Consumer Insights 2Q14 Sacramento

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Consumer Insights

Top Amenities by Generation Sacramento Housing Outlook A Look at The Boomers, Gen X, and Gen Y

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ConsumerInsights What Do You Call Home?

NATIONWIDE SAMPLE

Consumer research in the real estate world is often overlooked because it is difficult and expensive to conduct. However, understanding what home buyers value is critical, given the market climate and competitive field today. Our third annual Consumer Insights report couples our timely market research with qualitative findings from our proprietary “What Do You Call Home?” survey to provide better information on consumer marketing strategies for your communities.

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Over 22,000 responses are collected across the nation annually. We have access to over 50,000 total responses in our past survey database.

PARTNERS

Builders, developers, and Zillow joined in the effort nationwide by sending an e-mail to their prospective shoppers.

E-MAIL SURVEY

Our survey includes over 100 questions and several hundred variables regarding shoppers’ opinions on their next home and community.


Insight Customized to Increase Your Bottom Line Consumer Insights is a “focus-forward� study so that real estate practitioners can use this information to make strategic decisions moving forward. The information can be customized to meet your needs.

GEOGRAPHIC

We understand that geography affects consumer preferences. Responses can roll up to a national or regional level or drill down to the MSA or submarket level.

PRICE POINT

We understand that affordability is different for each new home shopper. Respondents were asked their desired price point and payment in their next home; our report can be filtered accordingly.

GENERATIONS & LIFESTAGE

We understand that lifestage impacts purchasing behaviors. Reports are available specifically for 55+ and the millennial buyers.

Fantastic Insight On: HOME To learn more about how you can better develop your next community, marketing strategy, or new product design, please contact:

Kitchen Bathroom Private outdoor living Great space Architectural style Yard preferences Specifications & Technology

MOLLIE CARMICHAEL Principal

COMMUNITY

mcarmichael@realestateconsulting.com (949) 870-1214

Community amenities Lifestyle

INTERIOR STYLE

Interior style preferences Exterior style preferences Interior specifications Texture Color

ATTITUDES

How they live How they shop What they value

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DEAN WEHRLI Sr. Vice President Dean manages residential and commercial real estate consulting assignments across the country and has more than 15 years of experience in real estate market feasibility analyses. He is our Senior Vice President with an emphasis on the Bay Area, Sacramento, the Central Valley, and Northern Nevada markets. His experience as a seasoned analyst has spanned nearly 20 states and over 60 markets, consulting on developments ranging from a few lots of multi-million dollar custom homes to master planned communities with thousands of units. Dean’s analyses have focused on pricing, absorption, buyer profiles, product recommendations and segmentation, supply and demand, economic and demographic impacts, and aggregate housing market trends. Previously, Dean spent many years at Hanley Wood Market Intelligence (formerly The Meyers Group) and Sullivan Group as Managing Director of their Sacramento office. Dean plays basketball when not injured, writes novels and screenplays, and almost always wins at Trivial Pursuit. Almost. EDUCATION Ph.D. from the University of California, Los Angeles B.A. in Political Science from Cal State Fullerton. AFFILIATIONS Building Industry Association Urban Land Institute

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MOLLIE CARMICHAEL Principal Mollie Carmichael is a Principal at John Burns Real Estate Consulting. For over 25 years, Carmichael has helped companies increase profits dramatically by understanding the market and consumer first. She is passionate about guiding strategic planning decisions with consumer and market based methodologies in order to optimize financial results. Carmichael has led research efforts throughout the country on masterplan communities and individual neighborhood design where companies. In addition to managing various consulting assignments, Carmichael leads our firm’s Consumer Insights research to help our clients understand what consumers value in their homes and communities. She has led a national consumer survey for the last several years that has been launched to several million homeshoppers throughout the company. The survey effort is all about better understanding what consumers value and what they will pay for in their next community and home. It is the only survey of its kind today. Prior to joining the company, Carmichael served as a Vice President of Strategic Marketing for Lennar, Centex Homes, Pulte Homes/Del Webb and Vice President of Residential Product Planning at The Irvine Company, where she led strategic planning, target land acquisition strategies, acquisition and market study due diligence, consumer and product segmentation, quantitative and qualitative consumer research, competitive research, as well as tactical media planning, model and sales office merchandising. Carmichael has been quoted in various media publications including the Wall Street Journal, MSNBC, Reuters, Businessweek, and Professional Builder. She has been a speaker on Consumer Insights and innovative planning ideas throughout the country including PCBC, ULI, UBS, and other specific venues. AFFILIATIONS ULI – Community Development Council Building Industry Association 55+ Housing Council 5


Consumer

Insights

81%

of prospective shoppers say that design is one of the most important factors motivating them to buy a new home.

80%

will consider a smaller backyard if it is designed as a great outdoor space.

Consumer

Insights

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Consumer

Insights

Look out for multi-generational living! 39% plan on an elderly parent and 35% plan on a child over 18 living with them with their next purchase.

67% of all shoppers have pets.

Consumer

Insights

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Consumer

Insights

62%

will use either their tablet or mobile phone while shopping for their next home.

Top kitchen features include large islands, walk-in pantries, and high-tech appliances.

Consumer

Insights

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Consumer

Insights New Home Shoppers

Generations

Let’s look at who’s shopping out there today for a new home! Who are they? What do they want? This infographic is part of a new series of studies by JBREC on generational differences, based on responses from 22,000 new home shoppers. This Generations infographic details each generation’s life stage and behavior in regards to purchasing a home. Visit www.realestateconsulting.com and let us help your team improve your home or community strategies by better understanding your consumers by specific location.

New Home Shoppers

Boomers

New Home Shoppers

Gen X

Born 1946 to 1964

Gen Y

Born 1965 to 1979

Born 1980 to 2000

LIFE STAGE Family

Single

21%

Family

Single

66%

14%

79%

10%

34%

have 2 or fewer people in household.

have 2 or fewer people in household.

Family

Single

44%

9%

56%

have 2 or fewer people in household. Highest percentage of college graduates at 45%

PAYMENT, PRICE, AND DOWN PAYMENT

47%

of Boomers have a down payment of 30% or greater—thanks to their home equity. This generation is looking for the lowest monthly payment but not necessarily the lowest price. Boomer payments are lower than Gen Y because they are moving down and putting down equity. Their larger down payments help! This consumer will rely heavily on equity—particularly for the consumer that needs to travel further out to purchase or “cash out” for financial security.

47% Gen X

are paying the highest monthly payments...not the Boomers. They also have the highest incomes.

of Gen Y will rely on savings for their down payment. They are the most budget-conscious of all shopping groups. They are almost 2x more likely to get their down payment from their family than Gen X.

18% will pay $2,500+/month

28% will pay $2,500+/month

19% will pay $2,500+/month

69% want a home under $2,500/month

45% want a home under $2,500/month

52% want a home under $2,500/month

33% are looking for a home priced above $400k (varies by geography)

37% are looking for a home priced above $400k (varies by geography)

26% are looking for a home priced above $400k (varies by geography)

WWW.REALESTATECONSULTING.COM

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Consumer

Insights

Top Amenities Check out what 22,000 new home shoppers shared as the amenities they most wanted in their next community. Below are the top 25 preferences by generation. The major differences relate to the presence of children for the younger generations.

Boomers

Born 1946 to 1964

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Gen X

Born 1965 to 1979

Gen Y

Born 1980 to 2000

*

Grocery Store Close By

Grocery Store Close By

Grocery Store Close By

Restaurants Close By

Restaurants Close By

Restaurants Close By

Walking Trails

Walking Trails

Fitness Center

Fitness Center

Fitness Center

Walking Trails

Village Square

Recreational Center

Children’s Park

Shopping

Village Square

Shopping

Wi-Fi Internet Access in Public Areas

Shopping

Recreational Center

Community High-Speed Internet

Wi-Fi Internet Access in Public Areas

Recreational Center

Community High-Speed Internet

Community-Wide events

Shaded Areas

Shaded Areas

Children’s Park

Community High-Speed Internet

Organized On-Site Programming

Community-Wide events

Shaded Areas

Community Intranet with Events, Clubs, Bulletin Boards, etc

Organized On-Site Programming

Yoga/Pilates Studio

Running

Dog Park

Lake, Pond, Stream, and Water Elements, $50/Month

Community Intranet with Events, Clubs, Bulletin Boards, etc

Running

*

All three generations ranked Fitness Center and Walking Trails as top amenities above retail shopping.

Wi-Fi Internet Access in Public Areas

*

Wi-Fi Internet Access and a Community Intranet with Events, Clubs, etc. are more Village Square important to the Boomers than they are to Community-Wide events Gen X and Gen Y.

*

Community-Wide events rank above pools, parks, and other typical amenities. Events can be much less expensive too!

Children’s Water /Play Area

*

Look for our future trends in what consumers want in communities and homes by generation. We believe it starts with your consumers. 10

Today’s shoppers rated Service & Retail as the most important amenities for their next community purchase.

A Dog Park is among the top park choices. It scored highest for Gen Y, followed by the Boomers.


Consumer research in the real estate world is often overlooked because it is difficult and expensive to conduct. However, understanding what home buyers value is critical, given the market climate and competitive field today. Our third annual Consumer Insights report couples our timely market research with qualitative findings from our proprietary “What Do You Call Home?” survey to provide better information on consumer marketing strategies for your communities.

Gen X

Boomers

16 17

Gen Y

Born 1965 to 1979

Born 1946 to 1964

Born 1980 to 2000

Hiking Trails with Historical Markers of the Area

Tennis Courts

Live Music in the Park

Yoga/Pilates Studio

Sport Fields

Remote Guard Gate, $50/month

Sport Fields

Basketball Courts

Dog Park

Children’s Water/Play Area

Tennis Courts

Cycling

Hiking Trails with Historical Markers of the Area

Yoga/Pilates Studio

Open Space, $50/Month

Lake, Pond, Stream, and Water Elements, $50/Month

Hiking Trails with Historical Markers of the Area

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Amphitheater Outdoors

Dog Park

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Adult-only Pool (18+)

Cycling

Art Shows in the Park

Basketball Courts

Lake, Pond, Stream, and Water Elements, $50/Month

Library

Live Music in the Park

Live Music in the Park

18 19 20 21

24 25

WATER

ADVENTURE

NATURE

ARTS &

ENTERTAINMENT

PARKS

Organized On-Site Programming

*

Events and experiences, as a whole, rank above “hard amenities” like a pool.

Community Intranet with Events, Clubs, Bulletin Boards, etc

Movies in the Park

REC CENTER

EVENTS

SERVICE & RETAIL

SPECIAL AMENITIES

Let us help! We can help optimize your community and home design for better homes, better places, and better profit. Please contact Mollie Carmichael at mcarmichael@realestateconsulting.com or (949) 870-1214. WWW.REALESTATECONSULTING.COM

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Analysis Sacramento, CA June 2014 Sacramento Analysis • Sacramento remains Warm. The Sacramento housing market continues to vary greatly by submarket. JBREC consultant Dean Wehrli notes sales in Placer and Sacramento are not spectacular, but Rocklin communities are selling better at 2.5–3.0 per month. Small-lot detached homes are selling fairly well in Roseville, led by K. Hovnanian’s below-market pricing at $298,000. Rocklin has fewer open communities than Roseville, which may be supporting the stronger sales. • Home prices move higher. Over the last year, home prices in Sacramento have increased 10% according to the Burns Home Value Index™. The Burns Affordability Index™ shows that affordability remains favorable with an index value of 3.1. Zero is very affordable, and 10 is the most unaffordable. 5 is the median level of affordability. • Buy a shirt; buy a house. A new showroom in the middle of a retail shopping center is KB Home’s latest method of letting potential customers browse new home offerings produced by KB Home. The new design studio will allow buyers to have more of a customhome experience, complete with a design consultant. Using the new design studio, a recent couple added $26,000 in upgrades to a $334,000 home. • Investor activity moves lower. Healthy price growth over the last year has decreased distressed inventory in the Sacramento market as the number of properties that received a foreclosure filing in May totaled 3,398, down 15% from a year earlier. The median sales price of a foreclosure home is 23% lower than nondistressed home. As home prices increased and distressed inventory decreased, investor activity has tapered. In 1Q14, the percentage of investor sales to total sales decreased to 29.7% compared to 40.2% a year earlier.

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Dean Wehrli Sr. Vice President Consulting

Local insight was provided by Dean Wehrli, Consulting. For further information, on our research please contact Dean at dwehrli@realestateconsulting.com.


Market Trends Metro Analysis and Forecast Housing Cycle Risk Index

HCRI Legend

Our HCRI is a 1–2 year leading indicator for home price appreciation/depreciation. Improving markets (rising prices and rising construction) make the market riskier and vice versa. *Based on a three-month trend

Demand

Actual results will vary from projections and the variation can be significant. We assume no liability for the use of any of the data or projections in this report. Projections as of: June 2014

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Consulting Services

Our Custom Consulting Team helps our clients maximize opportunity in the housing market. Our clients benefit from a team that applies its public and private home building background, local market insight, and analytical processes to market research.

Advisory 1. Market Feasibility

Market Health

Financial Testing

Societal/ Geographic Personality

Scope of Advisory

2. Consumer Research 3. Valuation & Cash Flows 4. Community Planning 5. Apartment Analysis

People/ Demographic Shifts

Marketing and Sales

Demand by Lifestage and Price

Product

6. Litigation Support 7. Performance Improvement 8. Demand Model by Lifestage 9. Business Plan/Strategy Development 10. Loan Workouts/Restructuring 11. Commercial Analysis 12. Urban Residential & Mixed Used Redevelopment 13. International & Resort Services

JBREC Client Segments

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Consumer Personality & Preferences

Competitve Environment Housing Supply


Research

Services

Metro Analysis & Forecast

MAF

This monthly report provides an overview of major housing and economic metrics, as well as our forecasts, at an MSA level. This is combined with local insight, proprietary surveys, and extensive data analysis to provide a complete picture of the important housing dynamics and shifts at the market level.

Regional Analysis & Forecast

RAF

This comprehensive monthly report summarizes important information in ten regions and key metro areas. This includes five-year pricing forecasts, supply and demand, and housing affordability and market health.

Monthly Builder Survey

Every month we survey more than 200 builders across the nation on new home market conditions. Our survey provides timely and accurate insights on housing market conditions just a few days after the end of every month. We believe our survey represents market conditions for production volume builders much more accurately than the Census Bureau.

Quarterly Land Survey and Land Index

Our quarterly land survey and index provides a balanced qualitative and quantitative approach to understanding the land market, using a proprietary model built through published data, local expertise, and our own market knowledge.

National Consumer Research

We have partnered with builders and developers across the nation to launch our third annual Consumer Insights survey. These three surveys combined present more than 50,000 total responses from prospective home buyers.

Ongoing Insight

U.S. Housing Analysis & Forecast

USHAF

This monthly report examines more than 150 metrics related to housing, and includes an Executive Summary with an overview of the important metrics affecting the housing market and our view of its impact on the future.

Home Builder Analysis & Forecast

HBAF

This report examines each of the publicly traded home builders based on their geographic footprint, ranked by their forecasted market growth in mid, small and micro-cap. It also includes location comparisons of builders based on the builders’ market fundamentals and submarket desirability.

Apartment Analysis & Forecast

AAF

This wide-ranging quarterly report includes an economic outlook for the multifamily market and analysis of the interplay between housing and apartment market dynamics and demographics. Included are five-year apartment rent forecasts, and rankings of top apartment REITs based on their regional diversification and economic factors.

White Papers: We publish thorough research reports covering relevant and important topics.

Truth in Housing: We regularly send out email notes to clients called “Truth in Housing” which include relevant nonconfidential insight that we uncover in the field, at industry conferences, or through our industry contacts.

Public Builder Call Summaries: We summarize key performance statistics and market insight from the public builder quarterly earnings conference calls.

Industry Expert Webinars: We sponsor webinars with Q&A that inform our clients of timely market and consumer research.

The Summit

Our annual client-only conference, The Summit, gathers leaders across the housing industry for one and a half days of thoughtprovoking discussion and networking.

HOUSING MARKET OUTLOOK The Housing Market Outlook, our other annual client-only conference, is designed to be the industry’s most informative day of the year. This new conference will highlight insight from 50 speakers from every region and discipline of the housing industry. For more information about our research, please contact:

Lisa Marquis Jackson Sr. Vice President

lmjackson@realestateconsulting.com (214) 389-9003

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