CRE Presentation

1
Is There Trouble With The Bubble?
Presented by Gregory H. Leisch, CRE November 14,
2005
2

• Prices Are Way Up

3
U.S. Is Experiencing Record Homeownership
Sources U.S. Census Bureau Economy.com Delta
Associates11/14/05.
4
And Investor Purchases Are Up
Home Purchases by Investors
Sources LoanPerformance and HMDA Delta
Associates 11/14/05.
5
And In Some Markets, Way Up
Condo Purchases in Select Markets
15
20
30
70
85
80
Las Vegas
South Florida
Washington, D.C.
Sources Multifamilyexecutive.com Delta
Associates 11/14/05.
6
Real Estate Returns vs.Investment
AlternativesAs of Mid-Year 2005
Real Estate
Alternatives
Total Return/Year
Source NAREIT, NCREIF, Vanguard, Delta
Associates November 2005.
7
And Second Home Purchases Are Up
of Mortgages for Second Homes
Sources LoanPerformance and HMDA Delta
Associates, 11/14/05.
8
Annual Increase Existing Home ValuesAs of June
2005
Annual House Price Increase
U.S. Average 13.4
Sources OFHEO Delta Associates 11/14/05.
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• Are Prices Sustainable?

10
Trend In RatioMedian Home Price to Median
Household Income1981-2005
Ratio
05
02
Sources Freddie Mac Delta Associates 11/14/05.
11
RatioMedian Home Price to Median Household
Incomeat June 2005Major Metro Areas
Ratio
Sources NAR Economy.com Delta Associates
11/14/05.
12
Types of Mortgages (Second Half of 2004)
Second Half 2004 Originations
Sources MBA Delta Associates 11/14/05.
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• Are Certain Cities at Risk?

14
Payroll Job GrowthLarge Metro Areas12 Months
Ending September 2005
Thousands of New Jobs
Sources BLS, Delta Associates 11/14/05.
15
Average Annual Building Permits2000-2002
Number of Units
Sources US Census Bureau Delta Associates
11/14/05.
16
Barriers to Entry
Sources Delta Associates 11/14/05.
17
Percent of Apartment Sales to Condo
ConvertersApril 2004-March 2005
Sources Real Capital Analytics Delta
Associates 11/14/05.
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Prerequisite to a Burst

• Over production of housing

• Trauma to the local economy

Source Delta Associates 11/14/05.
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Softer Markets Will Begin To Experience

• Supply will begin to outstrip demand
• Price appreciation will decline severely
• Instead of one day sell outs and waiting lines,
  concessions will appear
• Since owners will not be able to sell units as
  quickly as before, they will offer them for rent

Source Delta Associates 11/14/05.
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Is There Trouble With The Bubble?
Presented by Gregory H. Leisch, CRE November 14,
2005