U.S. and Bay Area Housing UpdateAndrew Borsanyi, Principal

May 8, 2012

National Household Growth

2,500

Average Annual Household Formation (000s)

1,9312,000

1,193

1,544

1,203

1,312

1 129 1 143

1,510

1 144

1,500

927

1,129 1,143 1,144

1,000

378500

THE CONCORD GROUP

01961 ‐ 1965 1966 ‐ 1970 1971 ‐ 1975 1976 ‐ 1980 1981 ‐ 1985 1986 ‐ 1990 1991 ‐ 1995 1996 ‐ 200 2001 ‐ 2008 2009 ‐ 2010 2011

2Source: US Census Bureau

U.S. EmploymentJobs

Value Growth000s Num. # %

Annual3,000

4,000

Annual1990 109,4871991 108,374 ‐1,113 ‐1.0%1992 108,726 352 0.3%1993 110,844 2,118 1.9%1994 114,291 3,447 3.1%

0

1,000

2,000

), ,1995 117,298 3,007 2.6%1996 119,708 2,410 2.1%1997 122,776 3,068 2.6%1998 125,930 3,154 2.6%1999 128,993 3,063 2.4% -2,000

-1,000

0G

row

th (0

00s)

2000 131,785 2,792 2.2%2001 131,826 41 0.0%2002 130,341 ‐1,485 ‐1.1%2003 129,999 ‐342 ‐0.3%2004 131,435 1,436 1.1%2005 133 703 2 268 1 7% 5 000

-4,000

-3,000Job

G

2005 133,703 2,268 1.7%2006 136,086 2,383 1.8%2007 137,598 1,512 1.1%2008 136,790 ‐808 ‐0.6%2009 130,807 ‐5,983 ‐4.4%2010 129,874 ‐933 ‐0.7%

-7,000

-6,000

-5,000

THE CONCORD GROUP3Source: US Bureau of Labor Statistics

2010 129,874 933 0.7%2011 131,359 1,485 1.1%1Q12 131,169 ‐190 ‐0.1%

U.S. New Home Sales and Prices

1 337

1,426$240

$260

1,400

1,600

984 978 9741,009

1,081

1,207

1,337

1,168

$200

$220

1 000

1,200

e (0

00s)

(000

s)

678740 744 741

841893

984 978 974

862

$180

$200

800

1,000

e M

edia

n Pr

ice

w H

ome

Sale

s (

593 566 539

417359 340 368 $140

$160

400

600

New

Hom

e

U.S

. New

$100

$120

0

200

THE CONCORD GROUP4Source: US Census Bureau

* 2012 estimate based on 1Q 2012 sales

U.S. New Home Inventory

1,300,000

1,400,000Mar. 2012

Demand Units

1,000,000

1,100,000

1,200,000LTM Sales 352,222

Recovery Rate 621,027

TCG Annual Demand 889,832

700,000

800,000

900,000

al S

uppl

y SupplyStanding Inventory 163,000

L i A i l M k d P j 210 000

400,000

500,000

600,000TotaLots in Actively Marketed Projects 210,000

Competitive Foreclosures 299,400

Total Supply 672,400

100,000

200,000

300,000Market OutlookMonths Supply 23

Sales Recovery 1Q 14

THE CONCORD GROUP

0Oct. 2010

Jan. 2011

April 2011

July 2011

Oct. 2011

Mar 2012

5Sources: US Census/HUD, NAR, RealtyTrac, HanleyWood, DataQuick, TCG

y

New Lot Development 1Q 13

U.S. Multifamily Performance

Annual Effective Rent Growth Annual Vacancy

10% 9.0%

6%

7%

8%

9%

7 0%

8.0%

3%

4%

5%

6%

al Growth

6.0%

7.0%

ge Vacan

cy‐1%

0%

1%

2%

Ann

u

4.0%

5.0%

Averag

‐4%

‐3%

‐2%

1%

2.0%

3.0%

THE CONCORD GROUP6Source: REIS

Bay Area Employment

150

200Jobs

Value Growth000s Num. # %

50

100

Annual1990 2,9271991 2,914 ‐14 ‐0.5%1992 2,867 ‐47 ‐1.6%1993 2,871 4 0.1%

‐50

0

owth (0

00s)

1994 2,879 8 0.3%1995 2,950 71 2.5%1996 3,060 110 3.7%1997 3,187 128 4.2%1998 3,288 101 3.2%1999 3 378 90 2 7%

150

‐100

50

Job Gro1999 3,378 90 2.7%

2000 3,530 152 4.5%2001 3,495 ‐35 ‐1.0%2002 3,312 ‐183 ‐5.2%2003 3,214 ‐98 ‐3.0%2004 3,196 ‐17 ‐0.5%

250

‐200

‐1502004 3,196 17 0.5%2005 3,226 30 0.9%2006 3,285 59 1.8%2007 3,331 45 1.4%2008 3,318 ‐13 ‐0.4%2009 3,123 ‐195 ‐5.9%

THE CONCORD GROUP7

‐2502010 3,083 ‐40 ‐1.3%L12M 3,106 23 0.7%

Source: US Bureau of Labor Statistics* L12M ending November 2011

Bay Area New Home Sales and Prices

10,513

9 464$600

$650

10,000

11,000

8,0948,334

8,096

7,553

9,0579,464

8,940

7,951$500

$550

8,000

9,000

e (0

00s)

es (0

00s)

7,274

5,8375 417

6,9237,168

6,279

,

6,020$400

$450

6,000

7,000

e M

edia

n Pr

ice

ew H

ome

Sale

4,758

5,3645,417

4,709

3,738 $300

$350

4,000

5,000

New

Hom

e

Bay

Are

a N

e

3,1212,929

3,132

$200

$250

2,000

3,000

THE CONCORD GROUP8Bay Area new home sales based on aggregation of five‐county area: San Francisco, San Mateo, Marin, Alameda and Contra Costa 

Source: DataQuick

Bay Area Market Performance

MetricSan 

Francisco AlamedaContra Costa San Mateo Marin

Total/ Average

Demographics

Households 2012 348 525 549 474 380 208 259 800 103 828 1 641 835Households 2012 348,525 549,474 380,208 259,800 103,828 1,641,835% of Total 21% 33% 23% 16% 6% 100%

Annual HH Growth Rate ('12 ‐ '17) 0.4% 0.4% 0.7% 0.3% 0.3% 0.5%

Median HH Income 2012 $69,224 $67,773 $75,551 $84,030 $86,864 $73,227% of Total 95% 93% 103% 115% 119% 100%% of Total 95% 93% 103% 115% 119% 100%

All New Homes For‐Sale (L4Q)

New Home Closings 507 1,256 1,024 267 33 3,087% of Total 16% 41% 33% 9% 1% 100%

Home Closings Per 1,000 HHs 1.5 2.3 2.7 1.0 0.3 1.9

Median Price $629,609 $424,042 $343,621 $662,393 $647,000 $454,126% of Total 139% 93% 76% 146% 142% 100%

All Resale Home Sales (L4Q)All Resale Home Sales (L4Q)

Resale Closings 5,044 15,406 15,927 6,953 2,876 46,206% of Total 11% 33% 34% 15% 6% 100%

% Buy New vs. Existing 9% 8% 6% 4% 1% 6%

THE CONCORD GROUP9Sources: DataQuick, Claritas, US Census

Median Price $638,105 $326,130 $246,540 $566,418 $600,610 $385,994

Resale Price as % of New Home Price 101% 77% 72% 86% 93% 85%

Bay Area New Home Inventory

Projected RecoveryTotal (Blended Rate)

New Home Sales Same Prod. New Home Sales New LotLast 12 % Chg Price Chg Competitive Months Recovery DemandLast 12 % Chg Price Chg Competitive Months Recovery Demand

Market Months 2005 YOY Inventory Supply Date Rate

United States 352,222 ‐76% 2.0% 672,405 18 4Q 13 4Q 12

Orange County 1,921 ‐67% 1.0% 1,886 10 1Q 13 1Q 12g y , , Q QSan Diego 2,699 ‐80% ‐2.0% 3,225 11 1Q 13 1Q 12San Jose 1,116 ‐68% ‐1.0% 1,612 13 2Q 13 2Q 12Raleigh 5,340 ‐56% ‐4.0% 9,326 19 4Q 13 4Q 12Inland Empire 4,316 ‐87% 1.0% 14,668 22 1Q 14 1Q 13Washington D.C. 10,051 ‐69% 4.0% 21,342 21 1Q 14 1Q 13Dallas 12,003 ‐72% ‐1.0% 28,345 21 1Q 14 1Q 13Santa Clarita 256 ‐82% 0.0% 1,024 21 4Q 13 4Q 12Sacramento 2,163 ‐86% ‐4.0% 9,488 25 2Q 14 2Q 13Seattle 7,070 ‐63% ‐2.0% 15,566 22 1Q 14 1Q 13Seattle 7,070 63% 2.0% 15,566 22 1Q 14 1Q 13Denver 5,137 ‐73% ‐2.0% 12,978 22 1Q 14 1Q 13Tampa 4,806 ‐82% 1.0% 15,473 25 2Q 14 2Q 13Las Vegas (Detached) 3,479 ‐92% ‐4.0% 16,293 25 2Q 14 2Q 13Orlando 4,859 ‐86% 2.0% 25,502 30 3Q 14 3Q 13

THE CONCORD GROUP10Sources: US Census/HUD, NAR, RealtyTrac, HanleyWood, DataQuick, TCG

Phoenix 9,055 ‐83% 0.0% 49,949 33 4Q 14 4Q 13Coachella Valley 453 ‐86% ‐1.0% 9,247 53 3Q 16 3Q 15

Bay Area Future Supply

San San San MateoFrancisco Oakland Alameda Emeryville Dublin Livermore Pleasanton Ramon County

Under Construction 4,521 436 0 240 2,228 788 669 0 275dApproved 19,705 2,172 0 401 3,786 114 339 1,166 623

Pending 8,902 4,414 1,990 180 3,079 0 365 21 10,291

Total Planned 33,128 7,022 1,990 821 9,093 902 1,373 1,187 11,189

THE CONCORD GROUP11Sources: TCG

Bay Area Multifamily Performance

Annual Effective Rent Growth Annual Vacancy

22% 6.0%

14%

16%

18%

20%

4.5%

5.0%

5.5%

6%

8%

10%

12%

l Growth

3.0%

3.5%

4.0%

e Va

cancy

4%

‐2%

0%

2%

4%

Ann

ua

1 5%

2.0%

2.5%

Average

12%

‐10%

‐8%

‐6%

‐4%

0 0%

0.5%

1.0%

1.5%

THE CONCORD GROUP12Source: REIS

‐12% 0.0%

San Francisco Multifamily Performance

Annual Effective Rent Growth Annual Vacancy

20%

22% 6.0%

12%

14%

16%

18%

20%

4.5%

5.0%

5.5%

4%

6%

8%

10%

12%

ual G

rowth

3.0%

3.5%

4.0%

ge Vacan

cy‐4%

‐2%

0%

2%Ann

u

1.5%

2.0%

2.5%

Averag

‐12%

‐10%

‐8%

‐6%

0.0%

0.5%

1.0%

THE CONCORD GROUP13

Source: REIS, TCG

Note: 2011 rent growth (15.1%) based on TCG survey of institutional apartment communities in Core San Francisco neighborhoods

Bay Area Multifamily Performance

Sales Trends (Per Unit)

$240

2011 Highlights

• Expansion of high‐tech and professional and business service sectors

$210

r Unit ($000s)• Rent growth across market pushing 

halted projects forward

C t f t ti t b l 5%

$180Med

ian Price Pe• Cap rates for top‐tier assets below 5%

• Increased demand for high‐quality Class B and value‐add 

M

• Sales trends near 2007 levels

THE CONCORD GROUP14Sources: Marcus & Millichap, CoStar Group, Inc., RCA

$1502007 2008 2009 2010 2011

Bay Area Ownership vs. Renting

$3,800

$4,200

Median Monthly Payment based on Home Ownership

Median Monthly Rent

$3,000

$3,400

$2,200

$2,600

Mon

thly Cost

$1,400

$1,800

M

$600

$1,000

THE CONCORD GROUP15Source: REIS

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12

San Francisco Ownership vs. Renting

$4,200

$4,600Median Monthly Payment based on Home Ownership (1)Median Monthly Rent (2)

$3,400

$3,800

$2,600

$3,000

Mon

thly Cost

$1,400

$1,800

$2,200M

$600

$1,000

$1,400

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12

THE CONCORD GROUP16

(1) Northern San Francisco zip codes

(2) Institutional apartment product in core San Francisco neighborhoods

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12

The Concord GroupNewport Beach • San Francisco • BostonNewport Beach • San Francisco • Boston

Andrew Borsanyi

Principal

415 397 5490415.397.5490

aab@theconcordgroup.com

THE CONCORD GROUP