1. California Association of REALTORS  Robert A. Kleinhenz, Ph.D. Deputy Chief Economist California Association of REALTORS  Economic and Housing Market Forecast International Real Estate Forum June 8, 2007

2. California Association of REALTORS  Overview  U.S. Economic Outlook  International Economic & R.E. Trends  2007 Forecast

3. California Association of REALTORS  U.S. Economic Outlook California Association of REALTORS 

4. National Economy 2007 World’s Largest Economy Safe Haven

5. California Association of REALTORS  Gross Domestic Product Year 2006: +3.3%; 2007 Q1: +1.3% ANNUAL PERCENT CHANGE, CHAIN-TYPE (2000) $ QuarterlyAnnual

6. California Association of REALTORS  Unemployment Rate California vs. United States SOURCE: CA Employment Development Division

7. California Association of REALTORS  Employment Growth, California vs. U.S. YEAR TO YEAR % CHANGE

8. California Association of REALTORS  Consumer Price Index April 2007: All Items 2.8% Y-T-Y; Core 2.5% Y-T-Y PERCENT CHANGE FROM A YEAR AGO, 100=1982-1984

9. California Association of REALTORS  SOURCE: Federal Home Loan Mortgage Corporation Mortgage Rates

10. California Association of REALTORS  SOURCE: Federal Home Loan Mortgage Corporation – 30-yr FRM Federal Reserve Board – 10-Year T-Bond 30-Year FRM vs. 10-Year T-Bond

11. California Association of REALTORS  Dollar Losing Value Globally July 2002-Present (Jan 1997 = 100) Jan 97= 100 SOURCE: Moody’s Economy.com

12. California Association of REALTORS  International Economic Outlook- GDP Annual Growth Rates in Percent SOURCE: International Monetary Fund

13. California Association of REALTORS  International Economic Outlook- GDP Annual Growth Rates in Percent SOURCE: International Monetary Fund

14. California Association of REALTORS  International Economic Outlook- Inflation Rate SOURCE: International Monetary Fund

15. California Association of REALTORS  International Economic Outlook- Inflation Rate SOURCE: International Monetary Fund

16. California Association of REALTORS  International Economic Outlook- Unemployment Rate SOURCE: International Monetary Fund

17. California Association of REALTORS  International Economic Outlook- Unemployment Rate SOURCE: International Monetary Fund

18. California Association of REALTORS  International R.E. Trends-Industrial Nations SOURCE: Finance & Development Magazine, Dec 2006 International Monetary Fund

19. California Association of REALTORS  International R.E. Trends – Asia/Pacific

20. California Association of REALTORS  SOURCE: Finance & Development Magazine, Dec 2006 International Monetary Fund R.E. Sector Tied to General Economy

21. California Association of REALTORS  Global R.E. Markets Linked By Interest Rates SOURCE: Finance & Development Magazine, Dec 2006 International Monetary Fund

22. California Association of REALTORS  Economic & Market Forecast

23. California Association of REALTORS  U.S. Economic Forecast SOURCE: California Association of REALTORS®

24. California Association of REALTORS  California Economic Forecast SOURCE: California Association of REALTORS®

25. California Association of REALTORS  California Housing Market Forecast SOURCE: California Association of REALTORS®

26. California Association of REALTORS  Recap Market May Bottom Out in 2007 Sales to Recover Before Prices Sub-Prime/Foreclosure Situation A Concern Direct Impact Narrow Psychological Impact Broader

27. California Association of REALTORS  Thank You To View This Presentation Online www.car.org  “Economics”  “Speeches & Presentations”