KCM Divided into Three Sections

Be their ‘Expert’This is a person to whom people will turn for advice on difficult or complex real estate decisions.

90

95

100

105

110

115

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

100 = Historically Healthy Level

Pending Home Sales

NAR 2/2014

Existing Home Sales

NAR 2/2014

WEST- 8.1%

MIDWEST +2.0%

SOUTH +3.6%

NORTHEAST+7.1%

U.S. + .8%

Year-over-Year as perNAR’s 2013 4Q Report

% Change in House Sales

NAR 2/2014

10%

15%

20%

25%

30%

35%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Percentage of Distressed Property Sales

35%

15%

23%

Date Sales % Non-Distressed Total Non-distressed

Jan ’13 4.87M 77% 3.75M

Jan ‘14 4.62M 85% 3.93M

Non-Distressed Sales Still Up

-19.1%

-6%

3.9%

15.2%19.4%

37.5%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+

% Sales +/- -19.1% -6% 3.9% 15.2% 19.4% 37.5%

Percentage Change in Sales from a Year Ago by Price Range

Bill McBrideCalculated Risk Finance & Economics

The bottom line is the housing weakness should be temporary. There

should be more inventory this year, price increases should slow, and sales

volumes increase.

8.2% 7.9%

5.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

January 2013 December 2013 January 2014

Institutional Investor Sales

RealtyTrac 2/2014

WHO ARE THEY?

HOUSEHOLD TYPE

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

WHAT ARE SOURCES OF DOWNPAYMENT?

Savings

Gift from Relative or Friend

Sale of Stocks or Bonds

401k/Pension Fund

Loan from Relative or Friend

Inheritance

IRA

78%

27%

9%

8%

7%

4%

3%

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

Cut Spendingon Luxury Items

Cut Spending on Entertainment

Cut Spendingon Clothes

Cancelled Vacation Plans

Income froma 2nd Job

Sold/Didn’t Buy a Car

33%

27%

13%

9%

5%

40%

WHAT SACRIFICES DO THEY MAKE TO PURCHASE?

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

FINANCING

95%

5%0%

25%

50%

75%

100%

Mortgage Cash

FIRST TIME HOMEBUYERS

NAR’s 2013 Profile of Home Buyers & Sellers

3.25

3.5

3.75

4

4.25

4.5

4.75

2013 - 2014 30 Year Fixed Mortgage Rates

Freddie Mac 2/2014

Mortgage Rate Projections

Analyst Projected Rate 1Q 2015

Fannie Mae 4.9% National Assoc of Realtors 5.5% Freddie Mac 5.1% Mortgage Bankers Assoc 5.1%

2/2014

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-14 1Q 2015 P

Freddie Mac 2/2014

2003 - 2013 30 Year Fixed

Mortgage Rates

Buying is CHEAPER than renting in ALL of the 100 largest metros by an average of… 38%

Trulia 2/2014

$300

$350

$400

$450

$500

$550

$600

$650

$700

$750

The Increasing Cost of Renting

Median Asking Rent1988-2013

Census Bureau 2014

3.8%

6.6%

Bachelor's Degree or More U.S.

Unemployment Rate: Millennials Ages 25-32 with a Bachelor’s Degree vs. U.S. Rate

Bureau of Labor Statistics & Pew Research 2/2014

$45,500

$40,872

Bachelor's Degree or More U.S.

Median Annual Full Time Wage: Millennials Ages 25-32 with Bachelor’s Degree vs. U.S. Rate

Bureau of Labor Statistics & Pew Research 2/2014

29%Have no student debt

$29.4K Average Student Debt

$335.33Typical Payment

The Project on Student Debt

Median HOUSEHOLD Income of Young Adults (25-32 years old) Living in their Parents’ Home?

Pew Research 2/2014

$113,181

Millennials Belief in Real Estate and its Agents

Optimistic About Real Estate In 2014 70%

Look To An Agent For Sound Guidance 62%

Think A Good Agent Can Maximize The Investment 70%

74%

4% 2%0%

10%

20%

30%

40%

50%

60%

70%

80%

Email Social Media Text

Method Used by 18-29 Year Olds to Download Information

HomePrices

Year-over-Year Price Change by Region

FHFA 2013 4Q

Year-over-Year Price Change by State

FHFA 2013 4Q

Home Price Expectation

SurveyA nationwide panel of over one hundred

economists, real estate experts and

investment & market strategists.

Home Price Expectation Survey 2014 1Q

Average Annual % APPRECIATION

4.54.0

3.7 3.7 3.8

2014 2015 2016 2017 2018

PROJECTED Percentage Appreciation

Home Price Expectation Survey 2014 1Q

Home Price Expectation Survey 2014 1Q

Cumulative House Appreciation by 2018

19.4%

28.4%

19.7%

10.9%

Pre-BubbleTrend

Bulls All Projections

Bears

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

S&P Case Shiller 2/2014

Year-over-Year Change in Prices

RETURN ON INVESTMENT

49.2

33.3

9.3

65.7

Dow S&P NASDAQ Real Estate

January 2000 – February 2014

MSN Money.com, Case Shiller

S&P Case-Shiller Home Price Indices

S&P Case Shiller 2/2014

-24%

-20.8%

-16.8%

-14%-13%

-7.6%

-5%-6.2%

1.8% 0.9%

5%

1.6%

7.3%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Jan Feb March April May June July Aug Sept Oct Nov Dec Jan

% -24% -20.8 -16.8 -14% -13% -7.6% -5% -6.2% 1.8% 0.9% 5.0% 1.6% 7.3%

NAR 2/2014

Year-over-Year Inventory Levels

4.0

4.3

4.5

4.8

5.0

5.3

Jan Feb Mar Apr May Jun Jul August Sept Oct Nov Dec Jan

Months Inventory of Homes for Sale

5-6 Months = Normal Market Inventory

NAR 2/2014

Months Inventory of Homes for Sale

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

5-6 Months = Normal Market Inventory

NAR 2/2014

ResourcesSlide Slide Title Link

6, 7, 9, 42, 43, 44

Pending Home Sales, Existing Home Sales, % Distressed Property Sales, Year-over-Year Inventory, Months Inventory Homes for Sale

http://www.realtor.org/

8 % Change in House Saleshttp://www.realtor.org/news-releases/2013/12/existing-home-sales-decline-in-november-but-strong-price-gains-continue

10 Non-Distressed Sales Still Uphttp://www.realtor.org/news-releases/2014/02/existing-home-sales-drop-in-january-while-prices-continue-to-grow

11Percentage Change in Sales from a Year Ago by Price Range

http://economistsoutlook.blogs.realtor.org/2014/02/23/a-closer-look-at-the-latest-ehs-release/

12 Bill McBride Quotehttp://www.calculatedriskblog.com/2014/02/housing-weakness-temporary-or-enduring.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

13 Institutional Investor Sales http://www.realtytrac.com/content/foreclosure-market-report

14-17 First Time Homebuyers http://www.realtor.org/ - NAR’s 2013 Profile of Home Buyers & Sellers

18, 20 30 Year Fixed Mortgage Rates http://www.freddiemac.com/pmms

19 Mortgage Rate Projections

http://fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_011314.pdf http://www.freddiemac.com/finance/docs/Jan_2014_public_outlook.pdf http://www.mortgagebankers.org/files/Bulletin/InternalResource/86783_.pdf http://www.realtor.org/sites/default/files/reports/2013/embargoes/phs-12-30-illtratatb/forecast-1-2014-us-economic-outlook-12-30-2013.pdf

22 Buying is Cheaper http://trends.truliablog.com/category/rent-vs-buy-index/

23 Increasing Cost of Renting http://www.census.gov/housing/hvs/data/histtabs.html

ResourcesSlide Slide Title Link

25, 26 Millennials: Unemployment & Incomehttp://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/ http://www.bls.gov/

27 Project on Student Debt http://projectonstudentdebt.org/

28Median Household Income of Millennials Living at Home

http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/6/#appendix-c-young-adult-living-arrangements-and-household-incomes

29 Millennials Belief in Real Estate & It’s Agents https://www.prudentialrealestate.com/Portals/0/Documents/Prudential%20Q4%20Consumer%20Outlook%20Infographic.jpg

30 Methods Used to Downloadhttp://www.mediabistro.com/alltwitter/files/2012/08/email-vs-social-media-marketing.jpeg

32, 33 Year-Over-Year Price Changes Regional & State www.fhfa.gov

35, 36, 37

Avg. Annual % Appreciation, Projected % Appreciation, Cumulative Appreciation

https://www.pulsenomics.com/Q4_2013_HPE_Survey.php

39 Year-over-Year Change in Price http://www.spindices.com/index-family/real-estate/sp-case-shiller

40 Return on Investmenthttp://www.spindices.com/index-family/real-estate/sp-case-shiller http://money.msn.com/

41 Case-Shiller Home Price Indexhttps://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/79678_cshomeprice-release-0225.pdf

48, 51 The Power of Using Visuals http://www.macrovu.com/VTVCInterEffectiveness.html

49, 50 The Power of Using Visuals https://www.osha.gov/doc/outreachtraining/htmlfiles/traintec.html

The Power of Using Visuals

Percentage Making a Decision Immediately after Presentation

Percentage Increase Seeing Presenter as More Convincing

64% 34%

24%MacroVU

Visual Learning

Compared IdenticalPresentations

With and Without Visuals

Amount of Time the Presentation was Reduced By

The Power of Using Visuals

83%

11%3.5% 1.5% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Visual Sound Smell Touch Taste

Studies by EducationalResearchers Suggest that

Human Learning Occurs by Approximately

these Percentages

OSHA

The Power of Using Visuals

10%

35%

65%

0%

10%

20%

30%

40%

50%

60%

70%

Oral Presentation Visual Presentation Oral & Visual Presentation

Studies suggest that three days after a presentation, people retain these percentages of what they heard

OSHA

MacroVU Visual Learning

The Power of Using VisualsPresenters using visuals were perceived as more effective. People said such things as…

MoreInteresting

MoreConcise

MoreProfessional More

Credible

BetterPrepared