Q42015 quarterlyreport ezine

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Quarterly Real Estate Report Q4 2015


Table of Contents

Contra Costa County/Tri-Valley 4 East Bay 10 Marin County 16 Napa County 22 San Francisco 28 Silicon Valley 38 Sonoma County 50 Sonoma Valley 56 Lake Tahoe/Truckee 62


Bay Area 10-Year Overview Here’s a look at home sales in the Bay Area’s real estate markets in the fourth quarter of 2015, with a glance back at the 10 preceding fourth quarters.

Bay Area: 10-Year Overview of Q4 Homes Sold Q4 '05

Q4 '06

Q4 '07

Q4 '08

Q4 '09

Q4 '10

Q4 '11

Q4 '12

Q4 '13

Q4 '14

Q4 '15

2,921

2,068

1,205

3,343

3,063

2,657

2,757

2,814

2,464

2,493

2,513

EAST BAY

831

708

510

515

601

595

634

807

757

680

694

MARIN COUNTY

580

541

390

303

522

454

453

593

558

525

514

NAPA COUNTY

316

266

161

281

325

282

324

376

313

271

273

SAN FRANCISCO (SFH)

807

652

488

481

649

615

665

737

712

675

620

SAN FRANCISCO (CONDOS)

563

548

490

353

516

447

466

625

690

621

587

SILICON VALLEY

662

619

467

335

573

584

501

687

590

550

477

1,295

1,090

667

1,303

1,154

1,014

1,230

1,300

1,143

1,143

1,195

SONOMA VALLEY

127

108

63

94

110

97

127

142

126

146

113

LAKE TAHOE/TRUCKEE (SFH)

272

220

178

167

297

249

293

356

283

325

317

84

70

60

45

74

87

73

97

95

88

86

REGION CONTRA COSTA COUNTY

SONOMA COUNTY

LAKE TAHOE/TRUCKEE (CONDOS)

Copyright © Pacific Union. Source: BrokerMetrics / Terradatum, Inc. using data from SFARMLS, EBRD, BAREIS, MLSLSTINGS, TSIERRA, January 7, 2016.

Click here to see specific 10-year data on key cities in the Bay Area.


Contra Costa County/Tri-Valley Quarterly Real Estate Report Q4 2015

Ellen Anderson Senior Vice President, Contra Costa County 925.743.9330 ellen.anderson@pacunion.com 101 Sycamore Valley Road West | Danville, CA 94526


Contra Costa County/Tri-Valley pacificunion.com

Contra Costa County/Tri-Valley: Q4 Results Market activity slowed during the fourth quarter in Pacific Union’s Contra Costa County/Tri-Valley region, with sales and active listings both down significantly from the previous quarter. Activity peaked in the second quarter of 2015 and moderated in the third before slipping further in the fourth, largely because of a severe shortage of homes on the market. Potential sellers were cautious – tempted by rising prices to put their homes on the market but uncertain of their prospects when they too become buyers. Buyers were more cautious as well. After the frantic pace of recent years, homebuyers generally took longer to make buying decisions in the fourth quarter. They inspected homes more frequently before making offers, and they were less likely to overbid. New buyers continued to enter the market, however, encouraged by the Bay Area’s strong economy and extremely low interest rates. Looking Forward: The upcoming election year and uncertainty over future interest-rate increases could slow sales activity in the first quarter of 2016, but the Bay Area’s economic fundamentals remain exceptionally strong. We fully expect that the coming of spring will energize both buyers and sellers. Defining Contra Costa County/Tri-Valley: Our real estate markets in Contra Costa County include the cities of Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek. Sales data in the charts below includes single-family homes in these communities.

Median Sales Price $1,300,000 $1,100,000

$1,185,000 $1,000,000 $970,000

$1,093,500 $1,010,000

$1,100,000

$1,110,000

$1,100,000 $1,069,000

$1,057,500 $1,022,500

$1,049,000

$1,001,600

$900,000 $700,000 $500,000 $300,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

Months’ Supply of Inventory 2.6

2.3

2.1

1.9 1.5

1.6

1.6 1.4

1.4

1.2

1.3

1.3

1.6

1.4

1.3

1.1 0.6

0.6

0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.


Contra Costa County/Tri-Valley pacificunion.com

Average Days on the Market 45

40

40 35

34

31

29

30

25

25 20

22

19

19

18

Apr-15

May-15

Jun-15

24

27

28

Sep-15

Oct-15

32

15 10 5 0

Dec-14

Jan-15

Feb-15

Mar-15

Jul-15

Aug-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

Percentage of Properties Under Contract 50%

45.4% 42.4%

45% 40% 35% 30%

33.7%

40.3% 38.0%

35.8%

36.9%

35.9%

36.4%

38.8%

37.4%

33.3%

29.5%

25% 20% 15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.

Sales Price as a Percentage of Original Price 104% 102.4% 102%

101.0%

101.6%

101.3% 99.8%

100%

98.8%

98.3% 98%

99.3%

99.0%

99.5% 98.8%

97.2% 96.0%

96% 94% 92%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in these Contra Costa County communities: Alamo, Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, and Walnut Creek.


Contra Costa County/Tri-Valley pacificunion.com

A Closer Look at Contra Costa County/Tri-Valley

Contra Costa County Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

Median Price

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Alamo

$

71,641,781

$

83,325,905

16%

45

42

-7%

43

68

58%

$ 1,500,000

$ 1,770,000

18%

Blackhawk

$

33,101,888

$

30,610,788

-8%

21

16

-24%

50

80

60%

$ 1,378,000

$ 1,647,000

20%

Danville

$ 143,733,273

$ 163,482,579

14%

116

129

11%

30

37

23%

$ 1,166,500

$ 1,175,000

1%

Diablo

$

9,449,525

$

1,800,000

-81%

5

1

-80%

47

154

228%

$ 1,475,000

$ 1,800,000

22%

Lafayette

$

90,114,024

$

87,370,315

-3%

67

62

-7%

23

23

0%

$ 1,160,000

$ 1,275,000

10%

Moraga

$

31,051,500

$

23,454,500

-24%

27

18

-33%

26

16

-38%

$ 1,060,000

$ 1,280,000

21%

Orinda

$

83,476,340

$

67,997,000

-19%

62

51

-18%

35

27

-23%

$ 1,197,500

$ 1,250,000

4%

Pleasant Hill

$

47,786,699

$

59,818,135

25%

70

91

30%

30

22

-27%

$

652,500

$

650,000

0%

San Ramon

$ 149,943,427

$ 157,387,546

5%

159

154

-3%

27

29

7%

$

889,000

$

963,750

8%

Walnut Creek

$ 130,050,065

$ 154,738,161

19%

134

152

13%

30

23

-23%

$

889,210

$

927,950

4%

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Contra Costa County cities.


Contra Costa County/Tri-Valley pacificunion.com

Contra Costa County Housing and Economic Outlook Though places like San Ramon, Berkeley, Concord, and Richmond are major local employment centers, Contra Costa is primarily a commuter housing market. The new BART rail line should make a major difference to home investment along state Route 4, where many buyers stretch to qualify for a home.

THE ECONOMY Solid Job Growth: Contra Costa County had nearly 344,000 employed individuals in 2014 and is projected to add another 7,900 by the year’s end. That translates to a solid growth rate of 2.3 percent for 2015. Though still positive, we project an easing of job growth heading into 2018. Sector Growth: The Education & Health Services and Professional & Business Services sectors have experienced the largest job growth over the past year. Solid Employment: With an unemployment rate of 4.4 percent, Contra Costa County is below the national average of 5.1 percent. High Incomes: With a median household income of nearly $82,000 in 2014, Contra Costa County enjoys a relatively strong income profile, well above the national norm of about $52,000. Income growth finally surged last year and is projected to be strong over the next few years.

Jobs and Median Income Trends and Projections - Contra Costa County Jobs Total Change Change Rate Median Income Change Rate

2009 326,400 -16,900 -4.9% $75,746 -4.0%

2010 316,700 -9,700 -3.0% $74,126 -2.1%

2011 317,500 800 0.3% $74,141 0.0%

2012 326,100 8,600 2.7% $76,064 2.6%

2013 336,600 10,500 3.2% $79,100 4.0%

2014 343,900 7,300 2.2% $81,908 3.5%

2015P 351,800 7,900 2.3% $85,745 4.7%

2016P 358,100 6,300 1.8% $89,595 4.5%

2017P 363,100 5,000 1.4% $94,098 5.0%

2018P 364,600 1,500 0.4% $98,607 4.8%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Stable Growth: Contra Costa County has seen its population grow at a solid to strong rate of 1.2 percent - 1.5 percent in recent years. This equates to about 14,700 additional residents annually over the last five years. Like growth, however, population growth is projected to ease through 2018. Household formation picking up: Household growth should outpace population growth as millennials begin to move out and, more generally, household formations pick up. We anticipate an increase of over 23,000 additional households by the end of 2018.

Population and Households Trends and Projections - Contra Costa County

2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

1,037,900

1,052,900

1,066,600

1,079,400

1,096,000

1,111,300

1,126,800

1,141,800

1,154,800

1,166,800

14,500

15,000

13,700

12,800

16,600

15,400

15,500

15,000

13,000

12,000

1.4%

1.4%

1.3%

1.2%

1.5%

1.4%

1.4%

1.3%

1.1%

1.0%

371,900

376,700

380,400

384,100

388,500

393,500

399,200

405,400

411,100

416,600

Change

4,700

4,900

3,700

3,700

4,400

5,000

5,700

6,200

5,700

5,500

Change Rate

1.3%

1.3%

1.0%

1.0%

1.1%

1.3%

1.4%

1.6%

1.4%

1.3%

Population Total Change Change Rate Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


Contra Costa County/Tri-Valley pacificunion.com

THE HOUSING MARKET Easing Home Price Growth: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the East Bay MSA shows prices have risen 10.1 percent over the last year. Though appreciation still remains strong, it has slowed substantially from the rates experienced in 2012 and 2013. JBREC forecasts slower price increases through 2018. Resale Volume Trending Up for 2015: The resale volume in Contra Costa County was down an average of 7 percent annually in 2013 and 2014, but is currently up 7.4 percent year over year. Projections at the MSA level indicate conservative volume growth of 0.5 - 2.0 percent through 2018. Investor Activity Slowing: Investors are purchasing about 16 percent of homes in the East Bay MSA, down from 31 percent at the peak at the beginning of 2013. Higher home prices, and hence lesser returns on rented homes, is the main reason as investors chase relative bargains elsewhere. Affordability: Though low mortgage rates help keep affordability at a historically normal level in Contra Costa County, comparatively high prices mean homeownership is still slightly more onerous than is ideal. The median-income household would need to pay 36 percent of their income to buy the median-priced resale home and about 43 percent to afford the median-priced new home. New Home Pricing: The median new home price in Contra Costa County is $601,250, up 17 percent from calendar 2014.

Burns Home Value Index Trends and Projections - East Bay MSA Burns Home Value Index Change Rate Affordability Index

2009 111.0 -3.1% 1.4

2010 105.5 -5.0% 1.4

2011 99.5 -5.6% 0.8

2012 115.2 15.8% 0.6

2013 139.9 21.4% 3.9

2014 153.0 9.4% 5.4

Current 165.4 10.1% 5.2

2015P 169.6 10.9% 5.0

2016P 178.2 5.1% 5.5

2017P 183.9 3.2% 5.7

2018P 187.1 1.7% 5.7

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Chevron to Cut 7,000 Additional Jobs: In October, San Ramon-based Chevron Corp. announced it will be eliminating up to 7,000 positions companywide. As of August 2015, Chevron had a workforce of 6,500 employees throughout the Bay Area, 3,200 of which were located at the San Ramon headquarters. Though it is uncertain how many of these job losses will be within the East Bay, the company has already eliminated 600 jobs in the region since the beginning of 2015. Growth to Push Eastward?: The state Route 4 corridor that stretches from Pittsburg to Brentwood has long been a major focus of new home builders looking to supply family-friendly detached product at comparatively affordable prices. With mostly infill opportunities in the western portions of this submarket, east Oakley may be the next major new home node there. Brookfield Homes and its partner DeNova Homes have started initial sales efforts in eastern Oakley at Emerson Ranch. As these 567 homes begin to wind down, the vast East Oakley Specific Plan area east of Emerson Ranch will likely take over. This area has multiple landowners, but may be fashioned into a large cohesive masterplan with thousands of new homes. Delta Coves, north of the East Oakley area, will eventually sell water-oriented upscale new homes, most of which will have their own slip in a marina environment.


East Bay Quarterly Real Estate Report Q4 2015

Pam Hoffman Senior Vice President, Managing Broker, East Bay Region 510.339.6460 phoffman@pacunion.com 1900 Mountain Boulevard | Oakland, CA 94611


East Bay pacificunion.com

East Bay: Q4 Results Homebuyers in Pacific Union’s East Bay region faced a severe shortage of available homes throughout 2015. The fourth quarter saw a modest increase in listings hit the market, but they were snapped up by an influx of buyers, leaving supply just as constrained as when the year started. Under such conditions, sales prices posted double-digit gains, buyers continued to submit bids above asking prices, and multiple offers remained the norm for desirable homes that were fairly priced. Fourth-quarter sales velocity remained strong through November before tapering off in December as the holiday season drew near. Overall, low interest rates, high rental prices, and a thriving regional economy kept buyers coming to the East Bay. Looking Forward: With the Bay Area’s high salaries and strong employment numbers, we look forward to a busy year for East Bay real estate markets this year. The Federal Reserve’s recent decision to raise interest rates will likely help motivate indecisive buyers in the months ahead. Interest rates at the start of 2016, after all, remain exceptionally low by historical levels. Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Alameda; Albany; Berkeley; El Cerrito; Kensington; and Piedmont. Sales data in the charts below includes single-family homes in these communities.

Median Sales Price $1,000,000 $900,000 $800,000

$900,000 $925,000 $820,000 $792,500

$915,000

$910,000

May-15

Jun-15

$918,500 $850,000

$805,100

$865,000

$913,500

$925,000

Oct-15

Nov-15

$892,500

$700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

Jul-15

Aug-15

Sep-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in the East Bay.

Months’ Supply of Inventory 2.6 2.1

2.1

1.9 1.6

1.6 1.1 1.1

0.9

1.1

1.0 0.8

0.7

0.9

0.9 0.7

0.6

0.1

0.3

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in the East Bay.


East Bay pacificunion.com

Average Days on the Market 40

37

35 30

27 24

25

23

22

20

20

16

17

17

Jun-15

Jul-15

24 20

19

20

15 10 5 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in the East Bay.

Â

Percentage of Properties Under Contract 60% 50.0% 50% 40%

51.0%

50.1%

51.1%

46.6%

42.9% 34.4%

42.4%

52.8%

52.7%

Nov-15

Dec-15

46.1% 39.6%

32.4%

30% 20% 10% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in the East Bay. Â

Sales Price as a Percentage of Original Price 118%

115.7%

116%

115.6%

115.2%

115.8%

114.9%

114% 112% 110%

114.1% 112.7%

110.4%

112.2% 110.8%

110.6%

109.0%

108% 106%

104.2%

104% 102% 100% 98%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in the East Bay.


East Bay pacificunion.com

A Closer Look at the East Bay

East Bay Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Homes Sold

Avg. Days on Market

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Median Price Q4 '14

Q4 '15

% change

Alameda

$

69,352,950

$ 101,791,157

47%

84

99

18%

22

20

-9%

$

813,000

$

938,000

15%

Albany

$

14,772,000

$

20,578,500

39%

17

21

24%

20

19

-5%

$

845,000

$

875,000

4%

Berkeley

$ 154,347,155

$ 158,447,749

3%

147

136

-7%

23

22

-4%

$

960,000

$ 1,055,500

10%

El Cerrito

$

40,163,451

$

37,783,338

-6%

56

51

-9%

23

17

-26%

$

685,000

$

750,000

9%

Kensington

$

23,635,720

$

19,365,000

-18%

25

18

-28%

27

17

-37%

$

786,720

$ 1,046,500

33%

Oakland*

$ 277,391,079

$ 328,555,439

18%

325

344

6%

23

22

-4%

$

801,000

$

887,500

11%

Piedmont

$

$

-6%

26

25

-4%

13

24

85%

$ 1,725,000

$ 1,668,888

-3%

50,060,776

47,026,388

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected East Bay cities; *Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705.

East Bay Price Range Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Homes Sold

Avg. Days on Market

Median Price

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

14,271,100

-46%

67

34

-49%

36

31

-14%

$

403,000

$

437,500

9%

Over $500,000 $ 603,313,431

$ 699,276,471

16%

613

660

8%

21

21

0%

$

851,000

$

935,000

10%

$500,000 $1 million

$ 318,585,712

$ 297,042,424

-7%

419

379

-10%

23

21

-9%

$

760,000

$

800,000

5%

Over $1 million $ 284,727,719

$ 402,234,047

41%

194

281

45%

17

21

24%

$ 1,326,500

$ 1,300,000

-2%

Under $500,000

$

Q4 '15

26,409,700

$

Q4 '14

Q4 '15

% change

Source: Terradatum, January 7, 2016. Data is for SFH in the East Bay: Alameda, Albany, Berkeley, El Cerrito, Kensington, Piedmont, and Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705.

Oakland Snapshot: Q4 2015 vs. Q4 2014 Neighborhood

Homes Sold Q4 '14

Q4 '15

Average Price % change

Q4 '14

Q4 '15

% change

Montclair / Joaquin Miller

76

83

9%

$978,695

$1,060,727

8%

Crocker Highlands / Grand Lake

35

34

-3%

$1,054,548

$1,212,426

15%

Rockridge / Claremont

33

38

15%

$1,266,553

$1,368,033

8%

Glenview/Oakmore

42

32

-24%

$893,452

$980,375

10%

Laurel / Dimond

22

23

5%

$640,159

$631,869

-1%

Redwood Heights / Lincoln Heights

20

25

25%

$647,800

$819,750

27%

Crestmont / Ridgemont / Skyline

10

11

10%

$1,110,700

$1,035,545

-7%

Temescal / Piedmont Ave.

18

19

6%

$865,833

$987,342

14%

Source: EBRD, January 7, 2016. Data is for single-family homes in selected Oakland neighborhoods.


East Bay pacificunion.com

Alameda County Housing and Economic Outlook Benefitting from easy access to both San Francisco and Silicon Valley, Alameda County offers relatively affordable housing opportunities for commuters as well as quality housing for those working locally. Areas with good schools are the most desirable as many parts of the county are more family oriented than the core urban parts of the region

THE ECONOMY Solid Job Growth: Alameda County had over 721,000 employed residents in 2014 and is projected to add another 16,600 by the end of the year. Employment growth has been at +/- 3 percent over for the past three years and we anticipate healthy increases going forward, though growth will slow by 2018. Growing Sectors: The Professional & Business Services and Leisure & Hospitality job sectors have experienced the largest job growth over the past year. High Employment: With an unemployment rate of 4.2 percent, Alameda County is below the national average of 5.1 percent. Good Incomes: At $75,600 in 2014, the Alameda County median household income is above state and national benchmarks, though lower than in other parts of the Bay Area such as San Francisco or San Jose. Income levels have risen by over 4 percent in the last two years and are projected to remain at solidly positive levels through 2018.

Jobs and Median Income Trends and Projections - Alameda County Jobs Total Change Change Rate Median Income Change Rate

2009 658,600 -43,800 -6.2% $68,344 -2.9%

2010 647,600 -11,000 -1.7% $67,008 -2.0%

2011 655,200 7,600 1.2% $67,309 0.4%

2012 676,000 20,800 3.2% $69,342 3.0%

2013 700,900 24,900 3.7% $72,399 4.4%

2014 721,100 20,200 2.9% $75,569 4.4%

2015P 737,700 16,600 2.3% $78,453 3.8%

2016P 751,000 13,300 1.8% $81,651 4.1%

2017P 761,500 10,500 1.4% $85,469 4.7%

2018P 764,500 3,000 0.4% $89,251 4.4%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Stable Growth: Alameda County has experienced population growth at a rate between 1.0 percent and 1.7 percent in recent years. This translates into over 112,000 additional residents in the past five years. Population growth is projected to maintain a solid level of about 1.2 percent to 1.5 percent annually over the next several years. Household Formation Growing: Household growth should outpace population growth as millennials begin to move out and, more generally, household formations pick up. We anticipate an increase of 35,700 additional households by the end of 2018.

Population and Households Trends and Projections - Alameda County

2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

1,498,500

1,513,600

1,532,500

1,556,200

1,583,200

1,610,900

1,634,900

1,656,900

1,676,900

1,696,400

21,300

15,100

18,900

23,700

27,000

27,700

24,000

22,000

20,000

19,500

1.4%

1.0%

1.2%

1.5%

1.7%

1.7%

1.5%

1.3%

1.2%

1.2%

541,100

546,300

551,400

558,700

566,200

575,400

584,300

593,500

602,200

611,100

Change

7,500

5,200

5,000

7,300

7,500

9,200

8,900

9,200

8,700

8,900

Change Rate

1.4%

1.0%

0.9%

1.3%

1.3%

1.6%

1.5%

1.6%

1.5%

1.5%

Population Total Change Change Rate Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


East Bay pacificunion.com

THE HOUSING MARKET Easing Home Price Growth: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the East Bay MSA shows prices have risen 10.1 percent over the last year. Though appreciation still remains strong, it has slowed substantially from the rates experienced in 2012 and 2013. JBREC forecasts slower price increases through 2018. Resale Volume Finally Trending Up: Alameda County’s resale volume was down about 5 percent annually in 2013 and 2014, but is up 4 percent currently to a level of 16,300 sales. Projections at the MSA level indicate conservative growth in sales volumes of 0.5 percent - 2.0 percent through 2018. Investor Activity Slowing: Investors are purchasing about 16 percent of homes in the East Bay MSA, down from an early 2013 peak of 31 percent. Higher home prices, and hence lesser returns on rented homes, is the main reason as investors chase comparative bargains elsewhere. Affordability: Though low mortgage rates help keep affordability at a historically normal level, comparatively high prices in Alameda County mean homeownership is still a burden for a household with an average income. The median-income household would need to pay 53 percent of their income to buy the median-priced resale home and about 65 percent to afford the median-priced new home. New Home Pricing: The median new home price in Alameda County is $848,000, up 10 percent from calendar year 2014.

Burns Home Value Index Trends and Projections - East Bay MSA Burns Home Value Index Change Rate Affordability Index

2009 111.0 -3.1% 1.4

2010 105.5 -5.0% 1.4

2011 99.5 -5.6% 0.8

2012 115.2 15.8% 0.6

2013 139.9 21.4% 3.9

2014 153.0 9.4% 5.4

Current 165.4 10.1% 5.2

2015P 169.6 10.9% 5.0

2016P 178.2 5.1% 5.5

2017P 183.9 3.2% 5.7

2018P 187.1 1.7% 5.7

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Tesla Expanding Operations: Tesla Motors has announced it will be leasing the old Solyndra vehicle factory in Fremont. The company already owns the former NUMMI plant nearby, which employs nearly 6,000 people. Tesla will use the additional 500,000-square-foot complex to “expand manufacturing and build more engineering labs as production increases.” Even with the existing car plant just down the street, this new endeavor could potentially add up to another 1,000 jobs. Pushing East on Interstate 580: While Dublin has been a tremendous new-home market for several years now, Livermore is starting to experience growth as well. Active projects in Dublin have actually diminished over the last two-plus years, though the impending market introductions of Wallis Ranch and then Dublin Crossing will change that. Livermore, meanwhile, has seen new infill neighborhoods just east of its revitalized downtown area and a major KB Home multineighborhood community (Vineyard Crossing) just north of the famed Livermore Labs complex. Shea Homes, moreover, will soon enter the market with a 460-plus-unit community of its own called Sage in north Livermore. This demand migration makes sense given frothy pricing in Dublin and will continue as long as that price difference remains. New Activity in Old Places: Southwest Alameda County, stretching roughly from Hayward south to Fremont, is a generally urban-suburban environment that is largely built out. Some significant development has occurred in Hayward, while Fremont, with its enviable schools, also has had a variety of new infill neighborhoods. Now some major developments are slated for Fremont (for example, Warm Springs by Lennar) that will include thousands of new homes. Meanwhile, places like Union City and Newark that have not seen much new housing activity in years have experienced strong sales at recent new home additions (for example, Trumark Homes and K. Hovnanian in Newark, Pulte in Union City). There are also sizable planned developments in this subregion that could combine to make this a major regional new-home hotbed.


Marin County Quarterly Real Estate Report Q4 2015

Brent Thomson President, Marin County 415.383.1900 brent.thomson@pacunion.com 575 Redwood Highway, Suite 150 | Mill Valley, CA 94941


Marin County pacificunion.com

Marin County: Q4 Results There were plenty of buyers in Pacific Union’s Marin County region during the fourth quarter but nowhere near enough homes to accommodate them – a problem that has persisted across the Bay Area for several years. In a marked change, however, buyers in the second half of the year started to gain the upper hand in negotiations. They displayed little sense of urgency and were more likely to pass on an attractive house at a competitive price, waiting to see what will come on the market in the weeks and months ahead. Sales prices rose throughout the year, climbing aggressively earlier in 2015 before moderating in the fourth quarter. Demand for housing remained high, and sellers continued to enjoy healthy premiums. Private purchase agreements – reached without homes ever appearing on a local MLS and without competing bids – were not uncommon. Looking Forward: Marin County remains an attractive destination for buyers. The chilly weather may affect sales in January and February, but we expect a very busy spring and summer, aided by a booming Bay Area economy. Interest rates remain exceptionally low, and any further increases would likely have little effect on Marin County sales. Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the charts below includes single-family homes in these communities.

Median Sales Price $1,300,000 $1,160,000 $1,100,000

$1,008,000

$990,000

$1,175,000

$1,175,000 $1,112,000 $1,056,000

$980,000

$1,095,000 $1,055,000

$1,201,908

$1,200,000

$1,130,000

$900,000 $700,000 $500,000 $300,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.

Months’ Supply of Inventory 3.1 2.7 2.6 2.1

2.4

1.8

2.3

1.6

1.6

1.3

1.4

1.5

1.4

1.7

1.6

1.5

1.1

0.9

0.6 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.


Marin County pacificunion.com

Average Days on the Market 80

74

70

62

60

59

58

57

56

51

47

50 40

38

38

Jun-15

Jul-15

48

53

56

30 20 10 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.

Percentage of Properties Under Contract 50%

43.8%

45% 40%

37.1%

35.2%

35%

39.3%

36.7%

29.9%

30% 25%

42.5%

35.2% 31.1%

30.8%

Aug-15

Sep-15

32.3% 29.3%

21.8%

20% 15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.

Sales Price as a Percentage of Original Price 104%

102.5%

102%

100.8%

100%

98.1%

98%

98.3%

97.8% 95.7%

96% 94%

100.2%

99.2%

96.1%

96.7%

95.1%

94.8%

93.7%

92% 90% 88%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in these Marin County communities: Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.


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A Closer Look at Marin County

Marin County Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

Median Price

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Belvedere

$

22,890,500

$

33,858,000

48%

6

9

50%

120

67

-44%

$ 3,775,000

$ 3,400,000

-10%

Corte Madera

$

16,418,250

$

29,999,616

83%

11

23

109%

58

56

-3%

$ 1,350,000

$ 1,275,000

-6%

Fairfax

$

15,627,000

$

14,177,500

-9%

17

17

0%

37

53

43%

$

$

750,000

-13%

Greenbrae

$

10,132,225

$

18,438,500

82%

8

12

50%

39

34

-13%

$ 1,320,000

$ 1,530,750

16%

Kentfield

$

29,566,500

$

37,869,000

28%

15

16

7%

65

115

77%

$ 1,850,000

$ 2,070,000

12%

Larkspur

$

29,270,750

$

23,987,500

-18%

18

14

-22%

53

58

9%

$ 1,447,000

$ 1,577,250

9%

Mill Valley

$

110,579,125

$ 143,274,000

30%

71

79

11%

54

48

-11%

$ 1,300,000

$ 1,488,000

14%

Novato

$

94,281,527

$ 105,556,000

12%

116

117

1%

63

54

-14%

$

$

847,000

12%

Ross

$

48,625,000

$

42,300,000

-13%

13

8

-38%

85

78

-8%

$ 3,000,000

$ 4,275,000

43%

San Anselmo

$

52,663,600

$

38,717,000

-26%

44

31

-30%

56

38

-32%

$ 1,070,000

$ 1,151,000

8%

San Rafael

$

115,587,310

$ 129,242,335

12%

118

111

-6%

59

44

-25%

$

899,500

$ 1,060,000

18%

Sausalito

$

26,640,000

$

31,969,000

20%

18

15

-17%

70

51

-27%

$ 1,392,500

$ 2,000,000

44%

Tiburon

$

98,722,887

$

90,024,500

-9%

34

29

-15%

81

58

-28%

$ 2,385,500

$ 2,750,000

15%

860,000

758,000

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Marin County cities.


Marin County pacificunion.com

Marin County Housing and Economic Outlook This affluent San Francisco suburban bedroom community offers older, but generally well-maintained and desirable homes. Supply constraints and great schools make this market a relatively safe long-term investment.

THE ECONOMY Decent Jobs: Marin County is only a bridge away from San Francisco but is a world apart with a quiet, suburban environment. It has an employment basis of only 112,000 and recent job growth has been a solid 1,900 jobs in the last year. We project continued job growth ahead, at least for the near term. High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin Counties), the higher-paying sectors – finance, information, and professional and business services – are critical and have experienced tremendous growth over the last three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014. Highly Employed Population: Only 3.1 percent of the county labor pool cannot find a suitable job. Well Off and Getting Better: Marin County is highly affluent, supporting a 2014 median household income of $100,700 per year. Wage growth has recently been excellent and is projected to be very strong for the next few years as well.

Jobs and Median Income Trends and Projections - Marin County Jobs Total Change Change Rate Median Income Change Rate

2009 100,800 -6,600 -6.1% $85,810 -2.4%

2010 100,400 -400 -0.4% $84,473 -1.6%

2011 102,200 1,800 1.8% $86,559 2.5%

2012 105,500 3,300 3.2% $90,871 5.0%

2013 109,700 4,200 4.0% $96,580 6.3%

2014 111,600 1,900 1.7% $100,677 4.2%

2015P 116,100 4,500 4.0% $104,507 3.8%

2016P 118,100 2,000 1.7% $109,276 4.6%

2017P 119,000 900 0.8% $115,111 5.3%

2018P 118,500 -500 -0.4% $120,684 4.8%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Slow and Steady: Marin County is home to a little over one-quarter of a million people in 106,000 households. Population growth is forecast to remain fairly slow as it has been historically, both a function of high housing prices and a generally slow growth sentiment. By the Numbers: Growth projections translate into about 2,000 new residents annually in Marin County, or about 1,000 new households, with household growth projected to increase at a slightly faster pace.

Population and Households Trends and Projections - Marin County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

250,900

252,900

255,400

256,100

258,800

260,800

262,800

264,900

267,000

269,000

Change

2,500

2,000

2,500

700

2,700

1,900

2,000

2,100

2,100

2,000

Change Rate

1.0%

0.8%

1.0%

0.3%

1.0%

0.7%

0.8%

0.8%

0.8%

0.7%

102,500

103,400

104,100

104,200

104,900

105,500

106,400

107,500

108,600

109,700

Population Total

Household Total Change

1,100

900

700

100

700

700

900

1,100

1,100

1,100

Change Rate

1.0%

0.9%

0.7%

0.1%

0.7%

0.6%

0.9%

1.0%

1.0%

1.0%

Source: Moody Analytics; John Burns Real Estate Consulting


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THE HOUSING MARKET Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA shows prices up 6.9 percent over the last year. We expect appreciation to shift to a more modest trend in the coming years as recent price increases have pushed absolute price points to extraordinary levels. Consistent Resale Volumes: There have been about 3,500 resales in Marin County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017. Shrinking Affordability: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific to Marin County, a household earning the median income would need to pay 56 percent of their income to buy a median-priced resale home and an infeasible 97 percent for a median-priced new home (new home activity in Marin is extremely limited and therefore median pricing can fluctuate substantially). High and Still Rising: Marin County sees very few new homes built in any given year. Thus undersupply, an attractive environment, and strong incomes mean new home prices are always high, with a current median of over $1.6 million over the last year.

Burns Home Value Index Trends and Projections - San Francisco MSA Burns Home Value Index Change Rate Affordability Index

2009 130.7 -1.0% 3.8

2010 125.5 -4.0% 3.6

2011 122.7 -2.2% 2.0

2012 141.4 15.2% 3.4

2013 164.5 16.4% 6.5

2014 180.2 9.6% 6.6

Current 200.7 13.7% 6.9

2015P 207.6 15.2% 7.2

2016P 222.5 7.2% 7.2

2017P 229.2 3.0% 6.9

2018P 229.2 0.0% 6.2

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Will Tech Fill Departing Jobs?: The Fireman’s Fund Insurance Co. announced this summer they were packing up their office of over 700 employees in Novato for more affordable rent 12 miles north in Petaluma. While this hurts the local jobs picture, there has been a buzz about who will occupy the 500,000-square-foot office complex in Marin. A number of Silicon Valley-based companies have inquired about the soon to be unoccupied space, including the Google-founded biotech company Calico. According to Novato economic development officials, a new tenant will be determined by the end of 2015. Though no more than rumors, other tech-oriented companies are said to be looking into Marin County for its proximity to the core Bay Area and lower rents. SMART on Track: The SMART train will provide a rail commuter option that parallels the congested Highway 101 from Sonoma County to the north and into Marin County, terminating at Larkspur. SMART is currently testing track to check onboard systems and operational requirements, and is on schedule to open several stations in late 2016. SMART riders will need to catch a ferry in Larkspur to commute to San Francisco jobs, but it will certainly take pressure off Highway 101 and make Marin County homes more attractive to those working in San Francisco.


Napa County Quarterly Real Estate Report Q4 2015

Linda Carroll Regional Executive, Napa County 707.251.8805 linda.carroll@pacunion.com 944 Main Street | Napa, CA 94559


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Napa County: Q4 Results Limited inventory squeezed sales volume in Napa County in 2015, while average sales prices climbed higher. Homes priced under $500,000 were in particularly short supply in the fourth quarter and commanded multiple offers, while those priced above $700,000 – typically a popular move-up market – sat idle longer than we had seen in quite some time. Even with the prospect of robust sales prices, sellers were reluctant to put their homes on the market, and many of those that did so added contingencies allowing them to find a new place to live before leaving their current home. Such contingencies made for some complex fourth-quarter deals, with several sales dependent on both the buyer and seller completing separate transactions first. Looking Forward: Buyers typically don’t like to shop in the rain, so first-quarter sales – particularly vineyard land – could be affected by the El Niño storms forecast for the West Coast. Otherwise, sellers who pulled their properties off the market in November and December will be returning them in the spring, when trees and flowers are blooming and Napa County looks its finest. Make no mistake: Buyers will be waiting. Defining Napa County: Our real estate markets in Napa County include the cities of American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville. Sales data in the charts below includes all single-family homes in Napa County.

Median Sales Price $800,000 $700,000 $600,000

$633,000 $522,500

$500,000

$559,750

$586,250 $600,000

$630,250

$620,000

$655,000

$685,000 $575,000

$571,316

$497,000 $492,000

$400,000 $300,000 $200,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in Napa County.

Months’ Supply of Inventory 6.1

5.7

5.1 4.1

3.4

3.8

3.4

3.1

3.2 2.6

3.6 2.9

3.4

3.2

2.9 2.4

2.3

2.1 1.1 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in Napa County.


Napa County pacificunion.com

Average Days on the Market 114

120 100

99

100 91

93

80

92 71

71

72

85

72

79

60

60 40 20 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in Napa County.

Â

Percentage of Properties Under Contract 28.2%

30%

26.1%

25.5%

23.2%

25%

25.1% 23.6%

24.3% 21.8%

21.9%

21.2%

20%

18.1% 15.9% 13.8%

15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in Napa County. Â

Sales Price as a Percentage of Original Price 97%

96.5%

95.9%

96%

96.4%

94.7%

94.5%

95%

95.8%

94.2%

94%

92.9%

93% 92%

95.0%

94.6%

92.0% 91.2%

91.2%

Dec-14

Jan-15

91% 90% 89% 88%

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in Napa County.


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A Closer Look at Napa County

Napa County Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Median Price Q4 '14

Q4 '15

% change

American Canyon

$

11,826,350

$

14,723,500

24%

28

33

18%

53

68

28%

$

407,500

$

435,000

7%

Angwin

$

6,720,000

$

1,330,000

-80%

3

2

-33%

294

61

-79%

$ 2,100,000

$

665,000

-68%

Calistoga

$

6,587,900

$

8,022,084

22%

8

12

50%

122

73

-40%

$

565,000

$

525,000

-7%

Napa

$ 131,025,684

$ 169,771,870

30%

191

193

1%

80

78

-3%

$

550,000

$

640,000

16%

St. Helena

$

36,505,500

$

41,213,500

13%

35

22

-37%

140

165

18%

$

776,000

$

964,500

24%

Yountville

$

6,060,088

$

17,538,500

189%

6

9

50%

86

90

5%

$

790,000

$ 1,110,000

41%

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Napa County cities.

Napa County Price Range Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Median Price Q4 '14

Q4 '15

% change

Under $500,000

$

42,231,263

$

28,821,029

-32%

106

72

-32%

65

66

2%

$

416,250

$

415,000

0%

$500,000 $999,999

$

83,797,171

$ 104,518,734

25%

125

151

21%

96

83

-14%

$

650,000

$

675,000

4%

$1 million - $3 million

$

61,992,088

$

67,158,691

8%

37

42

14%

126

107

-15%

$ 1,614,000

$ 1,353,500

-16%

Over $3 million $

10,705,000

$

52,880,000

394%

3

8

167%

158

156

-1%

$ 3,505,000

$ 4,792,500

37%

Source: Terradatum, January 7, 2016. Data is for single-family homes in Napa County.


Napa County pacificunion.com

Napa County Housing and Economic Outlook Net worth drives the second home and retiree market in Napa, and net-worth growth has been excellent. Rising stock and home prices continue to create Napa housing opportunities for the affluent, and the locals benefit from the increased spending.

THE ECONOMY Robust Job Growth: Napa County added 2,700 net new jobs last year and is projected to add another 2,000 by the end of 2015, which would bring the county to over 71,000 jobs. That is a solid growth rate of 2.9 percent this year, though below the 4.0-plus percent experienced in 2013 and 2014. We project job growth to ease through 2018. Tourism and Job Diversity: The educational and health services, leisure and hospitality, and manufacturing sectors matter most to the local economy. Highly Employed Population: Only 3.6 percent of the labor pool cannot find a suitable job. Upper-Middle Class: At $73,300 per year, Napa enjoys a solid income profile, though not as far above the statewide norm as some other parts of the Bay Area region. Napa County is somewhat more of a middleclass area than is perceived by many from outside Napa, who only know it for its vineyards and luxury vacation homes.

Jobs and Median Income Trends and Projections - Napa County Jobs Total Change Change Rate Median Income Change Rate

2009 61,400 -4,000 -6.1% $63,875 -2.8%

2010 60,600 -800 -1.3% $63,511 -0.6%

2011 61,200 600 1.0% $64,533 1.6%

2012 63,500 2,300 3.8% $67,217 4.2%

2013 66,500 3,000 4.7% $70,914 5.5%

2014 69,200 2,700 4.1% $73,277 3.3%

2015P 71,200 2,000 2.9% $75,574 3.1%

2016P 73,200 2,000 2.8% $77,894 3.1%

2017P 74,700 1,500 2.0% $81,030 4.0%

2018P 75,700 1,000 1.3% $84,104 3.8%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Usually Slow Growth: Napa has long favored a slow-growth sentiment. Population growth has fallen below 1.0 percent in recent years and household growth is at 0.8 percent in 2014. We project continued modest growth going forward, though we expect household growth to outpace population growth as millennials begin to move out and, more generally, household formation trends gravitate toward long-term norms. Slow Growth Future: Growth projections translate into only about 1,000 new Napa County residents annually over the next few years and about 500 new households annually.

Population and Households Trends and Projections - Napa County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

135,300

136,800

138,100

139,100

140,600

141,700

142,700

143,600

144,600

145,500

Change

1,200

1,500

1,200

1,100

1,400

1,100

1,000

1,000

1,000

900

Change Rate

0.9%

1.1%

0.9%

0.8%

1.0%

0.8%

0.7%

0.7%

0.7%

0.6% 52,100

Population Total

Household Total

48,500

49,000

49,300

49,600

49,900

50,200

50,600

51,100

51,600

Change

300

500

300

300

300

300

400

500

500

500

Change Rate

0.7%

0.9%

0.6%

0.6%

0.6%

0.7%

0.8%

1.0%

1.0%

1.0%

Source: Moody Analytics; John Burns Real Estate Consulting


Napa County pacificunion.com

THE HOUSING MARKET Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI shows prices have risen 7.6 percent over the last year, which has slowed from double-digit upticks in 2012 and 2013. JBREC forecasts slower price growth over the next few years, from 1.8 percent to 3.6 percent. Slightly Improving Volumes: We expect 2015 resale volume to be about 12 percent higher than 2014. Volumes will increase only marginally over the next few years, about 3-4 percent annually. This will put Napa at a level in line with the long-term norm of about 1,250 to 1,450 sales per year. Investors Slowing Down: Investors are purchasing about 24 percent of homes in the Napa market, down from 36 percent at the peak at the end of 2012. Affordability: Though low mortgage rates help keep affordability slightly below a historically normal level in Napa, rising prices will continue to impact affordability. The median-income household would need to pay 43 percent of their income to buy the median-priced resale home and about 68 percent to afford the medianpriced new home. Expensive New Homes: New home prices fluctuate drastically due to low supply. The current median price is $854,000, compared to last year at $770,000.

Burns Home Value Index Trends and Projections - Napa County Burns Home Value Index Change Rate Affordability Index

2009 111.0 -9.2% 3.2

2010 102.9 -7.3% 1.7

2011 98.7 -4.0% 1.1

2012 110.4 11.9% 0.3

2013 130.8 18.4% 3.2

2014 141.7 8.4% 4.9

Current 150.7 7.6% 4.2

2015P 153.6 8.4% 4.0

2016P 159.2 3.6% 4.8

2017P 163.6 2.8% 5.1

2018P 166.6 1.8% 5.1

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Uptick in Activity?: Napa has always been and will always be a supply-constrained new home market. Resale inventory is also extremely low. There have been some recent additions to the housing market, though, and they have generally been well-received. Richmond American opened Silverado Trail, and Lafferty opened Riva Reserve early this year, while Taylor Morrison recently opened Chesapeake Village with relatively affordable attached townhomes. Lafferty will soon open an upscale neighborhood in northwest Napa, and there are some other infill communities likely coming soon. Still, these communities have barely whet the appetites of Napa buyers. The 945-home, mixed-use Napa Pipe development just south of Napa, is the only major community on the near-term horizon, still winding its way through the entitlement process. Living the Life in Napa: Though incomes in Napa are generally middle to upper-middle class, there is an extraordinary amount of wealth in the area due to its cachet as wine country and its proximity to the affluent core of the Bay Area. Napa is particularly attractive to Bay Area households as a retiree or vacation-home option. An example of this impact is that Napa has the fourth-highest concentration of $1 million-plus homes in the nation (as a percentage of total listings). However, since Napa’s high-end market is closely tied to the fortunes of San Francisco and Silicon Valley, it will be heavily impacted by economic and housing market trends in those areas.


San Francisco Quarterly Real Estate Report Q4 2015

Patrick Barber President 415.929.7100 patrick.barber@pacunion.com 1699 Van Ness Avenue | San Francisco, CA 94109


San Francisco pacificunion.com

San Francisco: Q4 Results San Francisco has been a seller’s market for several years now, but by the fourth quarter of 2015, the landscape had slightly shifted in the direction of a more balanced market – for both condominiums and single-family homes. Sales prices kept rising, to be sure, but not at the pace of past quarters. And while many homes still commanded multiple offers, overbids have also slowed. Available homes stayed on the market a bit longer than in previous quarters before going into escrow. December closed out a very strong quarter, though the third quarter was stronger. But this may be the most surprising fact: More than a few San Francisco homes sold for below their asking prices in the fourth quarter – a phenomenon virtually unheard of at the start of 2015. The inventory of available homes remained tight, but we saw signs that owners are gradually more willing to put their homes on the market. Looking Forward: San Francisco remains an exceptionally desirable market with a booming regional economy – two factors that ensure strong real estate activity in the months ahead. El Niño storms could delay some sales, but only briefly, and interest rates are forecast to remain exceptionally low far into 2016.

Single-Family Homes – Median Sales Price $1,500,000 $1,250,000

$1,300,000 $1,100,000

$1,075,000

$1,307,500

$1,400,000

$1,300,000 $1,280,000

$1,115,000

$1,280,000 $1,225,444 $1,155,000

$1,285,000

Aug-15

Nov-15

$1,203,000

$975,000

$900,000 $700,000 $500,000 $300,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Sep-15

Oct-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in San Francisco.

Condominiums – Median Sales Price $1,300,000 $1,100,000

$1,100,000

$1,138,000 $1,105,000 $1,069,000

$1,105,000 $1,102,563 $1,050,000

$960,012

$1,111,500

$1,150,000

$1,100,000

$1,030,000

$885,000

$900,000 $700,000 $500,000 $300,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for condominiums in San Francisco.


San Francisco pacificunion.com

Single-Family Homes – Months’ Supply of Inventory 3.1 2.6

2.4

2.6

2.1

2.5

1.7 1.5

1.6 1.1

1.7

1.6

1.8 1.5

1.5

1.3

1.0 0.7

0.6 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in San Francisco.

Condominiums – Months’ Supply of Inventory 3.6 3.0

3.1 2.6

2.3

2.2

2.1

1.8

1.6 1.1

1.3

1.1

1.3

1.3

1.3

1.8

1.7

1.4 0.8

0.6 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for condominiums in San Francisco.

Single-Family Homes – Average Days on the Market 50 45 40

47 39

35

33

31

30

27

26

Mar-15

Apr-15

25

29

28

29

29

28

28

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

24

20 15 10 5 0

Dec-14

Jan-15

Feb-15

May-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in San Francisco.


San Francisco pacificunion.com

Condominiums – Average Days on the Market 60 50

50

54

42 40 29

30

31

34

32

36 28

29

Jun-15

Jul-15

27

34 27

20 10 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for condominiums sold in San Francisco.

Single-Family Homes – Percentage of Properties Under Contract

41.2%

45% 40% 35%

37.2% 32.3% 27.9%

30%

39.3%

38.7% 35.4%

35.5% 31.8%

29.1%

38.1%

33.8% 27.9%

25% 20% 15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in San Francisco.

Condominiums – Percentage of Properties Under Contract 50%

44.2%

45% 40% 35%

40.3%

38.5% 30.7%

39.6%

41.3%

38.8%

30.5%

36.5% 30.6%

35.0%

31.6%

30% 25%

21.6%

20% 15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of condominiums under contract in San Francisco.


San Francisco pacificunion.com

Single-Family Homes – Sales Price as a Percentage of Original Price 118%

116.4%

116% 114%

113.9%

112.7% 110.9%

112%

109.6%

110%

112.2% 110.8%

109.8%

110.4%

108% 106%

105.3%

107.2%

106.9%

Nov-15

Dec-15

104.8%

104% 102% 100% 98%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in San Francisco.

Condominiums – Sales Price as a Percentage of Original Price 110%

109.3%

108.4% 106.8%

108%

109.2%

108.3% 107.2%

108.2%

108.2%

106.5%

105.7%

106% 103.3%

104% 102%

102.8%

101.4%

100% 98% 96%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for condominiums under contract in San Francisco.


San Francisco pacificunion.com

Delving into San Francisco’s Districts

San Francisco is defined by 10 separate districts, each of which encompasses several neighborhoods. District 1:

Inner Richmond, Central Richmond, Outer Richmond, JordanPark/Laurel Heights, Lake, Lone Mountain, Sea Cliff.

District 2: Outer Sunset, Central Sunset, Inner Sunset, Outer Parkside, Parkside, Inner Parkside, Golden Gate Heights. District 3: Pine Lake Park, Merced Manor, Lake Shore, Lakeside, Stonestown, Merced Heights, Ingleside, Ingleside Heights, Oceanview. District 4: Balboa Terrace, Diamond Heights, Forest Hill, Forest Hill Extension, Forest Knolls, Ingleside Terrace, Midtown Terrace, Miraloma Park, Monterey Heights, Mount Davidson Manor, Sherwood Forest, St. Francis Wood, Sunnyside, West Portal, Westwood Highlands, Westwood Park. District 5: Buena Vista/Ashbury Heights, Clarendon Heights, Cole Valley/Parnassus Heights, Corona Heights, Duboce Triangle, Eureka Valley/Dolores Heights, Glen Park, Haight-Ashbury, Mission Dolores, Noe Valley, Twin Peaks. District 6: Alamo Square, Anza Vista, Hayes Valley, Lower Pacific Heights, North Panhandle, Western Addition. District 7: Cow Hollow, Marina, Pacific Heights, Presidio Heights. District 8: Downtown, Financial District/Barbary Coast, Nob Hill, North Beach, North Waterfront, Russian Hill, Telegraph Hill,

Tenderloin, Van Ness/Civic Center.

District 9: Bernal Heights, Central Waterfront/Dogpatch, Inner Mission, Mission Bay, Potrero Hill, South Beach,

South of Market, Yerba Buena.

District 10: Bayview, Bayview Heights, Candlestick Point, Crocker Amazon, Excelsior, Hunters Point, Little Hollywood,

Outer Mission, Mission Terrace, Portola, Silver Terrace, Visitacion Valley.


San Francisco pacificunion.com

San Francisco Snapshot: SFH, Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

Median Price

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

-34%

61

42

-31%

29

30

3%

$

1,540,000

District 1

$

110,106,919

$

72,780,000

District 2

$

131,471,834

$

125,847,887

-4%

125

108

-14%

36

28

-22%

$

District 3

$

34,800,388

$

54,825,288

58%

42

54

29%

54

30

-44%

$

District 4

$

132,596,745

$

165,106,352

25%

97

104

7%

26

28

8%

District 5

$

200,051,899

$

183,722,976

-8%

94

81

-14%

27

27

0%

District 6

$

36,463,000

$

26,990,000

-26%

15

10

-33%

27

31

15%

District 7

$

187,752,971

$

137,075,888

-27%

39

26

-33%

40

38

District 8

$

11,465,000

$

35,406,000

209%

5

6

20%

36

District 9

$

88,634,000

$

105,853,685

19%

67

73

9%

27

District 10

$

95,601,498

$

98,881,500

3%

130

116

-11%

39

Q4 '15

% change

1,500,000

-3%

950,000

$ 1,162,500

22%

792,500

$

964,000

22%

$ 1,250,000

$ 1,417,500

13%

$

$

$

1,895,000

6%

$ 2,195,000

$ 2,250,000

3%

-5%

$

$

51

42%

$ 2,050,000

$ 4,900,000

24

-11%

$

1,265,000

$

1,317,500

35

-10%

$

712,950

$

844,000

1,781,000

3,800,000

4,225,000

11% 139% 4% 18%

Source: Terradatum, January 7, 2016. Data is for single-family homes in San Francisco districts.

San Francisco Snapshot: Condos, Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Median Price Q4 '14

Q4 '15

% change

District 1

$

42,109,500

$

46,348,500

10%

34

41

21%

34

40

18%

$

1,260,000

$

1,100,000

District 2

$

7,725,000

$

11,849,500

53%

9

12

33%

31

62

100%

$

875,000

$

945,000

8%

District 3

$

4,475,000

$

4,075,000

-9%

9

7

-22%

37

30

-19%

$

530,000

$

542,000

2%

District 4

$

9,459,948

$

7,067,538

-25%

16

10

-38%

35

28

-20%

$

569,500

$

682,500

20%

District 5

$

97,644,500

$

132,138,181

35%

83

104

25%

34

27

-21%

$

1,175,000

$

1,250,063

District 6

$

76,353,281

$

76,040,384

0%

74

58

-22%

51

29

-43%

$ 1,070,000

$ 1,277,500

19%

District 7

$

125,422,667

$

94,003,329

-25%

81

56

-31%

32

28

-13%

$

1,350,000

$

1,502,500

11%

District 8

$

91,693,651

$

110,097,688

20%

85

96

13%

40

37

-8%

$

860,000

$

962,500

12%

District 9

$

225,682,215

$

237,147,396

5%

214

192

-10%

41

38

-7%

$

952,444

$

1,142,000

20%

District 10

$

8,337,673

$

7,171,534

-14%

16

11

-31%

80

37

-54%

$

535,500

$

680,000

27%

-13%

6%

Source: Terradatum, January 7, 2016. Data is for condominiums in San Francisco districts.


San Francisco pacificunion.com

San Francisco Price Range Snapshot: SFH, Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Under $1 million

$

218,586,834

$

145,127,587

-34%

284

178

-37%

40

33

-18%

$1 million - $3 million

$

532,491,450

$

613,978,101

15%

335

394

18%

28

27

-4%

Over $3 million $

277,865,970

$

247,383,888

-11%

56

48

-14%

32

36

13%

Median Price Q4 '14

Q4 '15

% change

836,500

8%

$ 1,425,000

$ 1,422,500

0%

$

$

$

775,000

3,883,500

$

4,275,000

10%

Source: Terradatum, January 7, 2016. Data is for single-family homes in San Francisco County.

San Francisco Price Range Snapshot: Condos, Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Under $1 million

$

214,796,540

$

172,598,210

-20%

307

225

-27%

48

38

-21%

$1 million - $2 million

$

376,461,395

$

426,000,840

13%

276

315

14%

32

31

-3%

Over $2 million $

97,645,500

$

127,340,000

30%

38

47

24%

42

37

-12%

Median Price Q4 '14

Q4 '15

% change

788,000

8%

$ 1,310,000

$ 1,300,000

-1%

$

$

2%

$

730,000

2,452,500

$

2,500,000

Source: Terradatum, January 7, 2016. Data is for condominiums in San Francisco County.


San Francisco pacificunion.com

San Francisco County Housing and Economic Outlook The movement of tech/software firms into the city attracting urban-oriented workers and the ongoing activity of overseas investors looking for opportunity have pushed San Francisco’s home prices ever higher. Though San Francisco will always be one of the most desirable, and thus one of the most expensive, places to live in the world, any substantial slowdown in the tech sector would have an almost immediate negative impact on prices.

THE ECONOMY Great Job Growth: San Francisco County has long been the financial center of Northern California but is now also a tech/software hub. It is the most concentrated jobs node in the Bay Area with nearly 640,000 employed and over 86,000 net new jobs added over the last three years (2012-14). We project continued solid job increases through 2017, albeit at slower rates of growth. High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin counties), the higher paying sectors – finance, information, and professional and business services – are key and have experienced tremendous growth over the last three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014. Highly Employed Population: Only 3.2 percent of the labor pool cannot find a suitable job. Affluence: San Francisco County is very affluent, evidenced by its 2014 median household income of $80,200, though wealth disparities remain. Wage growth has been strong since 2012 and is projected to remain on an upward trend through 2018.

Jobs and Median Income Trends and Projections - San Francisco County Jobs Total Change Change Rate Median Income Change Rate

2009 541,100 -24,800 -4.4% $69,569 -2.0%

2010 539,000 -2,100 -0.4% $69,894 0.5%

2011 552,900 13,900 2.6% $70,840 1.4%

2012 582,900 30,000 5.4% $73,609 3.9%

2013 611,400 28,500 4.9% $77,485 5.3%

2014 639,200 27,800 4.5% $80,226 3.5%

2015P 664,800 25,600 4.0% $82,324 2.6%

2016P 676,100 11,300 1.7% $87,197 5.9%

2017P 681,500 5,400 0.8% $93,234 6.9%

2018P 678,800 -2,700 -0.4% $99,714 7.0%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Steady Growth Ahead: San Francisco County is approaching a population of 863,000 and has over 362,000 households. Recent growth has been fairly strong for such a small and mature market, and is expected to grow steadily over the next few years. By the Numbers: Growth projections translate into 8,500 to 10,000 new residents annually in San Francisco County, or about 4,500 to 4,900 new households each year. Household sizes are typically smaller than the norm in more suburban areas.

Population and Households Trends and Projections - San Francisco County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

801,900

805,800

816,200

829,700

841,100

852,500

862,500

872,000

881,000

889,500

10,800

3,900

10,400

13,500

11,400

11,300

10,000

9,500

9,000

8,500

1.4%

0.5%

1.3%

1.6%

1.4%

1.3%

1.2%

1.1%

1.0%

1.0%

344,000

346,100

349,400

354,400

357,900

362,300

366,800

371,700

376,500

381,300

Change

5,000

2,100

3,300

5,000

3,500

4,400

4,500

4,900

4,800

4,800

Change Rate

1.5%

0.6%

1.0%

1.4%

1.0%

1.2%

1.2%

1.3%

1.3%

1.3%

Population Total Change Change Rate Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


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THE HOUSING MARKET Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA is up 6.9 percent over the last year. We expect appreciation to slow in coming years, particularly by about 2018. Consistent Resale Volumes: There have been over 5,500 resales in San Francisco County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017. Investors Still Here: San Francisco MSA investor activity has gradually receded, but remains at about 21 percent, down from a high of over 24 percent in early 2013. While never reaching as high a market share as in more outlying parts of the region, investors still represent a healthy part of the market. Much of this is in the form of overseas money, most notably from China. Affordability Decreasing: Though mortgage rates remain historically low, the San Francisco MSA’s current affordability level is considerably worse than its long-term norm. Within San Francisco County, a household earning the median income would need to pay 87 percent of their income to buy a median-priced resale home and 80 percent for a median-priced new home (the discrepancy due to far higher densities in the newhome environment). Thus thousands of people working in San Francisco live elsewhere or rent. New Homes Difficult to Find: San Francisco County has a tremendous level of potential supply and a ton of supply on the way near-term, but demand is massive and supply was stagnant for years. These conditions, combined with high incomes, mean new home prices are always high despite small home sizes and high densities. Over the last 12 months, new home prices have fluctuated wildly depending on what sold in any given month, but have centered just above $1,100,000. This compares to a new home median for 2014 of $1,038,000 (current is up 6 percent).

Burns Home Value Index Trends and Projections - San Francisco MSA Burns Home Value Index Change Rate Affordability Index

2009 130.7 -1.0% 3.8

2010 125.5 -4.0% 3.6

2011 122.7 -2.2% 2.0

2012 141.4 15.2% 3.4

2013 164.5 16.4% 6.5

2014 180.2 9.6% 6.6

Current 200.7 13.7% 6.9

2015P 207.6 15.2% 7.2

2016P 222.5 7.2% 7.2

2017P 229.2 3.0% 6.9

2018P 229.2 0.0% 6.2

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Supply Relief: By one account, there are over 1,300 condominiums under construction in San Francisco and over 4,000 new apartments. This alone will be a comparatively major increase in the city’s supply. There are also, however, another 6,750-plus condos and over 6,200 apartments either approved, under review, or in the conceptual stage, and thousands more units with a less certain status. Given the nature of high-density urban development, anything not being built could vanish overnight, but this is still a tremendous amount of supply. This activity represents a massive collective bet in the continued good fortune of San Francisco. Construction Begins at SF Transit Center: A new Transbay development will help revitalize public transit. Construction has started on a transit center just south of the Financial District. Plans call for the 1 millionsquare-foot facility to accommodate 100,000 passengers daily. The area encompassing the center will feature 4,400 new housing units, 1,200 of which will be at affordable pricing. Rents Continue to Surge: With affordability worsening in the for-sale sector, people are flocking to the rental market. The average rental price in the San Francisco MSA is currently $3,015, an increase of 9.2 percent year over year, and nearly double the average rent in 2004 of $1,594.


Silicon Valley Quarterly Real Estate Report Q4 2015

David Barca Vice President, Silicon Valley 650.314.7200 dbarca@pacunion.com 1706 El Camino Real, Suite 220 | Menlo Park CA 94025


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Silicon Valley: Q4 Results After a strong third quarter and a continued shortage of available homes, we expected real estate activity to slow down in the fourth quarter in Pacific Union’s Silicon Valley region. Instead, sellers returned to the market, and sales rose in October and November – and in December, too, when we had expected them to taper off. Homes sold quickly, although most received fewer bids than earlier in the year. Sales prices continued to climb, even as the region made headlines for some of the priciest neighborhoods in the nation. Buyers were plentiful at all price points, even if they were more cautious with their offers than in the past. Looking Forward: Strong fourth-quarter sales bode well for the first quarter of 2016, although available homes may be hard to find in January after the December sales surge. There will be no shortage of buyers, attracted by Silicon Valley’s charming communities and the expanding workforces of the region’s world-famous tech companies. Some sales could be delayed by the coming El Niño rains, but not for long. Interest rates are expected to remain at historically low levels far into 2016. Defining Silicon Valley: Our real estate markets in the Silicon Valley region include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the charts below includes all single-family homes in these communities. Defining the Mid-Peninsula: Our real estate markets in the Mid-Peninsula subregion include the cities of Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area). Sales data in the charts below includes all single-family homes in these communities.

Median Sales Price $3,600,000

$3,280,000

$3,100,000 $2,600,000

$2,751,000

$2,800,000

$2,800,000 $2,665,000

$2,399,100

$2,700,000 $2,625,000

$2,700,000

$2,750,000

$2,750,000

$2,612,500

$2,641,500

$2,100,000 $1,600,000 $1,100,000 $600,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in these Silicon Valley communities: Atherton, Los Altos (excluding County area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside.

Months’ Supply of Inventory 3.1 2.5

2.6 2.2 2.1

2.0

1.9 1.4

1.6

1.3

1.2

1.2

1.3

1.2

1.9

1.4

1.1

0.9

0.6 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in these SIlicon Valley communities: Atherton, Los Altos (excluding County area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside.


Silicon Valley pacificunion.com

Average Days on the Market 45 40

37

40 36

35 30

25

25

26 19

20

21

22

20

23

24

24 18

15 10 5 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in these Silicon Valley communities: Atherton, Los Altos (excluding County area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside.

Percentage of Properties Under Contract 50%

45.4%

45% 40% 35% 30%

44.3%

38.7%

41.9%

42.2% 36.4%

31.0%

30.6%

25.7%

33.2% 29.1%

27.2%

25%

20.7%

20% 15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

104.2%

104.4%

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in these Silicon Valley communities: Atherton, Los Altos (excluding County area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside.

Sales Price as a Percentage of Original Price 108%

106.3%

106%

106.1%

106.5% 104.0%

104%

104.9% 103.0%

104.7%

102% 100%

99.1%

99.4%

99.5%

98%

96.8%

96% 94% 92% 90%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in these Silicon Valley communities: Atherton, Los Altos (excluding County area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside.


Silicon Valley pacificunion.com

A Closer Look at Silicon Valley

Silicon Valley Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Atherton

$

141,295,000

$

117,579,000

-17%

24

13

-46%

44

67

52%

Los Altos*

$

166,856,601

$

176,887,710

6%

60

63

5%

17

18

6%

Los Altos Hills

$

112,881,125

$

57,466,000

-49%

28

15

-46%

37

25

Menlo Park**

$

177,783,000

$

141,089,950

-21%

84

60

-29%

26

Palo Alto

$

230,223,110

$

227,259,250

-1%

85

77

-9%

Portola Valley

$

42,021,000

$

34,845,000

-17%

18

14

Woodside

$

60,305,000

$

77,670,151

29%

20

22

Median Price Q4 '14 $

4,937,500

Q4 '15 $

6,000,000

% change 22%

$ 2,505,001

$ 2,700,000

8%

-32%

$

$

3,550,000

-1%

21

-19%

$ 2,000,000

$ 1,917,250

-4%

18

20

11%

$

$

4%

-22%

47

43

-9%

$ 2,292,500

$ 2,612,500

14%

10%

70

42

-40%

$ 2,055,500

$ 2,950,000

44%

3,575,000

2,500,000

2,607,000

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected Silicon Valley cities. *Excludes County area **Excludes east of U.S. 101


Silicon Valley pacificunion.com

Santa Clara County Housing and Economic Outlook As long as the tech sector stays strong, it will fuel home prices and rents beyond the reach of most people living in Silicon Valley. Job and income growth remain sensational but are bound to slow. This will undoubtedly impact the housing market given how high prices have reached and how tech-fueled market demand has become.

THE ECONOMY Jobs Still Surging: The county added a tremendous 43,000 net new jobs last year and should add nearly 54,500 more in 2015, pushing employment well over one million. We project job growth to ease in the coming years, but still remain strong through 2016 until going relatively stagnant in 2018. Tech Key: For the San Jose MSA as a whole (which includes Santa Clara County and the far smaller San Benito County), education and health services and leisure and hospitality are important, but the high-paying professional and business services and information sectors are paramount with a combined 27 percent of total jobs. The tech sector is the engine that drives Silicon Valley and tech jobs are distributed throughout a variety of sectors. Highly Employed Population: Only 3.7 percent of the labor pool in the county cannot find a suitable job. Affluence: With a median income of $96,000 per year, Santa Clara County is one of the most affluent areas in the nation. Income growth has been robust in the past three years and is projected to maintain this trend through 2018.

Jobs and Median Income Trends and Projections - Santa Clara County Jobs Total Change Change Rate Median Income Change Rate

2009 855,300 -56,000 -6.1% $85,162 -3.1%

DEMOGRAPHICS

2010 852,600 -2,700 -0.3% $84,210 -1.1%

2011 873,300 20,700 2.4% $84,919 0.8%

2012 908,100 34,800 4.0% $87,813 3.4%

2013 947,100 39,000 4.3% $92,014 4.8%

2014 990,100 43,000 4.5% $95,990 4.3%

2015P 1,044,600 54,500 5.5% $100,646 4.9%

2016P 1,079,100 34,500 3.3% $106,377 5.7%

2017P 1,098,500 19,400 1.8% $112,933 6.2%

2018P 1,094,100 -4,400 -0.4% $120,089 6.3%

Source: Bureau of Labor Statistics; Moody Analytics

Steady Growth, Potentially Slowing: Santa Clara County is a huge population hub with nearly 1.92 million residents in over 643,000 households by the end of 2015. Population growth has been fairly strong recently with an average of 1.4 percent annually since 2009 despite supply constraints due to lack of developable land and high land prices. Population growth may outpace the projections seen in the table below, particularly as more new rental developments come onto the market. Pushed Out?: Growth projections translate into about 18,000 to 22,000 new residents annually in Santa Clara County, adding about 7,800 to 8,200 housing units to existing stock each year. Much of the county’s housing demand is exported to more outlying parts of the region due to high prices and lack of new supply.

Population and Households Trends and Projections - Santa Clara County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

1,765,100

1,786,900

1,814,100

1,841,100

1,871,100

1,894,600

1,916,600

1,936,600

1,955,600

1,973,600

24,200

21,800

27,200

27,000

30,000

23,500

22,000

20,000

19,000

18,000

1.4%

1.2%

1.5%

1.5%

1.6%

1.3%

1.2%

1.0%

1.0%

0.9%

598,100

606,000

613,200

621,000

628,700

635,800

643,600

651,800

659,900

668,000

Change

8,700

7,900

7,200

7,800

7,700

7,100

7,800

8,200

8,100

8,100

Change Rate

1.5%

1.3%

1.2%

1.3%

1.2%

1.1%

1.2%

1.3%

1.2%

1.2%

Population Total Change Change Rate Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


Silicon Valley pacificunion.com

THE HOUSING MARKET Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Jose MSA shows prices have risen 11.9 percent over the last year. The MSA experienced growth rates of over 9.5 percent annually since 2012. The projected BHVI increases will begin to normalize in the near-term and level off by 2018. Consistent Resales Volumes: Over the past 12 months, Santa Clara County has supported +/- 18,100 resales. We forecast increases over the next three years to range from 2.0-6.4 percent. Though these 17,500-20,000 annual sales are roughly in line with the long-term norm, this volume level is just more than half the market peak experienced in 2004. Investors Fewer and Shrinking: Investor activity was never as strong in the San Jose MSA as it was in many other regional markets given the strength of conventional demand. Still, investors represented 16 percent of the market in the second quarter, down from a 1Q 2013 peak of 20 percent. Affordability: Though low mortgage rates help keep affordability at a historically normal level in the San Jose MSA, high prices mean homeownership still requires a fairly high share of incomes in spite of the area’s affluence. The median-income household would need to pay 56 percent of their income to buy a medianpriced resale home and 49 percent for a median-priced new home (the discrepancy is due to new home densities being higher than the existing housing stock). Expensive and Uncommon New Homes: Limited new supply and the tremendous appeal of Santa Clara County means new home prices are consistently high. Over the last 12 months, the median new home price has centered at about $810,000. This compares to a full year 2014 median new home price of $749,000. In the heart of Silicon Valley (such as Sunnyvale and Mountain View), new townhomes will typically sell for over $1 million.

Burns Home Value Index Trends and Projections - San Jose MSA Burns Home Value Index Change Rate Affordability Index

2009 119.0 -1.8% 2.5

2010 117.0 -1.7% 3.1

2011 115.2 -1.6% 3.0

2012 134.8 17.0% 3.2

2013 153.5 13.9% 5.8

2014 168.0 9.5% 6.7

Current 184.3 11.9% 6.5

2015P 189.9 13.0% 6.3

2016P 200.1 5.4% 6.9

2017P 206.7 3.3% 7.0

2018P 206.7 0.0% 6.6

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Venture Capital Approaching Peak Levels: Venture capital is the beating heart of Silicon Valley and is now reaching peak levels only experienced during the tech boom of late 1990s and early 2000s. With $25.3 billion in funding in the Bay Area last year, it is not far from the $33.4 billion in investments from the lucrative year of 2000. While the number of deals is approximately half of what was experienced during the peak, the size of the deals are what matter most. Venture-capital investments in 2014 averaged $17.4 million and are trending up in Q1 2015, exceeding the former peak of $15.5 million in 2000. This shows VCs are being more selective with their investments for now, while concentrating larger capital in each deal.


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San Mateo County Housing and Economic Outlook Situated between two of the strongest housing markets and job hubs in the country – San Francisco and Santa Clara – San Mateo County offers suburban and urban housing and commute options in an affluent and appealing environment.

THE ECONOMY Great Job Growth: Though easily commutable to San Francisco and Silicon Valley – and ideal for split commutes – San Mateo County is also a major employment node in its own right. About 17,300 net new jobs were added last year, though we project that employment growth will begin to slow. High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin counties), the higher-paying sectors – finance, information, and professional and business services – are critical and have experienced tremendous growth over the last three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014. Highly Employed Population: Only 3.0 percent of the labor pool cannot find a suitable job. Affluence: San Mateo County is highly affluent, supporting a 2014 median household income of $94,800 per year. Wage growth has been strong since 2012 and is forecast to remain strong through 2018.

Jobs and Median Income Trends and Projections - San Mateo County Jobs Total Change Change Rate Median Income Change Rate

2009 322,300 -18,200 -5.3% $83,493 -2.1%

2010 315,900 -6,400 -2.0% $82,196 -1.6%

2011 324,500 8,600 2.7% $83,373 1.4%

2012 338,000 13,500 4.2% $86,694 4.0%

2013 353,200 15,200 4.5% $91,322 5.3%

2014 370,500 17,300 4.9% $94,752 3.8%

2015P 385,300 14,800 4.0% $97,617 3.0%

2016P 391,900 6,600 1.7% $103,442 6.0%

2017P 395,000 3,100 0.8% $110,670 7.0%

2018P 393,400 -1,600 -0.4% $118,353 6.9%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Steady Growth Ahead: San Mateo County is home to about three-quarters of a million people in nearly 270,000 households. Population growth is forecast to ease somewhat over the next few years, but household growth should be higher as household formations trend back toward longer-term norms. By the Numbers: Growth projections translate into about 8,000 new residents annually in San Mateo County, or about 3,000 to 3,500 new households each year. As is true in most of the core Bay Area, many working in the county cannot afford to live there and thus seek housing in outlying parts of the region.

Population and Households Trends and Projections - San Mateo County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

713,600

720,000

729,400

740,700

750,500

758,600

767,100

775,100

782,600

789,800

Change

9,800

6,300

9,500

11,300

9,800

8,100

8,500

8,000

7,500

7,300

Change Rate

1.4%

0.9%

1.3%

1.6%

1.3%

1.1%

1.1%

1.0%

1.0%

0.9%

256,100

258,400

260,900

264,400

266,800

269,400

272,600

276,100

279,500

282,900

Change

3,500

2,200

2,600

3,500

2,400

2,500

3,200

3,500

3,400

3,400

Change Rate

1.4%

0.9%

1.0%

1.3%

0.9%

1.0%

1.2%

1.3%

1.2%

1.2%

Population Total

Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


Silicon Valley pacificunion.com

THE HOUSING MARKET Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA is up 6.9 percent over the last year. We expect appreciation to slow in coming years, particularly by about 2018. Consistent Resale Volumes: There have been over 7,100 resales in San Mateo County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017. Affordability Decreasing: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific to San Mateo County, a household earning the median income would need to pay 67 percent of their income to buy a median-priced resale home and 71 percent for a medianpriced new home. This is why so many who work in the county live elsewhere or rent. Expensive New Homes and Few of Them: San Mateo County has long been undersupplied for new homes. This combines with its affluence and appeal to push home prices to extraordinary levels. Over the last year, the median new home price is $1,161,000 and primarily for attached product.

Burns Home Value Index Trends and Projections - San Francisco MSA Burns Home Value Index Change Rate Affordability Index

2009 130.7 -1.0% 3.8

2010 125.5 -4.0% 3.6

2011 122.7 -2.2% 2.0

2012 141.4 15.2% 3.4

2013 164.5 16.4% 6.5

2014 180.2 9.6% 6.6

Current 200.7 13.7% 6.9

2015P 207.6 15.2% 7.2

2016P 222.5 7.2% 7.2

2017P 229.2 3.0% 6.9

2018P 229.2 0.0% 6.2

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Rents Continue to Surge: With affordability worsening in the for-sale sector, people are flocking to the rental market. The average rental price in the San Francisco MSA is currently $3,015, an increase of 9.2 percent year over year, and nearly double the average rent in 2004 of $1,594. A Spark in Daly City: In the ordinarily nonexistent new home market of Daly City, there have been several housing projects that have either come online recently or are expected to enter the market soon. Less than 10 miles south of core San Francisco and 25 miles north of Palo Alto, Daly City is regionally one of the most desirable locations imaginable. There are currently two active new home projects (Lennar and Warmington), selling small-lot detached homes for $1 million plus in Daly City, a figure most market observers would have thought impossible even a few years ago.


Mid-Peninsula pacificunion.com

Median Sales Price $1,800,000

$1,900,000 $1,700,000 $1,500,000

$1,675,700 $1,462,500

$1,688,000

$1,590,000 $1,490,000

$1,600,000

$1,400,000

$1,781,500

$1,575,000 $1,501,000

$1,550,000

$1,530,000

$1,300,000 $1,100,000 $900,000 $700,000 $500,000 $300,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in these San Mateo County communities: Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area).

Months’ Supply of Inventory 2.6

2.3 2.0

2.1

1.6

1.6 1.1

0.9

1.1

1.2 1.0

0.9

1.2

1.0

0.9

0.7

0.7

0.6

0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in these San Mateo County communities: Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area).

Average Days on the Market 50

47

45 40 35 30

34

32 28

25

21

21

20

21

21

Jun-15

Jul-15

19

25

22

19

14

15 10 5 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in these San Mateo County communities: Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area).


Mid-Peninsula pacificunion.com

Percentage of Properties Under Contract 60%

53.3%

50.8% 47.2%

50%

50.0%

46.6%

41.8%

42.0%

42.9%

43.5% 37.8%

36.7%

40% 31.7% 30%

26.0%

20% 10% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

105.3%

105.3%

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in these San Mateo County communities: Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area).

Sales Price as a Percentage of Original Price 115% 110.6% 110%

107.8%

105%

107.3%

106.7%

102.7% 101.2%

100%

100.9%

101.7%

101.1%

103.0%

97.5%

95%

90%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in these San Mateo County communities: Burlingame (excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area).

A Closer Look at the Mid-Peninsula Mid-Peninsula Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

Median Price

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Burlingame*

$

92,769,888

$

78,607,000

-15%

52

35

-33%

28

15

-46%

$ 1,700,000

$ 2,035,000

20%

Hillsborough

$

117,599,500

$

110,748,000

-6%

31

23

-26%

64

75

17%

$ 3,050,000

$ 4,625,000

52%

San Mateo**

$

187,481,451

$

227,896,388

22%

148

155

5%

21

22

5%

$ 1,093,000

$ 1,405,000

29%

Source: Terradatum, January 7, 2016. Data is for single-family homes in selected San Mateo County cities. * Excludes Ingold Millsdale Industrial Center ** Excludes the North Shoreview/Dore Cavanaugh area


Silicon Valley pacificunion.com

San Mateo County Housing and Economic Outlook Situated between two of the strongest housing markets and job hubs in the country – San Francisco and Santa Clara – San Mateo County offers suburban and urban housing and commute options in an affluent and appealing environment.

THE ECONOMY Great Job Growth: Though easily commutable to San Francisco and Silicon Valley – and ideal for split commutes – San Mateo County is also a major employment node in its own right. About 17,300 net new jobs were added last year, though we project that employment growth will begin to slow. High Pay Growth: For the San Francisco MSA as a whole (San Mateo, San Francisco, and Marin counties), the higher-paying sectors – finance, information, and professional and business services – are critical and have experienced tremendous growth over the last three years. These sectors added over 68,500 jobs MSA-wide from 2011-2014. Highly Employed Population: Only 3.0 percent of the labor pool cannot find a suitable job. Affluence: San Mateo County is highly affluent, supporting a 2014 median household income of $94,800 per year. Wage growth has been strong since 2012 and is forecast to remain strong through 2018.

Jobs and Median Income Trends and Projections - San Mateo County Jobs Total Change Change Rate Median Income Change Rate

2009 322,300 -18,200 -5.3% $83,493 -2.1%

2010 315,900 -6,400 -2.0% $82,196 -1.6%

2011 324,500 8,600 2.7% $83,373 1.4%

2012 338,000 13,500 4.2% $86,694 4.0%

2013 353,200 15,200 4.5% $91,322 5.3%

2014 370,500 17,300 4.9% $94,752 3.8%

2015P 385,300 14,800 4.0% $97,617 3.0%

2016P 391,900 6,600 1.7% $103,442 6.0%

2017P 395,000 3,100 0.8% $110,670 7.0%

2018P 393,400 -1,600 -0.4% $118,353 6.9%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Steady Growth Ahead: San Mateo County is home to about three-quarters of a million people in nearly 270,000 households. Population growth is forecast to ease somewhat over the next few years, but household growth should be higher as household formations trend back toward longer-term norms. By the Numbers: Growth projections translate into about 8,000 new residents annually in San Mateo County, or about 3,000 to 3,500 new households each year. As is true in most of the core Bay Area, many working in the county cannot afford to live there and thus seek housing in outlying parts of the region.

Population and Households Trends and Projections - San Mateo County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

713,600

720,000

729,400

740,700

750,500

758,600

767,100

775,100

782,600

789,800

Change

9,800

6,300

9,500

11,300

9,800

8,100

8,500

8,000

7,500

7,300

Change Rate

1.4%

0.9%

1.3%

1.6%

1.3%

1.1%

1.1%

1.0%

1.0%

0.9%

256,100

258,400

260,900

264,400

266,800

269,400

272,600

276,100

279,500

282,900

Change

3,500

2,200

2,600

3,500

2,400

2,500

3,200

3,500

3,400

3,400

Change Rate

1.4%

0.9%

1.0%

1.3%

0.9%

1.0%

1.2%

1.3%

1.2%

1.2%

Population Total

Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


Silicon Valley pacificunion.com

THE HOUSING MARKET Prices Strong Then Slower: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI for the San Francisco MSA is up 6.9 percent over the last year. We expect appreciation to slow in coming years, particularly by about 2018. Consistent Resale Volumes: There have been over 7,100 resales in San Mateo County over the last 12 months. At the MSA level, we forecast annual sales growth of 1-2 percent in 2016 and 2017. Affordability Decreasing: Despite low mortgage rates, the San Francisco MSA’s current affordability level is worse than its long-term norm. Specific to San Mateo County, a household earning the median income would need to pay 67 percent of their income to buy a median-priced resale home and 71 percent for a medianpriced new home. This is why so many who work in the county live elsewhere or rent. Expensive New Homes and Few of Them: San Mateo County has long been undersupplied for new homes. This combines with its affluence and appeal to push home prices to extraordinary levels. Over the last year, the median new home price is $1,161,000 and primarily for attached product.

Burns Home Value Index Trends and Projections - San Francisco MSA Burns Home Value Index Change Rate Affordability Index

2009 130.7 -1.0% 3.8

2010 125.5 -4.0% 3.6

2011 122.7 -2.2% 2.0

2012 141.4 15.2% 3.4

2013 164.5 16.4% 6.5

2014 180.2 9.6% 6.6

Current 200.7 13.7% 6.9

2015P 207.6 15.2% 7.2

2016P 222.5 7.2% 7.2

2017P 229.2 3.0% 6.9

2018P 229.2 0.0% 6.2

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Rents Continue to Surge: With affordability worsening in the for-sale sector, people are flocking to the rental market. The average rental price in the San Francisco MSA is currently $3,015, an increase of 9.2 percent year over year, and nearly double the average rent in 2004 of $1,594. A Spark in Daly City: In the ordinarily nonexistent new home market of Daly City, there have been several housing projects that have either come online recently or are expected to enter the market soon. Less than 10 miles south of core San Francisco and 25 miles north of Palo Alto, Daly City is regionally one of the most desirable locations imaginable. There are currently two active new home projects (Lennar and Warmington), selling small-lot detached homes for $1 million plus in Daly City, a figure most market observers would have thought impossible even a few years ago.


Sonoma County Quarterly Real Estate Report Q4 2015

Rick Laws Senior Vice President, Sonoma County 707.547.3800 rick.laws@pacunion.com 3333 Mendocino Avenue, Suite 210 | Santa Rosa, CA 95403


Sonoma County pacificunion.com

Sonoma County: Q4 Results Pacific Union’s Sonoma County region moved much closer to a balanced real estate market in 2015 after several years tilted decidedly in sellers’ favor. Buyers were reluctant to overpay for homes and submitted fewer multiple offers, and bidding wars usually involved lower-priced homes. It was a buyer’s market for multimillion-dollar homes, with many properties sitting on the market for extended periods and selling only after price reductions. Inventory levels rose during the first three quarters of the year before pulling back in the fourth. Sales prices jumped higher in the first quarter of the year before moderating for the next three quarters. There was no shortage of homebuyers in the region, with the strongest demand – and scarcest inventory – seen in Healdsburg and Sebastopol. Looking Forward: Many Sonoma County sellers pulled their homes off the market at the end of the fourth quarter, and we expect sales activity to pick up once that inventory is back in the picture. Spring is always a busy season for real estate, although El Niño storms could delay some sales. The Federal Reserve’s recent decision to raise interest rates, which remain exceptionally low by historical levels, may actually boost sales by motivating indecisive buyers. Defining Sonoma County: Our real estate markets in Sonoma County include the cities of Cotati, Healdsburg, Penngrove, Petaluma, Rohnert Park, Santa Rosa, Sebastopol, and Windsor. Sales data in the charts below includes all single-family homes and farms and ranches in Sonoma County.

Median Sales Price $600,000 $550,000

$515,000

$500,000

$479,000 $492,000

$510,000

$536,000

$545,000

$546,000 $545,000

$541,000

$541,500

$529,750

$527,000

Oct-15

Nov-15

$549,450

$450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes and farms/ranches in Sonoma County.

Months’ Supply of Inventory 3.1 2.5

2.6

2.6

2.1 1.6

2.5

2.3 1.9

1.8

1.6

2.1 1.7

2.1

1.7

1.9

1.3

1.1 0.6 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes and farms/ranches in Sonoma County.


Sonoma County pacificunion.com

Average Days on the Market 100 90 80

89

89

80 73 66

70

63 56

60

56

59

60

60

60

Jul-15

Aug-15

Sep-15

Oct-15

64

50 40 30 20 10 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes and farms/ranches sold in Sonoma County.

Â

Percentage of Properties Under Contract 40%

36.5%

35% 29.7%

30% 25%

36.8%

34.3%

34.6%

31.1%

31.4%

31.4% 28.2%

28.0%

Aug-15

Sep-15

30.6% 27.9%

23.8%

20% 15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes and farms/ranches under contract in Sonoma County. Â

Sales Price as a Percentage of Original Price 99.6%

100%

97.9%

98%

97.7% 96.7%

96.9%

97% 96%

95.0%

95% 94%

99.5%

98.5%

99%

95.3%

96.5%

95.1% 93.7%

93.8%

93% 92% 91% 90%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes and farms/ranches under contract in Sonoma County.


Sonoma County pacificunion.com

A Closer Look at Sonoma County

Sonoma County Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Median Price Q4 '14

Q4 '15

% change

Cloverdale

$

12,484,900

$

15,808,900

27%

34

36

6%

89

64

-28%

$

350,000

$

430,500

23%

Healdsburg

$

39,504,095

$

39,499,080

0%

42

47

12%

111

75

-32%

$

619,500

$

700,000

13%

Petaluma

$

72,726,473

$ 100,881,808

39%

120

146

22%

61

62

2%

$

540,025

$

600,000

11%

Rohnert Park

$

31,256,400

$

35,623,380

14%

71

73

3%

46

49

7%

$

430,000

$

470,000

9%

Santa Rosa

$ 260,224,001

$ 286,960,659

10%

462

515

11%

65

63

-3%

$

456,510

$

489,900

7%

Sebastopol

$

56,962,833

$

38,383,678

-33%

63

47

-25%

67

60

-10%

$

720,000

$

748,000

4%

Windsor

$

34,807,450

$

47,099,855

35%

66

74

12%

66

56

-15%

$

482,000

$

529,475

10%

Source: Terradatum, January 7, 2016. Data is for single-family homes and farms/ranches in selected Sonoma County cities.

Sonoma County Price Range Snapshot: Q4 2015 vs. Q4 2014 Sales Volume

Homes Sold

Avg. Days on Market

Median Price

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

Under $1 million

$ 528,526,641

$ 592,550,488

12%

1037

1,094

5%

71

61

-14%

$

$1 million and over

$ 178,193,890

$ 176,309,524

-1%

106

101

-5%

103

114

11%

$ 1,322,250

470,000

Q4 '15

% change

515,000

10%

$ 1,349,500

2%

$

Source: Terradatum, January 7, 2016. Data is for single-family homes and farms/ranches in selected Sonoma County cities.


Sonoma County pacificunion.com

Sonoma County Housing and Economic Outlook Though most residents work locally or commute into San Francisco or the Peninsula, net worth also drives the second-home and retiree markets in Sonoma, which are critical. We are optimistic about retirement opportunities in Sonoma particularly as the growth in households reaching their 60s continues.

THE ECONOMY Solid Job Growth: Sonoma County added 8,400 net new jobs last year and is projected to add 4,400 this year, pushing total jobs to over 196,000. The 2015 figure would be a solid 2.3 percent improvement from last year, with similar rates projected through 2016 before we expect job growth to slow. Tourism and Some Tech: Tourism-based leisure and hospitality jobs represent about 13 percent of total jobs in Sonoma. Professional and business services, trade, transportation and utilities, and government are also key sectors within this market. Highly Employed Population: Only 3.1 percent of the labor pool cannot find a suitable job. Middle Class: At $62,000 per year, Sonoma supports an essentially middle-class income profile, though there are many higher-income professionals. Substantial housing demand, however, also comes from the more affluent San Francisco.

Jobs and Median Income Trends and Projections - Sonoma County Jobs Total Change Change Rate Median Income Change Rate

2009 173,600 -14,600 -7.8% $61,579 -3.9%

2010 169,900 -3,700 -2.1% $59,697 -3.1%

2011 171,800 1,900 1.1% $58,850 -1.4%

2012 175,100 3,300 1.9% $59,520 1.1%

2013 183,600 8,500 4.9% $61,029 2.5%

2014 192,000 8,400 4.6% $61,646 1.0%

2015P 196,400 4,400 2.3% $63,556 3.1%

2016P 201,300 4,900 2.5% $65,543 3.1%

2017P 203,300 2,000 1.0% $68,160 4.0%

2018P 204,300 1,000 0.5% $70,724 3.8%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Steady Growth: Sonoma is home to about half a million residents. Population growth is modest, near 1.0 percent in recent years, with household growth slightly lower. We project slow and steady population growth at 1.0 percent annually going forward. Household growth, however, should outpace population growth as household formation trends return to long-term norms. Continuity: Growth projections translate into approximately 5,000 new Sonoma residents annually over the next few years, or about 2,100-2,500 new households each year.

Population and Households Trends and Projections - Sonoma County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

479,500

484,700

487,700

490,800

495,400

500,300

505,500

510,600

515,600

520,600

Change

6,400

5,200

3,100

3,100

4,600

4,900

5,200

5,100

5,000

5,000

Change Rate

1.4%

1.1%

0.6%

0.6%

0.9%

1.0%

1.0%

1.0%

1.0%

1.0%

183,700

186,100

186,700

187,500

188,500

190,100

192,200

194,600

197,000

199,500

Change

2,800

2,400

600

800

1,000

1,600

2,100

2,400

2,400

2,500

Change Rate

1.6%

1.3%

0.3%

0.4%

0.5%

0.9%

1.1%

1.2%

1.2%

1.3%

Population Total

Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


Sonoma County pacificunion.com

THE HOUSING MARKET Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI shows prices have risen 8.8 percent over the last year, down from a remarkable 17.2 percent in 2013. JBREC forecasts more modest growth in this measure, ranging from 2.0 percent to 4.0 percent from 2016-18. Consistent Resales Volumes: We project 2015 resale volume to come in at about 5 percent above 2014 with 6,400 sales. Sales should slowly increase to approximately 6,400-6,700 per year through 2018. This is down from about 8,000-10,000 annual resales, however, from the late 1990s through 2005. Investors Slowing but Still Key: Investors are purchasing about 26 percent of the Sonoma market homes, down from the 33 percent at the peak in 2012. Affordability: Though low mortgage rates help keep affordability at a historically normal level in Sonoma County, comparatively high prices mean homeownership is still expensive. The median-income household would need to pay 48 percent of their income to buy a median-priced resale home and about 46 percent to afford a median-priced new home (the lower new home price due to typically higher new home densities). Expensive and Uncommon New Homes: Limited new residential development translates into new home prices that often fluctuate, but typically average from the mid-$400s to the low-$500s. Over the last 12 months, the median new home price is about $483,000 countywide.

Burns Home Value Index Trends and Projections - Sonoma County Burns Home Value Index Change Rate Affordability Index

2009 110.7 -2.0% 2.1

2010 102.1 -7.8% 1.9

2011 95.2 -6.8% 1.1

2012 109.2 14.7% 1.1

2013 128.0 17.2% 4.3

2014 139.4 8.9% 5.9

Current 149.4 8.8% 5.8

2015P 152.4 9.3% 5.6

2016P 158.5 4.0% 5.8

2017P 163.6 3.2% 6.1

2018P 166.9 2.0% 6.1

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Over 500 Jobs to Sonoma County: Fireman’s Fund Insurance Co. announced they were downsizing their current office in Novato to bring potentially up to 550 employees to a newer, smaller office complex located in Petaluma. As office rents in comparatively closer-in parts of the Bay Area, and even Marin County, continue to increase, some businesses will opt for lower rents in more outlying markets. Vacation Rentals Hurting Housing Inventory: Since 2011, Sonoma County has issued over 1,000 permits for “whole-house vacation rentals,” while only constructing 495 new residential units. With a growing trend of a “sharing economy,” activity has flourished for such websites as Airbnb. Currently there are hundreds of Sonoma County short-term rentals available, many of which lack proper permitting, that would otherwise be included in the resale inventory market. This trend further heightens the housing shortage while applying pressure to both resale pricing and rents in the area. From 2011 to 2014, existing home prices are up a total of 40 percent, while apartment rents have grown 29 percent. SMART on Track: The SMART train will provide a rail commuter option that parallels the congested Highway 101 from Sonoma County to the north and into Marin County, terminating at Larkspur. SMART is currently testing track to check onboard systems and operational requirements, and is on schedule to open several stations in late 2016. SMART riders will need to catch a ferry in Larkspur to commute to San Francisco jobs, but it will certainly take pressure off Highway 101 and make Sonoma County homes more attractive to those working in San Francisco.


Sonoma Valley Quarterly Real Estate Report Q4 2015

Jill Silvas Regional Executive, Sonoma Valley 707.939.9500 jill.silvas@pacunion.com 135 West Napa Street, Suite 200 | Sonoma, CA 95476


Sonoma Valley pacificunion.com

Sonoma Valley: Q4 Results Fourth-quarter activity in Pacific Union’s Sonoma Valley region could be titled “A Tale of Two Markets.” There were plenty of closings in September as the summer wound down, but a dearth of new transactions created a sluggish October. But in November, homebuyers woke up and quickly got busy. December, typically a slower month, was anything but, as buyers hustled to make and close deals before the end of the year. Overall, the Sonoma Valley region ended 2015 just as it started: in a very strong state. Residential sales volume climbed higher, and the average sales price jumped considerably. Well-priced, attractive properties continued to draw buyers, but sellers found that they had to be careful in pricing their homes; some with unrealistic expectations found themselves sitting on properties far longer than they would have a year earlier. Looking Forward: Sonoma Valley is an attractive destination, and employment remains strong across the Bay Area – two factors that bode well for future real estate activity. The impact of rising interest rates on home sales in the region remains to be seen, even though they are at historically low levels. Many Sonoma Valley sales involve second homes, and buyers’ discretionary income is often closely tied to the stock market, which is anticipated to be as volatile in 2016 as it was in 2015, and to some extent interest rates. Defining Sonoma Valley: Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the charts below refers to all residential properties – including single-family homes, condominiums, and farms and ranches – in these communities.

Median Sales Price $800,000

$756,000

$700,000 $600,000

$665,000 $589,500 $545,000

$540,000

Jan-15

Feb-15

$672,150

$640,000

$637,000

$759,000

$740,000

$712,500

$572,000

$575,000

$500,000 $400,000 $300,000 $200,000 $100,000

Dec-14

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes, condominiums, and farms/ranches in Sonoma Valley.

Months’ Supply of Inventory 3.9

4.1 3.6

3.6

3.3

3.2

3.1 2.6

2.3

2.5

2.5

2.5

2.1

2.0

2.1 1.6

2.3

1.7

1.6

1.1 0.6 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes, condominiums, and farms/ranches in Sonoma Valley.


Sonoma Valley pacificunion.com

Average Days on the Market 100 90

89 82

85 76

80 70

66

64

60

65 53

50

60

58

Aug-15

Sep-15

68

69

Oct-15

Nov-15

47

40 30 20 10 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes, condominiums, and farms/ranches sold in Sonoma Valley.

Â

Percentage of Properties Under Contract 32.2%

35% 29.9%

30%

28.4%

27.9%

24.9%

23.5%

22.4%

25% 20%

31.8%

25.0%

26.3% 23.0%

16.8%

15.7%

15% 10% 5% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes, condominiums, and farms/ranches under contract in Sonoma Valley. Â

Sales Price as a Percentage of Original Price 104% 102%

101.4%

100.5%

98.8%

100% 98% 96%

94.7%

95.2%

96.3%

96.7%

98.5% 96.5%

96.7%

95.4%

93.5%

94% 92%

89.4%

90% 88% 86% 84% 82%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes, condominiums, and farms/ranches under contract in Sonoma Valley.


Sonoma Valley pacificunion.com

A Closer Look at Sonoma Valley

Sonoma Valley Snapshot: Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Median Price Q4 '14

Glen Ellen

$

16,995,192

$

12,999,600

-24%

18

10

-44%

91

102

12%

$

Kenwood

$

9,758,500

$

9,339,000

-4%

8

6

-25%

128

116

-9%

Sonoma

$

94,386,303

$

91,563,610

-3%

120

97

-19%

76

68

-11%

Q4 '15

% change

750,500

-5%

$ 1,081,250

$ 1,370,000

27%

$

$

17%

787,000

580,000

$

680,000

Source: Terradatum, January 7, 2016. Data is for single-family homes, condominiums, and farms/ranches in selected Sonoma Valley cities.


Sonoma Valley pacificunion.com

Sonoma County Housing and Economic Outlook Though most residents work locally or commute into San Francisco or the Peninsula, net worth also drives the second-home and retiree markets in Sonoma, which are critical. We are optimistic about retirement opportunities in Sonoma particularly as the growth in households reaching their 60s continues.

THE ECONOMY Solid Job Growth: Sonoma County added 8,400 net new jobs last year and is projected to add 4,400 this year, pushing total jobs to over 196,000. The 2015 figure would be a solid 2.3 percent improvement from last year, with similar rates projected through 2016 before we expect job growth to slow. Tourism and Some Tech: Tourism-based leisure and hospitality jobs represent about 13 percent of total jobs in Sonoma. Professional and business services, trade, transportation and utilities, and government are also key sectors within this market. Highly Employed Population: Only 3.1 percent of the labor pool cannot find a suitable job. Middle Class: At $62,000 per year, Sonoma supports an essentially middle-class income profile, though there are many higher-income professionals. Substantial housing demand, however, also comes from the more affluent San Francisco.

Jobs and Median Income Trends and Projections - Sonoma County Jobs Total Change Change Rate Median Income Change Rate

2009 173,600 -14,600 -7.8% $61,579 -3.9%

2010 169,900 -3,700 -2.1% $59,697 -3.1%

2011 171,800 1,900 1.1% $58,850 -1.4%

2012 175,100 3,300 1.9% $59,520 1.1%

2013 183,600 8,500 4.9% $61,029 2.5%

2014 192,000 8,400 4.6% $61,646 1.0%

2015P 196,400 4,400 2.3% $63,556 3.1%

2016P 201,300 4,900 2.5% $65,543 3.1%

2017P 203,300 2,000 1.0% $68,160 4.0%

2018P 204,300 1,000 0.5% $70,724 3.8%

Source: Bureau of Labor Statistics; Moody Analytics

DEMOGRAPHICS Steady Growth: Sonoma is home to about half a million residents. Population growth is modest, near 1.0 percent in recent years, with household growth slightly lower. We project slow and steady population growth at 1.0 percent annually going forward. Household growth, however, should outpace population growth as household formation trends return to long-term norms. Continuity: Growth projections translate into approximately 5,000 new Sonoma residents annually over the next few years, or about 2,100-2,500 new households each year.

Population and Households Trends and Projections - Sonoma County 2009

2010

2011

2012

2013

2014

2015P

2016P

2017P

2018P

479,500

484,700

487,700

490,800

495,400

500,300

505,500

510,600

515,600

520,600

Change

6,400

5,200

3,100

3,100

4,600

4,900

5,200

5,100

5,000

5,000

Change Rate

1.4%

1.1%

0.6%

0.6%

0.9%

1.0%

1.0%

1.0%

1.0%

1.0%

183,700

186,100

186,700

187,500

188,500

190,100

192,200

194,600

197,000

199,500

Change

2,800

2,400

600

800

1,000

1,600

2,100

2,400

2,400

2,500

Change Rate

1.6%

1.3%

0.3%

0.4%

0.5%

0.9%

1.1%

1.2%

1.2%

1.3%

Population Total

Household Total

Source: Moody Analytics; John Burns Real Estate Consulting


Sonoma Valley pacificunion.com

THE HOUSING MARKET Slowing Home Price Appreciation: Our Burns Home Value Index (BHVI) estimates price appreciation for the entire resale market. Currently, the BHVI shows prices have risen 8.8 percent over the last year, down from a remarkable 17.2 percent in 2013. JBREC forecasts more modest growth in this measure, ranging from 2.0 percent to 4.0 percent from 2016-18. Consistent Resales Volumes: We project 2015 resale volume to come in at about 5 percent above 2014 with 6,400 sales. Sales should slowly increase to approximately 6,400-6,700 per year through 2018. This is down from about 8,000-10,000 annual resales, however, from the late 1990s through 2005. Investors Slowing but Still Key: Investors are purchasing about 26 percent of the Sonoma market homes, down from the 33 percent at the peak in 2012. Affordability: Though low mortgage rates help keep affordability at a historically normal level in Sonoma County, comparatively high prices mean homeownership is still expensive. The median-income household would need to pay 48 percent of their income to buy a median-priced resale home and about 46 percent to afford a median-priced new home (the lower new home price due to typically higher new home densities). Expensive and Uncommon New Homes: Limited new residential development translates into new home prices that often fluctuate, but typically average from the mid-$400s to the low-$500s. Over the last 12 months, the median new home price is about $483,000 countywide.

Burns Home Value Index Trends and Projections - Sonoma County Burns Home Value Index Change Rate Affordability Index

2009 110.7 -2.0% 2.1

2010 102.1 -7.8% 1.9

2011 95.2 -6.8% 1.1

2012 109.2 14.7% 1.1

2013 128.0 17.2% 4.3

2014 139.4 8.9% 5.9

Current 149.4 8.8% 5.8

2015P 152.4 9.3% 5.6

2016P 158.5 4.0% 5.8

2017P 163.6 3.2% 6.1

2018P 166.9 2.0% 6.1

Source: John Burns Real Estate Consulting

Note: The Burns Affordability Index is scaled from 1 to 10, with 5 set to the long-term norm for a given market, 0 indicating excellent affordability and 10 indicating poor affordability compared to that market’s norm.

MARKET COLOR Over 500 Jobs to Sonoma County: Fireman’s Fund Insurance Co. announced they were downsizing their current office in Novato to bring potentially up to 550 employees to a newer, smaller office complex located in Petaluma. As office rents in comparatively closer-in parts of the Bay Area, and even Marin County, continue to increase, some businesses will opt for lower rents in more outlying markets. Vacation Rentals Hurting Housing Inventory: Since 2011, Sonoma County has issued over 1,000 permits for “whole-house vacation rentals,” while only constructing 495 new residential units. With a growing trend of a “sharing economy,” activity has flourished for such websites as Airbnb. Currently there are hundreds of Sonoma County short-term rentals available, many of which lack proper permitting, that would otherwise be included in the resale inventory market. This trend further heightens the housing shortage while applying pressure to both resale pricing and rents in the area. From 2011 to 2014, existing home prices are up a total of 40 percent, while apartment rents have grown 29 percent. SMART on Track: The SMART train will provide a rail commuter option that parallels the congested Highway 101 from Sonoma County to the north and into Marin County, terminating at Larkspur. SMART is currently testing track to check onboard systems and operational requirements, and is on schedule to open several stations in late 2016. SMART riders will need to catch a ferry in Larkspur to commute to San Francisco jobs, but it will certainly take pressure off Highway 101 and make Sonoma County homes more attractive to those working in San Francisco.


Lake Tahoe/Truckee Quarterly Real Estate Report Q4 2015

Sally Gardner Regional Executive, Tahoe/Truckee Tahoe City 530.581.1882 | Truckee 530.587.7098 | Squaw Valley 530.584.6282 sally.gardner@pacunion.com


Lake Tahoe/Truckee pacificunion.com

Lake Tahoe/Truckee: Q4 Results Snow is a magical thing in the Sierra Nevadas. Elsewhere it slows traffic and shuts down businesses, but in Lake Tahoe/Truckee it opens world-famous winter resorts and attracts skiers, outdoor enthusiasts, and vacation homebuyers. After a long and difficult drought, snowfall was enthusiastically welcomed in the area in the fourth quarter. Weather conditions held back sales for much of 2015, but real estate activity was brisk by the end of the year, traditionally a busy time as out-of-town buyers – many from the Bay Area – shop for vacation homes in time for the ski season. Lake Tahoe/Truckee is a buyer’s market, and multiple offers were rare last year. Buyers leveraged home prices that still haven’t reached their prerecession peaks in many communities to score some exceptional bargains. Looking Forward: First-quarter home sales in Lake Tahoe/Truckee are influenced by the weather, and forecasts suggest that the winter and spring will be busy times indeed as Bay Area residents pack their skis and head for the mountains. We also expect that many sellers who pulled their properties off the market last year will return them to the mix in the coming weeks and months. Defining Lake Tahoe/Truckee: Our real estate markets in Tahoe/Truckee include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. Sales data in the charts below includes single-family homes and condominiums in these communities.

Single-Family Homes – Median Sales Price $800,000 $725,000

$700,000 $600,000

$611,250

$572,000

$650,000 $535,000

$530,500

Apr-15

May-15

$560,000

$585,000

$577,500

Jul-15

Aug-15

$605,500

$579,000

$550,000

$595,000

$500,000 $400,000 $300,000 $200,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Jun-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Median sales price for single-family homes in the Lake Tahoe/Truckee region.

Condominiums – Median Sales Price $450,000 $400,000

$427,500 $391,500

$385,000

$370,250

$359,500

$362,500

$356,000

$375,000

$339,000

$350,000 $290,000

$300,000

$335,000

$330,000

Nov-15

Dec-15

$281,000

$250,000 $200,000 $150,000 $100,000

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Source: Terradatum, January 7, 2016. Median sales price for condominiums in the Lake Tahoe/Truckee region.


Lake Tahoe/Truckee pacificunion.com

Single-Family Homes – Months’ Supply of Inventory 9.1

8.5

8.4

8.0

8.1 6.7

7.1

6.3

7.0

6.7

6.8

6.1 5.1

5.3

4.8

5.6

6.0

4.2

4.1 3.1 2.1 1.1 0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for single-family homes in the Lake Tahoe/Truckee region.

Condominiums – Months’ Supply of Inventory 25.1 19.3

20.1 14.5

15.1

10.1

12.5

11.3

9.9

9.4

9.4

12.1 8.9

10.7

10.9

Nov-15

Dec-15

8.3 6.2

5.1

0.1

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Source: Terradatum, January 7, 2016. Months' supply of inventory for condominiums in the Lake Tahoe/Truckee region.

Single-Family Homes – Average Days on the Market 200

183

180 160 140 120

143 118

110

102

100

95

83

80

80

81

Jul-15

Aug-15

89

98

111

59

60 40 20 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for single-family homes sold in the Lake Tahoe/Truckee region.


Lake Tahoe/Truckee pacificunion.com

Condominiums – Average Days on the Market 160 138

140 120

120

122

107

100

100

122

119

112

107

103

73

80

55

60

42

40 20 0

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Average days on market for condominiums sold in the Lake Tahoe/Truckee region.

Single-Family Homes – Percentage of Properties Under Contract 16%

14.4%

14%

12.1%

12.9%

14.9% 13.8%

12.3%

12.4%

13.1%

13.5%

12% 10%

10.0%

11.7%

12.2%

Nov-15

Dec-15

9.6%

8% 6% 4% 2% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Source: Terradatum, January 7, 2016. Percentage of single-family homes under contract in the Lake Tahoe/Truckee region.

Condominiums – Percentage of Properties Under Contract 14% 12% 10%

12.6%

11.7%

11.4% 9.7%

9.3% 7.0%

8%

7.8%

7.8%

7.8%

7.3%

6.3%

6.9%

6.7%

6% 4% 2% 0%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Percentage of condominiums under contract in the Lake Tahoe/Truckee region.


Lake Tahoe/Truckee pacificunion.com

Single-Family Homes – Sales Price as a Percentage of Original Price 98%

96.5% 95.0%

96% 94% 92%

94.2% 92.1%

90.9%

90%

88.6%

92.9% 91.5%

93.4%

93.5%

Nov-15

Dec-15

90.6%

88.2%

88%

86.8%

86% 84% 82% 80%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for single-family homes under contract in the Lake Tahoe/Truckee region.

Condominiums – Sales Price as a Percentage of Original Price 98%

96.5%

96%

94.3%

94%

92.7%

92%

94.3%

95.9%

95.6%

94.1% 91.6%

91.3%

92.8%

93.4%

90.2%

90% 88%

87.3%

86% 84% 82%

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Source: Terradatum, January 7, 2016. Sales price as % of original price (including adjustments) for condominiums under contract in the Lake Tahoe/Truckee region.


Lake Tahoe/Truckee pacificunion.com

A Closer Look at Lake Tahoe/Truckee Lake Tahoe/Truckee Snapshot: SFH, Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Median Price Q4 '14

Q4 '15

% change

Alpine Meadows

$

4,222,500

$

4,547,500

8%

6

7

17%

49

72

47%

$

567,500

$

595,000

5%

Donner Lake

$

4,384,900

$

7,426,700

69%

5

11

120%

74

115

55%

$ 1,150,000

$

615,000

-47%

Donner Summit

$

8,875,700

$

4,723,000

-47%

15

8

-47%

95

93

-2%

$

445,000

$

477,500

7%

Martis Valley

$

70,744,159

$

46,118,199

-35%

37

29

-22%

133

116

-13%

$

890,000

$

579,000

-35%

North Lake Tahoe

$

57,686,000

$

42,744,750

-26%

59

52

-12%

110

94

-15%

$

560,000

$

595,000

6%

Northstar

$

7,157,500

$

3,380,000

-53%

9

4

-56%

292

64

-78%

$

695,000

$

812,500

17%

Squaw Valley

$

5,185,000

$

7,335,000

41%

3

4

33%

348

377

8%

$

2,070,000

$

1,712,500

-17%

Tahoe City

$

29,175,500

$

16,390,250

-44%

25

20

-20%

83

80

-4%

$

810,000

$

690,000

-15%

Tahoe Donner

$

46,102,909

$

49,313,003

7%

63

79

25%

96

87

-9%

$

630,000

$

575,000

-9%

Truckee

$

84,803,159

$

55,873,919

-34%

60

50

-17%

100

96

-4%

$

596,407

$

501,500

-16%

West Shore

$

41,545,500

$

57,558,000

39%

43

53

23%

140

110

-21%

$

535,000

$

650,000

21%

Source: Terradatum, January 7, 2016. Data is for single-family homes in the Lake Tahoe/Truckee region.

Lake Tahoe/Truckee Snapshot: Condos, Q4 2015 vs. Q4 2014 Sales Volume Q4 '14

Q4 '15

Homes Sold

Avg. Days on Market

Median Price

% change

Q4 '14

Q4 '15

% change

Q4 '14

Q4 '15

% change

Q4 '14

n/a

2

0

n/a

18

0

n/a

$

Q4 '15

n/a

0

4

n/a

0

247

n/a

$

n/a

1

0

n/a

290

0

n/a

$

210,000

$

% change

Alpine Meadows

$

Donner Lake

$

Donner Summit

$

210,000

$

North Lake Tahoe

$

12,556,500

$

9,753,500

-22%

23

22

-4%

148

114

-23%

$

367,500

$

348,500

-5%

Northstar

$

7,549,150

$

3,674,500

-51%

12

8

-33%

116

95

-18%

$

405,000

$

403,500

0%

Squaw Valley

$

5,946,500

$

5,738,500

-3%

7

11

57%

164

149

-9%

$

670,000

$

422,000

-37%

Tahoe City

$

5,475,500

$

5,992,500

9%

9

12

33%

135

107

-21%

$

315,000

$

426,000

35%

Tahoe Donner

$

3,748,500

$

3,742,000

0%

13

13

0%

94

92

-2%

$

295,000

$

312,000

6%

Truckee

$

11,860,500

$

8,202,000

-31%

18

14

-22%

98

147

50%

$

448,500

$

375,750

-16%

West Shore

$

5,760,000

$

1,128,000

-80%

3

2

-33%

307

337

10%

$ 2,275,000

$

564,000

-75%

905,000 -

$ $

470,650 -

452,500 -

$ $

119,575 -

n/a n/a n/a

Source: Terradatum, January 7, 2016. Data is for condominiums in the Lake Tahoe/Truckee region.


Lake Tahoe/Truckee pacificunion.com

Lake Tahoe Area Housing and Economic Outlook As a year-round resort getaway for affluent Bay Area residents, the Lake Tahoe housing market depends heavily on the health of the Bay Area economy and housing markets, both of which have been very strong for the last few years.

BAY AREA IMPACT Feeder Markets: Housing and employment data from core Bay Area MSAs helps us understand how the Lake Tahoe market will perform. Strong job income, and net-worth growth in the Bay Area means more demand in Lake Tahoe. High and rising home prices in the Bay Area and a strong sales environment provide the equity for primary (often retiree) or second homes in Lake Tahoe. Jobs and Income: Bay Area jobs have been booming over the last three years, with 4 percent annual job growth since 2011. We project this growth to continue in the near term, though at a more conservative rate. The Bay Area is a highly affluent region, with the current median household income in the East Bay and San Francisco MSAs at $81,000 and $90,000, respectively, and the San Jose MSA just under $100,000. Sales Volume: Existing home sales have been strong throughout the Bay Area in recent years and are projected to maintain steady growth. High Prices: Pricing of existing homes has surged in all three core Bay Area MSAs. We project existing home prices will rise healthily in the coming years, though appreciation will slow notably by 2018. (JBREC does not project home prices, but the table below shows our price change rate projections for each MSA.)

Employment Trends and Projections - Bay Area 2009

MSA

East Bay MSA 984,900 San Francisco MSA 964,200 San Jose MSA 867,900 Aggregate Total 2,817,000 Source: U.S. Bureau of Labor Aggregate Change Aggregate Change Rate

-167,600 -5.6%

2010

2011

2012

2013

2014

Current

2015P

2016P

2017P

2018P

964,300 955,400 865,200 2,784,900

972,700 979,600 885,900 2,838,200

1,002,100 1,026,400 921,000 2,949,500

1,037,500 1,074,300 960,800 3,072,600

1,065,000 1,121,300 1,004,300 3,190,600

1,085,900 1,179,400 1,062,800 3,328,100

1,090,000 1,166,300 1,059,300 3,315,600

1,110,000 1,186,300 1,094,300 3,390,600

1,125,000 1,196,300 1,114,300 3,435,600

1,130,000 1,191,300 1,109,300 3,430,600

-32,100 -1.1%

53,300 1.9%

111,300 3.9%

123,100 4.2%

118,000 2.9%

126,100 4.1%

125,000 3.9%

75,000 2.3%

45,000 1.4%

-5,000 -0.1%

Source: U.S. Department of Labor

Existing Home Sales Trends and Projections - Bay Area 2009

2010

2011

2012

2013

2014

Current

2015P

2016P

2017P

2018P

East Bay MSA San Francisco MSA San Jose MSA Aggregate Total

34,368 13,864 19,533 67,765

31,254 14,438 18,641 64,333

31,420 14,949 18,612 64,981

34,068 18,024 20,679 72,771

32,542 18,167 20,120 70,829

30,302 16,704 18,277 65,283

31,987 16,136 18,786 66,909

32,500 16,300 18,800 67,600

33,100 16,600 20,000 69,700

33,600 16,800 20,500 70,900

33,800 16,900 20,900 71,600

Aggregate Change Aggregate Change Rate

10,430 18.2%

-3,432 -5.1%

648 1.0%

7,790 12.0%

-1,942 -2.7%

-4,369 -6.1%

1,626 2.5%

691 1.0%

2,100 3.1%

1,200 1.7%

700 1.0%

Sales

Source: John Burns Real Estate Consulting; CoreLogic

Existing Home Pricing Trends and BHVI Projections - Bay Area Median Pricing Source: DataQuick East Bay MSA San Francisco MSA San Jose MSA

2009

2010

2011

2012

2013

2014

Current

2015P

2016P

2017P

2018P

$292,000 $664,500 $477,900

$332,800 $698,900 $536,600

$313,300 $663,600 $518,300

$349,000 $711,400 $574,900

$457,700 $841,900 $698,500

$529,200 $958,300 $775,100

$582,900 $1,082,300 $898,300

10.9% 15.2% 13.0%

5.1% 7.2% 5.4%

3.2% 3.0% 3.3%

1.7% 0.0% 0.0%

Source: John Burns Real Estate Consulting; CoreLogic


Lake Tahoe/Truckee pacificunion.com

DEMOGRAPHICS Steady Growth Ahead: Lake Tahoe has just over 45,000 residents in about 19,300 households. The area’s population has declined through the 2000s at a rate of -1.0 percent per year but is forecast to grow over the next five years and approximate its 2000 level by 2020. Households: Growth projections for the next five years translate into about 500 new residents annually in the Lake Tahoe area or about 250 new households each year. Household growth at a higher rate than population growth is common in major secondary markets like Lake Tahoe. Population and Households Trends and Projections - Lake Tahoe Area, California 2000 47,629 18,929 2.50

Population Total Annualized Change Rate Household Total Avg. HH Size

2010 42,740 -1.0% 18,026 2.34

2015 45,268 1.2% 19,300 2.31

2020P 47,925 1.2% 20,564 2.30

Source: ESRI. The Lake Tahoe area is defined as the following eight California ZIP codes: 96140, 96141, 96142, 96143, 96145, 96146, 96148, and 96150.

THE HOUSING MARKET Prices Rising: The median sales price for existing homes in the Lake Tahoe area has generally been increasing in recent years. Single-family home prices are up 4.3 percent year over year, but condominium pricing is currently down 8.3 percent. Median pricing can fluctuate considerably from month to month given the comparatively low volumes and the variety of homes that might come onto the market. Higher Supply: There are a considerable amount of homes on the market in Lake Tahoe, typically ranging from five to eight months of supply. This is relatively high in terms of larger market standards, but is the norm – if not somewhat tight – for high-end, second-home-oriented markets. Longer to Sell: High-end vacation homes typically stay on the market longer than conventional housing given how discretionary a second home purchase is. In Lake Tahoe, the average single-family home is on the market for close to three months, and it is not uncommon for condominiums to be up for sale longer.

Existing Home Pricing and Supply Trends - Lake Tahoe / Truckee Median Sales Price Single-Family Homes Condominiums Months of Supply Single-Family Homes Condominiums Avg Days on the Market Single-Family Homes Condominiums

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

YoY %

$587,000 $385,000

$607,342 $416,000

$740,000 $392,500

$572,000 $370,250

$725,000 $290,000

$611,250 $359,500

$650,000 $362,500

$535,000 $281,000

$530,500 $339,000

$560,000 $385,000

$585,000 $356,000

$580,000 $427,500

$612,500 $353,000

4.3% -8.3%

7.2 6.5

6.0 6.2

5.2 6.2

4.7 9.9

6.6 14.5

8.4 11.3

6.2 9.3

7.0 19.2

8.5 9.3

6.8 12.5

6.7 8.8

7.8 8.2

5.2 12.5

-27.8% 92.3%

86 197

91 154

127 101

118 120

110 122

143 138

183 112

102 100

83 73

60 42

81 107

80 55

96 109

11.6% -44.7%

Source: Pacific Union. The Lake Tahoe / Truckee region includes the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley,Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. YOY figures measure September 2014 against September 2013.

MARKET COLOR Developers and Conservationists Strike a Deal: Officials of Placer County have recently approved a deal that would transfer development rights for a major new home project in Martis Valley. Property owners Sierra Pacific Industries and developers Mountainside Partners intend to develop up to 1,360 homes east of state Route 267. This prospect, however, was worrisome to some conservationist groups including Trust for Public Land and Truckee Donner Land Trust. As of October, the parties have reached an agreement whereby Mountainside Partners would transfer their development rights to now develop 760 residential units, as well as 6.6 acres of commercial use, to the west of state Route 267. This agreement will help end a seemingly endless stalemate while protecting up to 50,000 acres of Martis Valley.


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