Rental Housing – Apartment Markets

1. Rental Housing –Apartment Markets William Ktsanes Director of Research RealFacts

2. Outline • Sources of private vendor apartment data • RealFacts • History, scope, methodology and clients • California’s apartment markets • Southern MSAs vs. Northern MSAs • Bay Area’s apartment markets • San Francisco, San Clara, Alameda and San Mateo County rents • Two Interesting trends • Single-family home prices vs. apartment rents • Condo Conversions

3. Words of Wisdom forHousing Data Users… “As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don't know we don't know.”

4. Words of Wisdom forHousing Data Users… “As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don't know we don't know.” - Donald Rumsfeld, Secretary of Defense

5. Private Data Providers • National Multifamily Housing Council publishes on their website (www.nmhc.org > Research and Statistics > Sources of Apartment Data) an extensive list of private sources of apartment data. • Their Directory of Private Data Providers identifies companies providing information on apartment market conditions and demographics in local areas throughout the country. • Some private data providers “recycle” government-collected “pubic” data from sources such as the US Census Bureau, Bureau of Labor Statistics and HUD; others conduct their own surveys and collect proprietary data.

6. National Vendors/Providers Claritas CB Richard Ellis Clayton-Fillmore First-American Real Estate Solutions M/PF Research Marcus & Millichap National Real Estate Index NPA Data Services Real Capital Analytics Reis Torto Wheaton Research Regional Vendors/Providers Delta Associates (Washington DC and Baltimore) Dupre + Scott Apartment Advisors (Western Washington state) Monarch Data (Texas) Pierce Eislen (Southern California) RealFacts (Western US) Tracy Cross and Associates (Chicago) Triad Research and Consulting (Florida) A few Private-Sector Apartment Data Providers

7. RealFacts has been collecting, analyzing and publishing data relevant to multifamily housing markets for fifteen years.  • We are a leading source of timely, property-specific data for the multifamily industry. • Each quarter we survey the individual rents, occupancy and ownership of over 10,000 properties in primarily Western states. • Clients include investors, owners, property managers, brokers, lenders and government officials. • A subscription to our quarterly data and web-based software RealFactsonline provide tools to quickly produce market overviews, market comparisons, rental trends, rental comps, sales trends, sales comps, property profiles, and ownership information, as well as customized reports and analyses for user-defined submarkets and property groups. 

8. MSAs with Greatest Changes2nd Quarter 2004 - Western US

9. San Diego MSA Average 2Q04 rents – $1,197 Year-over-year change in rents - up 3.3% Over last four years – up 21.2% Los Angeles-Orange MSA Average 2Q04 rents – $1,336 Year-over-year change in rents - up 3.7% Over last four years – up 19.3% Inland Empire (Riverside MSA) Average 2Q04 rents – $978 Year-over-year change in rents - up 5.9% Over last four years – up 29.0% Sacramento MSA Average 2Q04 rents – $902 Year-over-year change in rents - up 2.6% Over last four years – up 22.4% San Francisco-Oakland MSA Average 2Q04 rents – $1,310 Year-over-year change in rents - down 1.0% Over last four years – down 12.5% San Jose-Sunnyvale MSA Average 2Q04 rents – $1,271 Year-over-year change in rents - down 2.8% Over last four years – down 27.1% California Overview

10. San Francisco County Average 2nd quarter 2004 rents – $1,790 Last quarter change in rents – up 1.9% Year-over-year change in rents - up 1.5% Over last four years – down 18.8% Alameda County Average 2nd quarter 2004 rents – $1,201 Last quarter change in rents – down 0.8% Year-over-year change – down 1.9% Over last four years – down 10.8% Santa Clara County Average 2nd quarter 2004 rents – $1,271 Last quarter change in rents – 0.6% Year-over-year change - down 1.8% Over last four years – down 27.2% San Mateo County Average 2nd quarter 2004 rents – $1,378 Last quarter change in rents – none Year-over-year change – down 2.0% Over last four years – down 20.8% Bay Area Overview

11. Apartment Rents vs. Home Prices

12. Condo Conversions • “Rondos” – Rental units converted into condominiums • Mostly happening in San Diego and Las Vegas (estimated to be about 4,000 units in San Diego) • Starting to occur in Los Angeles • Essex on Lake Merritt is a high-profile, high-end example in the Bay Area • Not yet a big impact on apartment markets • Buyers are largely coming out of the ranks of renters • Likely to slow down considerably as interest rates rise • “Condo Craze” is shaping current development • In some hot markets condos pencil-out where rental apartments do not