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June 7, 2011 Vol. 4, Issue 6

What are real estate professionals saying to homebuyers and sellers about current market

conditions? The successful brokers and sales associates are talking about the strengths that exist inthe market. Below are positive angles that appeared recently in the media and underscore why it is

a good time to buy real estate.

Survey: Americans Have a Visceral Desire to Own Their Own Home

A bipartisan national poll of 2,000 likely voters by the National Association of Home Builders makes

clear the unique position that homeownership holds in Americans minds and the delicacy requiredin dealing with the issue.

75% of voters believe that owning a home is the best long-term investment they can makeand is worth the risk of ups and downs in the housing market.Interestingly, a highpercentage of people in different financial situations felt this way, including 81% of those whoown their homes outright, 76% with mortgages, 67% who are renters, and 65% with

underwater mortgages.

80% of respondents they would recommend buying a house to a close friend or familymember just starting out, including 78% who had underwater mortgages.

73% of the respondents who do not own a home said that their goal is to eventually buy one.Clearly, the decline in home values and economic turmoil has not diluted their dream ofhomeownership and the aspirational element that makes the notion a core value.

Told that since the federal income tax was introduced in 1913, the federal government has used

the tax code to encourage homeownership, respondents were then asked: In general, do youthink it is appropriate and reasonable for the federal government to provide tax incentives topromote homeownership, or do you think it is not a good idea?

73% of all voters thought those incentives should be provided, including 71% of Republicans,

68% of independents, 79% of Democrats, and even 68% of those who support the tea party

movement.

Given this kind of visceral connection to homeownership, its not surprising that 71% of

respondents oppose eliminating the mortgage-interest deduction and 63% oppose lowering it.

Moreover, 58% oppose eliminating the deduction for home-equity loans or limiting the deduction

for those who earn more than $250,000 a year.

These numbers are pretty much across the board: 63% of Republicans, 56% of independents, 55%of Democrats, 61% of tea party supporters, and 58% of those voters in congressional districts held

by freshman Republicans would be less likely to support a candidate who favored killing the

deduction.

The clear message is that owning a home is among the values that Americans most cherish an

important part of the American Dream.

-- The Cook Report: The Home Front, byCharlie Cook, National Review, June 3, 2011.

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SmartMoney: Why its A Good Time to BuyThere are growing indications that it is a good time to buy.

Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, arenear 50-year lows.

Homes have become more affordable than they have been in years: According to Moody'sAnalytics, the ratio of home prices to income is now 20.9% lower than the 15-year average

through 2010, and 12.5% lower than the 1989-2004 average.

A historic glut of homes, meanwhile, has created a buyer's market: There were about 15million vacant homes in the U.S. last year, according to John Burns Real Estate Consulting Inc.

some 3.1 million more than normal.

Such conditions might not last long.Moody's Analytics predicts that the number of distressed sales will begin to fall in 2013, and

that prices will begin to edge upward then.

Home building is at a virtual standstill, so the supply overhang isn't likely to get much worse.

Demographic indicators such as "household formation" the number of new households each

yearare on the rise, and promise to take a bite out of the glut in coming years.

The upshot: While we might not see rapid growth in the next couple of years, there are a

tremendous number of positive signs that could lead to a rebound,says Anthony Sanders, a real-

estate finance professor at George Mason University.

-- Is Now the Time to Buy a Home, byRuth Simon and Jessica Silver-Greenburg, SmartMoney,June 6, 2011.

Barrons: Home Prices Should Stabilize by the Second Half of 2011Another shock last week was the first-quarter decline in the Standard & Poor's/Case-SchillerNational Index of home prices, following increases in 2009 and early 2010, to levels not seen since

2002. But to begin with, the up-and-down price pattern, which inspired the dreaded term doubledip,was due to the on-again, off-again tax credits to homebuyers, which temporarily boostedsales and prices.

More to the point, home prices should begin to stabilize by the second half. Based on its modelingof the factors that determine the National Association of Realtor's median price on existing homes

(a series with far more history than Case-Shiller), Benderly Economics finds the price will probably

run about flat on a year-over-year basis, and start trending up by 2012.

-- Facing the Music, and It Ain't All Blues, byGene Epstein, Barrons (subscription required), June 4, 2011.

Analyst:Don't Believe the Doom on U.S. HousingData from the U.S. housing market has not made for nice reading in recent months but one analystbelieves the worst could well be over and that if you take a closer look at the data prices arestabilizing.The decline is mainly because the mix of homes sold has changed in favor of distressedsales, which typically sell with a 'foreclosure discount.' Non-distressed properties (sold by voluntary

sellers) have already started to stabilize, said Ajay Rajadhyaksha, the co-head of U.S. fixedincome strategy at Barclays Capital said in a research note on Friday.

As voluntary sales pick up in the summer, the mix of homes should change again in the next few

months, in favor of non-distressed sales. As a result, the aggregate index of home prices shouldstop declining and could even go up, he added.

-- Don't Believe the Doom on US Housing, byPatrick Allen, CNBC, June 3, 2011.

Mortgage Rates for 30-Year Loans Fall for Seventh WeekMortgage rates in the U.S. fell for a seventh week, the longest decline since September. The

average rate for a 30-year loan slipped to 4.55% in the week ended June 2, from 4.60%, according

to Freddie Mac. That is the lowest since the week ended Dec. 2. The 15-year rate fell to 3.74%from 3.78% a week ago, the McLean, Virginia-based mortgage-finance company said.

-- Mortgage Rates for 30-Year Loans Fall for Seventh Week, byPrashant Gopal, Bloomberg, June 2, 2011.

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