Greater Phoenix Market Trends MIKE ORR: Founder MIKE ORR: Founder © October 11, 2011

Josh Billings (pen name of Henry Wheeler Shaw) “It ain't what you don't know that gets you into trouble. - It's what you know for sure that just ain't so.” “It ain't what you don't know that gets you into trouble. - It's what you know for sure that just ain't so.” According to “The Quote Verifier” ©

What People “know for sure” © These JUST AIN’T SO in Greater Phoenix today A glut of foreclosed homes overhangs the market A new wave of foreclosures is coming Shadow inventory is big, scary and out to get you!!! Prices are still declining Short sales take forever and rarely succeed Renting saves money compared with buying a home A glut of foreclosed homes overhangs the market A new wave of foreclosures is coming Shadow inventory is big, scary and out to get you!!! Prices are still declining Short sales take forever and rarely succeed Renting saves money compared with buying a home

“Supply is way down So why aren’t prices rising?” “Supply is way down So why aren’t prices rising?” A Frequently Asked Question from the Well-Informed A Frequently Asked Question from the Well-Informed ©

HUD Listings - down 83% REOs - down 65% Short Sales - down 71% Normal Listings - down 36% HUD Listings - down 83% REOs - down 65% Short Sales - down 71% Normal Listings - down 36% ©

$115,000

Tax credit expiry

It typically takes months for prices to respond to a big change in the supply/demand balance “Supply is way down So why aren’t prices rising?” “Supply is way down So why aren’t prices rising?” ©

Days Inventory Supply = Active Listing Count Demand = Average Daily Sales over Last Year Days Inventory = Supply / Demand Supply = Active Listing Count Demand = Average Daily Sales over Last Year Days Inventory = Supply / Demand An excellent measure of market health ©

Active Listings including AWC

Normal Market Normal Market

The Bubble The Bubble Warning Signal Warning Signal

Running On Fumes Running On Fumes Pricing Stable Pricing Stable

Prices Declined 50%

Stabilization

NORMAL Active Listings include AWC 100

Here Active Listings EXCLUDE AWC May 04 – Oct 05 71

The longer it takes before prices respond, the larger the response is likely to be. The Coiled Spring Theory ©

“Shadow Inventory”

©

Government Imposed Moratorium Bank of America Moratorium ©

1,280 Purchased by Third Party Reverted to Beneficiary New REOs Reverted to Beneficiary New REOs ©

Arizona Ranking February 2010 August 2011 Non-current home loans – # 24 Late but not in foreclosure – # 27 In foreclosure – # 18 Non-current home loans – # 24 Late but not in foreclosure – # 27 In foreclosure – # 18 Non-current home loans – # 3 (after FL, NV) Late but not in foreclosure – # 6 (FL, NV, GA, MS, MI) In foreclosure – # 4 (FL, NV, NJ) Non-current home loans – # 3 (after FL, NV) Late but not in foreclosure – # 6 (FL, NV, GA, MS, MI) In foreclosure – # 4 (FL, NV, NJ) ©

Arizona home loan delinquency is down 32.1% This is more than any other state! Arizona home loan delinquency is down 32.1% This is more than any other state! Source: Lender Processing Services Mortgage Monitor ©

Title Versus Lien Theory ©

Greater Phoenix

© Greater Phoenix

Josh Billings (again) “As scarce as truth is, the supply has always been in excess of the demand.” ©