Market Analysis 2022 - 49

CRITICAL ASSUMPTIONS
Our conclusions are based on our analysis of the information available from our own sources and from the client as of the date of this report. We assume that the information is
correct, complete, and reliable.
We made certain assumptions about the future performance of the global, national, and local economy and real estate market, and on other factors similarly outside either our
control or that of the client. We analyzed trends and the information available to us in drawing these conclusions. However, given the fluid and dynamic nature of the economy and
real estate markets, as well as the uncertainty surrounding particularly the near-term future, it is critical to monitor the economy and markets continuously and to revisit the
aforementioned conclusions periodically to ensure that they are reflective of changing market conditions.
We assume that the economy and real estate markets will continue to recover, albeit at a moderating pace over the next 12 to 24 months. However, stable and moderate growth
patterns are historically not sustainable over extended periods of time, the economy is cyclical, and real estate markets are typically highly sensitive to business cycles. Further, it is
very difficult to predict when an economic and real estate expansion will end. With the above in mind, we assume that the long-term average absorption rates and price changes will
be as projected, realizing that most of the time performance will be either above or below said average rates.
Our analysis does not consider the potential impact of future economic shocks on the national and/or local economy, and does not consider the potential benefits from major
" booms " that may occur. Similarly, the analysis does not reflect the residual impact on the real estate market and the competitive environment of such a shock or boom. Also, it is
important to note that it is difficult to predict changing consumer and market psychology.
As such, we recommend the close monitoring of the economy and the marketplace, and updating this analysis as appropriate.
Further, the project and investment economics should be " stress tested " to ensure that potential fluctuations in revenue and cost assumptions resulting from alternative scenarios
regarding the economy and real estate market conditions will not cause failure.
In addition, we assume that the following will occur in accordance with current expectations:
► COVID-19 pandemic continues to ease and does not require re-imposition of lockdown measures that could materially impact consumer confidence and the economy
► GDP, employment, and household growth and other key demographic and economic patterns
► The cost of development and construction
► Tax laws, monetary policy, and other major legislation (i.e., property and income tax rates, deductibility of mortgage interest, and so forth)
► Availability and cost of capital and mortgage financing for real estate developers, owners and buyers
► Competitive projects will be developed as planned (active and future) and that a reasonable stream of supply offerings will satisfy real estate demand
► Major public works projects occur and are completed as planned
Should any of the above change, this analysis should be updated, with the conclusions reviewed accordingly (and possibly revised).
DPEP | Cotino™, a Storyliving by Disney™ Community | Rancho Mirage, California
R1-12149.06 | March 25, 2022 | 49
Market Analysis 2022

Table of Contents for the Digital Edition of Market Analysis 2022
