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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.06 November 2009Americas/United States
Equity Research
Homebuilding / MARKET WEIGHT
Monthly Survey of Real EstateAgents
CHANNEL CHECK
Traffic Slows in Late October; Waiting forRebound
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October traffic slips from September levels, sharp divergence betweenearly and late October.
Our October survey of real estate agents showed aslight decrease in traffic for the month as a whole with our buyer traffic indexinching down to 44.0 in October from 44.8 in September. However, the statsfor the month do not tell the complete story, as traffic early in the month wasabove September levels, as last-minute tax credit-driven buyers hurried totake advantage of the credit (which will likely be extended and expanded).However, late in the month we saw a decline in traffic, with our traffic indexdown 5 points from the levels at the start of the month. We fear that many ofthe first-time buyers have already acted and that there will be less entry-leveldemand even with an extension of the tax credit. We continue to believe thatthe tax credit pulled forward demand and that there will likely be a lull inbuyer traffic at the end of 2009 and start of 2010.
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Will traffic rebound following an extension of the tax credit?
Wepreviously noted that it would be important to watch traffic trends in mid-October for evidence of a slowdown once it was no longer possible to sign acontract and have closing before November 30
th
.
We now think the key willbe watching to see what happens to traffic in November once the tax creditis officially extended and expanded. If traffic levels improve from thesubdued levels seen as of late, it would be an indication that the slowdownin traffic was primarily related to uncertainty around the continuation of thetax credit. However, if traffic does not rebound, it is likely an indication thatdemand was pulled forward by the tax credit.
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Slowing in Minneapolis and Seattle; Strength in Las Vegas.
We sawmeaningful declines in our traffic index in both Minneapolis and Seattle,whereas most other markets were relatively stable. Las Vegas was theonly key market to see a sharp rebound in demand. The highest levels oftraffic were seen in Ft Myers, Las Vegas, Orlando, Los Angeles, theInland Empire, and Washington, D.C. The key driver of traffic in allmarkets is the favorable affordability, which continues to lead to strongdemand from investors and first time buyers who are fleeing rentals.
Research AnalystsDaniel Oppenheim, CFA
212 325 5726dan.oppenheim@credit-suisse.com
Michael Dahl
212 325 5882michael.dahl@credit-suisse.com
William Alexis
212 538 3992william.alexis@credit-suisse.com
06 November 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
06 November 2009
Monthly Survey of Real Estate Agents
3
Traffic Slows in Late October; Waiting for theRebound
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.
October traffic slips from September levels, sharp divergence between early andlate October.
Our October survey of real estate agents showed a slight decrease in trafficfor the month as a whole with our buyer traffic index inching down to 44.0 in October from44.8 in September. However, the stats for the month do not tell the complete story, astraffic early in the month was above September levels, as last-minute tax credit-drivenbuyers hurried to take advantage of the credit (which will likely be extended andexpanded). However, late in the month we saw a decline in traffic, with our traffic indexdown 5 points from the levels at the start of the month. We fear that many of the first-timebuyers have already acted and that there will be less entry-level demand even with anextension of the tax credit. We continue to believe that the tax credit pulled forwarddemand and that there will likely be a lull in buyer traffic at the end of 2009 and start of2010.
Will traffic rebound following an extension of the tax credit?
We previously noted thatit would be important to watch traffic trends in mid-October for evidence of a slowdownonce it was no longer possible to sign a contract and have closing before November 30
th
.
We now think the key will be watching to see what happens to traffic in November oncethe tax credit is officially extended and expanded. If traffic levels improve from thesubdued levels seen as of late, it would be an indication that the slowdown in traffic wasprimarily related to uncertainty around the continuation of the tax credit. However, if trafficdoes not rebound, it is likely an indication that demand was pulled forward by the taxcredit.
Slowing in Minneapolis and Seattle; Strength in Las Vegas.
We saw meaningfuldeclines in our traffic index in both Minneapolis and Seattle, whereas most othermarkets were relatively stable. Las Vegas was the only key market to see a sharprebound in demand. The highest levels of traffic were seen in Ft Myers, Las Vegas,Orlando, Los Angeles, the Inland Empire, and Washington, D.C. The key driver oftraffic in all markets is the favorable affordability, which continues to lead to strongdemand from investors and first time buyers who are fleeing rentals.
Improving price trends in key areas.
Our price index moved up slightly in October to37.5, from 36.3 in September. We saw rising pricing trends in Washington, D.C., theInland Empire, Ft Myers, Los Angeles, Sacramento, San Diego, and San Francisco. We’llwatch for continued improvement in home prices in these areas with significant interestfrom first-time buyers and investors.
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