PCBC Multifamily Trends Conference

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Condo and apartment market conditions on major West Coast markets

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  • 09/23/09 19:59
  • 09/23/09 19:59
  • 09/23/09 19:59 Manpower Survey: 9/14/04: 16,000 Employers: 28% plan to add staff: 2X – ‘03
  • 09/23/09 19:59
  • 09/23/09 19:59 Job Growth Global Warfare Representation of 5,000 Households.
  • 09/23/09 19:59 July, 2004: 1,134,000 - 1.9% down YOY August, 2004: 1,180,000 – up 9.5% YOY: Largest gain since Dec. 2000
  • July, 2004: 1,134,000 - 1.9% down YOY August, 2004: 1,180,000 – up 9.5% YOY: Largest gain since Dec. 2000
  • 09/23/09 19:59 July, 2004: 1,134,000 - 1.9% down YOY August, 2004: 1,180,000 – up 9.5% YOY: Largest gain since Dec. 2000
  • PCBC Multifamily Trends Conference

    1. 1. For: Multifamily Trends 2009 June 16, 2009 SULLIVAN GROUP REAL ESTATE ADVISORS Peter Dennehy, Sr. Vice President (858) 523-1443 x118 [email_address] Multifamily Housing Market Outlook: Developer’s Guide to Surviving the Downturn, Thriving on the Recovery
    2. 2. The Current Situation Where Are We Now?
    3. 3. GDP Growth is Declining ‘ 90-’91 Recession ‘ 81-’82 Recession ‘ 01 Recession 12/07-? Recession 1Q 2009 = -5.7% 2009* using 1 st qtr. data Source: Bureau of Economic Analysis, released May 29, 2009; Sullivan Group
    4. 4. Source: Bureau of Labor Statistics (Non-Farm Employment, in Thousands); Sullivan Group May 2009 -345,000 Jobs U.S. Lost Over 6 Million Jobs Since Jan. 2008
    5. 5. So Unemployment is Increasing 81-82 Recession 90-91 Recession 2001 Recession 2009* – May Source: Bureau of Labor Statistics; Sullivan Group 12/07-? Recession Avg. 1980 to 2008 = 6.1% May 2009 = 9.4%
    6. 6. All Western Metros Posting Negative Employment Annual Change in Employment by Metro Area Apr ’08 vs Apr ’09 and 2009 Forecast Source: Bureau of Labor Statistics; Marcus & Millichap; Sullivan Group
    7. 7. 90-91 Recession 2001 Recession 12/07-? Recession 81-82 Recession 2009* as of June 11 Source: Freddie Mac; Sullivan Group June 2009* = 5.59% 30-Year Fixed Rate Mortgages are Historically Low
    8. 8. U.S. Consumer Confidence is Low, But Improving 2Q09* = 54.9 *2nd Qtr 2009 as of May Source: The Conference Board, released May 26, 2009; Sullivan Group 3-Year rough patch
    9. 9. Note: 2009 as of April Source: Census Bureau, released May 28, 2009; Sullivan Group 2005 = 1,283,000 Peak 2008 = 485,000 2009*= 352,000 New Home Sales Continue to Fall: Lowest in Two Generations Stole demand from future
    10. 10. Western New Home Sales 78% Off Pace in 2005 New Home Sales, Median Price, and Average Price Western United States, 2000 - April 2009 2009 annualized using data through April. Source: National Association of Realtors; Sullivan Group
    11. 11. Existing Condo Sales 43% Off Peak in 2005 Prices at 2001 Level Existing Condo/Co-op Sales and Median Price Western United States 2009 annualized using data through April. Source: National Association of Realtors; Sullivan Group
    12. 12. Big Pullback in Multifamily Construction to Lowest Level in Three Decades Multifamily Building Permits NSA, Ths. (5+ units per building) United States 2009 annualized using data through April Source: US Census Bureau; Sullivan Group Historical Average = 355
    13. 13. U.S. Home Prices Declining Prices at 2003 Level Tracks changes I the value of the residential real estate market in 20 metropolitan regions across the US, collecting data on single-family home resales, capturing re-sold sale prices to form sale pairs. The Composite of 10 has a longer history than the Composite of 20 and includes: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, Washington DC Source: S&P/Case-Shiller released May 26, 2009; Sullivan Group S&P/Case-Shiller Home Price Index Selected Metropolitan Areas (Resales)
    14. 14. Existing Condo Sales 56% Off Peak in 2005 Price Declines are More Recent Phenomenon Existing Condo/Co-op Sales and Median Price United States, 2000-April 2009 2009 annualized using data through April. Source: National Association of Realtors; Sullivan Group
    15. 15. Apartment Market Showing Increased Vacancy and Flat Rent (Overall) Effective Rent and Vacancy Rate United States, 2000-2009 2009 annualized using data through April. Source: Marcus & Millichap; Sullivan Group
    16. 16. Rent and Vacancy Trends Vary at Metro Level Forecasted Apartment Vacancy Rate 2009 Source: Marcus & Millichap; Sullivan Group National Avg. 7.7%
    17. 17. Rent and Vacancy Trends Vary at Metro Level Forecasted Apartment Asking Rent Percent Change 2008 vs. 2009 Source: Marcus & Millichap; Sullivan Group
    18. 18. Significant Slowdown in Multifamily Activity in Most Western Metro Areas Annual Change in Multifamily Permits Issued YTD April 2009 versus YTD April 2008 Source: NAHB; U.S. Census Bureau; Sullivan Group
    19. 19. Looking Forward
    20. 20. There is a New Wave Behind Boomers Source: Claritas, National Center for Health Statistics; Sullivan Group Generation Born 2008 2007 % of Nation 2007 Population Eisenhowers Before 1946 62+ 17% 51M Baby Boomers 1946 – 1964 43 – 62 27% 78M Gen X 1965 – 1980 27 – 43 18% 52M Gen Y (Echo/Millenials) 1981 – 1999 8 – 27 27% 80M Gen Z 2000 and after 0 – 8 10% 30M
    21. 21. If Gen Y Acts Like Previous Generations, Rental and High Density Are Good Bets Source: Claritas, Inc.; National Center for Health Statistics; Sullivan Group
    22. 22. Rental Housing Propensity by Age Renters Dominate Under 35 Years Source: U.S. Census Bureau, 2006; Sullivan Group
    23. 23. 7.0% ARM interest Rates in 2000 Mar 2009=67.3% There are over 1 million homeowners more today than long-term trends would indicate 3.4% ARM interest Rates in 2004 2009* as of March Source: Census Bureau; Sullivan Group
    24. 24. Demographics are positive but, due to affordability, current and future growth will be dominated by renters Source: U.S. Census Bureau: American Community Survey; Sullivan Group Rental demand expanding after Decade of Decline
    25. 25. Demographic Shifts Over The Next 10 Years Favor Multi-Family Development Source: U.S. Census Bureau; RCLCO Apartments and Condos: Single and Roommate Rentals; Entry-Level and First Move-Up Condos Apartments and Condos: Move-Down/Downsizing And Lifestyle Product Senior Living Projected Total Population Growth Rate by Age 2008-2018
    26. 26. For: Multifamily Trends 2009 June 16, 2009 SULLIVAN GROUP REAL ESTATE ADVISORS Peter Dennehy, Sr. Vice President (858) 523-1443 x118 [email_address] Multifamily Housing Market Outlook: Developer’s Guide to Surviving the Downturn, Thriving on the Recovery

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