Housing Key to Asset Building Nation s Tangible Assets

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2 Panel Sponsored by

3 Housing Key to Asset Building Nation s Tangible Assets Government Owned 19% Consumer Durables 9% Housing 36% Non- Residential Equipment 14% Other Buildings 22%

4 Thousands 6 Housing Key to Asset Building Median Net Wealth (1998) 5 $5.K Low-Income Owners $1.5K Low-Income Renters

5 Minorities will Dominate Household Share of All Households: 2 Hispanic 9% Black 12% Asian / Other 4% Growth Hispanic 31% Share of Household Growth: 2-21 Asian / Other 13% White 36% White 75% Total Households = 15.5 Million Black 2% Total Growth = 11.7 Million

6 The Dual Mortgage Market Share of Growth in Home Purchase Lending, Lower-Income Borrowers in Lower-Income Neighborhoods Higher-Income Borrowers in Higher-Income Neighborhoods 12% 37% 15% 3% 25% 1% 26% Conventional Prime Government Subprime Manufactured Homes 81%

7 Intergenerational Wealth Transfers Favor Higher Income and White Homebuyers 12 1 Recipient Non-Recipient Percent Receiving Transfers Below $2K $2-5K Income Over $5K Minorities Whites Race/Ethnicity

8 Whites with High School Degrees Have Higher Ownership Rates than College Educated Minorities Percent No High School Diploma Bachelors Degree Only Central City H.S. Diploma Only Suburb 4 2 White Black Hispanic White Black Hispanic

9 Millions of Lowest-Income Owners are Stretching Their Income very Thin Thousands of Lowest-Income Households Elderly Owners Paying 3%-5% of Income for Housing Non-Elderly Owners Paying More Than 5% of Income for Housing Owners Without Mortgages Owners With Mortgages Owners Without Mortgages Owners With Mortgages

10 Household Investments in the US US$ Billions Total Real Estate and Equity Investments Real Estate Equities

11 US Real Estate and Equity Investments Percent 34 Share of Total Household Investment 32 3 Real Estate Equities

12 US Real Estate Price Appreciation Percent Change, Year Ago OFHEO House Price Index

13 Ratio 4.2 Ratio of Median Home Price to Median Income

14 Average 3-Year Fixed Rate Mortgage Percent

15 Housing Affordability and New House Percent 5 45 Sales Thousands 12 New Home Sales [R] Mortgage Payment as a Percent of Income [L]

16 The 2s: Prime Forces for Change Terrorism and Security Issues Weakness in equities; strong housing market Continued De-clustering of industry and middle-class population New Age and Race Demographics Post-nomadism: new social attitudes for the 2s

17 General Conclusions Economic Activity will continue to shift towards suburbs and peripheral regions Areas with family growth and middle class immigrants key to watch High priced nerdistans and boutiques will recover slowly Demand for village environments in older suburbs and peripheral communities likely to grow

18 Turbulence, breakdown of hierarchies inevitable under new conditions human prosperity does not abide long in the same place Herodotus 5th Century B.C.

19 How 9/11 Has Changed America s Sense of Safety and Security "A Great Deal" or "A Good Amount" 37% Unaffected 39% More Secure 13% Less Secure Now than Immediately After 11%

20 Reactions to 9-11 Differ by Area Percent of Respondents Level of Concern 3 A Great Deal 2 1 Not at All Large City Metro Suburb Small Town Rural

21 Post-Nomadism: Americans are less likely Percent 2 18 to move now that Move Every Year In the 197s over 2% of Americans moved every year since then, it has declined

22 Americans Rethinking the Dream? Percent 1 Spiritual over Material Values? 8 Materialism Spiritualism

23 Since 2, Houses have been a Better Index 2=1 15 Investment House Price Index (HPI) Dow Jones Industrials 5 25 NASDAQ Composite

24 Declustering: People, Jobs and Offices to the Periphery New technology makes dispersion of industry more possible Locational Choice more compelling Most people, particularly families, opt for the periphery Suburbs become more diverse, and sophisticated

25 US Job Growth Remains Centered in Low- and Moderate-density Areas

26 Office Space Development Millions of Square Feet 1 8 Central City & Suburban, Downtown Suburban

27 White Households Continue Their Exodus From the Nation s Central Cities

28 Emerging Demographic Trends Rise of Minority Homeowners Immigrants and Minorities to the Periphery Resurgence of families The Emergence of Swinging Suburbs

29 Demographic Change in Bergen-Passaic

30 Strong Household Growth Has Driven the Increase in Minority Homeowners Since 1994

31 Top Ten Home-Buyer Surnames (2) Northern California 1. Nguyen 2. Wong 3. Lee 4. Chen 5. Tran 6. Johnson 7. Smith 8. Singh 9. Garcia 1. Martinez Southern California 1. Garcia 2. Hernandez 3. Lopez 4. Martinez 5. Smith 6. Gonzalez 7. Rodriguez 8. Lee 9. Kim 1. Johnson Los Los Angeles County 1. Garcia 2. Lee 3. Rodriguez 4. Kim 5. Hernandez 6. Lopez 7. Gonzalez 8. Martinez 9. Smith 1. Perez

32 Percent 6 Families on the Rise

33 Percent 4 Whose Kids? traditional family households White Black Asian Hispanic

34 Top Five with Families growth in 9s Percent Las Vegas, NV Naples, FL Mc. Allen, TX Laredo, TX Austin, TX

35 Another Kind of Diversity: Suburb and Central City Household Change by Household Type, 199-2

36 Emerging Winners in Post-Nomadic Era Post-bubble economies with reasonable cost structures and housing Places that can attract and maintain younger workers, particularly families and immigrants Areas with diversified economies Places perceived as safe

37 Likely Losers in Post-Nomadic Economy Overpriced, overexposed, high cost structure cities and regions Places with exceedingly-high housing prices Unattractive areas to younger families and upwardly mobile immigrants Places over-concentrated in one or two sectors Places perceived as vulnerable to attack

38 US Growth Rates of Selected Indicators Percent Population 3.9 HPI Employment Income

39 US Growth Rates of Selected Indicators Percent Population HPI Employment Income

40 US Growth Rates of Selected Indicators Percent Population HPI Employment Income

41 Percent Post Nomadic Centers: Riverside Population HPI Employment Income

42 Percent Post Nomadic Centers: San Diego Population HPI Employment Income

43 Percent Post Nomadic Centers: Las Vegas Population HPI Employment Income

44 Percent Post Nomadic Centers: Houston Population HPI Employment Income

45 California s Inland Empire: A Post-Nomadic Center Rapid Population Growth Relatively low-cost housing and other costs Large upwardly mobile immigrant population Diverse, growing job base

46 The Inland Empire offers the most reasonable median home prices in Southern California Median Home Prices in Southern California (21) in thousands $ $5 $1 $15 $2 $25 $3 $35 $4 Orange Ventura California Los Angeles San Bernardino Riverside

47 Percent Boutiques: New York City Population 3.9 HPI Employment Income

48 Percent Boutiques: New York City Population 3.9 HPI 1.1 Employment 5.5 Income

49 Percent Boutiques: New York City Population 12.2 HPI -.8 Employment 2.1 Income

50 Percent Population Boutiques: Boston HPI Employment Income

51 Percent Population Boutiques: Boston HPI 1. Employment 6.5 Income

52 Percent Population Boutiques: Boston HPI.7 Employment 2.5 Income

53 Percent Population Boutiques: San Francisco HPI Employment Income

54 Percent Population Boutiques: San Francisco HPI.8 Employment 8.1 Income

55 Percent Population Boutiques: San Francisco HPI -2.5 Employment 2.1 Income

56 Percent Population Boutiques: Seattle HPI Employment Income

57 Percent Population Boutiques: Seattle HPI 1.8 Employment 7.4 Income

58 Percent Population Boutiques: Seattle HPI -2.1 Employment 2. Income

59 Percent Population Nerdistans: Austin HPI Employment Income

60 Percent Population Nerdistans: Austin HPI 3.6 Employment 11. Income

61 Percent Population Nerdistans: Austin HPI.4 Employment 3.4 Income

62 Percent Population Nerdistans: Raleigh HPI Employment Income

63 Percent Population Nerdistans: Raleigh HPI 2.7 Employment 8.3 Income

64 Percent Population Nerdistans: Raleigh HPI.4 Employment 4.2 Income

65 Percent Population Nerdistans: San Jose HPI Employment Income

66 Percent Population Nerdistans: San Jose HPI 1.8 Employment 9.9 Income

67 Percent Population Nerdistans: San Jose HPI -3.5 Employment -3.8 Income

68 Trends to Watch in the Future Continued Growth of Exurbs and Suburbs Changing Population Mixtures in Outer rings Slow revival of most desirable boutique cities Growing popularity of Urban Village mixed use communities in older suburbs, the exurbs and even some core areas

69 The Urban Villages are emerging in many suburbs and peripheral areas. Older Suburban Model Village Development Model New Town Model New Paradigm Sherman Oaks, CA Studio City, CA Downers Grove, Il Claremont, CA Alexandria, VA Valencia, CA Woodlands,TX Playa Vista, CA Dos Lagos, CA

70 Percent Latino Population in California Share of State Total

71 Millions Latino Population in California Projected

72 Percent California Homeownership Rate By Ethnicity (2) 57. All - Households 65. White 57. Asian 41. Latino 39. African-American

73 Top Ten California Counties with Latino Home Buyers (21) 5, 1, 15, 2, 25, 3, Los Angeles 24,15 San Bernardino Riverside Orange San Diego 7,5 6,95 6,42 6,9 Sacramento Santa Clara Fresno Ventura Contra Costa 3,367 2,894 2,622 2,619 2,575

74 Percent Latino Homeownership Rates in California (197-2)

75 Length of Current Ownership % 5% 1% 15% 2% 25% 3% 35% 4% 45% 5% 4 yrs. or less 44% 5 to 9 yrs. 18% 1 to 14 yrs. 13% 15 or more yrs. 25%

76 Top Five Reasons For Purchasing a Home More Room for a Growing Family 39% Home as Investment Wanted to be Property Owner Independence Did Not Want to Rent 22% 19% 17% 14%

77 Experiences of Homeownership Strongly Agree with Following Statements 8% 82% 84% 86% 88% 9% 92% Owning is Better for Raising a Family 9% Owning is a Good Financial Investment for Me 89% Owning Provides Me More Independence 87% Owning Requires More Responsibility 87% Owning Provides Me a Sense of Security/Stability 84%

78 Top Challenges to Homeownership Finding a House I Liked 36% 4% Understanding Home-Buying Process 3% 38% Application/Paperwork Process 25% 34% Obtaining the Downpayment 26% 31% Finding a Good Realtor/Agent Finding a Community I Liked Establishing Good Credit 13% 14% 14% 23% 28% 3% Foreign-Born U.S.-Born Selecting/Finding a Lender 1% 24% Obtaining Approval for Loan 29% 37% Working with Realtor/Agent 9% 16% % 5% 1% 15% 2% 25% 3% 35% 4% 45%

79 Percent of Household Income Spent Percent 3 25 on Monthly Mortgage US Born Avg. = 32.21% Foreign Born Avg. = 42.55% <2% 21-3% 31-4% 4%+

80 Percent Down Payment Amount Used to Purchase Home <$1K $1 K- $5K $5K - $1K $1K - $2K $2K+

81 Rent Payments As a Percent of Monthly Income Over 4% 34% 31-4% 13% 21-3% 13% 2% or Less 12% % 5% 1% 15% 2% 25% 3% 35% 4%

82 Renters Likely to Purchase in Next Five Years Extremely Likely 14% Very Likely 23% =69% Somewhat Likely 32% Not Very Likely 12% Not at All Likely 19% =31%

83 California's Single-Family Home Sales Thousands of Units (197-21)

84 California Median Home Prices US$ Thousands Single-Family Homes

85 45 California Housing Affordability Percent Who Can Afford a Median-Priced Home Percent

86 Overcrowded and Substandard Renter Households in Metropolitan California (1999) Overcrowded (more than 1 person per room) Severely overcrowded (more than 1.5 persons per room) Overcrowded Latino Households Substandard Conditions Severely Substandard Conditions Percent of Households 13% 4% 33% 12% 4% Number of Households 55, ,857 43, , ,11