Presentation at Mid-Fairfield Association of REALTORS® Norwalk, CT April 28, 2008 Presentation at Mid-Fairfield Association of REALTORS® Norwalk, CT April 28, 2008 Lawrence Yun, Ph.D. Chief Economist NATIONAL ASSOCIATION OF REALTORS® Lawrence Yun, Ph.D. Chief Economist NATIONAL ASSOCIATION OF REALTORS® Market Trends and Forecasts

National Home Price Growth Source: NAR % change from a year ago

NY-CT MSA Home Price Growth Source: NAR % change from a year ago

Hartford MSA Home Price Growth Source: NAR % change from a year ago

Annual Existing-Home Sales Home sales have retreated back to pre-boom years, which was then considered to be at healthy levels. Home sales have retreated back to pre-boom years, which was then considered to be at healthy levels. In thousand units EXCESSIVE BOOM

Monthly National Existing-Home Sales

Monthly National Home Price Trend 12-month Price Change

Monthly National Inventory Trend

CT Existing-Home Sales Source: NAR In thousand units

U.S. Single-Family Housing Starts (Major fall – but, good trend to control inventory) Source: Census In thousand units

CT Single-Family Housing Starts Source: Census

New Home Inventory (Already Topped Out) Source: Census

Souring Loan Performance (Big swings for subprime; no real change in prime) Job Losses pushes up delinquency Housing boom permits re-financing and lowers delinquency Stagnant Prices Data: MBA

Subprime Loan Exposure in U.S. Source: NAR Estimate

Foreclosed Homes in U.S. Source: NAR Estimate

Foreclosure Rates by Loan Type 2007 Q3 % Source: MBA

Foreclosure Rate Comparisons (2007 Q3) % Source: MBA

Gamble Did Not Pay: Wall Street Re-valuation Source: Wall Street Journal Stock Price

Subprime Problem Huge Loss Write-downs from PAST lending mistakesHuge Loss Write-downs from PAST lending mistakes Expect more write-downs and rising foreclosure from PAST lending mistakesExpect more write-downs and rising foreclosure from PAST lending mistakes Does not impact CURRENT mortgage borrowersDoes not impact CURRENT mortgage borrowers –Historically low rates –FHA safer alternative Impacts home values from rising defaultsImpacts home values from rising defaults Impacts homebuyer confidenceImpacts homebuyer confidence

All Real Estate is Local

National vs. Local Information National data are importantNational data are important –Quick casual glance –Economic impact and monetary policy Local data are importantLocal data are important –Home purchase is a serious decision –Huge local variations national data are not meaningfulnational data are not meaningful

Something appears Out of Whack! Income and Price set to Index of 100 in 1990 Source: NAR

Mortgage Rates Falling Source: Freddie Mac

Mortgage Obligation to Income Manageable Source: NAR %

Mortgage Obligation to Income Very High in Some Markets San Diego Source: NAR

Mortgage Obligation to Income Historically High in Some Markets Miami Source: NAR

Under-Priced Markets With Affordable Mortgage Obligation to Income Source: NAR U.S. Historic Average Similar Trends in Vast Part of Middle America

Mortgage Obligation to Income Manageable in Hartford Hartford Source: NAR

GDP Growth % annualized growth rate Source: BEA

U.S. Job Gains - Decelerating Source: BLS 12-month payroll job changes in thousands

Job Gains in CT Source: BLS 12-month net payroll job changes in thousands

Jobs in CT Source: BLS in thousands

Corporate Profits – Near Record High Source: BEA $ billion

Stock Market S&P 500 Index Source: NYSE

Business Spending $ billion (2000-chain $)

$Dollar vs Euro Source: BLS

Exports Growing $ billion (2000-chain $)

Imports Growing $ billion (2000-chain $)

Net Exports – Finally Improving Source: BEA $ billion (2000-chain $)

Consumer Spending % year-over-year growth rate

Fed Rate Cut Source: Freddie Mac

Mortgage Rates Source: Freddie Mac Following Fed Rate Cuts

Jumbo Loan Rate Spread (Jumbo Loan rate above Prime Conforming Rate) Source: Freddie Mac, NAR Estimate Basis Points

Economic Outlook GDP2.1%1.4%2.4% CPI Inflation 2.9%3.4%2.2% Job Growth 1.3%0.2%1.1% Unemployment Rate 4.6%5.4%5.6%

Pent-Up Demand ? Difference Total Home Sales (new and existing) 8.4 million 6.5 million million Jobs million million million Wage + Salary $5.7 trillion $6.4 trillion + $700 billion Household Wealth (4th quarter) $51 trillion $58 trillion + $7 trillion Home Prices $219,600$218,900 Little change Mortgage Rates 5.9%6.3% Little change

Unleashing of Pent-Up Demand

Housing Affordability Index Source: NAR

FHA Market Share for Home Purchase Source: HMDA, NAR Estimate

National Housing Outlook Existing-Home Sales 5.65 million 5.38 million 5.74 million New Home Sales 0.77 million 0.58 million 0.60 million Housing Starts 1.35 million 1.00 million.99 million 30-Year FRM 6.3%5.9%6.3% 1-Year ARM 5.6%5.0%5.0% Existing-Home Price Growth -1.4%-1.4%3.7

Local Forecast Rising Exports help EconomyRising Exports help Economy Consistent Job GrowthConsistent Job Growth Northeast Region – Best Performing Region TodayNortheast Region – Best Performing Region Today New England Region - educated work force in a knowledge based economyNew England Region - educated work force in a knowledge based economy Falling housing inventoryFalling housing inventory 2008 – Stabilizing to modest improvement2008 – Stabilizing to modest improvement 2009 – Healthy rise in sales and prices2009 – Healthy rise in sales and prices

Best Evidence: Household Wealth Accumulation Median Net Worth $184,400 $4,000 Source: Federal Reserve