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Dougbibby 100930085051 Phpapp02
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Transcript of Dougbibby 100930085051 Phpapp02
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September 2010
State of the Apartment Market
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1
1.6%
3.7%
5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
4Q09 1Q10 2Q10
GD
P %
s
Real GDP Consumption Investments Net Exports Government
2.1% Excl. Growth inPrivate Inventories
1.2% Excl. Growth in Private Inventories
1.0% Excl. Growth in Private Inventories
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-15%
-10%
-5%
0%
5%
10%
15%
20%
1970 1975 1980 1985 1990 1995 2000 2005 2010
CPI-Total
CPI-Core
Inflation Not a Threat Yet
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-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48
Months from Onset of Recession
1948 1953 1957 1960 1970 1973 1980 1981 1990 2001 2007
Jobs Lost in Recessions As Share of Peak2007 excluding temporary Census jobs
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0
25
50
75
100
Jul1999
Jan2001
Jul2002
Jan2004
Jul2005
Jan2007
Jul2008
Jan2010
NMHC Market Tightness Index
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1990 1995 2000 2005 2010
0%
1%
2%
3%
4%
5%
6%
Vacant (000s, left scale)
Vacant share (right scale)
Still Too Many Vacant Housing Units
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0
5
10
15
20
2000 2002 2004 2006 2008 2010
Single-family
Condo
Housing Inventory Remains High(Months’ Supply of Existing Homes)
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Young Adults Living at HomeTrend Suggests Significant Pent-Up Demand
16
17
18
19
20
21
1983 1987 1991 1995 1999 2003 2007
25%
26%
27%
28%
29%
30%
Number (millions)
Share
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Will we finally see sweeping change in favor of the density, efficiency, flexibility and affordability of apartment living?
If so, what will drive it?
1. Population growth2. Echo boomers (and Millennials)3. Changing household composition4. Continued immigration5. Environmental concerns 6. Affordability (in the post-crash world)7. Bloom off the rose of homeownership
Why the Long-Term Outlook for U.S. Apartments Should Be Favorable
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• The U.S. population is expected to increase 33% by 2030 to 376 million.
• That’s 94 million more people than there were in 2000.
• To accommodate that growth, we need 60 million new housing units.
Population Growth
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• 78 million strong, 45 million households.
• If only a small percentage migrate to rental housing, the new demand is tremendous.
Relocation Choices of Seniors
Renter Before Move 20%
Renter After Move 59%
Baby Boomers
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Echo Boomers and Millennials
1
2
3
4
5
1933 1943 1953 1963 1973 1983 1993 2003
Millions
A Continuing Stream of Young People
Source: National Center for Health Statistics.
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Immigration Set a New Record In the First Decade of the 21st Century
0
2
4
6
8
10
12
1820s 1840s 1860s 1880s 1900s 1920s 1940s 1960s 1980s 2000s
Millions
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Changing Household Composition• For 50 years, married couples with children drove
America’s housing industry. But now they account for less than 22% of all households and that number is falling
Household Type 1970 2030
HH with Children 45% 27%
HH without Children 55% 73%
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Household Growth, 2000 - 2040
14% 86%
With Children Without Children
47 million7 million
Changing Household Composition
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Declining Homeownership Rates
• 2009 Survey: 49% don’t believe homeownership is a realistic wealth-building strategy.
• It costs $200 less per month, on average, to rent than to own.
• A $100 investment in housing in 1985 would be worth $240 today, while that same $100 invested in stocks would be worth $1,116—more than four-and-a-half times as much.
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60%
62%
64%
66%
68%
70%
1995 2000 2005 2010 2015
62%
64%
Declining Homeownership Rates
» Source: Harvard University, State of the Nation’s Housing 2009
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Future Housing Demand: Shifting Tenure Implications
U.S. Household Growth Projection2008 - 2015
» Source: Prof. Chris Nelson, Univ. of Utah
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Supply Trends
Period Starts, Annual Average
Completions, Annual Average
1999 – 2008 297,000 278,000
2009 97,000 259,000
2010 (est.) 85,000 135,000
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Multifamily Mortgage Credit Extended,2008Q1 – 2010Q1
-40
-20
0
20
40
60
80
Total Banks LifeCos.
GSEs Ginnie CMBS Other
$ Billions
Source: Federal Reserve Board; NMHC.
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0%
20%
40%
60%
80%
100%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Excess Reserves (shareof total reserves)
Bank Lending Not Back To Normal
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0
5
10
15
20
25
30
35
40$ Billions
U.S. Quarterly Apartment Transactions
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$0
$20
$40
$60
$80
$100
$120
$140
2001 2003 2005 2007 2009
5%
6%
7%
8%
9%
10%
Price Per UnitCap Rate
(000)
National Apartment Price and Cap Rates
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Financial Regulatory Reform: Impact on Commercial Real Estate
• Added regulation and higher costs, which could be passed on to borrowers, but most onerous provisions revised. o Risk Retention Provisionso CMBS Ratings Changeso Costly “End-User” Derivatives Regulations
• More than 200 regulatory rulemaking procedures expected to implement it. (Sarbanes-Oxley had 16!)
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Next Up: GSE Reform
• Making the case for multifamily o We weren’t part of the problem – don’t throw the
baby out with the bath water!o The nation is increasingly relying on rental housing,
but private capital cannot meet 100% of the industry’s needs
o A federally backed secondary market is critical to the industry’s health
• The process: a marathon, not a sprint.
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Other Legislative Threats
• Carried Interest• National Energy Efficiency Building Code/Green Building
Mandates • Card Check/Unionization Legislation• Tax Law Changes
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Conclusion
• Short-Term: Jobs, Jobs, Jobs
• Longer Term: Positive Demographics
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1
Douglas M. BibbyPresidentNational Multi Housing Council
Web Site: www.nmhc.org E-Mail: [email protected] Phone: 202/974-2300
Thank You