Keeping Current Matters In Today’s Market”: Positioning Agents As Experts In The Marketplace

ping Current Matters in Today’s Mar

Real Data. The Real Message. The Right Deliv Picture 10

Positioning agents as experts in the marketplace

April 2009

CBS Early Show CBS Early Show money maven Ray Martin weighed in on the Saturday Edition about whether buying is indeed the way go to now. Question: IS THIS A GOOD TIME TO INVEST IN REAL ESTATE?

Answer: Yes, it is, and for a number of reasons. For one thing, housing prices are declining just about nationwide. Plus, mortgage rates are at a serious low. Rates on a 30-year, fixed-rate mortgage are at a level we won't see again in our lifetime. Finally, if you buy before December 1, you'll get an $8,000 tax credit if you're a first-time buyer. For all those reasons, there's really never been a better time to go shopping for real estate. Source: CBS.com 3/14/09

NBC Today Show “For the first time in a long time, you can actually get both a short- and long-term gain on a real estate investment. With prices down, interest rates at record lows, and so many would-be buyers deciding to rent instead, it’s a great time to buy a real estate investment.” - Barbara Corcoran

Source: NBC TODAYShow.com 3/12/09

Forbes.com Ten Things To Buy Before The Economy Improves “At the top of the list: housing. This may be the best time in a generation to buy a home.”

Source: Forbes.com 3/31/09

Kiplinger's Personal Finance “It's a good time to snag a bargain if you're confident in your job prospects and you don't plan to sell for at least five years.”

Source: Kiplinger's Personal Finance 3/09

$8,000

$

Pew Research Center Survey 75 percent said it was a good or very good time to buy a home.

Source: Pew Research Center 3/16/09

Sales – month over month Category

Existing Sales Pending Sales New Construction

Percent age5.1 2.1 4.7

Interest Rates

Mortgage Rates – 30 year fixed Since 1/1/2009

1/1/2009 Source: Federal Reserve

Source: Ashley B. Garner, Intracoastal Realty

Mortgaging

Source: FHFA 3/18/09

Major Banks Re-Enter Jumbo Arena Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios. It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20-percent down payment, have good credit, provide proof of income, and hold six months' of principal, interest, property tax, and insurance payments in reserve. Other banks offering jumbo loans include ING Group's ING Direct unit and Luxury Loans of San Diego.

Source: Chicago Dailey Herald 3/20/09

Pricing

List Prices The 10-City Composite Index was effectively flat during the last month but still down 2.1% over the most recent three month period. This represents the first non-declining month since inception of the Composite Index in January 2008. Listing prices moved up or down by less than one percent for the month in 16 of 26 markets indicating at least some level of stability.

Source: Altos Research & Real IQ 2/09/09

Prices - year over year Index

% Price Change

OFHEO Case Shiller NAR IAS360 Census Bureau

(New

Homes) Source: Macro Markets, IAS, OFHEO, Census Bureau, NAR

- 6.3 - 19 - 15.5 - 14.1 - 16.7

Home Prices Up 1.7% - Really? The January home sales reflected in the FHFA data disproportionately occurred in areas with the strongest markets…The data suggest that if one were to remove those effects, the change in home prices in January, while still positive, would have been far less dramatic.

Source: FHFA 3/24/09

First American Core Logic Home prices have declined by at least 10 percent on a year-over-year basis for 11 consecutive months and February preview data indicates the trend will continue, according to a report released by First American CoreLogic. “Nearly three quarters of all CBSAs (core based statistical areas) are now experiencing declines, almost three times more than a year ago,” Fleming said. “The economic downturn and high levels of distressed housing inventory means that the likelihood of a price recovery will not begin until 2010.” Source: Housing Wire 3/24/09

Source: Seeking Alpha, Tom Iacono 3/24/09

Source: Seeking Alpha, Tom Iacono 3/23/09

Source: Seeking Alpha, Tom Iacono 3/17/09

Conclusion The fourth quarter of 2008 saw substantial increases in price risk as the nation experienced weaker home price growth, rising mortgage delinquency rates, and higher rates of unemployment. Risk is likely to continue increasing for a while… We still expect that national home prices will fall further because of the large number of homes for sale. The worst national price drops are probably behind us, however, and by 2010 national prices should begin to stabilize.

Source: PMI Report April 2009

Foreclosures

Source: FHFA 3/18/09

Shadow Inventory? Some of the top U.S. lenders own as many as 700,000 foreclosed homes they have yet to offer for sale, said Rick Sharga, executive vice president for marketing for RealtyTrac.

Source: Bloomberg 3/12/09

Future Inventory? Because home prices continue to drop across most of the country, the mortgage debt on about 20% of all U.S. single-family homes exceeded the estimated current value of those properties as of Dec. 31. That’s a situation often known as being “underwater” or “upside down.” That proportion will rise to 25% of single-family homes if prices fall another 5%.” - First American CoreLogic

Source: Wall Street Journal 3/4/09

Future Inventory? “A third of owners will stop making mortgage payments if the value of their homes drop 20 percent or more below what they owe, a situation known as ‘rational default’.” - Norm Miller, director of real estate programs at the University of San Diego School of Business Administration.

Source: Bloomberg 3/5/09