4%

6.5%

7.0%

7.6%

8.6%

10%

Q: Which state?

SELLER/AGENT RELATIONSHIP

SELLERS THAT DID NOT USE AN AGENT REMAINS UNDER 5%

2013 2014 201595%

96%

97%

98%

99%

100%

98.0%

96.9%

97.7%

% that used an agent

Q. How did you find your real estate agent?

SELLERS NEEDED MOST HELP WITH NEGOTIATION

Q: In what part of the transaction seller needed the most assistance?

Other

Negotiating the price

Preparing transaction documents

Preparing home for sale

Marketing the property

Setting the right price

Negotiating terms of sale

7%

10%

12%

16%

17%

18%

20%

MAJORITY OF SELLERS FOUND AGENT BY REFERRAL/PERSONAL CONTACT

Didn't use agent

"For Sale Sign"

Internet

Online

Previous client

Referral

Personal contact

0% 5% 10% 15% 20% 25% 30% 35%

2%

3%

4%

4%

17%

25%

29%

Q. How did you find your real estate agent?

HOW SELLERS FOUND THEIR AGENT

Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

Category All Gen Y Gen X Boomers Silent

Personal contact 29% 34% 25% 27% 43%

Referral 25% 19% 26% 27% 23%

Previous client 17% 19% 20% 15% 11%

Internet 4% 6% 2% 6% 0%

Online 4% 6% 2% 6% 0%

"For Sale Sign" 3% 5% 3% 3% 2%

Q. How did you find your real estate agent?

70% OF SELLERS INTERVIEWED ONLY 1 AGENT

1 2 3 4 5+0%

10%

20%

30%

40%

50%

60%

70%

80%66%

14%8%

1% 2%

70 %

13% 11%

3% 3%

20142015

Number of Agents

Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?

SELLERS INTERVIEWED SLIGHTLY MORE AGENTS

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2.3 2.2

3.13.5

4.4

5.4

6.2

5.0

3.5 3.6 3.5

1.5 1.6

Chart Title

Nu

mb

er

of

Ag

en

ts

Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?

REASON SELLER SELECTED AGENT

Trustworthy (18%)

Worked with agent on previous transaction (17%)

Recommended (17%)

Friend / acquaintance (17%)

Good reputation/successful (16%)

Fastest to respond (6%)

Q: What was the single most important reason for selecting the agent you used in your recent home sale?

REASON SELLER SELECTED AGENT

Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

Category All Gen Y Gen X Boomers Silent

Trustworthy 18% 14% 20% 18% 10%

Worked with agent previously 17% 22% 19% 15% 14%

Recommended 17% 13% 15% 18% 19%

Friend/Acquaintance 17% 19% 17% 13% 29%

Good reputation 16% 16% 17% 18% 14%

Fastest to repsond 6% 6% 7% 6% 2%

Q: What was the single most important reason for selecting the agent you used in your recent home sale?

MORE SELLERS CHANGED AGENTS IN 2015

2009 2011 2012 2013 2014 20150%

10%

20%

30%

40%

50%

60%

70% 64%

22%

44%

31%

4%8%

Q: Did you initially list your home with an agent other than the one with whom you sold it?

AGENT / SELLER COMMUNICATION IN SYNC

0%

5%

10%

15%

20%

25%

30%

35%

40%37%

25%

20%

15%

39%

25%24%

10%

Preferred Actual

Q: What was the actual method of communication used most frequently with your agent?

Q: What was your preferred method of communication with your agent?

AGENTS MEET RESPONSE TIME EXPECTATIONS

Instantly Within 30 Minutes

Within 1 Hour

Within 2 Hours

Within 4 Hours

Within 1 business

day

> 1 business

day

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

9%

26%

16%

10%

15%16%

6%5%

16% 16%

13%

21%

28%

1%

Actual Expected

Q: On average, what was the ACTUAL time in which your agent responded to your communications?

Q. What was the typical response time you expected from your agent to return any form of communication to you?

SELLER RESPONSE TIME EXPECTATIONS

All Gen Y Gen X Boomers Silent

Instantly 5.1% 4.8% 7.9% 3.9% 0%

Within 1 hour 16% 16% 17% 17% 12%

Within 2 hours 12.% 13% 8.0% 15% 19%

Within 1 business day

28% 24% 31% 26% 33%

Q. What was the typical response time you expected from your agent to return any form of communication to you?

SLIGHT DECLINE IN SELLER SATISFACTION

Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.

Q: Please rate your degree of satisfaction with your agent on these three things using a 1 to 5 scale where 1 is “Least Satisfied” and 5 is “Most Satisfied”.

Category 2011 2012 2013 2014 2015

Value received for what you paid your real estate agent

3.1 3.0 3.0 4.4 3.9

Overall satisfaction with the real estate agent

2.8 2.8 2.7 4.4 4.2

Overall satisfaction with the home selling process

2.6 2.5 2.6 4.4 4.0

SELLER SATISFACTION DECREASED IN 2015

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20151.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Agent Selling process

Q: Please rate your degree of satisfaction with your agent on these three things using a 1 to 5 scale where 1 is “Least Satisfied” and 5 is “Most Satisfied”.

SELLER SATISFACTION WAS NEGATIVELY AFFECTED BY MISCOMMUNICATION OR LACK OF COMMUNICATION

1. Stayed on top of process (44%) 2.Good/excellent job (13%) 3. Agent was professional (11%)

1. Didn’t communicate well (5.6%)2. Could have done a better job (5.4%)3. Could have sold for higher price (1.8%)

Q: Please explain why you had that level of satisfaction with your agent.

SELLER ADVICE TO AGENTS

47%

• Work hard and stay on top of everything47%

• Be honest and ethical46%

• Keep client informed34%

• Listen to client needs33%

• Be up front with clients30%

• Explain the process

27%

• Set the correct listing price

Q: What advice would you give to real estate agents to improve the process or level of service?

4/10 SELLERS WOULDN’T CHANGE ANYTHING ABOUT THEIR RECENT SALE

Q: If there was one thing you could change about your recent home sale, what would it be?

Sell Home for higher price (22%)

Hire a better real estate agent (13%)

Not have to sell (10%)

Sell the home faster (5%)

Do more research about selling process (4%)

CONCLUDING REMARKS

THE TAKEAWAY

–CA housing market remains strong

–Sellers are optimistic about the future housing market, and many want to buy another home

–Sellers need help with negotiation

2015 Annual Housing Market Survey: An Overview of the California Housing Market

Thursday, October 29, 20152:00 PM – 3:00 PM

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