Real Estate: Investing for the Future Sponsored By:
Percent Change, Year Ago 6 5 4 3 2 1 Real GDP Growth United States, 2000 Prices 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
U.S. Employment Picture Employment Growth and Unemployment Rate Percent 6.5 6.0 Unemployment Rate - L Civilian Employment - R Percent Change, Year Ago 4 3 5.5 2 5.0 1 4.5 0 4.0-1 3.5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005-2
Percent 11 10 9 8 7 6 5 4 Civilian Unemployment Rate United States 3 60 65 70 75 80 85 90 95 00 05
Index 1985=100 160 140 120 100 80 60 Consumer Confidence Index Conference Board 40 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Real Consumer Spending United States Percent Change, Year Ago 8 6 4 2 0-2 70 75 80 85 90 95 00 05
US$/Troy Ounce 500 Gold Prices Spot Price 450 400 350 300 250 200 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
US$/bbl 60 50 40 30 20 10 Oil Prices West Texas Intermediate Crude Oil Price 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Industrial Production Industrial Production Index, FRB Percent Change, Year Ago 15 10 5 0-5 -10-15 70 75 80 85 90 95 00 05
Corporate Profits Profits Before Tax (without IVA and CCAdj.) Percent Change, Year Ago 30 20 10 0-10 -20 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Percent Change, Year Ago 5 4 3 2 1 0-1 -2 Unit Labor Costs Business Sector, United States -3 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Interest Rates Fed Funds Rate and 10-year Government Bond Percent 8 6 4 2 Fed Funds Rate 10-year Government Bond 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Historical Yield Curve 10-year Government Bond minus Fed Funds Rate Percent 4 2 0-2 -4 55 60 65 70 75 80 85 90 95 00
Rate 10 9 8 7 6 5 4 Mortgage Rates United States 30-year Fixed 15-year Fixed 1-year ARM 3 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Percent 7 1-Month LIBOR London Interbank Offered Rate 6 5 4 3 2 1 0 95 96 97 98 99 00 01 02 03 04 05
Millions 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0 Single-Family Housing Starts United States 0.9 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Thousands 400 Multi-Family Housing Starts United States 350 300 250 200 150 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Existing Single-Family Home Sales United States Millions 7.0 6.0 5.0 4.0 3.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Existing Median Home Price Single-Family Homes, United States US$ Thousands 200 Home Price - L % Change, Year Ago - R 180 Percent Change, Year Ago 14 12 160 10 140 8 6 120 4 100 2 80 95 96 97 98 99 00 01 02 03 04 0
Existing Median Home Price Ranked by 10-year Growth, 1994-2004 Home Price, (US$, Thous.) 10-year Rank Metropolitan Area 1994Q4 2004Q4 Growth 1 San Diego CA $172 $579 236.2% 2 Orange County CA $216 $641 196.3% 3 Fort Lauderdale FL $102 $301 194.8% 4 Sarasota-Bradenton FL $98 $286 192.8% 5 Miami FL $104 $303 190.3% 6 West Palm Beach-Boca Raton FL $120 $343 186.7% 7 Barnstable-Yarmouth MA $107 $303 184.3% 8 Sacramento CA $123 $348 183.0% 9 Merced CA $96 $270 182.5% 10 Portland ME $83 $235 182.2%
Existing Median Home Price Ranked by 5-year Growth, 1999-2004 Home Price, (US$, Thous.) 5-year Rank Metropolitan Area 1999Q4 2004Q4 Growth 1 Sacramento CA $135 $348 158% 2 West Palm Beach-Boca Raton FL $134 $343 156% 3 Riverside-San Bernardino CA $132 $325 147% 4 Merced CA $111 $270 143% 5 San Diego CA $242 $579 139% 6 Fresno CA $119 $281 136% 7 Los Angeles-Long Beach CA $201 $470 134% 8 Bakersfield CA $105 $242 130% 9 Portland ME $103 $235 127% 10 Orange County CA $289 $641 122%
Existing Median Home Price Ranked by 1-year Growth, 2003-2004 Home Price, (US$, Thous.) 1-year Rank Metropolitan Area 2003Q4 2004Q4 Growth 1 Las Vegas NV-AZ $194 $286 47.5% 2 Riverside-San Bernardino CA $241 $325 34.8% 3 West Palm Beach-Boca Raton FL $256 $343 33.9% 4 Sacramento CA $265 $348 31.2% 5 Melbourne-Titusville-Palm Bay FL $136 $178 30.6% 6 Bakersfield CA $189 $242 27.7% 7 Merced CA $212 $270 27.5% 8 Ocala FL $91 $116 27.0% 9 Washington DC-MD-VA-WV $296 $376 27.0% 10 Fort Myers-Cape Coral FL $162 $205 26.6%
Existing Median Home Price Most Expensive Metros, Ranked by 2004 Price Home Price, (US$, Thous.) 10-year Rank Metropolitan Area 1994Q4 2004Q4 Growth 1 San Francisco CA $253 $671 165% 2 Santa Cruz-Watsonville CA $238 $663 179% 3 San Jose CA $251 $646 157% 4 Orange County CA $216 $641 196% 5 Santa Barbara-Santa Maria-Lompoc CA $210 $591 182% 6 San Diego CA $172 $579 236% 7 Salinas CA $215 $552 157% 8 Honolulu HI $355 $493 39% 9 Santa Rosa CA $199 $490 146% 10 Ventura CA $186 $489 163%
Home Prices Rising Faster Than Income United States Percent Change, Year Ago 14 Home Prices - L Personal Income - R 12 10 8 6 4 2 0 95 96 97 98 99 00 01 02 03 04
Percent 5.8 5.6 5.4 5.2 House Price to Income Ratio United States Percent of Disposable Income 13.5 House Price to Per Capita Income Ratio - L Household Debt as % of Disp. Income - R 13.0 12.5 5.0 12.0 4.8 4.6 4.4 11.5 11.0 4.2 84 86 88 90 92 94 96 98 00 02 04 10.5
Home Prices Rise Faster than Inflation Existing Median Home Price vs. Core CPI Percent Change, Year Ago 12 Home Prices Core CPI 10 8 6 4 2 0-2 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Base=100 160 140 120 100 80 60 Housing Affordability Index 1975-Present, United States 40 75 80 85 90 95 00 05
Base=100 150 145 140 135 130 125 Housing Affordability Index 1995-Present, United States 120 95 96 97 98 99 00 01 02 03 04 05
Percent Change, Year Ago 60 U.S. Apartment Market Construction Completions 40 20 0-20 -40 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Rate 85 80 75 70 65 60 55 U.S. Apartment Market Absorption Activity Percent Change, Year Ago 15 Absorption Rate - L Percent Change, Year Ago - R 10 5 0-5 -10-15 -20 50 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004-25
Real Estate Investment Trusts Sector Net Acquisition of Financial Assets US$ Billions 250 200 150 100 50 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Percent Vacant 18 16 U.S. Vacancy Rates Industrial vs. Office Space Industrial Space Office Space 14 12 10 8 6 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Percent Vacant 20 U.S. Vacancy Rates Office Space Markets 18 16 14 12 10 8 6 Downtown Metropolitan Suburban 4 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Construction Put in Place Total Private vs. Residential, United States Percent Change, SAAR 25 20 15 10 5 0-5 -10 1994 1995 1996 1997 1998 1999 2000 2001 2002 Total Residential 2003 2004 2005
Construction Put in Place Total Private vs. Non-Residential, United States Percent Change, SAAR 20 10 0-10 -20-30 1994 1995 Total Non-Residential 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Millions 4.5 4.0 3.5 3.0 Travel & Tourism Industry Employment Percent Change, Year Ago 6 Employment Level - L % Change, Year Ago - R 4 2 0-2 -4 2.5 86 88 90 92 94 96 98 00 02 04-6
Travel Expenditures Resident and International Travel for United States Percent Change, Year Ago 15 10 5 0-5 -10-15 92 U.S. Resident Travel International Travel 93 94 95 96 97 98 99 00 01 02 03
Euros Per Dollar 1.20 The Tumbling Dollar Euros Per Dollar 1.10 1.00 0.90 0.80 0.70 1999 2000 2001 2002 2003 2004 2005
Percent 92 Hotel Occupancy Rate Las Vegas 90 88 86 84 82 80 78 76 97 98 99 00 01 02 03 04
Cost of Renting Significantly Lower in Some Markets City Cost of Renting *Cost of Owning San Francisco $1,780 $3,010 Los Angeles $1,430 $2,159 Wash. D.C. $1,155 $1,700 Las Vegas $780 $1,290 Miami $1,000 $1,362 Chicago $1,030 $1,111 Atlanta $795 $722 Dallas $785 $630 *Assuming 20% Down Payment and 5% Interest-Only ARM
Rents Going Down in Most Markets Percent Growth Rent Growth, Percent 1995- Market 2000 2003 2004 Atlanta 3.1-4.5-1.4 Boston 6.2-0.8-2.2 Chicago 3.3-3.1 0.2 Dallas 3.1-3.3-1.2 Denver 3.9-5.2-3.6 Detroit 3.1-2.1-1.3 Houston 2.5-1.7-0.9 Philadelphia 3.8 1.0 2.2 San Francisco 8.6-6.0-1.0 Southern CA 5.1 3.2 4.0 Wash. D.C. 3.9 2.5 3.5 NATION 3.5-0.3 1.5
Most Overvalued Markets Percent Over Fair Value Metro Area Percent Chico, CA 43% Stockton, CA 34% Santa Barbara, CA 34% Los Angeles, CA 32% San Francisco, CA 30% Modesto, CA 30% San Diego, CA 28% W.Palm, FL 26% Sacramento, CA 25% Las Vegas, NV 24%
Most Undervalued Markets Percent Under Fair Value Metro Area Percent Salt Lake City, UT -23% Memphis, TN -20% Macon, GA -17% Little Rock, AR -16% Beaumont, TX -16% Syracuse, NY -16% Albuquerque, NM -14% New Orleans, LA -14% Baton Rouge, LA -14% Oklahoma City, OK -13%
A New Product Revolution What Kind of Loans are Available? Fixed-Rate Mortgages available for 30, 25, 20, 15 and 10 years Balloon Loans Adjustable Rate Mortgages available for 1, 3, 5, and 7 year 5/1 Interest Only ARM Combined (Hibrid) Loans Mortgage Programs Conventional Loans (Conforming/Nonconforming) Interest Only Loans Low Downpayment Loans Zero Down - 100% Financing Credit Flex Subprime Loans Government Loans FHA Loans VA Loans Rural Housing Service Loans (RHS)
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