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U.S. Apartment Market Outlook
Economic, Demographic Drivers and Apartment
Market Performance
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U.S. Median Home Price Trend Shifting Existing
Single-Family Homes
Data points growth from 2001-2006
68
44
38
25
Median Home Price
29
Through August
Sources Marcus Millichap Research Services,
Economy.com, National Association of Realtors
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U.S. Housing Market Cooling EvidentMonths
Supply of Inventory Rising
75.5
Y-O-Y Change
55.3
No. of Months
Sources Marcus Millichap Research Services,
National Association of Realtors
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Housing Slow Down Impacting Overall Economy -
Existing Home Sales
Year-Over-Year Percent Change
Through July
Sources Marcus Millichap Research Services, NAR
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Economic Down-Shift Already Under Way (Growth in
GDP and Jobs Slowing)
Monthly Job Growth
Gross Domestic Product
Jobs in Thousands
Estimate
Through August
2007 Monthly Average Forecast
Sources Marcus Millichap Research Services,
Economy.com
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Inflation Pressures Easing Along with Economic
Slowdown
Sources Marcus Millichap Research Services,
Federal Reserve
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The Fed Holds Rates Steady for 4th Consecutive
Month 10-Year Dips
Through September 22, 2006
Sources Marcus Millichap Research Services,
Economy.com
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Vacancy Recovery Fueled by Job Growth, Low
Housing Affordability, Inventory Removal
Completions (Thousands of Units)
Vacancy
Forecast
Sources Marcus Millichap Research Services,
Reis, U.S. Census Bureau
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U.S. Apartment Market Recovery Broad-Based
Vacancy by Region Q2- 2006, YOY Change
Northeast 4.4 10 Bps
Midwest 7.0 -20 Bps
West 4.8 -30 Bps
South Atlantic 6.0 -50 Bps
Southwest 7.4 -270 Bps
Sources Marcus Millichap Research Services,
Reis
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Top 15 U.S. Apartment Markets By Improvement in
Vacancy Rate 2Q2006
Sources Marcus Millichap Research Services,
Reis
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Apartment Rents Finally Registering Healthy
Increases
Forecast
Sources Marcus Millichap Research Services,
Reis
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Top 15 U.S. Apartment Markets By Improvement in
Effective Rent 2Q2006
Sources Marcus Millichap Research Services,
Reis
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Top 10 and Bottom U.S. Apartment Markets By
Vacancy Rate 2007
Sources Marcus Millichap Research Services,
OConnor Associates, Reis
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Apartment Price and Rent Growth Trends
Year-Over-Year Change
As of 1H2006
Sources Marcus Millichap Research Services,
CoStar Group, Inc., Reis
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U.S. Condo Conversion and Ground-Up Development
Cycle Moving Past Peak
No. of Units (000s)
Forecast
Sources Marcus Millichap Research Services,
Dodge, Real Capital Analytics
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2007 Economic and Apartment Market Outlook

• Economic Slowdown Most Likely to Continue
• Employment Growth Slower but Positive
• Recession Unlikely, but Risks Are Higher
• Housing Correcting More than Expected
• Apartment Fundamentals to Remain Healthy
• Renter Demand Still Strong
• Some Competition From Condo Overhang in Select
  Markets
• Rent Growth Moderately Slower (Fewer Jobs, New
  Supply, Lack of Concession Burn)
• Long-term Risk Factors Capital Market Shock,
  Supply Risk in Select Markets

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