1. Greater Phoenix Market Trends MIKE ORR: Founder www.cromfordreport.com mike@cromfordreport.com MIKE ORR: Founder www.cromfordreport.com mike@cromfordreport.com © 2011 www.cromfordreport.com October 11, 2011

2. 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” © 2011 www.cromfordreport.com

3. What People “know for sure” © 2011 www.cromfordreport.com 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

4. “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 © 2011 www.cromfordreport.com

6. 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% © 2011 www.cromfordreport.com

7. $115,000

8. Tax credit expiry

9. It typically takes 12-18 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?” © 2011 www.cromfordreport.com

10. 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 © 2011 www.cromfordreport.com

11. Active Listings including AWC

12. Normal Market Normal Market

13. The Bubble The Bubble Warning Signal Warning Signal

14. Running On Fumes Running On Fumes Pricing Stable Pricing Stable

15. Prices Declined 50%

16. Stabilization

17. NORMAL Active Listings include AWC 100

18. Here Active Listings EXCLUDE AWC May 04 – Oct 05 71

19. The longer it takes before prices respond, the larger the response is likely to be. The Coiled Spring Theory © 2011 www.cromfordreport.com

20. “Shadow Inventory”

21. © 2011 www.cromfordreport.com

22. Government Imposed Moratorium Bank of America Moratorium © 2011 www.cromfordreport.com

24. 1,280 Purchased by Third Party Reverted to Beneficiary New REOs Reverted to Beneficiary New REOs © 2011 www.cromfordreport.com

26. 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) © 2011 www.cromfordreport.com

27. 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 © 2011 www.cromfordreport.com

28. Title Versus Lien Theory © 2011 www.cromfordreport.com

30. Greater Phoenix

31. © 2011 www.cromfordreport.com Greater Phoenix

33. Josh Billings (again) “As scarce as truth is, the supply has always been in excess of the demand.” © 2011 www.cromfordreport.com