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Housing Key to Asset Building Nation s Tangible Assets Government Owned 19% Consumer Durables 9% Housing 36% Non- Residential Equipment 14% Other Buildings 22%
Thousands 6 Housing Key to Asset Building Median Net Wealth (1998) 5 $5.K 4 3 2 1 Low-Income Owners $1.5K Low-Income Renters
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
The Dual Mortgage Market Share of Growth in Home Purchase Lending, 1993-2 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%
Intergenerational Wealth Transfers Favor Higher Income and White Homebuyers 12 1 Recipient Non-Recipient Percent Receiving Transfers 8 6 4 2 Below $2K $2-5K Income Over $5K Minorities Whites Race/Ethnicity
Whites with High School Degrees Have Higher Ownership Rates than College Educated Minorities Percent 1 8 6 No High School Diploma Bachelors Degree Only Central City H.S. Diploma Only Suburb 4 2 White Black Hispanic White Black Hispanic
Millions of Lowest-Income Owners are 14 12 1 8 6 4 2 Stretching Their Income very Thin Thousands of Lowest-Income Households Elderly Owners Paying 3%-5% of Income for Housing Non-Elderly Owners Paying More Than 5% of Income for Housing Owners Without Mortgages Owners With Mortgages Owners Without Mortgages Owners With Mortgages
Household Investments in the US US$ Billions 14 12 Total Real Estate and Equity Investments 1 8 6 Real Estate Equities 4 2 75 8 85 9 95
US Real Estate and Equity Investments Percent 34 Share of Total Household Investment 32 3 Real Estate 28 26 24 Equities 22 2 18 75 8 85 9 95
US Real Estate Price Appreciation Percent Change, Year Ago 1 8 6 4 2 OFHEO House Price Index -2 9 91 92 93 94 95 96 97 98 99 1 2
Ratio 4.2 Ratio of Median Home Price to Median Income 4. 3.8 3.6 3.4 3.2 75 8 85 9 95
Average 3-Year Fixed Rate Mortgage Percent 18 16 14 12 1 8 6 4 75 8 85 9 95
Housing Affordability and New House Percent 5 45 Sales Thousands 12 New Home Sales [R] 1 4 8 35 6 3 4 25 2 2 75 8 Mortgage Payment as a Percent of Income [L] 85 9 95
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
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
Turbulence, breakdown of hierarchies inevitable under new conditions human prosperity does not abide long in the same place Herodotus 5th Century B.C.
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%
Reactions to 9-11 Differ by Area Percent of Respondents 6 5 4 Level of Concern 3 A Great Deal 2 1 Not at All Large City Metro Suburb Small Town Rural
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 16 14 12 1 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99
Americans Rethinking the Dream? Percent 1 Spiritual over Material Values? 8 Materialism 6 4 42. 52. 2 33. Spiritualism 1998 2 22
Since 2, Houses have been a Better Index 2=1 15 Investment 125 1 75 House Price Index (HPI) Dow Jones Industrials 5 25 NASDAQ Composite 2 21 22
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
US Job Growth Remains Centered in Low- and Moderate-density Areas
Office Space Development Millions of Square Feet 1 8 Central City & Suburban, 1986-99 Downtown Suburban 6 4 2 86 87 88 89 9 91 92 93 94 95 96 97 98 99
White Households Continue Their Exodus From the Nation s Central Cities
Emerging Demographic Trends Rise of Minority Homeowners Immigrants and Minorities to the Periphery Resurgence of families The Emergence of Swinging Suburbs
Demographic Change in Bergen-Passaic
Strong Household Growth Has Driven the Increase in Minority Homeowners Since 1994
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
Percent 6 Families on the Rise 4 5.7 2-2 -2.3-1.8-4 197-198 198-199 199-2
Percent 4 Whose Kids? traditional family households 35 3 33.4 35.8 25 2 22.8 15 16. 1 White Black Asian Hispanic
Top Five with Families growth in 9s Percent 8 7 75.4 6 5 5.8 4 43.7 41.5 41.5 3 Las Vegas, NV Naples, FL Mc. Allen, TX Laredo, TX Austin, TX
Another Kind of Diversity: Suburb and Central City Household Change by Household Type, 199-2
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
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
US Growth Rates of Selected Indicators Percent 16 14 12 1 8 6 4 2-2 1.2 1992-2 2-22 1.1 Population 3.9 HPI 1992-22 8. 1.7 -.2 Employment 5.7 3.4 Income
US Growth Rates of Selected Indicators Percent 16 14 12 1 8 6 4 2 1992-2 5.7 3.9 1.2 1.7-2 Population HPI Employment Income
US Growth Rates of Selected Indicators Percent 16 14 12 1 8 6 4 2-2 Population HPI 2-22 8. 3.4 1.1 -.2 Employment Income
Percent 16 14 12 1 8 6 4 2 Post Nomadic Centers: Riverside 2-22 12. 5.1 3.7 3.3-2 Population HPI Employment Income
Percent 16 14 12 1 8 6 4 2 Post Nomadic Centers: San Diego 2-22 14.1 4.9 2. 1.4-2 Population HPI Employment Income
Percent 16 14 12 1 8 6 4 2 Post Nomadic Centers: Las Vegas 2-22 7.4 4.9 5.2 3.3-2 Population HPI Employment Income
Percent 16 14 12 1 8 6 4 2 Post Nomadic Centers: Houston 2-22 5.9 3.4 2.2 1.4-2 Population HPI Employment Income
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
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
Percent 16 14 12 1 8 6 4 2-2.9 Boutiques: New York City 1992-22 1992-2 2-22.1 Population 3.9 HPI 12.2 1.1 -.8 Employment 5.5 2.1 Income
Percent 16 14 12 1 8 6 4 2-2 Boutiques: New York City 1992-2.9 Population 3.9 HPI 1.1 Employment 5.5 Income
Percent 16 14 12 1 8 6 4 2-2 Boutiques: New York City 2-22.1 Population 12.2 HPI -.8 Employment 2.1 Income
Percent 16 14 12 1 8 6 4 2-2.8 1992-2 2-22.5 Population Boutiques: Boston 1992-22 5.5 HPI 12.3 1..7 Employment 6.5 2.5 Income
Percent 16 14 12 1 8 6 4 2.8-2 Population Boutiques: Boston 1992-2 5.5 HPI 1. Employment 6.5 Income
Percent 16 14 12 1 8 6 4 2.5-2 Population Boutiques: Boston 2-22 12.3 HPI.7 Employment 2.5 Income
Percent 14 12 1 8 6 4 2-2 -4.7 Population Boutiques: San Francisco 1992-22 1992-2 2-22 -.7 6.3 HPI 7.6.8-2.5 Employment 8.1 2.1 Income
Percent 14 12 1 8 6 4 2-2 -4.7 Population Boutiques: San Francisco 1992-2 6.3 HPI.8 Employment 8.1 Income
Percent 14 12 1 8 6 4 2-2 -4 -.7 Population Boutiques: San Francisco 2-22 7.6 HPI -2.5 Employment 2.1 Income
Percent 14 12 1 8 6 4 2-2 -4 1.6 1992-2 2-22.9 Population Boutiques: Seattle 1992-22 5.4 HPI 6.1 1.8-2.1 Employment 7.4 2. Income
Percent 14 12 1 8 6 4 2 1.6-2 -4 Population Boutiques: Seattle 1992-2 5.4 HPI 1.8 Employment 7.4 Income
Percent 14 12 1 8 6 4 2.9-2 -4 Population Boutiques: Seattle 2-22 6.1 HPI -2.1 Employment 2. Income
Percent 16 14 12 1 8 6 4 2-2 4.2 1992-2 2-22 3.9 Population Nerdistans: Austin 1992-22 6.7 HPI 5.6 3.6.4 Employment 11. 3.4 Income
Percent 16 14 12 1 8 6 4 4.2 2-2 Population Nerdistans: Austin 1992-2 6.7 HPI 3.6 Employment 11. Income
Percent 16 14 12 1 8 6 4 3.9 2-2 Population Nerdistans: Austin 2-22 5.6 HPI.4 Employment 3.4 Income
Percent 16 14 12 1 8 6 4 2-2 3.3 1992-2 2-22 3. Population Nerdistans: Raleigh 1992-22 4.6 HPI 4.2 2.7.4 Employment 8.3 4.2 Income
Percent 16 14 12 1 8 6 4 2-2 3.3 Population Nerdistans: Raleigh 1992-2 4.6 HPI 2.7 Employment 8.3 Income
Percent 16 14 12 1 8 6 4 2-2 3. Population Nerdistans: Raleigh 2-22 4.2 HPI.4 Employment 4.2 Income
Percent 12 1 8 6 4 2-2 -4-6 1.2 1992-2 2-22 -.9 Population Nerdistans: San Jose 1992-22 7.6 HPI 5.8 1.8-3.5 Employment 9.9-3.8 Income
Percent 16 14 12 1 8 6 4 2-2 1.2 Population Nerdistans: San Jose 1992-2 7.6 HPI 1.8 Employment 9.9 Income
Percent 12 1 8 6 4 2-2 -4-6 -.9 Population Nerdistans: San Jose 2-22 5.8 HPI -3.5 Employment -3.8 Income
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
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
Percent 45 4 35 3 25 2 15 1 Latino Population in California Share of State Total 39. 35. 32. 26. 1. 5 198 199 2 21 22
Millions 36 32 28 24 2 16 12 Latino Population in California Projected 28. 22.5 17.8 14. 1.7 8 4 2 21 22 23 24
Percent 72 64 56 48 4 32 24 16 8 California Homeownership Rate By Ethnicity (2) 57. All - Households 65. White 57. Asian 41. Latino 39. African-American
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
Percent 54 48 42 36 3 24 18 12 6 Latino Homeownership Rates in 49. 197 California (197-2) 48. 198 42. 199 41. 2
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%
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% 5 1 15 2 25 3 35 4 45
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%
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%
Percent of Household Income Spent Percent 3 25 on Monthly Mortgage US Born Avg. = 32.21% Foreign Born Avg. = 42.55% 22. 2 18. 15 1 12. 1. 5 <2% 21-3% 31-4% 4%+
Percent 3 25 2 Down Payment Amount Used to Purchase Home 26. 21. 15 14. 14. 1 8. 5 <$1K $1 K- $5K $5K - $1K $1K - $2K $2K+
Rent Payments As a Percent of Monthly Income Over 4% 34% 31-4% 13% 21-3% 13% 2% or Less 12% % 5% 1% 15% 2% 25% 3% 35% 4%
Renters Likely to Purchase in Next Five Years Extremely Likely 14% Very Likely 23% =69% Somewhat Likely 32% Not Very Likely 12% Not at All Likely 19% =31%
California's Single-Family Home Sales Thousands of Units 6 5 4 3 2 1 (197-21) 7 75 8 85 9 95
35 3 25 2 15 1 5 California Median Home Prices US$ Thousands Single-Family Homes 1991991 1992 19931994 1995 19961997 19981999 2 2122
45 California Housing Affordability Percent Who Can Afford a Median-Priced Home Percent 4 35 3 25 2 15 1 5 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22
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 55,636 159,857 43,571 492,792 161,11