Return on Investment

January 2000 – March 2013

MSN Money.com, Case Shiller

90

95

100

105

110

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

Pending Home Sales

NAR 2/2013

80

85

90

95

100

105

110

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

January 2012 – January 2013

January 2011 – January 2012

100 = Historically Healthy Level

Pending Home Sales

NAR 2/2013

New Home

SALES

Compared to

December 2012

Compared to

January 2012

January 2013 Sales

+15.6%

+28.9%

Census 3/1/2013

“While gross domestic product is

expected to be negatively impacted by

all the uncertainty surrounding the

nation's impending debt ceiling debate

and the risk of sequestration, the

housing sector is expected to continue

its upward trajectory, the National

Association for Business

Economics (NABE) said.”

Political Uncertainty

Housing Wire 2/25/2013

Month’s 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

NAR 2/2013

5-6 Months = Normal Market Inventory

Month’s Inventory of Homes for Sale

0.0

1.0

2.0

3.0

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

NAR 2/2013

5-6 Months = Normal Market Inventory

2011

2012

3.0

4.0

5.0

6.0

7.0

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

< 4 Months = Sellers’ Market

5-6 Months = Normal Market

Month’s Inventory of Homes for Sale

NAR 2/2013

Calculated Risk 2/2013

New Home Inventory

Calculated Risk 2/2013

Months Market Pricing

1- 4 Sellers Appreciation

5 - 6 Even The Norm

7+ Buyers Depreciation

Months Supply & Impact on Price

FHFA 2012 1Q HPI Report

FHFA Regional Home Prices (year-over-year)

FHFA Regional Home Prices (year-over-year)

FHFA 2012 2Q HPI Report

FHFA Regional Home Prices (year-over-year)

FHFA 2012 3Q HPI Report

FHFA Regional Home Prices (year-over-year)

FHFA 2012 4Q HPI Report

1st Quarter 2nd Quarter

3rd Quarter 4th Quarter

FHFA 2/2013

FHFA State Home Prices (year-over-year)

S&P Case Shiller 2/2013

S&P Case-Shiller Home Price Indices

S&P Case-Shiller Home Price Indices

-3.9%-3.5%

-2.5%

-1.7%

-0.5%

0.6%1.1%

2.0%

3.6%

4.3%

5.5%

6.8%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

Jun Jul Aug Sep Oct Nov Dec

Year-over-Year Change in Prices

Jan Feb Mar Apr May

S&P Case Shiller 2/2013

Index Increase

Case Shiller 6.8%

LPS 5.8%

CoreLogic 8.3%

FHFA (4th Quarter) 5.5%

Year-over-Year Price Increases

S&P Case-Shiller Home Price Indices

Metropolitan Area Year-over-Year

Atlanta 9.9%

Boston 3.6%

Charlotte 5.3%

Chicago 2.2%

Cleveland 2.9%

Dallas 6.5%

Denver 8.5%

Detroit 13.6%

Las Vegas 12.9%

Los Angeles 10.2%

Metropolitan Area Year-over-Year

Miami 10.6%

Minneapolis 12.2%

New York -0.5

Phoenix 23.0%

Portland 6.5%

San Diego 9.2%

San Francisco 14.4%

Seattle 8.2%

Tampa 7.2%

Washington 5.9%

S&P Case Shiller 2/2013

Home Prices in the Short Term

130.00

135.00

140.00

145.00

150.00

May June July Aug Sept Oct Nov Dec Jan Feb

2010-11

2011-12

2012-13

S&P Case Shiller 2/2013

PROJECTED?

S&P Case-Shiller Home Price Indices

S&P Case Shiller 2/2013

Metropolitan Area M-o-M

Atlanta 0.3

Boston 0.1

Charlotte -0.4

Chicago -0.7

Cleveland -0.1

Dallas -0.1

Denver -0.3

Detroit -0.6

Las Vegas 1.8

Los Angeles 1.1

Metropolitan Area M-o-M

Miami 0.8

Minneapolis -0.1

New York -0.4

Phoenix 0.9

Portland -0.5

San Diego 0.4

San Francisco 0.7

Seattle -0.5

Tampa 0.2

Washington -0.1

3.25

3.5

3.75

4

4.25

4.5

4.75

5

5.25

30 Year Fixed Rate Mortgage History

2/2011 – 3/2013

Federal Reserve 3/1/2013

The MBA projects

30 year mortgage rates

will hit 4.4% by the end

of the year.

Mortgage Rates Moving Forward

“After reaching record lows in 2012,

mortgage rates are expected to creep up

slowly in 2013, the Mortgage Bankers

Association (MBA)predicted.”

MarketWatch 10/24/2012

Mortgage Rates - 30 year fixed

Freddie Mac 3/1/2013

3.3

3.35

3.4

3.45

3.5

3.55

3.6

12/01/2012 – 3/1/2013

Impact of Increasing Rates

Price Rate P&I

200,000 3.4 886.96

200,000 4.4 1,001.52

Monthly Savings $114.56

“If, as the Federal Open Market Committee (FOMC)

anticipates, the economic recovery continues at a moderate

pace, with unemployment slowly declining and inflation

expectations remaining near 2 percent, then long-term

interest rates would be expected to rise gradually

toward more normal levels over the next several years…

Bernanke on Interest Rates

Federal Reserve 3/1/2013

The precise timing and pace of the

increase will depend importantly on how

economic conditions develop, however,

and is subject to considerable two-sided

uncertainty.”

Housing America’s Future: New Directions for National Policy

Bipartisan Policy Center 3/1/2013

“The report proposed a reformed system of housing finance

in which the private sector plays a far more prominent role in

bearing credit risk while promoting a greater diversity of

funding sources available for mortgage financing.

The problems we face in housing are so

significant and so urgent today that inaction

is no longer a viable option… It is therefore

the commission’s hope that 2013 will be the

year that Congress and the administration

finally elevate housing to the top of the

national policy agenda and give housing

the dedicated attention it deserves.”

20%

25%

30%

35%

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

Percentage of Distressed Property Sales

35%

23%

NAR 2/2013

Shadow Inventory

“Shadow inventory never hit full force, so now I think

we’re at a point where the pendulum has swung

completely the other way and the housing market

needs more inventory, so 2013 would be a

serendipitous time for banks to release that inventory.”

Daren Blomquist, VP of RealtyTrac

He expects 600,000 REOs in

2013 and short sales to exceed

the 2012 number, which will

likely be around 1 million.

DSNews 2/22/2013

100 hardest hit zips in 2012

FORECLOSURES

CNN Money 2013

CoreLogic 2/28/2013

Short Sales Moving Forward

“Short sales don’t seem to be going away anytime

soon...I think 2013 and 2014 are going to be all

about the short sale.”

Wingspan Portfolio Advisors CEO Steven Horne

“I think we’re going to set a new

record for short sales in 2013.”

Rick Sharga, EVP of Carrington Mortgage

HousingWire 2/21/2013

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Building Trust is Important

Ford 2013

Resources

KEEPINGCURRENTMATTERS.COM

Slide Slide Title Link

3,4,7,8,

9

Pending Home Sales, Month’s Inventory of

Homes for Sale http://www.realtor.org

5 New Home Sales http://www.census.gov/construction/nrs/pdf/newressales.pdf

6 Political Uncertainty http://www.housingwire.com/news/2013/02/25/nabe-economic-uncertainties-remain-one-exception

10 Existing Home Inventory www.calculatedriskblog.com

11 New Home Inventory http://www.calculatedriskblog.com/2013/02/new-home-sales-at-437000-saar-in-

january.html

18 FHFA State Home Prices http://www.fhfa.gov/webfiles/25010/2012Q4HPI.pdf

19,21,

23,24,

25

S&P Case Shiller Home Price Indices, Home

Prices in the Short Term, Year Over Year Price

Increases

http://www.standardandpoors.com/indices/articles/en/us/?articleType=PDF&assetID=12

45347994966

21 Year Over Year Price Increases

http://www.lpsvcs.com/Products/CapitalMarkets/PredictiveModeling/Pages/LPSHomePri

ceIndex.aspx, http://www.lpsvcs.com/Products/CapitalMarkets/PredictiveModeling/

Pages/LPSHomePriceIndex.aspx

25, 27 30 Year Fixed Rate Mortgage History,

Mortgage Rates http://www.freddiemac.com/pmms

26, 28 Mortgage Rates Moving Forward, Impact of

Increasing Rates

http://www.marketwatch.com/story/mortgage-rates-will-rise-next-year-but-slowly-2012-

10-24

Resources

KEEPINGCURRENTMATTERS.COM

Slide Slide Title Link

29 Bernake on Interest Rates http://www.federalreserve.gov/newsevents/speech/bernanke20130301a.htm

30 Housing America’s Future http://bipartisanpolicy.org/sites/default/files/BPC_Housing%20Report_web.pdf

31 Percentage of Distressed Property Sales http://www.realtor.org

32 Shadow Inventory http://www.dsnews.com/articles/lack-of-inventory-not-shadow-is-real-concern-2013-02-

22

33 Foreclosures http://money.cnn.com/interactive/real-estate/foreclosure-rate/2013/

34 Largest Foreclosure Inventory http://www.corelogic.com/research/foreclosure-report/national-foreclosure-report-

january-2013.pdf

35 Short Sales Moving Forward http://www.housingwire.com/news/2013/02/21/mba-servicing-short-sales-stay-popular-

next-two-years

39 Building Trust is Important http://media.ford.com/images/10031/fordtrendbook2013.pdf