By NAR Research

1
Denver Housing Market Conditions and Prospects
By NAR Research
2
Denver Metro Home PricesDid not Experience
Rapid Price Growth
thousand
Source NAR
3
Denver is Affordable Western Market(2006)
Source NAR
4
Existing Home Sales in Colorado at Near Historic
Highs
In thousand units
Source NAR
5
Something appears Out of Whack!National Income
and Price Trend
Income and Price set to Index of 100 in 1990
Source NAR
6
However, Consider that Low Historic Rates permits
Higher Loans to be taken out without Higher
Monthly Payments
1970s 9 average
1980s 13 average
1990s 8 average
2000s 6.5 average
Source Freddie Mac
7
Better Metric on Assessing Housing Market Bubble
is Mortgage Obligation to Income Looks
Manageable at the National Level

Source NAR
8
All Real Estate is Local and National Trends may
not apply at Denver
9
Mortgage Obligation to Income Very High in Some
Markets
45 !!!
San Diego
Source NAR
10
Mortgage Obligation to Income Very Favorable in
Denver and Below Historic Average
Denver
Source NAR
11
Apartment Rent Now Rising and will Begin to
Squeeze Renters in Denver

Source Torto-Wheaton Research
12
National Foreclosure Rates High only in Subprime
Loans2007 Q1
Data MBA
13
Colorado Foreclosure Rates also High in Subprime
Loans
14
Delinquency Leading to Foreclosure shows Bad
Performance by Subprime Loans(Latest
Foreclosure/Delinquency ratio)
Better Loss Mitigation Programs for VA and FHA
Bottom Line FHA and VA are superior to Subprime
Loans
15
Healthier Future Market

• Job growth leads to accumulating and releasing of
  pent-up housing demand
• Cut back in new home construction thins out
  inventory and strengthen home prices
• Shift to traditional products
• Reckless lenders going belly up
• Wall Street tightening
• FHA revival
• Higher prevalence of fixed-rate mortgages
• Could lead to a temporary setback for homebuying
  but will bring forth a much healthier housing
  market conditions in the future

16
Job Gains in Denver Region
12-month net payroll job changes in thousands
Source BLS
17
Denver Office Vacancy Rate Falling due to Job
Gains

Source NAR/Torto-Wheaton
18
Denver Office Rent - Positive

Source NAR/Torto-Wheaton
19
Wage Growth Picking Up

Source BLS
20
U.S. Migration Trend Favors Warm-Weather,
Low-Tax States (Top vs. Bottom)
State Net Migration from 2000 to 2006
Florida 1,221,000
Arizona 541,000
Texas 452,000
Georgia 378,000
North Carolina 347,000
Nevada 318,000

Michigan - 239,000
New Jersey - 277,000
Massachusetts - 290,000
Illinois - 473,000
California - 950,000
New York - 1,242,000
Source Census
21
Mountain States Benefiting
State Net Migration from 2000 to 2006
Arizona 541,000
Nevada 318,000
Colorado 80,000
New Mexico 23,000
Wyoming 5,000
Utah 18,000 (expected to be positive if including 2007)
Source Census
22
Denver New Single-Family Construction Falling
Very Good in Limiting Oversupply Conditions
Source Census
23
FHA Market Share for Home Purchase in Denver
will revive and much better than Subprime Loans
Source HMDA,NAR estimate
24
Local ForecastsWho Will be on Top?
Presented by Lawrence Yun, Vice President of
Research at NAR Midyear Meetings in May
25
Top Five Markets (in random order)

• Nashville
• Austin
• Salt Lake City
• Denver
• Raleigh-Durham

Watch out for these small markets St. George, UT
Myrtle Beach, SC
26
Best Evidence for HomebuyingHousehold Wealth
Accumulation
184,400
Median Net Worth
4,000
Source Federal Reserve
27
Summary

• Denver clearly looks to be underpriced
• Compared to other Western Markets
• Based on Mortgage servicing cost to income ratio
• Job growth and educated workforce will provide
  solid demand for homes
• Homebuilder cutback is good for housing in
  limiting oversupply conditions
• FHA loan revival will help for the better for
  low-and-moderate income households buy their
  first homes (good move away from risky subprimes)
  
• Subprime resets on the horizon, but to be
  overwhelmed by above positive factors
• Denver one of the markets to watch and one of
  the markets to be on top over the next two years