California COVID-19 Economic/Market Update April 22, 2020 Jordan G. Levine Deputy Chief Economist California Association of REALTORS®
California COVID-19 Economic/Market UpdateApril 22, 2020
Jordan G. LevineDeputy Chief EconomistCalifornia Association of REALTORS®
CALIFORNIA ASSOCIATION OF REALTORS®
overview
page2
01 Fundamentals First
• Still too early for most major indicators.• We started on a strong footing economically
02 Impacts of COVID-19
• Revised forecasts for economy and housing• Lots of uncertainty and forecasts change rapidly
03 Outlook & Scenarios
• Rates won’t be enough to offset this one• Housing could be a bright spot after crisis
04 Resources for YOU
• CAR has many resources available• Information & will connect you with ASSISTANCE
Review of Pre-Crisis Economy
CALIFORNIA ASSOCIATION OF REALTORS®
The economy was still growing at a decent clip
-2
-1
0
1
2
3
4
5
6U.S. GDP Growth
CALIFORNIA ASSOCIATION OF REALTORS®
Fastest job growth in a year
1.6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
1/1/
2010
4/1/
2010
7/1/
2010
10/1
/201
01/
1/20
114/
1/20
117/
1/20
1110
/1/2
011
1/1/
2012
4/1/
2012
7/1/
2012
10/1
/201
21/
1/20
134/
1/20
137/
1/20
1310
/1/2
013
1/1/
2014
4/1/
2014
7/1/
2014
10/1
/201
41/
1/20
154/
1/20
157/
1/20
1510
/1/2
015
1/1/
2016
4/1/
2016
7/1/
2016
10/1
/201
61/
1/20
174/
1/20
177/
1/20
1710
/1/2
017
1/1/
2018
4/1/
2018
7/1/
2018
10/1
/201
81/
1/20
194/
1/20
197/
1/20
1910
/1/2
019
1/1/
2020
U.S. vs California Job Growth
Balance of U.S. CA
CALIFORNIA ASSOCIATION OF REALTORS®
Unemployment shrinks back to all-time low
0
2
4
6
8
10
12
14
1/1/
1976
12/1
/197
611
/1/1
977
10/1
/197
89/
1/19
798/
1/19
807/
1/19
816/
1/19
825/
1/19
834/
1/19
843/
1/19
852/
1/19
861/
1/19
8712
/1/1
987
11/1
/198
810
/1/1
989
9/1/
1990
8/1/
1991
7/1/
1992
6/1/
1993
5/1/
1994
4/1/
1995
3/1/
1996
2/1/
1997
1/1/
1998
12/1
/199
811
/1/1
999
10/1
/200
09/
1/20
018/
1/20
027/
1/20
036/
1/20
045/
1/20
054/
1/20
063/
1/20
072/
1/20
081/
1/20
0912
/1/2
009
11/1
/201
010
/1/2
011
9/1/
2012
8/1/
2013
7/1/
2014
6/1/
2015
5/1/
2016
4/1/
2017
3/1/
2018
2/1/
2019
1/1/
2020
Unemployment Rate
CA US
CALIFORNIA ASSOCIATION OF REALTORS®
Biggest strength also big housing weakness
CALIFORNIA ASSOCIATION OF REALTORS®
Consumers had been relatively confident
0
20
40
60
80
100
120
1/1/
1978
10/1
/197
97/
1/19
814/
1/19
831/
1/19
8510
/1/1
986
7/1/
1988
4/1/
1990
1/1/
1992
10/1
/199
37/
1/19
954/
1/19
971/
1/19
9910
/1/2
000
7/1/
2002
4/1/
2004
1/1/
2006
10/1
/200
77/
1/20
094/
1/20
111/
1/20
1310
/1/2
014
7/1/
2016
4/1/
2018
U. Mich. Consumer Sentiment Index
80
85
90
95
100
105
1/1/
2016
4/1/
2016
7/1/
2016
10/1
/201
6
1/1/
2017
4/1/
2017
7/1/
2017
10/1
/201
7
1/1/
2018
4/1/
2018
7/1/
2018
10/1
/201
8
1/1/
2019
4/1/
2019
7/1/
2019
10/1
/201
9
U. Mich. Consumer Sentiment Index
CALIFORNIA ASSOCIATION OF REALTORS®
Consumer spending was still going strong
0
100
200
300
400
500
600
Jan-
92A
pr-9
3Ju
l-94
Oct
-95
Jan-
97A
pr-9
8Ju
l-99
Oct
-00
Jan-
02A
pr-0
3Ju
l-04
Oct
-05
Jan-
07A
pr-0
8Ju
l-09
Oct
-10
Jan-
12A
pr-1
3Ju
l-14
Oct
-15
Jan-
17A
pr-1
8Ju
l-19
U.S. Retail Sales
Retail Sales Retail (x Food/Autos)
0%
1%
2%
3%
4%
5%
6%U.S. Retail Sales Growth
Retail Growth Retail Growth (x Food/Autos)
CALIFORNIA ASSOCIATION OF REALTORS®
Consumers were in good financial shape!
8
10
12
14
16
18
20
Q1-
80Q
4-80
Q3-
81Q
2-82
Q1-
83Q
4-83
Q3-
84Q
2-85
Q1-
86Q
4-86
Q3-
87Q
2-88
Q1-
89Q
4-89
Q3-
90Q
2-91
Q1-
92Q
4-92
Q3-
93Q
2-94
Q1-
95Q
4-95
Q3-
96Q
2-97
Q1-
98Q
4-98
Q3-
99Q
2-00
Q1-
01Q
4-01
Q3-
02Q
2-03
Q1-
04Q
4-04
Q3-
05Q
2-06
Q1-
07Q
4-07
Q3-
08Q
2-09
Q1-
10Q
4-10
Q3-
11Q
2-12
Q1-
13Q
4-13
Q3-
14Q
2-15
Q1-
16Q
4-16
Q3-
17Q
2-18
Q1-
19
Consumer Debt and Financial Obligations
Debt Service Ratio Financial Obligations Ratio
Why This Should BeTaken Seriously, Economically
Financial markets impact people’s wealth & confidence
page12
SERIES: Dow 30, Nikkei, FTSESOURCE: Yahoo! Finance, Bloomberg
10,000
15,000
20,000
25,000
30,000
35,000
4/21
/201
5
6/21
/201
5
8/21
/201
5
10/2
1/20
15
12/2
1/20
15
2/21
/201
6
4/21
/201
6
6/21
/201
6
8/21
/201
6
10/2
1/20
16
12/2
1/20
16
2/21
/201
7
4/21
/201
7
6/21
/201
7
8/21
/201
7
10/2
1/20
17
12/2
1/20
17
2/21
/201
8
4/21
/201
8
6/21
/201
8
8/21
/201
8
10/2
1/20
18
12/2
1/20
18
2/21
/201
9
4/21
/201
9
6/21
/201
9
8/21
/201
9
10/2
1/20
19
12/2
1/20
19
2/21
/202
0
Dow Jones Industrial Average
CALIFORNIA ASSOCIATION OF REALTORS®
Poorer population is a good predicter of recession
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q1-
68Q
1-69
Q1-
70Q
1-71
Q1-
72Q
1-73
Q1-
74Q
1-75
Q1-
76Q
1-77
Q1-
78Q
1-79
Q1-
80Q
1-81
Q1-
82Q
1-83
Q1-
84Q
1-85
Q1-
86Q
1-87
Q1-
88Q
1-89
Q1-
90Q
1-91
Q1-
92Q
1-93
Q1-
94Q
1-95
Q1-
96Q
1-97
Q1-
98Q
1-99
Q1-
00Q
1-01
Q1-
02Q
1-03
Q1-
04Q
1-05
Q1-
06Q
1-07
Q1-
08Q
1-09
Q1-
10Q
1-11
Q1-
12Q
1-13
Q1-
14Q
1-15
Q1-
16Q
1-17
Q1-
18Q
1-19
YoY % Change in U.S. Real Net Worth Per Capita
CALIFORNIA ASSOCIATION OF REALTORS®
If confidence is also impacted, not much to fall back on
-3
-2
-1
0
1
2
3
4
5
6U.S. GDP Growth by Component
Consumers Everything Else
Biggest monthly decline ever in consumer confidence
page15
March 2020 120.0
SERIES: Consumer ConfidenceSOURCE: The Conference Board
CALIFORNIA ASSOCIATION OF REALTORS®
New record for retail sales declines
-66.6%
-53.6%
-80%
-60%
-40%
-20%
0%
20%
40%
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20
U.S. Retail Sales Growth
Retail Growth Retail Growth (x Food/Autos)
CALIFORNIA ASSOCIATION OF REALTORS®
California’s 10-year jobs streak comes to an end
-99,500
-150,000
-100,000
-50,000
0
50,000
100,000
150,000Ja
n-11
Apr
-11
Jul-1
1O
ct-1
1Ja
n-12
Apr
-12
Jul-1
2O
ct-1
2Ja
n-13
Apr
-13
Jul-1
3O
ct-1
3Ja
n-14
Apr
-14
Jul-1
4O
ct-1
4Ja
n-15
Apr
-15
Jul-1
5O
ct-1
5Ja
n-16
Apr
-16
Jul-1
6O
ct-1
6Ja
n-17
Apr
-17
Jul-1
7O
ct-1
7Ja
n-18
Apr
-18
Jul-1
8O
ct-1
8Ja
n-19
Apr
-19
Jul-1
9O
ct-1
9Ja
n-20
California Nonfarm Jobs Base (Monthly Change)
CALIFORNIA ASSOCIATION OF REALTORS®
Other records we’re breaking
• Biggest drop in housing starts since 1984
• Largest decline in builder sentiment – ever
• Empire manufacturing index drops to lowest level – ever
• Industrial production at lowest level since 1946
• Philly Fed index at lowest level in 40 years
• Nearly 5 million households in forbearance
Retail store sales by category
page19SOURCE: Mortgage Bankers Association
page20
U.S. movie theaters struggle
SOURCE: BoxOfficeMojo.com, J.P. Morgan
Domestic movie theater box office receipts
*Greylines are data for 2017-2019
page21
Broadway hits a new bottom
SOURCE: BroadwayWorld.com, J.P. Morgan
Broadway theater box office receipts
*Greylines are data for 2017-2019
page22
NBA attendance drops to zero
SOURCE: espn.com, J.P. Morgan
Attendance at NBA basketball games
*Greylines are data for 2018-2019
(Average)
page23
Restaurant bookings slide
SOURCE: OpenTable.com, J.P. Morgan
Seated restaurant diners tracked by OpenTable.comyty% chg.
page24
Grocery delivery surges but food delivery fails to increase
SOURCE: SimilarWeb.com, J.P. Morgan
Website traffic growth over 2018-2019 average
*Data through March 14
page25
Hotel occupancy tumbles
SOURCE: Smith Travel, J.P. Morgan
U.S. hotel occupancy rate
*Greylines are data for 2018-2019
page26
Fewer commercial flights
SOURCE: Flightradar24 (March 27, 2020), BBC
Number of daily flights in March
Daily GDP lost by state
page27SOURCE: Wall Street Journal, Moody’s Analytics
page28
Where the rubber meets the road…
SOURCE: FRED St. Louis Fed
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000U.S. Initial Unemployment Insurance Claims
~22 millionin 4 weeks
37 millionin ~2 years
Concerns in Real EstateRamped Up Quickly
CALIFORNIA ASSOCIATION OF REALTORS®
Dates
page30
• Week 1 (n=266): March 6-8• Week 2 (n=1,085): March 14-16• Week 3 (n=749): March 20-23• Week 4 (n=923): March 27-30• Week 5 (n=749): April 3-6• Week 6 (n=722): April 10-13• Week 7 (n=609): April 17-20
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Members continue to feel the impact
page31
53%47%
78%
22%
96%
4%
97%
3%
96%
4%
97%
3%
95%
5%
Yes No
March 6-8March 14-16March 20-23March 27-30April 3-6April 10-13April 17-20
Q: Do you feel that Coronavirus has or will have a negative impact on your personal Real Estate business?
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Percent of members seeing buyers withdraw their offer remains in mid-40’s
page32
36%
64%
42%
58%
43%
57%
44%
56%48%
52%
Yes No
March 20-23March 27-30April 3-6April 10-13April 17-20
Q: Have you had any buyers withdraw an offer due to Coronavirus?
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Sellers continuing to remove homes from market
page33
13%
54%
33%31%
39%
30%
44%
32%
24%
46%
30%24%
54%
26%19%
57%
27%
16%
Yes No Not sure
March 14-16March 20-23March 27-30April 3-6April 10-13April 17-20
Q: Have you seen any sellers remove their home from the market completely due to Coronavirus?
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
1 in 4 members reporting a transaction that fell out of escrow
page34
21%
79%
29%
71%
27%
73%
28%
72%
31%
69%
Yes No
March 20-23March 27-30April 3-6April 10-13April 17-20
Q: Have you had a transaction fall out of escrow due to Coronavirus?
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
9 in 10 buyers now expecting lower prices
page35
Q: In general, are home buyers expecting lower prices now?
89%
11%
90%
10%
Yes No
April 10-13April 17-20
CALIFORNIA ASSOCIATION OF REALTORS®
30%
70%
Yes No
April 17-20
Q: Have you had a buyer attempt to renegotiate the purchase price prior to close?
CALIFORNIA ASSOCIATION OF REALTORS®
Sellers aren’t on the same page
33%
67%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes No
Have any of your home sellers recently reduced price to
attract buyers?
Apr. 17-20
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3/8
3/10
3/12
3/14
3/16
3/18
3/20
3/22
3/24
3/26
3/28
3/30 4/1
4/3
4/5
4/7
4/9
4/11
4/13
4/15
4/17
4/19
California Active Listings
Discounted Original Price
Market Environment Will Remain Challenging During SIP
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Closed sales now follow the pending sales down
page39
104
325
22
135
631
81
229
1897
461
Bay Area So CA Central Coast Central Valley California
Average Daily Closed SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
**Closed sales for the latest week will likely be revised upward due to recording delays.
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Double-digit decline for the state and most regions
page40
9.7%5.4%
16.3%
4.8% 6.7%
-10.1%-13.2%
-9.6%-14.2% -12.4%
Bay Area So CA Central Coast Central Valley California
% Chg. in Closed Sales from Prior Week (Daily Average)
Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
**Closed sales for the latest week will likely be revised upward due to recording delays.
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Big markets leading the slide
page41
2023
41
5
10
21
11 9
2018
2 2 35
18
9
6
Alameda ContraCosta
Marin Napa SanFrancisco
San Mateo Santa Clara Solano Sonoma
Average Daily Closed SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
**Closed sales for the latest week will likely be revised upward due to recording delays.
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Closed sales by county (Southern California)
page42
98
45
65
4755
15
66
3344
37 38
11
Los Angeles Orange Riverside San Bernardino San Diego Ventura
Average Daily Closed SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
**Closed sales for the latest week will likely be revised upward due to recording delays.
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Closed sales by county (Central Coast)
page43
5
10
5
23
7 6
2
Monterey San Luis Obispo Santa Barbara Santa Cruz
Average Daily Closed SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
**Closed sales for the latest week will likely be revised upward due to recording delays.
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Closed sales by county (Central Valley)
page44
22
1
16
3 3 4
15
33
1
14 12 1114
1
10
3 3 49
22
1
13 11 8
Average Daily Closed SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
**Closed sales for the latest week will likely be revised upward due to recording delays.
March data was tip of the iceberg
page45
California, March 2020 Sales: 373,070 Units, 3.1% YTD, -6.1% YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan-
05
Sep
-05
May
-06
Jan-
07
Sep
-07
May
-08
Jan-
09
Sep
-09
May
-10
Jan-
11
Sep
-11
May
-12
Jan-
13
Sep
-13
May
-14
Jan-
15
Sep
-15
May
-16
Jan-
17
Sep
-17
May
-18
Jan-
19
Sep
-19
SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
New listings leveling off?
page46
182
511
40
240
1,068
110
282
21146
602
Bay Area So CA Central Coast Central Valley California
Average Daily New ListingsMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
More properties listed in latest week
page47
-14.2% -11.6% -12.4%-6.5% -10.8%
4.9%14.4%
-0.8%
3.8%8.7%
Bay Area So CA Central Coast Central Valley California
% Chg. in New Listings from Prior Week (Daily Average)
Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Too early to tell, but encouraging signs
page48
3538
7 6 5
17
38
18 1818
26
4 4 2
10
22
12 12
Alameda ContraCosta
Marin Napa SanFrancisco
San Mateo Santa Clara Solano Sonoma
Average Daily New ListingsMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
New listings by county (Southern California)
page49
151
7595 87
78
24
84
3453
4156
14
Los Angeles Orange Riverside San Bernardino San Diego Ventura
Average Daily New ListingsMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
New listings by county (Central Coast)
page50
10
13
108
5 6 7
4
Monterey San Luis Obispo Santa Barbara Santa Cruz
Average Daily New ListingsMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
New listings by county (Central Valley)
page51
30
1
31
49 6
27
63
3
28 241519
1
17
4 6 3
15
42
1
15 11 12
Average Daily New ListingsMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Pending sales bottoming out?
page52
121
369
24
175
744
65
196
13
130
441
Bay Area So CA Central Coast Central Valley California
Average Daily Pending SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Glimpse of hope in Bay Area and Central Valley
page53
8.6%
-3.6%
4.7%0.5%
-0.5%
7.3%
-9.8%-5.0%
7.7%
-1.5%
Bay Area So CA Central Coast Central Valley California
% Chg. in Pending Sales from Prior Week (Daily Average)Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Pending sales also show hopeful signs
page54
25
32
4 46
11
24
8 7
1214
2 2 25
15
85
Alameda ContraCosta
Marin Napa SanFrancisco
San Mateo Santa Clara Solano Sonoma
Average Daily Pending SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Pending sales by county (Southern California)
page55
101
52
78
62 63
14
52
22
40 36 38
9
Los Angeles Orange Riverside San Bernardino San Diego Ventura
Average Daily Pending Sales
Mar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Pending sales by county (Central Coast)
page56
6
9
7
33
4 4
2
Monterey San Luis Obispo Santa Barbara Santa Cruz
Average Daily Pending SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
SERIES: 2020 Membership SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Pending sales by county (Central Valley)
page57
25
0
22
5 5 6
17
46
1
18 16 1420
1
14
4 4 3
14
36
1
13 11 10
Average Daily Pending SalesMar 1 - 7 Mar 8 - 14 Mar 15 - 21 Mar 22 - 28 Mar 29 - Apr 4 Apr 5 - 11 *Apr 12- 17
Mortgage applications declined sharply from last year
page58SOURCE: Mortgage Bankers Association Weekly Application Survey
Week-over-week % Chg. Year-over-Year %Chg.
Week ending 4/10/2020
Week ending 4/3/2020
Week ending 4/10/2020
Week ending 4/3/2020
CA 16.4% -38.0% -52.5% -59.9%NY 1.8% -15.9% -49.0% -47.5%WA 0.8% -31.3% -58.4% -55.4%US -1.0% -12.0% -35.0% -33.0%
Note: Not seasonally adjusted, home purchase applications only
CALIFORNIA ASSOCIATION OF REALTORS®
Not much impact to prices yet
$382
$569
$214
$505
$361
$545
$213
$451
$0
$100
$200
$300
$400
$500
$600
Southern California Bay Area Central Valley Central Coast
California Median Prices Per Square Foot by Week
10 11 12 13 14 15 16 17
CALIFORNIA ASSOCIATION OF REALTORS®
List prices down a little from early March
-3.0%
-8.4%
0.4%
-4.6%
-9%
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
Southern California Bay Area Central Valley Central Coast
Median Price Per Sq. Ft.3/2-3/8 vs. 4/13-4/19
Real Estate Poised for Strong, Eventual, Recovery
CALIFORNIA ASSOCIATION OF REALTORS®
Rates are low, and poised to remain low
3.310
0
2
4
6
8
10
12
14
16
18
20Key Interest Rates
10-Yr. Treasury 30-Yr. FRM
CALIFORNIA ASSOCIATION OF REALTORS®
Could eventually drop even lower
2.69
Historical Avg. 1.70
-1
0
1
2
3
4
5
6Mortgage Rate Spread (30-Yr. FRM – 10-Yr. Treasury)
CALIFORNIA ASSOCIATION OF REALTORS®
Market might make real estate look more attractive
Sales highest in nearly 2 years
page65
California, February 2020 Sales: 421,670 Units, 8.0% YTD, 5.9% YTY
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan-
05
Sep
-05
May
-06
Jan-
07
Sep
-07
May
-08
Jan-
09
Sep
-09
May
-10
Jan-
11
Sep
-11
May
-12
Jan-
13
Sep
-13
May
-14
Jan-
15
Sep
-15
May
-16
Jan-
17
Sep
-17
May
-18
Jan-
19
Sep
-19
SERIES: Sales of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Median price remained below 600kbut grew solidly from last year
page66
California, February 2020: $579,770, 0.8% MTM, 8.5% YTY
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Jan-
05
Sep
-05
May
-06
Jan-
07
Sep
-07
May
-08
Jan-
09
Sep
-09
May
-10
Jan-
11
Sep
-11
May
-12
Jan-
13
Sep
-13
May
-14
Jan-
15
Sep
-15
May
-16
Jan-
17
Sep
-17
May
-18
Jan-
19
Sep
-19
SERIES: Median Price of Existing Single Family HomesSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
TheForecast
This Photo by Unknown Author is licensed under CC BY-NC-ND
CALIFORNIA ASSOCIATION OF REALTORS®
Gussied up guesses
page69* Latest updates as of 04/08/2020
Q120 Q220 Q320 Q420 2020
Bank of America -7.0% -30.0% -1.00% 30.0% -10.4%
Barclays 0.5% -7.0% 0.0% 2.5% -0.6%
Goldman Sachs -9.0% -34.0% 19.0% NA -6.2%
JP Morgan -10.0% -25.0% 8.0% 4.0% NA
Morgan Stanley -3.4% -37.9% 20.7% 15.9% -5.5%
Federal Reserve Bank of St. Louis NA -50% NA NA NA
UBS -2.1% -9.5% 2.1% 6.7% -0.9%
UCLA 0.4% -30.0% -5.0% 4.0% NA
Wells Fargo -1.2% -22.3% 7.2% 4.8% -3.0%
page70
Fed has taken unprecedented action
SOURCE: California Association of REALTORS®
Federal Reserve
• Cut fed funds rate down to 0% - 0.25%
• Lowered discount window rate to 0.25%
• Expanded reverse repo operation, adding liquidity to the banking system
• Restarted quantitative easing
• Created multiple new programs to help preserve market liquidity
page71
Fiscal stimulus was a good first few steps
SOURCE: California Association of REALTORS®
Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
• Forgivable Small Business Administration Loans - independent contractors who take out SBA loans between Feb. 15, 2020, and June 30, 2020 to cover payroll costs, mortgage interest, rents, and utility costs during the covered period may be forgiven.
• Pandemic Unemployment Assistance – REALTORS® not eligible for unemployment insurance will be able to obtain unemployment assistance for up to 39 weeks if they were negatively impacted as a result of COVID-19
• Direct Payments to REALTORS® – REALTORS® and their families with annual incomes of up to $75,000 will receive a rebate check of $1,200 ($2,400 for married couples with gross annual incomes up to $150,000). An additional $500 may be given per child in the household.
CALIFORNIA ASSOCIATION OF REALTORS®
Worried about inflation?
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Jan-
59Ju
l-60
Jan-
62Ju
l-63
Jan-
65Ju
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19
Trilli
ons
U.S. Base Money Supply
CALIFORNIA ASSOCIATION OF REALTORS®
Not a major concern right now
0.0
1.0
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19
Trilli
ons
Decomposition of Base Money Supply
Net Monetary Base Excess Reserves
Retail markets dip during a crisis but stabilize eventually
page74
SERIES: Retail sales year-over-year growth
Covid-19 projections in California (Mar 31, 2020)
page75SOURCE: Institute for Health Metrics and Evaluation (IHME)
Note: The projections assume the continuation of strong social distancing measures and other protective measures.
Covid-19 projections in California (Apr 12, 2020) –the curve has been flattened
page76SOURCE: Institute for Health Metrics and Evaluation (IHME)
Note: The projections assume the continuation of strong social distancing measures and other protective measures.
Covid-19 projections in California (Apr 21, 2020) –the curve has been flattened
page77SOURCE: Institute for Health Metrics and Evaluation (IHME)
Note: The projections assume the continuation of strong social distancing measures and other protective measures.
Going hard early works
page78SOURCE: Bloomberg and health ministry data
Rush to normalcy could increase the severity
page79SOURCE: New York Times
Timing is everything for small businesses & economy
page80SOURCE: J.P. Morgan Chase
Median small business holds 27 cash buffer days in reserve
Jobs market: more like a natural disaster than recession
page81
SERIES: Louisiana jobless claimsSOURCE: St. Louis Fed, VOX
Jobless claims in Louisiana
Concluding remarks
page82
1. Economy was in good shape prior to the outbreak2. BUT, the virus has changed everything for 20203. Unprecedented in terms of size and economic scope4. Data still rolling in and weeks seem like months5. Unemployment is and will drive negative impacts6. Already seeing the effects on housing7. Key question hinges on how long the SIP lasts8. Severe pullback may be best chance for quick recovery
page83
Resources for REALTORS®
• Coronavirus Microsite
• COVID Relief Hotline
• Legal Hotline & Legal Webinars
• Transaction Rescue™ Hotline
• Ombudsman Hotline
• CARES ACT Relief for REALTORS®
• Real Estate as an Essential Service
• New FORMS for REALTORS®
• Electronic Closings
• Online Notary Services
https://www.carcovidupdates.org/
Thank YouThis presentation can be found on
www.car.org/marketdataSpeeches & Presentations