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Market Update
December 17, 2019
Jordan G. Levine
Deputy Chief Economist
California Association of REALTORS®
overview
03 Selling homeownership:
04 2020 forecast IMPROVED
GDP 2.1%
2019-Q3
Unemployment 3.6%
October 2019
Consumption 2.9%
2019-Q3
Job Growth 1.4%
October 2019
Core CPI 2.3%
October 2019
1/1/1989
3/1/1991
5/1/1993
7/1/1995
9/1/1997
1/1/2002
3/1/2004
5/1/2006
7/1/2008
9/1/2010
1/1/2015
3/1/2017
5/1/2019
11/1/1986
11/1/1999
11/1/2012
15
12
6 3.73
YTY% Chg.
5%
3%
0%
2% -5% -7.4%
-10%
1%
May-16
May-17
May-18
May-19
Jan-16
Jan-17
Jan-18
Jan-19
Sep-16
Sep-17
Sep-18
Sep-19
0%
May-15
May-16
May-17
May-18
May-19
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Sep-15
Sep-16
Sep-17
Sep-18
10%
5%
0%
-5%
-7.40%
-10%
Mar-16
May-16
Mar-17
May-17
Mar-18
May-18
Mar-19
May-19
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Sep-16
Nov-16
Sep-17
Nov-17
Sep-18
Nov-18
Sep-19
Nov-19
Price Growth Mortgage Pmt Growth
SERIES: Price Growth vs. Mortgage Payment Growth page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
7
Mortgage payment declined from last month
and last year
California, November 2018: $2,345, November 2019: $2,172
$3,000
$2,500
Mortgage Payment
$2,000
$1,500
$1,000
$500
$0
Los Angeles
$2,025 $2,166 -6.5%
Metropolitan Area
0
5
Q1-71
Q1-72
Q1-73
Q1-74
Q1-75
Q1-76
Q1-77
Q1-78
Q1-79
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
22.6
Q1-95
Q1-96
+/-1 Std. Dev.
Q1-97
Q1-98
Q1-99
Q1-00
U.S. Capital Markets P/E Ratio
Q1-01
Q1-02
Q1-03
Q1-04
(Wilshire 5000 Market Cap / Total Corporate Profits)
Q1-05
Q1-06
Q1-07
Q1-08
Q1-09
Q1-10
Q1-11
Q1-12
Q1-13
Q1-14
Q1-15
Equities do seem overvalued–are failed IPOs GOOD?
Q1-16
CALIFORNIA ASSOCIATION OF REALTORS®
Q1-17
Q1-18
Q1-19
16.6
How About
Housing?
Sales remained above 400k
for 5th consecutive month
California, November 2019 Sales: 402,880 Units, -1.9% YTD, 5.6% YTY
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
May-06
May-08
May-10
May-12
May-14
May-16
May-18
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
Jan-17
Jan-19
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Sep-15
Sep-17
Sep-19
SERIES: Sales of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
13
California home sales continue to improve
10%
YoY % chg.
0%
-4.8%
-10%
-20%
-30%
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
SERIES: Sales of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
16
So. California sales grew
at slower pace in November
So CA 6 per. Mov. Avg. (So CA)
40%
30%
20%
YoY % chg.
10%
4.6%
0%
-10%
-20%
-30%
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
SERIES: Sales of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
17
Central Valley sales growth softened but
remained positive
30% Central Valley 6 per. Mov. Avg. (Central Valley)
20%
10%
YoY % chg.
0% 0.6%
-10%
-20%
-30%
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
SERIES: Sales of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
18
Sales down at the bottom end of the market
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
2018 2019
Mar-16
May-16
Mar-17
May-17
Mar-18
May-18
Mar-19
May-19
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Sep-15
Nov-15
Sep-16
Nov-16
Sep-17
Nov-17
Sep-18
Nov-18
Sep-19
Nov-19
SERIES: Active Listing of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
24
Housing supply tightened up in all regions
Nov-18 Nov-19
35,000
30,033
30,000
Active Listings
25,000
21,496
20,000
15,000
11,119
10,000 8,659
6,288 4,747
5,000 2,542 2,159
0
San Francisco Bay Southern California Central Valley Central Coast
Area
SERIES: Active Listings of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
25
All regions dropped by double-digits in supply
November 2019
Sales Active Listings
10%
4.6%
0.6% 1.0%
Year-to-Year % Chg
0%
-4.8%
-10%
-20% -15.1%
-22.1%
-30% -24.5%
-28.4%
-40%
San Francisco Bay Southern California Central Valley Central Coast
Area
SERIES: Sales and Listings of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
26
Supply improved slightly only
at the upper end of the market
November 2019
0%
-10%
-20% -13.5%
12.0
10.0
8.0
6.0
4.0
2.0
0.0
May-06
May-08
May-10
May-12
May-14
May-16
May-18
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
Jan-17
Jan-19
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Sep-15
Sep-17
Sep-19
SERIES: Unsold Inventory Index of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
28
Market
Competitiveness
Time on market not increasing anymore
60
50
40
30 25.0
20
10
0
May-06
May-08
May-10
May-12
May-14
May-16
May-18
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
Jan-17
Jan-19
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Sep-15
Sep-17
Sep-19
SERIES: Median Time of Market of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
30
Median time on market up in top percentiles
32
30 28 27 28 28 27 27
Days on Market
26 26 25 26
23 24 24 24 23 24 24
21 22
20
10
0
0-20 20-40 40-60 60-80 80-100 80-85 86-90 91-95 96-100 Total
Percentile
Nov-18 Nov-19
98%
96%
94%
92%
90%
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
SERIES: Sales to List Ratio of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
32
Sales-to-list price ratio down at top percentile
Share of Listings with a Reduced Price: 39.2%; Median Reduction Amount: -4.4%
50% 0%
45% -1%
40% -2%
35% -3%
30% -4%
25% -5%
20% -6%
15% -7%
10% -8%
5% -9%
0% -10%
1/1/2010
5/1/2010
9/1/2010
1/1/2011
5/1/2011
9/1/2011
1/1/2012
5/1/2012
9/1/2012
1/1/2013
5/1/2013
9/1/2013
1/1/2014
5/1/2014
9/1/2014
1/1/2015
5/1/2015
9/1/2015
1/1/2016
5/1/2016
9/1/2016
1/1/2017
5/1/2017
9/1/2017
1/1/2018
5/1/2018
9/1/2018
1/1/2019
5/1/2019
9/1/2019
Share Reduced Median Reduction
SERIES: Listing Price of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
34
Growth in Reduced-Price Listings
11/1/2016
11/1/2017
11/1/2018
11/1/2019
1/1/2015
3/1/2015
5/1/2015
7/1/2015
9/1/2015
1/1/2016
3/1/2016
5/1/2016
7/1/2016
9/1/2016
1/1/2017
3/1/2017
5/1/2017
7/1/2017
9/1/2017
1/1/2018
3/1/2018
5/1/2018
7/1/2018
9/1/2018
1/1/2019
3/1/2019
5/1/2019
7/1/2019
9/1/2019
Share Reduced Median Reduction
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$-
May-06
May-08
May-10
May-12
May-14
May-16
May-18
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
Jan-17
Jan-19
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Sep-15
Sep-17
Sep-19
SERIES: Median Price of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
37
Condo/Townhome median price growth
picked up – the strongest gain in 13 months
50% Condo Single-Family Homes
40%
30%
20%
YTY% Chg. in Price
10%
0%
-10%
-20%
-30%
-40%
-50%
May-06
May-08
May-10
May-12
May-14
May-16
May-18
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
Jan-17
Jan-19
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Sep-15
Sep-17
Sep-19
SERIES: Median Price of Existing Condo/Townhomes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
38
Price/Square Foot growth rate remained soft
$300
$250
$200
$150
$100
$50
$0
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
SERIES: Median Price Per Square Feet of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
39
Top end of market rebounds, finally
4%
2%
0%
-2%
-4%
-6%
40%
Listing Price Sales Price
30%
YTY% Chg. in Price
20%
10%
0%
-10%
-20%
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
SERIES: Sales to List Ratio of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
43
Market Velocity
50.0%
-50.0%
100.0%
150.0%
-150.0%
-100.0%
0.0%
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Price Growth
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Market Velocity (12 month trailing average)
Jun-17
Sep-17
Dec-17
California Market Velocity and Price Growth
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Market Velocity
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
44
Do you think it’s a good time to buy a Do you think it’s a good time to sell a
home in California? home in California?
N=300 N=300
51%
46% 47%
25% 24%24%
Los Angeles
$110,000 $102,400 7.4%
Metropolitan Area
$2,500
Mortgage Payment
$2,000
$1,500
$1,000
$500
$0
18.0
16.0 November 2018: 3.7 Months; November 2019: 3.1 Months
14.0
Months of Supply
12.0
10.0
8.0
6.0
4.0
2.0
0.0
May-06
May-08
May-10
May-12
May-14
May-16
May-18
Jan-05
Jan-07
Jan-09
Jan-11
Jan-13
Jan-15
Jan-17
Jan-19
Sep-05
Sep-07
Sep-09
Sep-11
Sep-13
Sep-15
Sep-17
Sep-19
SERIES: Unsold Inventory Index of Existing Single Family Homes page
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
49
So, affordability will remain an issue
50%
40%
31%
30%
20% 17%
10%
0%
-36,218
-50,000
-61,114
-66,428
-75,871 -72,060
-100,000 -87,713
-92,092
-105,037 -103,987
-111,233
-121,830
-150,000 -138,782
-159,355
-200,000
-197,916
-250,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CALIFORNIA ASSOCIATION OF REALTORS®
Over 1.4 million ADULTS lost, NET, since 2005
North Carolina, -45,588
Georgia, -54,085
Utah, -77,153
Idaho, -82,534
Texas, -317,830
Colorado, -83,257
Washington, -
136,153 Arizona, -290,462
Nevada, -215,777
Oregon, -221,264
250 $231.4
200
Thousands
150
100
50
$5.0
0
1989 1992 1995 1998 2001 2004 2007 2010 2013 2016
Owner Renter or other
SOURCE: Fed Consumer Finances Survey
CALIFORNIA ASSOCIATION OF REALTORS®
page
54
#2: hedge against inflation
250
200
150
0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
SOURCE: American Community Survey – U.S. Census Bureau
CALIFORNIA ASSOCIATION OF REALTORS®
page
55
#3: better individual outcomes
“Children of homeowners
are significantly more likely
to stay in school until age
17 than children of
renters…”
- Journal of Urban Economics
Home Stocks
Appreciation 3% 15%
29%
30%
27%
23%
20%
13%
10% 8%
0%
40%
40%
33%
30%
19%
20%
10%
4% 4%
0%
69%
60%
40%
31%
20%
0%
72%
60%
40%
28%
20%
0%
Asian, 150,233
40% of Income
Other, 51,143
85% of Median Price
4.11% 30-yr FRM
3.5% Downpayment
1.38% Taxes/Insurance
1% Annual PMI Fee
White, 611,381
Not Qualified,
4,620,979
Housing Affordability
31% 31% 29% 28% 32% 32%
Index
page
SERIES: CA Housing Market Outlook CALIFORNIA ASSOCIATION OF REALTORS®
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 68
Key takeaways