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Appraisal: APN 053-182-030, S.E. Corner of Maple & Lathrop Streets, Redwood City, Calif.Page 11 <br />2025CNA112 <br />A. Regional Economic Conditions <br />The March 2025 Allen Matkins/UCLA Anderson Forecast for the California <br />economy states that Much of the story currently being told in regard to the <br />California economy is rooted in immigration. Immigration policy will likely have <br />two effects on California. <br />The first will be the withdrawal of millions of undocumented workers from the <br />U.S. labor force including in California either through the deportation <br />process underway or because such workers voluntarily leave jobs that put them at <br />high risk of deportation. The current Forecast report for California assumes such <br />deportations will commence and be carried out, as repeatedly promised by the <br />current administration since the beginning of the election campaign. Studies have <br />shown that past incidents of mass deportation decreased the number of <br />undocumented workers but also decreased the rate of employment in the <br />remaining population. <br />The second effect of immigration policy involves H1B visas issued to workers in <br />the tech industry. The emphasis the new administration is expected to place on <br />challenging. First, deportations will deplete the construction workforce. The loss <br />of workers the industry relies on for installing drywall, flooring, roofing and <br />finishing, for example, will directly diminish production of single-family and <br />smaller (non high-rise) multifamily developments. <br />The second factor relates to persistent inflation in the U.S. The Federal Reserve is <br />much less likely to lower the federal funds rate with the trend in consumer <br />inflation moving away from their 2.0% target. This will increase the cost of funds <br />for construction loans and, therefore, the cost of new construction. <br />The third factor relates to the tariff policy of the Trump administration. The <br />source of building materials is international, with key inputs such as lighting and <br />electrical fixtures and appliances originating in China. A 20% or more increase <br />in the cost of these inputs will increase the cost of construction and further limit <br />the demand for newly built homes. Moreover, nearly 70% of U.S. lumber imports <br />come from Canada, and 71% of gypsum imports (the primary component of <br />drywall) come from Mexico. <br />8.K. - Page 58 of 105 <br />308