Jeff Meyers, President Meyers LLC, a Kennedy Wilson Company (310)887-6297 Allen Matkins Real Estate Development Law Update Land and Home(s) No Longer Four Letter Words? February 27, 2013
Nov 15, 2014
Jeff Meyers, PresidentMeyers LLC, a Kennedy Wilson Company(310)887-6297
Allen MatkinsReal Estate Development Law
Update
Land and Home(s)No Longer Four Letter Words?
February 27, 2013
2009 & 2010
2011 & 2012
2013
New Home Market Trends
Thursday, September 28, 2006
Michelle WolkoysPrincipalBuilder Advisors, LLC (Meyers Group)(949) 640-0050 x207(714) 357-6005 mobile
E/P RATIOCalifornia
Source: NAR; CAR; www.meyersllc.com
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
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1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
F20
12F
2013
F20
14F
2015
F20
16F
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30State of California Price Appreciation and E/P Ratio
CA Price Appreciation 40-Year CA Historical Average E/P
Year
Year
-ove
r-Ye
ar P
rice
Chan
ge
E/P
Ratio
8.1% Annual Average
New Home Market TrendsBAY AREA HOUSING MARKETExisting Single-Family Median Sales Price (Q4 2012 vs. Q4 2011)
SOURCE: DataQuickNote: Median prices of completed sales of existing single-family homes.
New Home Market TrendsAgenda
1. The Recovery
2. A Few Samples
3. What to Watch For
New Home Market Trends1. The Recovery
Source: BLS, Moody’s Analytics
Excess Supply – REO is moving through system
Stopped New Construction – Five Year Absence
Economic Fundamentals – Improving
Still some mixed macro signals, but from the ground up, this recovery is gaining momentum.
New Home Market TrendsAgenda
1. The Recovery
2. A Few Samples
3. What to Watch For
New Home Market TrendsANNUAL NONFARM JOB CHANGES BY STATEDecember 2012 vs. December 2011
Source: BLS
+225,900
+260,800
+123,600
New Home Market Trends
Source: Indeed.com
Rank (Last Qtr Rank) Metropolitan Area Job Postings per 1000 People
1 (1) San Jose, CA 153
2 (2) Washington, DC 112
3 (3) Raleigh, NC 106
4 (4) Hartford, CT 102
5 (5) Boston, MA 92
6 (6) Baltimore, MD 88
7 (7) Denver, CO 82
8 (8) San Francisco, CA 77
9 (10) Seattle, WA 73
10 (9) Austin, TX 73
Job Trends – Job Postings per Capita
2. A Few Samples
New Home Market Trends
Source: Wells Fargo Securities
California Employment Growth by Industry3-Month Moving Average, Nov. 2012
2. A Few Samples
New Home Market Trends2. A Few Samples
Source: Wells Fargo Securities
California Employment Growth by County3-Month Moving Average, Nov. 2012
New Home Market Trends2. A Few Samples
Source: Census
California Single Family Permits (in thsds)
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
20
40
60
80
100
120
140
160
180
200Recession Recession Recession Recession
Added 13.3M people since ‘82
New Home Market Trends
FINISHED LOT VALUES, LOS ANGELES COUNTYMapped
Source: DQ News, Meyers Research
Assumes a home size of 2,000 square feet and directs of $45/ft. Soft costs estimated at 20% with a targeted profit margin of 15%.
New Home Market Trends
FINISHED LOT VALUES, LOS ANGELES COUNTYTop and Bottom Markets
Source: DQ News, Meyers Research
Community Name
ZIP CodeMedian Resale
Home Price/ Sq. Ft
Est. Median New Home Price/ Sq. Ft (+
15%)
Est. Median New Home Price (2,000
SF)
Est. Finished Lot Value
Finished Lot, % Home Price
Snta Monica 90402 $1,042 $1,198 $2,396,600 $1,467,790 61%Snta Monica 90403 $952 $1,095 $2,189,600 $1,333,240 61%LA/Brentwd 90049 $856 $984 $1,968,800 $1,189,720 60%Beverly Hills 90212 $855 $983 $1,966,500 $1,188,225 60%Venice 90291 $816 $938 $1,876,800 $1,129,920 60%Snta Monica 90405 $810 $932 $1,863,000 $1,120,950 60%P Palisades 90272 $805 $926 $1,851,500 $1,113,475 60%Malibu 90265 $801 $921 $1,842,300 $1,107,495 60%Beverly Hills 90211 $768 $883 $1,766,400 $1,058,160 60%Hermosa Bh 90254 $742 $853 $1,706,600 $1,019,290 60%
Palmdale 93551 $97 $112 $223,100 $55,015 25%Lancaster 93536 $87 $100 $200,100 $40,065 20%Littlerock 93543 $84 $97 $193,200 $35,580 18%Palmdale 93550 $79 $91 $181,700 $28,105 15%Palmdale 93552 $78 $90 $179,400 $26,610 15%Lancaster 93535 $72 $83 $165,600 $17,640 11%Lancaster 93534 $71 $82 $163,300 $16,145 10%Palmdale 93591 $66 $76 $151,800 $8,670 6%Llano 93544 $57 $66 $131,100 ($4,785) -4%Pearblossom 93553 $50 $58 $115,000 ($15,250) -13%
Assumes a home size of 2,000 square feet and directs of $45/ft. Soft costs estimated at 20% with a targeted profit margin of 15%.
New Home Market TrendsAgenda
1. The Recovery
2. A Few Samples
3. What to Watch For
Peak to Trough
Source: RCA and Moody’s Investors Service
MARKET SHARE BY GENERATIONGen Y captures 25% of population
Source: Census
Generation Silent Baby Boomers GenerationX
Echo Boom/Gen Y
Years Born 1925 – 1945 1946 – 1964 1965 – 1979 1980 - 2000
Age Range 65 to 85 46 to 64 31 to 45 10 to 30
US Population 34M 82M 62M 84M
% of Population 13% 31% 23% 32%
PREFERRED COMMUNITY TYPENational Association of Realtors 2011
SOURCE: NAR
City - Downtown Area
City - Residential Area
Suburb - mix of housing, businesses
Suburb - housing only
Small Town
Rural Area
0% 5% 10% 15% 20% 25% 30%
8%
11%
28%
12%
18%
22%
If you could choose where to live, in which type of the following locations would you most like to live?
City + Suburban Mixed-Use = 47%
New Home Market Trends
Thursday, September 28, 2006
HOUSING AFFORDABILITY & NEW HOME SALESUnited States
Source: CAR, Census, Freddie Mac
*Housing Affordability Index score thru Q3 2012
19881989
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20082009
20102011
*2012
0
200
400
600
800
1,000
1,200
1,400
20
30
40
50
60
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80
90
US New Home Sales US Affordability
NEW
SFD
HO
ME
SALE
SH
OU
SING
AFFORDABILITY IN
DEX
Annual Mortgage Rates:1988 – 10.34 %1993 – 7.31%2002 – 6.54%2009 – 5.04%
Currently – 3.41%
New Home Market Trends
AVERAGE FICO OF AGENCY MBS ORIGINATIONSSeptember 2003 – October 2012
Source: CoreLogic Loan Performance
New Home Market TrendsCASH BUYERSCalifornia
Source: DQ News
2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
100,000
200,000
300,000
400,000
500,000
600,000
700,000
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
10.3% 10.7% 11.0%10.1%
13.1%
20.1%
27.6%29.4%
31.3%
33.8%
All Resales % Cash
Tota
l Res
ales
% o
f Cas
h Bu
yers
New Home Market TrendsCASH BUYER ACTIVITY IN CALIFORNIAMarket Share by Region
Source: DQ News
Mountains*
North Calif*
Coast
Bay Area
Central Valley
Southern California
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
1.49%
2.41%
2.90%
18.00%
21.71%
53.48%Chart Title
New Home Market TrendsCASH BUYER ACTIVITY IN SO CALMarket Share by County
Source: DQ News
Imperial
Ventura
Orange
San Bernardino
San Diego
Riverside
Los Angeles
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
1%
3%
14%
14%
17%
20%
32%Chart Title
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
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1988
1989
1990
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1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
F20
14F
2015
F20
16F
2017
F20
18F
2019
F
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
58.0
59.0
60.0
61.0
62.0
63.0
64.0
65.0
66.0
67.0
68.0
69.0
70.0
Multi-Family Homeownership Rate
Perm
its (i
n th
ousa
nds)
Hom
eow
ners
hip
Rate
Historical Total Annual Permit Average = 469
1970’s6.7 Million
1990’s3.1 Million
2000’s3.9 Million
New Home Market TrendsMULTIFAMILY PERMITSHistory and Forecast
Source: Census; Meyers LLC
1960’s 4.9 Million
1980’s5.6 Million
2010’s (Forecast)4.3 Million
New Home Market TrendsMULTIFAMILY PERMITSTop 10 By Metro Area, 2012 vs 2011
Source: Census
Rank Metro Area 2012 2011 % Ch.
1 NY-North NJ-Long Island NY-NJ-PA 20,137 15,138 33.02%2 Dallas-Fort Worth-Arlington TX 15,976 10,443 52.98%3 Houston-Baytown-Sugar Land TX 14,883 8,127 83.13%4 Los Angeles-Long Beach-Santa Ana CA 12,486 10,197 22.45%5 Wa. DC-Arlington-Alexandria DC-VA-MD-WV 11,382 9,633 18.16%6 Austin-Round Rock TX 11,249 4,025 179.48%7 Seattle-Tacoma-Bellevue WA 9,400 5,150 82.52%8 Denver-Aurora CO 8,156 2,902 181.05%9 Miami-Fort Lauderdale-Miami Beach FL 7,578 3,279 131.11%
10 Raleigh-Cary, NC 6,460 1,613 300.50%
New Home Market Trends
TOP 10 RENTAL MARKETS IN CALIFORNIARanked by Average Rent
Source: RealFacts
Area Avg. Rent Yr/Yr Change Purchase Power Avg. OccupancySanta Monica $3,041 2.10% $656,640 96.70%San Francisco $2,741 -0.70% $591,861 95.60%
Palo Alto $2,714 -1.00% $586,031 95.50%Los Gatos $2,455 0.40% $530,105 96.40%
Marina del Rey $2,454 0.70% $529,889 95.90%Berkeley $2,368 -12.10% $511,319 86.10%
Cupertino $2,357 0.70% $508,944 94.90%Foster City $2,307 -0.30% $498,148 95.20%
South San Fran. $2,296 -0.40% $495,773 95.10%Newport Beach $2,263 -0.90% $488,647 94.60%
Note: only includes areas with at least 5 communities
New Home Market Trends
TOP SELLING ATTACHED PROJECTSVicino by KB Home, San Jose, CA
Source: The Ryness Report, February 17, 2013
• 3 floor plans ranging from 1,507 – 1,812 SF• 3 Bedrooms with 3 or 3.5 Bathrooms• Mid $700,000s to low $800,000s• YTD/Overall sales: 21/51 homes• YTD/Overall monthly sales rate: 13.0/9.14
CAPITAL STACKTerm Sheet Summary
SOURCE: Meyers LLC
• Co-invests: 10% to 20%• Preferred Returns: 12% (Pari Passu)• Waterfalls: 75/25 to a 22%-25% IRR with
a multiple of 1.5X• Capital Management Fees: 0.5% to 1%• G&A Fees: 3%
Lease up for NEW projects will continue to be robust
Trended Rents will increase at a decreasing rate and Home Prices will accelerate
Lease up for NEW projects will continue to be robust
Job growth will continue but probably at a decreasing rateMultifamily development will increase over the next several years
New Home Market Trends4. Going Forward
Consensus Forecasts:
Jeff Meyers, PresidentMeyers LLC, a Kennedy Wilson Company(310)887-6297
Allen MatkinsReal Estate Development Law
Update
Land and Home(s)No Longer Four Letter Words?
February 27, 2013