The Evaporating Dream: Homeownership in California
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Transcript of The Evaporating Dream: Homeownership in California
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THE EVAPORATINGDREAM:HOMEOWNERSHIPIN CALIFORNIA
April 23,2015
Mid-Year Luncheon
Joel Singer, Chief Executive Officer
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OVERVIEW
• The Good News
• Our Challenge
– Affordability Gap
– Homeownership Gap
– Housing Production Gap
– Solving California Housing Problem
• What Kind of State Will CA be?
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TODAY’S CALIFORNIA HOUSINGMARKET
Strengthening (even if underperforming)
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2015 Q1 HOME SALES UP SLIGHTLY
California, Mar. 2015 Sales: 391,680 Units, +2.3%YTD, +7.3%YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
*Sales are seasonally adjusted and annualizedSERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Mar-15:391,680
Mar-14:365,120
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MEDIAN HOME PRICE CONTINUES TO CLIMB
California, Mar. 2015: $468,550, +9.2% MTM, +7.2%YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Jan
-10
Jul-
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Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
P: May-07$594,530
T: Feb-09$245,230-59% frompeak
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Mar-15:$468,550
Mar-14:$437,100
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SALES LOOKING POSITIVE SO FAR FOR ‘15
SERIES: Sales of Existing Single Family Homes, Seasonally AdjustedSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Jan
-10
Ap
r-10
Jul-
10
Oct
-10
Jan
-11
Ap
r-11
Jul-
11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12
Oct
-12
Jan
-13
Ap
r-13
Jul-
13
Oct
-13
Jan
-14
Ap
r-14
Jul-
14
Oct
-14
Jan
-15
Year-over-Year % Chg 6 per. Mov. Avg. (Year-over-Year % Chg)
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INVENTORY REMAINS VERY TIGHT
Mar 2014: 4.0 Months; Mar 2015: 3.8 Months
Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. Theremaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) anddivide the sum by the number of “Sold” properties for the month in question.
0
2
4
6
8
10
12
14
16
18
Jan
-05
Jul-
05
Jan
-…
Jul-
06
Jan
-07
Jul-
07
Jan
-…
Jul-
08
Jan
-…
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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• Housing market is under-preforming givenfundamentals
– Low mortgage rates
– Job & Income growth are back
• And yet…
– Sales off 7.6% in 2014 compared to 2013
– Share of first-time buyers LOW
– Affordability key concern for renters
2015 - WHERE ARE WE TODAY?
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INVENTORY DROPPED SIGNIFICANTLYIN 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. Theremaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) anddivide the sum by the number of “Sold” properties for the month in question.
2.4
3.7
4.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15
Bay Area Central Valley So CA
SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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WHERE IS THE INVENTORY?
– Investors renting instead of flipping
– Mortgage Lock-In Effect
– Where will I go?
– Foreclosure pipeline is dry
– New construction recovering but LOW
– Off-market (aka “pocket’) listings not beingcounted in listing stats
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OUR CHALLENGE:HOW TO RE-ESTABLISH HOUSING
AFFORDABILITY ANDHOMEOWNERSHIP
(When Government Policy Fails)
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WHERE ARE WE HEADED?
“…By 2025, California will have a middle class ofrenters.”
John Husing, Ph.D Economics
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• Housing supply constrained in long-run– New construction recovery is very slow
– Missing 165,000+ new units per year
– Production has fallen short of housing needs
• Inhibited by– Fiscal interests of local government
– Residents who disdain further development, especiallymulti-family
– Unfavorable legal/business environment fordevelopment in general & multi-family in particular
INADEQUATE HOUSING SUPPLYISSUE
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CALIFORNIA’S 3 HOUSING GAPS
• Housing Gaps:
– Housing affordability gap
– Homeownership gap
– Housing production gap
• Chronic problems spanning decades, butthey are coming back home to roost…
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AFFORDABILITY GAP
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HOUSING AFFORDABILITY DOWNSHARPLY SINCE Q1 2012
California vs. U.S. – 1984-2014% OF HOUSEHOLDS THAT CAN BUYA MEDIAN-PRICED HOME
SERIES: Housing Affordability Index of Traditional BuyersSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
0%
10%
20%
30%
40%
50%
60%
70%
80% CA USAnnual Quarterly
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INCOME REQUIRED TO BUY A MEDIAN-PRICEDHOME IN CA: (PEAK VS. CURRENT)
$56,324
$91,552
$0
$20,000
$40,000
$60,000
$80,000
$100,000
2012 Q1 2014 Q4
• Change in minimum required income:$35,228
• Increase in income attributed tointerest rate increase:$338 (1.0% of total change)
• Increase in income attributed to priceincrease :$34,890 (99.0% of total change)
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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HOUSING AFFORDABILITY IN CA: BY COUNTY
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
HAI
64
59 57 56 5653 53
50 4945
41
31 29 29 28 27 27 26 24 23 22 21 21 2017 15 15 14
0
10
20
30
40
50
60
70
% able to purchase median priced home
2014 Q4
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VERY SLOW REAL INCOME GROWTH
$0.00
$10,000.00
$20,000.00
$30,000.00
$40,000.00
$50,000.00
$60,000.00
$70,000.00
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
U.S. CAIn 2013 Dollars
SERIES: Median Household IncomeSOURCE: US Census Bureau, Current Population Survey
2013 gap = $5600
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CALIFORNIA’S MAJOR METROS ARE LESSAFFORDABLE THAN THE AVERAGE U.S. METRO
SOURCE: Legislative Analyst’s Office
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RIVERSIDE AND SACRAMENTO ARE STILL BELOW THE AVERAGESHARES OF INCOME DEVOTED TO MORTGAGE PAYMENTS
Source: Zillow
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STATE’S LOW-INCOME HH’S SPEND MUCH MORE!
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SLOW WAGE GROWTH A CONCERN
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$27,010
$45,340
$69,990 $71,630
$87,520 $89,250
$98,400
$119,970
$91,552
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
RetailSalespersons
Chefs andHead Cooks
ElementarySchool
Teachers
Firefighters Police andSherriff's
PatrolOfficers
ComputerProgrammers
RegisteredNurses
SoftwareDevelopers
(Applications)
Min. IncRequired toBuy a Med.
Home
HOW WAGES MEASURED AGAINST INCOMEREQUIRED TO BUY A HOME (2014)
SOURCE: Bureau of Labor Statistics, C.A.R.
Annual Mean Wage
California
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$26,870
$42,610 $44,330
$72,720
$82,830$86,840
$93,180
$103,790
$91,297
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
RetailSalespersons
Auto.Mechanics
Chefs andHead Cooks
ElementarySchool
Teachers
Firefighters ComputerProgrammers
RegisteredNurses
SoftwareDevelopers
(Applications)
Min. IncRequired toBuy a Med.
Home
HOW WAGES MEASURED AGAINST INCOMEREQUIRED TO BUY A HOME
SOURCE: Bureau of Labor Statistics, C.A.R.
Annual Mean Wage
Los Angeles
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MORTGAGE AND RENT PAYMENTS ABOVEHISTORIC SHARES OF INCOME IN LOS ANGELES …
Source: Zillow
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$30,340
$52,690 $49,230
$70,680
$88,390$97,570
$124,980$118,690
$194,870
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
RetailSalespersons
Auto.Mechanics
Chefs andHead Cooks
ElementarySchool
Teachers
Firefighters ComputerProgrammers
RegisteredNurses
SoftwareDevelopers
(Applications)
Min. IncRequired toBuy a Med.
Home
HOW WAGES MEASURED AGAINST INCOMEREQUIRED TO BUY A HOME
SOURCE: Bureau of Labor Statistics, C.A.R.
Annual Mean Wage
San Francisco
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… AND IN SAN FRANCISCO
Source: Zillow
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$26,610
$46,790$50,730
$67,300
$58,520
$75,980
$105,390 $103,730
$54,400
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
RetailSalespersons
Auto.Mechanics
Chefs andHead Cooks
ElementarySchool
Teachers
Firefighters ComputerProgrammers
RegisteredNurses
SoftwareDevelopers
(Applications)
Min. IncRequired toBuy a Med.
Home
HOW WAGES MEASURED AGAINST INCOMEREQUIRED TO BUY A HOME
SOURCE: Bureau of Labor Statistics, C.A.R.
Annual Mean Wage
Sacramento
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MEDIAN MONTHLY MORTGAGE PAYMENT - CA
What Will Happen When Mortgage Rates Increase?
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
$1,525$1,624
$1,727 $1,833$1,942
$2,054$2,169
$2,286Q4-2014 Median Price $452,140
20% Downpayment
INTEREST RATE
MONTHLY MORTGAGE
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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MINIMUM QUALIFYING INCOME - CA
What Will Happen When Mortgage Rates Increase?
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
$81,798$85,768
$89,873 $94,108$98,468
$102,949$107,544
$112,249
Q4-2014 Median Price $452,140
20% Downpayment
INTEREST RATE
Minimum Qualifying Income
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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HOUSING AFFORDABILITY INDEX - CA
What Will Happen When Mortgage Rates Increase?
0%
10%
20%
30%
40%
50%
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
36%34%
32%30% 28% 26%
24%23%
Q4-2014 Median Price $452,140
20% Downpayment
INTEREST RATE
% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT
SERIES: Housing Affordability IndexSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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NET MIGRATION CA TO TEXAS BY INCOME GROUP
-18,000
-16,000
-14,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
2007
2012
SOURCE: U.S. Census Bureau, IPUMS, CAR
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HOUSING AFFORDABILITY GAP
• Affordability crisis goes beyond lowincome households– Lack of affordable housing for low income
service workers is apparent
– Less obvious problem: moderate incomehouseholds who cannot afford homes in/nearcommunities where they work
– In general, there are programs to assist the firstgroup, but not the second group
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FEWER HOUSING UNITS BEING TURNED OVERSINCE THE GREAT RECESSION
4.6%5.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
CA US
SERIES: Percent of existing single-family homes being soldSOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.
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LENDING STANDARD DROVE 50% OF THEDECLINE BETWEEN 2001 AND 2012
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AFFORDABLE HOMES IN SHORT SUPPLY
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HOMEOWNERSHIP GAP
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HOMEOWNERSHIP RATES
California Vs. U.S. – 9.9% gap in 2014
53.7%
Peak: 60.2%
54.9%
64.5%
Peak: 69.0%
64.8%
45%
50%
55%
60%
65%
70%
75% CA US
SERIES: Homeownership RatesSOURCE: U.S. Census Bureau
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HOMEOWNERSHIP RATE BY AGE OFHOUSEHOLDER
SOURCE: Census Bureau
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HOMEOWNERSHIP RATES BY AGE
California
40%
45%
50%
55%
60%
65%
70%
75%
80%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
SERIES: Homeownership RatesSOURCE: U.S. Census Bureau, American Community Survey
65 &Above
45 – 64
Overall Rate
35 – 44
Under 35
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Immigrants
Native-Born
0
2
4
6
8
10
12
1980-90 1990-00 2000-10 2010-20
forecast
Source: Dowell Myers and John Pitkin, “Immigrant Contributions to the Housing Market…” RIHA, Mortgage Bankers Association,2013
GROWTH IN NUMBER OF IMMIGRANT OR NATIVEBORN OWNER (MILLIONS)
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SHARE OF FIRST-TIME BUYERS UP IN ’14 BUTSTILL BELOW LONG-RUN AVERAGE
28.1%30.5%
0%
10%
20%
30%
40%
50%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
% First-Time Home Buyers Long Run Average
Long Run Average = 38%
QUESTION: Was the buyer a first-time buyer?SERIES: 2014 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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WHY DO WE CARE ABOUT LOW LEVELOF FIRST-TIME BUYERS?
• It signals a constrained flow of new households in thehousing market
• Trade-up market cannot be replenished in the longrun
• First-time buyers represent the main impulse thatdrives the state’s homeownership rate
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REASONS FOR RENTING INSTEAD OF BUYING
44%
9%
6%
6%
6%
5%
5%
3%
2%
Can't afford to buy
Poor credit / Can't qualify
Renting is easier
Young/Starting out/Not ready
Flexibility/Freedom if renting
Cost/Upkeep/Responsibility
Plan to / Saving for down
Never considered it/No interest
Disabled/On disability
SERIES: 2013 Renter SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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MILLENIALS – DIFFERENTHOUSING ASPIRATIONS – OR LACK
OF MEANS?
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MILLENNIAL “TRUE” HOMEOWNERSHIP FALLING …
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… AS AN INCREASING NUMBER OF THEMSTILL LIVE WITH THEIR PARENTS
SOURCE: U.S. Dept. of Commerce, Wells Fargo Securities LLC
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2010-2020
Dowell Myers, USCPrice
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
West Midwest South Northeast
Source: Dowell Myers and John Pitkin, “Immigrant Contributions to the HousingMarket…” RIHA, Mortgage Bankers Association, 2013
IMMIGRANT SHARE OF GROWTH INHOME OWNERS
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MORE IMMIGRANTS FULFILLING THEIRAMERICAN DREAMS
Source: Dowell Myers and John Pitkin, “Immigrant Contributions to the HousingMarket…” RIHA, Mortgage Bankers Association, 2013
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CA MILLENNIALS - OVER 1/3 LIVE WITH THEIR PARENTS
What is your current living situation?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
I rent I live with myparents
I own I live in a dorm Other:
41%
36%
20%
1%1%
SERIES: 2014 Millennials SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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MANY OF THEM, HOWEVER, PLAN TOLEAVE THE NEST BY 2018
SOURCE: 2013 Demand Institute Housing & Community Survey; 2013 Demand Institute Housing Forecasts
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MILLENNIALS PUT OFF MARRIAGE,BUT IT IS STILL IN THEIR PLAN
SOURCE: American Community Survey; 2013 Demand Institute Housing & Community Survey
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MILLENNIALS BELIEVE IN HOMEOWNERSHIP
SOURCE: 2013 Demand Institute Housing & Community Survey
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MILLENNIALS’ BIGGEST CONCERNS
What are your biggest concerns about home ownership?
Price/Affordability (45%)
Problems with Credit, Mortgages, or Taxes (19%)
Maintenance/Upkeep (14%)
Satisfaction with Home/Location (7%)
Responsibility (4%)
SERIES: 2014 Millennials SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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STUDENT LOAN DEBT:25% OF RENTERS
Yes, 23%
No, 75%
Refused, 2%
Student Loan Debt
SERIES: 2013 Renter SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
78%
8%
6%
3%
2%
2%
<$10,000
$10-$20K
$20-$50K
$50-$100K
> $100K
Refused
Amount of Debt
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STUDENT DEBT: DRAGS ON HOME SALES
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PERSPECTIVE ON STUDENT LOANS, MAJORITYNOT AFFECTED
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CALIFORNIA’S HOUSING DELIMMA
• Even with everything (or at least most things) going right, ourhomeownership market is in trouble…
• The rental market, even with the conversion of 500,000 SFH’s, isstill exhibiting inadequate supply
• CA Housing Needs = Minimally 165,000 Units Annually– Regulatory Problem– Impact Fees– Public Attitudes
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BUSINESS IMPACTS - FEWER HOUSING UNITSBEING TURNED OVER
SINCE THE GREAT RECESSION
4.6%
5.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%CA US
SERIES: Percent of existing single-family homes being soldSOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.
Housing Turnover Rate(Single-Family Homes only)
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HOMEOWNERS DO NOT MOVEAS OFTEN AS THEY USED TO …
18.9
0
5
10
15
20
25
30
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
CA Long Run Average
Long Run Average = 15.9
SERIES: Percent of existing single-family homes being soldSOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.
Tenure of Homeowners (Years)
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NET MIGRATION – CA TO OTHER STATES
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NET MIGRATION BY ANNUAL INCOME, 2007-2013
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HOMEOWNERS DO NOT MOVEAS OFTEN AS THEY USED TO …
0
5
10
15
20
25
30
35
1970
1973
1976
1979
198
2
198
5
198
8
199
1
199
4
199
7
20
00
20
03
20
06
20
09
20
12
CA US
SERIES: Percent of existing single-family homes being soldSOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.
Tenure of Homeowners (Years) Reasons for longer tenure:
• Mortgage Lock-in effects
• “Underwater” homeowners
• Lack of “affordable” trade-up/downproperties
• More costly to move than to remodel
• Investors using properties as rental
• Prop. 13?
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HOUSING PRODUCTION GAP
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CA PERMITS UP BUT MORE UNITS NEEDED
2014: 85,065 Units, Up 3.4% from 2013
2015f: 89,318 Units
SERIES: New Housing PermitsSOURCE: Construction Industry Research Board
0
50000
100000
150000
200000
250000
300000
350000 Single Family Multi-Family
Household Growth: 165,000/yr
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HOUSING CONSTRUCTION HAS SLOWED IN THECALIFORNIA’S COASTAL METROS
Total Number of SFH Building Permits by Region
0
20,000
40,000
60,000
80,000
100,000
120,000
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Inland Coastal
SERIES: New Single Family Housing PermitsSOURCE: Construction Industry Research Board
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-5,485 165,105223,058
575,156
957,834
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2009 2010 2011 2012 2009 - 2012
Households not formed
# OF HOUSEHOLDS LOST IN THE GREATRECESSION
SOURCE: California Dept. of Finance; compiled by C.A.R.
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POPULATION AND HOUSEHOLDS WILLCONTINUE TO GROW
California 1970-2020
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
1970
1972
1974
1976
1978
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
SOURCE: Moody’s Analytics
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HOW DID WE GET HERE?
Why the Production Shortfall?
• Shortage of Land:– Production shortfall greatest in cities where need is most
critical
• High Costs of Development– Fees in most California communities are higher than
elsewhere in US
– Infill development costs higher than suburban developmentcosts
– Environmental policies, etc increase costs
– Lengthy permitting process increases cost per unitproduced and favors deep pockets
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• General Desire for Low Density Land Use– Preference for detached single family homes
– Disdain for multifamily developments
• Cost of service to cities higher than other land uses
• NIMBYism:– Desire to preserve existing character of community
– Dislike for multifamily, higher density development by residents andofficials
– Quality of life concerns
– Fear of crime and other negative aspects associated with density
HOW DID WE GET HERE?
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WHAT IS OUR FUTURE?
“…If current trends continue, California will build less than 60percent of the new housing needed over the next 20 years.”
Little Hoover Commission Report on Housing in California
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SOLVING CALIFORNIA’SHOUSING PROBLEM
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SOLUTIONS
• Production Gap is Primary Source of CA’s HousingProblems
• Solutions must include:– Increase in Production
• Infill and brownfield opportunities in urban areas whereshortage is critical
– Revitalization of Neighborhoods– Change Incentive Structure Facing Cities
• Fiscal• Housing & Zoning Requirements• Enforce housing elements of general plans, create incentives to
comply
– Improve Business & Legal Climate for Developers –CEQA Reform
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SOLUTIONS
• Attitude Shift is Essential to Moving TowardSolutions…
– By Households as Residents– By Households as Taxpayers– By Local Elected Officials– By State Officials
• … and an Attitude Shift Requires Education andHeightened Awareness of Problems, Implications, andSolutions!
• Solutions will take time
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SOLUTIONS - LOCAL
• Permanent city affordable housing subsidy source
• Dedication of a share of county tax increment financingto affordable housing
• Revise zoning code and/or density bonus ordinance toincrease
• Ease parking and set-aside requirements to enable morebackyard homes; granny flats
• Convert unlawful but affordable units
• Collaborate with business community
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SOLUTIONS - STATE
• CEQA Reform
• Inclusionary Zoning
• Experiment with social impact bonds & health fundsas a source
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2015 FORECAST
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CALIFORNIA HOUSING MARKET OUTLOOK
2009 2010 2011 2012 2013 2014 2015f
SFH Resales (000s) 474.9 416.5 422.6 439.8 414.9 383.3 398.4
% Change 24.5% -12.3% 1.4% 4.1% -5.9% -7.6% 3.9%
Median Price ($000s) $275.0 $305.0 $286.0 $319.3 $407.2 $447.0 $473.1
% Change -21.1% 10.9% -6.2% 11.6% 27.5% 9.8% 5.8%
Housing Affordability
Index 51% 48% 53% 51% 36% 30% 28%
30-Yr FRM 5.0% 4.7% 4.5% 3.7% 4.0% 4.3% 4.5%
SERIES: CA Housing Market OutlookSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®