A thought to ponder More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly. -Woody Allen, 1975 (to a graduating class)
THE NATION OF CALIFORNIA: alive again in 2010? Alan Nevin Director of Economic Research When you need to know about real estate, you need to know about MarketPointe
THE FUTURE OF AMERICA ECONOMIC STRENGTH HIGHER INDICATOR VALUE = STRONGER ECONOMIC STRENGTH FACTORS 2450 1950 1450 Cyclical Downturn Systemic Downturn 950 450-50 NV AZ UT FL WA OR GA TX CA VA NM CO MD NC AVERAGE NY MA SC NJ TN MN CT AL WI KY MO AR IL NE KS PA IN OK IA MS WV OH MI LA
Trading Places Data: Labor Department Published: Wall St Journal 7.13.09
Military In Uniform Economic Drivers Nation of California Federal & State Government (Civilian) Manufacturing Tourism Universities Import / Export Technology Biotech Telecommunications Electronics Headquarters
High Tech Economies CURRENT NATIONAL RANK # OF COUNTIES IN METRO RANK: 1- COUNTY METRO AREAS RANKING OF HIGH-TECH ECONOMIES UNITED STATES METRO AREA STATE EMPLOYMENT 1 1 1 SAN JOSE, SUNNYVALE, SANTA CLARA CA 244,000 2 3 SEATTLE, BELLEVUE, EVERETT WA 226,300 3 1 2 CAMBRIDGE, NEWTON, FRAMINGHAM MA 163,600 4 5 WASHINGTON, ARLINGTON, ALEXANDRIA DC/VA/MD 275,700 5 1 3 LOS ANGELES, LONG BEACH, GLENDALE CA 376,400 6 8 DALLAS, PLANO, IRVING TX 187,700 7 1 4 SAN DIEGO, CARLSBAD, SAN MARCOS CA 136,400 8 1 SANTA ANA, ANAHEIM, IRVINE CA 147,000 9 11 NEW YORK, WHITE PLAINS, WAYNE NY/NJ 262,000 10 3 SAN FRANCISCO, SAN MATEO, REDWOOD CITY CA 106,400 INITIALLY PREPARED BY MILKIN INSTITUTE, UPDATED/REVISED: MARKETPOINTE REALTY ADVISORS NOTE: RANKING IS A QUALITATIVE RANKING ASSIGNED BY MILKIN INST. REGARDING STRENGTH OF MARKET, 2008
Good News on Jobs, San Diego County Sept Nov 2008 compared to Sept Nov 2009 10,000 10,000 8,800 8,000 6,000 4,000 San Diego County 4,100 4,300 2,000 0 Sep 2008 Oct 2008 Nov 2008 Sep 2009 Oct 2009 Nov 2009-2,000-4,000-6,000-3,300-2,700-3,500-3,100
% Population Growth, By State, 2000-2008
California Population 39,000,000 38,488,000 38,000,000 37,000,000 36,000,000 35,000,000 34,000,000 33,000,000 32,000,000 31,000,000 30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Ca Deptof Finance
San Diego County Population Growth From Migration is On the Rise Again 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 72,100 39,566 49,684 16,562 35,661 2,472 32,534 33,122 33,189 31,485 30,774 Net Migration Natural Increases Total 7,634 13,113 52,944 27,451 45,751 21,571 50,624 25,952 35,406 56,251 31,999 31,781 45,759 20,205 31,224 6,485 11,822 28,222 26,812 25,493 24,180 24,672 24,536 24,252 24,225 25,554 24,739 4,212 59,942 56,006 +47,500 51,547 40,630 38,976 23,138 27,587 12,691 11,636 24,202 607 26,980 26,350 27,939 28,409 27,340-2,148-10,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-20,000-30,000-14,990-17,661-23,851-24,010-80,500
Residential Building Permits 2005 2008 MARKET SF MF TOTAL SF MF TOTAL CENTRAL COAST 4,248 1,012 5,260 1,104 720 1,824 SACRAMENTO 15,629 2,863 18,492 3,980 1,756 5,736 SOUTHERN CALIFORNIA 71,765 31,680 103,445 13,282 18,569 31,851 BAY AREA 14,686 12,215 26,901 4,578 7,980 12,558 CENTRAL VALLEY 34,676 4,315 38,991 7,182 2,019 9,201 OTHER COUNTIES 14,318 1,565 15,883 2,841 741 3,582 TOTAL 155,322 53,650 208,972 32,967 31,785 64,752 DECLINE IN SINGLE FAMILY 79% DECLINE IN MULTI-FAMILY 41% CONSTRUCTION INDUSTRY RESEARCH BOARD MARKETPOINTE REALTY ADVISORS 6.09 RESIDENTIAL BUILDING PERMITS NATION OF CALIFORNIA 2005 AND 2008
Shrinking New Home Inventory Bodes Well for SD Market 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 10,181 7,788 2,393 11,328 8,433 9,633 2,895 3,591 2005/1 2005/2 2005/3 13,645 13,224 9,058 4,587 9,361 5,918 16,819 16,270 15,279 15,145 9,537 9,607 9,258 8,210 8,518 8,090 7,835 6,733 7,212 5,887 5,379 13,589 13,426 13,542 5,336 2005/4 2006/1 2006/2 2006/3 2006/4 2007/1 2007/2 12,227 11,260 7,462 9,247 5,873 8,114 5,024 7,185 4,359 6,109 4,772 3,828 5,024 4,392 2,909 3,798 2,351 3,374 1,974 3,090 3,200 2,826 2,421 1,854 2007/3 2007/4 2008/1 2008/2 2008/3 Offered Unsold Future Phases Total Inventory 2008/4 2009/1 2009/2 2009/3
Residential Resale Market Statistics San Diego County 25,000 San Diego County Monthly Resale Market 22,883 7,000 20,955 20,000 18,963 6,000 15,000 15,019 Listings 5,000 Listings Sales 4,000 10,000 7,798 3,000 5,000 Sales 2,452 2,000 0 1,000
Resale Market Statistics San Diego County $700,000 Median Price - Attached Homes Median Price - Detached Homes $600,000 $500,000 $400,000 $300,000 $200,000 $100,000
Foreclosures Southern California TRUSTEE SALES (FORECLOSURES) SOUTHERN CALIFORNIA 3Q2008-3Q2009 AREA 3Q2008 3Q2009 CHANGE % LOS ANGELES 11,690 7,927-3,763-32% ORANGE 3,997 2,238-1,759-44% SAN DIEGO 5,797 3,601-2,196-38% RIVERSIDE 10,813 6,776-4,037-37% SAN BERNARDINO 7,930 4,999-2,931-37% VENTURA 1,420 793-627 -44% TOTAL 41,647 26,334-15,313-37% SOURCE: DATAQUICK MARKETPOINTE REALTY ADVISORS 3.09
San Diego County Foreclosures LOWEST NUMBER OF FORECLOSURES SAN DIEGO COUNTY 2ND QUARTER 2009 ZIP CODE COMMUNITY NO. FORECLOSURES 92014 DEL MAR 2 92121 SORRENTO VALLEY 3 92007 CARDIFF 5 92118 CORONADO 6 92075 SOLANA BEACH 6 92067 RANCHO SANTA FE 7 92106 PT. LOMA 7 92130 CARMEL VALLEY 17 92037 LA JOLLA 21 TOTAL 74 SAN DIEGO COUNTY (90 ZIP CODES) 3516 LOWEST AS % OF COUNTY 2.1% SOURCE: DATAQUICK MARKETPOINTE REALTY ADVISORS 7.09
San Diego County Foreclosure Concentration HIGHEST NUMBER OF FORECLOSURES SAN DIEGO COUNTY 2ND QUARTER 2009 COMMUNITY # GEOGRAPHIC CONCENTRATION OF FORECLOSURE ACTIVITY BY ZIP CODE SAN DIEGO COUNTY CHULA VISTA TOTAL (5 ZIP CODES) 462 OCEANSIDE TOTAL (4 ZIP CODES) 317 ESCONDIDO TOTAL (4 ZIP CODES) 289 EL CAJON TOTAL (3 ZIP CODES) 224 SAN MARCOS TOTAL (2 ZIP CODES) 125 NESTOR - 92154 113 ENCANTO - 92114 109 SPRING VALLEY - 91977 105 VISTA TOTAL (2 ZIP CODES) 92 CITY HEIGHTS - 92105 80 PARADISE HILLS - 92139 74 TOTAL OF ABOVE 25 ZIP CODES 1990 SAN DIEGO COUNTY (90 ZIP CODES) 3516 REMAINING 65 ZIP CODES, 43.4% 25 ZIP CODES WITH HIGHEST FORECLOSURE RATES, 56.6% LOWEST AS % OF COUNTY 56.6% SOURCE: DATAQUICK MARKETPOINTE REALTY ADVISORS 7.09
Predictable Housing Cycles
Mortgage Rates & 10 Year Treasury Yields 18 CONVENTIONAL MORTGAGE RATES Recessionary Periods: Yellow Highlight Blue Line: 30 Year Conv Mortgage Dashed Red Line: 10 Year Treasury Yield 16 14 12 10 8 6 5.03% 4 2
Commercial Building Permits $100,000,000 PERMIT VALUATIONS COMMERCIAL PROPERTIES SAN DIEGO COUNTY 2007-2009 OFFICE RETAIL INDUSTRIAL $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- 1q07 2q07 3q07 4q07 1q08 2q08 3q08 4q08 1q09 2q09 3q09
2010 Economic Forecast San Diego County 10 20 % 0 10 % 1 1 ½ % 1 2 % Population Local Jobs Housing Construction Commercial Construction Public Works / Military Government Tax Revenues 10 20 % 10 20 %
As we grow older and more experienced, we overrate the accuracy of our judgments
Economic & Real Estate Projections For 2010 The Nation of California California will continue to add 400,000+ population annually The job market will just mope along, with the real estate construction industry dragging down an otherwise healthy and diverse economy Interest rates will stay low Home foreclosures and short sales will continue to decline. Real bargains will disappear Resales and refi s will be strong
Economic & Real Estate Projections For 2010 The Nation of California New for-sale home production will be modest The housing market will stabilize in early 2010 The commercial market will feel deep pain, particularly the office market The apartment, retail and industrial investment markets will remain healthy, but not cheap 2010 is a great year to have cash. Pouncing on distressed properties is an art form that requires concentration, a strong will and faith in the future of California.
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