usa and phoenix, az q4 2010 newsletter

Meyers‐Pollack Quarterly2010 Fourth Quarter

Main Themes Economy at Glance: What are the Experts Saying?National Consensus Forecast

If you liked 2010, you will like 2011. Gross Domestic ProductCredit markets remain difficult for most consumers, small businesses and Panelists lowered expectations due to waning fiscal stimulus and small residential mortgage loans. contributions to business inventories. 2010 = 2.9% and 2011 = 2.8%Until those markets ease, any normal recovery remains problematic. Personal Consumption ExpendituresNormal drivers of a recovery (consumers / housing) remain under pressure. Expected to improve in 2010 and 2011.So far the recovery has been mainly driven by inventories, exports Industrial Production & business equipment. Set to moderate in second half of 2010 now that business inventories are Consumers still paying down debt and increasing savings. more closely aligned with underlying demand.Issues in housing still being resolved. InflationRestructuring of consumer balance sheet not yet complete. Consensus forecasts for inflation have begun to show signs of stabilization (2.1%).Jobs and hours worked looking better. HousingUnemployment rate will stay high. Housing starts are expected to reach 800,000 (down from previous forecastPolicy uncertainty remains a big issue. of 980,000). A normal year is 1.5 million.

Arizona Arizona Consensus Forecast

Recovery has begun in Arizona, but normal drivers of recovery are weak. PopulationJob growth (seasonally adjusted) has been relatively flat since January 2010. Net migration growth is slow but should further accelerate by the end of 2010.Lack of population growth is a big issue. When will it resume and Employment how fast will it recover? Soon and very slowly. Month / month seasonally adjusted employment growth turned positive It will be a while until Arizona is once again one of the most rapidly growing states. this summer. Employment expected to be up 1.5% in 2011.New housing should recover progressively over the next few years, but it will Personal Income be 2014 – 2015 until builders have to build to accommodate all new demand. Personal income growth is still weak – due mainly to lack of significant job growth.The decline in housing prices is probably not over. Retail SalesOther problems include: Sales activity has turned positive after several quarters of decline.

High levels of vacant single family units Housing Permits Continued foreclosures Permits in 2010 are expected to be the same as in 2009. Permits in 2011 will show 50% of homes in state are underwater a large percent increase but will still be 80% off the peak in 2005. Mortgage standards remain tight

Elliott D. Pollack & Co.www.arizonaeconomy.com

National

Double Dip or Just a Lousy Year?

www.builderadvisors.comMeyers Builder Advisors

The best source for economic and real estate information.Prepared by:


The National Economy

The U.S. economy turned positive in the 3rd quarter of 2009, thus signaling the end of the recession. While the recession is technically over, the unemployment rate will remain high for some time and the job recovery will be relatively weak. The consumer will continue to be cautious in coming quarters due to uncertainty in the job market and the residual of negative wealth effects associated with lower home values and weak stock market. Yet, while consumers are still carrying too much debt and consumer confidence still remains at levels associated with weakness, there has been a substantial improvement in both areas. This should allow some upturn in retail sales.

U.S. Real Gross Domestic ProductAnnual Growth 1970-2011*

Source: U.S. Bureau of Economic Analysis & Blue Chip Indicators

-4%

-2%

0%

2%

4%

6%

8%

1970

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2011

National EmploymentPercent Change Month Ago, Annualized

1981-2010*Source: US Bureau of Labor Statistics

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

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U.S. Leading Indicators1978-2010*

Source: The Conference Board

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Hour Worked Quarterly Percent Change

2000 - 2010*Source: Bureau of Labor Statistics

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

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* As of Sept 2010 * As of Aug 2010

* As of Q2 2010

* As of Aug 2010

Real GDP should be up in 2010 and 2011. Employment has been relatively flat after taking out theeffects of short‐term U.S. Census workers.

Leading Indicators continue to advance.

Businesses are trying to get all they can out of existingworkers before hiring new ones.

U.S. Unemployment Rate1980-2010*

Source: Bureau of Labor Statistics

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

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Key economic variables during this recovery remain weakdespite how far they fell during the recession.

The unemployment rate remains high.

Key Economic IndicatorsAnnual Growth at Recession End v. One Year Later

Source: NAHB; Census; BEA; BLS

26.7%

6.6%

10.0%

6.0% 5.9%

9.8%

2.4%

-7.5%

4.1%

8.2%

3.0% 2.7%4.2%

-0.1%

-10%

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0%

5%

10%

15%

20%

25%

30%

HousingStarts

Retail Sales IndustrialProduction

GDP Non-residential

construction

Nonfarmpayroll

Nonfarmemployment

Average of 8 Prior Recoveries Current Recovery


The National Economy: The Consumer

Consumer confidence turned around from its downward spiral earlier this year, but remains relatively flat since mid‐2009. Households continue to pay off debt and save more. The financial obligation ratio is back to pre‐boom levels. Do consumers feel uncomfortable about debt levels or is it due to consumers' inability to get loans? Probably both, but the latter will continue. A return to a free spending consumer will take quite a while.

Real Personal Income Percent Change Quarter Ago, Annualized

1971 – 2010*Source: Bureau of Economic Analysis

-12.0%

-10.0%-8.0%

-6.0%

-4.0%-2.0%

0.0%

2.0%

4.0%6.0%

8.0%

10.0%12.0%

14.0%

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Consumer Confidence1978-2010*

Source: The Dismal Scientist

20

3040

5060

70

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100

110120

130140

150

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* As of Aug 2010 * As of Aug 2010

Financial Obligation Ratio1980-2010*

Source: Federal Reserve

15.00%

16.00%

17.00%

18.00%

19.00%

20.00%

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* As of Q1 2010 * As of Q1 2010

Household Net Private Saving1971 - 2010*

Source: Free Lunch.com

$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000

$1,000,000$1,100,000$1,200,000

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1989

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Q1

1996

Q3

1998

Q1

1999

320

01 Q

120

02 Q

320

04 Q

120

05 Q

320

07 Q

120

08 Q

320

10 Q

1

* As of June 2010

Real Retail Sales U.S.Percent Change Year Ago

1973-2010*Source: Federal Reserve

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

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Consumer confidence up to levels historically associatedwith the bottom of a recession.

The financial obligation ratio is at levels first seen in1985 and not seen since 1999. How much more does ithave to fall before consumers feel comfortable?Probably down to 16% or less. But, given consumers'inability to borrow, the ratio could go even lower.

The quantity of savings has almost doubled from pre‐recession levels. This is a good sign. Savings needs to behigher since consumers can no longer use their house asa credit card and stocks are still way off of the peak.

Household net worth turned positive in the fourthquarter of 2009. People will continue to feel better butmodestly so.

Real incomes are growing again. It will take sustainedemployment and hours worked growth to push up therate of growth.

Retail sales has turned positive after several quarters ofdecline.

* As of Q2 2010

Household Net Worth 1970 – 2010*

Source: Federal Reserve

0

10

20

30

40

50

60

70

1970

Q119

71Q2

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Q319

73Q4

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Q319

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Q119

81Q2

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Q319

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Q119

86Q2

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Q319

88Q4

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Q119

91Q2

1992

Q319

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1995

Q119

96Q2

1997

Q319

98Q4

2000

Q120

01Q2

2002

Q3

2003

Q4

2005

Q1

2006

Q2

2007

Q3

2008

Q4

2010

Q1


The National Economy: Business & Banking

Business spending on plant will lag… …While business spending on equipment has come back. An index above 50 suggests expansion. This indicator looks good.

Capacity utilization is still low so there is no upward pressure on plant expansion.

U.S. Exports as a percent of Real GDP turned positive again.

A few banks reported easier standards on business loans.

The business sector seems to be in good shape. Corporate profits are way up and spending on business equipment (mainly software and computers) is up as well. The health is due to a swing in inventories since mid‐2009 and growth in exports. The banking system remains very tight. Borrowing remains difficult as few are credit worthy given current conditions. Big business does not need to borrow at the moment.

Purchasing Managers Index1970-2010

Source: Institute of Supply Management

20

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80

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* As of Q2 2010 * As of Q2 2010 * As of Aug 2010

Business Spending on Equipment Percent Change from Prior Quarter

2000-2010*Source: Bureau of Economic Analysis

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2000

Q120

00Q3

2001

Q120

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Q120

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Q120

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2004

Q120

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Q1

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Q1

Business Spending on Plant Percent Change from Prior Quarter

2000 - 2010*Source: Bureau of Economic Analysis

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

2000

Q120

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2001

Q120

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320

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120

06 Q

320

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320

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320

10 Q

1

Capacity Utilization Rate1970-2010*


65

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75

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85

90

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Percentage of Large U.S. BanksReporting Easier Standard on Business Loans

1997-2010*Source: Federal Reserve, Board of Governors

0%

5%

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25%

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Small & Medium Firms

Large Firms

U.S. Real Exports as Percent of Real GDP1971-2010

Source: Bureau of Economic Analysis

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

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The Western United States Outlook

What the Experts are Saying

The following table provides the results of forecasted growth rates of the WesternBlue Chip Panel.

Current $ Wage & Salary Population Single‐FamilyPersonal Income Employment Growth Housing Permits Rank State % Growth

1 Nevada 30.96%AZ 2.4% ‐0.1% 1.2% 20.4% 2 Arizona 27.66%CA 2.2% ‐1.4% 1.0% 36.6% 3 Utah 24.08%CO 3.3% ‐0.4% 1.7% 22.7% 4 Georgia 19.43%ID 2.1% ‐0.2% 1.4% 36.5% 5 Idaho 18.96%MT 3.2% 0.5% 1.0% 15.5% 6 Texas 18.31%NV 1.2% ‐2.3% 1.0% 11.4% 7 North Carolina 16.12%NM 2.7% ‐0.1% 1.6% 9.1% 8 Colorado 16.10%OR 3.4% 0.1% 1.1% 15.6% 9 Florida 15.52%TX 4.1% 0.7% 1.7% 13.3% 10 South Carolina 13.37%UT 2.0% ‐0.6% 1.4% 10.0%

WA 3.5% ‐0.6% 1.1% 27.6% Ranking of Other Western States

WY 1.5% 0.0% 1.0% 15.0% Rank State % Growth11 Washington 12.74%

AZ 3.3% 1.9% 1.5% 31.5% 13 Oregon 11.51%CA 4.0% 1.4% 1.0% 49.3% 17 New Mexico 10.38%CO 4.2% 1.6% 1.7% 20.2% 18 Wyoming 10.18%ID 2.5% 1.2% 1.5% 25.0% 19 California 8.71%MT 0.0% 0.0% 0.0% 0.0% 20 Montana 7.94%NV 1.2% 0.6% 1.1% 2.5%NM 3.1% 1.6% 1.7% 17.3% United States 8.81%OR 4.7% 2.3% 1.2% 23.6%

TX 5.3% 2.1% 1.8% 19.6%

UT 4.0% 1.5% 1.7% 25.0%

WA 5.5% 2.4% 1.2% 29.7%

WY 2.5% 1.5% 1.3% 20.0% Western statesSource: Arizona State University Source: U.S. Census Bureau, estimated growth rate July 2008‐June 2009.

2011 Forecast (percent change from 2010)

Six Western states were the nation's fastest growing this decade, according to population estimates from the U.S. Census Bureau. The total number of residents in Nevada, Arizona, Utah, Idaho, Texas and Colorado increased by 16 percent or more, a pace double that of the U.S. as a whole. With the exception of California and Montana, population in all Western states grew more rapidly than the nation from 2000 through 2009.

2010 Forecast (percent change from 2009)

Top 10 Population Growth States


The Western United States Home Prices

The following charts provide percent change month ago for the home price indices for selected metro areas.The S&P/Case‐Schiller Home Price Index measures changes in existing single family home prices given a constant level of quality.

* As of July 2010

* As of July 2010

* As of July 2010

* As of July 2010* As of July 2010

* As of July 2010

Greater Phoenix Home Price Index 1990-2010*

Source: S&P/ Case-Shiller, Macro Markets LLC

-8.0%

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Greater Los Angeles Home Price Index 1990-2010*

Source: S&P/Case-Shiller, Macro Markets, LLC

-5.0%

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Greater San Diego Home Price Index 1990-2010*


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Greater San Francisco Home Price Index 1990-2010*


-6.0%

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Greater Denver Home Price Index 1990-2010*


-3.0%

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Greater Las Vegas Home Price Index 1990-2010*


-6.0%

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0.0%

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6.0%

8.0%

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Metro Area Outlook

Phoenix-Glendale-Mesa MSA Employment Annual Percent Change 1975-2011*

Source: Department of Commerce, Research Administration**

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

Greater Phoenix Net Migration1975-2011*

Source: University of Arizona

0

20

40

60

80

100

120

140

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

School Enrollment Growth2001-2010

Source: Arizona Department of Education

2.8%3.2%

6.1%

3.5%3.1%

4.9%

2.4%

0.7%

2.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

No

Dat

a

Yearly employment growth had its worst showing onrecord in 2008 and 2009. 2010 will be negative as well.2011 will be up modestly. Some sectors, mainly inservices, have started to recover.

The most recent economic downturn was especially severe in Greater Phoenix. The downturn impacted every industry. As with the national economy, it had its roots in easyaccess to money and excess home construction earlier in the decade. Declining levels of wealth impacted consumer spending which, in turn, depressed economic activity. Fallinghome prices, combined with a difficult mortgage market and job losses, restricted peoples’ ability to move to Greater Phoenix. The local economy is very dependent onpopulation growth and the recession produced significant declines in population growth and the level of employment.

School enrollment growth is weak.Net change in residential customers was the lowest onrecord in 2009. 2010 has been only a little better.

Migration has slowed dramatically as people can't sellhomes elsewhere or can't find a job in Phoenix.

Arizona Public Service Percent Change of Residential Customers

1955-2009Source: Arizona Public Service

0%

1%

2%

3%

4%

5%

6%

7%

8%

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Salt River Project Residential Utility HookupGreater Phoenix

2003-2010*Source: Salt River Project

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Jan-

03Ap

r-03

Jul-0

3O

ct-0

3Ja

n-04

Apr-0

4Ju

l-04

Oct

-04

Jan-

05Ap

r-05

Jul-0

5O

ct-0

5Ja

n-06

Apr-0

6Ju

l-06

Oct

-06

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-0

8Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-1

0

The same trend in utility hookups for Salt River Project. SRP serves the other half of Greater Phoenix.

Greater Phoenix Y/Y Job Losses Recent Recessions - Duration in Months

Source: Bureau of Labor Statistics

-10%

-8%

-6%

-4%

-2%

0%

2%

0 3 6 9 12 15 18 21 24 27 30

1974 Recession 1980/81 Recession1991 Recession 2001 RecessionLast Recession

*2010 & 2011 are Forecasts *2010 & 2011 are Forecasts

*As of May 2010

Job losses during the most recent recession were severein both duration and depth.


Metro Area Outlook: Housing Market

Negative Equity in HomesTop 10 MSA's

Source: First American Core Logic

0% 20% 40% 60% 80%

Las Vegas, NV

Stockton, CA

Modesto, CA

Vallejo, CA

Phoenix, AZ

Reno, NV

Port St. Lucie, FL

Orlando, FL

Bakersfield, CA

Fort Myers, FL

Re-Default Rates on Loan Modifications2008-Current*Source: OCC/OTS

0%

10%

20%

30%

40%

50%

60%

70%

3+ Mos 6+ Mos 9+ Mos 12+ Mos

Fannie Mae Freddie Mac Govt. Guaranteed Private

Maricopa County Foreclosures2002-2010*

Source: The Information Market

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

Jan-

02M

ay-0

2Se

p-02

Jan-

03M

ay-0

3Se

p-03

Jan-

04M

ay-0

4Se

p-04

Jan-

05M

ay-0

5Se

p-05

Jan-

06M

ay-0

6Se

p-06

Jan-

07M

ay-0

7Se

p-07

Jan-

08M

ay-0

8Se

p-08

Jan-

09M

ay-0

9Se

p-09

Jan-

10M

ay-1

0

Greater Phoenix Single Family Permits1975-2010

Source: ASU Realty Studies

0

10000

20000

30000

40000

50000

60000

70000

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

*All modifications since January 2008 that have had time to age the number of months.* As of Aug 2010

We are in the fourth year of a bear market in housing and could face several more years of stress. There is no quick way out. Why?*Job and population growth anemic;*Underwriting standards tough;*Negative equity in homes affects peoples ability to sell and buy; *Previous loan modifications have been, for the most part, failures;*Foreclosures still high; *Option ARM resets do not peak until next year.

Greater Phoenix Employment LevelSeasonally Adjusted

2000-2010*Source: U.S. Bureau of Labor Statistics

1,400

1,500

1,600

1,700

1,800

1,900

2,000

Jan-

00M

ay-0

0Se

p-00

Jan-

01M

ay-0

1Se

p-01

Jan-

02M

ay-0

2Se

p-02

Jan-

03M

ay-0

3Se

p-03

Jan-

04M

ay-0

4Se

p-04

Jan-

05M

ay-0

5Se

p-05

Jan-

06M

ay-0

6Se

p-06

Jan-

07M

ay-0

7Se

p-07

Jan-

08M

ay-0

8Se

p-08

Jan-

09M

ay-0

9Se

p-09

Jan-

10M

ay-1

0

Permits in 2010 will be about the same as 2009

While foreclosures seem to have peaked, the levelremains very high. Also, it seems likely that foreclosureswill not decline much in the near term.

Almost 55% of Phoenix homeowners are underwater.Job growth, seasonally adjusted, remains anemic. Jobs should start to grow.

About 60% of loan modifications re‐default within one year.

Greater Phoenix Single Family HomesMedian Price of Resale

2000-2010*Source: Arizona State University Realty Studies

$50

$100

$150

$200

$250

$300

2000

Q1

2000

Q3

2001

Q1

2001

Q3

2002

Q1

2002

Q3

2003

Q1

2003

Q3

2004

Q1

2004

Q3

2005

Q1

2005

Q3

2006

Q1

2006

Q3

2007

Q1

2007

Q3

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

* 2010 Preliminary

* 2010 Preliminary * As of July 2010

Single family home prices have fallen 50% from the peakin mid‐2006 and may fall even further.


Metro Area Outlook: Commercial Market

Multi-Family Year-End Vacancy RatesMaricopa County 1986-2011*

Source: ASU Realty Studies

0%

2%

4%

6%

8%

10%

12%

14%

16%

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

The problem in the commercial market is the same as in the single family market ‐ too much supply and not enough demand. The oversupply comes from the fact that there is along lead time between when a project is conceptualized and when it is finally finished. Overall, it is not a pretty picture. But, 2010 should be the worst and a modestimprovement should occur from this point forward. A full recovery is years away.

The apartment market is expected to improve as peoplemove out of houses and into apartments. Also, as theeconomy improves, household formations shouldincrease.

Maricopa County Apartment SalesPrice Per Square Foot

1982-2009Source: Kammrath & Associates

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Maricopa County Office SalesPrice Per Square Foot

1980-2009Source: Kammrath & Associates

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

*2010 & 2011 are Forecasts

Greater Phoenix Office MarketAbsorption v. New Supply

Source: EDPCo; Greater Phoenix Blue Chip Economic Indicators

(3.0)

(2.0)

(1.0)

-

1.0

2.0

3.0

4.0

5.0

6.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (f) 2011 (f) 2012 (f)

Absorption New Supply

(SF Millions)

Greater Phoenix Industrial MarketAbsorption v. New Supply

Source: EDPCo; Greater Phoenix Blue Chip Economic Indicators

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (f) 2011 (f) 2012 (f)

Absorption New Supply

(SF Millions)

U.S. Commercial Mortgage Maturities1980-2020

Source: Foresight Analytics

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Sales price per square foot for apartments haveplummeted.

Industrial fits the same mold. Very little constructionand absorption picking up, albeit, modestly so.

New construction for office space is projected toapproach zero in 2011 and 2012. While absorption isexpected to be positive, it should be only modestly so.

The worst for the commercial market is still in front ofus.

The same is true for office and industrial sales persquare foot.


We will benefit from the U.S. recovery SUBJECT GOOD NEWSHousing is very affordable again National economy RecoveringSingle family permitting is probably bottomingEmployment has probably bottomed Housing At or past bottomSo has net migrationConsumer spending will be up a little State government Sales tax revenuesBoycotts from Senate Bill 1070 having a minor impact no longer falling

Retail sales Past bottom; pent up demand

Longer Term Considerations

People will start moving here again Greater Phoenix Forecast 2010 ‐ 2011We will again create jobs at a rapid pace as the recovery takes hold Indicator 2009 Actual 2010 (f) 2011 (f)But, these will be lower quality jobsWe anticipate base industries will not grow as stronglyThe jury is still out on whether the State policymakers will help to turn this aroundSenate Bill 1070 not expected to have any long term impact

Elliott D. Pollack & Co. Meyers Builder Advisorswww.arizonaeconomy.com www.builderadvisors.com

Building Permits ‐41.0% 20.0% 50.0%

Retail Sales ‐10.6% 1.0% 8.0%

Population 1.0% 2.0%

Employment ‐7.8% ‐1.0% 2.0%

Still many negatives. No quick fix for population flows.Revenue growth too slow to fix problem soon.Consumers need to restructure balance sheet will prevent big recovery.

0.9%

Shorter Term Considerations

Metro Area Outlook

BAD NEWSVery slowly.

The best source for economic and real estate information.Prepared by:


Leading & Coincident Indicators

Jun‐10 Jul‐10Leading Indicators1 Interest rate spread 3.0 2.8 ‐6% ‐2 Building permits 586 559 ‐5% ‐3 Average weekly initial claims for unemployment insurance 467 459 ‐2% +4 Stock prices 1,083 1,080 0% neutral5 Index of consumer expectations 70 62 ‐11% ‐6 Index of supplier deliveries 57 58 2% +7 Money supply 7,775 7,757 0% neutral8 Manufacturers' new orders for nondefense capital goods 41,829 40,884 ‐2% ‐9 Average workweek of production workers & manufacturers 41.0 41.1 0% neutral10 New orders for consumer goods & materials 123,088 124,685 1% +

Coincident Indicators1 Industrial production 92 93 1% +2 Personal income less transfer payments 9,197 9,196 0% neutral3 Manufacturing & trade sales (April to May 2010) 971,580 976,068 0% neutral4 Payrolls 130,419 130,365 0% neutral

% Change

According to the Conference Board, the leading economic index (LEI) for the U.S. increased 0.1 percent in July 2010. The following table provides themonthly growth rates for each leading indicator.


Leading Indicators

* As of Aug 2010

* As of Aug 2010

* As of Aug 2010

* As of Aug 2010

* As of Aug 2010

* As of Aug 2010

10 Year Treasury Bonds Less Federal Funds1960-2010*


-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Consumer Expectations1960-2010*


40

50

60

70

80

90

100

110

120

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Index of Stock Prices1960-2010*


0

200

400

600

800

1000

1200

1400

1600

1800

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Average Weekly Insurance Claims1960-2010*


100

200

300

400

500

600

700

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Building Permits1960-2010*


250

750

1,250

1,750

2,250

2,750

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Index of Supplier Deliveries1960-2010*


0

10

20

30

40

50

60

70

80

90

100

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10


Leading Indicators

* As of Aug 2010

* As of July 2010 * As of July 2010

Money Supply-M21960-2010*


1000

2000

3000

4000

5000

6000

7000

8000

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Manufacturing New Orders Non-Defense Goods1960-2010*


5,000

15,000

25,000

35,000

45,000

55,000

65,000

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Average Weekly Hours1960-2010*


35

36

37

38

39

40

41

42

43

44

45

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

Manufacturing New Orders Consumer Goods1960-2010*


40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Jan-

60Ja

n-62

Jan-

64Ja

n-66

Jan-

68Ja

n-70

Jan-

72Ja

n-74

Jan-

76Ja

n-78

Jan-

80Ja

n-82

Jan-

84Ja

n-86

Jan-

88Ja

n-90

Jan-

92Ja

n-94

Jan-

96Ja

n-98

Jan-

00Ja

n-02

Jan-

04Ja

n-06

Jan-

08Ja

n-10

* As of July 2010


Metro Area Outlook ‐ Land Phoenix‐Mesa MSA

Land TransactionsFollowing is a list of the most recent two quarters of land transactions in the Metro Area and the detail behind them.

Product/ TotalCounty City Acreage Count Status Price per Lot Price

1 Surprise Farms Maricopa Surprise n/a 2010Q3 232 Developed $28,017 $6,500,000 Beazer Homes Holding Corp. 2 Veneto Maricopa Phoenix 13.9 2010Q3 51 Finished $27,490 $1,402,000 Lexin Capital3 Stonefield Maricopa Chandler n/a 2010Q3 65 Platted $72,400 $4,706,000 Ashton Woods Arizona LLC4 Diamond Tree Estates Maricopa Phoenix 10 2010Q3 25 Platted/En $29,000 $725,000 D.R. Horton Inc. 5 Desert Silhouette Maricopa Glendale n/a 2010Q3 17 Finished $30,120 $512,040 D.R. Horton Inc. 6 Savannah Maricopa Phoenix n/a 2010Q3 65 Finished $36,538 $2,375,000 Richmond American Homes of Arizona, Inc.7 NW Verrado Way & Western Dr. Maricopa Buckeye 12.4 2010Q3 14 Finished $50,857 $712,000 Valley West, LLC8 Bela Flor Riggs Rd. Maricopa Chandler 4.9 2010Q3 10 Finished $70,000 $700,000 Arcus Private Capital Solutions, LLC9 NE Olive Ave. & Perryville Rd. Maricopa Waddell 3.83 2010Q3 n/a Finished n/a $2,760,000 Beazer Homes Holding Corp. 10 Pronghorn Ranch Yavapai Prescott Valley n/a 2010Q2 138 Finished $21,123 $2,915,000 Lexin Capital11 Montana Vista Estates Maricopa Phoenix n/a 2010Q2 19 Finished $54,737 $1,040,000 Lexin Capital12 Tristanos Maricopa Phoenix n/a 2010Q2 40 Partially Im $13,000 $520,000 Lexin Capital13 Quintessa Maricopa Phoenix n/a 2010Q2 19 N/A $48,684 $925,000 Lexin Capital14 Buena Vista Maricopa Phoenix n/a 2010Q2 14 Finished $18,500 $259,000 Lexin Capital15 Sossaman Estates Maricopa Queen Creek n/a 2010Q2 35 Finished $57,486 $2,012,000 Standard Pacific of Arizona Inc. 16 Barcelona Maricopa Surprise n/a 2010Q2 86 Developed $25,744 $2,214,000 Quantum Capital LLC17 Tortosa Pinal City of Maricopa n/a 2010Q2 1064 Platted $5,324 $5,665,000 Avatar Properties Inc., Beckham Properties18 Tortosa Pinal City of Maricopa n/a 2010Q2 135 Finished $13,200 $1,782,000 Quantum Capital LLC19 Encanto Vista Pinal Pinal County 105 2010Q2 76 Platted $13,158 $1,000,000 Cason Tyler Communities20 27th Ave. and Dobbins Maricopa Phoenix n/a 2010Q2 130 Platted an $9,608 $1,249,000 Kemper and Ethel Marley Foundation21 Weston Ranch Maricopa Gilbert n/a 2010Q2 51 Finished $69,118 $3,525,000 Meritage Homes of Arizona Inc. 22 Calabria Maricopa Chandler n/a 2010Q2 47 Platted $30,319 $1,425,000 Pinnacle Ridge Holdings LLC23 Provence Maricopa Glendale n/a 2010Q2 180 Finished $29,444 $5,300,000 K. Hovnanian Great Western Homes LLC24 Lynnhaven Estates Maricopa Chandler n/a 2010Q2 50 Platted an $32,000 $1,600,000 D.R. Horton Inc.25 Cottonwood Ranch Pinal Casa Grande n/a 2010Q2 197 Finished $11,497 $2,265,000 Quantum Capital LLC26 Red Valley Ranch Pinal City of Maricopa 164 2010Q2 575 Finished $1,670 $960,000 Crescent Bay Holdings27 Dominion Creek Pinal Casa Grande/Bu n/a 2010Q2 386 Finished $9,839 $3,798,000 Garrett Development29 The Estates at Annecy Maricopa Mesa n/a 2010Q2 45 Finished $84,444 $3,800,000 K. Hovnanian Great Western Homes LLC30 Lyons Gate Community Maricopa Gilbert n/a 2010Q2 147 Finished $70,905 $10,423,000 Pulte Home Corp. 31 Lyons Gate Community Maricopa Gilbert 12.55 2010Q2 61 Finished $77,909 $4,752,450 Ashton Woods Arizona, LLC32 Lyons Gate Community Maricopa Gilbert 15.34 2010Q2 88 Finished $64,440 $5,670,720 Pulte Home Corp. 33 Estates at Superstition Foothills Pinal Gold Canyon 96.24 2010Q2 93 Finished $127,957 $11,900,000 4H Mountain View Properties34 Crestfield Manor Pinal Florence 35.57 2010Q2 119 Finished $17,212 $2,048,176 ILP Corporation35 Crestfield Manor Pinal Casa Grande 4.27 2010Q2 31 Finished $10,704 $331,824 ILP Corporation36 Lexin Tapestry Homes Maricopa Phoenix 19 2010Q2 40 Partially Im $13,000 $520,000 Lexin Capital37 Rancho Mirage Pinal City of Maricopa 12.4 2010Q2 74 Pinal $15,068 $1,115,000 Quantum Capital LLC38 NE Sarival Ave. & McDowell Rd. Maricopa Goodyear 18.09 2010Q2 61 Finished $52,000 $3,172,000 PV Landbank, LLC39 SW Western Dr. & Arcadia Way Maricopa Buckeye 15.7 2010Q2 95 Finished $35,000 $3,325,000 Richmond American Homes of Arizona, Inc.40 SW Kortsen Rd. & Arizola Rd. Pinal Casa Grande 12.6 2010Q2 79 Finished $12,025 $950,000 Tamaron Ranch 79 Investors, LLC41 Lakeview Trails Maricopa Gilbert 28 2010Q2 112 Finished $80,000 $8,960,000 Richmond American Homes of Arizona, Inc.42 SW Gilbert Rd. & Markwood Dr. Maricopa Chandler 2.91 2010Q2 112 Finished $14,509 $1,625,000 Weststone USA43 Taresso Maricopa Buckeye 19.25 2010Q2 77 Finished $7,501 $577,577 Terrazzo II, LLC.45 Marley Park Maricopa Surprise 4.24 2010Q2 42 Finished $17,500 $735,000 Mattamy Arizona, LLC

Buyer# LocationProject NameLot

Quarter

usa and phoenix, az q4 2010 newsletter

Economy & Finance

conference board source

bureau of labor statistics12

us bureau of labor statistics

unemployment rateannual

percent change month

recession end

nahb census bea bls2000