With respect to the Southern California Housing Market, the Fourth Quarter of 2008 appears to be experiencing a "wait and see" pattern among many developers, investors, lenders, and consumers; as they try and sort out a future direction for next year. The main factors or variables under observation have included: the recent Presidential election, SB 375, the curtailment in water supply to Southern California next year, job growth/job security, and when construction financing will be available again from the lending community as a result of the Emergency Economic Stabilization Act of 2008 (i.e., the $700 Billion' Troubled Asset Relief Program or "TARP").

In addition, we have observed and heard the following during the 4th Quarter of 2008... there have been numerous "vulture funds" expressing a lot of enthusiasm about their eagerness to purchase distressed subdivisions and land assets; however there have been relatively few transactions completed to date. Those that have taken place have generally been in the $0.20 -$0.40 on the dollar range. Many developers and investors have reported a future strategy to purchase "dirt" just prior to the market leveling off; as they do not want to purchase land after the market bounces off the bottom; as they are afraid everyone will jump back in the game at that time. The critical information desired is identifying which submarkets will bottom out and rebound first, and the major factors supporting those projections (i.e., inventory, foreclosures, job growth, finished lot values, home price ranges of opportunity etc.). Addressing these type of issues has generated a lot of consulting assignments in recent weeks for The Concord Group.

Nine out of ten developers and investors that I talk to weekly have indicated that they will be looking to purchase land over the course of next year: because they believe most submarkets will bottom out before the end of 2009; and they want to begin construction sometime in 2010, in order to catch the earliest rebound in market conditions.