Midge Jimerson 2017 President Bakersfield Association of REALTORS

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1 Midge Jimerson 2017 President Bakersfield Association of REALTORS

2 It s tangible, it s solid, it s beautiful. It s artistic, from my standpoint, and I just love Real Estate. Donald Trump Meetville.com

3 2015 Actual 2016 Forecast 2016 Projected SFH Resales (000s) % Change 6.8% 6.3% -0.4% Median Price ($000s) $474.4 $491.3 $503.9 % Change 6.2% 3.2% 6.2% 30-Yr FRM 3.9% 4.5% 3.6% Housing Affordability Index 31% 27% 33% U.S. Gross Domestic Product 2.4% 2.7% 1.5%

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5 SOURCE: Gallup

6 January 2010 November MONTHLY 3.47 WEEKLY FRM ARM / / / / / / / / / / / SERIES: 30Yr FRM, 5Yr ARM SOURCE: Freddie Mac

7 Republican stance has been to: Shrink Freddie Mac and Fannie Mae Reform FHA Reduce the government footprint in housing. Unclear how Trump reacts to both the needs of the voters and the platform of the Republican party when it comes to housing. (Nela Richardson, Redfin)

8 September 2016: California 5.5% Bakersfield Fresno MSA Stockton MSA Modesto Inland Empire Ventura Sacramento Los Angeles San Diego Oakland Orange San Jose San Francisco 5.5% 5.4% 5.2% 4.7% 4.4% 4.1% 3.8% 3.2% 6.2% 7.5% 7.5% 8.3% 9.2% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

9 Region Last Cyclical Peak Month Last Cyclical Peak Price Jun-16 Median %Chg From Peak CALIFORNIA May-07 $594,530 $519, % Madera County Feb-08 $275,000 $234, % Sacramento County Aug-05 $394,450 $332, % Placer County Aug-05 $527,990 $444, % Kern (Bakersfield) County Jun-06 $299,920 $238, % Kings County Mar-06 $268,050 $211, % Tulare County Dec-05 $269,710 $211, % Fresno County Jun-06 $313,510 $242, % San Benito County May-05 $671,190 $511, % Merced County Oct-05 $344,610 $207, % SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

10 County Moved To/From Total Number Moved to Los Angeles County Total Number Moved from Los Angeles County Total Net Migration Inland Empire 25,777 50,531-24,754 Kern 2,466 10,460-7,816 Orange 23,887 31,435-7,548 San Diego 8,916 7,240 1,676 Ventura 7,464 7,543-79

11 Lack of supply hinders sales High-end: discretionary & slowing Low/Moderate-end: demand continues unabated Urban coastal CA slowing Inland and Central and Northern CA growing Migration patterns mirror housing affordability and jobs Demographics is Destiny: Boomers aren t moving, even when they retire

12 Oct. 2015: 3.6 Months; Oct. 2016: 3.4 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

13 Oct 2015: 3.2 Months; Dec 2016: 3.0 Months Source: Golden Empire Multiple Listing Service, Trend Graphics

14 Long-Time Homeowners are not moving as in the past Low rate on current mortgage Low property taxes Capital gains hit Where can I afford to go? Could not qualify for a mortgage today Remodel and stay Are we headed for the European Model where children inherit the home of their parents? One more thing Secular decline in marriage

15 71% of Californian s aged 55+ haven t moved since % 30% 25% 20% 15% 10% 5% 0% 24.4% 0.9% 0.8% 1978 & Earlier California Homeowners by Length of Tenure, % 1979 to % 11.0% 1985 to 1989 Under % 12.4% 1990 to % 14.2% 1995 to % 12.0% 2000 to % 8.9% 2005 to % 7.3% 2010 to 2013 SERIES: Distribution of Home Ownership by Year Moved In SOURCE: U.S. Census Bureau, 2013 American Housing Survey

16 % 9% Housing Turnover Rate (Single-Family Homes only) CA US 8% 7% 6% 5% 4% 4.8% 4.2% 3% 2% 1% 0% SERIES: Percent of existing single-family homes being sold SOURCE: Census Bureau, American Community Survey, Moody s Analytics, C.A.R.

17 All Sellers 10 SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

18 $ Billions Alterations/Additions Reach All-Time High & Gaining Steam Up 16% from 2015 YTD levels $3.9 Billion through July Year-to-Date Through July SOURCE: California Homebuilding Foundation (CHF)/Construction Industry Research Board (CIRB) Downloaded from Moody s Analytics

19 No, 8% Yes, 92% Do you have equity in your home? SERIES: 2016 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

20 Yes, 36% No, 64% Do you plan to sell your current home when you retire? SERIES: 2016 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

21 No, 23% Yes, I have already helped, 24% Yes, I am planning to help, 53% Are you planning to provide help for your children to buy a home by contributing to their down payment or mortgage payments? SERIES: 2016 Generations / Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

22 7,500,000 Owner-Occupied (left) Renter-Occupied (right) 3,000,000 7,000,000 2,500,000 6,500,000 2,000,000 1,500,000 6,000,000 1,000,000 5,500, ,000 5,000, SOURCE: U.S. Census Bureau, Annual Social and Economic Supplement (ASEC) to the Current Population Su Downloaded from the National Bureau of Economic Research (NBER)

23 Potentially between 400,000 and 700,000 SF Rentals that Used to be Owner-Occupied 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 6,919,164 6,527,730 3,000,000 2,000,000 1,000,000 1,940,607 2,674,808 0 SF Owners SF Renters SOURCE: U.S. Census Bureau, Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS) Downloaded from the National Bureau of Economic Research (NBER)

24 No plans to buy 28% Not sure 24% In 5+ Years 11% 3-5 Years 14% In 2 Years 13% Within a year 9.6% Q. When do you plan to buy your next home? 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 24

25 No preparations 45% Searched for homes 34% Searched for home buying process 21% Spoken to a REALTOR 16% Consulted credit counselor/financial 12.0% Pre-qualified with a lender 9.0% Other 1.0% 0% 10% 20% 30% 40% 50% Q. Have you made any of the following preparations to buy a home? Please select all that apply. 25

26 Q2: % able to purchase median-priced home SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

27 Source: GEMLS Trend Graphics

28 12/1/ 1/1/15 2/1/15 3/1/15 4/1/15 5/1/15 6/1/15 7/1/15 8/1/15 9/1/15 10/1/ 11/1/ 12/1/ 1/1/16 2/1/16 3/1/16 4/1/16 5/1/16 6/1/16 7/1/16 8/1/16 9/1/16 10/1/ 11/1/ 12/1/ #Units Bakersfield, December 2015: 587 Units +5.2% 2015, -10.8% 2016 YTD, +3.2% YTY SOURCE: GEMLS Trends Graphics 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.

29 12/1/ 1/1/15 2/1/15 3/1/15 4/1/15 5/1/15 6/1/15 7/1/15 8/1/15 9/1/15 10/1/ 11/1/ 12/1/ 1/1/16 2/1/16 3/1/16 4/1/16 5/1/16 6/1/16 7/1/16 8/1/16 9/1/16 10/1/ 11/1/ 12/1/ 300 Bakersfield, December 2016: $224,000 Up -0.9% MTM, Up 3.1% YTY Source: GEMLS Trends Graphics

30 12/1 1/1/15 2/1/15 3/1/15 4/1/15 5/1/15 6/1/15 7/1/15 8/1/15 9/1/15 10/1 11/1 12/1 1/1/16 2/1/16 3/1/16 4/1/16 5/1/16 6/1/16 7/1/16 8/1/16 9/1/16 10/1 11/1 12/1 Bakersfield, December 2016: 465 Units +3.2% 2015, +3.1% 2016 YTD, -7.9% YTY Units Source: GEMLS Trends Graphics

31 Central Valley Regions County Oct-16 Sep-16 Oct-15 M-t-M Y-t-Y Y-t-D Fresno % 10.5% 11.7% Glenn % 0.0% 0.0% Kern (Bakersfield) % -13.7% -2.7% Kings County % 0.0% 4.6% Madera % 18.6% 24.9% Merced % 14.0% 8.2% Placer County % -4.5% -2.6% Sacramento 1,521 1,609 1, % 3.9% 1.5% San Benito % -4.1% 8.4% San Joaquin % -1.1% 1.7% Stanislaus % -5.7% -3.5% Tulare % -3.7% 7.6% SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

32 Central Valley Regions County Oct-16 Sep-16 Oct-15 M-t-M Y-t-Y Fresno $235,000 $240,000 $215, % 9.3% Glenn $185,050 $220,500 $201, % -8.2% Kern (Bakersfield) $227,000 $215,000 $210, % 8.1% Kings County $217,000 $197,000 $180, % 20.6% Madera $227,500 $240,000 $202, % 12.3% Merced $233,250 $214,000 $195, % 19.6% Placer County $436,000 $430,240 $397, % 9.7% Sacramento $320,000 $317,500 $290, % 10.3% San Benito $506,000 $527,500 $487, % 3.8% San Joaquin $320,000 $322,000 $280, % 14.3% Stanislaus $280,000 $270,000 $259, % 8.1% Tulare $205,000 $209,900 $191, % 7.1% SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

33 Units (Thousand) Sales of Existing Detached Homes Price (Thousand) $600 $500 Median Price $504 $ $400 $ $ f $100 $ f SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

34 100% 90% 80% 70% 47% 31% 36% 62% 60% 50% 40% 30% 40% 44% 35% Up Flat Down 20% 10% 0% 35% 25% 29% 13% 3.0% Prices Sales Inventory Interest rates Q1 - What do you think will happen to the California real estate market in 2017?

35 Economy Under Trump Unexpected rise in rates Economic collapse Tech giants crumble Hit to equities Global instability Other Black Swans

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