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DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ONTRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. FOR OTHERIMPORTANT DISCLOSURES, visit www.credit-suisse.com/ researchdisclosures or call +1 (877) 291-2683.
U.S.Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investorsshould consider this report as only a single factor in making their investment decision. Customers of Credit Suisse in theUnited States can receive independent, third party research on the company or companies covered in this report, at no costto them, where such research is available. Customers can access this independent research at www.credit-suisse.com/ir orcall 1 877 291 2683 or email equity.research@credit-suisse.com to request a copy of this research.05 February 2009Americas/United States
Equity Research
Homebuilding (Homebuilding/Building Products) / MARKETWEIGHT/UNDERWEIGHT
Monthly Survey of Real EstateAgents
CHANNEL CHECK
Higher Traffic, But Extremely Price Sensitive
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Traffic up again in January; economy leads to some caution, butbuyers focus on lower prices and mortgage rates.
Our Monthly Survey ofReal Estate Agents in January saw a further increase in buyer traffic as aresult of the continued low mortgage rates and further declines in homeprices. We’ve generally seen an uptick in traffic in January relative toDecember, but believe it was more significant this year as a result of theattractive affordability. Most sales activity remains at the lower price points,with especially strong demand for foreclosures. Homebuilders will need toadapt to compete with foreclosures or should expect limited orders.
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Widespread improvement in traffic, highest levels seen in foreclosure-rich markets.
Our traffic index increased by 11.2 points to 36.5 from 25.3 inDecember, with improvement in 33 of the 40 markets. Among the largestmarkets, the most pronounced improvement in traffic was seen in Dallas, FtMyers, Jacksonville, and Orlando. Overall, we saw the highest levels oftraffic in hard-hit markets contending with significant foreclosure activity suchas Ft Myers, Las Vegas, and Sacramento, as the foreclosures are selling atsuch affordable levels that they are helping to generate traffic. There was,however, continued concern among buyers as to the prospects for theeconomy with buyers needing to think that they were getting a great “deal”before moving ahead with a purchase.
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Continued pressure on home prices due to foreclosures and highinventory levels.
Our price index inched up to 15.9 in January, up from 13.3in December, with any readings below 50 implying sequentially lower prices.We do not expect prices to increase until we see significantly lower inventorylevels and believe that the improving traffic is a function of these lowerprices. Our home listings (inventory) index declined to 43.5 from 48 inDecember, with levels below 50 indicating rising inventory (which we wouldexpect as inventory increases ahead of the Spring season). Our time to sellindex, which is a good leading indicator of pricing trends, remained low at26.6 (up from 23.2 in December), with anything below 50 indicating alengthening time needed to sell a home.
Research AnalystsDaniel Oppenheim, CFA
212 325 5726dan.oppenheim@credit-suisse.com
Michael Dahl
212 325 5882michael.dahl@credit-suisse.com
Russell W. Lane
212 538 3992russell.lane@credit-suisse.com
05 February 2009
Monthly Survey of Real Estate Agents
2
Table of Contents
Overview of Results………………………………..…..3Survey Methodology…………………………………...5Top 20 Housing Markets
Atlanta, Georgia 7Austin, Texas 8Charlotte, North Carolina 9Chicago, Illinois 10Dallas, Texas 11Denver, Colorado 12Fort Myers, Florida 13Houston, Texas 14Jacksonville, Florida 15Las Vegas, Nevada 16Los Angeles, California 17Miami, Florida 18Minneapolis, Minnesota 19New York-Northern New Jersey 20Orlando, Florida 21Phoenix, Arizona 22Riverside-San Bernardino [Inland Empire], California 23Seattle, Washington 24Tampa, Florida 25Washington, D.C. 26
Additional Key Housing Markets…………………… 27
Baltimore, Maryland 28Boston, Massachusetts 29Charleston, South Carolina 30Cincinnati, Ohio 31Columbus, Ohio 32Detroit, Michigan 33Nashville, Tennessee 34Philadelphia-Southern New Jersey 35Port St. Lucie, Florida 36Portland, Oregon 37Raleigh, North Carolina 38Richmond, Virginia 39Sacramento, California 40San Antonio, Texas 41San Diego, California 42San Francisco, California 43Sarasota, Florida 44Tucson, Arizona 45Virginia Beach, Virginia 46Wilmington, North Carolina 47
Historical Survey Trends by Market……………… 48
*Markets are characterized based on permit activity and listed in Alphabetical order
05 February 2009
Monthly Survey of Real Estate Agents
3
Higher Traffic, But Extremely Price Sensitive
For those who may be unfamiliar with our survey, we center our indices around 50 so that readings above 50 indicate positive or improving trends and readings below 50 indicate negative or worsening trends. Please see page 5 for a full description of our survey methodology.
Traffic up again in January; economy leads to some caution, but buyers focus onlower prices and mortgage rates.
Our Monthly Survey of Real Estate Agents in Januarysaw a further increase in buyer traffic as a result of the continued low mortgage rates andfurther declines in home prices. We’ve generally seen an uptick in traffic in Januaryrelative to December, but believe it was more significant this year as a result of theattractive affordability. Most sales activity remains at the lower price points, with especiallystrong demand for foreclosures. Homebuilders will need to adapt to compete withforeclosures or should expect limited orders.
Exhibit 1:Affordability Drives Better Traffic in January
MonthBuyerTrafficIndexHomePriceIndexIncentiveIndexHomeListingsIndexTimeto SellIndex
Apr-2008 33.1 20.6 28.3 27.2 24.2May-2008 31.5 21.4 30.8 32.1 24.9Jun-2008 29.0 22.1 28.8 33.6 26.6Jul-2008 27.4 21.0 30.5 34.7 24.9Aug-2008 25.9 20.1 29.7 37.5 25.7Sep-2008 24.0 17.5 30.6 39.5 22.5Oct-2008 19.6 15.3 29.6 41.0 19.9Nov-2008 19.8 15.3 30.3 45.3 22.0Dec-2008 25.3 13.3 30.3 48.0 23.2Jan-2009 36.5 15.9 32.1 43.5 26.6
Point change11.22.61.8(4.5)3.4
Source: Credit Suisse estimates
Widespread improvement in traffic, highest levels seen in foreclosure-rich markets.
Our traffic index increased by 11.2 points to 36.5 from 25.3 in December, withimprovement in 33 of the 40 markets. Among the largest markets, the most pronouncedimprovement in traffic was seen in Dallas, Ft Myers, Jacksonville, and Orlando. Overall,we saw the highest levels of traffic in hard-hit markets contending with significantforeclosure activity such as Ft Myers, Las Vegas, and Sacramento, as the foreclosures areselling at such affordable levels that they are helping to generate traffic. There was,however, continued concern among buyers as to the prospects for the economy withbuyers needing to think that they were getting a great “deal” before moving ahead with apurchase.
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