2017 Renter Survey Webinar

Californias Future Home Buyers
What You Need to Know
August 31, 2017

Jordan G. Levine
Senior Economist
jordanl@car.org
Methodology
Online Only Survey conducted from April 2017 - May 2017

Total respondents : 1721
Respondent Ethnicity: Black: 124, Latino (over-sampled): 924, Asian: 157,
White: 459, Native American: 52
Respondent Age: Boomer (50+): 389; Gen-Xers (36-49): 475; Millennial
(18-34): 852
Respondent Gender: Female: 1001, Male 715
Survey Sampling attempted to match renter demographics of each
age by ethnicity by gender.
Sampling quotas were matched to Census ACS 2014 for CA renters
based on these characteristics
Post-survey stratified weighting was applied to correct age sampling,
and a Latino oversample
Who's Renting
California Renter Demographics
Many more renters: cyclical AND structural forces at play
California Housing Tenure California Renter Households

60% 48% 7,000,000
6,213,131
58% 46% 6,000,000
5,059,055
56% 44% 5,000,000
4,146,331
54% 42% 4,000,000
3,000,000
52% 40%
2,000,000
50% 38%
1,000,000
48% 36%
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Home Ownership Renter Share
U.S. Census Current Population Survey, AESC

Renting not just for the income challenged anymore
California Renters by Population

Household Income
$75,000
< $50,000 $99,999 > $200,000
$50,000 $100,000
$74,999 $199,999 Percent of Group
Year
60%
40%
20%
2000 2005 2010 2015
U.S. Census - American Community Survey

Basic Demographics
Survey respondents generally mapped to Census
What's your age?

n: 1716
50%
Percent
44%
40%
36%
30%
20%
20%
10%
0%
CALIFORNIA ASSOCIATION OF REALTORS

43% in Apartments, 40% in SFH, 10% in Townhomes
What type of home is it?

n: 1716
50%
Percent
43%
40%
40%
30%
20%
10%
10%
3% 2% 2% 0%
0%

Single-family rentals more popular: adds to supply issue
Index: California Renter Households by Type of Home

150
140
136
130
120
115
110
100 100
90
80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Multi-Family Single-Family
U.S. Census Current Population Survey, AESC

Most live in 2BR homes
How many bedrooms are in your home?

n: 1716
Per cent
40%
34%
30% 27%
20%
20%
13%
10%
3%
1% 1%
0%

Renters move A LOT or hunker down, small middle
How many years have you been renting your current residence?
n: 1716
Percent
23%
19%
20% 17%
15%
12%
10%
10%
3%
1%
0%

As with resales, Boomers dont move, Millennials do
How many years have you been renting your current residence?
n: 1716
Millennials Gen-X Boomers +

Percent
30%
20%
10%
0%

Not only not moving, not even looking #affordability
Have you searched for a cheaper rental within the past year?
n(2017): 1716 ; n(2016): 1998

Percent
54%
50% 47% 47%
40%
40% 37%
31%
30%
20%
10%
0%

Rents ~ $1300 per month and 37% split w/roommates
How much is the monthly rent of your home?

n: 1716 mean : $1,300 median : $1,200
25%
Percent
20%
20%
17% 17%
14%
15%
10% 10%
10% 7%
5% 3%
2%
0%

Affordability just as big an issue for renters
California Average Asking Rent Rent vs. Household Income
$2,200
180 Indexed: 2000=100
$1,977 173.0
$2,000 Asking Rent
170
Household Income
$1,800 160
150
$1,600
140 135.9
$1,400 $1,337
130
$1,200
120
$1,032
$1,000 110
100
$800
SERIES: California asking rent and household income

SOURCE: California Department of Housing and Community Development,
Census Bureau Decennial Census, American Community Survey
Not slowing down: rent up for more than half of respondents
How much has the monthly rent changed since you moved?
n: 974 mean : 33.9% median : 13.3%
Percent
30%
30%
20% 18%
14%
12% 10%
10%
6%
3% 2% 2%
2%
0%
0%
Percentage Change

Which matches perceptions of neighborhood affordability
In the past year has housing affordability in your area gotten... ?

n: 1677
40%
Percent
36%
30%
30%
20%
20%
11%
10%
2%
0%

Renters don't seem to
particularly enjoy renting
Too expensive and dont suit their needs
What do you dislike about your current residence?

n: 1721
Reason
Nothing, I love my place 19%

Too small, not enough space 13%
The rent is too high 12%
It's not well maintained 10%
The rent increased by too much 8%
Violence / worsening neighborhood 8%
The place is noisy 7%
There is no parking 6%
It doesn't allow pets 5%
Other 4%
Location - too far from needs 3%
Bad relations with landlord 3%
Too large to maintain 1%
Percent

Older folks more satisfied, everybody worried about rents
What do you dislike about your current residence?
n: 1721
23%
Percent
21%
20%
15%
13% 14% 13% 13%
11%
10%
10% 6%
5%
3%
0%
Nothing, I love my place Too small, The rent is too high It doesn't allow pets
not enough space

Affordability, neighborhood, and size reign supreme
Why did you select the place you currently rent?

n: 1721
The price is affordable 25%

I like the neighborhood 18%
Good size 12%
It's near work 10%
The building is quiet 9%
It's near family 8%
It's located in a good school district 7%
Amenities (pool, gym, bbq) 5%
It wasn't my choice 4%
Other 2%
Percent

Other Facts? Pets Matter!
California Renter Demographics
Half of renters have pets, and consider their pets family
Do you have any pets?

n: 1714
Percent
52%
48%
40%
20%
0%

65% thought it was harder to find place that allows pets
Was it harder to find a home that accepted pets?

n: 926
Percent
65%
60%
40%
35%
20%
0%

This tends to be a big deal for Millennials

n: 926
Percent
70%
63%
60% 58%
40%
20%
0%

Especially if they live in a city or urban area

Millennials n: 483
Percent
80% 77% 78%
67%
62%
60% 58%
40%
20%
0%

Fido also hits Millennials harder in the pocketbook
Was it more expensive to find a home that accepted pets?

Answering More Expensive n: 927
Percent
60% 59%
54%
40% 40%
20%
0%
Might not need to buy for a hubby/kids, but the pet situation
could be a good motivator for Millennials to purchase

Ultimately, its ALL
about affordability
25% moved to find a cheaper place
Why did you move to your current home

Select all that apply. n: 1721
Percent
20% 19%
15% 13%
10% 9%
10%
7% 6% 6%
5%
0%
To save money / Larger or better Better quality Change in Better access to
Relocated to Rent Increase
cheaper place to live quality home neighborhood a new city family status
transportation/
commute

Especially true for Millennials Boomers face life changes
Why did you move to your current home

Select all that apply. n: 1721
20%
Percent
20%
17% 17%
14% 14%
15%
11%
9% 9% 9%
10% 7% 8%
6%
5%
0%
To save money / Larger or better Better quality Change in family status
cheaper place to live quality home neighborhood

Some are even being driven out by housing costs
Why are you planning moving out of your current city / county?
Rate 4+ Move; n: 355
CA Not-CA
Percent
24%
19%
20% 18% 17%
16%
11% 10%
9%
10% 7% 7%
6% 6% 6% 5% 5% 5% 6%
5% 4%
3% 3% 2% 3% 1% 1%
1%
0%

20% dont even pay for their own cell phones
Do you pay for your own cell phone plan? It's ok. Be honest.
n: 1713
Percent
80% 79% 80% 79%
60%
40%
20%
0%
Answering Cell Phone

Only Gen-Xers hopeful of getting house before paying cell
What do you think comes first, getting your own cell plan or purchasing a home in California?
(Of those who don't pay themselves) : n: 360
Percent
61% 62%
60%
48%
40%
20%
0%
Answering Cell Phone

Big obstacles to
homeownership
30%: affordability/downpayment; 8% mortgage qualification
What is the top reason you selected?

n: 1681
Can't afford to buy 29%
Can't qualify for mortgage 12%
It's easier to rent 11%
Can't purchase where I want 7%
Not ready to buy 7%
Flexibility/freedom 6%
Don't want the responsibility 6%
Too costly to maintain 5%
No interest in buying 4%
Housing market will decline 3%
Don't have a job 3%
Don't have a down payment 2%
Other 2%
Past foreclosure 2%
Cannot find the property I want 1%
Percent

Affordability an even bigger issue for non-whites
What would most motivate you to buy a home now?

Gen-X Respondents; n: 445 Non-Latino Latino
32%
Percent
30% 27% 26%

24%
21% 21%
20%
15%
10% 6% 6% 5%
4% 5% 4% 5%
0%
Improvement Savings for

Lower prices Starting a family Better credit in finances down payment Nothing Something else

Strong perceptions that affordability is getting worse
In the past year has housing affordability in your area gotten... ?

n: 1677
40%
Percent
36%
30%
30%
20%
20%
11%
10%
2%
0%
Much worse Somewhat worse About the same Somewhat better Much better

Saving is hard when rents are so high!
California Average Asking Rent Rent vs. Household Income
$2,200
180 Indexed: 2000=100
$1,977 173.0
$2,000 Asking Rent
170
Household Income
$1,800 160
150
$1,600
140 135.9
$1,400 $1,337
130
$1,200
120
$1,032
$1,000 110
100
$800
SERIES: California asking rent and household income

SOURCE: California Department of Housing and Community Development,
Census Bureau Decennial Census, American Community Survey
Downpayments an obstacle, but perceptions are too
How much downpayment is required to purchase a home?

n: 1681

49%
Percent
50%
41%
40%
34% 34%
30% 28% 28%
24%
21%
20% 17%
10% 6% 4% 4% 5%
3% 3%
0%

Despite all this, 1/3 renters plan to buy when they move
Do you plan to rent again after you move from your current residence?
n: 1716
60%
Percent
57%
40%
33%
20%
5% 6%
0%
I plan to rent I plan to buy a home I plan to move in I have other plans
with a relative

But not right away 32% say within 3 years
When do you plan to purchase your next house?

n: 1716
Percent
33%
30%
24%
20%
15%
11%
9%
10% 8%
0%
Don't know/
Within 12 months 1 to 3 years 4 to 5 years 5+ years Not Sure Never

But buying outlook is getting worse from last year!

n(2017): 1716 n(2016): 1989
2016 2017
32% 33%
Percent
30% 26%
24%
22%
19%
20% 16%
10% 9%
10% 8%
0%
Within 12 months 1 to 3 years After 4 years Don't know / Not Sure Never

Younger folks more bullish, Boomers downtrodden

n: 1716
50% 46%
Percent
40% 37%
30% 26% 27% 26%

24%
21%
20% 16%
13% 13%
9% 8% 7% 6% 7%
10% 5% 4% 3%
0%
Within 12 months 1 to 3 years 4 to 5 years 5+ years Don't know / Not Sure Never

Smaller sense of urgency than last year

n(2017): 1716 n(2016): 1989
2016 2017
32% 33%
Percent
30% 26%
24%
22%
19%
20% 16%
10% 9%
10% 8%
0%
Within 12 months 1 to 3 years 4+ years Don't know / Not Sure Never

Millennials, particularly, shift purchase timeline

Millennials: n(2017): 852 n(2016): 1145
2016 2017
40% 37% 37%

Percent
30% 26%
22% 23% 24%
20%
10% 9%
10% 7%
3%
0%
Within 12 months 1 to 3 years After 4 years Don't know / Not Sure Never

Gen-Xers previously said 'never' are now 'unsure'

Gen-X: n(2017): 475 n(2016): 559
2016 2017
37%
Percent
32%
30% 27%
23%
20%
18%
20%
15%
12%
8% 7%
10%
0%
Within 12 months Within 1 to 3 years 4 years Don't know / Not Sure Never

22% of Renters were previous owners, most were Boomers
Have you ever owned a primary residence?

n: 1716
Percent
45%
40%
30%
22%
20%
11%
10%
0%

Previous owners still arent ready but why not?

n: 1716
Previous Owners Never Owned
40%
Percent
32% 33%
30% 26%
23%
20% 16%
12% 13% 12%
11%
9%
10% 6% 7%
0%
Within 12 months 1 to 3 years 4 to 5 years 5+ years Don't know / Not Sure Never

Previous owners hit by financial crisis
Why did you sell your previous primary residence?

n: 303
Percent
25%
20% 20%
20%
10% 10% 9%
10%
5%
0%

Boomers: Foreclosures; Millennials: Bankruptcy/affordability
Why did you sell your previous primary residence?

n: 303

35%
Percent
30%
30%
23% 25%
23%
19% 19%
20%
14% 14% 13%
11% 13% 11%
10% 8% 8% 9% 8%
7%
4% 4%
2%
0%

Improved affordability/life change would motivate, but
What would most motivate you to buy a home now?

n: 1555
25%
Percent
23%
21%
20%
11% 10%
10%
6%
4%
0%

Prospects for Converting
Renters to Owners?
It's still aspirational! But...
The good news: homeownership still aspirational
How important is homeownership to you?

n: 1663
Percent
29%
30%
27%
23%
20%
13%
10% 8%
0%

But less so as affordability and supply dwindles

n(2017): 1663 n(2016): 1998
2016 2017
34%
29% 30%
30% 27%
25%
Percent
23%
20%
13%
10% 7% 8%
4%
0%
This Photo by Unknown Author is licensed under CC BY-SA

Generational shifts: Gen-X strong, Boomer have soured

n: 1663
32%
Percent
30%
30% 29%
26% 26%
23%
21%
20% 19% 20%
20% 18%
12% 12%
10% 7%
5%
0%
Not at all Slightly Moderately Very Extremely

For Gen-X, ownership a pragmatic choice vs. a 'dream'

Of those planning to purchase next; n: 346
Millennials Gen-X
41%
Percent
40%
34% 35% 34%
30% 26%
22%
20%
10%
5%
1% 2%
0%

Most renters CAN be spurred into purchasing
Would anything spur you to purchase?

n: 1721
Percent
81%
80%
60%
40%
20% 19%
0%

At least for younger renters, but 45% of boomers are out
Would anything spur you to purchase?

Pct Answering No; n: 330
Percent
43%
40%
30%
20% 16%
11%
10%
0%
Response
It comes down to jobs, and family change
Would any of the following life events spur you to buy

n: 1391
New Job / Raise / Promotion 34%
Getting Married 14%
Starting a family 14%
Change in family status 11%
Finishing school 9%
Finishing current lease 6%
Other 6%
Move out of my parents' place 4%
Percent
Finishing school, starting a family for Millennials & Gen-X,
Marriage for everyone, Boomers - Winning the lottery
Would any of the following life events spur you to buy
n: 1391
40%
Percent
30%
20%
10%
0%

REALTORS can be Agents of
Change
And Education is Key
Most renters would buy if they could put little down
If you could qualify for a mortgage with a much lower down-payment would you buy?
n: 1716
Percent
69%
60%
40%
31%
20%
0%

But they vastly over estimate required downpayment

n: 1681
Percent
40%
40%
33%
30%
19%
20%
10%
4% 4%
0%

And Millennials are particularly bad at it

n: 1681
49%
Percent
50%
41%
40%
34% 34%
30% 28% 28%

24%
21%
20% 17%
10% 6%
4% 4% 5%
3% 3%
0%

And only 30% know of FHA loans: big opportunity!
Are you aware of (FHA) backed loans that require only a 3.5% downpayment
n: 1716
Percent
72%
60%
40%
28%
20%
0%

Who is actually getting
ready to buy?
(They Exist!)
Preparations signs to buy
Have you made any of the following preparations to buy a home?

n: 1721
25% 23%
Percent
20%
16%
15% 14%
12%
10% 9%
7% 6% 5% 4%
5% 2%
0%

Preparations signs for those saying they will buy within a year
Have you made any of the following preparations to buy a home?

Purchase within 1 year n: 134
19%
Percent
20% 18%
15% 13% 12%

10% 9%
7% 7%
6% 5%
5% 2%
0%

Renters Home Prep
Big Factors
Checking credit / searching for homes
But, more serious searchers
Don't think credit check is important part of process
Those who think they are purchasing within a year
12% have spoken to a realtor
Biggest difference between serious purchasers:
2x consulted a counselor
10% of within 1 year vs 5% not
7% went to an open house.
Think outside the box. . . Your
clients will be
Millennials want to purchase but
don't have the DP, #1 thing...
Family Money is Important (and Necessary) in CA
Have your parents or other family offered to help with a home purchase?
n: 1721
80% 78%
Percent
60%
40%
20% 18%
4%
0%
Yes, offered to help Yes, offered to help
with downpayment with mortgage payments No / Not Applicable

And is even important for people in their 40s even.
Have your parents or other family offered to help with a home purchase?
n: 1721

92%
82%
Percent
75% 68%
50%
26%
25% 15%
5% 6% 3% 3%
0%
Yes, offered to help Yes, offered to help

with downpayment No / Not Applicable
with mortgage payments

What Else is Happening
in the Market
12% are looking to buy together, 25% -maybe
Do you plan to pool your funds together to buy a home with other friends or family?
n: 1716
Percent
63%
60%
40%
25%
20%
12%
0%

Most with 1 additional family
With How Many Households?

n: 218
Percent
60%
60%
40%
20% 18%
16%
5%
0%

Other Options : Encouraging
ADUs for Owners
What do Renters want
Good interest in ADUs in general
Would you be amenable to rent an ADU compared to a more traditional rental?

n: 1711
Percent
41%
40%
33%
30% 27%
20%
10%
0%

Appears to be a healthy demand for ADU rentals too
Would you be amenable to rent an ADU compared to a more traditional rental?

n: 1711
41% 41%
Percent
39%
40%
35% 35%
33%
30% 26%
25% 25%
20%
10%
0%

Will take some adjusting too, but
What factors would you want to be assured of before renting an ADU?

n: 1711
Percent
20% 19%
17%
14% 13%
15% 13%
11% 11%
10%
5%
2%
1%
0%

Boomers want them cheap, Millennials want privacy
What factors would you want to be assured of before renting an ADU?

n: 1721

Percent
20%
15%
10%
5%
0%

Conclusions
Conclusions
Lots more renters today

Across all demographics
This all comes down to affordability
For many, simply too many headwinds
Thats going to impact volume of transactions
For these, all we can do is address the supply crisis
Lots of room for REALTORS to be Agents of change
Most people still want to buy a home
Lots of unconventional approaches to ownership
Mom/dad, pooling funds, multi-generational, ADUs
Educate on finance, benefits of ownership, downpmts.
First Time Buyers your next
customers for life!
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(FTBS) Certification from C.A.R.
Education
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Specialist 1 Master the
Market Specialist 2 Be the Go-to
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Californias Future Home Buyers

What You Need to Know

August 31, 2017

Online Only Survey conducted from April 2017 - May 2017

California Housing Tenure California Renter Households

U.S. Census Current Population Survey, AESC

California Renters by Population

2000 2005 2010 2015

U.S. Census - American Community Survey

What's your age?

CALIFORNIA ASSOCIATION OF REALTORS

What type of home is it?

CALIFORNIA ASSOCIATION OF REALTORS

Index: California Renter Households by Type of Home

U.S. Census Current Population Survey, AESC

How many bedrooms are in your home?

CALIFORNIA ASSOCIATION OF REALTORS

CALIFORNIA ASSOCIATION OF REALTORS

Millennials Gen-X Boomers +

CALIFORNIA ASSOCIATION OF REALTORS

Millennials Gen-X Boomers +

CALIFORNIA ASSOCIATION OF REALTORS

How much is the monthly rent of your home?

CALIFORNIA ASSOCIATION OF REALTORS

SERIES: California asking rent and household income

CALIFORNIA ASSOCIATION OF REALTORS

In the past year has housing affordability in your area gotten... ?

CALIFORNIA ASSOCIATION OF REALTORS

What do you dislike about your current residence?

Nothing, I love my place 19%

CALIFORNIA ASSOCIATION OF REALTORS

What do you dislike about your current residence?

CALIFORNIA ASSOCIATION OF REALTORS

Why did you select the place you currently rent?

The price is affordable 25%

CALIFORNIA ASSOCIATION OF REALTORS

Do you have any pets?

CALIFORNIA ASSOCIATION OF REALTORS

Was it harder to find a home that accepted pets?

CALIFORNIA ASSOCIATION OF REALTORS

Was it harder to find a home that accepted pets?

CALIFORNIA ASSOCIATION OF REALTORS

Was it harder to find a home that accepted pets?

80% 77% 78%

CALIFORNIA ASSOCIATION OF REALTORS

Was it more expensive to find a home that accepted pets?

CALIFORNIA ASSOCIATION OF REALTORS

Why did you move to your current home

CALIFORNIA ASSOCIATION OF REALTORS

Why did you move to your current home

Millennials Gen-X Boomers +

CALIFORNIA ASSOCIATION OF REALTORS

CALIFORNIA ASSOCIATION OF REALTORS

80% 79% 80% 79%

Answering Cell Phone

CALIFORNIA ASSOCIATION OF REALTORS

Answering Cell Phone

CALIFORNIA ASSOCIATION OF REALTORS

What is the top reason you selected?

CALIFORNIA ASSOCIATION OF REALTORS

What would most motivate you to buy a home now?

30% 27% 26%

Improvement Savings for

CALIFORNIA ASSOCIATION OF REALTORS