Prospects for a Housing
         Market Bottom in 2009?

     For: San Diego BIA Annual Bull & Bear
                Januar...
San Diego Job Losses Picking Up
                                                                       2004 -    20,200
  ...
San Diego County Job Losses Occurring
                 in 2008 at Accelerating Pace
       25,000
                        ...
2007 – 2008P Job Gain/Loss Comparison
                                                                  September 2008    ...
Unemployment Level:
                                              United States vs. San Diego
   10.0
                    ...
San Diego’s Residential Permits are at the
                               Lowest Level Since the 1940s
                   ...
1,000
                                                                                                                    ...
+/-32,000 Homes Sales in ’08: Good/Bad = Bad/Good?
                                                                       ...
San Diego County New Home Sales
                                                                  2008P = ±2,800
    16,00...
Case-Shiller: Prices Down 36% Since 2005
                                                                       Drop from ...
Median New Home Price Also Lower
               SFD: -31%; ATT: -9% Vs. Peak
   $1,000,000
                               ...
Affordability Back to Late 1990s Level
                                                                                   ...
Number of Active Home Projects is Declining
                                                 San Diego: Q1 ‘05 to Q3 ‘08: ...
New Detached Inventory is Generally Low
                                                       November 2008
             ...
Most New Attached Inventory in Central Submarket
                                                      November 2008
     ...
Improvement in Existing Sales Levels in ’08
         Lower Prices and REOS Stimulating Sales Activity
    6,000
    5,000
...
Total Existing Sales Volume Improved in 2008
   5,000                             MLS ‘08 vs. ‘07
                        ...
Active Resale Listings Have Declined Steadily
 26,000                                                                     ...
There is a 6.2 Month Supply of Resale Units
              25,000                                                          ...
Foreclosures Still at Record Levels in
                    San Diego County
   7,000
   6,000                             ...
NOD’s Jumped Again in December ‘08

        4,000
        3,500
        3,000
        2,500
        2,000
        1,500
  ...
Foreclosures at Record Level of Transactions
            (Nov 2008 = 15.4%)
  25,000                                      ...
Top 10 Homebuilders
                                        San Diego County
                                             ...
Best Selling Attached Projects
                                     January – November 2008
                              ...
Best Selling Detached Projects
                               January - November 2008
                                    ...
Prospects for a Housing
         Market Bottom in 2009?

     For: San Diego BIA Annual Bull & Bear
                Januar...
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Sd Bia Bull And Bear Jan 15

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Speech for San Diego Building Industry Association

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Transcript of "Sd Bia Bull And Bear Jan 15"

  1. 1. Prospects for a Housing Market Bottom in 2009? For: San Diego BIA Annual Bull & Bear January 15, 2009 SULLIVAN GROUP REAL ESTATE ADVISORS Peter Dennehy, Sr. Vice President (858) 523-1443 x118 p.dennehy@sgrea.com Phone 858.523.1443 www.sullivangroupadvisors.com
  2. 2. San Diego Job Losses Picking Up 2004 - 20,200 2004 - 20,200 60,000 Y-T-Y PERCENT CHANGE 2005 - 21,800 2005 - 21,800 50,000 2006 - 19,500 2006 - 19,500 40,000 2007 - 6,600 2007 - 6,600 Nov ’08- -15,300 Nov ’08- -15,300 30,000 20,000 10,000 0 -10,000 -20,000 -30,000 Sep-86 Sep-87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Data is year over year change Source: California Employment Development Department; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  3. 3. San Diego County Job Losses Occurring in 2008 at Accelerating Pace 25,000 2006 - 19,500 2006 - 19,500 20,000 2007 - 6,600 2007 - 6,600 15,000 Nov ’08- -15,300 Nov ’08- -15,300 10,000 Y-T-Y PERCENT CHANGE 5,000 0 -5,000 -10,000 -15,000 -20,000 May-06 May-07 May-08 Jan-06 Mar-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 Jul-08 Sep-08 Nov-08 Data is year over year change Source: California Employment Development Department; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  4. 4. 2007 – 2008P Job Gain/Loss Comparison September 2008 California Job Growth California Job Growth 3.0% San Jose 0.2% San Jose 0.2% SF/Oakland -0.2% SF/Oakland -0.2% San Diego -0.4% 2.0% San Diego -0.4% Los Angeles -0.6% Los Angeles -0.6% Sacramento -0.6% Sacramento -0.6% 1.0% Orange County -1.7% Orange County -1.7% Inland Empire -1.9% Inland Empire -1.9% 0.0% -1.0% -2.0% -3.0% Sacramento Salt Lake City Las Vegas Seattle San Jose Orange County Denver Houston Portland SF/Oakland San Diego Dallas Los Angeles Phoenix Inland Empire Austin Tucson 2008P is projected through September Source: BLS; Sullivan Group Real Estate Advisors Phone 858.523.1443 www.sullivangroupadvisors.com
  5. 5. Unemployment Level: United States vs. San Diego 10.0 United States 7.2% United States 7.2% 9.0 San Diego 6.9% San Diego 6.9% 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 United States San Diego Note: US data as of Dec 2008 and San Diego as of Nov 2008 Source: Bureau of Labor Statistics; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  6. 6. San Diego’s Residential Permits are at the Lowest Level Since the 1940s 2004 15,587 2004 15,587 50,000 Long-term average - 17,000/yr 2005 14,306 -8% 2005 14,306 -8% 45,000 2006 9,194 -36% 2006 9,194 -36% Building Permits 40,000 2007 7,461 -19% 2007 7,461 -19% 2008P 5,500 -26% 2008P 5,500 -26% 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2008P 1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 Note: 2008 is a projection using data through November Source: SOCDS; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  7. 7. 1,000 1,250 1,500 1,750 2,000 2,250 2,500 250 500 750 0 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Phone 858.523.1443 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Source: Bureau of Labor Statistics; Sullivan Group Jul-06 Aug-06 Sep-06 Oct-06 Attached Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Detached Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Attached Attached Detached Detached Apr-08 May-08 Jun-08 Jul-08 November 2008 Aug-08 November 2008 84 148 84 148 Sep-08 San Diego Residential Permits: 2005-2008 Oct-08 Nov-08 www.sullivangroupadvisors.com
  8. 8. +/-32,000 Homes Sales in ’08: Good/Bad = Bad/Good? 8 year Total Home 2004 68,262 +7% 2004 68,262 +7% 70,000 Sales Average 2005 58,953 -14% 2005 58,953 -14% 50,507 2006 42,253 -28% 2006 42,253 -28% 60,000 2007 32,658 -23% 2007 32,658 -23% 2008P 32,794 0% 2008P 32,794 0% 50,000 40,000 8 year New Home Sales Average 30,000 9,835 20,000 10,000 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008P New Existing Source: Dataquick; Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  9. 9. San Diego County New Home Sales 2008P = ±2,800 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2008P 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Detached Attached 2008P annualized using data from January through November. Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  10. 10. Case-Shiller: Prices Down 36% Since 2005 Drop from Peak - 36% 300 October 2008 250 San Diego 159.12 200 Composite of 10 169.78 150 100 50 0 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 San Diego Composite of 10 Composite of 10 includes Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, Washington DC Source: S&P/Case-Shiller; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  11. 11. Median New Home Price Also Lower SFD: -31%; ATT: -9% Vs. Peak $1,000,000 3rd Qtr 2008 3rd Qtr 2008 $800,000 Detached $599,450 Detached $599,450 Attached $359,995 Attached $359,995 $600,000 $400,000 $200,000 $0 3Q88 3Q89 3Q90 3Q91 3Q92 3Q93 3Q94 3Q95 3Q96 3Q97 3Q98 3Q99 3Q00 3Q01 3Q02 3Q03 3Q04 3Q05 3Q06 3Q07 3Q08 Attached Detached Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  12. 12. Affordability Back to Late 1990s Level 3rd Qtr 2008 = 38.7 rd 50 45 40 35 30 25 20 15 10 5 0 1Q97 3Q97 1Q98 3Q98 1Q99 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 Note: 2Q02 through 3Q03 data not available Source: NAHB Housing Opportunity Index; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  13. 13. Number of Active Home Projects is Declining San Diego: Q1 ‘05 to Q3 ‘08: - 46% November 2008 November 2008 Active Projects –– 188 Active Projects 188 Total Sales - - 41 Total Sales 41 Active Projects 400 2,000 348 in Nov 06 350 188 in Nov 08 Active Projects 300 1,500 Total Sales 250 200 1,000 150 100 500 50 0 0 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Active Projects Sales Source: Hanley Wood; Sullivan Group Real Estate Advisors Phone 858.523.1443 www.sullivangroupadvisors.com
  14. 14. New Detached Inventory is Generally Low November 2008 750 12.0 10.0 Speculative Inventory 600 Months of Inventory 8.0 450 6.0 300 4.0 150 2.0 0 0.0 San Diego Central Coastal East Inland South Bay County North North Number of Units Months of Inventory Source: Hanley Wood; Sullivan Group Real Estate Advisors Phone 858.523.1443 www.sullivangroupadvisors.com
  15. 15. Most New Attached Inventory in Central Submarket November 2008 2,000 1,800 30.0 Speculative Inventory 1,600 Months of Inventory 82% of Attached Inventory 25.0 1,400 in Central Submarket 1,200 20.0 1,000 15.0 800 600 10.0 400 5.0 200 0 0.0 San Diego Central Coastal East Inland South Bay County North North Speculative Inventory Months of Inventory Source: Hanley Wood; Sullivan Group Real Estate Advisors Phone 858.523.1443 www.sullivangroupadvisors.com
  16. 16. Improvement in Existing Sales Levels in ’08 Lower Prices and REOS Stimulating Sales Activity 6,000 5,000 4,000 3,000 2,000 1,000 0 Nov-88 Nov-89 Nov-90 Nov-91 Nov-92 Nov-93 Nov-94 Nov-95 Nov-96 Nov-97 Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Total Sales 12 per. Mov. Avg. (Total Sales) Source: Dataquick; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  17. 17. Total Existing Sales Volume Improved in 2008 5,000 MLS ‘08 vs. ‘07 MLS ‘08 vs. ‘07 4,500 2007 25,492 2007 25,492 4,000 2008 29,284 2008 29,284 3,500 % Change +15% % Change +15% 3,000 2,500 2,000 1,500 1,000 500 0 Jan-05 Sep-05 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08 Sep-08 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 May-05 May-06 May-07 May-08 Source: Dataquick; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  18. 18. Active Resale Listings Have Declined Steadily 26,000 Jan 14, 2009 Jan 14, 2009 24,000 Attached 4,535 Attached 4,535 Detached 9,512 22,000 Detached 9,512 Total 14,047 Total 14,047 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2/13/2007 3/13/2007 4/13/2007 5/13/2007 6/13/2007 7/13/2007 8/13/2007 9/13/2007 10/13/2007 11/13/2007 12/13/2007 1/13/2008 2/13/2008 3/13/2008 4/13/2008 5/13/2008 6/13/2008 7/13/2008 8/13/2008 9/13/2008 10/13/2008 11/13/2008 12/13/2008 SFD Listings Attached Listings Total Listings Source: Zip Realty; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  19. 19. There is a 6.2 Month Supply of Resale Units 25,000 5,000 22,500 4,500 Total Existing Sales 20,000 4,000 17,500 3,500 Listings 15,000 3,000 12,500 2,500 10,000 2,000 7,500 1,500 Dec ’08 Listings 15,110 5,000 1,000 Nov ’08 Sales 2,411 2,500 500 0 0 Mar-06 May-06 Nov-06 Mar-07 May-07 Nov-07 Mar-08 May-08 Nov-08 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08 Sep-08 Jul-06 Jul-07 Jul-08 Listings Total Existing Sales Source: Zip Realty; Dataquick; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  20. 20. Foreclosures Still at Record Levels in San Diego County 7,000 6,000 3Q06 = 561 3Q07 = 2,355 5,000 3Q08 = 6,463 4,000 3,000 2,000 1,000 0 Q3/89 Q3/90 Q3/91 Q3/92 Q3/93 Q3/94 Q3/95 Q3/96 Q3/97 Q3/98 Q3/99 Q3/00 Q3/01 Q3/02 Q3/03 Q3/04 Q3/05 Q3/06 Q3/07 Q3/08 Source: Real Estate Research Council; CAR; Sullivan Group Real Estate Advisors Phone 858.523.1443 www.sullivangroupadvisors.com
  21. 21. NOD’s Jumped Again in December ‘08 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Oct-07 Oct-08 Nov-07 Dec-07 Jan-08 Feb-08 Apr-08 Jun-08 Jul-08 Aug-08 Sep-08 Nov-08 Dec-08 Mar-08 May-08 Source: InnoVest Resource Mgmt; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  22. 22. Foreclosures at Record Level of Transactions (Nov 2008 = 15.4%) 25,000 25% Data reflects new state requirement which requires 20,000 20% lenders to contact homeowners Trustee Deeds as % of All Deeds 30 days prior to filing. 15,000 15% 10,000 10% 5,000 5% 0 0% Nov-91 Nov-92 Nov-93 Nov-94 Nov-95 Nov-96 Nov-97 Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 All Deeds Notices of Default Trustee's Deed TD % of all Deeds Source: InnoVest Resource Mgmt; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  23. 23. Top 10 Homebuilders San Diego County Jan-Nov % of Jan-Nov % of Builder Name 2008 Sales Total 2007 Sales Total 1 Shea Homes 248 9.6% 354 5.9% 2 Pardee Homes 169 6.5% 316 5.3% 3 Standard Pacific Homes 160 6.2% 290 4.8% 4 Lennar Homes 146 5.6% 220 3.7% 5 William Lyon Homes 139 5.4% 278 4.6% 6 Brookfield Homes 89 3.4% 79 1.3% 7 Davidson Communities 76 2.9% 61 1.0% 8 Hammer Ventures 71 2.7% 177 2.9% 9 Richmond American Homes 70 2.7% 104 1.7% 10 KB Home 63 2.4% 126 2.1% Total Top 10 Builders 1,231 47.4% 2,005 33.4% Total San Diego County 2,595 100.0% 6,002 6,002 Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  24. 24. Best Selling Attached Projects January – November 2008 Jan-Nov Project Name Community Name Open Date Sales VILLA MONTEVINA Rancho San Diego 04/29/2006 67 VILLA LA JOLLA CONDOMINIUMS La Jolla 06/30/2005 56 GIANNI AT 4S RANCH Rancho Bernardo 05/07/2005 45 SUNSET COVE Clairemont 01/20/2007 39 APERTURE Downtown San Diego 09/15/2005 38 SUNCREST RIDGE CONDOS Oceanside 02/11/2007 38 LAS BRISAS Oceanside 04/13/2005 37 CYPRESS GREENS Poway 04/14/2007 37 TREVISO Santee 04/09/2005 32 NORTHSTAR Santee 04/21/2007 30 Note: Red Highlight indicates condo conversion project. Source: Hanley Wood; Sullivan Group Real Estate Advisors Phone 858.523.1443 www.sullivangroupadvisors.com
  25. 25. Best Selling Detached Projects January - November 2008 Jan-Nov Project Name Community Name Open Date Sales PORTICO AT PACIFIC HIGHLANDS RANCH Future Urbanizing - Coastal 03/12/2005 39 BRIARS OF EUREKA SPRINGS (THE) Escondido 07/16/2006 36 TRIESTE AT LA COSTA GREENS La Costa 03/31/2007 33 CABRILLO AT DEL SUR San Diego 09/01/2005 31 DERBY HILL Carmel Valley 09/17/2005 31 SAN VINCENZO AT LA COSTA RIDGE Carlsbad 03/25/2006 31 LAKE RANCHO VIEJO Fallbrook 01/26/2006 28 CARRIAGE RUN Carmel Valley 06/01/2006 25 ESMERALDA Otay Mesa 05/07/2005 25 SERRAMAR La Mesa 03/19/2005 25 Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  26. 26. Prospects for a Housing Market Bottom in 2009? For: San Diego BIA Annual Bull & Bear January 15, 2009 SULLIVAN GROUP REAL ESTATE ADVISORS Peter Dennehy, Sr. Vice President (858) 523-1443 x118 p.dennehy@sgrea.com Phone 858.523.1443 www.sullivangroupadvisors.com

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