UNDERSTANDING CALIFORNIA

HOME SELLERS

January 30, 2014
Oscar Wei, Senior Research Analyst
Methodology
Telephone surveys conducted in August/September
of 600 randomly selected home sellers who sold in
the past 6 months.

Maximum sampling error: 4.0 percent at two
standard deviations (a 95% confidence level).
(Subsets of the total sample will have a higher
sampling error.)
Sales of Existing Detached Homes
California, Dec. 2013 Sales: 361,890 Units, -5.9% YTD, -18.6% YTY

-
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 Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS
Median Price of Existing Detached Homes
California, December 2013: $438,040, Up 19.7% YTY
$-
$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% from
peak
SERIES: Median Price of Existing Single Family Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS
Share of Equity Sales Decreased for the
First Time Since December 2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Equity Sales Short Sale REO
SERIES: Distressed Sales
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS
Unsold Inventory Index
California, December 2013: 3.0 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 Homes
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS
Short Sales Market Shrank as Home Prices Surged
56%
88%
44%
12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013
Equity Sale Short Sale
Q: Was the home sold as a short sale?
Mortgage Rates: Heading Higher as Economy
Improves and Fed Tapers
January 2009 December 2013
0%
1%
2%
3%
4%
5%
6%
FRM
ARM
MONTHLY
WEEKLY
SERIES: 30Yr FRM, 1Yr ARM
SOURCE: Federal Home Loan Mortgage Corporation
Sellers Received 5.9 Offers on Average
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2012 2013
3.1
5.9
Q: How many offers did you receive from buyers?
98% of Sellers Received Multiple Offers
0%
5%
10%
15%
20%
25%
30%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
2%
3%
22%
14%
30%
5%
2%
1%
5%
8%
2%
1%
0%
3% 3%
1%
Q: How many offers did you receive from buyers?
26%
50%
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010 2011 2012 2013
% of Sales above Asking Price
Long Run Average = 18%
Market Competition Leads to More Sales with
Above Asking Price
19%
46%
34%
43%
30%
57%
0%
10%
20%
30%
40%
50%
60%
2008 2009 2010 2011 2012 2013
% of Sales Above Asking Price
All Equity Sales REO Short Sales
Market Competition Leads to More Sales with
Above Asking Price
Sellers Are Optimistic About Future Home Prices
37%
19%
10%
21%
23%
17%
43%
58%
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 Year 5 Years 10 Years
Down Flat Up
Q: Do you think home prices in your neighborhood will go up, down, or stay flat?
Sellers More Optimistic About Future Home Prices
16%
20%
35%
13%
14%
26%
9%
12%
20%
43%
58%
74%
In 1 Year In 5 Years In 10 Years
2010 2011 2012 2013
Q: Do you think home prices in your neighborhood will go up?
Moving up is #1 Reason for Selling in 2013
Q: Why did you sell your home?
0% 5% 10% 15% 20% 25%
Other
Jos loss
Home worth more now
Home not worth what we owe
Changed jobs/relocation
Desired larger home
Could get maximum price/ value for our home
Financial difficulties/Cannot afford to keep the house
Interest rate are not going to get any better
Time/Price was right to move up
7%
2%
4%
6%
8%
9%
13%
14%
14%
23%
*Financial difficulties include: couldnt afford mortgage, moved to less expensive market, loss of household income, income not
keeping up with expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.
Reasons to Sell Changed as Market Conditions
Improved
Q: Why did you sell your home?
*Financial difficulties include: couldnt afford mortgage, moved to less expensive market, loss of household income, income not
keeping up with expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.
23%
Time to move up
14%
Interest rates not
improving
14%
Financial difficulties
58%
Financial difficulties
17%
Job/Income
uncertainty
7%
Underwater
2013 2012
Moving up is #1 Reason for Selling for Both First-
Time Sellers and Repeat Sellers
Q: Why did you sell your home?
0% 5% 10% 15% 20% 25%
Other
Desired larger home
Could get maximum price/ value for our home
Financial difficulties/Cannot afford to keep the
house
Interest rate are not going to get any better
Time/Price was right to move up
7%
7%
12%
14%
14%
23%
8%
9%
13%
14%
16%
22%
Repeat First-Time
*Financial difficulties include: couldnt afford mortgage, moved to less expensive market, loss of household income, income not keeping up with
expenses, monthly payment went up, new job paid less, needed to move to less expensive residence.
Most Sellers Currently Own
Own 69%
Rent 31%
Q: Do you own or rent your current home?
More Sellers Are Repurchasing
55%
42%
12%
47%
69%
45%
58%
88%
53%
31%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013
Own Rent
Q: Do you own or rent your current home?
Short Seller Are More Likely to Rent
Own
75%
Rent
25%
Equity Sale Homeowners
Own
25%
Rent
75%
Short Sale Homeowners
Q: Do you own or rent your current home?
Most Sellers Own
Own
69%
Not buying
another home
30%
Buying
another home
70%
Rent
31%
Q: Do you own or rent your current home?
For Renters Who Do Not Plan to Repurchase, Here
Are Their Reasons:
25%
25%
24%
11%
5%
2%
27%
40%
15%
3%
12%
3%
0% 10% 20% 30% 40% 50%
Credit problems
Insufficient down payment
Renting is more affordable
Uncertainty about income
Insufficient income
Pessimistic about home price appreciation
2013 2012
SERIES: 2013 California Home Seller Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS
ABOUT THE SELLER
Gen X and Y Dominate Seller Population
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011 2012 2013
Gen Y (1980-1999) Gen X (1965-1979) Boomers (1946-1964) Seniors (before 1946)
Q: What is your age?
Q: What is your age?
Age
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
<25 25-34 35-44 45-54 55-64 65+
Q: What is your age?
Median Age: 46
11%
32%
27%
24%
7%
25-34
35-44
45-54
55-64
65+
Q: What is your age?
Half of All Sellers are Married
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Single Married Other
Q:What was the marital status the head of your household at the time of the sale?
Ethnic Background
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Other
Black
Asian
Hispanic
White
Q: How would you describe your ethnic background?
Minorities are the Majority
36%
26%
25%
12%
White
Hispanic
Asian
African American
Q: How would you describe your ethnic background?
Annual Household Income
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
< $50,000 $50,000-$74,999 $75,000-$99,999
$100,000-$149,999 $150,000-$199,999 $200,000+
Q: Which of the following categories best describes your total annual household income from all sources?
Household Income
3%
26%
27%
26%
18%
< $50,000
$50,000-$74,999
$75,000-$99,999
$100,000-$149,999
$150,000-$199,999
$200,000+
Q: Which of the following categories best describes your total annual household income from all sources?
First-time Sellers
21%
16%
20%
18%
17%
15%
33%
44%
47%
48%
57%
35%
0%
10%
20%
30%
40%
50%
60%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Q: Was this your first experience in selling a house?
Length of Ownership Spiked
2.6 2.3
3.3
3.0
3.3
8.0
0
1
2
3
4
5
6
7
8
9
10
2008 2009 2010 2011 2012 2013
Median Years Mean Years
Q: Length of time home was owned prior to sale.
Length of homeownership surged
Implication: Sellers who bought during the peak
decided to sell as price increases minimized losses
0
20
40
60
80
100
120
1st-time Seller Repeat Seller
39
44
104
103
Average Months
2012 2013
Q: Length of time home was owned prior to sale.
THE SELLING PROCESS
A Typical Home Owner Considered Selling for a Year
Before Actually Doing So
6%
17%
10%
17%
4%
16%
14%
5% 5%
2%
1%
2%
1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
4 8 10 12 16 24 36 48 60 72 96 108 120
Months
Q: How long did you consider selling before actually doing so?
The Time It Took to Consider Selling Has Been
Consistent in the Last Few Years
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2011 2012 2013
12
10
12
Decline in Average Weeks on Market Reflects Tight
Inventory
1.0
6.0
11.0
16.0
21.0
26.0
31.0
2005 2006 2007 2008 2009 2010 2011 2012 2013
3.3
10.7
14.0
20.5
25.6
27.4
29.2
26.0
8.5
Q: How many weeks was your home listed on the market prior to the opening of a successful escrow?
Half of All Homes Were on the Market for 6 Weeks
or Less
0%
5%
10%
15%
20%
25%
30%
1-3 4-6 7-9 10-12 13+
25% 25%
10%
12%
28%
Weeks on Market
Q: How many weeks was your home listed on the market prior to the opening of a successful escrow?
of Sellers Closed Escrow Within 60 Days
0%
5%
10%
15%
20%
25%
30%
35%
40%
30 45 60 75 90 120
17%
36%
21%
16%
9%
1%
Days
Q: How long was your home in escrow?
Average Days in Escrow
1
11
21
31
41
51
61
2011 2012 2013
58
55
55
Q: How long was your home in escrow?
Q: How long was your home in escrow?
How Property Was Marketed?
Marketing Method % of Sellers
MLS 98%
Internet 95%
Open houses 67%
Virtual tours 59%
Featured on social media 49%
Most Important Websites for Sellers (Top 3)
68%
24%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2008 2009 2010 2011 2012 2013
Realtor.com Zillow.com Yahoo! Real Estate Trulia
Most Sellers Used Social Media
0%
10%
20%
30%
40%
50%
60%
70%
80%
2010 2011 2012 2013
24%
77%
74% 74%
Q: Did you use social media in the home selling process?
74% of All Sellers Used Social Media
Q: Which social media websites did you use to learn more about and communicate with real estate agents
and companies?
83%
52%
39%
24%
19%
What Sellers Would Change About the Sale
Q: If there was one thing you could change about your recent home sale, what would it be?
40%
Improve communication
39%
Sell for higher price
5%
Market more aggressively
4%
Respond faster
4%
Better initial pricing
2013 2012
37%
Sell for higher price
34%
Sell faster
10%
Market more aggressively
9%
Improve communication
6%
Negotiate harder
SELLER/AGENT
RELATIONSHIP
More than Half of Sellers Found Agent Online
0% 10% 20% 30% 40% 50% 60%
Friend or relative
Farming material
Referral
"For Sale" sign
Previous client
Internet
3%
4%
7%
8%
26%
51%
Q. How did you find your real estate agent?
Over of Sellers Interviewed at Least 3 Agents
0%
5%
10%
15%
20%
25%
30%
1 2 3 4 5 6
10%
12%
28%
25%
14%
11%
Q: How many agents did you interview prior to selecting the agent you used in your recent home selling
process?
Sellers Interviewed Fewer Agents
2 2
3
4 4
5
6
5
3
4
4
0
1
2
3
4
5
6
7
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Median Average
Q: How many agents did you interview prior to selecting the agent you used in your recent home selling process?
Most Buyers and Sellers Interviewed
Multiple Agents before Selecting One
Q. How many agents did you interview prior to selecting the agent you used in your recent home
purchase?
1 agent,
19%
2 agent,
26%
3 agent,
12%
4 agent,
21%
5 agents,
11%
6 or
more
agents,
11%
Buyers
Source: C.A.R. 2013 Buyer and Seller Surveys
1 agent,
10%
2 agents,
12%
3 agents,
28%
4 agents,
25%
5 agents,
14%
6 or
more
agents,
11%
Seller
Reason Seller Selected Agent
Appeared most responsive (29%)
Used agent before (19%)
Appeared most aggressive (18%)
First agent to response (12%)
Most qualified (8%)
Q: What was the single most important reason for selecting the agent you used in your recent home sale?
Response Time is Most Important in Agent
Selection
Category 2011 2012 2013
First agent to respond to my inquiry/quickest response time 4.2 4.3 4.3
Agent offered the best deal, lowest commission rate 4.1 4.3 4.1
Agent offered best marketing proposal 4.1 3.9 4.0
Agent was a REALTOR N/A 3.8 3.9
Agent was the most knowledgeable in the market area
where the property was located
3.8 3.8 3.8
Agent's knowledge of handling foreclosures, short sales,
other distressed properties
2.9 3.0 2.5
Agent was referred by relative/friends/co-workers 3.1 2.9 3.0
Q: Please rate the following factors by their importance in your decision on selecting the agent you used for your
home selling process on a scale from 1 to 5, where 5 is Extremely important and 1 is Not at all important.
96% of Sellers Expect Response Within 1 Hour
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Instantly Within 30
Minutes
Within 1
Hour
Within 2
Hours
Within 4
Hours
Same day 1 business
day
> 1
business
day
14%
11%
4%
32%
19%
14%
5%
1%
43%
34%
19%
2%
1%
Actual Expected
Q: On average, what was the ACTUAL time of your agent to return any form of communication to you?
Q: What was the typical response time you EXPECTED from your agent to return any form of communication with you?
44%
43%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Buyers Sellers
Q. What was the typical response time you expected from your agent to return any form of communication to you?
More Buyers and Sellers Expect Instant Response
from Agent
Gap in Phone & Text Communication
13%
47%
32%
5%
44%
49%
1%
3%
Telephone Email Text Message In Person
Preferred Actual
Q. What was your preferred method of communicating with your agent?
Q. How did your agent actually communicate with you?
Agent Satisfaction Ratings Relatively Unchanged
Category 2011 2012 2013
Marketing the home 3.6 3.4 3.5
Setting the price 3.4 3.3 3.3
Preparing the home for sale 3.1 3.2 3.1
Assuring the buyer is qualified 3.1 3.0 3.0
Value received for what you paid your real estate agent 3.1 3.0 3.0
Negotiating the transaction 3.0 3.0 3.0
Overall satisfaction with the real estate agent 2.8 2.8 2.7
Overall satisfaction with the home selling process 2.6 2.5 2.6
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.
Seller Satisfaction Declining
0
1
2
3
4
5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Agent Selling process
Seller Satisfaction with Agent is Correlated to Sale
Price
1. Negotiated good deal
(57%)
2. Got best price (48%)
3. Worked hard on sellers
behalf (39%)
1. Ineffective
communication (54%)
2. House took too long to
sell (39%)
3. Slow response (34%)
Q: Please explain why you had that level of satisfaction with your agent.
Seller Advice to Agents
59%
Improve communication speed
49%
Sell home faster
42%
Negotiate more aggressively
29%
Improve communication quality
26%
Listen to needs better
Q: What advice would you give to real estate agents to improve the process or level of service?
CONCLUDING REMARKS
The Takeaway
Sellers are optimistic about the future
housing market
Most sellers interview multiple agents; there
is an opportunity to gain a new client
Most sellers want better communication

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