2012 Survey of CaliforniaHome Buyers

Survey Methodology

800 telephone interviews conducted in August 2012

Respondents are home buyers that purchased in previous 6 months

Maximum sampling error: ±3.5% at two standard deviations (a 95% confidence level). (Subsets of the total sample will have a higher sampling error.)

About the Buyer

53%female

65% minority

35 years old

54% single

60% college / graduate degree

99% household income >

$75k

36% 1st time buyers

Typical 2012 California Buyer

Buyer Gender Remains a Fairly Equal Male/Female Split

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%20%30%40%50%60%70%80%90%

100%

36% 36% 38% 39% 43% 42% 44% 42% 41%52% 47%

64% 64% 62% 61% 57% 58% 56% 58% 59%48% 53%

Male Female

Average Age: 35

< 25 (3%)

25-34 (22%)35-44

(21%)

45-54 (20%)

55-64 (18%)

Q. What is your age?

The Increase of Younger Buyers Continues

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%20%30%40%50%60%70%80%90%

100%

Under 25 25-34 35-44 45-5455-64 65+ Refused

Buyers Continue Getting Younger

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

5

10

15

20

25

30

35

40

45

50

Average Age Median Age

Whites & Hispanics Make Up Majority of Buyers

Black 14% Chi-

nese 5%

White 34%

Filipino 3%

Hispanic 26%

Indian 7%

Korean 5% Other Asian 6%

Q. How would you describe your ethnic background?

Ethnic Background of Buyers Resembles CA Population

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CA*0%

10%20%30%40%50%60%70%80%90%

100%

White Black Asian/Pacific IslanderHispanic Other

*Source: U.S. Census Bureau 2010 American Community Survey

Singles Made Up 46% of Buyers in 2012

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

54%

46%

Married Single

60% of Buyers are College Graduates

9%17%

14%45%

15%

High SchoolSome CollegeVocation/TechnicalCollege GradPost Grad

Q. What is the highest level of education you have completed?

Most Buyers are Well Educated

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0%10%20%30%40%50%60%70%80%90%

100%

High School Some College Vocation/TechnicalCollege Grad Post Grad

99% of Buyers Have an Annual Household Income Over $75K

1%33%

35%

18%

13%

$50-000-$74,999$75,000-$99,999$100,000-$149,999$150,000-$199,999$200,000 +

Q. Which of the following categories best represents you total annual income from all sources?

Buyers’ Annual Household Income Continues Increasing

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%20%30%40%50%60%70%80%90%

100%

Under $50,000 $50-000-$74,999 $75,000-$99,999$100,000-$149,999 $150,000-$199,999 $200,000 +

Q. Which of the following categories best represents you total annual income from all sources?

Investment Buyers are on the Rise

Annual Housing Market Survey Question: Was the buyer a first-time buyer?

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%20%30%40%50%60%70%80%90%

100%110%

% First-Time Home Buyers % of Repeat Buyers % of Investment Buyers

Residence Location

56%24%

20%

Southern CANorthern CAOther CA

Geographical Distribution of Purchases has Remained Steady

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

SoCal NorCal Other CA

About the Home

Location is Most Important to Buyers

Neighborhood + Home Features

Home Features

"The Deal" (affordable price)

The Neighborhood

9%

13%

29%

49%

Q. What was most important to you in buying the home you did?

Location & Price are More Important to Buyers

2011 20120%

10%20%30%40%50%60%70%80%90%

100%

25%9%

41%

49%

34%

13%

29%

Neighborhood & home features equally important Neighborhood Home features "The deal"

Q. What was most important to you in buying the home you did?

The Buying Experience

Most Buyers Were Renters

Owned(36%)

Rented(53%) Lived with parents(6%)

Lived with other rela-

tive/friend(2%)

Q. What was the living arrangement immediately before your recent home purchase?

More than 8 out of 10 1st-time Buyers Were Renters

Rented84%

Lived with Parents

13%

Live with Other Rela-tive/Friend

3%

Q. What was the living arrangement immediately before your recent home purchase?

Fewer Buyers Owned Previous Residence

2011 20120%

10%20%30%40%50%60%70%80%90%

100%

49%38%

48%54%

3%7%

2%

Owned RentedLived with parents Other

DecisionFactors

Average Buyer Spent Over 3 Months Considering Purchase Before Contacting Agent

2 Weeks Or Less

3-7 Weeks

8-12 Weeks

16-24 Weeks

36+ Weeks

0% 5% 10%15%20%25%30%35%40%

10%

37%

34%

18%

7%

Q. How many weeks did you consider buying a home before contacting a real estate agent? (Asked if agent was used)

Buyers Spent 1 Month Less than Last Year Considering Buying Before Contacting Agent

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

3.9 3.9 4 3.8 3.85.6

7.28.4 8.6

16.6

12.2

Q. How many weeks did you consider buying a home before contacting a real estate agent? (Asked if agent was used)

Average Weeks

Average Buyer Investigates Homes & Neighborhoods for Over 6 Weeks Before Contacting an Agent

2 weeks or less

3-7 weeks

8-12 weeks

16+ weeks

0% 10% 20% 30% 40% 50% 60% 70%

6%

60%

31%

3%

Q. How many weeks did you spend investigating homes and neighborhoods before contacting a real estate agent? (Asked if agent was used)

Buyers Spending More Time Investigating Homes & Neighborhoods Before Contacting Agent

Q. How many weeks did you spend investigating homes and neighborhoods before contacting a real estate agent? (Asked if agent was used)

Average Weeks

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

3.93.0 3.2 3.0 3.1

5.46.2

6.6 6.86.2 6.5

Price Decreases Were Primary Reason for Buying

Changed jobs/Relocated

Change in family

Desired larger home

Tired of renting

Promotion/raise

Investment/Tax advantage

Favorable price/financing

Desired better/other location

Price decreases

1%

2%

7%

7%

8%

8%

11%

12%

45%

Q. What was the primary reason for buying your home?

Property Tax & Mortgage Interest Deductions are Important to Buyers

3 4 51%

20%

79%

Q As you may know, homeowners can deduct mortgage interest and property taxes from their taxable income. Please rate the importance of these deductions in your decision to become a homeowner.

Not at AllImportant

ExtremelyImportant

Mean = 4.8

Deductions Consistently Important in Buying Decision

2011 20120

0.51

1.52

2.53

3.54

4.55

4.8 4.8

Mean

Q As you may know, homeowners can deduct mortgage interest and property taxes from their taxable income. Please rate the importance of these deductions in your decision to become a homeowner.

Most Buyers Found Home through Agent

For Sale Sign; 4%

Website; 16%

Agent; 80%

Q. How did you find the home you purchased?

More Buyers are Finding Homes Online

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0%10%20%30%40%50%60%70%80%90%

100%Agent Website For Sale Sign Friend/Family Open House Driving Around Other

Q. How did you find the home you purchased?

Average Buyer Searched for a Home for 2 Months with Agent

2 Weeks Or Less 3-7 Weeks 8-12 Weeks 16-24 Weeks

1%

35%

54%

10%

Q. Once you found your agent, about how many weeks did you spend looking for a home with your agent? (Asked if agent was used)

The Home Search is Getting Lengthier

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

2

4

6

8

10

12Median Weeks

Q. Once you found your agent, about how many weeks did you spend looking for a home with your agent? (Asked if agent was used)

8 out of 10 Buyers Viewed at Least 6 Homes Before Buying

1-5 6-10 11-15 16-20 21-25

20%

46%

24%

8%

2%

Average = 9 HomesMedian = 10 Homes

Q. How many different homes did you preview and visit with your agent prior to making a purchase?

Drop in Homes Viewed Reflects Tight Inventory

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1110

910

11

1514 14

15

12

10

Q. How many different homes did you preview and visit with your agent prior to making a purchase?

Median

Majority of Escrows Don’t Close on Time

Yes 30%

No 70%

Q. Did escrow close on time?

Slightly More Escrows Closing on Time

2006 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

55% 48% 44% 37% 34%24% 30%

45% 52% 56% 63% 66%76% 70%

Yes No

Q. Did escrow close on time?

Buyers Slightly Less Satisfied with Home Finding Process

2005 2006 2007 2008 2009 2010 2011 20121

1.5

2

2.5

3

3.5

4

4.5

5

Q. Please rate your degree of satisfaction with the following aspects of your home buying experience on a scale of 1-5, where 1 is “least satisfied” and 5 is “most satisfied”.

What Buyers Would Change About the Home Buying Experience

1. Agent negotiate better (26%)

2. Better agent communication (24%)

3. Better market direction understanding (20%)

4. Faster agent response (18%)

5. Escrow close on time (9%)

Q. If there was one thing you could change about the home buying experience, what would it be?

Buyers Optimistic About Long Term Direction of Home Prices

1 Year 5 Years 10 Years

Up 25% 41% 73%

Flat 49% 35% 20%

Unsure 27% 23% 7%

Q Do you think home prices in the neighborhood where you purchased will go up, down, or stay flat … in one year, in five years, in ten years?

Buyers Optimistic About Long Term Direction of Home Prices

Up

Flat

Unsure

1 Year 5 Years 10 Years

Q Do you think home prices in the neighborhood where you purchased will go up, down, or stay flat … in one year, in five years, in ten years?

Buyer Optimism About Future Home Prices Relatively Unchanged

In 1 Year In 5 Years In 10 Years

25%

41%

73%

21%

46%

68%

23%

52%

76%

8%

35%

60%

2012201120102009

Q Do you think home prices in the neighborhood where you purchased will go up in one year, in five years, in ten years?

Internet Use

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-20%

0%

20%

40%

60%

80%

100%

120%

Yes (Internet Buyers) No (Traditional Buyers)

Q. Did you use the Internet as an important part of your home-buying and selection process?

Nearly All Buyers Use the Internet

Realtor.com Remains Most Widely Used Website Among Buyers

Real estate company website

Real estate agent website

Q. Which websites did you use as part of your home buying process?

Top 3 Websites

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

0.10.20.30.40.50.60.70.80.9

1

Zillow realtor.com RE co.Google Agent

Q. Which websites did you use as part of your home buying process?

Realtor.com & Zillow are Most Useful Websites in Buying Process

Q. What was the single most useful website that you visited during your home buying process?

0% 5% 10% 15% 20% 25% 30%

6%

8%

19%

20%

23%

24%

Brokerage

Agent

Top 3 Most Useful Websites Unchanged

2007 2008 2009 2010 2011 20120%5%

10%15%20%25%30%35%40%45%50%

Zillow realtor.com Brokerage

Most Buyers Found Home on Realtor.com or Zillow

0% 5% 10% 15% 20% 25% 30%

3%

5%

6%

6%

10%

17%

26%

28%

Q. On which website did you find your home?

Agent

Brokerage

Zillow & Trulia Helped More Buyers Find Homes

2011 20120%

5%

10%

15%

20%

25%

30%

35%Agent realtor.com BrokerageZillow Trulia

Q. On which website did you find your home?

Previewing Homes Online is Very Important to Buyers

- Avg. Rating on 1-10 Scale -

Get information on home financing and down payments

Find a real estate firm

Learn about specific neighborhoods

Find a specific real estate agent

Identify specific homes you want your real estate agent to show you

Preview homes (via pictures, virtual tours, maps, videos)

6.0

6.1

7.0

7.2

7.5

8.9

Q. Please rate the importance of each of the following activities in using the internet as part of your home buying process on a scale of 1 to 10, with 1 being “not at all important, and 10 being extremely important

Photos are Most Important to Buyers in Online Home Viewing

- average rating on 1-5 scale -

Commentary & analysis of housing market conditions

Automatic notification of new listings available

Neighborhood profile

Statistics on comparable home sales/listings

Virtual tour or Videos

Multiple pictures or Slide show

3.5

3.7

3.7

3.9

4.3

4.4

Q. Using a 1-5 scale, where 1 = “not at all important” and 5 = “extremely important”,how important are each of these online features in home viewing?

Social Media Use on the Rise

2011 20120%

10%

20%

30%

40%

50%

60%

70%

52%

68%

Q. Did you use social media (such as Facebook, Twitter, YouTube, etc.) in your home buying process?

Social Media Used for Neighborhood & Agent Scoop

Neighborhood lifestlye

Agent referrals

Neighborhood amenities

Agent's Facebook page

Neighborhood info from friends

Buying tips, suggestions from friends

0% 10% 20% 30% 40% 50% 60%

29%

33%

35%

47%

50%

51%

Q. How did you use social media (such as Facebook, Twitter, YouTube, etc.) in your home buying process?

90% of Buyers are Receptive to Receiving Information via Social Media

2 3 4 5

10%

22% 21%

48%

Not Inter-ested

Extremely Receptive

Average Rating = 4.1

Q. How receptive would you be to receiving information about the home buying process directly from your real estate agent via social media? Rate how receptive

you would be on a 1-5 scale, where 1 = “not at all interested” and 5 = “extremely receptive”.

Buyers Remain Receptive to Receiving Information Via Social Media

2011 20121.01.52.02.53.03.54.04.55.0

4.2 4.1

Average

Q. How receptive would you be to receiving information about the home buying process directly from your real estate agent via social media? (Scale: 1-5)

Financing

Majority Obtain Financing

2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%100%

94% 92%96%

Q. Did you obtain financing for your home purchase?

Average Down Payment Remains Above Traditional 20%

2009 2010 2011 20120%

5%

10%

15%

20%

25%

30%

35%

Average

Q. What was your down payment for the home purchased, in percent of the home value?

Most Buyers Obtain Fixed Rate Loans

Fixed 93%

Ad-justable 7%

Q. What type of loan do you have?

Fixed Rate Loans Continue to Increase

2009 2010 2011 20120%

10%20%30%40%50%60%70%80%90%

100%

69%79% 84%

93%

31% 15%16%

7%6%

Fixed Adjustable Other

87% of Loans are for 30 Years

20112012

0%

20%

40%

60%

80%

100%

85%87%

15%13%

< 30 Year 30 Year

Q. What was the duration of your loan?

Buyers Continue Having Difficulty With Financing

20092010

20112012

0.01.02.03.04.05.06.07.08.09.0 8.1 8.5

8.0 8.5

Average

Q. Please rate how easy or difficult it was to obtain financing on a scale of 1 to 10 with 1 being very easy and 10 being very difficult.

Financing is Difficult to Obtain

1 2 3 4 5 6 7 8 9 100%5%

10%15%20%25%30%35%40%

2009 2010 2011 2012

Q. Please rate how easy or difficult it was to obtain financing on a scale of 1 to 10 with 1 being very easy and 10 being very difficult.

EASY DIFFICULT

Buyer / Agent Experience

Nearly All Buyers Use an Agent

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% 96%

Q. Did you use a real estate agent in your home buying process?

Most Buyers Find Agents Online

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0%10%20%30%40%50%60%70%80%90%

100%

Relationships/Contacts AdvertisingInternet Other

Q. How did you find your real estate agent?

More than 7 out of 10 Buyers Interviewed at Least 2 Agents

Q. How many agents did you interview prior to selecting the agent you used in your recent home purchase?

1 2 3 40%

5%

10%

15%

20%

25%

30%

35%

40%

30%

38%

18%15%

# of Agents Interviewed

Buyers Interviewed More than 2 Agents on Average

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0

0.5

1.0

1.5

2.0

2.5

3.0

Response Time is Important to Buyers in Selecting Agent

Most qualified

Most knowledgeable

Previous relationship

Distressed property knowledge

Negotiating ability

1st to respond

Most aggressive

Most reponsive

5%

6%

6%

12%

14%

17%

19%

21%

Q. What was the single most important reason for selecting the agent that you used in your recent home purchase?.

Reputation is Most Important in Agent Selection- average on 1-5 scale -

Social media presence

Market share in neighborhood where you wish to purchase

Response time

Experience

Reputation

3.5

3.9

4.2

4.2

4.3

Q. Please rate the importance of the following agent characteristics in selecting your agent using a 1-5 scale, where 1 = “not at all important” and 5 = “extremely important”

More Buyers Google their Agent

Q. Did you Google your agent…?

2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

TelephoneEmail

Text MessageIn Person

14%

52%

32%

2%

44% 50%

5%

0%

PreferredActual

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?

Room for Improvement in Agent Response Time

Instantly

With

in 30 mins.

With

in 1 hr.

With

in 2 hrs.

With

in 4 hrs.

Same day

1 business

day-10%

0%

10%

20%

30%

40%

50%

60%

Expected Actual

Q. What was the typical response time you expected from your agent to return any form of communication to you?

Q. On average, what was the actual response time of your agent to return any form of communication to you?

Fewer than 50% of Agents Met Buyer Response Time Expectations- Rating on 1 to 5 Scale -

0%10%20%30%40%

12%

40% 39%

6% 3%

Q. Did your real estate agent meet your expectations on response time? Please rate your agent’s response time on a scale of one to five, with five being agent exceedingly surpassed expectations and one being agent fell way below expectations.

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

42%

Q. What was the typical response time you expected from your agent to return any form of communication to you?

More Buyers Expect Instant Response from Agent

There’s Room for Improvement in Meeting Buyer Response Time Expectations

2005 2006 2007 2008 2009 2010 2011 20120.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

3.3 3.33.6

3.1 3.13.3

2.6 2.5

Average

Q. Did your agent meet your expectations on response time? Using a 1-5 scale where 1 = “way below expectations” and 5 = “exceedingly surpassed expectations”, please rate your agent’s response time.

Agent Satisfaction Ratings Relatively Unchanged- Average Ratings on 1-5 Scale -

2011 2012

Information on housing market conditions that your agent provided 3.3 3.1

Your real estate agent’s negotiating skills 3.2 3.4

Assistance your real estate agent provided in searching for a home 3.4 3.3

Professional referrals your agent provided (i.e. lender, inspector, etc) 3.1 3.5

Overall process of finding a home 3.6 3.4

Value received for what you paid your real estate agent 3.6 3.5

Overall satisfaction with your real estate agent 3.4 3.4

Q. Please rate your degree of satisfaction with the following aspects of your home buying experience on a scale of 1-5, where 1 is “least satisfied” and 5 is “most satisfied”.

Buyer Satisfaction Reflects Market Conditions

2005 2006 2007 2008 2009 2010 2011 20121

1.5

2

2.5

3

3.5

4

4.5

5

Process of Finding a Home Satisfaction with Agent

Q. Please rate your degree of satisfaction with the following aspects of your home buying experience on a scale of 1-5, where 1 is “least satisfied” and 5 is “most satisfied”.

Reasons for Satisfaction With Agent

Q. Why do you have that level of satisfaction with your agent?

Found best home (58%)

Worked hard (53%)

Quick to respond (40%)

Negotiated good deal (29%)

Listened to needs (21%)

Reasons for Dissatisfaction With Agent

Q. Why do you have that level of satisfaction with your agent?

Slow response (51%)

Ineffective/inefficient communication (23%)

Undesirable communication methods (15%)

Not aggressive in negotiation (14%)

Showed homes unlikely to buy (2%)

More Buyers Certain they Would Work With the Same Agent Again

2004 2005 2006 2007 2008 2009 2010 2011 2012

88% 87%

50%67% 61% 64% 72%

54% 60%

2% 3%

4%

3% 15% 13%11%

11%12%

10% 10%

46%30%

25% 22% 17%35% 28%

Unsure No Yes

Q. Would you work with the same agent again?

Majority of Buyers Find Ratings Valuable in Agent Selection

Very Bene-ficial 40%

Beneficial 24%

Somewhat Bene-ficial 18%

Not beneficial 8%

Unsure 10%

Q. How valuable would it have been to you to have ratings of agents prior to choosing your agent?

Buyers Increasingly Find Agent Ratings Beneficial

2011 20120%

10%20%30%40%50%60%70%80%90%

100%

Very beneficial Beneficial Somewhat beneficial Not beneficial Unsure

Q. How valuable would it have been to you to have ratings of agents prior to choosing your agent?

Majority of Buyers Didn’t Rate their Agent,Yelp Was Most Popular Among those Who Did

No81%

7%4%

4% 4%

Sales

Q. Did you rate your agent on a public forum, like Yelp or Zillow?Q. (If so) On which platform did you rate your agent?

Buyers Who Had Bad Experience More Likely to Rate Agents

63%

37%

Q. Would you be more likely to rate your agent on a public forum if you had a good experience, or if you had a bad experience?

Advice to Agents from Buyers

Q. What advice would you give to real estate agents to improve the process or the level of service?

Communicate according to client preference (50%)

Gain better market direction understanding (45%)

Be savvier about distressed properties (44%)

Respond faster (43%)

Have better understanding of interest rate direction (9%)

Provide more assistance with mortgage approval (6%)

Negotiate better (3%)