Marcus & Millichap, Inc. · NYSE:MMI
Marcus & Millichap — Conference Presentation (2005)
25 slides from Marcus & Millichap's conference presentation, 2005
Slide 1: Apartment Trends: A National Multifamily Market Overview
APARTMENT RENDS A National Multifamily Market Overview | “oD = Hessam Nadji Linwood C. Thompson Marcus Millichap Managing Director Managing Director MrafCus GPMMICNAap Research Services National Multi Housing Group NATIONAL MULTI HOUSING GROUP
Slide 2: U.S. Apartment Market Outlook
U.S. Apartment Market Outlook 2006 Economic, Demographic Drivers and Apartment Market Performance
Slide 3: Economic Conditions Still Favorable: GDP & Job Growth In-Line with Long-Term Trend
Economic Conditions Still Favorable: GDP & Job Growth In-Line with Long-Term Trend 8% U.S. GDP 8% U.S. Employment ’04 = 4.2 20-yr Avg. 6% ’05 = 3.6 6% GDP Growth: 3.3% ’06 = 3.3 20-yr Avg. Job Growth: 1.9% 4% 4% 2% 2% 0% 0% -2% -2% 01 02 03 04 05* 06* 01 02 03 04 05* 06* *Forecast Sources: Marcus &
Slide 4: U.S. Employment Well Beyond Recovery
U.S. Employment Well Beyond Recovery 135 Non-Farm Employment (millions) 130 5/03 – 9/05 2/01 – 5/03 4.2 Million -2.7 Million 125 120 115 5 6 7 8 9 0 1 2 3 4 5 -9 -9 -9 -9 -9 -0 -0 -0 -0 -0 -0 pt pt pt pt pt pt pt pt pt pt pt Se Se Se Se Se Se Se Se Se Se Se Sources: Marcus & Millichap Research Servi
Slide 5: Record Oil Prices a Natural Break (For Now)
Record Oil Prices a Natural Break (For Now) Inflation Pressures Building Gradually $75 Crude Oil (WTI) Core CPI CPI 12% Crude Oil (price per barrel) Year-Over-Year % Change $50 8% $25 4% $0 0% 95 96 97 98 99 00 01 02 03 04 05* *Forecast Sources: Marcus & Millichap Research Services, BLS, Economy.com
Slide 6: Short-Term Rate Increases to Continue, Long-Term Rates On Gradual Upswing
Short-Term Rate Increases to Continue, Long-Term Rates On Gradual Upswing 10% Fed Funds Target Rate 10-Year Treasury 8% Interest Rate 6% 4% 2% 0% 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05* *As of 10/7/05 Sources: Marcus & Millichap Research Services, BLS, Economy.com, Federal Reserve
Slide 7: U.S. Median Home Prices
U.S. Median Home Prices Existing Single-Family Homes 1990-2001 2002-2004 Q2 2005 $320,000 Data points = % growth from 2002 - 2Q2005 42% Median Home Price 41% $240,000 27% 19% 16% $160,000 $80,000 $0 U.S. Northeast Midwest South West Sources: Marcus & Millichap Research Services, Economy.com, Nationa
Slide 8: Unprecedented Home Price Appreciation Fueled by Moderate Rise In House Payments
Unprecedented Home Price Appreciation Fueled by Moderate Rise In House Payments 100% Payment as a % of Median HH Income $250,000 Mortgage Payment As % of Income Median Home Price U.S. Median Home Price 75% $200,000 50% $150,000 25% $100,000 0% $50,000 75 80 85 90 95 00 05 YTD Sources: Marcus & Milli
Slide 9: Cash-Out Refinancing Volume
Cash-Out Refinancing Volume Total Home Equity Cashed-Out $160 Cash-Out as % of Refi Orgination Amount 20% Cashed-Out Equity as % of Refi $120 15% Cash-Out ($ in Billions) Origination Amount $80 10% $40 5% $0 0% 93 94 95 96 97 98 99 00 01 02 03 04 05* 06* *Estimate ** Forecast Sources: Marcus & Milli
Slide 10: U.S. Job Growth Will Generate Renter Demand
U.S. Job Growth Will Generate Renter Demand Multi-Family Absorption Employment 250,000 5% Y-O-Y Change in Jobs 200,000 4% Absorption 150,000 3% 100,000 2% 50,000 1% 0 0% -50,000 -1% 90 92 94 96 98 00 02 04 06* *Forecast Sources: Marcus & Millichap Research Services, Economy.com, Reis
Slide 11: U.S. Vacancy Cycle Recovery Well Entrenched
U.S. Vacancy Cycle Recovery Well Entrenched Multi-Family Completions Vacancy Completions (Thousands of Units) 200 10% 160 8% Vacancy 120 6% 80 4% 40 2% 90 92 94 96 98 00 02 04 06* *Forecast Sources: Marcus & Millichap Research Services, Reis, U.S. Census Bureau
Slide 12: Average Asking and Effective Rent Growth
Average Asking and Effective Rent Growth Asking Rent Effective Rent 10% 8% Effective Rent Growth Asking Rent Growth 6% 4% 2% 0% -2% 96 97 98 99 00 01 02 03 04 05 06* *Forecast Sources: Marcus & Millichap Research Services, Reis
Slide 13: Apartment Fundamentals Slowly Catching Up To Capital Market Driven Pricing
Apartment Fundamentals Slowly Catching Up To Capital Market Driven Pricing 20% Median Price Per Unit Avg. Effective Rent 15% Annual Change 10% 5% 0% -5% -10% 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05* *First half sales activity for sales of $500,000 and above nationally Sources: Marcus & Millicha
Slide 14: Apartment Price Appreciation Trends By Price Category
Apartment Price Appreciation Trends By Price Category 2001-2004 2005* 40% Increase $120,000 95% Increase Median Price per Unit $100,000 34% Increase $80,000 $60,000 $40,000 $20,000 $0 <$10 Million $10-$19.99 Million $20+ Million *YTD Estimate Sources: Marcus & Millichap Research Services, CoStar Gro
Slide 15: Top U.S. Apartment Markets By Vacancy Rate
Top 10 U.S. Apartment Markets By Vacancy Rate 2006 Forecast Bps 2005* 2006* Change Orange County 3.5% 3.2% -30 Los Angeles 3.4% 3.2% -20 Las Vegas 3.7% 3.3% -40 San Diego 3.5% 3.3% -20 Ft. Lauderdale 3.7% 3.4% -30 New York 3.7% 3.6% -10 Miami 4.0% 3.9% -10 Riverside/San Bernardino 4.3% 4.0% -30 Phil
Slide 16: Bottom U.S. Apartment Markets By Vacancy Rate
Bottom 10 U.S. Apartment Markets By Vacancy Rate 2006 Forecast Bps 2005* 2006* Change San Antonio 9.0% 8.6% -40 Columbus 8.9% 8.6% -30 Cincinnati 9.0% 8.9% -10 Charlotte 9.7% 9.0% -70 Milwaukee 9.2% 9.0% -20 Austin 9.5% 9.2% -30 Atlanta 9.5% 9.4% -10 Indianapolis 9.9% 9.7% -20 Dallas/Fort Worth 11.0
Slide 17: U.S. Housing Sales Activity
U.S. Housing Sales Activity Percent Change in Number of Transactions Single-Family Condo 15% 13% 10% 8% 5% 2003 2004 2005 * Based on seasonally adjusted annual rate as of August 2005 Sources: Marcus & Millichap Research Services, National Association of Realtors
Slide 18: Developers/Converters Drawn by Strong Appreciation
Developers/Converters Drawn by Strong Appreciation Median Price Growth 2002 – 2005 YTD* Region Single-Family Condo Spread South 25.5% 82.1% 56.6% United States 32.5% 56.3% 23.8% Northeast 53.5% 69.7% 16.2% West 44.2% 58.9% 14.7% Midwest 23.2% 26.0% 2.9% Data as of August 2005 Sources: Marcus & Milli
Slide 19: Growth in U.S. Condominium Market
Growth in U.S. Condominium Market 150 Ground Up Development Apartment Conversion Sales No. of Units (000's) 100 50 0 2002 2003 2004 2005* * YE estimate Sources: Marcus & Millichap Research Services, Real Capital Analytics, Torto Wheaton Research
Slide 20: Youngest Cohorts Have Experienced the Largest Ownership Increase
Youngest Cohorts Have Experienced the Largest Ownership Increase 600 Change in Homeownership Rate 2Q1995-2Q2005 (basis points) Current Homeownership Rate 42.8% 400 68.7% 80.3% 200 81.3% 76.3% 0 Under 35 35-44 45-54 55-64 65+ Age Cohort Sources: Marcus & Millichap Research Services, Economy.com
Slide 21: U.S. Housing Market: Months of Available Supply
U.S. Housing Market Months of Available Supply Single Family Condo 5.5 5.0 13.6% YOY No. of months Change 4.4% 4.5 4.0 3.5 2003 04 04 04 05 05 05 05 Avg 08 10 12 02 04 06 08 p * preliminary Sources: Marcus & Millichap Research Services, National Association of Realtors
Slide 22: Growth in U.S. Condominium Market: Most Active MSAs in 2005
Growth in U.S. Condominium Market Most Active MSAs in 2005 Ground Up Development Apartment Conversion Sales MSA # of % change MSA YTD 2004 Units* from 2004 2005* Total Miami/Ft. Lauderdale 16,189 162% Miami/Ft. Lauderdale 17,200 16,818 Atlanta 7,886 259% Orlando 10,513 4,406 Chicago 7,141 74% Tampa
Slide 23: U.S. Renter Demographics Turning Positive
U.S. Renter Demographics Turning Positive 10% Change in Population 5% 0% -5% -10% 1990-95 1995-00 2000-05* 2005-10* 2010-15* Ages 20-24 Ages 25-29 Ages 30-34 * Forecast Sources: Marcus & Millichap Research Services, Economy.com
Slide 24: 2006 Economic, Apartment Market Outlook
2006 Economic, Apartment Market Outlook ¾ Recovery of Renter Demand on Solid Ground: Employment Growth Spurring Household Formation Housing Market Cooling, Price Premium, Consumer Squeeze Favors Rentals Favorable Demographic Shift in Full Swing ¾ Capital Markets Tightening Moderately, Macro Tr
Slide 25: Apartment Trends: A National Multifamily Market Overview
APARTMENT RENDS A National Multifamily Market Overview | “oD = Hessam Nadji Linwood C. Thompson Marcus Millichap Managing Director Managing Director MrafCus GPMMICNAap Research Services National Multi Housing Group NATIONAL MULTI HOUSING GROUP