OVERVIEW
- Economic Outlook
- California Housing Market Outlook
- Regional Housing Market Outlook
- 2016 Forecast
ECONOMIC OUTLOOK
WHERE ARE WE HEADED?
- Fed takes a more dovish tone, leave interest rates unchanged, will gradually increase rates 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
CALIFORNIA HOUSING MARKET OUTLOOK
WHERE IS THE INVENTORY?
- Affordability challenge for repeat buyers
- Low rate on current mortgage
- Low property taxes
- Concerned with capital gains
- Why list when there is nowhere to go I can afford?
- Could not qualify for a mortgage today
- New construction recovering but LOW
- Demographics: Trade-up buyer pool is smaller
- Measurement error? Off-MLS (aka “pocket’) listings not being counted in listing stats
BAY AREA HOUSING MARKET
SAN FRANCISCO COUNTY
OAKLAND
MARIN COUNTY
2016 FORECAST
KEY TAKEAWAYS
- Both CA home sales and prices will be up mid -single digits in 2016
- Fundamental demand drivers (jobs; rates; household formation) are strong
- Housing affordability an insurmountable hurdle for many
- Trading up/down is too expensive for Boomers
- CA will see accelerating out-migration of Millennials in search of housing they can afford
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
- 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