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By: Anirban Basu Sage Policy Group, Inc. November 2, 2005

The Beginning of the End? Not Necessarily in Washington. Multi-family & Senior Housing Conference. By: Anirban Basu Sage Policy Group, Inc. November 2, 2005. Components of GDP, 2005Q3. Source: Bureau of Economic Analysis.

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By: Anirban Basu Sage Policy Group, Inc. November 2, 2005

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  1. The Beginning of the End? Not Necessarily in Washington Multi-family & Senior Housing Conference By: AnirbanBasu Sage Policy Group, Inc. November 2, 2005

  2. Components of GDP, 2005Q3 Source: Bureau of Economic Analysis

  3. University of Michigan Consumer Sentiment SurveySeptember 2001 through October 2005 Between Aug. 2005 and Sept. 2005, the consumer sentiment index dropped 12.2 points, the largest one-month decline since December 1980. Source: Economy.com, The Conference Board

  4. Retail & Food Services SalesJanuary 2001 through September 2005 Gas Stations: +34.8% in September Y/Y Building Material Dealers: +8.6% in September Y/Y Source: Dismal.com

  5. U.S. Chain Store Sales Growth by Type of Store September 2005 vs. September 2004 Source: Economy.com

  6. U.S. New Home SalesJanuary 1999 through September 2005 Source: Economy.com, Census Bureau

  7. Current Hot Metro Housing MarketsAnnual Existing Single-Family Home Price Appreciation 2005Q2 vs. 2004Q2 Baltimore: 17.5% New York: 18.3% Philadelphia: 12.2% Boston: 6.6% Washington, D.C.: 26.2% Source: National Association of Realtors

  8. Housing Opportunity IndexWashington, D.C. Metro vs. United States1993Q1 through 2005Q2 Source: National Association of Home Builders Housing Opportunity Index: the share of homes affordable for median income—lower index indicates less affordability

  9. Average Home Prices in Select MD Jurisdictions September 2005 Source: Maryland Association of Realtors

  10. 2004 Residential Building Permits per 100 Households (2004 estimates) by select Regions Source: U.S. Census Bureau BWI Corridor includes: Anne Arundel, Howard, Montgomery and Prince George’s counties

  11. 2004 Residential Building Permits per 100 Projected New Households (2004-2009) by select Regions Source: U.S. Census Bureau BWI Corridor includes: Anne Arundel, Howard, Montgomery and Prince George’s counties

  12. Housing Price Appreciation of Single-Family HomesMaryland vs. Virginia vs. United States 1999Q1- 2005Q2 1. Nevada 5. Florida 2. Arizona 6. D.C. 3. Hawaii 7. Maryland 4. California 8. Virginia Source: Office of Federal Housing Enterprise Oversight

  13. Nationally, an inflection point…

  14. NYMEX Crude Oil Future Prices in U.S. DollarsJanuary 2002 through October 25, 2005 As of 11:54am, October 25th: $62.90 Source: Energy Information Administration

  15. NYMEX Heating Oil Future Prices in U.S. DollarsJanuary 2003 through October 3, 2005 Roughly 7.5% of U.S. households use heating oil as their main heat source. Source: Energy Information Administration

  16. U.S. Personal Savings Rate vs. NYMEX Crude Oil Prices, January 2002 through August 2005 Source: Bureau of Economic Analysis; Energy Information Administration

  17. Effects of Katrina on Exports • Roughly 60% of U.S. grain exports leave through New Orleans and neighboring ports; • The Gulf region contains 5 of the top 12 U.S. ports, including South Louisiana, the nation’s top port by cargo volume; • Cargo shipped through ports in the region affected by Katrina is valued at about $150 billion a year; • There is no adequate substitute for the Mississippi River as a shipping route, forcing many to consider rail or road routes. Source: BBC News “US Counting the Cost of Katrina,” September 1, 2005; Forbes

  18. CPISeptember 2005 CPI : +4.7% Core CPI*: +2.0% 35.1% Source: Bureau of Labor Statistics *Core CPI: All items less food and energy

  19. Consumer Price Index vs. Producer Price Index January 1999 through September 2005 Source: Economy.com, Census Bureau

  20. FedSpeak “The consumer price index, or CPI, data released Friday provided some evidence that the very substantial increases in the prices of many petroleum-based products have not found their way into core consumer prices -- at least not yet.” – Donald Kohn, Federal Reserve Board Governor, 10.19.05 “Monetary accommodation can be withdrawn at a faster pace if inflation pressures seem to be building to a greater extent than expected .” – Roger Ferguson, Vice Chairman of the Federal Reserve, 10.18.05.

  21. 10-Year Treasury YieldJanuary 2000 through October 25, 2005 Fed tightening begins Source: Federal Reserve Board

  22. S&P 500 Index Year-to-Date ChangeOctober 25, 2005 Source: Standard & Poors

  23. Now some good news…

  24. Gross Domestic Product1990Q1 through 2005Q3 2005Q3: 3.8% Source: Bureau of Economic Analysis

  25. Net Change in U.S. JobsJanuary 2000 through September 2005 9/05: -35,000 Between March 2001 and July 2002, the nation lost nearly 2.4 million jobs. Over the last 12 months (Sept. to Sept.) the U.S. added 2.161 million jobs Between January 2000 and February 2001, 2,051,000 jobs were created. Source: Economy.com, Bureau of Labor Statistics

  26. National Nonfarm Employmentby Industry Sector GroupsSeptember 2005 v. September 2004Absolute Change +2,161k All Told Bush Scorecard Private Sector: +545,000 Public Sector: +1,042,000 Total: +1,587,000 Source: Economy.com, Bureau of Labor Statistics

  27. BRAC Re-Alignment Winners Source: Economy.com *Direct Impact: the actual number of defense positions affected, including civilian and contract workers. *Indirect Impact: the Defense Department’s estimate of additional jobs affected as a result of changes.

  28. Maryland Nonfarm Employmentby Industry Sector GroupsSeptember 2005 v. September 2004Absolute Change MD Total: +54.2K; +2.1% US Total: +2,161K; +1.6% Source: Bureau of Labor Statistics

  29. Baltimore MSA Nonfarm Employmentby Industry Sector Groups (NSA) September 2005 v. September 2004Absolute Change Baltimore MSA Total: +16.3K; +1.3% MD Total: +54.2K; +2.1% US Total: +2,161K; +1.6% Source: Bureau of Labor Statistics

  30. 20 Fastest Growing Large Metropolitan Areas, Employment, September 2004 vs. September 2005 Source: Bureau of Labor Statistics

  31. Washington, D.C. MSA Nonfarm Employmentby Industry Sector Groups (NSA)September 2005 v. September 2004Absolute Change DC MSA Total: +79.4K; +2.8% US Total: +2,161K; +1.6% Source: Bureau of Labor Statistics

  32. Northern Virginia Nonfarm Employmentby Industry Sector Groups (NSA) September 2005 v. September 2004Absolute Change No. VA Total: +40.2K; +3.3% VA Total: +45.8K; +1.3% US Total: +2,161K; +1.6% Source: Bureau of Labor Statistics

  33. Suburban Maryland Nonfarm Employmentby Industry Sector Groups (NSA) September 2005 v. September 2004Absolute Change Sub. MD Total: +26.3K; +2.8% MD Total: +54.2K; +2.1% US Total: +2,161K; +1.6% Source: Bureau of Labor Statistics

  34. Unemployment Rates, U.S. StatesSeptember 2005 Source: Bureau of Labor Statistics * U.S. unemployment rate: 5.1%

  35. Conclusions on Macroeconomy • National economy has slowed – look for GDP growth in the 3.1% range for the second half of ’05; 2.7% for ’06; • The region’s economy will continue to outperform; • Local economic development offices should be quite busy; • Risks remain (oil/energy, the dollar, interest rates and flu).

  36. H5N1 • The H5N1 strain remained largely in South-East Asia until this summer, when Russia and Kazakhstan both reported outbreaks. • UK authorities announced on 23 October that H5N1 had been detected in a parrot that died in quarantine. Source: MSNBC; BBC News

  37. The Apartment Market

  38. Lowest Apartment Vacancy Rates Among Major Metro Areas, Year-End 2004 Source: Delta Associates

  39. U.S. Apartment Market Tightness Index2001Q1 through 2005Q3 “Tight” markets are those with low vacancy rates and high rent increases Source: National Multi Housing Council A Market Tightness Index reading above 50 indicates that, on balance, apartment markets around the country are getting tighter; a reading below 50 that market conditions are getting looser.

  40. The D.C. Metro Apartment Market is Still the Hottest in the Nation in 2005 • Vacancy rates, at below 2.5%, are lowest in the nation; • Rent growth is up 4.5% from last year, with Class A rent growth increasing 5.7%; • So far in 2005, $635 million of multi-family Class A building sales closed, along with another $95 million of land to construct new apartments or condominiums. Source: Delta Associates

  41. Multi-Family Housing Permits - UnitsMaryland vs. Virginia1980 vs. 2004 Source: Real Estate Center of Texas A&M

  42. Median Condo Resale Prices Source: Delta Associates

  43. New Condominium Prices per Square FootWashington Metro, Year-End 2004 Inside Beltway Outside Beltway Source: Delta Associates

  44. Condo Conversions & Switches Sales in the Washington, DC Metropolitan Area Source: Delta Associates

  45. Demand & Supply Projections in Washington, DC Class A Apartment Market, 12/04 – 12/07 Projections Source: Delta Associates Estimates are probable supply (planned and under construction) after attrition.

  46. Condominium Market Pipeline in the Washington, DC Metropolitan Area, 2003-2004 Source: Delta Associates

  47. A brief word about senior demographics

  48. U.S. Population Estimates by Generation as of 2005 Gen. Y > BB: 0.49% Source: U.S. Census Bureau; ACCRA GI’s: born 1901-1924, Silent: 1925-1946, Baby Boomer: 1947-1964, Generation X: 1965-1979, Generation Y: 1980-2000, Generation Z: 2000-

  49. Current and Projected Elderly Population in the U.S.2000 through 2050 Source: U.S. Census Bureau

  50. Population Growth in the D.C. Metro1990 through 2009* Source: Census Bureau; ACCRA *Data for 2009 are projections

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