1. ROBERT CHARLES LESSER & CO., LLC Demographic Changes Driving New Residential Development www.RCLCo.com

2. ROBERT CHARLES LESSER & CO., LLC 2 Demographic Changes Driving New Residential Development Changing Household Types –Growth in non-traditional-family households –Changing face of renters and owners Impact of Immigration –When, where and how immigrants live Impact of Race/Ethnicity Implications for Different Housing Types Relationship to Employment Patterns

3. ROBERT CHARLES LESSER & CO., LLC Changing Household Types

4. ROBERT CHARLES LESSER & CO., LLC 4 Changing Household Types The growth is in non-traditional-family households –Singles –Unmarried couples or childless couples –Roommates –Single parents Non-traditional-family households –Willing to pioneer new areas –Less concerned about school districts –Looking to balance price and lifestyle Married renters and single buyers Source: US Census, Brookings Institution

5. ROBERT CHARLES LESSER & CO., LLC 5 Changing Household Types DC a national leader in non-married-couple households –DC - 77%, vs. 64% for 100 Largest US Cities –DC MSA - 50%, vs. 48% National Average –DC – 8% of households married with kid(s) – vs. 23.5% in US –In 1990s, married households flocked to suburbs Lifestyle drives housing location decisions –Look for where they can live, work & play – all in one place –Active communities – “3 rd Places” for informal gathering

6. ROBERT CHARLES LESSER & CO., LLC 6 Changing Household Types What does that mean? –Product configuration changes Less need for 3 rd or 4 th bedrooms Creative living spaces More architecture, less “sameness” –Location change Unconcerned with conventions and traditions Heretofore unacceptable locations Single females prefer established locations Couples & single men will take more risk for the $

7. ROBERT CHARLES LESSER & CO., LLC 7 Household Types | Owners Over 110,000 new owner HH will be added (~22,000/year) Largest % growth in Singles and Childless Couples Married w/ children growing slower than other groups Source: US Census, Claritas The Brookings Institution 1.4% 2.1% 1.6% 1.5% 1.1% 2.5% Growth%

8. ROBERT CHARLES LESSER & CO., LLC 8 Household Types | Renters ~21,000 new renters –(~4,200/yr) Singles drive the rental market However… Married Couples without children ~13% of renter growth Female HH Heads ~11% of renter growth Source: US Census, Claritas 0.4% 1.5% 0.7% 1.0% -0.1% 1.2% Growth%

9. ROBERT CHARLES LESSER & CO., LLC 9 Owners What does that mean – for-sale? –GenXers flooding the market – singles, couples without children –Designs for non-kid or young-kid households –Married w/children growing slower than other groups

10. ROBERT CHARLES LESSER & CO., LLC 10 Renters What does that mean - rentals? –Need to design for both singles and couples –“Renters by choice” aren’t a myth (20% 50K+ incomes) – they seek quality, mobility, and convenience – but affordability key for many –GenX not having children yet – some rent for a while –Echo Boomers – tomorrow’s renter (after 2008) Many doubling up & living with parents

11. ROBERT CHARLES LESSER & CO., LLC 11 Summary: Demographic Changes Driving New Residential Development Maturing Boomers: –Luxury homes/condos and some rentals –More affluent demand top-flight amenities and services GenX not having children yet, but soon –Moving into ownership Echo Boom generation: –Tomorrow’s renter--after 2008 –Less affluent than GenX, doubling up, living with parents

12. ROBERT CHARLES LESSER & CO., LLC Impact of Immigration

13. ROBERT CHARLES LESSER & CO., LLC 13 Source: Brookings Institution Top Ten Immigrant Populations by Metropolitan Area, 2000 Impact of Immigration DC region is 7 th in foreign born residents, 5 th in total population 8 th in % foreign born Foreign born population grew almost 7 fold in last 30 years

14. ROBERT CHARLES LESSER & CO., LLC 14 New immigrants made up nearly half of the overall population growth in the region in the 1990s Source: Brookings Impact of Immigration

15. ROBERT CHARLES LESSER & CO., LLC 15 Impact of Immigration Immigrants choosing to settle in the inner suburbs rather than the District –4% of 1990s foreign-born growth in DC Absolute population growth in the 1990s equal in the inner and outer portions of region –85% of inner-jurisdiction population growth foreign-born –12% of outer-jurisdiction population growth foreign-born

16. ROBERT CHARLES LESSER & CO., LLC 16 1970 Total Foreign Born 127,579 Source: The Brookings Institution 2000 Total Foreign Born 832,016 Impact of Immigration

17. ROBERT CHARLES LESSER & CO., LLC 17 Source: Brookings Impact of Immigration Percent Foreign Born (By Census Tract) 2000 Less than 5% 5% - 15% 16% - 25% 26% - 35% Greater than 35% Foreign born residents tend to concentrate near but not in the District

18. ROBERT CHARLES LESSER & CO., LLC 18 Foreign-Born Median Household Income Less than 50% of Median Income 50% - 100% of Median Income 101% - 150% of Median Income Greater than 150% of Median Income Impact of Immigration Source: Brookings Immigrants tend to live close to DC Poorer immigrants flock to DC and Prince George's County Affluent immigrants move to Montgomery and Fairfax Counties

19. ROBERT CHARLES LESSER & CO., LLC Race & Ethnicity

20. ROBERT CHARLES LESSER & CO., LLC 20 Race & Ethnicity Minorities growing in the suburbs Mirrors national trend DC losing African- American residents Suburban builders should understand needs, desires of minorities Source: US Census, Brookings Institution

21. ROBERT CHARLES LESSER & CO., LLC 21 Race & Ethnicity Source: US Census, Brookings Institution Hispanics live in north-central DC Concentration in NE Prince George’s, SE Montgomery, Arlington & Fairfax counties

22. ROBERT CHARLES LESSER & CO., LLC 22 Race & Ethnicity Minorities are 32% of 1 st time homebuyers (national) Minorities have lower incomes & wealth Lenders are correcting for prior patterns of discrimination Minorities are less mobile –65% of minority homeowners nationwide 65 yrs of age are still in 1 st home –Compared with 32% for non-Hispanic white homeowners Source: US Census, Brookings Institution, Joint Center for Housing Studies

23. ROBERT CHARLES LESSER & CO., LLC Relationship to Employment Patterns

24. ROBERT CHARLES LESSER & CO., LLC Demographic Changes Driving New Residential Development www.RCLCo.com