In particularly and this industry in and
anywhere in the real estate industry

advocacy is hugely important
forty eight of the fifty

state governments are like the federal
government they're operating in a deficit.

So they look at small businesses
they look at real estate as a means

of raising the revenues they need to
at least try to balance the budget and

meet the demands they have with with.

Pensions and everything else.

So all across the country local
municipalities states and

also in the federal government
they introduce legislation.

That will impact either negatively or
positively what we do so

we follow that legislation
all around the country.

Communication is obviously hugely
important in in with today's technology.

You know we have to be available
twenty four seven to our members so

where we're just in the process
of upgrading our website now so

that we can do a lot
of the things that we.

That our current website does not allow
us to do but that our younger members.

Your age group.

You guys are right and I know with my son.

You're you communicate with
technology much more frequently and

certainly much easier
than my generation does.

We're more about the classroom or
more about getting together in groups.

Your generation.

You can do a you can do anything and
everything you want.

Over the Internet and
you very capable you very

comfortable doing it not as well as being
cables so that's something different.

And then education.

Obviously we have six
designation programs.

We always look to to make sure that
we're trying to make sure that

the people who work on site
in the corporate offices have

the latest education because
the better educated the employees

are the better job they do in the property
which translates into great of.

Retention which which to an owner or
to the group that head up

means more money coming in the door
which translates bottom line that

that property has more value on the open
market than someone down the street so

we we push starting with
the maintenance staff to make sure that

they know how to manage the physical
plant in a five hundred unit building you

have hundreds of thousands of dollars of
the air conditioning equipment elevators

heating they have to be able to maintain
that so that the residents the people that

we provide housing for have everything
that they need and what they're paying for

same with leasing agents they're the first
people you meet when you go in to rent.

The manager in the community and

then regional managers and going right up
to the executive staff of the company.

So we look to provide education so

that they stay on top of what they
need to be efficient and profitable.

Now.

Before I get into the next
thing I got this information.

Last night and
I'll leave this with Dr Phillips.

But Chris Lee who does a lot of
industry studies sent out something for

a new book he's doing from from
good to great to best in class.

In one of the things he said is.

Margaret Mead said great opportunities a
brilliantly disguises unsolvable problems.

I think this is a this is a great.

Saying for anything in the real
estate industry because

there are phenomenal opportunities.

If you want to make a very good living.

It's possible to do it in the in the real
estate in particular in multifamily.

Throughout the ages real estate
entrepreneurs have successfully

harnessed the challenges and harvested
the opportunities created by others.

The real estate industry is as it
has been for thousands of years.

As you can.

Are It continues to provide positive
in lasting value to the to society

in the life of the individuals
in the society.

And whether that commercial
development multifamily development

single single family housing.

Real estate plays a great role
in making sure that the end

I live in hopefully is more positive.

He says his belief that
there are nine elements

that are factors in any
kind of real estate.

Number one.

They provide market driven solutions that
respond to shifting economic political

demographic generational and
societal changes.

Number two.

Creating investment opportunities that
add value to the fabric of daily life.

Three conceiving projects and
properties that are or are a part

of rather than apart from the communities
and neighborhoods where they exist.

I think that's very important that
the community you live in is part of

where you live and

it's you not separated or isolated from
everyone else in the local community.

Establishing valued recurring and
trusted relationships with all stakeholder

groups involved within impacted by the
real estate based decisions that are made.

Most important to you.

Hiring motivating and recognizing the
achievements of outstanding talent that's

something that in the multifamily
industry is repeated constantly

making sure that you reward
your most talented people and

make sure you're paying them
enough money or bonus ing them.

And there's all kinds of
bonus programs that exist in

multifamily operations where
people who are the top performers.

Regardless of where they are in
the organization are paid for

that top performance.

I understanding and creating asset and
service based solutions for owners.

And uses real estate assets and I'm
skipping some of these but the last one

is in Hansing the value of the communities
by remaining vigilant on protecting

the environment for future generations
in which you provide solutions.

And the the last thing I'll have here
is his comment as the real estate

industry has become an American laboratory
the innovation and social solutions.

So that is sort of an overview of real
estate and how many people feel about it.

Now we'll go into
the multifamily part of it and.

The information I'm going to share
from you is was prepared by great Will

it with N.P.R. research and their
their company headquartered in Dallas.

And they look at
multifamily constantly they

they get information from thousands and
thousands of communities every year.

In by seeing the trends
that are happening.

They make projections.

So this is going to be an update
of what has been happening

in the multifamily industry through the
second quarter of two thousand and eleven.

Now to Kaviak it's.

For all of these is that in order for

multi family and quite frankly for
the for the economy to be successful.

Depends on jobs and you'll see in some
slides later on we talk about what has

happened to jobs in the United States
since since two thousand and

seven when the bottom when the bottom
fell out of the housing market because of

the subprime mortgage thing that
has impacted everything we do cause

us to go into a recession.

The second half of the jobs.

All the projections are dependent on
us not going into a second reception.

Recession a double dip
from the economists and

point there was there was a lot of
concern a couple weeks ago that

we were already into that that
second recession that double dip.

Because of.

What has been happening in Europe
with the Eurozone defaults.

Because of what's been happening
within the United States.

You know the unability the inability
to get the the debt ceiling.

Lifted in time you know where it was
pushed to the to the very last moment

our allies around the world lost
total confidence in the U.S.

system to act decisively
on a program on a problem.

That has to be resolved one way or another
you know we're spending more money than is

being brought in but the fact that the you
know both parties politicize the process.

That hurt us.

So there is a lot of concern.

You know I think some stuff
that I've seen recently

the the fact that the market rebounded
earlier this week even though there was

a sell off at the end of the day
yesterday that maybe we we haven't.

Maybe we got to the brink
of the the second.

Deb.

That's something we're
still waiting to see on.

So let's go with it and
we'll cover some of this information.

OK this is a thing of occupancy and
the like.

If I get this right.

Yes.

This was at about the time
that the subprime

meltdown happened in and the government
was in in danger of collapsing.

And what happened is that occupancy

rates dropped significantly at that time.

Because of everything that was happening.

The write offs people losing
their homes and there's and

there's a second twist of that
because also in losing their homes.

It also helped.

The market to grow back because
everyone who lost a home.

Had to live someplace.

So for the multifamily industry.

It was making lemonade
basically out of lemons

from of from a from a very sad
point from an economic standpoint.

It did have a beneficial effect.

On occupancies now you see up here

probably close to ninety six
percent any any time that we

have occupancy rates around the country
where we're hitting ninety six percent for

all intents and purposes in
the in the multifamily industry

that's full occupancy now in this
is obviously based on all of

the units twenty two million units
around the country a weighted average.

When you hit ninety six percent
that's people moving out

new units coming on that
haven't been leased yet.

So it's really effectively.

You're darn close to one hundred
percent of your own units

being being occupied the other in
another reason why there are plenty of

people that say if you ever get to one
hundred percent occupancy new building.

You're not charging enough you rent
raise your rents into loans so

you're leaving money on the table.

So if our members are incredibly
happy if they can if they're at

ninety six percent anything higher than
that and it's just a great great time.

So.

The other thing is is we have
within the industry we have

what we call a Properties be properties
and see properties a Properties typically

they're you luxury apartments you top in
where you can pay the greatest price.

Those you those units typically have
a much better rate even in hard times

the A properties always have a greater
occupancy rate than the the bottom.

And when in a recovering economy.

It's because the A units are due.

Better and they have increased their rates
in then it's sort of a trickle down effect

the BE properties in the sea
properties all benefit

sort of like a rising tide
lifts everybody's boat.

That is what's happening and
in today's market and

from these are the these
are the markets in the U.S.

that are having the best
race in actually topping.

Ninety six percent in the funny
thing is in New York and San Jose.

And many athletes as well.

They fight rent control and
rent control is a policy that

a lot of jurisdictions have
put in that try to limit

the the amount of an increase that
an owner can put through on each year.

One of the big concerns we have all around
the country is that people who support

the infrastructure of our cities policemen
firemen teachers can't afford to

live in the cities where they work
because rents are too high so

they they live in suburbia.

Oftentimes they're commuting
great distances every

day in order to get to the a job.

So a lot of the larger communities where
there is a where there is a heavy.

Resiliency in dependency on
the infrastructure rent control is in so

that's used.

While it's not the greatest thing
if you own the property because you

can only increase it by whatever.

If it's a cost of living factor or
a city council sets it and if you

have expenses higher than that you can't
pass those expenses on to the residents.

So it's both a it's a it's it's
a blessing for the residents.

It's not the greatest thing sometimes for
onus and we work with that constantly but

there has been a strong resurgence
a in the last two years now.

These are the the lagging
thing in Unfortunately you

see Atlanta is third from.

Bottom.

While again.

B. and C. properties in Atlanta
are doing very well the season

having problems in most of these cities.

That's really a factor of what is it's
the it's the it's the lower properties.

Oftentimes unfortunately
in a forcible communities

where the resident where
the vacancies get lower.

And that tends to drag down.

The market within the cities.

So what we're seeing is that it's better
than it was there were some figures.

Now one exception to this is Houston.

Which is the bottom one here.

But part of the reason for
Houston is that they have

a huge inventory of really outdated.

Product that is constantly vacant vacant
they're there and B. properties are doing

extremely well probably in the upper
ninety's but they have so much obsolete.

Property in the pipeline that
they can't fill anymore.

And because of the current economy they
can't refurbish those homes to turn them

into into better more attractive
properties so they have been on the legged

side for a number of years now and
just because of that excess product they

have they're probably still be at
the bottom the list for another few years.

This is kind of an a very interesting
thing if you look again you can see.

When the full impact of the subprime and
the recession hit.

Rates effective rights for
apartments dropped dramatically and

you can see back here in
the early two thousand.

There were some some
significant ten percent

effective rates that were going on
in various parts of the country now.

Now.

One of the one of the nice
things about about this is.

N.P.R. measures that N.P.R. measures the
same communities all around the country.

So every year when they do this study.

It's from the same thousand two
thousand three thousand community so

that they have year to year information
that's that's very effective.

And what we're seeing now a three point
eight percent increase in effective rents

is probably the best thing you know growth
in the industry in a number of years.

Now one of the one of the things
that you have to understand is

this is also with all concessions.

How many how many of you rent apartments.

How many of you are in an apartment for
your second or third year.

OK.

You're paying more money now than
you did a couple years ago and

when you first moved in.

Did you get some sort of concession
maybe like a couple of months free or

free cable free internet.

OK Well that's that's when times get bad

in it's epidemic in the family
is that owners in order to

get people into the air units
will give away concessions.

Some parts of the country where
it's harder hit than others.

The concessions a bigger it could be three
months of free rent or free internet or

free cable.

Or waving the dog.

Now they'll go out and tell everybody.

We sell We rent our units for
four thousand dollars but

the reality is if you got three
months free the effective rate that

you're paying a seven hundred fifty
dollars a month for a year so

it's not something so
this is all of the concessions now.

Been weeded out so this is this is actual
positive growth that's terrific for

the industry and
something we haven't seen for a while.

But the the of a sad part of it is

that all it's really doing is getting
us back to where we were it's just

there was a big hole that that when into
the market when everything dropped and

people were moving out so
they they were giving this away.

The problem for
the multifamily industry is that

it looks like we're greedy and
that we're trying to

line our pockets at the expense
of people who are going as well.

Now the industry prayed the industry
trade press understands.

What effect the rates are and
what happened.

All we're really doing is we're back to
where we were three or four years ago so

that there's no real growth per se.

If you compare it to you know to two
thousand and six and two thousand and

seven is just getting us back there.

But again as an industry.

You know something that we deal with
are the slumlords the greedy landlords and

those you know that those
few people who who.

You know wind up where you read a story
about an owner who does something like

that gives a black eye to
the rest of the industry.

So we look at that constant.

OK Why is this not moving.

Yep there it is OK.

It's like my apps on my i Phone.

OK These are the rent growth
leaders around the country.

Well a couple of things.

Debbie is if you see that the first
five are on the West Coast.

When the when the when the downturn hit.

The West Coast was hit
harder than anybody.

And that was partially because.

As a lot of it was.

The rents they were charging at
the time they were very much hired the.

The average unit in California was
the highest of any anywhere in the country

where you know it might be one
hundred thousand dollars in Atlanta

in California they averaged two hundred
thousand in some places higher than that.

So they were hit particularly hard.

They have made it.

They have made a strong comeback and
it's certainly better

than they have performed in years but
again for many of these people.

It's just getting them back
to where they were before.

Now and now we're going to see the same
thing for the people who aren't growing.

Now last year.

Every single one of these cities
was in a negative growth rate

they were had negative rents.

They just could not move to do anything
Las Vegas is is very interesting.

Prior to two thousand and eight ten out of
the eleven years before two thousand and

eight Las Vegas was the fastest growing
city in the country more people moving in

and percentages than any other
city in the United States.

Now the problem is.

Vegas has one industry gambling and
entertainment and.

When people's disposable income
disappears that industry got hammered.

And if you've been to Vegas lately

as you fly into particular
if you come in at night.

You can see all these structures without
a single light on because they stopped

the construction in the middle of and
they walked away from it.

Now eventually the owners
of those properties.

If they haven't gone into foreclosure
will go back in bring those back.

But.

And it's probably Las Vegas is the cements
are at Las Vegas is still probably two to

three years away before they start to
see positive rent growth in the market.

So if you should take a job in Las Vegas.

You can find a great apartment at
a reasonable at a reasonable place

to pay so
that hopefully you're not going there for

gambling because that
could be a downside to.

Now this is the you see.

Since two thousand really two thousand
one two point four percent growth.

When you look at things in may
not seem like much to you but

that is the best growth the industry
has had in ten years now but

it's also kind of scary in one
comparison because ten years ago.

And even no have an idea
what might have driven

the the big great growth ten years ago.

Was the tech was the tech market and
so in Silicon Valley.

San Francisco Austin Raleigh Boston
some other companies around.

They had huge growth
they were hiring people.

People were coming in from
all over the country.

So the owners in those
cities had unbelievable.

Rent growth.

In then the bubble burst.

All those companies went out of business
people lost their jobs they were out.

Now the great thing now is there's
a wider balance of cities.

Showing growth and.

The highs and the lows aren't as
extreme as they were in two thousand.

So that's a very positive sign that
the economists who study this feel

that you know we're in a much better
position now than we were ten years ago.

Over the last twelve months from
second quarter two thousand and

ten to the second quarter
of two thousand and twelve.

I mean to two thousand and

eleven the growth was four point six
percent and the projection is and again.

Absent a double dip or you know.

Continuing slowing in of jobs is that it
will be five point nine percent almost six

percent across the country
that's a significant increase

from what our members have been
seeing over the last couple of years.

And it's a sign that maybe something
is happening right in the economy.

So we're pretty happy about that.

Now we're going to we're going to go
over some of the things that caused

the problems.

From there to their eight million
jobs around the country were lost.

That had an impact on
the economy on everything we do

that is devastating had
obviously had a huge impact

on the multifamily industry initially but.

The the projections
are that we have to add

two hundred fifty thousand net
jobs a month to the economy.

For the next three and

a half to four years to get back to where
we were before we lost the eight million.

Now if you look at at
the administration's projections that's

obviously their goal and
it's it should be everybody's goal because

we need we need those jobs in order for
the economy to rebound.

And obviously all of you as you get closer
to graduation you want that to rebound so

that when you go out and you have a degree
that degree is worth something because

someone will hire you and start paying you
a fee that is representative of the time

and effort you spent in getting your
degree that's a big problem right now and

while with made some recoveries.

We're still nowhere near where we
need to be because these you know.

Too many of them are under the two hundred
and we need to fifty and in August.

Did anybody see what
the August jobs report was.

Zero new jobs were created in the month
of August that that was devastating.

For the Obama administration
because obviously

it's on his watch that
these things are happening.

It's devastating for the economy.

So we need to do something and.

You know this is something where where the
government can't do this on its own this

is where private industry
has to come in and

make the commitment to hire people
bring people back into the workforce.

I think the problem is is that because
of the uncertainty of the economy.

No one is making moves.

The unemployment rate right now
is at nine point one percent

the effective rate of unemployment is
probably fifteen to twenty percent.

And that's all the people
who've been on employment for

a few years who just stop looking.

They have they've given up.

They have lost hope people
have moved on to welfare.

Part time employees.

Some are employers.

If you all had summer jobs and
you've gone off the payroll.

That's part of the effect of.

Unemployment so.

That's a significantly high figure
probably the highest it's ever been.

Since the Great Depression in
the history of the United States.

So we've got to get people back to work.

We have to get them jobs.

That you know I talked earlier
about you know the problems we

had with getting the U.S. debt ceiling
raise all the defaults in the eurozone and

the biggest thing here in this
country is the lack of confidence of.

Business in that they recovery
is going to be sustained.

Most businesses and
certainly in the multi-family industry.

Our companies have more money in their
bank accounts now than they've ever had

as a as a percentage.

I mean this sitting on piles of money
banks across the country have more

money than they have ever had in
the history is of their organizations but

they had huge amounts of money.

The problem is after the subprime
market collapsed and people saying yeah

you make one hundred twenty thousand a
year will say that don't worry about that.

We'll take your.

You know there was the big push
that it's the American dream.

So that we were pushing
people into homes who

couldn't afford the debt service on
the homes and when it collapsed.

That sent a tremor through the industry so
the bank was went one eighty from

where they were so from being
relatively easy to get a mortgage.

Now it's incredibly hard in if you're

a first time home buyer going through
that mortgage process is definitely.

So again we can get
the economy turned around.

It's going to help.

OK Let's let's show how the impact
of these lost jobs where it hit.

My age group people who own homes
lost the greatest number of jobs.

And twenty to thirty four year olds

only lost thirty seven percent of the jobs
of these eight million that went.

Now as jobs have been replaced and
job growth has been created.

You guys are getting sixty
three percent of all

the new jobs being created so
that that's a great sign for multi-family.

Because one of the one of the big
predicator is in multifamily is household

creation so that means when you get a job.

When you move out from mom and
dad you get your own apartment.

That's household creation.

That's that's a great indicator for
multi-family.

Well it's all yours.

And probably the only people who love
it better than you getting a job

in moving out is mom and dad so.

Now there's there's lots of things that.

That go into this and
we're going to go into something that's

again is is studied very
closely in multifamily.

In that's demographic trends.

The demographics when this country has
always been a boon to multi family

because we have such a diverse and

we have such a diverse population
in the United States and so.

Everybody from you know every ethnicity
has lived in apartments at one time or

another or will live in apartments and our
job is to make sure that we're getting.

Representation from any of these groups as
they move in and you'll find them in all

of the demographic trends but we're going
to start off with with the age groups.

Unfortunately this is my generation and
I'm at the top end of it.

Seven million people in this group.

It's going to be interesting
what happens because

you know is we get older
in the kids are gone.

We're ready to sell the homes.

When we sell the homes if we're able
to and I'll get to that in the second.

We're going to be looking at
multi family as an option.

And on the the A properties
because hopefully most of us you

know have enough money still left in our
four one K.'s that if if we want to live.

Live in a high end luxury
apartment similar to what we

were used to in our home but
without the maintenance without the care.

We can afford to to go into multifamily.

So that's a target that multifamily
developers across the country should be

looking at the caviar is who's
going to buy the McMansion as we're

all living in and I'll show you
why I asked that in a second.

Gen X. only forty six million I'm

seventy eight million trying to
sell to forty six million this.

This is a big program problem now again.

Gen X. is very important to
multifamily because they.

Primarily.

Many of them are still
living in rental housing.

So we love that.

And as a and as a generation Gen X.
is the smallest generation

as a percentage of the total population
since pre-one thousand nine hundred

know why the the reason why they
have such a an interesting factor

is that most of these people particularly
the ones who are thirty to thirty nine.

That's the group that traditionally in
the US has been first time home buyers.

But they're not buying homes.

You know they they haven't and

in obviously the economy has
strained that that further that.

That group of thirty to thirty nine S.
is down seven percent.

From what it has been in prior decades.

That translates to three million
people with the ability to buy homes.

Now.

They are further.

Income by the fact that
mentioned just a little bit ago

about the restrictive mortgage.

Process.

That's going through because the banks
as I said have just jumped to the other

end of the extreme and they're throwing
up every roadblock in making sure that

you go through every trap and
you pass every test

before they're going to be willing to
give you the money to put into that home.

So as a result of that we're
saying people are staying put.

Now because the other thing is this is
this is had a had a been a big factor

on the housing industry but
one of the questions is come up is

had had the economy not fallen had
we had not had the subprime but

with only forty eight million people
in the market we might have still had

a decline in housing values because
they're just on the people to buy them.

So again this is this is this is
a good sign on the multifamily side

because we have people who will
be living in our properties.

Probably for
longer than they would like to now.

Now we come to you guys.

Seventy eight million you
the biggest generation.

By population living in the country today.

And you are the guys who are going to
influence everything as we move forward

we were talking about at lunch.

You know.

You don't drive the economy yet
but your trends and your needs

are driving the economy is everybody
is looking at your your group your

seventy eight million who are going to be
the biggest purchasing unit and probably

in ten years you'll be the biggest
purchasing unit in the United States.

So what is important to you.

Is being incorporated into the plans
of every industry real estate

car manufacturers clothing
private housing vacation.

The way you communicate your trends.

Your predict abilities are driving all of
this and that's why so much generational.

Research is being done on millennia.

Because you guys are a group
that are unlike anything that

a country has ever seen before and
that to.

From my point of view.

That's all the better
because we need change.

You know we've done a lot of good things
but every generation has brought something

new and interesting and
powerful to the to the next.

You know in driving this country's
economy in the way we fuel it and

what we're able to do for ourselves.

So.

You know I'm very happy and
again you know you're

the guys that if you decide maybe
you'd like to give multifamily ago.

You guys will be the leaders of this
industry five ten fifteen years from now

and we need to make sure that all of you

involved because you know what the you
know the one problem with multifamily

is right now everyone in
it looks like Jerry and me.

All white guys.

OK but we represent and
we provide housing for

every ethnic group in this country and
we need to make sure that every

one of those groups is represented in the
management of the multifamily industry.

You can't understand the problems that.

Potential tenants might
have residents might have.

Because of religious ethnic background.

If you're not part of the group and so we
need to make sure we have representation

from every group in leadership roles
in the industry and in this is an end.

You know the association that I run
right now in a way because as I

said you your group is
going to make some of

the most radical changes that
this country has seen and.

From a housing standpoint we need to
make sure that we're there for you and

that all of you are represented not
only in living in those communities but

running those communities
in running the industry.

But some of the things that are going
on that I find kind of interesting.

Those of you who are in your
twenty's are are entering.

You know multifamily housing now in
living in it in the the tent in one

thousand segment of the millennial is just
as big from a from a population size.

As.

The twenty year olds and again why
this is so great for our industry

more almost all of you will live in
rental housing at one time or another.

So our challenge is to be ready and

to make sure that we have
housing that you can live in to.

When you're ready to do it now
some of the some of the trends

that have come up with from for
millennia and again this is taking

everybody as a group that as a group
you will tend to wait longer to marry.

And thus will live in rental
housing longer and so

all our owners think that's a great.

Ok that works.

They're more likely to rent by themselves
than live in a two to three bedroom

unit living with other people.

And I think part of this is because

as a group you all tend to
want what you have at home.

Most of you you know.

Might have your own
bedroom your own bathroom.

You have you have cable you have a T.V.
in your room.

You have Wi-Fi.

So why share with somebody else when
you when you've had it on your own and

so when you come into housing and
a lot and

a lot of our members who now do
student housing around the country.

Say your age group.

This is all they see
what everything you have.

So you don't want to share
bathrooms can't say as I blame you.

You know you have you
have T.V.'s in your room.

You want full Wi-Fi
throughout the unit and

so these are the types of things that
our owners and as we build and develop.

As I said you're driving the market for
the for the future.

All of that stuff goes into the planning
mix now when new multifamily is built or

it's refurbished and rehabbed.

All of that stuff comes into play.

And so we're going to be prepared for

you when you when you
come into the properties.

The other thing is while single you will
tend to choose urban locations close

to work and close to play.

Will utilize public transportation and
support a green.

Sustainable lifestyle.

I had some interesting discussion
on that at at launch and

it seems that a couple of years ago.

Lots of demographics that said that
you as a group when you came out in

rent an apartment.

If the building was sustainable.

That you would be willing
to pay extra money to live.

In that property.

And in talking with Joe He did some
demographic study during the summer.

Going out to college students
on where they're going to live

in found it had turned you no
longer willing to pay for it.

You love it if it's available but
I don't want to pay extra for it.

So is that the economy speaking is
that the difficulty in getting jobs

interesting to know but
it's something that will be looked at.

OK this this is obviously a dynamic for
multifamily.

This part.

This part here all the family
loves That's private homes and

the percentage is dropping so
that from a high of sixty

six to sixty four that that represents
about five million families.

Going from private homes into
something now hopefully.

We hope it's multifamily but there
are there are other housing providers and

I have a slip slide coming up that will
show you where where people have moved to

obviously again caused by it by a tragic.

Incident within the economy.

With the subprime.

You know so many people have lost their
homes that it has significantly impacted.

Again the economy but

it's one of those things where out of
something bad something good happen for

multifamily and again for
many many years to come these trends

should continue positive which is why
again if you're looking at multi family.

It is it's going to be a great
industry to be in minimally for

the next fifteen to twenty years.

Now the the part if this

if this should drop to about sixty four
percent which it really if you see over

the years has been sort of a traditional
thing sixty four percent ownership.

That means another one and
a half to two million families.

Are potentially looking to come into
multi-family another good sign.

Now a bad part of the sign.

There is still millions and
millions of subprime mortgages out that

haven't reached their balloon date but
when they can do.

Bad news is that because of.

Valuations of homes in and what.

You owe on the home so
many homes are underwater.

You know it's not worth what you owe.

And so many people are going to start
walking away from those homes as

it becomes when those blue notes will
come through at the end of the year or

seven year belong.

Whatever might have been granted.

Should that happen.

In the banks don't get smart and
say you making your payments stay in it.

We won't foreclose.

Because what the hell are we going to do
you know with a couple million more homes

but the projections are that
we could have anywhere from.

Two to two seven million more
people in families lose their

homes because of because of
these subprime mortgages.

Now again.

An extremely beneficial event for

multifamily but for the economy as a whole
and what we're going through horribly

tragic if it happens so hopefully the
banks will get their act together on that

in move to make sure that
that does not happen.

Now the other side.

I was referring to is.

These anon apartment rentals.

OK and about.

Twenty percent of the rental
housing in the United States.

Is not apartments these
a single family homes.

What was called when when the again when
the subprime bubble the shadow market.

Those were all those homes that had been
foreclosed on banks turned around and

rented those out have somebody in the home

occupying the home keeping
taking care of the property.

Not a lot of revenue coming in.

But it drove some markets away.

You have.

Condos you have mobile homes and

you have duplex and plex homes that
by the way the government does it

it's your multifamily if you more
than five units in a building.

And if it's less than five units.

It's not considered
multifamily it's other.

Now you can see when they last
substantially when they started doing so

prime They lost about seven
hundred thousand households and

they've gained back almost a million and
a half households.

And again it's it's a shame that.

Segments of the industry have survived and

are actually thrive because
of of a very sad occurrence.

But the good thing is that the housing
is there and that people still can have

a roof over their head and that's you
know I think that's another thing that.

When you when you look at it.

Multifamily industries provides
housing to one hundred

million people in the United States.

And if you can't feel good about yourself

on a day to day basis knowing that
you're providing a quality home.

To individuals to families and

we employ over a million people in the
industry and that that number will grow.

As the developments part
of the industry comes back.

Now one of the things you know we
hear constantly is owning your home.

Still the American dream.

Your generation

is is a lot more mobile
than the than the Gen X.

is where you're more willing
to move to to go to a job.

And so.

Owning a home is a deterrent to mobility.

So many many of you are going
to find it's easier.

To move in work your career by by
moving from a location to look.

Ation then accepting the responsibility
of owning a home and and

everything that goes with it and
sort of an interesting.

Side note is that this thing of mobility

is is very different in the United States
than it is from other parts of the world.

We we showed the.

Ownership of housing.

It's about six a sixty six percent of
the American population owns a home.

Thirty four percent live in apartments
in Europe it's just the reverse.

It's about sixty seven
percent live in apartments.

And thirty three percent own their home.

And it has nothing to do
with mobility it's more.

The value of housing there as
a percentage of salaries is so

much greater than it is
in the United States.

The average we talk about
mobility the average

lease in the United States is nine and
have to ten months.

Averaging everything together.

In Germany.

Anybody want to take a guess and what
you think the average leases in Germany.

Fourteen.

Nineteen years.

OK.

The other thing in Europe is and
part of the reason for that is when you go

into a unit here in the United States
stove dishwasher refrigerator.

Toilets all that's a carpet
in Europe you buy it.

So when you when you go and
you've paid all that money for

all your appliances carpeting that stuff.

If you leave you've got to
take all that stuff with you.

So it's almost a it's a huge deal.

Turned to being people being mobile and
the other thing is in Europe.

Most people.

Typically wind up living within
about twenty to twenty five

miles of where they grew up.

They're very family oriented much more so
then I don't want to say that we're not

family oriented in the United States but
we will move to a job in Europe.

If somebody lives in Berlin.

Which is of the in which is in
the northern part of Germany and

is offered a promotion in Munich
which is in the southern part of

maybe I don't know six
hundred six hundred fifty.

They won't move.

They won't take the job they'll turn down
the promotion in the additional revenue.

Probably eighty percent
of the time it's a very

different dynamic than we have had here
in the States but that's also why.

If you have or
if you own rental property in Europe and

you get a resident you can be pretty sure
that you're probably going to have that

resident for as long as you on that
property or as long as you live.

Whichever comes first but
I mean it is a dynamic that is so

amazing that every time I
go over there and I and

I talk with property owners of the air and
I'll tell them.

Yeah the average the average lease
in the United States is nine have

to ten months in it's like
the conversation comes to us standstill

because they think they've
misunderstood what I've said.

When.

I am going to Germany tomorrow to Munich.

There is a big real estate show that's
held in Munich every year and it's all of

the real estate industry commercial office
building multifamily condo single family.

They they tracked about forty thousand
people go through the show every year.

And there's probably two to three
million square feet of exhibit space.

And the exhibits are unlike
anything you see in the trade show

industry in the United States.

It's kind of overwhelming but
more and more US com companies

are actively looking at the at
the European market in the Asian

market because they want to spread their
risk that you know they have they have

hundreds of millions of dollars invested
in real estate in the United States.

The downturn has made that.

Less valuable than it
was several years ago.

You know it will come back because
the market always seems to have but

where they're sitting on so
much money right now

a lot of companies a looking at
opportunities in Europe and Asia.

Because it does help them
to spread their risk.

It puts particular in Europe.

It puts you into a resident base

that's a lot stronger than in his
here in the United States and

you can be fairly You can be sure
of very strong income streams.

You know for the for
the time you might own that building.

So a lot of lot of our members
are over there actively looking for

acquisitions and a lot of folks in
Europe in Asia are coming into the U.S.

because again the euro.

Is a lot stronger against the dollar
now than it than it's ever been before.

So they can buy more hair in the U.S.
they can in Europe.

So it's working both ways.

And that's another thing that that
you know we want to do is as part of

the national apartment association is make
sure that we're providing a focus for

those people and

making sure we can introduce them to
people that they can do deals with.

OK ethnic diversity talked
about this earlier.

There is not enough of you in our
industry and we need more of you

in management positions in positions
where you will be running companies

where you would be managing communities
becoming regional managers.

It's great great job opportunities
that are out there and I and

I hope that some of you will consider
it because we are providing housing.

For every ethnic group and

some of the you know it says Does
this change some the common way how

perceptions about WANT TO else well I gave
you some things just to be a live longer.

They'll be urban his let me
tell you what they say about.

The thing thirty nine percent of today's
twenty somethings are hysteria Hispanic

black or Asian That's a total of thirty
million of the seventy eight million.

In the Millennial.

Something different that
research has come up with and

also came out as part of the two
thousand and ten cents sense.

Two thousand and ten census.

Ethnic minorities tend to get married and
have children much earlier than do whites.

OK Is this a trigger
that could lead to more

millennialist moving out of multifamily
in buying single family homes.

Again the census showed that the big
population growth center is for

ethnic minority households of
the suburbs not urban areas.

Why do you think they're
moving to suburbs guys.

Number one reason they're moving.

Anyone want to take a guess schools.

Schools for their kids find it.

Finding that in that
the suburban schools are better

equipped to educate their children for
the challenges of the future.

So there has been a significant move.

It's the first time the census
has ever said has ever seen this

to the degree it is.

It's a very significant move.

So once again one size does not fit all
no matter what we try to put into figure.

We can never accurately capture
what everybody is doing

this this figure of seventy
five percent of our

growth that goes against all
generations not just millennia.

I think many of you
have probably seen the.

The speculation that by two thousand and
fifty Spanish will be the number one

language the most populous language
spoken in the United States of America.

Over fifty percent of the residents of
the United States will speak Spanish.

That's that's a significant change.

And again one of the things that we in
multifamily have to be prepared for.

So you know we are very much in need of

Hispanic and Asian employees particularly
in a lot of the urban centers because.

Legal immigrants come to this country.

You know with a visa tend to
live in rental housing for

the first ten years there they are in
the United States in the in the the pool

of legal immigrants legal aliens coming
into the country every year is growing.

It's.

Upwards of two million people a year so

that is another great factor for
multi-family.

Because they live in rental housing for

the first ten years they were in the
United States is an average about ninety

five percent of them will spend
the first ten years in rental housing.

So you know we're really looking at.

Some very interesting.

Beats between the three generational pools

between legal immigrants
coming into the country.

We potential.

We have more people moving into
multi-family than we have units for

them to move into.

It's a great problem and
hopefully the economy will turn around.

So the development side of the industry
can get going because that's what

that's really what has suffered
the last four years is the development

side the management the owner property
ownership side has been great.

As you've seen from the occupancy
rates we're seeing but

the development side is what has
slowed but having those types of.

You know influx of people will drive.

Now this is absolutely true.

From my point.

My son.

The last two summers after his
freshman softened your work for

me and so every morning I would go in and
wake him up.

His phone would be in his
hand asleep on vibrate.

God forbid he missed a call or a text
message in the middle of the night and

if you guys the same way.

Come on you can be honest.

All right Josh.

You're honest man now and I think the rest
of you would not telling the whole truth.

But you know.

You know another trend.

How do you reach Millennial.

Don't call them on the phone text them or
email them text Preferably I know

my own son if he sees them
that my number coming in.

He just ignores it.

If I text him though he
generally will get back to me

within a couple of minutes but a cell.

I mean guys it's a cell phone
you supposed to talk on it.

It's again.

So I say you guys are going to make
is a generation to make changes and

you will make living changes that
you know have been unprecedented and

I think this is an example in.

One of our communities and
Dallas upscale community.

Did a survey of their residents and
they got some surprising.

Announcements from.

From the money else.

And again it's something that we as
operators of multifamily have to take into

consideration.

Jerry when you and I lived in apartments.

When our when our Reno came up the day
of the slide the renewal under the door

just pasted on the door and so when
you got around to taking off the door.

You got around to it.

Millennia else.

Hey don't do that if I'm not around.

If I'm out visiting or
I'm away on vacation.

That tells everybody on that
floor that I'm not there and

potentially places my unit as something
that could be burglarized or vandalized.

They want the text message.

You know your reno lease
is at the front desk and

down pick it up but don't do that.

So just warning it.

Well he's even more hopeless than I am so.

I do feel a little bit better about that.

So again these are the types of things.

Yes Jerry.

This is the research that I got from him.

P.F. and they got it in there as was.

Hold on let me get back there and
see what.

OK I don't see where they
got it from a lot of their

stuff is like from the Census Bureau
in but it didn't note.

Immigration they get that
from State Department.

And again I don't know
if they have broken out.

Children who come in and if they're broken
into the money that I don't know Jerry.

OK just these are some predictors for the.

For the balance of the year.

Apartment revenue growth this
year will rank among the best

performances the industry has ever seen.

Talked earlier it said two point four
percent four point six for year.

Two point four percent for

the second quarter five point
nine percent for the year.

That's effective rent growth that's
that's a great figure in for

our members for many of our members.

That's the difference between red ink at
the bottom of your financial statement

in black ink.

OK so that that is a big big number.

General marketing performance influences
will be working the rental housing.

So a lot of the.

You know what's what's happening with
Unfortunately people losing their homes.

The fact that the the baby
boomers are going to be selling

hopefully if they can to make mansions and
they will be looking at the Gen X.

is still in there and
you guys are going to come out in huge

huge wave of numbers over
the next fifteen years.

And that is really what is
driving the great forecast for

multifamily is your generation.

You know the sad part is it's
not you know for many of you.

It's not going to be whether or

not you want to own a home it's
can you afford to buy a home so.

Because of that the evidence
is that millennia

ago into occupy rental housing in greater
numbers than any generation before you.

So again for multifamily That's
a great statistic coming out.

OK The rental housing base already quite

varied will become much more as is more
ethnic groups come to the United States.

We have to be prepared to support
those groups so that they are.

Constable in coming into our housing.

So as I said earlier we need to
make sure that all of the different

groups that are represented in this room
are represented in management in leasing

in maintenance whatever it is

what threw out every segment from the from
the executive office chair down to

the guy who is doing Curb appeal and
making sure that the the law is a mode.

We have to make sure that
everyone is represented in that

is not the case right now.

We're making strides It's a look at
certainly it's a lot better than it was

twelve years ago when I took
over as president of N.A.I.A..

We have seen significant
increases in minority represent

representation in the leadership of our
associations all around the country and

in the workforce working
at the properties.

But it's not as good as it has as it
needs to be you know within five years.

We need to be fully up to make
sure that we can represent every

group living in our communities.

And then the last minute
you bust a number of

your generation the other generation
learning what makes you tick.

What you want.

What is going to be attractive that
will cause you to rent my unit other

than Gerry's So there is going to
be extensive extensive research.

Will be done by our industry to
get to know all of you better.

What do you want.

What do you need.

How do you want it.

How do you how does how can it be
delivered what are the extras the concept.

You know a lot of multifamily
communities are going to concierge

service now they'll be
a lot more of that and

as I said your generation is going to
define the future of multifamily and

what and how multifamily presents
an office itself to all of you.

So thank you very much I enjoyed it.

Thank you thank you.