What's happening in the Southwest California housing market. statistics for the 1st half of the year.

1. Market Correction?
The housing market in our region appears to be in a state of flux right now across several
indices. Historically June has been our highest month for single family home sales – and it may
be again this year. But sales are well off last years pace, posting the lowest 1st half sales in the
past four years, some 9% off last year’s 1st half (5,953 / 5,404). This may not be a localized
phenomenon since sales across the state were down 4.6% in May. Pending home sales
coming into July are also down 6% from June indicating that July will not be a gangbuster
month either. As I said last month, I hate to call a trend predicated on a brief data window, but
we’re running on six months of reduced volume sales at this point. So lagging sales is one
factor to consider.
Another factor indicating a market shift is median price data. Our median price has dropped for
three consecutive months and fallen four out of six months this year. The decline has not been
precipitous, falling just 1% in the past quarter ($376,833 / $374,605) but that reverses a trend
of steadily escalating prices reaching back nearly six years. Median price for the region is up
just 2% since January ($368,333 / $374605). Year-to-year the 1st half rate of appreciation has
slowed from an average of 7% to just 3% this year. That’s another factor to consider.
If there’s a bright spot it’s inventory. Available inventory is up 10% month-over-month (2,203 /
2,454) and up nearly 30% from a year ago (1,743). That 700+ additional units is more than can
be attributed to the 550 unit drop in sales across the same period. Inventory is back to mid-
2016 levels and that’s good. Increased inventory combined with reduced sales inevitably leads
to slower price appreciation, as we’re witnessing. Months inventory stands at about 2.5 months
in June compared to just 1.7 months last June.
Temecula and Murrieta continue to suffer from reduced effective inventory in that last month
each city had four sales in excess of $1,000,000 yet Temecula shows 78 properties listed over
$1,000,000 and Murrieta has 88. That’s a 22 month inventory in that price range and reduces
the effective inventory in each city by nearly 20% for properties available to 98% of prospective
buyers. Hasn’t hurt them so far but sellers of higher end properties will need adjust their
expectations accordingly if they have any timeframe for a sale.
Not saying this is the end of our rally market – according to ‘experts’ that’s still a ways down the
road. And by slowing some now, we may avoid a more serious correction in the future. But the
market has shifted. My friends working with banks are getting more indications that banks are
ramping up the foreclosure market again, yet that isn’t reflected in the numbers at all.
Distressed properties still represent a scant 2% of both active and sold properties – 1% short
sales and 1% REO’s. Rising interest rates have impacted buyers ability to purchase and new
homes coming on the market in cities across our region give buyers more opportunities outside
of the existing resale market. And by all indication, the market for new homes is strong.
So while there’s no immediate cause for alarm, change is in the wind.
Stay cool, my friends.

2. Southwest
California
Reporting
Period
Current
Month
Last
Month Year Ago
Change from
Last Month
Change from
Year Ago
Existing Home Sales
(SFR Detached)
June 2018 1,087 1,074 1357 1% 20%
Median Home Price $374,605 $375,000 $355,155 ___ 5%
Unsold Inventory Index
(SFR Units)
2,454 2,203 1,743 10% 29%
Unsold Inventory Index
(Months)
2.5 2.3 1.4 8% 44%
Median Time on
Market (Days)
20.3 19.6 17.1 3% 16%
SW Market @ A Glance
Source: CRMLS
California May 2018

3. 0
200
400
600
800
1000
1200
2013 2014 2015 2016 2017 2018
Temecula 962 879 1009 948 1056 970
Murrieta 949 901 976 1057 1077 1023
Menifee 901 830 906 975 1014 889
Hemet 795 794 889 967 982 894
Lake Elsinore 566 460 530 526 647 561
Perris 440 435 473 430 463 414
San Jacinto 345 290 345 388 397 332
Wildomar 200 170 172 180 200 203
Canyon Lake 183 132 135 106 147 118
1st Half Comparison
Single Family Unit Sales
5,341 4,891 5,435 5,577 5,953 5,404Total
1st half sales are off to their slowest start since 2014 with sales
declining in almost every city across the region. Increased
interest rates, increased gas prices and declining affordability are
partly to blame.
An increasing supply of new construction locally is also providing
some relief to buyers looking for more alternatives.
8% 10% 3% 6% 9%Avg. change

4. $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
2013 2014 2015 2016 2017
Temecula $347,817 $386,950 $395,700 $423,389 $439,115 $473,833
Murrieta $299,833 $346,742 $353,125 $382,167 $402,708 $431,333
Canyon Lake $294,108 $360,667 $370,442 $364,492 $414,458 $426,333
Wildomar $264,342 $305,517 $325,667 $358,575 $387,333 $410,667
Lake Elsinore $228,000 $276,225 $297,081 $321,725 $345,117 $371,208
Menifee $214,917 $269,917 $290,317 $308,300 $333,350 $353,917
Perris $177,042 $230,083 $243,133 $266,075 $282,908 $309,833
San Jacinto $162,308 $193,917 $209,667 $233,667 $248,408 $274,500
Hemet $149,917 $179,192 $194,475 $215,750 $237,900 $251,775
AxisTitle
$237,588 $286,612 $303,226 $326,397 $355,663 $367,044Total
17% 6% 7% 8% 3%
1st Half Comparison
Median Price
1st half median prices are showing some slowing from prior years
appreciation rate, slowing at less than half the rate. Again, not
necessarily a bad thing, just what it is. It may be a precursor or a
pricing plateau, or it might just be a slowing before another run-
up to year-end. 3 consecutive months of median price declines,
while very slight, breaks a six year upward trend.

5. June 2018 SFR Transaction Value*:
Temecula $110,111,951 Lake Elsinore $39,160,374
Murrieta $103,075,042 Wildomar $18,442,689
Menifee $58,042,273 Canyon Lake $10,819,799
Hemet $48,603,277 San Jacinto $17,004,679
Perris $28,153,945 Total $433,508,408
* Revenue generated by single family residential transactions for the month.
May 2018 SFR Transaction Value*:
Temecula $108,805,996 Lake Elsinore $40,567,376
Murrieta $89,482,679 Wildomar $14,760,000
Menifee $52,994,384 Canyon Lake $14,264,483
Hemet $55,477,738 San Jacinto $22,539,300
Perris $23,397,555 Total $421,989,511
* Revenue generated by single family residential transactions for the month.
June Median Price:
2017 2018 %
Temecula $450,000 $485,000 7%
Murrieta $415,000 $445,000 7%
Menifee $341,000 $355,000 4%
Lake Elsinore $358,500 $376,250 5%
Wildomar $404,500 $400,000 1%
Canyon Lake $422,500 $432,450 2%
Hemet $243,400 $265,000 8%
San Jacinto $265,000 $290,250 9%
Perris $296,500 $322,000 8%

6. 4
9
6
1
4
6
2
1
2
1
5
2
.
3
7
4
4
6
2
1
4
9
2
0
6
1
3
2
.
2
7
0
4
1
1
1
5
7
1
8
4
1
7
2
.
2
7
4
3
5
7
1
3
0
1
6
6
1
7
2
.
2
6
9
2
4
2
1
0
8
1
0
6
2
5
2
.
3
6
6
1
3
2
1
1
0 8
6
1
4
1
.
5
9
1
1
4
8
6
7
6
0 2
0
2
.
5
6
8
9
5
3
8
4
5 1
7
2
.
1
8
0
1
1
1
2
6
2
2
4
5
5
.
0
5
1
0
100
200
300
400
500
600
Active (Supply) Pending Closed (Demand) Days on Market Months Supply Absorption rate *
Murrieta Temecula Hemet Menifee Lake Elsinore Perris San Jacinto Wildomar Canyon Lake
June Demand
On Market 2,203 – 2,454) 10%
Pending Sales (993 - 931) 6%
Closed (1,074 – 1,087) 1%
Days on Market (19.5 – 20.3) 4%
Months Inventory (2.3 – 2.5) 8%
Absorption (69% - 72%) 4%
Month over Month
0
500
1000
1500
2000
2500
3000
1/15 4/15 7/15 10/15 1/16 4/16 7/16 10/16 1/17 4/17 7/17 10/17 1/18 4/18
Inventory Sales Linear (Inventory) Linear (Sales)
Inventory v. Sales

7. Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT
Temecula 418 90% 189 92% 3 1% 3 1% 5 1% 1 0%
Murrieta 454 92% 203 96% 1 0% 1 0% 7 1% 0 0%
Wildomar 88 93% 42 93% 1 1% 0 0% 2 2% 0 0%
Lake Elsinore 232 96% 104 98% 2 1% 0 0% 4 2% 0 0%
Menifee 343 96% 155 93% 5 1% 6 4% 3 1% 2 1%
Canyon Lake 106 95% 21 95% 2 2% 0 0% 1 1% 0 0%
Hemet 389 95% 175 95% 3 1% 2 1% 5 1% 5 3%
San Jacinto 136 92% 58 97% 4 3% 2 3% 4 3% 0 0%
Perris 125 95% 81 94% 1 1% 1 1% 1 1% 1 1%
Regional
Average 2291 93% 1028 95% 22 1% 15 1% 32 1% 9 1%
June 2018 Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale
City Median Sold $ Average Sold $ Average SqFt Bed Bath YrBlt
Temecula $485,000 $534,524 2,473 4 3 1998
Murrieta $445,000 $486,203 2,603 4 3 1999
Wildomar $400,000 $409,838 2,288 4 3 1999
Lake Elsinore $376,200 $369,437 2,063 4 3 2001
Menifee $355,000 $349,652 1,931 3 2 1991
Canyon Lake $433,450 $491,809 2,247 3 3 1983
Hemet $265,000 $264,148 1,688 3 2 1985
San Jacinto $290,250 $283,411 2,003 4 3 1998
Perris $322,000 $327,371 1,951 4 3 1998
Your 'Average' House, June 2018
By City
Source: CRMLS

8. 0
50
100
150
200
250
300
Temecula Murrieta Wildomar Lake Elsinore
0
50
100
150
200
250
Menifee Canyon Lake Hemet San Jacinto Perris
Southwest California Homes
SFR sales I-15 corridor
Southwest California Homes
SFR sales I-215 corridor

9. $250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Temecula Murrieta Wildomar Lake Elsinore
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
Menifee Canyon Lake Hemet San Jacinto Perris

10. Temecula Product Mix
Murrieta Product Mix
Both Temecula and Murrieta markets are substantially in balance across most price
levels until you hit the top of the market where there’s a significant oversupply of homes
for sale in excess of $1,000,000. With 90+% of buyers below $700,000, this surplus
reduces effective inventory to that market by some 20%. Upper end sellers should adjust
their expectations accordingly.