Is There Trouble With The Bubble? Presented by: Gregory H. Leisch, CRE November 14, 2005

Prices Are Way Up

U.S. Is Experiencing Record Homeownership Sources: U.S. Census Bureau; Economy.com; Delta Associates;11/14/05. 70% 60% 61% 62% 63% 64% 65% 66% 67% 68% 69% Homeownership Rate

And Investor Purchases Are Up Sources: LoanPerformance and HMDA; Delta Associates; 11/14/05. % Home Purchases by Investors

And In Some Markets, Way Up Washington, D.C. Las VegasSouth Florida Speculators & Investors End Users 70% 30% 85% 15% 80% 20% Sources: Multifamilyexecutive.com; Delta Associates; 11/14/05. Condo Purchases in Select Markets

Source: NAREIT, NCREIF, Vanguard, Delta Associates; November Total Return/Year Real Estate Alternatives Real Estate Returns vs. Investment Alternatives As of Mid-Year 2005

And Second Home Purchases Are Up Sources: LoanPerformance and HMDA; Delta Associates, 11/14/05. % of Mortgages for Second Homes

Annual Increase Existing Home Values As of June 2005 Sources: OFHEO; Delta Associates; 11/14/05. Annual House Price Increase U.S. Average 13.4%

Are Prices Sustainable?

Trend In Ratio Median Home Price to Median Household Income Sources: Freddie Mac; Delta Associates; 11/14/05. Ratio 0502

Ratio Median Home Price to Median Household Income at June 2005 Major Metro Areas Ratio Sources: NAR; Economy.com; Delta Associates; 11/14/05. U.S. 4.3

Types of Mortgages (Second Half of 2004) % Second Half 2004 Originations Sources: MBA; Delta Associates; 11/14/05.

Are Certain Cities at Risk?

Thousands of New Jobs Payroll Job Growth Large Metro Areas 12 Months Ending September 2005 Sources: BLS, Delta Associates; 11/14/05.

Average Annual Building Permits Sources: US Census Bureau; Delta Associates; 11/14/05. Number of Units

Barriers to Entry Sources: Delta Associates; 11/14/05.

Percent of Apartment Sales to Condo Converters April 2004-March 2005 Sources: Real Capital Analytics; Delta Associates; 11/14/05.

Prerequisite to a Burst: u Over production of housing Source: Delta Associates; 11/14/05. u Trauma to the local economy

Softer Markets Will Begin To Experience: u Supply will begin to outstrip demand u Price appreciation will decline severely u Instead of one day sell outs and waiting lines, concessions will appear u Since owners will not be able to sell units as quickly as before, they will offer them for rent Source: Delta Associates; 11/14/05.

Is There Trouble With The Bubble? Presented by: Gregory H. Leisch, CRE November 14, 2005