1. Understanding California Home Sellers
January 30, 2014
Oscar Wei, Senior Research Analyst

2. Methodology
Telephone surveys conducted in August/September of 600 randomly selected home sellers who sold in the past 6 months.
Maximum sampling error: ±4.0 percent at two standard deviations (a 95% confidence level). (Subsets of the total sample will have a higher sampling error.)

3. Sales of Existing Detached Homes
California, Dec Sales: 361,890 Units, -5.9% YTD, -18.6% YTY
361,890 (SAAR), as compared to 387,860 (revised) in Nov 13 and 444,770 (revised) in Dec 12.  Sales in December declined for the fifth straight months and had the largest yty drop since Oct 2010 when sales declined by 20.8 percent. Sales of existing single-family homes in December were at the lowest level since May Sales growth at lower price segments continued to be limited by supply constraint with sales under $200k dropping 42.7 percent yty and sales between $200k – 300k decreasing 24.4 percent yty. Housing markets of higher price segments held up better with sales in the $300k -$400k segment decreasing 8.5 percent yty; sales in price segment between $400k-$500k growing 7.7 percent yty, and sales above $500k increasing 10.7 percent yty.  For the year 2013, 413,870 (preliminary) units of existing single-family homes were sold in California, a decline of 5.9 percent from 2012.
Sales of condo/townhomes also declined on a year-over-year basis, with sales falling 6.1 percent over December 2012 but increasing 3.2 percent from November For the year as a whole, sales of condos/townhomes increased 3.8 percent from 2012.
We typically see an uptick in distressed sales at the end of the year as lenders try to move these properties off their books,” said C.A.R. President Kevin Brown.  “However, the supply of foreclosures and short sales is the lowest it’s been since well before the financial crisis, greatly constraining the number of these transactions.  In addition, housing prices are improving across the board, even reaching pre-2007 levels in parts of the Bay Area. Higher prices and rising rates as the Fed slowly tapers are additional factors in the sales slowdown evidenced in the December numbers.”
SERIES: Sales of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
*Sales are seasonally adjusted and annualized

4. Median Price of Existing Detached Homes
California, December 2013: $438,040, Up 19.7% YTY
$438,040 as compared to $422,210 in Nov 13 and $365,840 (revised) in Dec 12.  The statewide median price increased on a month-to-month basis after declining for three consecutive months, and continued to increase by double-digit on a year-to-year basis. The median price increase on a year-to-year basis for twenty-two straight months and it was the eighteenth consecutive month with double-digit yty growth in price. The mtm percent increase of 3.7 percent was better than the long-run average of 0.6 percent mtm increase from Nov to Dec observed between 1979 and 2012.
The mix of sales played a big role in the yty jump in the median price as sales in the higher-price segments made up a bigger portion of the market as compared to a year ago. Sales with price above $500k, for example, made up 35.4 percent of the market in Dec 2013, as compared to 27.7 percent the same month of last year. The median price was 78.6 percent above the cyclical bottom of $245,230 reached in Feb The median price for the year 2013 increased 27.5 percent from 2012 to $407,180.
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

5. Share of Equity Sales Decreased for the First Time Since December 2012
We saw an increase in the share of short sales for the first time since Dec 2012.
SERIES: Distressed Sales
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 5

6. Unsold Inventory Index
California, December 2013: 3.0 Months
Raw inventory decreased 13.7 percent from Dec 2013 and increased 2.5 percent from a year ago. The supply condition was still tight in the lower price segment of the market as inventory for homes priced below $300k fell 17.5 percent from the previous year, while the inventory for a million dollar plus homes increased 10.2 percent from last year.
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®

7. Short Sales Market Shrank as Home Prices Surged
As home prices continue to increase by double-digit on year-to-year basis, many properties that were previously “underwater” appreciated in value and no longer needed to be sold as short sales. As a result, the short sale market shrank significantly in 2013.
Q: Was the home sold as a short sale?

8. Mortgage Rates: Heading Higher as Economy Improves and Fed Tapers
January 2009 – December 2013
MONTHLY
WEEKLY
Monthly from 2009 to present, weekly for the past 8 weeks
SERIES: 30Yr FRM, 1Yr ARM
SOURCE: Federal Home Loan Mortgage Corporation

9. Sellers Received 5.9 Offers on Average
With an imbalance between supply and demand, home buyers have been fiercely competing with each other.
On average, each home sale received 5.9 offers, a surge from 3.1 offers in 2012.
Q: How many offers did you receive from buyers?

10. 98% of Sellers Received Multiple Offers
77% took the highest offer
47% took the best mortgage qualified buyer
39% took the offer without contingencies
23% took all cash offer
14% took the offer because buyer’s ability to close the fastest
Q: How many offers did you receive from buyers?

11. Market Competition Leads to More Sales with Above Asking Price
Long Run Average = 18%
The fierce market competition led to more properties being sold above the list price. According to the 2013 Annual Housing Market Survey, 18 percent of all homes on average were sold above their asking price historically. In 2013, the share of home sales with a premium from the list price surged to 50 percent, the highest ever recorded.
Source: 2013 Annual Housing Market Survey

12. Market Competition Leads to More Sales with Above Asking Price
Close to six of ten (56.7 percent) of the short-sale properties in 2013 were sold above the asking price, follow by equity sales with 45.7 percent and REO sales with 42.9 percent.
Source: 2013 Annual Housing Market Survey

13. Sellers Are Optimistic About Future Home Prices
Q: Do you think home prices in your neighborhood will go up, down, or stay flat?

14. Sellers More Optimistic About Future Home Prices
Sellers were more optimistic about future home prices when compared to the last few years. More than two of five of them (43 percent) thought home prices will go up in one year, as compared to 9 percent in 2012.
Q: Do you think home prices in your neighborhood will go up?

15. “Financial Difficulties” was #1 Reason for Selling in 2012
*Financial difficulties include: couldn’t afford mortgage, moved to less expensive market, loss of household income, income not keeping up with expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.
Q: Why did you sell your home?

16. “Moving up” is #1 Reason for Selling in 2013
The reasons for selling changed significantly in In 2012, the majority of sellers sold primarily because of financial difficulties/cannot afford to keep the house (58%). As home prices continued to surge in the last couple years, seller’s desire to move up became the number one reason for selling in Other homeowners sold their properties because they wanted to take advantage of the low interest rates environment in financing their next home (14%), or they believed the price of their property had peaked and wanted to cash out.
*Financial difficulties include: couldn’t afford mortgage, moved to less expensive market, loss of household income, income not keeping up with expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.
Q: Why did you sell your home?

17. Moving up is #1 Reason for Selling for Both First-Time Sellers and Repeat Sellers
*Financial difficulties include: couldn’t afford mortgage, moved to less expensive market, loss of household income, income not keeping up with expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.
Q: Why did you sell your home?

18. Most Sellers Currently Own
Q: Do you own or rent your current home?

19. More Sellers Are Repurchasing
With mortgage rates remaining at record-low levels, many sellers take advantage of the favorable home financing environment and decide to buy instead of rent after selling their previous home. More than two-thirds (69 percent) of home sellers purchased a home after selling their previous residence. In 2012, only about half of sellers (47 percent) purchased another home, while in 2011 only 12 percent re-purchased.

20. Short Seller Are More Likely to Rent
Home sellers who were not underwater and sold their home as a regular market sale were less likely to become a renter than those who sold their home as a short sale.
Q: Do you own or rent your current home?

21. Most Sellers Own
Even for those sellers who were renting in 2013, 70 percent of them planned to buy another home, a jump from 22 percent who planned to buy another home in For those who did not want to buy, their top reasons for not buying include credit problems (25 percent), insufficient down payment (25 percent), and more affordable renting (24 percent).
Q: Do you own or rent your current home?

22. For Renters Who Do Not Plan to Repurchase, Here Are Their Reasons:
SERIES: 2013 California Home Seller Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

23. ABOUT THE SELLER

24. Median Age: 46
Q: What is your age?

25. Gen X and Y Dominate Seller Population
Q: What is your age?

26. Half of All Sellers are Married
Q:What was the marital status the head of your household at the time of the sale?

27. Minorities are the Majority
Q: How would you describe your ethnic background?

28. Ethnic Background

29. Household Income
Q: Which of the following categories best describes your total annual household income from all sources?

30. Annual Household Income

31. First-time Sellers
Q: Was this your first experience in selling a house?

32. Length of Ownership Spiked
Q: Length of time home was owned prior to sale.

33. Length of homeownership surged Implication: Sellers who bought during the peak decided to sell as price increases minimized losses
Q: Length of time home was owned prior to sale.

34. THE SELLING PROCESS

35. A Typical Home Owner Considered Selling for a Year Before Actually Doing So
Q: How long did you consider selling before actually doing so?

36. The Time It Took to Consider Selling Has Been Consistent in the Last Few Years

37. Half of All Homes Were on the Market for 6 Weeks or Less
Q: How many weeks was your home listed on the market prior to the opening of a successful escrow?

38. Decline in Average Weeks on Market Reflects Tight Inventory
Properties also stayed on the market for a much shorter time than in 2012; the average weeks on market was the lowest since 2005.
Q: How many weeks was your home listed on the market prior to the opening of a successful escrow?

39. ¾ of Sellers Closed Escrow Within 60 Days
Q: How long was your home in escrow?

40. Average Days in Escrow Does not go beyond 2011
Q: How long was your home in escrow?

41. How Property Was Marketed?
Marketing Method
% of Sellers
MLS
98%
Internet
95%
Open houses
67%
Virtual tours
59%
Featured on social media such as Facebook, LinkedIn, and YouTube
49%
Print advertising
42%
Had our home professionally staged
38%
Signs throughout the home showing upgrades and special features
37%
Showings by appointment only
35%
Follow-up calls to agents who showed our home
27%
ing the listing to many agents
26%
Special web site just for our home
21%
Had a prize drawing for agents who toured our home
12%
QR code on for sale sign 3%
Pocket listing 2%

42. Most Important Websites for Sellers (Top 3)

43. Most Sellers Used Social Media
Q: Did you use social media in the home selling process?

44. 74% of All Sellers Used Social Media
83%
39%
52%
24%
19%
Q: Which social media websites did you use to learn more about and communicate with real estate agents and companies?

45. What Sellers Would Change About the Sale - 2012
Sell for higher price (37%)
Sell faster (34%)
Market property more aggressively (10%)
Improve agent communication(9%)
Have agent negotiate harder (6%)
Q: If there was one thing you could change about your recent home sale, what would it be?

46. What Sellers Would Change About the Sale - 2013
Improve agent communication (40%)
Sell for higher price (39%)
Market property more aggressively (5%)
Get agent to respond faster(4%)
Initial listing price closer to what it would sell for (4%)
Q: If there was one thing you could change about your recent home sale, what would it be?

47. SELLER/Agent Relationship

48. More than Half of Sellers Found Agent Online
98% of all sellers used a real estate agent.
The Internet continued to be the most common resource for sellers to find an agent, with 51 percent of sellers finding their agent online in A quarter of all sellers, however, connected with their agents because they had done business with them before, a significant increase from 3 percent reported in 2012.
Q. How did you find your real estate agent?

49. Over ¾ of Sellers Interviewed at Least 3 Agents
Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?

50. Sellers Interviewed Fewer Agents
Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?

51. Most Buyers and Sellers Interviewed Multiple Agents before Selecting One
Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase?
Source: C.A.R Buyer and Seller Surveys

52. Reason Seller Selected Agent
Appeared most responsive (29%)
Used agent before (19%)
Appeared most aggressive (18%)
First agent to response (12%)
Most qualified (8%)
“Used agent before” made up only 5% in 2012, but has since jumped up to 19%.
Q: What was the single most important reason for selecting the agent you used in your recent home sale?

53. Response Time is Most Important in Agent Selection
Category
2011
2012
2013
First agent to respond to my inquiry/quickest response time
4.2
4.3
Agent offered the best deal, lowest commission rate
4.1
Agent offered best marketing proposal
3.9
4.0
Agent was a REALTOR®
N/A
3.8
Agent was the most knowledgeable in the market area where the property was located
Agent's knowledge of handling foreclosures, short sales, other distressed properties
2.9
3.0
2.5
Agent was referred by relative/friends/co-workers
3.1
Q: Please rate the following factors by their importance in your decision on selecting the agent you used for your home selling process on a scale from 1 to 5, where 5 is “Extremely important” and 1 is “Not at all important”.

54. 96% of Sellers Expect Response Within 1 Hour
Q: What was the typical response time you EXPECTED from your agent to return any form of communication with you?
Q: On average, what was the ACTUAL time of your agent to return any form of communication to you?

55. More Buyers and Sellers Expect Instant Response from Agent
Q. What was the typical response time you expected from your agent to return any form of communication to you? 55

56. Gap in Phone & Text Communication
Q. What was your preferred method of communicating with your agent?
Q. How did your agent actually communicate with you?

57. Agent Satisfaction Ratings Relatively Unchanged
Category
2011
2012
2013
Marketing the home
3.6
3.4
3.5
Setting the price
3.3
Preparing the home for sale
3.1
3.2
Assuring the buyer is qualified
3.0
Value received for what you paid your real estate agent
Negotiating the transaction
Overall satisfaction with the real estate agent
2.8
2.7
Overall satisfaction with the home selling process
2.6
2.5
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.

58. Seller Satisfaction Declining

59. Seller Satisfaction with Agent is Correlated to Sale Price
1. Negotiated good deal (57%)
2. Got best price (48%)
3. Worked hard on seller’s behalf (39%)
1. Ineffective communication (54%)
2. House took too long to sell (39%)
3. Slow response (34%)
Q: Please explain why you had that level of satisfaction with your agent.

60. Seller Advice to Agents
59%
Improve communication speed
49%
Sell home faster
42%
Negotiate more aggressively
29%
Improve communication quality
26%
Listen to needs better
Q: What advice would you give to real estate agents to improve the process or level of service?

61. Concluding Remarks

62. The Takeaway Sellers are optimistic about the future housing market
Most sellers interview multiple agents; there is an opportunity to gain a new client
Most sellers want “better” communication

63. Join us for our next webinar…
“Understanding California Luxury Clients”
Thursday, February 27, 2014
2:00 PM - 3:00 PM
To register:
Get the inside scoop on luxury transactions and discover how REALTORS® can improve their level of service and grow their business! The 2013 Luxury Survey takes a look at luxury transactions in greater detail. Gather insights on luxury seller demographics, financing, the details of the selling experience from the owners’ perspective, and the differences between traditional and luxury home buyers! Also, learn how to communicate more effectively with luxury clients, understand how luxury consumers market their properties, improve your value proposition, and maximize your social networking and internet profiles.

65. For more information: http://www.facebook.com/CARResearchgroup

66. For more information: http:// www.twitter.com/CARResearchInfo

67. NEW C.A.R. Member Benefit for 2013!
C.A.R. Finance Helpline
Finance.car.org
(213)
Get one-on-one assistance with short sales, funding, REOs, Deeds in Lieu, and closing transactions.
NEW C.A.R. Member Benefit for 2013!
C.A.R. Finance Helpline is a financing resource for REALTORS®.
This is a new, free member benefit.
It was created for members with financing-related questions.
Call the helpline to speak with a lender ombudsman who will assist members in closing transactions.

68. Thank You!