The Voice for Real Estate

SW Market @ A Glance

Southwest California Reporting

Period Current Period

Last Period Year Ago

Change from Last

Period

Change from Year Ago

Existing Home Sales (SFR Detached)

March 2014

934 636 872 32% 7%

Median Home Price

$302,569 $300,847 $294,120 1% 3% Unsold Inventory Index (SFR Units)

2,294 2,378 2,105 4% 8% Unsold Inventory

Index (Months)

2.7 4 2.8 32% 4% Median Time on Market (Days)

78 83 72 6% 8% Source: CRMLS

0

50

100

150

200

250

3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15

Temecula Murrieta Lake Elsinore Wildomar

Trend Line

Last March

Year over Year

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14

Temecula Murrieta Lake Elsinore Wildomar

March Median Price: 2014 2015 %

Temecula $426,256 $431,543 1%

Murrieta $379,234 $374,619 1%

Menifee $254,949 $284,426 11%

Lake Elsinore $285,043 $288,231 1%

Wildomar $323,501 $335,944 4%

Canyon Lake $419,653 $355,613 15%

Hemet $183,401 $196,419 7%

San Jacinto $191,126 $201,867 5%

Perris $237,185 $254,461 7%

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015

Temecula Murrieta Menifee Lake Elsinore Wildomar Canyon Lake Hemet San Jacinto Perris

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

2010 2011 2012 2013 2014 2015

Temecula Murrieta Menifee Lake Elsinore Wildomar Canyon Lake Hemet San Jacinto Perris

0

50

100

150

200

250

300

350

400

450

On Market (Supply) Pending Closed (Demand) Days on Market Months Supply Absorption rate *

402

183

165

78

2.4

106%

422

202

197

75

2.1

112%

410

204

143

77

2.9

91%

343

194

141

66

2.4

101%

229

113

98

91

2.3

113%

145

93 6

0

72

2.4

122%

114

30

24

107

4.8

59%

72 4

4

27

58

2.7

73%

Murrieta Temecula Hemet Menifee Lake Elsininore San Jacinto Canyon Lake Wildomar

* Absorption rate - # of new listings for the month/# of sold listings for the month

March Demand On Market -4% Pending 11% Closed 32% Days on Market 6% Months Inventory 32% Absorption 32%

Month over Month

0

500

1000

1500

2000

2500

Inventory Sales

27% Price Appreciation

March Market Activity By Sales Type

Standard Sale Bank Owned Short Sale

Active % of MKT Sold

% of MKT Active

% of MKT Sold

% of MKT Active

% of MKT Sold

% of MKT

Temecula 397 94% 176 89% 11 3% 7 4% 7 2% 11 6%

Murrieta 367 91% 149 90% 16 4% 5 3% 5 1% 7 4%

Wildomar 67 93% 23 85% 3 4% 3 11% 3 4% 1 4%

Lake Elsinore 204 89% 82 84% 4 2% 5 5% 5 2% 7 7%

Menifee 310 90% 120 85% 8 2% 8 6% 8 2% 7 5%

Canyon Lake 109 96% 23 96% 2 2% 0 0% 0 0% 0 0%

Hemet 365 89% 122 85% 19 5% 13 9% 13 3% 5 3%

San Jacinto 117 81% 57 95% 8 6% 5 8% 5 3% 6 10%

Perris 133 85% 66 84% 6 4% 10 13% 10 6% 1 1%

Regional Average 2069 90% 818 88% 77 3% 56 6% 56 2% 45 5%

• Affordability is worsening • Homeownership rate for 18-34 - year-olds still falling • Household formation is VERY slow • Census: US added 476,000 HH v. 1.3 m HH prior 2

years • Majority of new households rent: “Renter Nation” • Millennials delaying “adulthood”: Getting married

later or not at all; Student loans; dim job prospects • Baby boomers delaying “retirement” and staying put

longer; they will love their loans when rates do rise • Inventory is better but still well below “normal”

Housing Fundamentals are positive.

What are some upsides? • Mortgage rates are low & lending is loosening up a

bit • Affordability is still good and price gains are slowing • Foreclosure & delinquency rates are low & distressed

sales are less than 10% of the market • Investors are leaving creating more opportunity for

buyers needing financing • Overall homeownership rate has stabilized • International demand for housing in CA still strong • Construction is up – residential and non-residential

Home Price Advantage Median Price Homes

www.narrpr.com

• Federal Economic Policy • Regulations • Mortgage Interest Deduction • CFPB • Future of GSE’s

• Lender Requirements • Short Sales • Foreclosures • Interest Rates • Inflation • Shadow Inventory • Global Economy • Unemployment

Unprecedented era of government involvement in housing

• SB 8 C.A.R. is opposing legislation to impose a SERVICE TAX, essentially a sales tax, on services in California, including real estate transaction services.

Issue Background

To generate approximately $10 billion dollars for various programs, Senator Robert Hertzberg, Chair of the Senate Governance and Finance Committee, has proposed Senate Bill 8 to establish a tax on services. The bill exempts health and education services but housing is not exempted. As a result, the home buying transaction would be heavily taxed.

Real estate transactions, which are “services intensive” would be especially hard hit by a service tax. Services that may be rendered as part of a real estate transactions usually include: appraisal, brokerage commissions, escrow fees, home inspections and repairs, loan brokerage fees, Natural Hazard Disclosure Statements, roof certifications, structural pest control inspections, title insurance and home warranty fees. This doesn’t include the services sellers and buyers incur in preparation for selling or after purchasing the property, including landscaping, painting and other home improvement services.

Tax Rate Tax Median Priced Home with Tax # of Households no longer able to afford median 0% (Current) 0 $447,010 n/a 5% $2,972 $449,982 38,152 7.5% $4,458 $451,468 57,228

• Canyon Lake April 2, 2015 The following is for use in required disclosure documents in real estate transactions involving properties located in Canyon Lake, California. This disclosure has been prepared by the legal Counsel for the Southwest Riverside County Association of REALTORS ® based upon public, non-privileged information and State law available on the date of its preparation. Changes or updates to this information may be forthcoming as needed. A. Currently there are pending lawsuits, countersuits, and claims related to the Canyon Lake lease agreement (the “Lake Lease”) between the

Canyon Lake Property Owners Association (the “CLPOA”) and the Elsinore Valley Municipal Water District (the “EVMWD”) that may affect the value or desirability of property within Canyon Lake. See attached: “Escrow/Lender Letter, dated March 27, 2015,” provided by Counsel for the CLPOA; “Rejection of Government Claim Letter, dated March 26, 2015," provided by Counsel for the EVMWD, and; “Informational Letter, dated March 30, 2015,” provided by the EVMWD.

B. B. Material pleadings and allegations within Riverside County Superior Court Case #RIC1503428 (available on the Court’s Case Access website) include:

a. A claim by the CLPOA that the Lake Lease is oppressive and unfair to the CLPOA. b. A counterclaim by the EVMWD that the CLPOA is in default on the Lake Lease.

C. A claim filed by the CLPOA against the EVMWD alleging that the EVMWD has overcharged the CLPOA by approximately $6 million dollars since 2010 has been rejected by the EVMWD. It is anticipated that another lawsuit may be filed by the CLPOA related to this issue and/or related causes of action. D. The dispute noted above appears to be a complex legal matter. Neither the Agent(s), Broker(s), or the Southwest Riverside County Association of REALTORS ® makes any representation, or offers any opinion, or offers any other statement of law or fact as to the possible or probable outcome or effect of pending lawsuits or claims, or as to the merits of any of the included allegations. State law prohibits non-attorneys from providing legal analysis, opinion or advice. Be advised that the parties to a real estate transaction should engage in their own due diligence, which may include seeking the advice of independent legal counsel, particularly regarding items A-C above.” •HERO Program

AB 205 (Wood) Squatters Pilot Program Jurisdictions - In 2014, C.A.R. sponsored AB 1513 (Fox) in an effort to address the lengthy process required to prevent squatting or to evict squatters. This measure created a three year pilot program in the cities of Lancaster, Palmdale and Ukiah that permits the owner of a vacant property to register it with local law enforcement. It establishes a fee-based program for local government that permits an owner of a vacant home to register it with local law enforcement and have it monitored while it remains vacant. It further requires timely action by these law enforcement agencies should the property be unlawfully occupied. As introduced, AB 205 proposes to expand the pilot program to include the cities of Eureka and Fairfield and the counties of Humboldt and Lake. Status: Assembly Judiciary Committee AB 237 (Daly) Parcel Tax Vote Notification - Under current law, property owners who reside within a local jurisdiction receive notice of proposed parcel taxes with receipt of their ballot pamphlet while non-resident property owners do not receive any notice. This measure would require a city, county or special district (e.g., school districts, hospital districts, etc.) to provide at least 90 days’ notice of a vote to impose a parcel tax on non-resident property owners. Status: Assembly Local Government Committee AB 345 (Frazier) Continuing Education - Under current law, real estate brokers and salespersons are required to complete 45 hours of CalBRE-approved continuing education in order to renew their licenses. AB 345 seeks to earmark three hours of a broker’s mandated continuing education for a course on the management and supervision of real estate licensed activity. The bill also permits salespersons to elect to take a course containing relevant information to assist them in understanding how to be effectively supervised by a responsible broker or branch manager. Status: Assembly Business and Professions Committee AB 607 (Dodd) Bonds for Unlicensed Employees - The Bureau of Real Estate’s current regulations allow an unlicensed employee of a broker, with written authorization, to manage the broker's trust account if the employee has fidelity bond coverage that is equal to the maximum amount of funds to which the employee has access. This regulation is interpreted to mean that the bond must be a zero deductible bond, meaning that the insurers are responsible for the first dollar lost. REALTORS® have reported that bond companies will not sell bond coverage exceeding $100,000 unless the bond contains a deductible, usually of 1-5 percent. This measure would, among other things, allow bonds for unlicensed employees with access to broker trust funds to include a deductible of up to 5%. Status: Awaiting policy committee assignment by the Assembly Rules Committee AB 685 (Irwin) Real Estate Law Cleanup - While current law permits the Bureau of Real Estate (CalBRE) to deny the renewal of a license to a licensee who has an unpaid fine, it is not clear that CalBRE can deny an application for a license based on an unpaid fine. This measure would, among other things, clarify that CalBRE can deny an application based on an unpaid fine, revoke an erroneously/mistakenly issued license, and add the filing of a criminal complaint charging a felony to the list of disciplinary activities licensees must report to CalBRE. Status: Awaiting policy committee assignment by the Assembly Rules Committee AB 807 (Stone) Private Transfer Fees - Private Transfer Fees (PTFs) are fees imposed by an individual, developer, etc. that require a homebuyer and any subsequent purchaser to pay a fee upon the transfer of a home. In 2007, C.A.R. successfully sponsored AB 980, which requires disclosure of new and existing PTFs and requires PTFs to be recorded against the applicable property. However, new kinds of PTFs are now being used. This bill would expand the current PTF recordation requirement to include PTFs whose payment does not occur upon a change in ownership or that are not based on sales price. Status: Awaiting policy committee assignment by the Assembly Rules Committee SB 146 (Galgiani) Team Names - In 2014, C.A.R. sponsored AB 2018 (Bocanegra) to remove ambiguity surrounding Fictitious Business Names (FBNs) by statutorily defining how salespersons, with their broker’s permission, can use FBNs while also establishing clear standards for the use of “team names” that are not FBNs. This measure would clean-up and clarify that "team names" not requiring an FBN for purposes of the real estate law do not require the filing of an FBN with their local county. Status: Senate Business, Professions and Economic Development Committee SB 474 (Wieckowski) Credit Bids - In 2014, C.A.R. successfully sponsored AB 2039 (Muratsuchi) addressing real estate short sales. That legislation, among other things, prohibits companies from using "shill bids" (i.e., bids from non-bona fide purchasers) to drive up the price of the home being auctioned. A "credit bid" (lender bidding amount of their note at the foreclosure sale) is exempt from the "shill bid" prohibition. This measure would define "credit bid" in statute. Status: Awaiting policy committee assignment by the Senate Rules Committee

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