Brought to you by:

KW Research

Commentary 2

The Numbers That Drive Real Estate 3

Recent Government Action 9

Topics for Buyers and Sellers 15

Released:

February 5, 2010

KW Research 2

January began the new decade with indications that the economyis beginning to gain traction. Real GDP grew by 2.2 percent in the third quarter of 2009 and preliminary signals point to a continued positive trend for the following quarter. GDP is a measure of total economic growth for the country in a year.

A dip in home sales in December was due in large part to timing.First time buyers that would have liked to close in December but qualified for the tax credit bumped their timeline up in order to cash in. News of the credit’s extension reached many of them after their plans to close in December were set.

Interest rates are back below 5% and home prices are up compared to last year. The government continues to attempt to minimize the impact of troubled homeowners by continuing to improve its foreclosure prevention program and has also taken steps to help foreclosure buyers purchase faster.

Although the unemployment rate is expected to stay high as jobs increase modestly, experts expect the economy to continue to grow in 2010.

Commentary

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KW Research

Home Sales 4

Home Price 5

Inventory 6

Mortgage Rates 7

Affordability 8

The Numbers That Drive Real Estate

KW Research 4Latest Data Release: January 25, 2010

Source: National Association of Realtors

Seasonally Adjusted Home Sales

Home SalesIn Millions

After a rising surge for three straight months, existing home sales slowed in

December after first-time buyers rushed to meet the original November tax

credit deadline and evidenced by first timers accounting for 51% of sales in

November compared to 43% in December. “It’s significant that home sales

remain above year-ago levels, but the market is going through a period of

swings driven by the tax credit,” said Lawrence Yun, NAR chief economist.

December sales of 5.45 million remain 15 percent above the 4.74 million-unit

level last year.

KW Research 5

Median Home PriceIn Thousands

Existing-home price was $178,300 in December, 1.5 percent higher than

December 2008 and 8.2 percent above its low in January 2009. It was the first

year-over-year gain in median price since August 2007, attributable to an

increase in the number of mid- to upper-priced homes in the sales.

Latest Data Release: January 25, 2010

Source: National Association of Realtors

KW Research 6

Inventory -In Millions

The supply of homes continued to shrink, falling 6.6 percent to 3.29 million,

representing a 7.2-month supply at the current sales pace. Compared to a

year ago, there are now 11 percent fewer homes on the market. This is the

lowest level of competing homes on the market since March 2006.

Number of Homes Available for Sale - In Millions

Latest Data Release: January 25, 2010

Source: National Association of Realtors

Number of homes available for sale

11%

decline

from last

year

KW Research 7

Mortgage Rates30-Year Fixed

Mortgage rates have moved back to less than 5 percent, which have been

categorized by industry experts like Freddie Mac chief economist Frank

Nothaft as “near a record low.” This move that may help boost home loan

demand and lend support to the housing market recovery. On January 28, the

average 30-year fixed-rate mortgage was 4.98 percent.

Source: Freddie Mac

Average Weekly Mortgage Rates

2009 Average

5.04%

KW Research 8

Affordability -Percentage of Income

Affordability remains at record levels, supported by the lowest mortgage

rates in decades, low home prices, as well as the first-time buyer tax credit.

So far this year, the home price-to-income ratio has fallen well below the

historical average of 25 percent. The ratio now stands at 15 percent.

Affordability as of December every year. Calculations assume a 20% down payment.

Source: National Association of Realtors

Well below the

historical

standard of 25%

The percentage of a median family’s income required

to make mortgage payments on a median-priced

home

Historical Average: 25%

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Recent Government Action

FHA Tightens Requirements 10

Paperwork Streamlined for Mods 12

FHA Helps Foreclosures Sell Fast 13

Small Business Lending Proposal 14

KW Research 10

FHA Tightens Lending Requirements

The Federal Housing Administration (FHA) insured almost 30 percent of all purchase loans and 20 percent of

refinances from September 2008 to September 2009, up from about only 2 percent of all loans three years

earlier. The influx of loans combined with falling capital reserves, which cushion against rising defaults, has

led the FHA to announce several measures to strengthen its economic vitality.

On January 20, the FHA announced it will do the following:

1. Raise Insurance Fees - In exchange for FHA backing, borrowers pay an up-front premium.

Previously it was 1.75% of their loan. It’s now risen to 2.25%.Sales price of: $200,000 x 1.75% = $3,500

Sales price of: $200,000 x 2.25% = $4,500

2. Cap Seller Contribution to Buyer’s Closing Costs - Sellers can contribute a maximum of

3%, down from 6%, of the sales price to the buyer’s closing costs. The higher cap created risk by

incentivizing homes to sell at a substantially marked-up price to compensate for contribution.

3% is still a significant proportion to closing costs.

Sales price of: $200,000 x 3% = $6,000 in closing costs

3. Require Higher Down Payments for Poor Credit - Beginning this summer, borrowers with

a credit score below 580 will need to make a down payment of at least 10%. The FHA will still

provide a viable alternative to the 1% of FHA borrowers who fall in this category, whereas most

lenders’ credit score cutoff is 620.

$1,000 additional

Sources: The Wall Street Journal, Keller Williams Realty Research First-Time Buyer Survey

KW Research 11

FHA Tightens Lending Requirements

These changes will likely have the biggest impact on first-time buyers. First-Timers are

about half of all buyers in the market right now. According to a Keller Williams Realty Research

study, 73% of first time buyers put down less 3.5% or less. 3.5% is the minimum down payment

for financing to be backed by the FHA.

Concerns have been expressed about how these changes will happen alongside two other

noteworthy changes this spring:

1. The expiration of the home buyer tax credit

2. The end of the Federal Reserve’s purchase of mortgage-backed securities(which has helped keep rates low over the past year)

The good news is the FHA, an integral player in the market, has stepped up to

protect itself so it can continue helping first-time buyers, those with less cash for a

down payment, and those with less-than-perfect credit obtain home loans.

Additionally, these proactive measures aim to protect the agency from needing taxpayer funds

from the government.

Sources: The Wall Street Journal, Keller Williams Realty Research First-Time Buyer Survey

KW Research 12

Paperwork Streamlined for Modifications

During 2009, 900,000 troubled homeowners began trial loan modifications under Obama’s Making Home Affordable program. However less than 67,000 went from the trial phase to a permanent modification. One of the main culprits for borrowers not qualifying for the permanent modification is paperwork.

In an effort to streamline paperwork, the Treasury released the following simplified paperwork requirements:

1. A form requesting a modification

2. Authorization for the bank to obtain tax information from the IRS

3. Proof of income, i.e. two recent paystubs

Beginning June 1, lenders must collect the paperwork before beginning the trial modification period.

These changes are aimed at increasing the number of people who can avoid foreclosure and stay in their home. Short sales can provide an alternative for those who don’t qualify. As the number of defaults and foreclosures slow, home prices are expected to stabilize and normalize the market.

Source: The Wall Street Journal

KW Research 13

FHA has announced it will lift the 90-day seasoning requirement for one year. The FHA ‘s 90-day “seasoning” provision requires that a home sold to an FHA buyer must be owned for at least 90 days by the seller before closing. This is intended to prevent buyers from purchasing property from “flippers” at an overly inflated value.

In the current climate, quickly selling foreclosures has risen in importance while the prominence of “flippers” has dramatically decreased. Acquiring, rehabbing, and reselling a foreclosure often takes fewer than 90 days. Banks have been reluctant to sell foreclosures to FHA buyers if they would need to push closing back to meet the FHA requirement.

The policy change will allow FHA buyers to purchase HUD-owned and bank-owned properties along with private sales faster. There are additional stipulations; for more, please visit the press release.

Quickly moving foreclosures out of the bank’s hands and into those of home buyers is an important step in stabilizing home prices, neighborhoods, and communities leading toward a healthy housing market.

FHA to Help New Foreclosures Sell Fast

Source: U.S. Department of Housing and Urban Development

KW Research 14

Obama proposes $30B for Small Business Loans

Small businesses are a major driving force of the economy. More than 95 percent of businesses in the United States have less than 500 employees. They tend to have less capital “cushion,” which can make it more difficult to weather a recession. However, the number of small businesses generally is not significantly impacted by recessions.*Unemployed workers turn to entrepreneurship as an alternative, driving innovation and growth. Available funds are a critical part of this by helping existing businesses to bridge the gap and start-ups to grow and expand.

President Obama announced plans to create jobs through aiding small business during the State of the Union Address. The first steps in this direction have been announced but will need Congressional approval. The

initiative would open up $30 billion of the federal money for community banks who commit to increasing small business lending. Participating banks would pay the government a 5%-1% dividend on the capital they receive depending on the level of lending. Others have discussed the possibility of having the Small Business Administration lend directly rather than going through community banks.

Supporting small business will be an important component to lowering unemployment and an overall firmer economy, but the method is up for discussion. Look for continued discussion of small business lending and steps toward improving it this year.

Sources: The Washington Post, U.S. News & World Report

*In the 1990-1992 recession, 1,068,124 small

businesses were closed. 1,085,737 were created.

A net of more than 17,000 jobs were gained. In

2001, more businesses were closed than opened,

but in the following two years, there was a net

gain nearly 55,000 small businesses.

$8B (2%) decrease in

small business lending from

September 2008 to September 2009.

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Topics for Home Buyers, Sellers, and

Owners

Pricing Research 16

Staging Stats 17

KW Research 16

Here is a sneak peek at conclusions from KW Research’s most recent

Home Seller’s Survey. The full report will be available in March.

Pricing Research

Price it right.

• Sellers who listed their home at the price originally recommended by their agent sold it:

− 38 days fastero This would save a mortgage payment and taxes and insurance, for example:

For a $200,000 home with a 20% down payment and 6.5% interest rate, the principal and interest alone would be $1,101*

− For 2.25% highero 2.25% of $200,000 is $4,500*

− With 1 less price reductiono The average price reduction was $11,042.

* Averages based on national survey data. Actual dollar amounts are for example only.

Source: Keller Williams Realty Research Getting the Home Sold

KW Research 17

Staging Stats

Staging can be an important component, not only in selling a home but also in attracting

buyers to tour it in person. Even with all of the commonly accepted advantages of staging,

only about 1 in 3 sellers stage their home.

Pictures of the home, that are then posted online and viewed

by potential buyers, often look their best if the home has been staged.

The National Association of Realtors 2009 Profile of Home Buyers and Sellers

found that, as a result of viewing a home online:

The Keller Williams Realty Research Getting The Home Sold study found it typically took between

2-6 hours to stage a home and cost an average of $523, including the cost of a staging professional

and items purchased or rented.

Source: Keller Williams Realty Research Getting The Home Sold

The study found staged homes had more showings and a higher list-to-sell

percentage than those that were not staged. Staging had advantages at all

price points, but the finding showed that staging is particularly important for

homes over $600,000.

Top reasons for

not staging

include the

following: Seller

did not believe

was necessary, or

he/she didn’t

want to incur

costs.

The average increase in list-to-sell in staged homes: 1.08%

The average cost of staging: $523

Potential benefit based on a $200,000 home:

$2,160 -523 = $1,637

• 77% of buyers drove by or viewed the home

• 61% walked though the home

• 22% requested more information

KW Research 18

Although it is important to stay informed about what is going on in the

national economy and housing market, many different factors impact the real estate market in your area.

Talk to your Keller Williams agent for assistance

interpreting the conditions in your local market.

Keller Williams associates are equipped with all the knowledge and

information to help you navigate through the process of buying or selling a home in this challenging market.

Your Local Market

KW Research 19

About Keller Williams Realty

Founded in 1983, Keller Williams Realty, Inc., is an international real estate company with more than 74,175 associates and 693 offices located across the

United States and Canada. The company began franchising in 1991, and

following years of phenomenal growth and success, became the third-largest U.S. residential real estate firm in 2009.

The company has succeeded by treating its associates as partners and shares

its knowledge, policy control, and company profits on a system-wide basis.

Focusing on helping associates realize their fullest potential, Keller Williams

Realty is known as an industry leader in its family culture, unmatched education, profit sharing business model, phenomenal coaching program, and

technology offerings. The company provides associates with all the tools

needed to grow and thrive in today’s market.

www.kw.com

KW Research 20

About Paul W. Drury

• Originally licensed as an agent in Ohio in 1986, Paul began withLehman Johnson Real Estate in Elyria. He acquired his Real Estate Brokerage License in 1992 and became an Associate broker with West Shore Realty. In 1995 he moved his brokerage license to Continental Realty Investment where he began to focus on additional work with commercial and investment real estate. During these years he also performed professional appraisals with The Appraisal House.

• In 2001 he began Drury Realty Consulting and worked as an independent Real Estate Consultant and worked on his own until 2009 when he joined Keller Williams Realty, Greater Cleveland West. “Being a part of the Keller family provides me with tools and serves unachievable strictly on my own, provides me with the tools and networking of a huge national network, while still enabling me to work, act, and function as the manager of my own business. It’s the best of both worlds.” – Paul

• Paul's Home Page

KW Research 21

What we have to offer sellers

• Sellers now have access to tools unimaginable just a few years earlier. Keller Williams Realty doesn’t spend valuable resources promoting its own name. Instead it puts

resources into the best tools and resources for education and training, providing the highest quality real estate professionals into local communities.

• Properties put up for sale by Paul are also listed in KWLS, a national MLS, implemented by Keller Williams the third largest company in the US; local MLS; NEOHREX (Northern

Ohio Real Estate Exchange); and on national sites such as Trulia, Zillow, CyberHomes, and others.

KW Research 22

What we have to offer sellers ( Cont’d)

• Other tools brought to bear by Paul include branding using unique web addresses with a virtual tour that can be emailed or the link can posted anywhere, to include Craig’s List and Back Page. Examples of properties sold recently

using this method include:– 947 Gulf Road in Elyria (sold in 28 days) http://947gulfroad.com/

– 359 Gayle Drive in Sheffield Lake (sold in 57 days) http://359gayledrive.com/

– 327 Gayle Drive in Sheffield Lake (sold in 18 days) http://327gayledr.com/

– 810 Sandalwood Drive in Elyria (Sold in 19 days) http://810sandalwooddr.com/

• Not Planning to sell in the near future?

– Would you still like to monitor what is happening in your neighborhood or area?

– Contact Paul now for a free periodic market update. No cost. No obligation.

KW Research 23

Properties currently for sale

• Properties currently for sale:– 37101 Hunters Trail in Avon - http://37101hunterstrail.com/

– 4435 Porter Road in North Olmsted - http://4435porterroad.com/

– 19593 Whitehead Road in Wellington - http://19593whiteheadrd.com/

– 1 Grover Court in Grafton – http://1groverct.com

– 416 Winckles Street in Elyria – http://416wincklesst.com

– 149 Woodview Drive in Elyria – http://149woodviewdr.com

• Would you like to see one of these homes? Click on the link for a tour.

• Would you like your home or property promoted like these?

– Contact Paul for a free, no obligation, consultation today at 440-385-5650.

KW Research 24

What we have to offer buyers

• Buyers of Real Estate also have access to tools unimaginable just a few years before. Since Keller Williams doesn’t spend its money promoting its own name, it puts its resources into providing the best tools and resources to

its systems, education, and training, thus providing the most professional real estate team members back into the communities.

• Paul is available most hours of the day directly without having to speak with assistants and he monitors his email regularly.

KW Research 25

What we have to offer buyers (Cont’d)

• Buyers can access Paul’s website at www.druryrealty.comand conduct their own searches as well as create their own search profiles for searching for properties anywhere in Ohio. If relocating out of Ohio, Keller Williams offers one of

the finest relocation referral networks in the nation. While we may not be the biggest firm in Northern Ohio yet, we are in many areas of the national already.

• Paul’s website is easy to manage and he can set up search profiles for you so you get notified at about 8:30 am of any

new properties that come available. He also has profiles set up on national websites such as Trulia providing for greater access to search tools.

KW Research 26

Investors & Shoppers – Foreclosure Watch

• Are you shopping for the deal of a century for your

new home?

• Are you in the market to buy a home at a steep

discount and try and fix it up and “flip it”?

• Are you looking for a home for someone else?

• Want to know what is happening in your marketplace?

• Send Paul an email today and request free market updates at paul@druryrealty.com

• Call Paul directly at 440-385-5650.

• No cost. No commitments. No obligations. No fuss. No

kidding.

KW Research 27

Follow Paul on line…

Home Web Page• www.druryrealty.com

On Zillow• www.zillow.com/profile/PaulWDrury

On Trulia• www.trulia.com/profile/paulwdrury

On the Real Estate Global Network

• www.realestateglobalnetwork.com/profile/PaulWDrury

On Twitter• - www.twitter.com/PaulWDrury

On FaceBook• - www.facebook.com/paul.w.drury

On LinkedIn• www.linkedin.com/in/paulwdrury