economic trends economic trends (re26rc01) presented by gary bourque [email protected] october...

49
Economic Economic Trends Trends (RE26RC01) Presented by Gary Bourque [email protected]

Post on 21-Dec-2015

215 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Economic TrendsEconomic Trends (RE26RC01)

Presented by

Gary Bourque

[email protected]

October 18, 2011

Page 2: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

SOURCES OF DATASOURCES OF DATA NAR/MAR/Local Realtor BoardsNAR/MAR/Local Realtor Boards Case-ShillerCase-Shiller Foreclosures.comForeclosures.com RisMediaRisMedia U.S. Bureau of Labor StatisticsU.S. Bureau of Labor Statistics Banker & Tradesman / The Warren GroupBanker & Tradesman / The Warren Group Associated Industries of MassachusettsAssociated Industries of Massachusetts Executive Office of Labor & Work Force DevelopmentExecutive Office of Labor & Work Force Development RealtyTracRealtyTrac U.S. Bureau of Economic AnalysisU.S. Bureau of Economic Analysis Citydata.comCitydata.com BloombergBloomberg CorelogicCorelogic

Page 3: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

WHAT ARE SOME CURRENT WHAT ARE SOME CURRENT MARKET PROBLEMSMARKET PROBLEMS

•Lack of Buyer Confidence

•Unemployment – Shakey job market

•Anticipated Lower Home Prices

•Weather Effect/European Debt/Japan

•Oil Prices/Gas Prices/Food Prices

•Default & Foreclosure Rates

•Fear of Inflation/ Deflation - CPI –Up 3.8% in past 12 months

•Unemployment – Shakey Job Market

•Bottom Yet ?????

•Realtor Self Destruction

•Finding the Good !!!!!!!!!

Page 4: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

6.7% Gain in Fuel PricesNon-Fuel Imports Flatter at .6%Rising gas Prices Hurt Consumer and Business ConfidencePut off Plans to HireEffects Realtors.. Transportation (Food )

Page 5: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

MAJOR ISSUESMAJOR ISSUES Consumer ConfidenceConsumer Confidence

– Demographic ChangesDemographic Changes– Stricter Mortgage RequirementsStricter Mortgage Requirements

Unemployment 9.1% MA 7.4%Unemployment 9.1% MA 7.4%– B of A (3500 jobs) (Total 10,000) MA up 56,800 jobsB of A (3500 jobs) (Total 10,000) MA up 56,800 jobs

Foreclosures & Short Sales (90 day right to cure) (1/3 Distressed)Foreclosures & Short Sales (90 day right to cure) (1/3 Distressed)– Strategic DefaultStrategic Default– 18-28% Below18-28% Below– 39% Cash Sales39% Cash Sales– 3 Million Properties- Shadow Inventory- Robo signing-Ackerman 3 Million Properties- Shadow Inventory- Robo signing-Ackerman

ProposalProposal Rental MarketRental Market Appraisal IssuesAppraisal Issues

– Value/ # of salesValue/ # of sales– Dodd-Frank Dodd-Frank

European Financial Crisis European Financial Crisis Interest RatesInterest Rates New Construction ????New Construction ????

Page 6: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Consumer Confidence at 45.4 – Lowest since March of 2009

Biggest One Month Drop since October of 2008

Steadily declining in 2011 – Financial Crisis Climax

Weakening Expectations -& Pessimistic Future

Debt Ceiling Debacle, inflation rising, oil prices rising, stock market volatility, & most importantly jobs!

Page 7: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Something Appears Out of Whack! Something Appears Out of Whack! Something Appears Out of Whack! Something Appears Out of Whack!

50

100

150

200

250

Income Home Price

50

100

150

200

250

Income Home Price

Income and Price set to Index of 100 in 1990

Source: NAR & Personal Update

Page 8: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011
Page 9: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011
Page 10: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

HOMEOWNERSHIPHOMEOWNERSHIPdata from U.S. Census Bureaudata from U.S. Census Bureau

Biggest Decline since the Great DepressionBiggest Decline since the Great Depression 65.1% in 2010 Down 1.1% from 200065.1% in 2010 Down 1.1% from 2000 Biggest drop since 1930.s – 4.2%Biggest drop since 1930.s – 4.2% Around 2004 really high 70%Around 2004 really high 70% More than 4% down in 5 yearsMore than 4% down in 5 years West lowest- 60.5%West lowest- 60.5% Midwest highest 69.2%Midwest highest 69.2% South 66.7%South 66.7% Northeast 66.2%Northeast 66.2% New York lowest 53.3% New York lowest 53.3% District of Columbia 42%District of Columbia 42% West Virginia 73.4% Minnesota 73%West Virginia 73.4% Minnesota 73%

Page 11: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Homeownership Rate Back to Homeownership Rate Back to 1996 Level1996 Level

U.S. Home Ownership Rate

66.8%

69.0%

66.8%

64.0%

60%61%62%63%64%65%66%67%68%69%70%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Source: Census

Page 12: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

HOMEOWNERSHIP (cont)HOMEOWNERSHIP (cont)

Vacant HomesVacant Homes– Up 43.8% to @ 15 million – (11.4% of all housing units) -Up 43.8% to @ 15 million – (11.4% of all housing units) -

10.4 million in 200010.4 million in 2000– # of homes increased over the decade by 16 million# of homes increased over the decade by 16 million– Nevada “ground zero” for foreclosures vacancies grew 120% Nevada “ground zero” for foreclosures vacancies grew 120%

to 14.3% of all homes, then Georgia up 82.7%, Florida 62.2% to 14.3% of all homes, then Georgia up 82.7%, Florida 62.2% and Arizona 61%and Arizona 61%

– Maine 22.8% & Vermont 20.5% of homes vacant, Florida 3Maine 22.8% & Vermont 20.5% of homes vacant, Florida 3rdrd with 17.5%with 17.5%

– New York City - highest % of renters at 69%, then LA @ New York City - highest % of renters at 69%, then LA @ 61.5% and Dallas 55.9% 61.5% and Dallas 55.9%

– San Jose lowest 5 of renters at 41.5% San Jose lowest 5 of renters at 41.5% dd

Page 13: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

MAJOR DEMOGRAPHIC MAJOR DEMOGRAPHIC CHANGESCHANGES

25-29 yr olds – (Gen Y)25-29 yr olds – (Gen Y)– Deciding not to buyDeciding not to buy– Not ready to buyNot ready to buy– Less able to buyLess able to buy– MotivationsMotivations

High UnemploymentHigh Unemployment Job UncertaintyJob Uncertainty Afraid to make major financial commitmentAfraid to make major financial commitment Stricter Mortgage RegulationsStricter Mortgage Regulations

30-34 – (Gen X)30-34 – (Gen X)– Prime Homebuyer GroupPrime Homebuyer Group– Most UnderwaterMost Underwater– Student Debt (35% under 35 have)Student Debt (35% under 35 have)– Baby BoomersBaby Boomers

Can’t moveCan’t moveSell too lowSell too low

65+ Group65+ Group27% have Mortgages – was 18% in 199927% have Mortgages – was 18% in 1999

Page 14: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Market Conditions - SellersMarket Conditions - Sellers

Sellers Becoming More ReasonableSellers Becoming More Reasonable Better ExpectationsBetter Expectations Some Still in DenialSome Still in Denial Pulling Property off MarketPulling Property off Market Requires Good ConditionRequires Good Condition Concessions Need to be Factored In Concessions Need to be Factored In Short Sales ProminentShort Sales Prominent May have to delay selling/purchasingMay have to delay selling/purchasing

Page 15: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Market Conditions - BuyerMarket Conditions - Buyer

Looking at Many Properties- No UrgencyLooking at Many Properties- No Urgency Plenty of Inventory-- ???Plenty of Inventory-- ??? Low Rates – Great AffordabilityLow Rates – Great Affordability Looking for Value (Bottom Feeding)Looking for Value (Bottom Feeding) Maybe No Counter-OfferMaybe No Counter-Offer Property Needs Good ConditionProperty Needs Good Condition Wiling to Wait for Short Sale Process?Wiling to Wait for Short Sale Process? Willing to RentWilling to Rent Concessions CommonConcessions Common

– Closing CostsClosing Costs– Buy-down Buy-down

Page 16: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

2010-2011 Buyer Profile2010-2011 Buyer Profile

Buyer was a first-time purchaser 33% Buyer purchased a foreclosed home 27% Buyer purchased a short-sale home 13% Buyer was an investment purchaser 22% Buyer paid all cash 35% Typical buyer today stays in home 10 Years Housing Inventory at 8.4 months

Page 17: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

NEW HOME SALESNEW HOME SALES Nationally Down 2.3 % in AugustNationally Down 2.3 % in August Record low this year at @302,000 unitsRecord low this year at @302,000 units 321, 000 last year 321, 000 last year 2005 new homes peaked at 1.3 million units2005 new homes peaked at 1.3 million units Record low 162,000 units for sale Record low 162,000 units for sale

nationwide (NAR)nationwide (NAR) Commerce Dept said fewer homes under Commerce Dept said fewer homes under

construction in August than anytime since construction in August than anytime since 19701970

Mediam price of new home was $209,100 Mediam price of new home was $209,100 down 9% from Julydown 9% from July

Page 18: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Single Family Construction and New Single Family Construction and New Home Sales Near All-time LowsHome Sales Near All-time Lows

SAAR

Source: Census

Page 19: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

RENTAL MARKETRENTAL MARKET US at 5 year low pushing rents upwardUS at 5 year low pushing rents upward Vacancy rate dropped to 5.6% lowest since Q3 of 2006Vacancy rate dropped to 5.6% lowest since Q3 of 2006 Was 5-8% in past 3 monthsWas 5-8% in past 3 months Reached three decade high of 8% at end of 2009 Reached three decade high of 8% at end of 2009 Prices up slightlyPrices up slightly Pessimism of home prices, Mounting foreclosure, tighter credit (less Pessimism of home prices, Mounting foreclosure, tighter credit (less

people qualifying) , young people moving out (increase retail jobs) people qualifying) , young people moving out (increase retail jobs) favor the rental marketfavor the rental market

Increases more like under 2% but maybe with tightening in a year or Increases more like under 2% but maybe with tightening in a year or two (minimal units being added) couls see 3-4% increases possibletwo (minimal units being added) couls see 3-4% increases possible

Rents have climbed 4.1 % from their low in 2009 Rents have climbed 4.1 % from their low in 2009 Higher as people tend to move during warmer weather monthsHigher as people tend to move during warmer weather months Higher rents move people back home (also to help older parent maybe Higher rents move people back home (also to help older parent maybe

with illness or down-size with illness or down-size – Rents- rent vs. buy multiples .. 15x magic number- caviat..low could be Rents- rent vs. buy multiples .. 15x magic number- caviat..low could be

really depressed markets.. Like Vegas, Phoenix, Miami, etcreally depressed markets.. Like Vegas, Phoenix, Miami, etc– Foreclosures jobs fuel engine, foreclosures puts on breaks…bring down Foreclosures jobs fuel engine, foreclosures puts on breaks…bring down

value in a community, boarded up houses , etcvalue in a community, boarded up houses , etc– Less interest in home ownership ********Less interest in home ownership ********

Page 20: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

COMMERCIAL MARKETCOMMERCIAL MARKET

Framingham, Natick strongest demandFramingham, Natick strongest demand Metro West market expected to remain flatMetro West market expected to remain flat Vacancies around 25% - Marlborough 40%Vacancies around 25% - Marlborough 40% Job growth major hurdle.. Ex 2014 or laterJob growth major hurdle.. Ex 2014 or later Not talent – recruiting companies –companies Not talent – recruiting companies –companies

aren’t growing- min expansionaren’t growing- min expansion Fidelity closing Marlborough headquarters Fidelity closing Marlborough headquarters

964,318 SF, 964,318 SF, TJX & Vestas TechnologyTJX & Vestas Technology

Page 21: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011
Page 22: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Unemployment Rate, Boston-Cambridge-Quincy, MA NECTA Division

%

1009080706Source: Bureau of Labor Statistics 04/27/11

9

8

7

6

5

4

3

Page 23: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

RETAILRETAIL

Retail hiring is improvingRetail hiring is improving Up 12.6% from aug to SeptUp 12.6% from aug to Sept Up 16% from one year agoUp 16% from one year ago Best in last 3 yearsBest in last 3 years

Page 24: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

UNEMPLOYMENTUNEMPLOYMENT

Worker’s Lack Job ConfidenceWorker’s Lack Job Confidence Nationally 9.1% - 13.7 Million Nationally 9.1% - 13.7 Million Zero jobs added Nationally in AugustZero jobs added Nationally in August Bank of America (3500 jobs eliminated)Bank of America (3500 jobs eliminated) 308 0f 372 Metro’s saw Drops in Feb308 0f 372 Metro’s saw Drops in Feb Some areas like Gardner/Lawrence, Fall River are over Some areas like Gardner/Lawrence, Fall River are over

10%10% Worst Financial Climate Since The Great Depression of Worst Financial Climate Since The Great Depression of

the 1930’s the 1930’s Slooooooooow RecoverySlooooooooow Recovery

Page 25: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

UNEMPLOYMENTUNEMPLOYMENT Currently 9.1% Nationally - MA 7.4%Currently 9.1% Nationally - MA 7.4% Lowest since February of 2009Lowest since February of 2009 Keynesian Economics NOT happeningKeynesian Economics NOT happening

– A supporter of Keynesian economics believes it is the government's job to A supporter of Keynesian economics believes it is the government's job to smooth out the bumps in business cycles. Intervention would come in the smooth out the bumps in business cycles. Intervention would come in the form of government spending and tax breaks in order to stimulate the form of government spending and tax breaks in order to stimulate the economy, and government spending cuts and tax hikes in good times, in economy, and government spending cuts and tax hikes in good times, in order to curb inflation. order to curb inflation.

Nothing to Change it Short-TermNothing to Change it Short-Term Up to 10,000 jobs in Financial SectorUp to 10,000 jobs in Financial Sector Make up Evergreen Solar & Fidelity (800 & 3000)Make up Evergreen Solar & Fidelity (800 & 3000) Banks- Dodd-Frank.. More regulation… AMC’s (not internal)Banks- Dodd-Frank.. More regulation… AMC’s (not internal) MA gained 48,000 jobs over a year ..47,700 in private sectorMA gained 48,000 jobs over a year ..47,700 in private sector 1.5% growth rate1.5% growth rate

– Most in Trade, Transportation, Utilities & Retail Most in Trade, Transportation, Utilities & Retail

Page 26: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

FINANCINGFINANCING

Page 27: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Overcorrection Needs to be HaltedOvercorrection Needs to be Halted(Home Price to Income Ratio)(Home Price to Income Ratio)

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

Stay within Budget and all will be OK !

Source: NAR

Page 28: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Qualifying More DifficultQualifying More Difficult

Income Not GrowingIncome Not Growing Lenders Tightening their BeltsLenders Tightening their Belts Higher Pricing Adjusters Increase RatesHigher Pricing Adjusters Increase Rates 740 & 20% Down- Best rate – now 25% Down740 & 20% Down- Best rate – now 25% Down Risk Based – Lower Credit Score=Higher RateRisk Based – Lower Credit Score=Higher Rate FNMA & FHLMC min to 620 from 580FNMA & FHLMC min to 620 from 580

– FHA to 640 from 620FHA to 640 from 620 Buyer employed on Day of FundingBuyer employed on Day of Funding Condo’s – 51% Owner-occupiedCondo’s – 51% Owner-occupied Appraisal – good for only 4 months Appraisal – good for only 4 months Ratios ???? Ratios ????

Page 29: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

INTEREST RATESINTEREST RATES

Lowest since the 1940’s Lowest since the 1940’s Mtg purchase apps down .8% m-m and 12% YOYMtg purchase apps down .8% m-m and 12% YOY Refi’s down, - Equity IssuesRefi’s down, - Equity Issues tougher qualifyingtougher qualifying Rates will probably not increase sales but thru Rates will probably not increase sales but thru

enhanced Refi programs (govt induced ??) may enhanced Refi programs (govt induced ??) may increase activityincrease activity

Page 30: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Qualifying More DifficultQualifying More Difficult

Income Not GrowingIncome Not Growing Lenders Tightening their BeltsLenders Tightening their Belts Higher Pricing Adjusters Increase RatesHigher Pricing Adjusters Increase Rates 740 & 20% Down- Best rate – now 25% Down740 & 20% Down- Best rate – now 25% Down Risk Based – Lower Credit Score=Higher RateRisk Based – Lower Credit Score=Higher Rate FNMA & FHLMC min to 620 from 580FNMA & FHLMC min to 620 from 580

– FHA to 640 from 620FHA to 640 from 620 Buyer employed on Day of FundingBuyer employed on Day of Funding Condo’s – 51% Owner-occupiedCondo’s – 51% Owner-occupied Appraisal – good for only 4 months Appraisal – good for only 4 months Ratios ???? Ratios ????

Page 31: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Homeowners Have Greater Debt Homeowners Have Greater Debt and Less Equityand Less Equity

Source: Federal Reserve

Page 32: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

FHAFHA•Replace Sub-prime Market

•Not as Many Appraisal Conditions

•Lead Paint

•Handrails

•Cracks & Holes in walls

•Underwriter Can Waive Conditions

•Processing Time Just as Quick

•203K Good if Property Needs Work (over $5K)

•Streamline (5-35K)

•Low Down payment (3.5% + Borrowed) •https://entp.hud.gov/idapp/html/hicostlook.cfm

Page 33: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

FORECLOSURESFORECLOSURES

Page 34: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

•Distressed Sales in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut

•Fewer Traditional Sellers on Market with Tax Credit Gone

Page 35: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Price GraphPrice Graph

Page 36: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

FORECLOSURES- NATIONALLYFORECLOSURES- NATIONALLY More homes entering the processMore homes entering the process banks are now addressing the backlog. / more aggressivebanks are now addressing the backlog. / more aggressive Longer Sale & repossession timesLonger Sale & repossession times Surge could be good for housing turnaround- glut hurts the market.Surge could be good for housing turnaround- glut hurts the market. 33rdrd quarter- avg of 338 days (11.2 months) from notice to foreclosure quarter- avg of 338 days (11.2 months) from notice to foreclosure 988 days in New York on Avg – Longest in Country988 days in New York on Avg – Longest in Country New Jersey 974 days, Florida 749 days, Texas 86 daysNew Jersey 974 days, Florida 749 days, Texas 86 days July – Sept notices increased 14% over 2July – Sept notices increased 14% over 2ndnd quarter- 1 quarter- 1StSt increase after 5 increase after 5

consecutive quarterly declines.consecutive quarterly declines. Other factors that slowed it down this yearOther factors that slowed it down this year

– Court delays by JudgesCourt delays by Judges– Legislation extending times- MA #Legislation extending times- MA #– Lender reluctance to take back properties in slow marketLender reluctance to take back properties in slow market– Settlement of government probes into industry mortgage –lending practices Settlement of government probes into industry mortgage –lending practices

(Robo-signing)(Robo-signing)

Banks to repossess 800,00 homes this year down from over 1 Million last year.Banks to repossess 800,00 homes this year down from over 1 Million last year.

Page 37: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

MA ForeclosuresMA ForeclosuresAugAug

Drops in petitions in 11 straight months YOYDrops in petitions in 11 straight months YOY Month o month increases last 2 months Month o month increases last 2 months Petitions Up 20% in August from JulyPetitions Up 20% in August from July Robo-signingRobo-signing Steady level of 1000-1500/month Steady level of 1000-1500/month MA- MGL c244-14 – Foreclosure Under Power of

Sale – 90 days

• Robo-signing & Processing Problems push 1 Million foreclosure auctions from 2011 to 2012 & beyond

Page 38: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

PENDING SALESPENDING SALES Nationally Declined 1.2% in AugustNationally Declined 1.2% in August

Up 7.7% from August of 2010Up 7.7% from August of 2010 Biggest decline in Northeast due to Biggest decline in Northeast due to

IreneIrene July-AugJuly-Aug Aug-AugAug-Aug Northeast Down 5-8% Up 1.3%Northeast Down 5-8% Up 1.3% Midwest Down 3.7% Up 8.2% Midwest Down 3.7% Up 8.2% South Up 2.6% Up 7.6% South Up 2.6% Up 7.6% West Down 2.4% Up 10.5% West Down 2.4% Up 10.5%

Page 39: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

PENDING SALESPENDING SALES MASSACHUSETTS MASSACHUSETTS

– Up for 5Up for 5thth Straight Month Straight Month– Fell in April from April of 2010 (Last month Fell in April from April of 2010 (Last month

Homebuyer Tax Credit) Homebuyer Tax Credit) Year-over YearYear-over Year

Single-Fam Up 9.6% 5Single-Fam Up 9.6% 5 thth straight month straight month– Aug-Sept Down 10.8%Aug-Sept Down 10.8%

Condo Down 1% Condo Down 1% – Aug-Sept Down 20.7% Aug-Sept Down 20.7%

Page 40: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

AUGUST 2011AUGUST 2011

Sales Up 2% Traditionally a strong monthSales Up 2% Traditionally a strong month Prices Down 6%Prices Down 6% Distressed property salesDistressed property sales Median over 300KMedian over 300K Condo Mkt Sales down 8% Prices down 7%Condo Mkt Sales down 8% Prices down 7% Condo 275K – empty nester, 1Condo 275K – empty nester, 1stst time, young time, young

Page 41: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

# Units Average $ # Units Average $ % Unit

Change% $

Change

Barnstable 2258 323,500$ 1996 315,000$ -11.60% -2.63%

Berkshire 668 180,000$ 587 181,500$ -12.13% 0.83%

Bristol 2118 235,000$ 1447 230,000$ -31.68% -2.13%

Dukes 163 552,500$ 104 542,033$ -36.20% -1.89%

Essex 3216 325,000$ 2732 320,000$ -15.05% -1.54%

Franklin 351 175,000$ 316 167,750$ -9.97% -4.14%

Hamden 2113 169,500$ 1712 160,000$ -18.98% -5.60%

Hampshire 676 239,250$ 588 244,250$ -13.02% 2.09%

Middlesex 6184 404,000$ 5798 395,000$ -6.24% -2.23%

Nantucket 83 1,075,000$ 72 1,135,000$ -13.25% 5.58%

Norfolk 3457 382,000$ 3200 379,000$ -7.43% -0.79%

Plymouth 2731 275,000$ 2510 271,000$ -8.09% -1.45%

Suffolk 895 323,000$ 783 320,000$ -12.51% -0.93%

Worcester 3651 220,000$ 3298 205,000$ -9.67% -6.82%

MA TOTAL 31,831 299,000$ 28588 295,000$ -10.19% -1.34%

Jan-Aug 2010 Jan-Aug 2011

Single Family Sales Data

Page 42: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

# Units Average $ # Units Average $ % Unit

Change% $

Change

Barnstable 562 227,250$ 334 200,000$ -40.57% -11.99%

Berkshire 68 224,000$ 36 235,250$ -47.08% 5.20%

Bristol 384 168,000$ 288 149,000$ -25.00% -11.30%

Dukes 7 162,500$ 13 10,500$ 85.71% -93.54%

Essex 1369 201,500$ 1046 190,000$ -23.59% -5.71%

Franklin 38 144,750$ 16 177,500$ -57.89% 22.63%

Hamden 305 139,500$ 173 129,900$ -43.28% -6.88%

Hampshire 153 185,000$ 122 173,500$ -20.26% -6.22%

Middlesex 3714 299,250$ 3129 309,900$ -15.75% 3.56%

Nantucket 20 385,000$ 8 302,500$ -60.00% -21.43%

Norfolk 1347 296,000$ 1027 300,000$ -23.67% 1.35%

Plymouth 572 217,750$ 333 187,000$ -41.78% -14.12%

Suffolk 3375 337,500$ 2858 365,000$ -15.32% 8.15%

Worcester 916 166,000$ 693 160,000$ -28.71% -3.61%

MA TOTAL 14,158 265,000$ 11308 276,500$ -20.13% 4.30%

Jan-Aug 2010 Jan-Aug 2011

Condo Sales Data

Page 43: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

Median SP

Median SF $

Change Median

SP Condo $ Change

2011 $296,000 -1.33% $277,000 3.99%2010 $300,000 5.26% Tax CR $266,000 Tax Cr 3.50%2009 $285,000 -10.38% $257,000 -8.21%2008 $318,000 -9.14% $280,000 -1.41%2007 $350,000 0.00% $284,000 0.00%2006 $350,000 -2.64% $284,000 0.42%2005 $360,000 7.31% $283,000 Same as 7.94%2004 $335,000 9.84% $262,000 Today 11.06%2003 $305,000 Same as 11.52% $236,000 10.75%2002 $274,000 today 14.44% $213,000 23.84%2001 $239,000 12.47% $172,000 15.44%2000 $213,000 14.86% $149,000 13.31%1999 $185,000 9.63% $132,000 5.96%1998 $169,000 8.87% $124,000 7.91%1997 $155,000 3.13% $115,000 4.55%1996 $150,000 3.66% $110,000 6.80%1995 $145,000 1.40% $103,000 0.59%1994 $143,000 0.83% $102,000 8.93%1993 $142,000 -0.83% $94,000 -2.08%1992 $143,000 -1.38% $96,000 -8.57%1991 $145,000 -4.61% $105,000 -12.50%1990 $152,000 -4.40% $120,000 -4.00%

Massachusetts Sales DataSF Jan-Aug Condo Jan-Aug

Page 44: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

# Units

SF Unit Change # Units

Condo Unit

Change2011 28,588 -10.19% Down 48% 11,308 Down 57% -20.13%2010 31,831 6.48% Since Peak 14,158 Since Peak 5.23%2009 29,895 -4.15% 13,454 -15.98%2008 31,189 -13.68% 16,013 -23.97%2007 36,130 -7.67% 21,062 -6.75%2006 39,132 -16.31% 22,586 -14.48%2005 46,761 -4.34% 26,411 17.75%2004 48,882 13.35% 22,429 18.92%2003 43,126 -1.65% 18,860 -0.85%2002 43,849 2.09% 19,022 8.93%2001 42,951 -4.61% 17,462 -2.52%2000 45,028 -10.45% 17,914 -2.31%1999 50,282 4.09% 18,337 7.94%1998 48,307 10.96% 16,988 17.60%1997 43,536 5.01% 14,445 10.69%1996 41,459 13.47% 13,050 19.55%1995 36,536 -11.41% 10,916 -3.94%1994 41,246 12.69% 11,364 14.26%1993 36,600 7.42% 9,946 6.74%1992 34,073 16.27% 9,318 Same as 6.31%1991 29,306 7.29% Same as 8,765 Today -9.18%1990 27,315 -12.53% Today 9,651 -27.38%

Massachusetts Sales DataSF Jan-Sept 2011 Condo Jan-Sept 2011

Page 45: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

THE GOODTHE GOOD•Getting to the Bottom

•Price of Housing is very Attractive

•Interest Rates Remain Attractive

•Fair Amount of Properties available for Buyer’s to Choose

•Short Sales becoming Easier

•Investors re-entering the Market

•Investors Re-entering the Market

•Labor base in MA is very talented, somewhat versatile & skilled

•NE NOT as Overbuilt as Other Areas Brookline (-5%)Brookline (-5%)

Cambridge (-8.6%)Cambridge (-8.6%)

Page 46: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

THE BADTHE BAD More Foreclosures Yet to hitMore Foreclosures Yet to hit Homebuyer Tax credit goneHomebuyer Tax credit gone Falling Home Prices (Not at Bottom Yet) Falling Home Prices (Not at Bottom Yet) Oil Prices/Food Prices - Inflation/DeflationOil Prices/Food Prices - Inflation/Deflation The European Bailout (Greece, Italy, etc) The European Bailout (Greece, Italy, etc) Unemployment / Weak Job GrowthUnemployment / Weak Job Growth New Construction at All Time LowsNew Construction at All Time Lows Consumer Confidence / PessimismConsumer Confidence / Pessimism Prices Expected to Decline 3-6% in 2011Prices Expected to Decline 3-6% in 2011 Entering typically slower SeasonEntering typically slower Season Realtor Negativity (No Way!!!!!)Realtor Negativity (No Way!!!!!)

Page 48: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

FUTURE ????FUTURE ????

Loooooooong RecoveryLoooooooong Recovery Triple –Dip Recession or Continuation???Triple –Dip Recession or Continuation??? Prices continuing to DeclinePrices continuing to Decline # of sales continue to Decline# of sales continue to Decline Appraisals Issues ContinueAppraisals Issues Continue Change in Housing Demographics Change in Housing Demographics Interest Rates Remain LowInterest Rates Remain Low Prices DownPrices Down Inventory (foreclosures) long time to absorb– Many more Inventory (foreclosures) long time to absorb– Many more

comingcoming Rental Market Strengthens – Good opportunityRental Market Strengthens – Good opportunity New Construction … a positive????? Could be!!!! New Construction … a positive????? Could be!!!!

Page 49: Economic Trends Economic Trends (RE26RC01) Presented by Gary Bourque gary@appraisalman.net October 18, 2011

FORECASTFORECASTclear capitalclear capital

Continued declines at least thru Q1 of 2012Continued declines at least thru Q1 of 2012 Moving closer to Q1 of 2011 prices which was the lowest Moving closer to Q1 of 2011 prices which was the lowest

since the downturn.. since the downturn.. Nothing to substantiate a seasonal overcoming the Nothing to substantiate a seasonal overcoming the

seasonal slowdownseasonal slowdown Positiv forces of record low mtg rates and low prices are Positiv forces of record low mtg rates and low prices are

offset by offset by – High unemploymentHigh unemployment– Consumer pessimism about the economyConsumer pessimism about the economy

– Flat or slightly down until more stable economic enviromnemtFlat or slightly down until more stable economic enviromnemt– Triple dip -- 1Triple dip -- 1stst winter of 2009, second winter of 2010 this year?? winter of 2009, second winter of 2010 this year??