NATIONAL HOUSING OPPORTUNITY RISK INDEX REPORT

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NATIONAL HOUSING OPPORTUNITY / RISK INDEX REPORT

• MARCH 2009

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REAL ESTATE ECONOMICS WEBINAR SCHEDULE

• National Age Qualified Nov 19th PST
  (Public-last one)
• Arizona Age Qualified Dec 3rd PST (Public-last
  one)
• National December 10th 9am PST (Public-always)
• Financial Markets January 7th 9am PST
  (Public-always)
• Las Vegas/Reno January 14th 9am PST (Public)
• Denver January 21st 9am PST (Public)
• Seattle January 28th 9am PST (Public)
• National February 4th 9am PST
• Texas February 18th 9am PST
• Arizona February 25th 9am PST
• National Housing Opportunity/Risk Index Report
  March 4th PST
• Sacramento/Central Valley March 11th PST (RER
  Subscribers)
• Bay Area/North Central Valley March 18th PST
  (RER Subscribers)
• Inland Empire March 25th PST (Press Enterprise
  Webinar)

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ECONOMIC STIMULUS PACKAGE
Tax Relief - includes 15 B for Infrastructure
and Science, 61 B for Protecting the Vulnerable,
25 B for Education and Training and 22 B for
Energy, so total funds are 126 B for
Infrastructure and Science, 142 B for Protecting
the Vulnerable, 78 B for Education and Training,
and 65 B for Energy. State and Local Fiscal
Relief - Prevents state and local cuts to health
and education programs and state and local tax
increases.
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NATIONAL STIMULUS PACKAGE

• 8,000 first-time home buyer tax credit (no
  repayment) for home purchase in 2009.
• Allows tax credit home buyers to participate in
  the mortgage revenue bond program.
• Permits State agencies to advance the credit
  amount as a non-payable loan.
• Restores higher FHA loan limits
• 10-year deferral of tax due to business debt
  restructuring
• Expands net operating loss carry-back from 2 to 5
  years for businesses w/ gross receipts lt 15mm.
• Increases bonus depreciation
• Source www.federalhousingtaxcredit.com

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NATIONAL JOB CHANGES RELATIVE TO HOUSING
CONSTRUCTION
Rates Peak at 18.5
Loss of Aero-space/ Military
Dot-Com Bust / 9-11
Credit Crisis
Oil Em-bargo
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NATIONAL HOME SALES VOLUME RELATIVE TO HOUSING
PRICES
Peak Sales Volume Precedes Peak Pricing.
Peak
Peak
Peak
Peak
Trough Jan 08
Likely Trough 2009
Peak
Peak
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DISRUPTION OF A NORMAL CYCLE
Flight from Stock Market, 9/11 and Loose Lending
Caused an Aberration in Sales
Based on Job Losses, The Cycle Should Have Begun
Correcting in 2001/2002.
Normal Cycle
Aberration in Sales caused an Aberration in Price.
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NATIONAL LOOSENED LENDING STANDARDS
Loose Lending Standards between 2004-2006 was the
main cause in the Aberration in Sales and Prices
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CURRENT AND NEAR-TERM NATIONAL ECONOMIC
CONDITIONS
Severe Recession
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CURRENT AND NEAR-TERM NATIONAL ECONOMIC
CONDITIONS
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CURRENT AND NEAR-TERM NATIONAL UNEMPLOYMENT
Severe Unemployment
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NATIONAL OPPORTUNITY/RISK INDEX
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JOBS-TO-HOUSING RELATIONSHIPS
Over Supply
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MORTGAGE COST-TO-INCOME RELATIONSHIPS
Under Valuation
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COMPOSITE INDEX OF LEADING INDICATORS
Under Valuation will increasingly offset Economic
Losses. Market stabilization by 3Q10.
During the 18-24 month lag time between the
index and market manifestation, foreclosure
inventory will shrink, credit will ease and
economic growth will resume (3Q10).
The Index Leads the Market by 18 to 24 Months
It Effectively Predicted the downturn.
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CURRENT AND NEAR-TERM NATIONAL HOUSING MARKET
CONDITIONS
We were paying 0.28-to-1.0 for mortgage costs
in 2006
Now, were paying 0.17-to-1.0 for mortgage
costs in 2009
The 20-year average is 0.23-to-1.0
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REAL ESTATE ECONOMICS

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• OPPORTUNITY/RISK INDEX
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REAL ESTATE ECONOMICS WEBINAR SCHEDULE

• National Age Qualified Nov 19th PST
  (Public-last one)
• Arizona Age Qualified Dec 3rd PST (Public-last
  one)
• National December 10th 9am PST (Public-always)
• Financial Markets January 7th 9am PST
  (Public-always)
• Las Vegas/Reno January 14th 9am PST (Public)
• Denver January 21st 9am PST (Public)
• Seattle January 28th 9am PST (Public)
• National February 4th 9am PST
• Texas February 18th 9am PST
• Arizona February 25th 9am PST
• National Housing Opportunity/Risk Index Report
  March 4th PST
• Sacramento/Central Valley March 11th PST (RER
  Subscribers)
• Bay Area/North Central Valley March 18th PST
  (RER Subscribers)
• Inland Empire March 25th PST (Press Enterprise
  Webinar)

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Mark Robbins Boud
mark.boud_at_realestateeconomics.com REAL
ESTATE ECONOMICS 8961 Research Drive Ste
200 Irvine, CA 92618
P [phone] F
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