How Can We House Our Future? 7/31/2018 How Can We House Our Future? Issues and Opportunities for Orange County Cities Richard M. Gollis OCCOG General Assembly 2017 Anaheim, California March 16, 2017

Our Diversity Defines Our Density 7/31/2018 3 Points to Remember Growth is Inevitable Our Diversity Defines Our Density Home Builder Decisions Follow the Path of “Most Certain Results” March 16, 2017

5 PEOPLE PER MINUTE! 30 PEOPLE PER HOUR! Growth is Inevitable US population is forecast to grow by 2.5 million people per year from today through 2025 California’s population is forecast to grow by 275,000 people per year from today through 2025 5 PEOPLE PER MINUTE! 30 PEOPLE PER HOUR! Source: US Census, Claritas March 16, 2017

Local Growth is Natural Orange County projected to grow by over 31,000 people per year through 2022 3+ PEOPLE PER HOUR! Source: US Census, Claritas March 16, 2017

And the survey results say… Orange County residents know that OC is growing rapidly and will continue to grow rapidly in the next 10 years. While 75% of Orange County’s growth in the next 10 years is projected to come from natural increase, only 8% of Orange County residents realize this. Resident’s cite issues associated with growth as a major issue for Orange County’s future. 1999 Survey! Source: Cal State Fullerton/ OCBC March 16, 2017

Shift to Density Post-Great Recession Source: BLS, HUD March 16, 2017

Jobs and Housing are Still Out of Balance Source: BLS, HUD March 16, 2017

It’s Expensive to Live in Orange County 7/31/2018 It’s Expensive to Live in Orange County   SFD Price (Median) Vs. OC Apt. Rent (Mo Median) Irvine $883,000 23% $2,728 11% San Juan Capistrano $829,000 15% $2,328 -5% Huntington Beach $807,000 12% $2,491 2% Costa Mesa $753,000 5% $2,751 Orange County $720,000 --- $2,448 Mission Viejo 0% $2,357 -4% Brea $682,000 $2,485 Fullerton $645,000 -10% $2,257 -8% Anaheim $581,000 -19% $2,307 -6% Santa Ana $518,000 -28% $2,056 -16% California $497,000 -31% $2,346 US $194,000 -73% $1,539 -37% Source: Zillow Data Research, January 2017 (All new and used homes) March 16, 2017

Housing Costs and Shortage Making Headlines 7/31/2018 Housing Costs and Shortage Making Headlines “The only way for young people starting out, as well as those struggling to lift themselves up, to live in Huntington Beach is for the city to increase its housing stock.” Source: OC Register, March 15, 2017 Source: OC Register Editorial, November 24, 2015 March 16, 2017

Do We See the Future? “Tech Starting to Feel Silicon Valley’s Housing Crunch as Residents Leave Region” (International Business Times, 3/5/16) “In Search of Cheaper Housing, Silicon Valley Workers Face Long Commute” (KQED, 4/7/16) “Lack of New Construction Pushes Bay Area to the Brink of a Bubble” (Curbed, 2/24/16) “Silicon Valley Residents Leave for Greener Grass, Cheaper Housing” (Wall Street Journal, 3/3/16) March 16, 2017

The County is Diverse Inland North Inland South Coastal North Coastal South March 16, 2017

“Lifestyle” Concentrations: Coast vs. Inland March 16, 2017

Discretionary/Workforce Dichotomy Source: Redfin (SFD Home Sales, Sample of Last 3 Months Ending March 2017), Orange County Submarkets

New Construction Pushed to “Buildable Pricing” 7/31/2018 New Construction Pushed to “Buildable Pricing” Median $ New Median $ All March 16, 2017

Lessons Learned for Certainty in Housing Delivery 7/31/2018 Lessons Learned for Certainty in Housing Delivery Recognize capital risk Builders and investors have national alternatives Labor, materials and land variables Support creative “density by design” ADUs, Multi-Generational, bonus tools Construction methods and types Establish consistent and timely approval mechanisms Overlay zones, pre-app processes Align fees with real and transparent costs Special Finance Districts, “Nexus Strategies” March 16, 2017

Newport Beach San Francisco New York Atlanta 7/31/2018 Richard M. Gollis www.theconcordgroup.com Real estate advisory firm focusing on market, financial and valuation analyses across sectors Offices in Newport Beach, San Francisco, New York City and Atlanta Deep experience in “first tier” and “second tier” U.S. Metro Markets Geographic reach spans North America plus Europe, Central America and Asia 500+ engagement completed across 5 continents in 2014 Senior team comprised of recognized industry thought leaders 40+ full time staff (Professional + Operations) and access to contract teams nationwide Diverse client/relationship base across real estate sectors Financial Institutions Developers (Multi-family REITs/Land) Homebuilders (Public/Private) Public Sector Newport Beach San Francisco New York Atlanta