UNDERSTANDING CALIFORNIA HOME SELLERS September 24,2015 Oscar Wei, Senior Economist.
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Transcript of UNDERSTANDING CALIFORNIA HOME SELLERS September 24,2015 Oscar Wei, Senior Economist.
UNDERSTANDING CALIFORNIA HOME SELLERS
September 24,2015Oscar Wei, Senior Economist
CALIFORNIA HOUSING MARKET OUTLOOK
SALES OF EXISTING DETACHED HOMES
California, Aug 2015 Sales: 431,800 Units, +7.4% YTD, +9.3% YTY
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3
Jan-
14
Jul-1
4
Jan-
15
Jul-1
5 -
100,000
200,000
300,000
400,000
500,000
600,000
700,000
*Sales are seasonally adjusted and annualized SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Aug-15: 431,800
Aug-14: 395,080
CALIFORNIA SALES
SERIES: Sales of Existing Single Family Homes, Seasonally Adjusted SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Jan-
10
Apr-1
0
Jul-1
0
Oct-1
0
Jan-
11
Apr-1
1
Jul-1
1
Oct-1
1
Jan-
12
Apr-1
2
Jul-1
2
Oct-1
2
Jan-
13
Apr-1
3
Jul-1
3
Oct-1
3
Jan-
14
Apr-1
4
Jul-1
4
Oct-1
4
Jan-
15
Apr-1
5
Jul-1
5-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Year-over-Year % ChgMoving average (Year-over-Year % Chg)
MEDIAN PRICE OF EXISTING DETACHED HOMES
California, Aug 2015: $493,420, 1.0% MTM, +2.5% YTY
Jan-
05
Jul-0
5
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3
Jan-
14
Jul-1
4
Jan-
15
Jul-1
5 $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000 P: May-07$594,530
T: Feb-09$245,230-59% frompeak
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Aug-15: $493,420Aug-14:
$481,250
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.
0
2
4
6
8
10
12
14
16
18
SERIES: Unsold Inventory Index of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
DEMAND OUTPACING SUPPLY
San Francisco Bay Area Southern California Central Valley-20%
-10%
0%
10%
20%
0%
7%
13%
-12%
-7%
-1%
Sales Active ListingsYear-to-Year % Chg
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Aug 2015
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 being counted in listing stats
SHORT SALES CONTINUED SHRINKING
2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
56%
88% 93% 96%
44%
12% 6.0% 4.0%
Equity Sale Short Sale
Q: Was the home sold as a short sale?
YEARS OWNED HOME BEFORE SELLING
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
2
4
6
8
10
12
10All Sellers
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
FEWER MIDDLE-AGE ADULTS IN RECENT YEARS
Source: Harvard Joint Center of Housing Studies, Census Bureau
DROP IN HOMEOWNERSHIP
Source: Harvard Joint Center of Housing Studies, Census Bureau
DECLINE IN # OF TRADE UP BUYERS DUE TO POPULATION LOSS & DROP IN HOMEOWNERSHIP RATE
Source: Harvard Joint Center of Housing Studies, Census Bureau
FEWER HOMEOWNERS IN THEIR 30’S, 40’S LED TO RECENT DECLINE IN TRADE UP BUYERS
Source: Harvard Joint Center of Housing Studies, Census Bureau
ABOUT THE SELLER
SELLERS ARE YOUNGER
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
10
20
30
40
50
60
70
4346 47 46 46 46
4137
40
3537
46
63
52
Median Age
Average Age
Q: What is your age?
SELLERS BY GENERATION
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Gen Y (1980-1999) Gen X (1965-1979) Boomers (1946-1964)
Seniors (before 1946)
Q: What is your age?
FIRST-TIME SELLERS
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
21%
16%
20%18% 17%
15%
33%
44%47% 48%
57%
35%
25%
40%
Q: Was this your first experience in selling a house?
FIRST-TIME SELLERS
Gen Y Gen X Boomers Silent All0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%91%
53%
24%
9%
40%
Q: Was this your first experience in selling a house?
MOST SELLERS ARE MARRIED
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%
20%
40%
60%
80%
100%
120%
24%13%
39% 37% 36%30% 34% 37% 35% 32% 33% 32%
12% 17%
76%87%
61% 63% 64%
53% 50% 48% 50%46% 47% 48%
71%71%
17% 17% 16% 16%22% 20% 19% 12%
13%
Single Married Other
Q:What was the marital status the head of your household at the time of the sale?
MEDIAN HOUSEHOLD INCOME: $100,000
< $50,000
$50,000-$74,999
$75,000-$99,999
$100,000-$149,999
$150,000-$199,999
$200,000+
0% 5% 10% 15% 20% 25%
23%
14%
11%
24%
13%
15%
Q: What is your annual household income?
MEDIAN ANNUAL INCOME HAS INCREASED
Q: What is your annual household income? (Please enter only numbers, no characters --- ie. $, periods, or commas)
2014 20150
20,000
40,000
60,000
80,000
100,000
120,000
$81,918
$100,000
MEDIAN HOUSEHOLD INCOME: $100,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< $50,000 $50,000-$74,999 $75,000-$99,999$100,000-$149,999 $150,000-$199,999 $200,000+
Q: What is your total annual household income
TOP REASON TO SELL: MOVING TO A BETTER LOCATION
Q: What was your primary reason for selling your home?
Other
I lost my job
I am an empty nester
I was retiring
I had a change in family status (i.e. marriage, child birth, divorce, etc.)
I wanted a larger home
0% 5% 10% 15% 20%
11.8%2.3%2.5%2.8%2.9%4.6%
7.9%9.8%10.8%12.1%
14.1%18.5%
TOP 5 REASONS FOR SELLING THEIR HOME (FIRST TIME VS. REPEAT)
Q: What was your primary reason for selling your home?
I wanted to downsize
I had to relocate for work
I had a change in family status (i.e. marriage, child birth, divorce, etc.)
I wanted to move to a better location
I wanted a larger home
7%
9%
14%
20%
22%
First Time Sellers
I wanted a larger home
I had to relocate for work
I was retiring
I wanted to downsize
I wanted to move to a better location
9%
10%
12%
16%
17%
Repeat Sellers
REASONS FOR MOVING DIFFER ACROSS GENERATIONS
Q: What was your primary reason for selling your home?
All Gen Y Gen X Boomers
Silent
Desired better location
19% 25% 20% 20% 4.5%
Wanted larger home 13% 25% 24% 3.3% 2.3%
Downsizing 12% 1.6% 6.6% 14% 32%
Change in family status
11% 16% 13% 7.6% 9.1%
Relocating for work 11% 14% 16% 8.1% 0%
I was retiring 8.0% 0% 0.6% 17% 5%
Trouble making mortgage payment
4.3% 4.7% 5.4% 2.9% 7.0%
I am an empty nester 3.3% 0% o% 7.1% 2.3%
I lost my job 2.9% 3.1% 1.8% 4.3% 0%
For the investment advantages
2.1% 1.6% 3.0% 0.5% 6.8%
TECHNOLOGY USE
THERE IS A 7% INCREASE IN INTERNET USAGE
Gen Y Gen X Boomers Silent All0%
10%
20%
30%
40%
50%
60%
70%
80% 72% 71%
63%
35%
57%
78% 75%
60%
32%
64%
2014 2015
¼ SELLERS LIST ZILLOW AS MOST USEFUL WEBSITE
Q: What was the most useful website you visited during your home selling process?
25%
14%
14%
4%
GOOD VARIETY IN MARKETING PROPERTIES
Social media
Online
Virtual tour
Privately marketed to agent's network
Open house
MLS
0% 20% 40% 60% 80%
13%
27%
33%
41%
63%
80%
Q: How was your property marketed?
SELLERS’ BIGGEST CONCERN: GETTING A GOOD PRICE
Finding qualified buyer
Selling house
Finding new house
Selling quickly
Getting good price
0% 5% 10%
15%
20%
25%
30%
35%
40%
45%
50%
8%
13%
13%
17%
47%
Q: What were your biggest concerns as a home seller?
67% OF SELLERS RECEIVED MULTIPLE OFFERS
1 2 3 4 5+0%
5%
10%
15%
20%
25%
30%
35% 33%
23%
20%
8%
16%
Q: How many offers did you receive from buyers?
SELLERS RECEIVING FEWER OFFERS
2012 2013 2014 20150.0
1.0
2.0
3.0
4.0
5.0
6.0
3.1
5.9
3.33.1
Average
Nu
mb
er
of
Off
ers
Q: How many offers did you receive from buyers?
MAJORITY OF SELLERS ACCEPTED HIGHEST OFFER
Q: Which offer did you accept?
Other
All cash
1st received
Personal letter/appeal from buyer
Buyer's ability to close fastest
No contingencies
Highest
0% 10% 20% 30% 40% 50% 60%
9%
6%
7%
8%
16%
16%
52%
MAJORITY OF SELLERS ACCEPTED HIGHEST OFFER
Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.
Category All Gen Y Gen X Boomers Silent
Highest 52% 49% 55% 52% 52%
Buyer's ability to close fastest 16% 21% 16% 18% 4%
No contingencies 16% 13% 17% 16% 16%
Personal letter/appeal from buyer 8% 10% 9% 7% 12%
1st received 7% 1% 7% 8% 4%
All cash 6% 8% 5% 4% 20%
Other 9% 13% 7% 9% 12%
Q: Which offer did you accept?
NET CASH GAIN TO SELLERS HIGHEST SINCE 2007
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015$0
$50,000
$100,000
$150,000
$200,000
$250,000
$120,000
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Q. What was the net cash gain or net loss to the seller as a result of this sale?
SELLERS ARE OPTIMISTIC ABOUT FUTURE HOME PRICES
1 Year 5 Years0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3.4%9.1%
23%15%
66% 60%
Down Flat Up
Q: Do you think home prices in your neighborhood will go up, down, or stay flat in 1 year? …in 5 years?
SELLERS OUTLOOK ABOUT FUTURE HOME PRICES
Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.
Category All Gen Y Gen X Boomers Silent
Up in 1 year 65% 63% 67% 65% 64%
Up in 5 years 59% 59% 58% 59% 61%
Down in 1 year 3.5% 4.7% 0.6% 4.8% 6.8%
Down in 5 years 10% 13% 8.4% 9.0% 14%
Unsure in 1 year 7% 6% 5% 8% 11%
Unsure in 5 years 16% 13% 17% 17% 16%
Q: Do you think home prices in your neighborhood will go up, down, or stay flat in 1 year? …in 5 years?
MORE THAN HALF OF ALL SELLERS ARE PLANNING TO BUY ANOTHER HOME
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
70%
80%
53%
SERIES: 2015 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
FEWER SELLERS MOVED OUT OF STATE
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20150%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
5% 6% 6%
15%
23%
34%
28%
34%
44% 44%
21%
Q. In which county is your current residence located?
TOP STATES WHERE CA SELLERS HAVE RELOCATED
Florida
Idaho
Colorado
Oregon
Washington
Nevada
Texas
Arizona
0% 2% 4% 6% 8% 10% 12%
4.3%
4.3%
5.4%
6.5%
7.0%
7.6%
8.6%
10%
Q: Which state?
SELLER/AGENT RELATIONSHIP
SELLERS THAT DID NOT USE AN AGENT REMAINS UNDER 5%
2013 2014 201595%
96%
97%
98%
99%
100%
98.0%
96.9%
97.7%
% that used an agent
Q. How did you find your real estate agent?
SELLERS NEEDED MOST HELP WITH NEGOTIATION
Q: In what part of the transaction seller needed the most assistance?
Other
Negotiating the price
Preparing transaction documents
Preparing home for sale
Marketing the property
Setting the right price
Negotiating terms of sale
7%
10%
12%
16%
17%
18%
20%
MAJORITY OF SELLERS FOUND AGENT BY REFERRAL/PERSONAL CONTACT
Didn't use agent
"For Sale Sign"
Internet
Online
Previous client
Referral
Personal contact
0% 5% 10% 15% 20% 25% 30% 35%
2%
3%
4%
4%
17%
25%
29%
Q. How did you find your real estate agent?
HOW SELLERS FOUND THEIR AGENT
Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.
Category All Gen Y Gen X Boomers Silent
Personal contact 29% 34% 25% 27% 43%
Referral 25% 19% 26% 27% 23%
Previous client 17% 19% 20% 15% 11%
Internet 4% 6% 2% 6% 0%
Online 4% 6% 2% 6% 0%
"For Sale Sign" 3% 5% 3% 3% 2%
Q. How did you find your real estate agent?
70% OF SELLERS INTERVIEWED ONLY 1 AGENT
1 2 3 4 5+0%
10%
20%
30%
40%
50%
60%
70%
80%66%
14%8%
1% 2%
70 %
13% 11%
3% 3%
20142015
Number of Agents
Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?
SELLERS INTERVIEWED SLIGHTLY MORE AGENTS
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2.3 2.2
3.13.5
4.4
5.4
6.2
5.0
3.5 3.6 3.5
1.5 1.6
Chart Title
Nu
mb
er
of
Ag
en
ts
Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?
REASON SELLER SELECTED AGENT
Trustworthy (18%)
Worked with agent on previous transaction (17%)
Recommended (17%)
Friend / acquaintance (17%)
Good reputation/successful (16%)
Fastest to respond (6%)
Q: What was the single most important reason for selecting the agent you used in your recent home sale?
REASON SELLER SELECTED AGENT
Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.
Category All Gen Y Gen X Boomers Silent
Trustworthy 18% 14% 20% 18% 10%
Worked with agent previously 17% 22% 19% 15% 14%
Recommended 17% 13% 15% 18% 19%
Friend/Acquaintance 17% 19% 17% 13% 29%
Good reputation 16% 16% 17% 18% 14%
Fastest to repsond 6% 6% 7% 6% 2%
Q: What was the single most important reason for selecting the agent you used in your recent home sale?
MORE SELLERS CHANGED AGENTS IN 2015
2009 2011 2012 2013 2014 20150%
10%
20%
30%
40%
50%
60%
70% 64%
22%
44%
31%
4%8%
Q: Did you initially list your home with an agent other than the one with whom you sold it?
AGENT / SELLER COMMUNICATION IN SYNC
0%
5%
10%
15%
20%
25%
30%
35%
40%37%
25%
20%
15%
39%
25%24%
10%
Preferred Actual
Q: What was the actual method of communication used most frequently with your agent?
Q: What was your preferred method of communication with your agent?
AGENTS MEET RESPONSE TIME EXPECTATIONS
Instantly Within 30 Minutes
Within 1 Hour
Within 2 Hours
Within 4 Hours
Within 1 business
day
> 1 business
day
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
9%
26%
16%
10%
15%16%
6%5%
16% 16%
13%
21%
28%
1%
Actual Expected
Q: On average, what was the ACTUAL time in which your agent responded to your communications?
Q. What was the typical response time you expected from your agent to return any form of communication to you?
SELLER RESPONSE TIME EXPECTATIONS
All Gen Y Gen X Boomers Silent
Instantly 5.1% 4.8% 7.9% 3.9% 0%
Within 1 hour 16% 16% 17% 17% 12%
Within 2 hours 12.% 13% 8.0% 15% 19%
Within 1 business day
28% 24% 31% 26% 33%
Q. What was the typical response time you expected from your agent to return any form of communication to you?
SLIGHT DECLINE IN SELLER SATISFACTION
Q: Please rate your degree of satisfaction with your agent for each of the following aspects on a scale of 1 to 5, where 1 is least satisfied and 5 is most satisfied.
Q: Please rate your degree of satisfaction with your agent on these three things using a 1 to 5 scale where 1 is “Least Satisfied” and 5 is “Most Satisfied”.
Category 2011 2012 2013 2014 2015
Value received for what you paid your real estate agent
3.1 3.0 3.0 4.4 3.9
Overall satisfaction with the real estate agent
2.8 2.8 2.7 4.4 4.2
Overall satisfaction with the home selling process
2.6 2.5 2.6 4.4 4.0
SELLER SATISFACTION DECREASED IN 2015
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20151.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Agent Selling process
Q: Please rate your degree of satisfaction with your agent on these three things using a 1 to 5 scale where 1 is “Least Satisfied” and 5 is “Most Satisfied”.
SELLER SATISFACTION WAS NEGATIVELY AFFECTED BY MISCOMMUNICATION OR LACK OF COMMUNICATION
1. Stayed on top of process (44%) 2.Good/excellent job (13%) 3. Agent was professional (11%)
1. Didn’t communicate well (5.6%)2. Could have done a better job (5.4%)3. Could have sold for higher price (1.8%)
Q: Please explain why you had that level of satisfaction with your agent.
SELLER ADVICE TO AGENTS
47%
• Work hard and stay on top of everything47%
• Be honest and ethical46%
• Keep client informed34%
• Listen to client needs33%
• Be up front with clients30%
• Explain the process
27%
• Set the correct listing price
Q: What advice would you give to real estate agents to improve the process or level of service?
4/10 SELLERS WOULDN’T CHANGE ANYTHING ABOUT THEIR RECENT SALE
Q: If there was one thing you could change about your recent home sale, what would it be?
Sell Home for higher price (22%)
Hire a better real estate agent (13%)
Not have to sell (10%)
Sell the home faster (5%)
Do more research about selling process (4%)
CONCLUDING REMARKS
THE TAKEAWAY
–CA housing market remains strong
–Sellers are optimistic about the future housing market, and many want to buy another home
–Sellers need help with negotiation
2015 Annual Housing Market Survey: An Overview of the California Housing Market
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