1. 2015 ANNUAL HOUSING MARKET SURVEY October 29, 2015 Oscar Wei, Senior Economist

2. METHODOLOGY C.A.R. has conducted the Annual Housing Market Survey since 1981. The questions and methodology have stayed essentially the same throughout that time. The survey was sent via email to a random sample of 25,350 REALTORS® throughout California. The sample represented the geographical distribution of C.A.R. membership across the state. The survey asked REALTORS® to provide information from their most recent sales transaction that closed escrow in the second quarter of 2015. The survey instrument was a questionnaire with both multiple choice and open-ended questions. There were 1,465 valid survey responses, equivalent to a response rate of 5.8 percent. The margin of error for this survey was +/- 2.5 percent at a 95 percent confidence level.

3. SALES HAVE BEEN STRONG AFTER A WEAK START California, Sep 2015 Sales: 425,030 Units, +7.3% YTD, +6.9% YTY *Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Sep-15: 425,030 Sep-14: 397,490

4. INVENTORY CONTINUED TO DECLINE FROM LAST YEAR Sep 2014: 4.2 Months; Sep 2015: 3.7 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®

5. MARKET REMAINED COMPETITIVE, AS INVENTORY LEVEL CONTINUED TO BE LOW SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

6. Long Run Average = 19% ONE-THIRD OF HOMES SOLD ABOVE THE ASKING PRICE SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

7. PRICE REDUCTION PRIOR TO AN OFFER BEING MADE Q. Was there any price reduction made to the list price prior to an offer being made to the property? Q. How much was the price reduction? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Avg. Reduction $ = $15,000

8. INVENTORY DROPPED SIGNIFICANTLY IN THE BAY AREA SINCE 2009 BUT REMAINED TIGHT 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®

9. TIGHT SUPPLY CREATED MORE MARKET COMPETITION IN THE BAY AREA SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

10. IMBALANCE BETWEEN SUPPLY AND DEMAND BID UP HOME PRICES, PARTICULARLY IN THE BAY AREA SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

11. REASONS FOR BUYING Q. What was the single most important reason for buying the property? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

12. DEMAND FOR INVESTMENT & SECOND/ VACATION HOMES DROPPED TO THE LOWEST LEVEL SINCE 2009 SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 5% Long Run Average: 12 % 13%

13. INVESTOR STRATEGY: STILL BUYING TO RENT Investment to Flip Rental Property 2013: 18% 2014: 30% 2015: 26% 2013: 82% 2014: 70% 2015: 74%

14. SHARE OF CASH BUYERS IS THE LOWEST SINCE 2009 One-fifth of buyers paid with all cash The share of all cash buyers is the lowest in the last 6 years SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

15. THE SHARE OF INTERNATIONAL BUYERS DROPPED TO THE LOWEST LEVEL IN 8 YEARS Q. Was the buyer an international buyer – a person who was a citizen of another country who wished to purchase residential real estate in the U.S.? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

16. ALL CASH INTERNATIONAL BUYERS SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

17. INTENDED USE FOR PROPERTY? HOME SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

18. # of Properties Sold to International Buyers in the Last 12 Months % Who Sold to International Buyers Q. How many properties have you sold to an international buyer in the last 12 months? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® REALTORS® WORKED WITH INTERNATIONAL BUYERS IN THE PAST 12 MONTHS

19. COUNTRY OF INTERNATIONAL BUYER China (43%) Mexico (8%) South Korea (8%) SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

20. REASONS TO BUY IN CALIFORNIA Mild year-around weatherAdvanced Educational Opportunities System# of Campuses Examples University of California10 University of California, Berkeley University of California, Los Angeles University of California, Riverside University of California, San Diego California State University 23 Cal State University, Fullerton Cal State University, Northridge Cal State Polytechnic University, Pomona California Community College 109+ Santa Monica College Pasadena City College Private UniversityHundreds California Institute of Technology Pepperdine University Stanford University University of Southern California Amazing outdoor environment

21. SHARE OF FIRST-TIME BUYERS REMAINS BELOW LONG-RUN AVERAGE SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

22. REASONS FOR BUYING FIRST-TIME VS. REPEAT Q. What was the single most important reason for selling/buying the property? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

23. THE MEDIAN DOWN PAYMENT INCHED UP FROM 2014 SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Q. What was the amount of downpayment?

24. PERCENT OF BUYERS WITH ZERO DOWN PAYMENT SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

25. PROPORTION OF TRANSACTIONS WITH SECOND MORTGAGES Q. In addition to the first mortgage or assumption, was there a second mortgage? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

26. PERCENT OF BUYERS WITH SECOND MORTGAGE SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

27. Q. Please indicate the type of mortgage. WHILE THE SHARE OF FHA INCREASED FROM THE RECENT LOW, IT WAS STILL MUCH LOWER THAN 2009 SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

28. YEARS OWNED HOME BEFORE SELLING SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Why aren’t they selling sooner? Affordability challenge: Low rate on current mortgage Low property taxes Concerned with capital gains Why list when there is nowhere to go I can afford? Could not qualify for a mortgage today Demographics

29. REPAIR COSTS/PRICE ADJUSTMENTS Q. Did the seller repair items, make adjustments to the purchase price, or make any other concessions during escrow due to discovered defects? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

30. SELLERS WITH NET CASH LOSS DROPPED TO THE LOWEST LEVEL IN THE LAST 9 YEARS Long Run Average = 11.9% Q. What was the net cash gain or net loss to the seller as a result of this sale? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

31. NET CASH GAIN TO SELLERS HIGHEST SINCE 2007 SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Q. What was the net cash gain or net loss to the seller as a result of this sale?

32. MORE INVESTORS SELLING THEIR INVESTMENT PROPERTIES Long Run Average = 19.1% Q. How was the property occupied? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

33. MORE THAN HALF OF ALL SELLERS ARE PLANNING TO BUY ANOTHER HOME SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

34. LOCATION OF SELLER’S NEW HOME 20052006200720082009201020112012201320142015 Within the same county 38%41%37%45%47%42%49%49%46%44%44% In another county in California 23%18%24%17%21%21%19%18%20%21%20% In another state 31%28%29%27%19%20%20%22%19%22%22% Out of US 1%2%1%1%2%1%1%1%0%1%1% Don't Know/Not sure 7%11%9%10%12%16%10%10%15%13%13% Total100%100%100%100%100%100%100%100%100%100%100%

35. REASONS FOR CHANGING COUNTY ALL BUYERS (2014 VS. 2015) SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

36. BUYERS BY GENERATION SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 32% Millennials 18 – 35 40% Gen X 36 – 50 24% Baby Boomers 51 – 69 5% Silent Gen 70 and older

37. HOME OWNERSHIP RATE NEARLY 4 TIMES HIGHER AMONG BOOMERS Baby BoomersMillennials Q. What is your current living situation? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

38. REASONS FOR BUYING MILLENNIALS VS. BABY BOOMERS Q. What was the single most important reason for selling/buying the property? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

39. BOOMERS HAVE LESS DEBT THAN MILLENNIALS THAT PREVENTS BUYING A HOME Q. What type of debt do you have that would make it difficult to buy a home? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

40. FINANCIAL CHARACTERISTICS: MILLENNIALS VS. BABY BOOMERS MillennialsBaby Boomers Median Household Income $100,000$130,000 Median Home Price $470,000$505,000 Median Monthly Mortgage Payment $1,538$1,516 Median Downpayment (in $$) $50,000$79,500 Median Downpayment (in % to Price) 13.1%20% SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

41. USE OF PROPERTY Q. How will the property be occupied? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

42. WHAT MILLENNIALS AND BABY BOOMERS WANT? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® MillennialsBaby BoomersAll Buyers Median Sales Price $470,000$505,000$495,000 Median Square Footage 1,6001,7791,707 Median Age of Structure 363335 % of Detached Single-Family 75.6%71.6%76.6% % of Condo/Townhome 19.8%17.5%15.5%

43. DEMOGRAPHICS: ETHNICITY SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

44. HOUSING DEMAND WILL INCREASE, LARGELY DRIVEN BY MINORITIES SOURCE: Urban Institute

45. SHARE OF MINORITY HOME BUYERS HAS GROWN OVER TIME … Q. What was the race/ethnicity of the head of household buying the property SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

46. SHARE OF MINORITY HOME SELLERS ALSO HAS GROWN OVER TIME … Q. What was the race/ethnicity of the head of household buying the property SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

47. REASONS FOR BUYING MINORITY BUYERS VS. ALL BUYERS Q. What was the single most important reason for selling/buying the property? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

48. REASONS FOR BUYING HISPANIC BUYERS VS. ASIAN BUYERS Q. What was the single most important reason for selling/buying the property? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

49. SHARE OF FIRST-TIME BUYERS UP Q. Was the buyer a first-time buyer? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

50. USE OF PROPERTY Q. How will the property be occupied? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

51. CHARACTERISTICS OF HOMES SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Minority Buyers Hispanic Buyers Asian Buyers All Buyers Median Sales Price $467,000$324,000$675,000$495,000 Median Square Footage 1,7001,6001,7831,707 Median Age of Structure 35303535 % of Detached Single-Family 78.7%85.0%75.6%76.6% % of Condo/Townhome 14.8%9.8%18.0%15.5%

52. BUYERS’ FINANCIAL PROFILE I SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Minority Buyers Hispanic Buyers Asian Buyers All Buyers Median Household Income $100,000$80,000$170,000$120,000 Median Monthly Mortgage Payment $1,673$1,443$1,969$1,669 Median Downpayment (in $$) $60,500$13,875$120,000$74,500 Median Downpayment (in % to Price) 18.4%5.0%20.2%19.6%

53. BUYERS’ FINANCIAL PROFILE II SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Minority Buyers Hispanic Buyers Asian Buyers All Buyers % of buyers with zero down payment 4.2%7.4%2.1%4.4% % of cash buyers 17.6%11.3%25.7%21.0% % of home buyers with a second mortgage 4.1%3.9%4.5%4.1% % with FHA Loan 25.9%46.3%8.6%19.3%

54. REASONS FOR CHANGING COUNTY (ALL BUYERS VS. MINORITY BUYERS) SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

55. REASONS FOR CHANGING COUNTY MINORITY BUYERS (2014 VS. 2015) SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

56. HOW CLIENT FOUND THEIR AGENT Q. How did your client find and select you to represent them? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

57. HOW CLIENT FOUND THEIR AGENT Q. How did your client find and select you to represent them? SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

58. BUYERS NEED MOST HELP WITH FINDING THE RIGHT HOME Q: In what part of the transaction buyer/seller needed the most assistance? SERIES: 2015 Annual Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

59. SELLERS NEED MOST HELP WITH NEGOTIATING TERMS OF SALE Q: In what part of the transaction buyer/seller needed the most assistance? SERIES: 2015 Annual Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

60. 2016 FORECAST

61. CALIFORNIA HOUSING MARKET OUTLOOK SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

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