1.Commentary2 Released:TheNumbersThatDriveRealEstate3April8,2011RecentGovernmentAction9TopicsforHomeBuyers,Sellers,andOwners 11 Shared by:Broughttoyouby: Robert Jarvis Signature PropertiesKWResearchVisit www.AnOpenHome.com for more!

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CommentaryGradualandunevenprogressinthehousingmarketcontinueswithoutgovernmentsupport.ThemarkethasshownremarkableimprovementfromtheinitialdropaftertheexpirationofthehomebuyertaxcreditthispastJuly.Althoughhigherthannormaldistressedsalesskewtheoverallpictureofhomepricesdownward,inventoryremainsatpretaxcreditexpirationlevels.Therockbottominterestratesof2010arelikelytotrendupward.Aseconomists anticipateratesatorabove6%bytheendof2012,buyersaremovingoffthesidelinesandintothemarket.Recentreportssuggesttheeconomyispickingupsteameventhoughitisnotyetfullyreflectedinthejobmarket.Intermsofeconomicgrowth,AmericaoutpacesalltheotherG7nationsexceptCanada.However,whenitcomestoaddingbackjobs,Americaistheweakest.Duringtherecession,businesseslookedforwaystoincreaseefficiencyandproductivity.U.S.productivity,oroutputperworker,doubledinbothofthepasttwoyears.Afullhousingrecoverydependsongrowingemployment.Withoutjobs,mostAmericanscannotbuynewhomesoraffordtheircurrentones.Astheeconomycontinuestopickupsteam,employmentwilllikelyfollowsuitasthereisalimitedamountofproductivityworkerscanprovide.Whiletheeconomyimproves,stimuluseffortsbythegovernmentandtheFederalReserveBoardwillgraduallywinddown,whichtypicallyspursrisinginterestrates.Meanwhile,buyerscontinuetobenefitfromhistoricallyfavorablebuyingconditionsandsellersareencouragedbyincreasedmarketstability. KWResearch2 3. HomeSales 4TheNumbersThatHomePrice 5 DriveRealEstate Inventory6 MortgageRates 8 Affordability9Broughttoyouby:KWResearch 4. HomeSalesInMillionsAlthoughhomesaleshavefallen9.6%comparedtothepreviousmonth,theyremainclosetolastyearslevels,showingonlya2.8%decline.TheunseasonablycoldweatheracrossmuchofthecountryduringlateJanuaryandFebruarycouldhavekeptbuyersindoorsmoresothannormal.Gradualimprovementwithbumpsalongthewayhaslongbeentheanticipatedroadtofullrecovery.Infact,homesalesremain26.4%abovethelowlastJuly.AsLawrenceYun,chiefeconomistoftheNationalAssociationofRealtors,explainsmonthtomonthmovementscanbeinstructive,butinthisunevenrecovery,itsimportanttolookatthelongtermperformance. ExtendedandExpandedHomeBuyerTaxCredit TaxCredit GradualRecoveryWithoutTaxCredit MusthaveclosedbyJune30,2010 Expired 1 1 a ry 1 0ruFeb February0910LatestDataRelease:March21,2011Source:NationalAssociationofRealtorsKWResearch4 5. HomePrice InThousands HomepricescontinuedtosofteninJanuarywithmedianhomepricesdecreasingto$156,100. Thisis5.2%belowtheyearagolevelandbringsthemedianpriceclosetoFebruary2002levels. TwooutofeveryfivehomessoldduringFebruary,or40%ofsales,weredistressedproperties. Distressedsalesoftensellfor10% 20%lessthantraditionalhomesales.Thedeclineinhome pricesislessreflectiveofthevalueofindividualhomesandmorereflectiveofthebargainsthata recordlevelofallcashbuyersandinvestorsaresnappingup.Pricesandmortgageratesremain favorableforbuyersasthespringsellingseasonstarts.February0910 February1011LatestDataRelease:March21,2011Source:NationalAssociationofRealtors KWResearch5 6. SupplyofInventory InMonths Theslowingofhomesalesandanincreaseinlistingspushedthe months supplyupto8.6 months,anincreaseof15%fromthepreviousmonthand2%yearoveryear.Thisisthethird lowestlevelsinceJune.Monthsofinventoryremains31%belowitspeakof12.5monthsinJuly andisnowbacktopretaxcreditexpirationlevels.Withthesummersellingseasonapproaching quickly,expertsanticipatemorehomestogoonthemarketinthecomingmonths.February0910February1011LatestDataRelease:March21,2011Source:NationalAssociationofRealtors KWResearch6 7. MortgageRates 30YearFixedThroughoutthemonth,rateshoveredinthe4.8% 4.9%range.Afterrisingabove5%forthefirsttimeinabouttenmonthsinearlyFebruary,rateshavecomeback belowbutareexpectedtofollowanupwardtrendthroughouttheyear.Asoveralleconomicrecoveryremainsontrack,rateswilllikelyrisetokeepinflationincheck.Buyerswantingtocapturethesavingsinmonthlypaymentsthatahistoricallylowinterestrateaffordsareexpectedtotakeadvantageofexcellentbuyingconditions.Type Rate30YearFixed4.86%15YearFixed4.09%5/1ARM3.70%HistoricalAverage 8.90%Source:FreddieMacKWResearch7 8. Affordability ThepercentageofamedianfamilysincomerequiredtomakemortgagepaymentsonamedianpricedPercentageofIncomehomeHousingaffordabilitycontinuedatrecordlevelsinFebruary.Therelationshipbetweenmortgagerates,homeprices,andfamilyincomeisthemostfavorableonrecordforbuying.Thehomepricetoincomeratiocontinuestoremainwellbelowthehistoricalstandard.Stabilizinghomepricesandrisinginterestratesareexpectedtoreversetherecentaffordabilitytrend.AffordabilityasofFebruaryeveryyear.Calculationsassumea20%downpayment. KWResearch8Source:NationalAssociationofRealtors 9. Recent GovernmentActionBroughttoyouby:KWResearch 10. SummitLevelSolutionstoForeclosureUncertaintiesFiveofthenationslargestbanksmetinlateMarchalongwithstateandfederalofficialstodiscussasettlementthataimstocorrectquestionablepracticesinthemortgageindustry.Reachinganagreementcouldresolveforeclosureprocedureproblemssparkedduringtherobosigningscandal.Whilemostofthemeetingfocusedonservicingstandards,thehottopicsofdebateincludedreducingloanbalances,broadbasedwritedowns,andtheextenttowhichlegalclaimswillbedispelled.TheObamaadministrationisencouragingaquicksettlementinordertopreventadditionaldelaystothehousingmarketrecovery.Theirconcern,accordingtoRealtyTrac,Inc.,isthatforeclosurefilingshavedecreasedimmenselyinthepastsixmonthstothelowestlevelinthreeyearsinFebruary.JamesDimon,chiefexecutiveofJPMorganChase&Co,concurred,statingthat,AnysettlementshouldproducerationalpoliciesthatworkfortheAmericanpublic.Thatswhatweneed.Whiletangibleresultshaveyettobeseen,thegoodnewsforhomeowners,buyers,andsellersisthatallpartiesinvolvedaretakingstepsintherightdirection.Theirfocusisonasolidresolutiontothetechnicalissuesthatarecreatingabottleneckinthedispositionofforeclosures aprerequisitetotherecoveryofthehousingmarket.Source: The Wall Street Journal KWResearch10 11. TopicsforHomeBuyers,Sellers,andOwnersBroughttoyouby:KWResearch 12. DecidingtoBuyWhenfirsttimehomebuyersdecidetheyarereadytobuy,itisessentialforthemtobegintheprocessbycarefullyassessingtheirvalues,wants,andneedsbothfortheshortandforthelongterm.Thisisacriticalstepsinceconsultationsessionsnormallystartwiththebuyers values.Afterward,buyerscanexploretheirwantsandneeds,andoncedefined,determineactualcriteria.Arecentstudyshowshowimportantthefollowinghomebuyingfactorsweretobuyers:1.ListPrice:72%2.Location:69%3.Neighborhood:55%4.FloorPlan:37%5.SquareFootage:28%6.Schools:22%Byhavingthehomebuyingcriteriainmindbeforewalkingintoaconsultation,buyersareofftoabetterstartwhenmeetingwiththeirrealestateagent.Theconsultationallowsbuyerstofillinanymissinggapswithintheirvalues,wants,andneeds.KWResearch12 13. YourLocalMarketAlthoughitisimportanttostayinformedaboutwhatisgoingon inthenationaleconomyandhousingmarket,manydifferentfactorsimpacttherealestatemarketinyourownarea.TalktoyourKWassociateforassistanceinterpretingthe conditionsinyourlocalmarket.KWassociatesareequippedwiththeknowledgeandinformationto helpyounavigatethehomebuyingorsellingprocessinthischallengingmarket.KWResearch13 14. AboutKellerWilliamsRealtyFoundedin1983,KellerWilliamsRealty,Inc.,isaninternationalrealestatecompanywithmorethan80,000associatesand686officesacrosstheUnitedStates andCanada.Thecompanybeganfranchisingin1991and,afteryearsofphenomenalgrowthandsuccess,becamethethirdlargestU.S.residentialrealestatefirmin2009.Thecompanyhassucceededbytreatingitsassociatesaspartners andsharingitsknowledge,policycontrol,andcompanyprofitsonasystemwide basis.Byfocusingonhelpingassociatesrealizetheirfullestpotential,KellerWilliamsRealtyisknownasanindustryleaderforitsfamilyculture,unmatchededucation,profitsharingbusinessmodel,phenomenalcoachingprograms,andtechnologyofferings. www.kw.com KWResearch14 15. Theopinionsexpressedin ThisMonthinRealEstateareintendedtosupplementopinionsonrealestateexpressedbylocalandnationalmedia,localrealestateagents,andotherexpertsources.Youshouldnottreatanyopinionexpressed in ThisMonthinRealEstateasaspecificinducementtomakeaparticularinvestmentorfollowaparticularstrategy,butonlyasanexpressionofopinion.KellerWilliamsRealty,Inc.,doesnotguaranteeandis notresponsiblefortheaccuracyorcompletenessofinformation,andprovidessaidinformationwithoutwarrantiesofanykind.Allinformationpresentedhereinisintendedandshouldbeusedforeducationalpurposesonly.Nothinghereinshouldbeconstruedas investmentadvice.Youshouldalwaysconductyourownresearchandduediligenceandobtainprofessionaladvicebefore makinganyinvestmentdecision.Allinvestmentsinvolvesomedegreeofrisk.KellerWilliamsRealty,Inc.,willnotbeliable foranylossordamagecausedbyyourrelianceoninformationcontainedin ThisMonthinRealEstate. KWResearch15