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Understanding California Luxury clients

Understanding California Luxury clients. February 27, 2014 Oscar Wei, Senior Research Analyst. Sales of Existing Detached Homes. California, Jan. 2014 Sales: 363,640 Units, -13.8% YTD, -13.8% YTY. SERIES: Sales of Existing Single Family Homes SOURCE : CALIFORNIA ASSOCIATION OF REALTORS ® .

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Understanding California Luxury clients

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  1. Understanding California Luxury clients February 27, 2014 Oscar Wei, Senior Research Analyst

  2. Sales of Existing Detached Homes • California, Jan. 2014 Sales: 363,640 Units, -13.8% YTD, -13.8% YTY SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® *Sales are seasonally adjusted and annualized

  3. Median Price of Existing Detached Homes • California, January 2014: $410,990, Up 22.1% YTY SERIES: Median Price of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  4. Sales of Existing Detached Homes • California 2013 Sales: 413,870 Units, Down 5.9% YTY SERIES: Sales of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® *Sales are seasonally adjusted and annualized

  5. Sales: Luxury home vs. the Rest of the Market 2013 : Up 35.5% 2013 : Down 8.4% SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  6. Change in Sales by Price Range • (Year-to-Year) SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  7. Sales Share by Price Range SERIES: Sales of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  8. Unsold Inventory Index • California, January 2014: 4.3 Months Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  9. Unsold Inventory Index By Price Range • California , Jan 2013 vs. Jan 2014 Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  10. Unsold Inventory Index By Price Range • California , Dec 2013 vs. Jan 2014 Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  11. Unsold Inventory Index (Months) Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  12. Unsold Inventory Index (Months) Note: “Unsold Inventory Index” represents the number of months it would take to sell the remaining inventory for the month in question. The remaining inventory for the month is defined as the number of properties that were “Active”, “Pending”, and “Contingent” (when available) and divide the sum by the number of “Sold” properties for the month in question. SERIES: Unsold Inventory Index of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  13. Change in Inventory by Price Range • (Year-to-Year) SERIES: Inventory of Existing Single Family Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  14. Survey Methodology • 730 online surveys were received in November 2013. • Respondents are Luxury clients who purchase/sell a home for over one million dollars. • Maximum sampling error: ±3.5 percent at two standard deviations (a 95% confidence level).

  15. Profile of Luxury Clients

  16. Type of Client Represented Q: Who did you represent in your last transaction?

  17. The Typical Luxury Client

  18. About Three-Quarters of Luxury Clients had a Post-Secondary Education Q. What is the highest level of education your client had completed at the time of your last luxury transaction?

  19. Singles made up 48% of Luxury Clients in 2013

  20. Over 70% of Luxury Clients were White

  21. Client Profiles

  22. Over 70% of Luxury Buyers were White

  23. Over 70% of Luxury Sellers were White

  24. Majority of Luxury Home Transactions are not the Client’s First Home Purchase Q. Was your last luxury transaction the client's first home purchase? SERIES: 2013 Annual Housing Market Survey and 2013 Luxury Clients Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  25. More than four of five luxury repeat buyers owned more than one property Mean: 2.4 properties Q. How many other properties does your last luxury client own?

  26. International Buyers Are Purchasing Properties in California SERIES: 2013 Housing Market Survey and 2013 Luxury Clients Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  27. Profile of Luxury Properties!

  28. Majority of Luxury Transactions were Traditional Sales

  29. Property Type

  30. Luxury properties often had a hilltop or ocean view

  31. Luxury Buyers intended Largely to use their Luxury Homes as their Primary Residence

  32. Property Value Breakdown Median Price: $1,375,000

  33. Buying and Selling Process

  34. Buying

  35. Main Reasons for Purchasing a Home Q. What primarily motivated the client in your last luxury transaction to buy within the past year?

  36. Reasons for Buying – All Homes First Time Homebuyers Vs. Repeat Homebuyers Q. What was the single most important reason for selling/buying the property? SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  37. The Median Number of Years that Luxury Buyers Intended to Keep the Property was 10. Q. How many years does the client in your last luxury transaction intend to keep the property?

  38. One –Third of Luxury Buyers Paid with All Cash • More than a third of luxury buyers paid with all cash • The share of all cash buyers had been on the rise for overall sales until this year SERIES: 2013 Housing Market Survey and 2013 Luxury Clients Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

  39. Luxury Buyers Typically Pay More Down Payment than Traditional Buyers

  40. Majority of Luxury Home Clients used their Personal Savings as the source of their down payment What was the source of the down payment in your last luxury transaction?

  41. Source of Down Payment Breakdown by Buyer Type

  42. Differences in Financing

  43. Difficulty in Obtaining Financing (1=Very Easy to 10=Very Difficult) Q. Please rate how difficult it was for the client in your last luxury transaction to obtain financing.

  44. Luxury clients utilized their personal contacts to find their agents. Q. How did you find the client in your last luxury transaction?

  45. How Agents Find Luxury Clients Q. How did you find your client in your last luxury transaction?

  46. Agents spent about 5 weeks on average looking for properties with their luxury buyers A luxury buyer typically viewed 10 properties with his/her agent before making a home purchase. A traditional buyer viewed 10 properties with his/her agent before making a home purchase Q. How many weeks did you spend looking for a property with your client in your last luxury transaction? Q. How many properties did you view with your client prior to the client making a purchase in your last transaction?

  47. Luxury Home Buyer Made Fewer Offers Than a Typical Home Buyer Q. How many offers did your last client make on other properties?

  48. Selling

  49. Main Reasons for Selling Luxury Home Q. What primarily motivated the client in your last luxury transaction to sell within the past year?

  50. Traditional Sellers - Reasons for Selling Q. What was the single most important reason for selling the property?

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