1. 2016 economic and housing market Forecast
June 15, 2016
Placer County AOR – Lincoln Joint Marketing Meeting
Oscar Wei, Senior Economist of C.A.R.

2. Overview Economic Outlook California Housing Market Outlook
Regional Housing Market Outlook
2016 Forecast

3. Economic outlook

4. Macro Economy Summary 0.8% 1.3% 4.7% 1.7% GDP 2016-Q1
Consumption Q1
4.7%
Unemployment
1.7%
Job Growth

5. US GDP: Q1 Slow, Expect pick-up in Q2 at risk from weak global growth?
2015: 2.4%; 2016 Q1: 0.8%, 2016 (F): 2.0%
ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $
ANNUALLY
QUARTERLY
Notes:
E – expected, F – forecast, P- preliminary
1929 though first quarter 2009 annual GDP figures were revised in July 2009 using 2005 benchmark.
2009 Largest Annual Drop since 1938 (-3.4%)
SERIES: GDP
SOURCE: US Dept. of Commerce, Bureau of Economic Analysis 5

6. Unemployment Rates at 8-year lows
US 4.7% (May 2016), CA 5.3% (Apr 2016)
CA: 5/14 7.6% 4/13 7.8% 3/14 8.1% 2/14 8.0% 1/14 8.1% 12/13 8.3% 11/13 8.5% 10/13 8.7% 9/13 8.7% 8/13 8.9% 7/13 8.5% 6/13 8.5% 5/13 8.6% 4/13 9.0% 3/13 9.4% 2/13 9.6% 1/13 9.8% 12/12 9.8% 11/12 9.9% 10/ % 9/ % 8/ % 7/ % 6/ % 5/ % 4/ % 3/ % 2/1210.8% 1/ % 12/ % 11/ % 10/ % 09/ % 08/ % 07/ % 06/ % 05/ % 04/ % 03/ % 02/ % 01/ % 12/ % 11/ % 10/ % 9/ % 8/ % 7/ % 6/ % 5/ % 4/ % 3/ % 2/ % / % / % / % 10/ % 9/ % 8/ % 7/ % 6/ % 5/ % 4/ % 3/ % 2/ % 1/09 9.7%
US: 6/14 6.1% 5/14 6.3% 4/13 6.3% 3/14 6.7% 2/14 6.7% 1/14 6.6% 12/13 6.7% 11/13 7.0% 10/13 7.3% 09/13 7.2% 08/13 7.3% 07/13 7.4% 06/13 7.6% 05/13 7.6% 04/13 7.5% 03/13 7.6% 02/13 7.7% 01/13 7.9% 12/12 7.8% 11/12 7.8% 10/12 7.9% 9/12 7.8% 8/12 8.1% 7/12 8.2% 6/12 8.2% 5/12 8.2% 4/12 8.1% 3/12 8.2% 2/12 8.3% 1/12 8.3% 12/11 8.5% 11/11 8.6% 10/11 8.9% 09/11 9.0% 08/11 9.0% 07/11 9.0% 06/11 9.1% 05/11 9.0% 04/11 9.0% 03/11 8.9% 02/11 9.0% 01/11 9.1% 12/10 9.3% 11/10 9.8% 10/10 9.5% 9/10 9.5% 8/10 9.5% 7/ % 6/ % 5/ % 4/ % 3/ % / % /10 9.8% /09 9.9% / % 10/ % 9/09 9.8% 8/09 9.6% 7/09 9.5% 6/09 9.5% 5/09 9.4% 4/09 9.0% 3/09 8.7% 2/09 8.3% 1/09 7.8%
Based on revised figures during EDD’s early-2009 rebenchmarking, CA job market has been on a par with US market over past several months.
SOURCE:
SERIES: Unemployment Rate
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

7. Labor Force Participation Rate
May 2016: USA – 62.6% vs. CA – 61.8%
Labor Force Rate
Source:
SERIES: Labor Force Participation Rate
SOURCE: BLS, Data Buffet

8. May Jobs Report a huge disappointment
Only 38,00 new jobs in May, following 160,000 increase in April Recession Job Losses: 8.8 million --- Since Jan’10: million
MONTH TO MONTH CHANGE
in more formatting options : 1 month net change
Also in US Nonfarm Employment.xls, column I.
SERIES: Employment Growth
SOURCE: US Bureau of Labor Statistics 8

9. Employment Growth, California vs. U.S.
ANNUAL PERCENT CHANGE
May jobs report a huge disappointment with only 38,000 new jobs in may, following 160,000 increase in April.
SERIES: Total Nonfarm Employment
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

10. Unemployment rate by California Metro Area
April 2016: California 5.3%
ANNUAL PERCENT CHANGE
Source:
SERIES: Total Nonfarm Employment
SOURCE: CA Employment Development Division

11. Consumer Confidence Index
May 2016: 92.6
INDEX, 100=1985
SERIES: Consumer Confidence
SOURCE: The Conference Board

12. Mortgage Rates Lower Now than 2015
January 2009 – June 2016
MONTHLY
WEEKLY
Monthly from 2009 to present, weekly for the past 8 weeks
SERIES: 30Yr FRM, 5Yr ARM
SOURCE: Freddie Mac

13. Silver lining for economic weakness and uncertainty …
Treasury yield dropped to fresh low amid global bond rally
Fed may raise rate once or twice in the second half of 2016, but long-term rates will remain low as foreign cash flood into U.S. bond
06/10/16:
10 Yr. – 1.64%
30 Yr. – 2.45%
SERIES: Treasury Yield 10 Yr., Treasury Yield 30 Yr.
SOURCE: Yahoo Finance

14. U.S. Economic Outlook SERIES: U.S. Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

15. California Economic Outlook
SERIES: CA Economic Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

16. California housing market outlook

17. Sales of Existing Detached Homes
California, Apr Sales: 406,800 Units, +3.6% YTD, -5.4% YTY
Apr-15: 430,030
Apr 16: 406,800
Peak:624,957 units in 2005
Valley:189,345 units in 1982
2012 annual sales up 4.3% from 2011
2011 annual sales up 1.4% from 2010
2010 annual sales down 12.3% from 2009
2009 annual sales up 24.5% from 2008
2008 annual sales up 30.4% from 2007
2007 annual sales down 33.4% from 2006
2006 annual sales down 23.8% from 2005
2005 annual sales up 0.8% from 2004
2004 annual sales up 3.8% from 2003
2003 annual sales up 7.6% from 2002
2002 annual sales up 14.1% from 2001
2001 annual sales down 4.7% from 2000 YTD
2000 annual sales up 1.4 from 1999
1999 sales up 7.3% over 1998
10/93: 41.0
Consumer Confidence
01/00:
03/03: 63.0
5/07: 128.4
2/09: 23.9
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
*Sales are seasonally adjusted and annualized

18. CA Sales Improved After declining two years
California 2015 Sales: 407,060 Units, Up 6.4% YTY
Peak:624,957 units in 2005
Valley:189,345 units in 1982
2012 annual sales up 4.3% from 2011
2011 annual sales up 1.4% from 2010
2010 annual sales down 12.3% from 2009
2009 annual sales up 24.5% from 2008
2008 annual sales up 30.4% from 2007
2007 annual sales down 33.4% from 2006
2006 annual sales down 23.8% from 2005
2005 annual sales up 0.8% from 2004
2004 annual sales up 3.8% from 2003
2003 annual sales up 7.6% from 2002
2002 annual sales up 14.1% from 2001
2001 annual sales down 4.7% from 2000 YTD
2000 annual sales up 1.4 from 1999
1999 sales up 7.3% over 1998
10/93: 41.0
Consumer Confidence
01/00:
03/03: 63.0
5/07: 128.4
2/09: 23.9
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
*Sales are seasonally adjusted and annualized

19. Household Formation rebounding
SERIES: Household Formation
SOURCE: U.S. Census Bureau, Housing Vacancy Survey

20. Median Price of Existing Detached Homes
California, Apr. 2016: $509,100, +5.3% MTM, +5.1% YTY
Apr-16: $509,100
Apr-15: $484,370
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

21. Inventory Up From Last Year But Primarily due to Sales Decline
Apr. 2015: 3.4 Months; Apr. 2016: 3.5 Months
Range since 1988:
Low: 1.3 months in April 2004
High: 18.8 months in Feb 1991
Long-run average: 6.9 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®

22. Where is the inventory? Affordability challenge for repeat buyers
Low rate on current mortgage
Low property taxes
Capital gains hit is onerous
Why sell when there is nowhere to go I can afford?
Could not qualify for a mortgage today
Demographics: Trade-up buyer pool is smaller
Investors renting instead of flipping
New construction recovering but LOW
Measurement error? Off- MLS listings not counted

23. Fewer housing units being turned over since the Great Recession
Housing Turnover Rate
(Single-Family Homes only)
SERIES: Percent of existing single-family homes being sold
SOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.

24. Years Owned Before Sale highest in 30 years
Q: How long had the seller lived in their home?
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

25. Fewer Middle-Age Adults in Recent years
Source: Harvard Joint Center of Housing Studies, Census Bureau

26. Drop in Homeownership
Source: Harvard Joint Center of Housing Studies, Census Bureau

27. Decline in # of Trade Up Buyers Due to population loss & drop in Homeownership Rate
Source: Harvard Joint Center of Housing Studies, Census Bureau

28. “missing” 65,000 new units annually
2015: 95,822 (42,959 sf, 52,863 mf) 2016f: 100,380 total units
Household Growth:
165,000/yr
SERIES: New Housing Permits
SOURCE: Construction Industry Research Board

29. Housing Affordability peaked q1 2012 prices v
Housing Affordability peaked q prices v. low rates and income growth
California vs. U.S. –
% OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME
Annual
Quarterly
C.A.R.’s traditional Housing Affordability Index (HAI) was replaced with the First-Time Buyer Housing Affordability Index (FTB-HAI) in 2006.
Note this slide takes the average of the 3 months in each of the quarters.
C.A.R. began producing its Housing Affordability Index (HAI) in At that time, fixed-rate mortgages were the prevailing form of financing a home purchase, while the calculations used to produce the HAI reflected a 20 percent down payment. The methodology also assumed a monthly payment for principal, interest, taxes and insurance that was no more than 30 percent of a household’s income. In the more than two decades since the CALIFORNIA ASSOCIATION OF REALTORS® first conceived the HAI, the mortgage finance landscape has changed dramatically. The range of mortgage products available to buyers as well as underwriting criteria has changed. C.A.R. developed the new index measuring affordability for first-time home buyers to better reflect the realities of today’s real estate market.
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

30. Housing Affordability In CA: by county
2016-Q1: % able to purchase median-priced home
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

31. How Wages measured against Income Required to buy a Home
California
2014 Annual Mean Wage
- Wage data is from May 2014; Min. income to buy a med. Home from Q215
SOURCE: Bureau of Labor Statistics, C.A.R.

32. Share of First-Time Buyers remains Below Long-Run Average
SERIES: 2015 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

33. Regional Housing Market Outlook

34. Placer County

35. Job Trends by California Metro Area
April 2016: CA +2.8%, +450,200
ANNUAL PERCENT CHANGE
Source:
SERIES: Total Nonfarm Employment
SOURCE: CA Employment Development Division

36. Unemployment Rate Placer County, April 2016: 4.3%
Source:
SERIES: Unemployment Rate
SOURCE: CA Employment Development Division

37. Employment Growth: California vs. Placer ( MSA)
ANNUAL PERCENT CHANGE
SERIES: Total Nonfarm Employment
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

38. Employment improvement in most industries
Placer (MSA)*, April 16: +2.21%, +20,400
ANNUAL PERCENT CHANGE
Source:
*Non Seasonally Adjusted
SERIES: Total Nonfarm Employment By Industry
SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

39. Household Formation rebounding
SERIES: Household Formation, Placer County
SOURCE: California Department of Finance, E5 Housing Estimates

40. Sales Reached the highest level in the last 15 years
Placer County, 2015: +13.4%, 2016 YTD: +10.4%
SERIES: Sales of Existing Detached Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

41. Sales of Existing Detached Homes
Placer County, April 2016: 546 Units, -3.7% YTD, -5.0% YTY
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

42. Median Price of Existing Detached Homes
Placer County, April 2016: $435,800, Up 4.2% YTY
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

43. Median Price of Existing Detached Homes
Placer County, April 2016: $435,800, Up 4.2% YTY Placer County, 2015: $393,330, Up 3.7%
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

44. Unsold Inventory Index
Placer County, April 2016: 3.0 Months
Note: The Unsold Inventory Index represents the number of months it would take to deplete the remaining inventory at the end of a particular month with the sales rate of the month in consideration. Inventory includes listings with “Active”, “Pending”, and “Contingent” (when available) statuses.
SERIES: Unsold Inventory Index of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

45. Median Time on the Market
Placer County, April 2016: 21.1 Days
SERIES: Median Time of Market of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

46. New Housing Permits Placer County, 2015: 2,039 Units, +14.3% YTY
2012 permits: units, up 2.9% from 2011
2011 permits: units, up 39.3% from 2010
2010 permits: 7,468 units, up 32.1% from 2009
2009 permits: 5,649 units, down 58.8% from 2008
2008 permits: 13,704 units, down 32.7% from 2007
2007 permits: 20,363 units, down 22.7% from 2006
2006 permits: 26,348 units, up 2.7% from 2005
2005 permits: 25,647 units, down 4.8% from 2004.
2004 permits were up significantly, but remained below levels of late 1980s and early 1990s.
2004 permits: 26,935 units, up 26.4% over 2003.
2003 annual permits: 21,313 units, up 10.1% over 2002
2002 annual permits up 6.1% over 2001
2001 annual permits up 6.9% over 2000
2000 annual permits up 18.7% from 1999
Giant housing shortage looming
SERIES: New Housing Permits
SOURCE: Construction Industry Research Board

47. Auburn 47

48. Sales of Single Family Homes
Auburn, May 2016: 58 Units +12.9% 2015, +8.0% 2016 YTD, +13.7% YTY
SOURCE: Clarus Market Metrics 48

49. Median Price of Single Family Homes
Auburn, May 2016: $367,000 Down 17.0% MTM, Up 8.9% YTY
SOURCE: Clarus Market Metrics 49

50. SOURCE: Clarus Market Metrics
For Sale Properties
Auburn, May 2016: 255 Units +6.6% 2015, +7.1% 2016 YTD, -3.8% YTY
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.
SOURCE: Clarus Market Metrics 50

51. Rocklin
hdaor 51

52. Sales of Single Family Homes
Rocklin, May 2016: 107 Units +10.9% 2015, -1.4% 2016 YTD, +33.8% YTY
SOURCE: Clarus Market Metrics 52

53. Median Price of Single Family Homes
Rocklin, May 2016: $442,680 Down 1.8% MTM, Up 5.3% YTY
SOURCE: Clarus Market Metrics 53

54. SOURCE: Clarus Market Metrics
For Sale Properties
Rocklin, May 2016: 286 Units -0.2% 2015, -7.0% 2016 YTD, -5.3% YTY
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.
SOURCE: Clarus Market Metrics 54

55. Roseville 55

56. Sales of Single Family Homes
Roseville, May 2016: 208 Units +12.2% 2015, -4.3% 2016 YTD, -6.7% YTY
SOURCE: Clarus Market Metrics 56

57. Median Price of Single Family Homes
Roseville, May 2016: $425,000 Up 3.8% MTM, Up 8.7% YTY
SOURCE: Clarus Market Metrics 57

58. SOURCE: Clarus Market Metrics
For Sale Properties
Roseville, May 2016: 662 Units -1.9% 2015, -7.5% 2016 YTD, +2.0% YTY
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.
SOURCE: Clarus Market Metrics 58

59. Lincoln 59

60. Sales of Single Family Homes
Lincoln, May 2016: 93 Units +17.9% 2015, -12.9% 2016 YTD, -21.8% YTY
SOURCE: Clarus Market Metrics 60

61. Median Price of Single Family Homes
Lincoln, May 2016: $391,000 Up 0.3% MTM, Up 7.1% YTY
SOURCE: Clarus Market Metrics 61

62. SOURCE: Clarus Market Metrics
For Sale Properties
Lincoln, May 2016: 299 Units +0.6% 2015, -20.1% 2016 YTD, -20.1% YTY
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.
SOURCE: Clarus Market Metrics 62

63. 2016 forecast

64. California Housing Market Outlook
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

65. Key Takeaways
Both CA home sales and prices will be up slightly in 2016
Fundamental demand drivers (jobs; rates; household formation) are strong
Housing affordability an insurmountable hurdle for many
CA will see accelerating out-migration of Millennials in search of housing they can afford

66. Stay connected with Research
CARResearchGroup CARResearchInfo On.car.org/CARResearch Housingmatters.car.org

67. #HomeChampSweepstakes
As part of C.A.R.’s “Who’s Your REALTOR®?” consumer advertising campaign, we’re holding a social media sweepstakes.
It’s really simple to enter.

68. Post to Instagram or Twitter Add #HomeChampSweepstakes
Post a photo with your client during any part of the transaction to a public Instagram and/or Twitter account, tag your client, and use the hashtag #HomeChampSweepstakes.
Each week (June 6-July 1) two pairs of winners will be randomly selected to win a cool prize, including an Amazon Echo, Nest Thermostat, Roku, Fitbit, Home Depot gift card, and Philipps Wake up Light.
It’s really important that you post to Instagram and/or Twitter. Posts to Facebook are not eligible.
You also must be sure that you account is public and not private. C.A.R. won’t be able to see posts that are made on private accounts.
Since you and your client could win a prize, you must tag your client.
More info available at
How to Enter:
Post to Instagram or Twitter
Tag your clients
Add #HomeChampSweepstakes

69. Thank You! www.car.org/marketdata oscarw@car.org
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