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Similar to Changed Circumstances for Real Estate Demand (20)
Changed Circumstances for Real Estate Demand
- 2. Bringing Clarity to Real Estate
As President of Otteau Valuation Group Mr. Otteau manages
facets of the firm's business including serving as General Manager
of www.otteau.com which is an information provider on real
estate trends. He has been actively engaged in real estate
consultation and valuation since 1974 and holds the State
Certified General Real Estate Appraiser certification, the highest
level offered. His practice is concentrated in providing project
feasibility, marketing analysis, redevelopment guidance and
valuation analysis to developers, financial institutions,
Governmental entities and investors. Frequently quoted in the
New York Times and Wall Street Journal, and having made
television appearances on CNBC, Bloomberg and NBC, Mr. Otteau
is widely respected for his knowledge and insight into real estate
trends. His attention to detail and comprehensive fact finding has
made him the go-to person for industry professionals seeking to
enhance their competitive position in the marketplace. Jeffrey
has provided testimony as an expert witness at the municipal,
county and state levels, authored several texts on property
Valuation techniques and has lectured throughout the United
States and in Canada. He served on the Appraisal Standards
Advisory Council, which consulted with the Appraisal Foundation
in Washington, D.C. on its agenda of projects and major technical
issues. Mr. Otteau served as a past Chairman of the Employee
Relocation Council's Appraisal Standards Council and was inducted
into their distinguished Hall of Leaders in 1995.
© Copyright 2013 Otteau Valuation Group, Inc.
- 3. MarketTRAC by OTTEAU.com
Stay Informed Throughout the Year on the Latest Trends
© Copyright 2013 Otteau Valuation Group, Inc.
• MarketNEWS from OTTEAU.com – Provides timely commentary & analysis of emerging
economic and real estate trends including home sales, multi-family apartments, retail,
office, and warehousing sectors.
• The OTTEAU Report Quarterly – This is the real estate industry’s report card on housing
trends that real estate professionals have relied upon for the past 30 years. Published 4
times a year, these reports provide detailed analysis for key housing markets throughout
New Jersey, New York’s Hudson Valley, Eastern Pennsylvania and Northern Delaware.
• MarketTRAC Monthly by OTTEAU.com – The ultimate tool for staying informed on
emerging housing trends. Published 12 times a year, these monthly updates will keep
you informed on the latest hyper-local market trends.
• Real Estate Price Index – A retrospective price index that measures real estate price
changes by property type (e.g. housing, retail, warehousing, etc.) and geographic regoin
(northern, central & southern New Jersey). This index provides guidance for evaluating
existing loan portfolios, first-glance refinancing viability and risk assessment.
Details @ Otteau.com/MarketTrac.aspx
- 4. © Copyright 2013 Otteau Valuation Group, Inc.
• Changed Circumstances
• Real Estate Demand Trends
• Where Do We Go From Here ?
Real Estate Demand Forecast
Agenda of Topics
- 5. A Quick Look Back…
© Copyright 2014 Otteau Valuation Group, Inc.
- 6. US Economic Growth
© Copyright 2014 Otteau Valuation Group, Inc.
-14.0
-9.0
-4.0
1.0
6.0
11.0
16.0
1930
1932
1934
1936
1938
1940
1942
1944
1946
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
GDP Change from 1930-2012
- 7. US Economic Growth
© Copyright 2013 Otteau Valuation
Group, Inc.
-14.0
-9.0
-4.0
1.0
6.0
11.0
16.0
1930
1932
1934
1936
1938
1940
1942
1944
1946
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
GDP Change from 1930-2012
- 8. US Economic Growth
© Copyright 2014 Otteau Valuation Group, Inc.
-3.5
-1.5
0.5
2.5
4.5
6.5
198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
GDP Change: 1980-2012
- 10. Soviet Collapse a Trigger Point
Thatcher: “Proves no alternative” (to capitalism)
Greenspan: “Seminal Economic Moment of our Time”
BRIC nations: Adopt capitalism
Added a Billion Low Wage Workers into the System
Capitalism Loves a ‘Cheap Date’
High Wages & Benefit Costs Fueled Job Flight
Economic growth shifted to emerging markets
Slower US Job Creation & Wage Growth
High Tax Rates Keep Profits Offshore
Changed Circumstances
Capitalism’s Triumph Launched Global Competition
© Copyright 2013 Otteau Valuation Group, Inc.
- 11. Changed Circumstances
Capitalism’s Triumph Launched Global Competition
© Copyright 2014 Otteau Valuation Group, Inc.
11000
12000
13000
14000
15000
16000
17000
18000
19000
20000
1000'sofPersons
US Manufacturing Employment
US Manufacturing Jobs Average $51,000 Annually
- 13. US Economy Requires Fewer Workers
GDP up 5.6%, Employment down by 1.6-MM Jobs
© Copyright 2014 Otteau Valuation Group, Inc.
73 Months & Counting
$15.0
$15.8
138.0
136.4
127,000
129,000
131,000
133,000
135,000
137,000
139,000
141,000
143,000
$13,500
$14,000
$14,500
$15,000
$15,500
$16,000
TotalNon-FarmJobsinMillions
GDPinBillions
US GDP vs. US Total Non-Farm Jobs
GDP Non-Farm Jobs
- 14. Technological Efficiency Constrains Income
© Copyright 2014 Otteau Valuation Group, Inc.
-0.2%
3.5%
5.5%
5.8%
6.2%
6.9%
-0.8%
0.7%
1.3%
0.1%
2.7%
1.1%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2008q4 2009q4 2010q4 2011q4 2012q4 2013q3
Productivity vs. Income Gains
Worker Productivity Personal Income
- 15. Job Recovery Pace from Past Economic Recessions
© Copyright 2013 Otteau Valuation
Group, Inc.
Profits Up, Personal Income Down
- 17. Changed Circumstances
© Copyright 2014 Otteau Valuation Group, Inc.
US Economy Still Strong….but Far Less Benevolent
Personal Income Remains Constrained
In-Sourcing a Positive Trend, but Returns Fewer Jobs
Households & Employers Adapt & Seek Efficiencies
Changing Dynamics for Where People Live & Work
Real Estate Demand No Longer a Field-of-Dreams
Financial Viability No Longer a Certainty – present & future
Municipal Tax Base Less Certain
- 18. © Copyright 2014 Otteau Valuation Group, Inc.
Changed Circumstances
Households Adjust to the New Realities
-90,000
-80,000
-70,000
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-23,759
-33,225
-45,045
-56,989
-72,547
-69,160
-56,208
-31,690
-66,603
-76,175
-88,979
NJ Net Domestic Migration
New Jersey Holds #1 Ranking
64% of NJ HH Goods Shipments are Outbound
- 19. Changed Circumstances
New Jersey Homeownership from 71% to 65%
© Copyright 2014 Otteau Valuation Group, Inc.
71.3
69.1
69.9
70.1
68.5
70.4
69.4
67.9
68.8
68.9
67.6
68.0
67.8
68.2
66.7
66.6
66.6
66.2
65.2
65.6
67.3
68.5
64.0
66.2
67.6
66.1
65.5
66.3
64.4
66.2
67.7
67.9
65.6
64.1
65.2
62.0
63.0
64.0
65.0
66.0
67.0
68.0
69.0
70.0
71.0
72.0
Q12005
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
Q22007
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
NJ Homeownership Rate
NJ Homeownership Rate 4 per. Mov. Avg. (NJ Homeownership Rate)
Source: Otteau Valuation Group, Census.gov
- 20. Changed Circumstances
Households Adjust to the New Realities
© Copyright 2014 Otteau Valuation Group, Inc.
24.7%
8.0%
2.3%
0.2%
0.1%2.3%4.9%
13.6%
17.1%
26.8%
65% Childless
Married-Couple Family, with
children
Other Family, Female
Householder, with children
Other Family, Male Householder,
with children
Nonfamily, Male Householder,
with children
Nonfamily, Female Householder,
with children
60% of Households = 1 or 2 Persons
127
118
70
63
0
20
40
60
80
100
120
140
1909 1960 2007 2012
US Birth Rates
per 1,000 Women
Source: Pew Research Center
- 22. Changed Circumstances
Transit Oriented Demand Growing
© Copyright 2013 Otteau Valuation Group,
Population Growth & Job Creation More Urban-Centric
24%
32%
52%
-5%
5%
15%
25%
35%
45%
55%
1990-1999 2000-2009 2008-2012
NJ Rail Towns Share of BP's
- 23. Changed Circumstances
Technology Jobs Shifting to Urban Places
© Copyright 2014 Otteau Valuation Group, Inc.
Population Growth & Job Creation More Urban-Centric
Metro
Total
Investment
Urban
Investment Urban Share
Suburban
Investment Suburban Share
San Francisco Bay Area $13,597 $11,649 85.70% $1,948 14.40%
San Francisco $8,449 $6,935 81.60% $1,564 18.40%
San Jose (Silicon Valley) $5,014 $4,668 93.10% $345 6.90%
Boston $3,275 $2,391 73.00% $884 27.00%
New York $3,147 $2,447 77.70% $701 22.30%
Los Angeles $2,461 $1,941 78.90% $520 21.10%
Washington/Baltimore $1,127 $772 68.50% $354 31.50%
San Diego $942 $865 91.80% $78 8.20%
Chicago $668 $360 54.00% $307 46.00%
Austin $630 $555 88.00% $75 12.00%
Seattle $591 $495 83.70% $97 16.30%
Philadelphia $341 $53 15.60% $288 84.40%
Dallas $251 $157 62.70% $93 37.30%
Venture Capital in Urban vs. Suburban Zip Codes - 2011
Ranked by Investment (dollars in millions)
- 24. Economy – 4 ½ Years After
© Copyright 2014 Otteau Valuation Group, Inc.
- 27. © Copyright 2014 Otteau Valuation Group, Inc.
All 50 State Economies Growing
- 28. © Copyright 2014 Otteau Valuation Group, Inc.
All 50 State Economies Growing
NJ Reported Loss of 36,300 Jobs in December
- 30. Purchase
Contracts
Rising
© Copyright 2014 Otteau Valuation
Group, Inc.
86,310
80,417
64,103
67,736
61,807
57,190
69,494
81,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2006 2007 2008 2009 2010 2011 2012 2013
YTD Home Purchase Contracts
January-November
NJ
- 31. © Copyright 2014 Otteau Valuation Group, Inc.
40000
45000
50000
55000
60000
65000
70000
75000
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
MarketTRAC Monthly by Otteau.com
NEW JERSEY INVENTORY OF UNSOLD HOMES
2009 2010 2011 2012 2013
- 34. © Copyright 2014 Otteau Valuation Group, Inc.
Unemployment by County
1 Hunterdon North 4.6 12 Union North 6.8
2 Morris North 5.0 13 Gloucester South 6.9
3 Somerset North 5.1 14 Ocean North 7.2
4 Mercer North 5.3 15 Camden South 7.4
5 Bergen North 5.6 16 Hudson North 7.6
6 Middlesex North 6.0 - 7.8
7 Monmouth North 6.1 17 Essex North 7.9
8 Warren North 6.1 18 Passaic North 8.0
9 Sussex North 6.2 19 Atlantic South 10.2
10 Burlington South 6.6 20 Cumberland South 10.3
11 Salem South 6.8 21 Cape May South 12.3
Statewide
Unemployment by County
Rank County Region
UE
Rate Rank County Region
UE
Rate
- 40. New Jersey Sector Trends
© Copyright 2013 Otteau Valuation Group, Inc.
Apartments 96,700 Apts
All-Age Homes 88,364 Homes
55+ Homes 562 Homes
Warehouse 1.7 Million Ft2
Office 2.5 Million Ft2
Retail 2.4 Million Ft2
2013 Real Estate Absorption
- 41. New Jersey Sector Trends
© Copyright 2013 Otteau Valuation Group, Inc.
29.4
16.8
11.0
0.5
0.2
0.0 5.0 10.0 15.0 20.0 25.0 30.0
Office
Retail
55+ Homes
All-Age Homes
Apartments
Years of Supply
Supply Availability by Sector
New Jersey
- 42. New Jersey Sector Trends
© Copyright 2013 Otteau Valuation Group, Inc.
7.5%
8.8%
10.2%
14.0%
14.4%
16.1%
21.7%
22.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Urban Essex Hudson Waterfront Shorthills/Millburn Princeton New Jersey Meadowlands Parsippany Route 287
Office Vacancy by Submarket
- 45. Recognize Today’s Changed Circumstances
Real Estate Demand No Longer a Field-of-Dreams
What We Don’t Need is ‘MORE OF THE SAME’
Do a Better Job Informing the Public
Too Many Local Decisions Based on Past Circumstances
Linkage between Housing and School Enrollment has Changed
Need More Small Lot Residential Zoning
Recognize Transportation Infrastructure a Core Asset
Creating Density Along Transportation Corridors
Direct Linkage to Job Retention & Growth
Office Demand Shifting to Transportation Hubs
Planning is ‘The Pathway’ to Future Prosperity
Sometimes, it’s about saying YES
Places that Adapt Will Prosper………..Those that Don’t Will be Left Behind
Failure to Adapt Threatens Non-Residential Tax Base
©
Cop
yrig
ht
201
0
Ott
eau
Val
Planning for Tomorrow
- 46. © Copyright 2013 Otteau Valuation Group, Inc.
About OTTEAU Valuation Group
Bringing Clarity to Real Estate
About Us: The lightning strike speed of today's information flow has accelerated
The pace of change for real estate markets. As a result, trends that previously took
Years to develop can now unfold in a few short months. Our mission is to assist our
clients In keeping pace with that change by providing insightful analysis and cutting
edge pricing skills. To accomplish this we have assembled a team of skilled
professionals specializing in the complex field of real estate market analysis. With
broad based experience in real estate valuation and consultation, our firm engages
in
a diversified practice encompassing all property types.
Appraisal Services are provided to financial & lending institutions,
developers & builders, attorneys, investors, relocation management service
companies, governmental agencies, corporations and the public.
Our Consulting Group provides a wide array of services with respect to market
analysis, project feasibility, demographic trends, project valuation and municipal
entitlement proceedings.
Litigation support is provided for matters requiring the valuation and
corresponding expert testimony for eminent domain proceedings, contractual
disputes, bankruptcy, tax appeals, equitable distribution, estate valuation and
stigma related issues.
OTTEAU.com offers a wide range of informational content and analysis of
real estate trends including published and live session formats. MarketTRAC is an
online market data service available for subscription on www.otteau.com.
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