School District Strategies Report - Denton ISD

School District Strategies Report - Denton ISD

Denton Independent School District Residential Growth Report 2nd Quarter 2010 Paloma Creek South August 10, 2010 New Cross Oaks Elementary Lantana - Bellaire Median New Home Price Annual Starts Annual Closings Finished Vacant Homes Month Supply Homes Under Construction Month Supply Vacant Developed Lots Month Supply Lots Under Development* Dallas Ft. Worth DFW $219,586 10,625 11,095 2,784 3.0 $183,527 5,853 6,197 1,620 3.1 $202,381 16,478 17,292 4,404 3.1 2,855 3.1 50,399 56.9 2,261 1,421 2.8 26,804 55.0 978 4,276 3.0 77,203 56.2 3,239 Dallas-Ft. Worth Housing Vital Signs

(3Q09 2Q10) Year-over-year growth Annual Starts by Price Point 56,000 52,000 <$150K 2Q09: 2,770 2Q10: 2,781 Change +11 % Change +0.4% 48,000 44,000 40,000 Annual Units 36,000 $151-200K 2Q09: 3,804 2Q10: 5,366 Change +1562 % Change +41% 32,000 28,000 24,000 20,000 Annual Starts of $151-200K Homes is on the rise 16,000 12,000 Starts Closings 8,000 4,000 0 1997 234 1998 234 1999 234 2000 234 2001 234 2002 234 2003 234 2004 234 2005 234 2006 234 2007 234 2008 234 2009 234 2010 2 Year-over-year Change Annual Starts: +18.67%, Annual Closings: -14.39%, Lot Deliveries: 84.8% $201-300K 2Q09: 4,303 2Q10: 5,277 Change +974 % Change +22% $301K+ 2Q09: 3,009 2Q10: 3,104 Change +95 % Change +3.16% Starts, Closings & Lot Deliveries Current DFW Market Conditions Start and sales activity was elevated during the first quarter and first few weeks of 2Q10, however after the tax credit deadline, traffic and sales trailed off for many builders Summer 2010 has provided mixed results for most homebuilders Buyers are torn as interest rates remain at historic, attractive levels while the national economic conditions lack any substantial improvement; qualification standards remain conservative Despite mixed results, overall housing conditions in DFW in terms of new home inventory and resale inventory remain healthy Vacant lot supply is overall still above equilibrium. However, supply in the best submarkets/communities is approaching very tight levels The credit crisis continues to limit access to the financing needed by developers, builders and home buyers Small and regional builders are especially challenged in finding new replacement locations, as much of the desired supply is now spoken for, requiring the initiation of new lot development, which smaller builders

are often unable or unwilling to do Remainder of 2010 likely to be characterized by slower pace of home starts and sales as compared to Spring levels, however, employment gains should help to solidify 2011 market performance. 140,000 Annual Change Jun 09-Jun 10 120,000 TWC CES: +27,300 Dallas Fed: +11,800 Total DFW MSA: 2,892,800 100,000 80,000 60,000 40,000 +27,300 20,000 0 -20,000 YEAR OVER YEAR IN THE POSITIVE -40,000 -60,000 -80,000 -100,000 -120,000 -140,000 Trough: 8/09 -137,400 -160,000 '0 0 A J O '01 A J O '02 A J O '03 Source: TWC CES, Dallas Federal Reserve A J

O '04 A J O '0 5 A J O '0 6 A J O '0 7 A J O '0 8 A J O '0 9 A J O 10 Current TWC Growth Rate is +0.95% DFW Current Employment Survey Current Trends Indicate Dallas Federal Reserve Accurate With Forecast of 1-2% Employment Growth for 2010 (+30-60K net new jobs) A DFW Unemployment Rate 10 Unemployment Rates June 10 DFW: 8.5% Texas: 8.5% US: 9.6% 9 UNEMPLOYMENT STILL HIGH 8 7 6 5 4 3

2 '00 '01 '02 '03 '04 '05 '06 '07 '08 Not Seasonally Adjusted Source: TWC - LAUS DFW Unemployment Trends 09 10 30,000 20,000 10,000 Mining, Log, Const Monthly Change 0 Manufacturing -10,000 Trade, Transp, Util -20,000 Information Financial Activities SEASONAL LAYOFFS (SUMMER JOBS) -30,000 Prof & Bus Services -40,000 Edu. & Hlth Serv. -50,000 DFW sees net creation of 72,500 jobs from Feb thru June, 2010 -60,000 -70,000

J F M 2007 A 2008 M J 2009 J A 2010 S O N D Annual Change % Change (13,800) -8.1% 5,500 2.1% (9,500) -1.6% (6,900) -8.3% (3,500) -1.5% 13,800 3.3% 21,700 6.4% (1,200) -0.4% (1,300) -1.2%

22,500 5.8% Leisure & Hospital Other Services Government Source: TWCCES Survey Monthly Change in Employment Market Outlook 1Q 2Q 3Q 4Q 2009 2,418 3,201 4,256 3,613 2010 4,148 4,460 Economy New Home Industry Note that 3Q09 was especially pronounced due to surge of homebuyers taking advantage of initial first time homebuyer tax credit Current anecdotal reports regarding traffic and sales suggest that it may be difficult to better 2Q10 start pace. Thus it is possible that annual start rate could moderate slightly in 3Q10 But overall conditions continue to improve, just more slowly than desired If annual start rate slows in 3Q10, expect it to pick back up in 4Q10 Denton ISD New Housing Activity 4-Yr History: Quarterly Totals 700 650 Starts 600 Closings 550 ACTIVITY FOLLOWS FED TAX CREDIT 500 450 400 350 300

250 200 150 100 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Starts 2003 2004 2005 2006 2007 2008 2009 2010 Closings 2003 2004 2005 2006 2007 2008 2009 2010 1Q 2Q 404 648 572 680 2,304 609 805 782 387 2,583 479 639 712 512 2,342 674 644 542 451 2,311

447 468 486 301 1,702 350 441 311 205 1,307 141 189 314 212 856 251 248 1Q 2Q 356 497 589 580 2,022 510 639 751 616 2,516 520 551 746 589 2,406 523 565 606 552 2,246 459 537 510 476 1,982 374 247 391 267 397 235 301 275 1,463 1,024 234 289 3Q 4Q

Total 3Q 4Q 499 Total 523 9 DFW School Districts by New Home Activity Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ISD Frisco Northwest Denton Keller Mansfield Eagle Mountain-Saginaw Lewisville Allen Crowley Wylie Prosper McKinney Royse City Burleson Little Elm Rockwall Forney Ft. Worth Crandall Dallas 3Q09-2Q10 Starts 1982 1566 1026 902 732 683 653 609 522 465

443 425 324 303 294 293 292 272 258 252 Denton ISDs new home market produced 3rd most annual starts among Dallas-Ft. Worth school districts from 3Q09-2Q10 10 Activity by City Sector Annual Annual Starts Closings 1. Denton Co. East 373 380 2. Denton South 243 251 3. Denton North 165 144 4. Prosper 111 95 5. Lantana 106 129

6. Corinth 18 10 7. Shady Shores 7 10 8. Cross Roads 1 10 11 Top Performing Subdivisions Starts 1-year Forecast Annual Closings 1. 2. 3. 4. 5. 6. 7. 8. Paloma Creek Lantana 129 Glenbrooke Est. 95 Savannah 72 Preserve at Pecan Creek Longhorn Cove 53 Robson Ranch Forest Meadow 42 295 79 256 64 83 33 58 256 12 33

63 0 46 63 0 53 23 2-year Forecast 53 23 12 Price Range Analysis 533 550 531 500 HOMES AT $151-200K REPRESENT 50% OF THE ACTIVITY STARTS AND CLOSINGS ARE LEVEL - CONTRACTORS ONLY BUILDING WHAT THEY CAN SELL 450 400 350 300 250 200 197 183 150 112 100 104 86 84 84 111 50

0 14 Under $150k $151-200k $201-250k Annual Starts = 1026 $251-300k $301-500k 20 $500k+ Annual Closings = 1033 Annual Average Start Price Annual Median Start Price 2Q10 Average Start Price $205,505 $180,051 $228,645 13 Lot Supply 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Prelim Vacant Developed Lots Approved Future Lots Prelim. Planned Lots Future VDL 3,172 lots (37.1 months) 4,436 lots (51.9 months) 39,463 14 2nd Qtr typically has the

highest sales; 2Q10 boosted by tax credits Denton ISD Resale Market (Single-Family Residential Only) Denton ISD Resale Data SF Residential Total Sales Average Sales Price Days-on-market Foreclosure Forced Sales Pending Sales Active Listings Months Inventory 1Q08 414 $182,976 91 64 29 119 2Q08 580 $183,354 75 93 29 139 3Q08 573 $179,381 78 69 31 202 4Q08 346 $175,630 80 81 33 281 1.8 Annual Total Sales 1,913 1Q09 357 $172,226 90 90 41 318 2.1 1,856 2Q09 507 $176,161 84 77 206 727

4.9 1,783 3Q09 529 $186,968 90 52 203 984 6.7 1,766 4Q09 1Q10 2Q10 482 321 670 $185,373 $184,303 $179,678 75 80 68 80 70 106 178 356 208 885 989 1,148 5.5 6.3 6.9 HIGHEST SINCE 1,924 1,894 WAS 2,002 INFORMATION TRACKED +9% -1.5% % Change from previous qtr. n/a -3.0% -3.9% -1.0% Annual Foreclosure Forced Sales 307 333 317 292 299 281 308

% Change from previous qtr. n/a 8.5% -4.8% -7.9% +2% -6% +9.6% Active Listings 281 318 727 984 885 989 1,148 n/a 13.2% 128.6% 35.4% -10% +11.8% +16.1% % Change from previous qtr. +5.7% 15 New Cross Oaks Elementary r rrido o C 80 US-3 s puse y m a C r enta

icing Serv aks Elem ol hool s O le Scho c s S o r C vo Midd yan High a N nton & R e D 16 Glenbrooke Estates r rrido o C 80 US-3 399 total lots 158 occupied homes 62 vacant lots 144 future lots planned 95 closings over past 12 months 46 new lots delivered in 2Q10 s puse m a C y ntar icing Serv h Eleme ol ho na avan iddle Sc ool S h M h Sc avo N nton Hig e D 17 Paloma Creek South r rrido o C 80 US-3 3,043 total lots

971 occupied homes 305 vacant lots 768 approved future lots 935 prelim lots planned 229 closings over last 12 months s puse ry m a a ing C lement c i v r kE Se Cree School a m le l alo P vo Midd Schoo h a N nton Hig e D 18 Lantana - Bellaire Area e l l i onv Bart 62 total lots 30 occupied homes 26 vacant lots 6 homes U/C s puse m a y ing C mentar c i v r le l Se zor E e Schoo y a R l .P. idd E rpool M School

a H yer High u G 19 Denton ISD 2Q10 Summary Starts up 21% vs. 2Q09 with 1,026 annual units (vs. 846) Annual closings declined 15% to 1,033 units (vs. 1,212 in 2Q09) Paloma Creek South (26), Glenbrooke Estates (22), Preserve at Pecan Creek (14), Longhorn Cove (13) 46 new lots delivered this quarter in Glenbrooke Estates (Prosper) 48,058 total potential lots remaining in the district However, 289 closings in 2Q10 is most in 18 months (since 4Q08) DISD ranks 3rd in annual new home starts among DFW school districts [Frisco (1st), Northwest (2nd)] Homes under construction down 8% from 1Q10 (220 units currently u/c) 165 finished vacant units available Activity boosted by expiration of federal tax credits on April 30th 3,172 vacant developed lots 4,436 future lots 39,463 preliminary lots planned New home forecast for 3Q10-2Q11 = 923 starts Highest quarterly resales total in over two years with 670 sales 2Q10 sees 106 foreclosure forced sales (70 in 1Q10) Annual foreclosure rate down 2% vs. 2Q09 (308 vs. 317) 20 Copyright 2010 School District Strategies Questions 21 Copyright 2010 School District Strategies

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