It is STILL all about Jobs…

Year Jan

Feb Mar Apr

May Jun Jul

Aug Sep Oct

2010 9.70
9 70 9.70
9 70 9.70
9 70 9.90
9 90 9.70
9 70 9.50
9 50 9.50
9 50 9.60
9 60 9.60
9 60

9 60
9.60

Nov

Dec

9 80
9.80

2009 7.70 8.20 8.60 8.90 9.40 9.50 9.40 9.70 9.80 10.10 10.00 10.00
2008 5.00 4.80 5.10 5.00 5.40 5.50 5.80 6.10 6.20

6.60

6.90

7.40

Wage Growth Stabilizing

Personal Income remains flat

Dollar Continues to Weaken

Commodities Rally, led by Oil

US Savings Rate appears to be settling in

Last Updated: Nov.
Nov 24th, 2010

Bottom line: we have witnessed an increase in the savings rate the
likes of which we have never seen since data tracking began.

Unprecedented 10 Year Bond Yields

Timeline: 3 PM Dec. 8th, 2010

Still near historical lows…

Inflation: appears to stay in downward trend

US Economic Outlook (Quarterly View)

Q1 ’11
11
Real GDP
2.6
Consumer Prices
1.8
Real Disposable Inc.
0.1
Consumer Confidence 51
Unemployment (%)
9.8
Fed Funds Rate
0.1

Q2 ’11
11
2.1
1.8
1.5
53
9.7
0.3

Q3 ’11
11
2.7
2.5
1.7
54
9.5
0.5

Q4 ’11
11
2.7
2.6
1.6
58
9.3
1.0

Source: NAR Research Division October 2010 Outlook
** Note: Discount Rate was raised 25 bps on 2/17/10

Bank of America: Confidential

10

Q1 ’12
12 Q2 ‘12
12
3.1
2.9
2.8
2.3
3.0
2.7
61
61
9.2
9.1
1.5
1.8

Interest Rate Forecast
2008

2009

2010

2011

2012

30-Year Fixed Rate Mortgage

6.0

5.1

4.7

5.0

5.9

10-Year Treasury
y Yield

3.7

3.3

3.1

3.2

4.1

1-Year ARM

5.2

4.7

3.9

4.1

5.0

Prime Rate

4.5

3.3

3.1

3.5

5.0

Source: NAR Research October, 2010

National Housing Forecast
Q1 ’11
Existing Home Sales
4.8
New Single Family Sales 365
Housing Starts
698

Q2 ’11
5.2
397
746

Q3 ’11
5.4
433
791

Q4 ’11
5.2
471
843

Q1 ’12 Q2 ‘12
5.1
5.4
492
560
875
979

Q2 ’11
-6.6
18.2
24.0

Q3 ’11
29.9
51.4
33.1

Q4 ’11
14.5
42.0
29.1

Q1 ’12 Q2 ‘12
7.1
3.0
35.0
41.1
25.4
31.2

Percentage Change – Year Ago
Q1 ’11
Existing Home Sales
-7.3
New Single Family Sales
1.3
Housing Starts
13.1

New Home Sales: plunged to 300,000 in May from 446,000 in April. Interestingly, new home inventory
is at one of the lowest p
points in the p
past 30 yyears.
Source: NAR Research Division October 2010 Outlook

Total Sales: Single-Family, Apartment Condos and Co-ops

State

2010.III p

Qtr %
Change

Year %
Change

’07

’08

’09

2010.I

2010.II r

US

5,652
5 652

4,913
4 913

5,156
5 156

5
5,140
140

5
5,570
570

4
4,163
163

-25.3%
25 3%

-21.2%
21 2%

NE

1,006

849

868

853

953

693

-27.3%

-24.4%

MW

1,327

1,129

1,163

1,133

1,297

860

-33.7%

-28.9%

South

2,235

1,865

1,914

1,893

2,093

1,637

-21.8%

-16.4%

West

1,084

1,070

1,211

1,263

1,227

973

-20.7%

-18.2%

Source: NAR Third Quarter 2010 Sales Report

Mortgage Originations (forecast)
2008

2009

2010

2011

2012

Total 1- to 4-Family (Bil $)

1,509

1,995

1,401

996

1,187

Purchase

731

665

480

626

877

Refinance

777

1,365

921

370

310

Refinance Share (%)

52

67

66

37

26

Source: Mortgage Bankers Association October 26th, 2010

Midterm (1 – 3 years) Challenges to Housing
Recovery
Q3 Webinar Focus
I. Job and Wage Growth/Consumer Confidence
II. Negative Equity
III. Distressed Sales Activity
IV. Regulatory
g
y Reform/Uncertainty
y
Q4 Webinar Focus
I. State Budget Deficits/Continued Unemployment
II Distressed
II.
Di t
dS
Sales
l A
Activity
ti it ((more granular)
l )

I. Job and Wage Growth will continue to come under
fire in states with significant budget deficits
October (p) 2010
unemployment rate

Projected Fiscal '11 Deficit as
% of Budget

N
Nevada
d

14 2%
14.2%

-54.0%
54 0%

Michigan

12.8%

-9.2%

California

12.4%

-21.6%

Florida

11.9%

-20.2%

Rhode Island

11.4%

-13.9%

South Carolina

10.7%

-25.6%

South Carolina

10.7%

-25.6%

Kentucky

10.0%

-8.8%

Ohio

9.9%

-11.3%

Indiana

9.9%

-9.4%

Georgia

9.9%

-26.2%

State

Source: Labor Department and CBPP

II. Distressed Sales Activity

Source: Realty Trac September 30th 2010

Fannie Mae Serious Delinquency Rates
continue to decline

Q3 2010 Total Foreclosure (FC) Sales
%∆ from
Q2
2010

%∆ from
Q3
2009

Pct. of All
Sales

Avg. FC
Sales
Price

Avg. FC
Disc
ount
%

Avg. REO
Disc
ount
%

Avg. PreFC
Disc
ount
%

State

# of FC
Sales

U.S. Total

188,748

-25.07

-30.83

24.89

$169,523

32.12

40.53

19.44

Alabama

606

-39.64

-13.55

13.75

$142,577

22.27

25.26

3.33

Alaska

118

-51.84

-35.52

7.44

$224,034

17.02

14.36

22.94

Arizona

14,343

-27.35

-32.46

46.54

$138,525

25.03

31.98

15.03

Arkansas

521

-47.53

-47.74

12.76

$128,368

20.6

25.21

11.75

California

45,825

-26.79

-43.48

39.68

$251,756

38.56

45.87

28.9

Colorado

4,079

-26.02

-19.51

23.19

$184,582

30.83

34.83

23.36

Delaware

275

-14.33

-9.84

14.14

$171,983

33.97

37.5

24.87

District of
Colum
bia

126

-16

-37

7.11

$292,648

39.56

48.12

30.41

Florida

34,186

-13.34

-7.65

36.75

$120,030

28.23

37.96

19.74

Georgia

6 340
6,340

-27.13
27 13

-35.46
35 46

29 36
29.36

$116 086
$116,086

40 22
40.22

44 97
44.97

32 72
32.72

404

-24.06

-27.86

12.29

$353,540

25.51

28.89

21.08

Hawaii

Source: RealtyTrac 12/2/10

Q3 2010 Total Foreclosure (FC) Sales

State

# of FC
Sales

%∆ from
Q2 2010

%∆ from
Q3 2009

Pct. of All
Sales

Avg. FC
Sales
Price

U.S. Total

188,748

-25.07

-30.83

24.89

$169,523

32.12

40.53

19.44

Idaho

1,439

-35.47

6.36

25.24

$154,983

15.1

21.27

10.67

Illinois

6,844

-24.34

-23.96

24.74

$142,214

41.34

49.91

20.9

Indiana

2,427

-33.2

-40.06

17.56

$112,544

27.53

31.86

17.87

Iowa

420

-23.77

-13.76

5.71

$96,861

33.56

38.17

-0.2

y
Kentucky

926

-24.22

-0.22

14.93

$95,208
,

44.31

50.79

30.96

Louisiana

534

-29.18

-18.6

10.07

$135,784

28.34

33.89

16.42

Maryland

2,338

-47.57

-16.97

16.95

$207,544

35.86

41.7

32.19

499

-65.18

-75.24

34.9

$181,088

25.34

25.9

25.21

g
Michigan

9,587

-25.55

-26.78

31.75

$72,266

40.52

44.24

21.26

Minnesota

1,721

-26.45

-40.45

12.18

$147,711

31.2

34.88

21.73

Missouri

2,669

-23.41

-23.92

16.36

$113,297

28.94

28.87

29.23

Montana

144

-23.81

53.19

6.7

$197,005

5.32

12.37

-14.33

Nevada

,
8,917

-15.07

-35.47

53.88

$135,221
$
,

19.01

22.16

14.22

127

-65.58

-73.98

7.74

$166,129

33.42

38.46

29.9

2,487

-30.39

-32.1

12.66

$219,758

41.19

52.6

30.46

Massachusetts

New Hampshire
New Jersey

Avg. FC
Discount
%

Avg. REO
Discount
%

Avg. PreFC
Discount
%

Source: RealtyTrac 12/2/10

Q3 2010 Total Foreclosure (FC) Sales

%∆ from
Q2
2010

%∆ from
Q3
2009

Pct. of All
S l
Sales

Avg. FC
Sales
Pi
Price

Avg. FC
Disc
ount
%

Avg. REO
Disc
ount
%

Avg. Pre
FC
Disc
ount
%

St t
State

# of FC
S l
Sales

U.S. Total

188,748

-25.07

-30.83

24.89

$169,523

32.12

40.53

19.44

New Mexico

426

-17.76

17.68

8.62

$176,572

15.47

13.83

16.96

New York

2,147

-20.25

-34.28

7.22

$287,352

29.5

53.81

16.66

North Carolina

2,329

-26.81

-28.14

11.85

$147,522

28.2

31.23

17.86

Ohio

6,117

-26.85

-24.78

21.67

$79,695

44.54

50.66

20.54

604

-37 15
-37.15

-39 66
-39.66

10 25
10.25

$96 377
$96,377

35 61
35.61

36 04
36.04

34 92
34.92

Oregon

2,381

-27.41

-14.69

26.59

$183,905

28.26

32.32

19.75

Pennsylvania

2,876

-11.15

-5.02

11.53

$123,249

40.35

47.44

22.74

South Carolina

1,918

-25.97

-8.45

19.44

$143,673

27.08

32.13

8.58

Tennessee

3 215
3,215

-29.97
29 97

-35.21
35 21

18 77
18.77

$95 512
$95,512

42 25
42.25

43 44
43.44

28 47
28.47

Texas

8,087

-27.85

-25.18

11.85

$146,858

26.69

28.07

23.03

Utah

1,905

-29.83

-20.99

20.31

$214,472

2.92

7.11

-7.32

Virginia

4,147

-28.18

-30.96

23.33

$229,933

33.86

38.56

25.08

Washington

2,513

-24.65

-35.58

14.08

$237,084

25.59

29.93

16.99

Wisconsin

1,254

-31.36

-45.29

13.6

$112,528

37.13

45.09

25.05

Oklahoma

Source: RealtyTrac 12/2/10

Summary (December 13th, 2010)
I.

2010 - 2011 Economic “SeeSaw”: economic news will likely ebb and
flow between positive growth and recessionary fears with no clear
“short” and “mid” term direction.
“L” shaped recovery continues

II.

2010 looks like MIRROR Image of 2009: Q3 decline in new and
existing
i ti h
home sales
l ffollowed
ll
db
by stabilization
t bili ti iin Q4 2010

First time home buyers pulled into current period from future
periods.

III.

Interest Rates likely to stay low for longer than most economists
forecast
I
I.
Potential for added Federal stimulus (Pros/Cons)

IV.

Long Term:

Rising rates driven by increased supply of government debt maybe
off set by improving employment environment in late 2011 and
2012.

“New Normal” here to stay for next 3 – 5 years

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