San Diego ULI Young Leaders

528 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
528
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

San Diego ULI Young Leaders

  1. 1. Prospects for a Housing Market Bottom in 2009? For: ULI San Diego Young Leaders June 2, 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. Agenda I. The Big Picture II. The San Diego Market III. Discussion Phone 858.523.1443 www.sullivangroupadvisors.com
  3. 3. I. THE BIG PICTURE Phone 858.523.1443 www.sullivangroupadvisors.com
  4. 4. Is the Current Economy A New Phenomena? Debt Threatens Democracy. Harper’s, 1940 Is the Country Swamped with Debt? Business Week, 1949 Never Have So Many Owed So Much. U.S. News & World Report, 1959 Time for a New Frugality. Time Magazine, 1973 Over the Ears in Debt. Time Magazine, 1987 Source: Time Magazine Phone 858.523.1443 www.sullivangroupadvisors.com
  5. 5. GDP Growth is Declining 8% 1Q 2009 = -5.7% 12/07-? Recession 6% ‘81-’82 Recession ‘90-’91 Recession ‘01 Recession 4% 2% 0% -2% -4% -6% -8% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2009* using 1st qtr. data Source: Bureau of Economic Analysis, released May 29, 2009; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  6. 6. So Unemployment is Increasing Avg. 1980 to 2008 = 6.1% Avg. 1980 to 2008 = 6.1% 11% April 2009 = 8.9% April 2009 = 8.9% 10% 12/07-? Recession 81-82 Recession 90-91 Recession 2001 Recession 9% 8% 7% 6% 5% 4% 3% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2009* – April Source: Bureau of Labor Statistics; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  7. 7. 30-Year Fixed Rate Mortgages are Historically Low 18.0% May 2009* = 4.91% 16.0% 12/07-? Recession 81-82 Recession 90-91 Recession 2001 Recession 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2009* as of May 28 Source: Freddie Mac; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  8. 8. U.S. Consumer Confidence is Low, But Improving 160 3-Year rough patch 2Q09* = 54.9 140 120 100 80 60 40 20 0 88-2 89-2 90-2 91-2 92-2 93-2 94-2 95-2 96-2 97-2 98-2 99-2 00-2 01-2 02-2 03-2 04-2 05-2 06-2 07-2 08-2 09-2 *2nd Qtr 2009 as of May Source: The Conference Board, released May 26, 2009; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  9. 9. U.S. Existing Home Sales: Stabilizing at Low Level 7,000,000 2005 = 6,171,667 Peak 6,000,000 2009*= 4,123,334 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009P seasonally adjusted rate using data through March Source: National Assn of Realtors; Economy.com; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  10. 10. Resale Supply Has Leveled Recently. Can We Work Off More Supply in 2009? 5,000,000 Months of supply was 10.7 12.0 4,500,000 months in April ‘08, but 4,000,000 dropped to 9.6 months in April ‘09. 10.0 3,500,000 8.0 3,000,000 2,500,000 6.0 2,000,000 1,500,000 4.0 1,000,000 Listings Months of Inventory 2.0 500,000 0 0.0 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Source: National Assn. of Realtors; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  11. 11. New Home Sales Continue to Fall: Lowest in Two Generations 1,400 2005 = 1,283,000 Peak 1,200 2008 = 485,000 Stole demand 1,000 2009*= 352,000 from future 800 600 400 200 0 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Note: 2009 as of April Source: Census Bureau, released May 28, 2009; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  12. 12. New Home Supply “Overhang”: Absolute Numbers Are Declining 12.0 April 09 = 296,000 Units April ‘09 = 10.1 Months 10.0 Aug 06 Peak = 570,000 Units 06 Peak = 8.0 6.0 4.0 2.0 0.0 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Avg. Months of Supply Source: Census Bureau; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  13. 13. Starts Below 1991 and 1981 Levels 2,500,000 Peak Sep 2005 = 2,263,000 2,250,000 2,000,000 “v” “u” 1,750,000 1,500,000 1,250,000 1,000,000 750,000 500,000 April 2009 = 498,000 250,000 0 1980M1 1982M1 1984M1 1986M1 1988M1 1990M1 1992M1 1994M1 1996M1 1998M1 2000M1 2002M1 2004M1 2006M1 2008M1 Source: U.S. Census Bureau, SA annual rate, released May 27, 2009; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  14. 14. U.S. Housing Rebound: Can It Start After 2009? 2.4 Million SF and MF Housing Starts 2.2 Average 1970-2008 2.0 1.8 1.6 1.4 1.2 1.0 0.8 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: U.S. Census Bureau; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  15. 15. National Foreclosures Still High 1,100,000 1,000,000 Quarterly Data Monthly Data 803,489 900,000 783,991 850,460 800,000 681,337 700,000 642,149 600,000 488,489 500,000 437,498 342,038 400,000 345,554 300,000 200,000 100,000 0 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 Apr-08 Jun-08 Aug-08 Oct-08 Feb-09 Sep-08 Dec-08 Apr-09 Jan-09 Jul-08 Nov-08 Mar-09 May-08 Source: RealtyTrac, released May 13, 2009; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  16. 16. III. THE SAN DIEGO MARKET Phone 858.523.1443 www.sullivangroupadvisors.com
  17. 17. Index of Leading Economic Indicators San Diego County April ’09 = 100.9 160 Up 0.2 since last month 10.00% % Change in Index From Prior Year 140 Index of Economic Indicators 5.00% 120 0.00% 100 80 -5.00% 60 Index of Economic Indicators -10.00% % Change From Prior Year 40 -15.00% 20 0 -20.00% Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Source: University of San Diego; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  18. 18. San Diego Job Growth Negative 2005 - 2005 - 21,800 21,800 80,000 2006 - 2006 - 19,500 19,500 Y-T-Y PERCENT CHANGE 2007 - 2007 - 7,200 7,200 60,000 2008 - 2008 - -9,600 -9,600 40,000 2009ytd- -8,150 2009ytd- -8,150 20,000 0 -20,000 -40,000 -60,000 Apr-86 Apr-87 Apr-88 Apr-89 Apr-90 Apr-91 Apr-92 Apr-93 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Data is year over year change; 2009ytd is the average of January through April. Source: California Employment Development Department; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  19. 19. Job Losses Starting in Mid 2008 25,000 2006 - 2006 - 19,500 19,500 20,000 2007 - 2007 - 7,200 7,200 15,000 2008 - 2008 - -9,600 -9,600 10,000 2009ytd- -8,150 2009ytd- -8,150 5,000 0 -5,000 Y-T-Y PERCENT CHANGE -10,000 -15,000 -20,000 -25,000 -30,000 -35,000 -40,000 -45,000 -50,000 May-06 May-07 May-08 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08 Sep-08 Jan-09 Mar-06 Mar-07 Mar-08 Mar-09 Jul-06 Jul-07 Jul-08 Nov-06 Nov-07 Nov-08 Data is year over year change; 2009ytd is the average of January through April. Source: California Employment Development Department; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  20. 20. Job Gain/Loss Comparison March 2009 vs. March 2008 4.00% 3.00% 2.00% 1.00% 0.40% 0.00% -1.00% -0.60% -1.30% -2.00% -3.00% -2.60% -3.40% -3.50% -4.00% -3.70% -3.90% -3.90% -4.00% -4.20% -5.00% -4.80% -4.80% -5.10% -5.20% -6.00% -7.00% -6.60% -7.10% -8.00% es re nd x go ity to tin s se s y on d r on tle ve nt ni ga la an pi en el Jo C la ie us at cs st al oe ou en Em Ve ng rtl ak D am ke ou Se D A Tu n Ph C D Po A n /O Sa s La H nd cr Sa e La s SF ng Sa Lo lt la Sa ra In O Source: BLS; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  21. 21. Unemployment Level United States vs. San Diego 10.0 9.0 United States United States 8.9% 8.9% 8.0 San Diego San Diego 9.3% 9.3% 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 Apr 2009 and San Diego as of Mar 2009 Source: Bureau of Labor Statistics; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  22. 22. San Diego’s Residential Permits are at the Lowest Level Since the 1940s 2004 2004 15,587 15,587 50,000 Long-term average - 17,000/yr 2005 2005 14,306 14,306 -8% -8% 45,000 2006 2006 9,194 9,194 -36% -36% Building Permits 40,000 2007 2007 7,461 7,461 -19% -19% 2008 2008 5,242 5,242 -30% -30% 35,000 2009P 2009P 3,000 3,000 -43% -43% 30,000 25,000 20,000 15,000 10,000 5,000 0 1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 Note: 2009 is a projection using data through April Source: SOCDS; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  23. 23. San Diego Residential Permits: 2005-2009ytd 2,500 2,250 2009ytd 2009ytd 2,000 Attached Attached 554 554 Detached Detached 501 501 1,750 1,500 1,250 1,000 750 500 250 0 May May May May Sep Sep Sep Sep Mar Mar Mar Mar Mar Nov Nov Nov Nov Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jul Jul Jul Jul Attached Detached Source: Bureau of Labor Statistics; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  24. 24. +/-34,000 Homes Sales in ’09: Good/Bad = Bad/Good? 8 year Total Home 70,000 2005 2005 58,953 58,953 -14% -14% Sales Average 2006 2006 42,253 42,253 -28% -28% 51,734 60,000 2007 2007 32,872 32,872 -23% -23% 2008 2008 33,113 33,113 1% 1% 50,000 2009P 2009P 33,900 33,900 2% 2% 40,000 8 year New Home Sales Average 30,000 9,873 20,000 10,000 0 2009P 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 New Existing 2009P-Dataquick (resales) annualized data through April; Hanley Wood (new) annualized data through March. Source: Dataquick; Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  25. 25. San Diego County New Home Sales 2009P = ±2,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009 Detached Attached 2009P annualized using data from January through March. Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  26. 26. Case-Shiller: Prices Down 42% Since 2005 300 250 March 2009 San Diego 144.56 200 Composite of 10 151.41 150 100 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 Jan-09 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
  27. 27. Median New Home Detached Price Also Lower SFD: -27%; ATT: 0% Vs. Peak $1,000,000 $900,000 1st Qtr 2009 1st Qtr 2009 $800,000 Detached $640,000 Detached $640,000 $700,000 Attached $399,900 Attached $399,900 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 4Q88 4Q89 4Q90 4Q91 4Q92 4Q93 4Q94 4Q95 4Q96 4Q97 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 Attached Detached Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  28. 28. Affordability Back to Late 1990s Level 70 1st Qtr 2009 = 58.8 60 50 40 30 20 10 0 1Q97 3Q97 1Q98 3Q98 1Q99 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 Note: 2Q02 through 3Q03 data not available Source: NAHB Housing Opportunity Index, released May 18, 2009; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  29. 29. Number of Active Home Projects is Declining San Diego: - 44% from Nov 2006 Active Projects March 2009 March 2009 348 in Nov 06 Active Projects –– 194 Active Projects 194 400 194 in Mar 09 Total Sales - - 150 Total Sales 150 2,000 350 1,750 Active Projects 300 1,500 Total Sales 250 1,250 200 1,000 150 750 100 500 50 250 0 0 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jul-05 Jul-06 Jul-07 Jul-08 Active Projects Sales Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  30. 30. New Detached Inventory is Generally Low March 2009 600 12 Standing/Under Construction Inventory 500 10 Months of Inventory 400 8 300 6 200 4 100 2 0 0 San Diego Central Coastal East Inland South Bay County North North Standing/Under Construction Inventory Months of Inventory Source: Hanley Wood; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  31. 31. Most New Attached Inventory in Central Submarket March 2009 2,000 40 Standing/Under Construction Inventory Months of Inventory 1,500 85% of Attached Inventory 30 in Central Submarket 1,000 20 500 10 0 0 San Diego Central Coastal East Inland South Bay County North North Standing/Under Construction Inventory Months of Inventory Source: Hanley Wood; Sullivan Group Real Estate Advisors Phone 858.523.1443 www.sullivangroupadvisors.com
  32. 32. Improvement in Existing Sales Levels in ’09 Lower Prices and REOS Stimulating Sales Activity 6,000 5,000 4,000 3,000 2,000 1,000 0 Apr-88 Apr-89 Apr-90 Apr-91 Apr-92 Apr-93 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Total Sales 12 per. Mov. Avg. (Total Sales) Source: Dataquick; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  33. 33. Total Existing Sales Volume Improved in 2008 5,000 MLS ‘08 vs. ‘07 MLS ‘08 vs. ‘07 4,500 2007 2007 26,403 26,403 4,000 2008 2008 30,471 30,471 3,500 % Change +15% % Change +15% 3,000 2,500 2,000 1,500 1,000 500 0 Sep-05 Sep-06 Sep-07 Sep-08 Nov-05 Nov-06 Nov-07 Nov-08 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 May-05 May-06 May-07 May-08 Source: Dataquick; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  34. 34. Active Resale Listings Have Declined Steadily May 28, 2009 May 28, 2009 22,500 Attached Attached 3,474 3,474 20,000 Detached Detached 6,093 6,093 Total Total 9,567 9,567 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 2/13/07 4/13/07 6/13/07 8/13/07 10/13/07 12/13/07 2/13/08 4/13/08 6/13/08 8/13/08 10/13/08 12/13/08 2/13/09 4/13/09 SFD Listings Attached Listings Total Listings Source: Zip Realty; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  35. 35. There is a 3.9 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 April 2009 7,500 1,500 Listings 12,511 5,000 Sales 3,194 1,000 2,500 500 0 0 Jan-06 Mar-06 May-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Sep-08 Nov-08 Jan-09 Mar-09 Jul-06 Jul-07 Jul-08 Listings Total Existing Sales Source: Zip Realty; Dataquick; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  36. 36. Foreclosures Still at Record Levels in San Diego County 7,000 Peak 3Q08 = 6,463 6,000 4Q08 = 3,837 5,000 4,000 3,000 2,000 1,000 0 Q4/89 Q4/90 Q4/91 Q4/92 Q4/93 Q4/94 Q4/95 Q4/96 Q4/97 Q4/98 Q4/99 Q4/00 Q4/01 Q4/02 Q4/03 Q4/04 Q4/05 Q4/06 Q4/07 Q4/08 Source: Real Estate Research Council; CAR; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  37. 37. NOD’s Jumped Again in December ‘08 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Apr-08 Aug-08 Apr-09 May-08 Oct-07 Nov-07 Feb-08 Jun-08 Mar-08 Jul-08 Sep-08 Oct-08 Nov-08 Feb-09 Mar-09 Dec-07 Jan-08 Dec-08 Jan-09 Source: InnoVest Resource Mgmt; Sullivan Group Phone 858.523.1443 www.sullivangroupadvisors.com
  38. 38. Foreclosures at Record Level of Transactions (April 2009 = 9.2%) 25,000 Data reflects new state 25% requirement which requires 20,000 lenders to contact homeowners 20% Trustee Deeds as % of All Deeds 30 days prior to filing. 15,000 15% 10,000 10% 5,000 5% 0 0% 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 Jan-09 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
  39. 39. III. DISCUSSION Phone 858.523.1443 www.sullivangroupadvisors.com
  40. 40. Prospects for a Housing Market Bottom in 2009? For: ULI San Diego Young Leaders June 2, 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

×