Keeping You Current - December 2008

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December 2008

By: Madeleine Romanello

Keeping You Current


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Sales Sales year over yearyear over yearCategory Percent

ageExistingSales

-1.6

PendingSales

1.6

NewConstruction

-40.1

Source: WSJ


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Mortgage RatesMortgage Rates 30 year fixed30 year fixed

Since 9/19/98

Source: Federal Reserve


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Prices -Prices -year over yearyear over yearIndex Price ChangeOFHEO -6

Case Shiller -17.4NAR -11.3

IAS360-13.3Census Bureau (New

Homes)-12.2

Source: Macro Markets, IAS, OFHEO, Census Bureau, NAR


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Asking prices for homes across the country fell 1.5 percent inOctober, bringing the total drop in the last three-month cycleto 2.9 percent. Listed property inventories declined in 23 of 26markets. Widespread inventory declines have continued for

many months but, as demonstrated by declining prices, thepace of supply contraction has not kept up with the falloff inmarket demand.

List PricesList Prices

Source: Altos Research & Real IQ 11/7/08


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At its most volatile time in US history, the

US housing market demands somethingmore from its experienced industryprofessionals; a closer look.

- Integrated Asset Services, LLC

Keeping Current MattersKeeping Current Matters


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The SellerThe Seller


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Source: Brookings Papers 9/08

% Appreciation in 5 Year Increments% Appreciation in 5 Year Increments


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Source: Of Two Minds Blog 10/08


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Loan Delinquency RateLoan Delinquency Rate


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Foreclosures


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Where are prices going?Where are prices going?

2nd Quarter 3rd Quarter

OFHEOOFHEO


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Pricing in Todays Market?Pricing in Todays Market?When cutting the price, take a big bite, not a bunchof nibbles.- Washington Post.com 8/24/2008

If prices in your area are generally down 20% from

where they were at the bubble peak in 2005, thenprice your house 25% to 30% below its peak bubblevalue. Your area down 40%? Be prepared to takejust half of what the house was worth three yearsago. - Wall Street Journal 7/14/2008

Set an asking price 10% below what homeslike yours have been selling for. If your marketis really frozen and you need to drop the price,make one large cut. No baby steps.- Money Magazine 5/12/2008


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Months Supply Pricing

1-2 Double digit appreciation

3-4 Single digit appreciation

5-6 The Norm

7-8 Single digit depreciation

9+ Double digit depreciation

Inventory vs. PriceInventory vs. Price


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Historically, during housing busts, existing home prices fall for 5 to 7 years -so I'd expect to start looking for the bottom in the bubble areas in 2010 to

2012 or so.

CalculatedCalculatedRiskRisk.com.com

Source: CalculatedRisk.com 8/12/2008


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John Burns, who is president of John Burns Real Estate Consulting, estimatesthat by 2010 the most stable markets will reach equilibrium and by 2011 the

national market will move into better balance. Overall, he believes that it willtake until 2014 for it to be business as usual.

2014 !?!2014 !?!

Source: BusinessWeek 8/18/2008


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On a $200,000 house, a familyloses

$384.61per week.

ssuming a 10% fall in pricesssuming a 10% fall in prices


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100 pencils3 buyers

Price?100 pencils

6 buyers


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The BuyerThe Buyer


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New rules for home buyers

Rule 1: You can't time the bottomYou could get to thinking about trying to time thebottom. Resist. It's harder to do than you think, and

this is the best buyers have had it in two decades,with inventories up and mortgage rates low.

oney Magazineoney Magazine

urce: Money Magazine 5/12/2008


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MSN Real EstateMSN Real Estate

urce: MSN Real Estate 5/13/08

Waiting for the absolute bottomto hit before buying puts you at

risk of missing it and gettingcaught up in amarket on the upswing.


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Reportsappear to bepointing to a bottom in

the housing problem; in

fact, maybe the tiniestbeginnings of a recovery.

The reality is a possible upturn in the

housing trend, and at the very least we aregetting a bottom.

Source: Kudlows Money Politics 7/24/08

-Lawrence Kudlow ,host ofCNBCs Kudlow & Company


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This could be the time to

buy a house.


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I am now telling you that between now and the next sixmonths you have to buy a house.

Source: Mad Money Blog 7/23/2008


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ource: Westcourt Funds

OptimismOptimism

ExcitementExcitement

EuphoriaEuphoria

DenialDenial

FearFear

PanicPanic

DespondencyDespondency DepressionDepression

HopeHope

OptimismOptimism

Point ofmaximum

risk ininvestment

Point ofmaximum

opportunity


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http://www.homesforworkingfamilies.org/approach/academic/


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he PMI Value of Homeownership Study

Price Appreciation Return on Equity

35%

139%

71%110%

301%

498%

ource: PMI October 2007

5 Years 10 Years 15 Years


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Case-ShillerCase-Shiller


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Good Investment?Good Investment?

CityCity % off Peak

Miami -32

Los Angeles -29

San Diego -30

Las Vegas -32

Peak

180.9

173.9

150.3

134.8


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Return on InvestmentReturn on Investment

Dow S&P Nasdaq

Real Estate

Jan 1, 2000 - Sept 30, 2008

-20.6

- 47.8

72

-9.8


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Madeleine Romanello

cell 305.282.2133

office 305.695.6300

fax 305.695.6301

[email protected]


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Any questions? Contact us at

[email protected]

Well bend over

backwards to

try and help!

Documents

Keeping You Current - December 2008