Southern California 2009 … A Very Difficult Year!
description
Transcript of Southern California 2009 … A Very Difficult Year!
![Page 1: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/1.jpg)
04/22/23 1
Southern California 2009 …A Very Difficult Year!
John Husing, Ph.D. Economics & Politics, Inc.
![Page 2: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/2.jpg)
04/22/23 2
265,
894
236,
506
227,
473
242,
148
243,
229
195,
379
120,
875
(182
,138
)
(203
,752
)
(100
,067
)
37,6
92 123,
967
125,
767
217,
617
246,
983
222,
192
217,
667
95,7
75
(9,2
42)
30,9
33 122,
033
151,
858
170,
783
35,3
42
(147
,033
)
(340
,600
)
Source: CA Employment Development Department
Southern California Employment GrowthAnnual Change, 1983-2009
So. Calif. Job Change, 1984-2009
![Page 3: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/3.jpg)
04/22/23 3
30,0
50 41,0
25
37,6
42
36,5
33
36,7
75
41,4
83
46,0
08
6,34
2
9,75
8
4,57
5 16,9
17 28,9
25
23,0
83 38,3
25
40,6
92 56,4
67
49,8
50
40,5
67
33,2
92
35,4
67
59,2
75
61,5
33
44,7
00
2,37
5
(48,
650)
(76,
500)
19841985
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
2008
2009ytd
Sources: CA Employment Development Department, John E. Husing, Ph.D.
Exhibit 133.-Job CreationInland Empire, Annual Average, 1984-2008
Inland Empire Job Change, 1984-2009
![Page 4: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/4.jpg)
04/22/23 4
Worst National Unemployment Rates
9.0
9.1
9.2
9.4
9.4
10.3
10.4
10.8
11.0
11.8
11.9
Orlando
Portland
Tampa
San Jose
Las Vegas
Providence
Sacramento
Los Angeles
Charlotte, Fl
Inland Empire
Detroit
U.S. Bureau of Labor Statistics
U.S. Metro Areas, 1 Million People or MoreHighest 10 Unemployment Rates, January 2009
Now 12.2%
![Page 5: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/5.jpg)
04/22/23 5
1929
1931
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
Source: U.S. Bureau of Labor Statistics & U.S. Census Bureau
U.S. Unemployment History, 1929-2009
Unemployment Can Get Stuck For Years
Inland EmpireL not U
![Page 6: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/6.jpg)
04/22/23 6
What Happened?
![Page 7: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/7.jpg)
04/22/23 7
Shrinking Our Economy
$4.5
$2.9 $2.5 $2.2 $2.3 $2.3 $2.5$3.3
$4.2$5.1 $5.4
$6.1
$7.2
$9.1
$12.1 $12.5
$10.6
$7.0
$3.9
Construction Industry Research Board
Exhibit 2.-Total Building Permit ValuationInland Empire, 1990-2008 (billions)
$8.6 Billion Hole
In IE Economic Base
![Page 8: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/8.jpg)
04/22/23 8
Gold Mine Theory
Primary Tier
Secondary Tier
-$8.6 Billion
Another-$8.6 Billion
-$17.2 Billion Loss To The Economy
![Page 9: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/9.jpg)
04/22/23 9
Taxable Sales Decline
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-14%-12%-10%
-8%-6%-4%-2%0%2%4%6%8%
10%12%14%16%18%20%
California Riverside
Source: CA Board of Equalization, RCTC for 2008
Exhibit 6.-Taxable Sales Growth RatesQuarterly, California & Riverside County, 1992-2008
![Page 10: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/10.jpg)
04/22/23 10
Housing Demand Rose With Population
1997 18.3 million people/3.9 million SFR homes = 4.66
1997-2007 Add 3.2 million people: Need 709,600 homes = 4.661997-2007 Actual New homes 552,9001997-2007 Shortfall 156,700Annual Production Too Low: 15,670 a year
CA Home RestrictionsSlow GrowthNIMBYsEndangered SpeciesWaterKeep “Them” Out of Our City
Just Under LA & OC
Production In 2006 or 2007
![Page 11: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/11.jpg)
04/22/23 11
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
80,000100,000120,000140,000160,000180,000200,000220,000240,000260,000280,000300,000320,000340,000360,000380,000400,000420,000
Source: Dataquick
Exhibit 8.-Price Trends, New & Existing HomesInland Empire, 1988-2008, Quarterly
$404,611
Prices Had To Take-Off To Eliminate Buyers
1997-200312.9% per year
2003-200619.7% per year
![Page 12: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/12.jpg)
04/22/23 12
Sales Soars Until Late 2005
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
02,0004,0006,0008,000
10,00012,00014,00016,00018,00020,00022,00024,00026,00028,00030,00032,000
Source: Dataquick
31,545
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
02,0004,0006,0008,000
10,00012,00014,00016,00018,00020,00022,00024,00026,00028,00030,00032,000
Source: Dataquick
Exhibit 11.-Existing & New Homes Sales, Inland EmpireSeasonally Adjusted, by quarter, 1988-2008
11,398
19,664
29,670
Price Peak
72.5%
![Page 13: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/13.jpg)
04/22/23 13
Prices Back to Early 2003 Levels
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
$60,000
$90,000
$120,000
$150,000
$180,000
$210,000
$240,000
$270,000
$300,000
$330,000
$360,000
$390,000
$420,000
Source: Dataquick & Economics & Politics, Inc.
Exhibit 8.-Price Trends, All HomesInland Empire, 1988-2008, Quarterly
$211,547
$404,611
359,044 SFR Homes Traded 2004-2007More Owed They Are Worth!
33.5% Of IE’s 1,071,071 SFR Homes
![Page 14: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/14.jpg)
04/22/23 14
Supply: Foreclosures
Sales In Jan. 2009
71.2% of Riv. Co. 67.3% of SB Co.
![Page 15: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/15.jpg)
04/22/23 15
Demand: Affordability
53%
45%
18%
52.1%
2000 2002 2005 2008
Source: CA Association of Realtors, 2000-2005; Economics & Politics, Inc., 2008
Exhibit 12.-Share Able To Buy Median Price HomeInland Empire, 2000-2008
Where is Price Floor?
![Page 16: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/16.jpg)
04/22/23 16
Demand & Supply
Demand From Lower Prices
Supply From Foreclosuresvs.
![Page 17: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/17.jpg)
04/22/23 17
And The Winner So Far ….
Foreclosure Supply Still Overwhelming Demand
![Page 18: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/18.jpg)
04/22/23 18
Key:Reducing the Flow of Foreclosures
![Page 19: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/19.jpg)
04/22/23 19
Current Market Status
•151,985 of 359,044359,044 Homes Sold 2004-2007 Notices of Default
•207,059207,059 Upside Down but Not Yet in Visible Trouble
2,592
4,5925,974
4,254 4,8546,092
5,148 5,7324,099
7,6989,220
8,3709,415 9,209 9,491 9,389 9,022 9,550 9,550
3,7894,945
9,000
Source: ForeclosureRadar
Exhibit A.-Notices of DefaultInland Empire, Mar-07 to Dec-08
![Page 20: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/20.jpg)
04/22/23 20
Defaulted Homes
•151,985 Notices of Default
•134,251 through 90-Day grace period
•103,205 ((77%77%) foreclosed) foreclosed … 44,536 (23%) worked out
1,2962,296 2,987 3,279
4,404 3,7635,032 4,754
3,347
6,234 7,083 7,806 8,070 8,484 8,289
4,265
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Source: ForeclosureRadar
Exhibit 11.-Notices of Trustee SalesInland Empire, Mar-07 to Sep-08
![Page 21: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/21.jpg)
04/22/23 21
Upside Down Homes
•207,059 Upside Down … Not Yet Notices of Default
• 17,734 NOD Grace Period
•224,793 Future Issue224,793 Future Issue!!
![Page 22: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/22.jpg)
04/22/23 22
Pace of Future Problem
Sub-Prime Alt-A
Option Adjustable
![Page 23: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/23.jpg)
04/22/23 23
Inland Empire’s Long Term Competitive Advantage Still Exists
$147,000 $136,000
$243,000$212,000
$359,000 $348,000
$455,000
Inland Empire San Diego Los Angeles Orange
Median All Home PriceLake Elsinore Advantage
Source: Dataquick
Exhibit 136.-Home Price Advantage, So. California MarketsMedian Priced New & Existing Home, 4th Quarter 2008
Have To Get This Crisis Behind Us …
$8.6 Billion Hole to Fill
![Page 24: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/24.jpg)
04/22/23 24
Worst Potential Financial Crisis Since 1929
President Hoover
Fed Raised Rates
Cut Money Supply!
Fed’s Ben Bernanke
![Page 25: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/25.jpg)
04/22/23 25
Issue: Mortgage Backed SecuritiesLoan Originator
Home Buyer
Low Risk Investors
Fannie, Freddie
Investment Bank
Mortgage Group
Loan Servicer
High Risk Investors
Mortgage
Loan Servicer Will Do
Nothing To HurtNothing To Hurtthe Interest of the
InvestorsInvestors
![Page 26: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/26.jpg)
04/22/23 26
Two Strategies
#1 Reduce the Principal Owed
NO!
Hurts The Interest of the Investor
![Page 27: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/27.jpg)
04/22/23 27
Two Strategies
#2 Cut Interest Rate
Lengthen Term
Leave Principal Alone
Lower Payment
Stay In Home BUT Upside Down
Never Able To Sell!
Obama: FNMA, Freddie Mac If Owe 105% Refi To Lower Rate
Obama: If 38% of Income, Share Cost of Lowering to 31% of Income
Inland Empire Upside Down Too Much For
These Strategies!
![Page 28: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/28.jpg)
04/22/23 28
Reduce PrincipalPurchase Price $400,000
Owe $350,000
Today’s Value $250,000
90% of Today’s Value Paid To Investor $225,000Loss to Investor $125,000
30 Year FHA Mortgage, Less Principal & Interest, Lower Payment
If Sell Early For Over $225,000 Profit To Lender
Only For Existing Mortgages
Obama Cramdown: Bankruptcy But Must Negotiate FirstObama Cramdown: Bankruptcy But Must Negotiate First
![Page 29: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/29.jpg)
04/22/23 29
What About Moral Hazard?
Unless We Cut Off The Flow of Foreclosures …
If Foreclosures Not Lowered …
No Recovery Until Past 2012
![Page 30: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/30.jpg)
04/22/23 30
Attempt To Get To First Strategy
Hope For Homeowners TARP: Govt Acquire Mortgages (Didn’t) BofA/Countrywide Bankruptcy Judges (Passed House, In Senate)
Being Sued By MBS Holders
![Page 31: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/31.jpg)
04/22/23 31
Local Action:Prices Back to Early 2003 Levels
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
$60,000
$90,000
$120,000
$150,000
$180,000
$210,000
$240,000
$270,000
$300,000
$330,000
$360,000
$390,000
$420,000
Source: Dataquick & Economics & Politics, Inc.
Exhibit 8.-Price Trends, All HomesInland Empire, 1988-2008, Quarterly
$211,547
$404,611
$235,000
![Page 32: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/32.jpg)
04/22/23 32
At 2004 Prices: 2,500 SF homes, 7,200 SF Lot
Revenue $324,000 Land Cost $0 Construction $288,980 Fees $42,897 Loss -$7,847 -2.2%
Direct Construction (of square footage) 50.00$ Indirect Construction (fixed cost) 15,000$ Site Dev. Costs (per square foot of gross land) 8.00$ Sales/Marketing (9%) 9%Warrenty (1%) 1%Finance (6%) 6%Homeowners Assoc./Dept. of R. Estate 500.00$ Property Tax (1.80%) 1.8%General and Administrative (4.0%) 4%
![Page 33: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/33.jpg)
04/22/23 33
At 2004 Prices: 1,500 SF homes, 7,200 SF Lot
Revenue $252,000 Land Cost $0 Construction $221,540 Fees $16,567 Profit +$13,893 5.0%
Direct Construction (of square footage) 50.00$ Indirect Construction (fixed cost) 15,000$ Site Dev. Costs (per square foot of gross land) 8.00$ Sales/Marketing (9%) 9%Warrenty (1%) 1%Finance (6%) 6%Homeowners Assoc./Dept. of R. Estate 500.00$ Property Tax (1.80%) 1.8%General and Administrative (4.0%) 4%
-60% Agency
-40% School
![Page 34: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/34.jpg)
04/22/23 34
Issue: Financial Freeze
Bank, S & L, CU
Savers
Borrower
Account
Mortgage
Secondary Market
More Loans
xAutoStudentPersonalBusiness
TALF: Term Asset Backed Security Loan Facility Creates Secondary MarketMortgagesAuto LoansStudent LoansPersonal LoansShort Term Business Loans
![Page 35: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/35.jpg)
04/22/23 35
Restoring Demand•Consumer (Scared)
•Business Investment (Can’t Borrow)
•Export Growth (Dollar Value Has Risen Again)
•Government Borrow & Spend (World War II Experience)
Borrow $787 Billion & Spend It
![Page 36: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/36.jpg)
04/22/23 36
Borrow $787 Billion & Spend It
Collect $787 Billion In Taxes … Cuts $787 Billion In Private Spending
Spend $787 Billion Collect … Effect is NEUTRAL on Demand
Collect Taxes … Spend That Amount
Borrow $787 Billion … Spent That Too … Adds $787 To Demand
![Page 37: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/37.jpg)
04/22/23 37
Has This Been Tried?
![Page 38: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/38.jpg)
04/22/23 38
World War II As A Giant Stimulus Effort
14.5%
9.7%
4.7%
1.9%
1940 1941 1942 1943
U.S. Unemployment RatesEntering World War II
![Page 39: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/39.jpg)
04/22/23 39
Why Do This? Have To Fill Hole In Our Economy
$4.5
$2.9 $2.5 $2.2 $2.3 $2.3 $2.5$3.3
$4.2$5.1 $5.4
$6.1
$7.2
$9.1
$12.1 $12.5
$10.6
$7.0
$3.9
Construction Industry Research Board
Exhibit 2.-Total Building Permit ValuationInland Empire, 1990-2008 (billions)
$8.6 Billion Hole
In IE Economic Base
![Page 40: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/40.jpg)
04/22/23 40
Blue Collar Industrial Jobs
![Page 41: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/41.jpg)
04/22/23 41
63.8%
50.9% 48.9% 47.9%44.7%
39.3% 37.2% 35.9%
Imperial San Bdno. Riverside Los Angeles Southern California Ventura Orange San Diego
Source: 2007 American Community Survey
Share of Adults, No College Class & BA or AboveSouthern California Counties, People 25 & Over, 2007
Why Blue Collar Jobs Important
![Page 42: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/42.jpg)
04/22/23 42
05,000,000
10,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,00050,000,000
Source: Grubb & Ellis & Economics & Politics, Inc.
Exhibit 14.-Industrial Space Gross AbsorptionInland Empire, 1991-2008 (moving 4-quarter total)
Quarterly Industrial Absorption, 1991-2008
20 million Sq.Ft.
7.1 million Sq.Ft.
![Page 43: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/43.jpg)
04/22/23 43
0%2%4%6%8%
10%12%14%16%18%20%22%24%26%
Source: Grubb & Ellis
Exhibit 21.-Industrial Space Availability RateInland Empire, 1991-2008
Industrial Vacancy Rate
9.9%
Moreno Valley-Perris 23.0% SB-Redlands 19.7%
Ontario-Mira Loma 5.2%
![Page 44: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/44.jpg)
04/22/23 44
3.7 3.8 4.1 4.4 5.1 5.4 5.8 6.5 7.5 8.2 9.5 9.6 10.6 11.8 13.1 14.2 15.8 15.7 14.5
42.5
TEU=20 foot equivalent container unitsSource: Ports of Los Angeles & Long Beach; forecast: Moffatt & Nichol Engineers
Exhibit 6.-Port Container TrafficPorts of Los Angeles & Long Beach, 1990-2008 & 2025e (million TEUs)
200743.2% U.S. Imported Containers25.3% U.S. Exported Containers
1. International Containers Thru So. Calif.
![Page 45: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/45.jpg)
04/22/23 45
2. Ports On West Coast Nearest Asia
Los Angeles Long Beach
![Page 46: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/46.jpg)
04/22/23 46
8,000-Container Post-Panamax Ships
3. Deep Water Ports As Ships Draw Over 50 feet of Water
![Page 47: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/47.jpg)
04/22/23 47
BUT (Warning) …
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Port Import Export Reporting Service (PIERS), collected from Vessel
Growth of Imported ContainersPorts of Los Angeles-Long Beach, 1997-2008 (000)
551454
654
160
670
349
788
443
934
(164)
(753)
2008
![Page 48: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/48.jpg)
04/22/23 48
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
(800)
(600)
(400)
(200)
0
200
400
600
Source: U.S. Bureau of Labor Statistics
Job Creation or DestructionU.S., 1998-2009, Seasonally Adjusted
1. U.S. Economic SlowdownLost 4,384,000 Jobs
![Page 49: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/49.jpg)
04/22/23 492000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: U.S. Federal Reserve Board
Exhibit 8.-Value of Dollar vs. Major Currencies, 2000-2009
Feb-02 to Jan-Feb-02 to Jan-0909
-17.2%-17.2%
2. Decline In Value of Dollar
![Page 50: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/50.jpg)
04/22/23 50
Manufacturing: OpportunityLogistics: Difficulty
Foreign Goods More Expensive Here
U.S. Products Cheaper Abroad-17.2% toForeigner
+17.2% toAmerican
![Page 51: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/51.jpg)
04/22/23 51
3. Clean Truck Program•Container Fees: Infrastructure, Clean Trucks
•Employee Mandate & Teamsters
![Page 52: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/52.jpg)
04/22/23 52
BCOs4-Corners Strategy
Beneficial Cargo Owners
![Page 53: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/53.jpg)
04/22/23 53
Industrial Situation
Long Term Strength As No Where Else To Build
Long Term Strength Due To Growth of Trade
Short Term Slowing Due To U.S. Economy
Short Term Slowing due to Low Value of the Dollar
??? Impact of Clean Truck Program & Diversion
![Page 54: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/54.jpg)
04/22/23 54
Office Market
Housing Slowdown Hurts!
![Page 55: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/55.jpg)
04/22/23 55
(600,000)(400,000)(200,000)
0200,000400,000600,000800,000
1,000,0001,200,0001,400,0001,600,0001,800,0002,000,000
Source: Grubb & Ellis & Economics & Politics, Inc.
Exhibit 90.-Office Net Space AbsorptionMoving 4-quarters, Inland Empire, 1991-2008
Office Absorption
Absorption Falls With Housing Slowdown
![Page 56: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/56.jpg)
04/22/23 561991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0%2%4%6%8%
10%12%14%16%18%20%22%24%26%28%
Source: Grubb & Ellis
Exhibit 93.-Office Vacancy RateInland Empire, 1991-2008
Office Vacancy Rate Has Jumped Dramatically
7.0%
20.6%
24.5%
![Page 57: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/57.jpg)
04/22/23 57
Office Forecast
Recovery Will Await End of Housing Crisis & Re-Emergence of Residential Construction
![Page 58: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/58.jpg)
04/22/23 58
2010 or 2011
When Will “Normal” Return?
xIf Policies
Work!
![Page 59: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/59.jpg)
04/22/23 59
While Waiting ….
![Page 60: Southern California 2009 … A Very Difficult Year!](https://reader036.fdocuments.in/reader036/viewer/2022070500/56816830550346895dddd842/html5/thumbnails/60.jpg)
04/22/23 60
www.johnhusing.com