1. 2016 CALIFORNIA ECONOMIC & MARKET FORECAST October 8, 2015 EXPO – San Jose Convention Center Leslie Appleton-Young, Vice President & Chief Economist

2. HOW DID I DO? LAST OCTOBER I TOLD YOU …

3. 2015 FORECAST REPORT CARD Forecast Date: October 2015 vs. October 2014 SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® SFH Resales (000s) % Change Median Price ($000s) % Change 30-Yr FRM Housing Affordability Index U.S. Gross Domestic Product 2014 Actual 383.3 -7.6% $447.0 9.8% 4.2% 30% 2.4% 2015 Forecast 402.5 5.8% $478.7 5.2% 4.5% 27% 3.0% 2015 Projected 407.5 6.3% $476.3 6.5% 3.9% 31% 2.4%

4. ECONOMIC OUTLOOK

5. ECONOMY HAS BEEN GROWING FOR 68 MONTHS 2014: 2.4%; 2015: 2.4%; 2016: 2.6% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ ANNUALLYQUARTERLY 2009 Largest Annual Drop since 1938 (-3.4%) SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis 3.9%

6. KEY SECTORS OF MACRO-ECONOMY Consumer Sector Business Sector Government International Trade

7. EMPLOYMENT STALLED IN SEPT:142K ANNUAL PERCENT CHANGE SERIES: Total Nonfarm Employment SOURCE: US Bureau of Labor Statistics, CA Employment Development Division ChangeGrowth United States2,752,0002.0% California470,0003.0% New York130,5001.4% Texas217,7001.9% 198K/mo 2014 avg 260K/mo 2015 avg

8. UNEMPLOYMENT RATE HOLDS STEADY September 2015: US 5.1% & August 2015:CA 6.1% SERIES: Unemployment Rate The U-6 rate covers the unemployed, underemployed and those who are not looking but who want a job SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

9. UNEMPLOYMENT RATES (U6 VS. U3) September 2015 = U3: 5.1%, U6: 10.0% SERIES: Unemployment Rates SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

10. PARTICIPATION DOWN: AGING POP & SLOW JOB GROWTH & HIGH LONG TERM UNEMPLOYMENT CA- 62.5% (Dec. 2014) vs. USA- 62.7% (Dec. 2014) Labor Force Rate SERIES: Labor Force Participation Rate SOURCE: BLS, Data Buffet

11. JOB TRENDS BY CALIFORNIA METRO AREA SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division ANNUAL PERCENT CHANGE August 2015: CA +3.0%, +470,000

12. CALIFORNIA JOB CHANGES BY INDUSTRY SERIES: Total Nonfarm Employment By Industry SOURCE: US Bureau of Labor Statistics, CA Employment Development Division August 2015: CA +3.0%, +470,000 ANNUAL PERCENT CHANGE

13. NONFARM EMPLOYMENT BY REGION SERIES: Total Nonfarm Employment SOURCE: CA Employment Development Division

14. JOB LOSSES IN PRIOR RECESSIONS - RECENT CYCLE WORST BY FAR

15. CONSUMER CONFIDENCE INDEX September 2015: 103.0 INDEX, 100=1985 SERIES: Consumer Confidence SOURCE: The Conference Board

16. CONSUMER PRICE INDEX August 2015: All Items 0.2% YTY; Core +1.8% YTY ANNUAL PERCENT CHANGE SERIES: Consumer Price Index SOURCE: US Bureau of Labor Statistics

17. IS IT TIME? AH… LET’S WAIT A LITTLE LONGER

18. MORTGAGE RATES January 2009 – October 2015 MONTHLY WEEKLY SERIES: 30Yr FRM, 1Yr ARM SOURCE: Federal Home Loan Mortgage Corporation

19. RATE HIKE POSTPONED, BUT NOT CANCELLED Factors for the delay -Global economic slowdown/Strong dollar Emerging markets vulnerable to rising rate environment -Heighten stock market volatility Negative wealth effect could lead to slowdown in economic growth -Avoid a repeat of Taper Tantrum Fed had not articulated enough on all the moving parts and did not want to give any surprises

20. WHERE ARE WE HEADED? -Fed will likely begin normalization in December (maybe) and rates will gradually increase in 2016 and 2017. Action will be “data determined” -Risk of rates increasing too fast: bringing economic growth to a halt -Risk of rates increasing too slow: zero leverage when next downturn hits

21. MARKET DOWN SHARPLY FROM THE PEAK MONTHLY AVERAGE Causes of the financial market turmoil -Highly valued asset markets -Economic slowdown in China -U.S. monetary policy normalization -Collapse in energy and other commodity prices

22. CROSS CURRENTS NET OUT $50 bbl Lower Oil Prices 50 bps Lower Mortgage Rates 15% $ Appreciation 5% Lower Stock Prices

23. U.S. HOME SALES UP IN 2015 U.S., Aug 2015 Sales: 4,690,000 Units, +8.1% YTD, +6.1% YTY *Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family Homes SOURCE: NATIONAL ASSOCIATION OF REALTORS®

24. U.S. HOME PRICE GAINS MODERATING U.S., Aug 2015: $230,200, -1.4% MTM, +5.1% YTY SERIES: Median Price of Existing Single Family Homes SOURCE: NATIONAL ASSOCIATION OF REALTORS®

25. U.S. COMMERCIAL VACANCY RATES SOURCE: NATIONAL ASSOCIATION OF REALTORS®

26. CA METRO COMMERCIAL VACANCY RATES 2015 Q2 SOURCE: National Association of REALTORS®

27. HOUSEHOLD GROWTH AFFECTED BY DEMOGRAPHIC AND ECONOMIC FACTORS

28. HOUSEHOLD FORMATION ACCELERATES IN 2015

29. U.S. ECONOMIC OUTLOOK SERIES: U.S. Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

30. U.S. HOUSING MARKET OUTLOOK SERIES: U.S. Existing home sales of single-family homes and condo/coops SOURCE: NATIONAL ASSOCIATION OF REALTORS®

31. CALIFORNIA ECONOMIC OUTLOOK SERIES: CA Economic Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

32. CALIFORNIA HOUSING MARKET OUTLOOK

33. MEMBERSHIP FOLLOWS SALES WITH 1-2 YEAR LAG

34. 2015 SALES DID NOT DISAPPOINT California, Aug 2015 Sales: 431,800 Units, +7.4% YTD, +9.3% YTY *Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Aug-15: 431,800 Aug-14: 395,080

35. CA SALES RE-GAINED MOMENTUM IN 2015 SERIES: Sales of Existing Single Family Homes, Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

36. HOME PRICE GAINS HAVE SLOWED California, Aug 2015: $493,420, 1.0% MTM, +2.5% YTY SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Aug-15: $493,420 Aug-14: $481,250

37. HOME PRICE APPRECIATIONS HAVE MODERATED SINCE MID 2013 SERIES: Sales of SFH and Condo Units SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® YTY% Chg. in Price

38. CALIFORNIA VS. U.S. MEDIAN PRICES 1970-2015 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

39. Housing market has recovered – Welcome to the new normal – Low mortgage rates – Job & Income growth are positive And yet… – Supply well below long-run average – Share of first-time buyers LOW – Affordability key concern for everyone It’s not an easy market/transaction for anyone. 2015 - WHERE ARE WE ?

40. UNDERWATER MORTGAGES RISING PRICES HAVE REVERSED EQUITY LOSSES SERIES: Underwater Mortgages SOURCE: CoreLogic

41. INVENTORY CONTINUED TO DECLINE FROM LAST YEAR Aug 2014: 4.0 Months; Aug 2015: 3.6 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®

42. WHERE IS THE INVENTORY? – Affordability challenge for repeat buyers Low rate on current mortgage Low property taxes Why list when there is nowhere to go I can afford? Could not qualify for a mortgage today – Foreclosure pipeline is dry – Investors renting instead of flipping – New construction recovering but LOW – Measurement error? Off- MLS (aka “pocket’) listings not being counted in listing stats – Demographics: Trade-up buyer pool is smaller

43. FEWER MIDDLE-AGE ADULTS IN RECENT YEARS Source: Harvard Joint Center of Housing Studies, Census Bureau

44. DROP IN HOMEOWNERSHIP Source: Harvard Joint Center of Housing Studies, Census Bureau

45. DECLINE IN # OF TRADE UP BUYERS DUE TO POPULATION LOSS & DROP IN HOMEOWNERSHIP RATE Source: Harvard Joint Center of Housing Studies, Census Bureau

46. REGIONAL HOUSING MARKETS

47. CA AUG. 2015 MEDIAN PRICES YTY SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

48. CA 2015 YTD SALES SERIES: Year to Date Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

49. $346,180 5% YTY www.car.org/marketdata 12% YTD 8% YTY 4.632.795.8%NA UII MonthsDays MTMPrice Per Sq Ft Sales To List Ratio Median PriceSales NORTHERN CALIFORNIA AUG 2015

50. NORTHERN CALIFORNIA AUG. 2015 MEDIAN PRICES SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

51. NORTHERN CALIFORNIA 2015 YTD SALES SERIES: Year to Date Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

52. $550,120 15% YTY 6% YTD 14% YTY 3.646.1NA UII MonthsDays MTMPrice Per Sq Ft Sales To List Ratio www.car.org/marketdata Median PriceSales NORTHERN WINE AUG 2015

53. NORTHERN WINE AUG. 2015 MEDIAN PRICES SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

54. NORTHERN WINE 2015 YTD SALES SERIES: Year to Date Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

55. $804,190 10% YTY 5% YTD 0.2% YTY 2.322.3103.4%$509 UII MonthsDays MTMPrice Per Sq Ft Sales To List Ratio www.car.org/marketdata Median PriceSales BAY AREA AUG 2015

56. BAY AREA AUG. 2015 MEDIAN PRICES SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

57. BAY AREA 2015 YTD SALES SERIES: Year to Date Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

58. $276,900 7% YTY 10% YTD 12% YTY 3.624.497.3%NA UII MonthsDays MTMPrice Per Sq Ft Sales To List Ratio www.car.org/marketdata Median PriceSales CENTRAL VALLEY AUG 2015

59. CENTRAL VALLEY AUG. 2015 MEDIAN PRICES SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

60. CENTRAL VALLEY 2015 YTD SALES SERIES: Year to Date Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

61. $520,830 4% YTY www.car.org/marketdata 11% YTD 6% YTY 3.929.197.7%NA UII MonthsDays MTMPrice Per Sq Ft Sales To List Ratio Median PriceSales CENTRAL COAST AUG 2015

62. CENTRAL COAST AUG. 2015 MEDIAN PRICES SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

63. CENTRAL COAST 2015 YTD SALES SERIES: Year to Date Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

64. $464,400 3% YTY www.car.org/marketdata 9% YTD 7% YTY 3.941.998.6%NA UII MonthsDays MTMPrice Per Sq Ft Sales To List Ratio Median PriceSales SOUTHERN CALIFORNIA AUG 2015

65. SOUTHERN CALIFORNIA AUG. 2015 MEDIAN PRICES SERIES: Median Price of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

66. SOUTHERN CALIFORNIA 2015 YTD SALES SERIES: Year to Date Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

67. ANNUAL HOUSING MARKET SURVEY: 2015 FINDINGS

68. SHARE OF SECOND/ VACATION HOMES HIGHER AFTER TWO YEARS’ OF DECLINE SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

69. SHARE OF INVESTMENT PROPERTIES DROPS TO THE LOWEST LEVEL SINCE 2009 SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

70. FIRST-TIME BUYERS FINDING IT HARD TO BUY SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

71. SHARE OF CASH BUYERS LOWEST SINCE 2009 Almost one-fourth 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®

72. THE SHARE OF INTERNATIONAL BUYERS LOWEST 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®

73. # 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® 23% OF CA REALTORS® WORKED WITH AN INTERNATIONAL BUYER IN THE PAST 12 MONTHS

74. COUNTRY OF INTERNATIONAL BUYER SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

75. 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?

76. MARKET COMPETITION COOLS DOWN AFTER PEAKING IN 2013 SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

77. YEARS OWNED HOME BEFORE SELLING SERIES: 2015 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

78. 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?

79. HOUSING AFFORDABILITY: CRISIS BREWING

80. CALIFORNIA PRICES MORE VOLATILE AND MUCH HIGHER THAN THE NATION 1970-2015 SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 2015 Dollar Value

81. HOUSING AFFORDABILITY PEAKED Q1 2012 PRICES V. LOW RATES AND INCOME GROWTH California vs. U.S. – 1984-2015 % OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® AnnualQuarterly

82. HOUSING AFFORDABILITY IN CA: BY COUNTY SERIES: Housing Affordability Index SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® % able to purchase median priced home

83. AFFORDABLE INVENTORY AVAILABLE TO MEDIAN-INCOME HOUSEHOLDS SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® 2015 Q2

84. HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME SOURCE: Bureau of Labor Statistics, C.A.R. 2014 Annual Mean Wage California

85. HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME SOURCE: Bureau of Labor Statistics, C.A.R. 2014 Annual Mean Wage San Francisco

86. HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME SOURCE: Bureau of Labor Statistics, C.A.R. 2014 Annual Mean Wage Sacramento

87. HOW WAGES MEASURED AGAINST INCOME REQUIRED TO BUY A HOME SOURCE: Bureau of Labor Statistics, C.A.R. 2014 Annual Mean Wage Los Angeles

88. CALIFORNIA’S MAJOR METROS ARE LESS AFFORDABLE THAN THE AVERAGE U.S. METRO SOURCE: Legislative Analyst’s Office

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

90. HOMEOWNERSHIP RATES California Vs. U.S. SERIES: Homeownership Rates SOURCE: U.S. Census Bureau

91. “MISSING” 100,000 UNITS ANNUALLY, AT LEAST 2015p: 98,500 (42,190 sf, 56,310 mf) 2016f: 124,600 total units SERIES: New Housing Permits SOURCE: Construction Industry Research Board Household Growth: 165,000/yr

92. THE BOOMERS AND THEIR NEXT MOVE

94. BOOMERS – BORN BETWEEN 1946-1964 What is your age? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® Average: 59

95. MAJORITY ARE MARRIED What is your marital status? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

96. BABY BOOMERS LESS DIVERSE THAN MILLENNIALS What is your ethnic background? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

97. 3/4 BABY BOOMERS ARE HOME OWNERS What is your current living situation? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

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

99. MOST HAVE EQUITY IN THEIR HOME Do you have equity in your home? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

100. MOST DON’T PLAN TO USE HOME EQUITY FOR INCOME DURING RETIREMENT Are you planning on using this equity for income during retirement? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

101. MAJORITY DO NOT PLAN TO SELL HOME WHEN THEY RETIRE Do you plan to sell your current home when you retire? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

102. MAJORITY WON’T SELL BECAUSE THEY LIKE THEIR HOME Why do you not plan to sell your current home when you retire? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

103. ¼ POSTPONED RETIREMENT BECAUSE … Did you have to postpone your date of retirement due to any of the following? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

104. > ½ DO NOT FEEL THEY HAVE SAVED ENOUGH MONEY TO RETIRE COMFORTABLY Do you feel you have saved enough money to retire comfortably? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

105. MAJORITY WORRY ABOUT CHILDRENS’ ABILITY TO BECOME HOME OWNERS Do you worry about your children’s ability to become home owners in the future? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

106. 2/5 PLAN TO HELP CHILDREN WITH DOWN PAYMENT Do you plan to help your children with their down payment to purchase a home? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

107. WHAT FINANCIAL DECISION WOULD BOOMERS CHANGE? If you could change one financial decision that you made within the past 10 years, what would it be? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

108. WHAT KEEPS BOOMERS UP AT NIGHT? What keeps you up at night? SERIES: 2014 Baby Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

109. CRAFTSMAN BUNGALOW IS DREAM HOME FOR 1/3 HOME OWNERS Q. Which of the following is your dream home? 8.5% 12% 5.7% 5.1% 2.6% 1.6%

110. 2/3 HOME OWNERS PREFER A NIGHT IN WITH FAMILY/FRIENDS FOR FUN Q. In which of the following activities would you like to participate? Select all that apply.

111. DIVERSITY IN HOMEOWNERSHIP

112. 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®

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

114. 2010-2020 Source: Dowell Myers and John Pitkin, “Immigrant Contributions to the Housing Market…” RIHA, Mortgage Bankers Association, 2013 IMMIGRANT SHARE OF GROWTH IN HOME OWNERS

115. 2016 FORECAST

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

118. SALES UP FOR 2015 AND CONTINUE TO IMPROVE IN 2015; PRICE WILL GROW STEADILY THIS YEAR AND NEXT Units (Thousand) Price (Thousand) SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

119. CA: DOLLAR VOLUME UP 13.3% IN 2015, UP 9.6% IN 2016 % Change$ in Billion -60% SERIES: CA Housing Market Outlook SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

120. WILD CARDS – Stock market volatility – Slower growth: China – Further collapse in energy/commodity prices – Geo-political tensions – Terrorism – El Nino/Water Shortage – 2016 Presidential election

121. MARKET OPPORTUNITIES IN 2016

122. MARKET OPPORTUNITIES – Millennials Turn renters into first-time buyers First-time buyers who bought with tax credit back in 2009 are ready to trade-up Understand the differences in needs between Millennial first-time buyers and Millennial trade-up buyers – Baby Boomers Ready to downsize Understand Boomers’ priorities: investment and retirement If we can’t keep them in CA, help them find a place out of state. Network with REALTORS® outside of CA

123. MARKET OPPORTUNITIES – Minorities Minorities have grown in homebuyer share over time Surge in the number of minority households will play a big role in the increase in housing demand in the next 10 years Develop programs and marketing material tailored towards minority home buyers of different ethnicity – Investor sellers Investor buyers who purchased bargain properties a few years ago are ready to sell as home prices start leveling off – Everyone else… Low interest rates will be here a little longer

124. MOST MILLENNIALS UNCERTAIN/DOUBTFUL THAT THEY COULD OBTAIN A MORTGAGE NOW?AMILLENNIAL ETHNICITY SOURCE: C.A.R. 2014 Millennial Survey Q: Could you obtain a mortgage if you applied now ?

126. #TBTC.A.R.110

127. #TBT…. SACRAMENTO 110 YEARS AGO 730 N Street

128. #TBT…. SAN FRANCISCO 110 YEARS AGO 500 block of Liberty Street

129. #TBT…. FRESNO 110 YEARS AGO Brix Mansion 2844 Fresno St

130. #TBT…. SUMMER OF LOVE

131. THANK YOU! www.car.org/marketdata lesliea@car.org Facebook: CARResearchgroup Twitter: CARResearchInfo This presentation can be found on www.car.org/marketdata Speeches & Presentations