Real estate market forecast for the rest of 2010 provided by Jed Smith, economist for National Association of REALTORS - presented on the Real Estate RoundTable show on BlogTalkRadio March 5, 2010.

1. NPMA Legislative Day, Monday, March 1, 2010, at the Mayflower Hotel on Connecticut Avenue. As the session stands, we are set for 10:30am to noon and it is a breakout. Economic Outlook Residential and Commercial Real Estate Market Conditions Jed Smith Managing Director for Quantitative Research NATIONAL ASSOCIATION OF REALTORS®

2. Economic Snapshot Recovering from a recession—slowly. Continued high unemployment. Key Issue: JOBS, JOBS, JOBS. Consumer Confidence: Short term and long term outlooks. Entitlement Programs, Government Spending, and Budget. National Debt. National Wealth Housing Issues Liquidity For 2010: EHS: 5.7 Million. Price: +3%, Starts 668,000 up from 552,000.

4. Where are We Now?

5. What’s the Economic Outlook?

6. What’s the Housing Outlook?

7. What are the Forecast Risks?

8. What’s the Commercial Outlook

10. Unemployment Rate % Source: BLS

11. What Happened?Consumer Confidence: The Cyber Cracker Barrel

12. Longer Unemployment—Slow to Find a Job

13. What Happened--Total U.S. JobsNon-Farm, Establishment Data Source: BLS

14. Single-Family Housing Starts In thousand units Source: Census

15. Construction Spending $ million Source: Census

16. Foreclosures—A Major Problem $ million Source: Mortgage Bankers

17. GDP Growth % annualized growth rate Source: BEA

18. Where Are We Now?Recent Real Estate Market Experience Financial System: Cleaning Up From The Tsunami. Weakened Balance Sheets, Increased Risk Aversion. Financial Institutions: Credit less available. Impacting Housing Markets: Debris from Tsunami. Major Loss of Wealth, Low Consumer Confidence, Lost Jobs. Distressed Property: Foreclosures and Short Sales Negative Equity. The Current Housing Markets. Residential Sales: Recovering, Price Still an Issue. Commercial: Financing, Price, Foreclosures, Slow Recovery. Continuing Issues: Concern over market trends and outlook. The KEY ISSUE: Jobs

19. Where Are We Now?Recent Real Estate Market Experience National Sales – Existing Homes. Down 30% as of January ‘10 from Sept 05 peak. Up 11.5% January 09 vs. January ‘10. Market forecast is 5,700,000 nationally for 2010. National Prices – Existing Homes. Median Down 29% as of January 09 from July 2006 peak. Median Constant January 09 vs. January ‘10. Sales – New Single Family Homes Sold. National Down 78% from July 2005 peak as of January ‘10. National Down 6% January ‘10 vs. January ‘09. Real Estate Trends. Distressed Sales: 38% of total including foreclosures and short sales. Negative Equity—est. at 25 percent of mortgages– continuing problem. REALTOR® expectations: 67% currently see constant/rising prices during next year, vs. 61% who saw declining prices in January 09.

20. Where Are We Now?Interest Rates: At Historic Lows Source: Freddie Mac

21. Existing-Home Inventory Source: NAR

22. Single Family New Home Inventory Source: Census

23. What’s the Economic Outlook?

24. What is the Housing Outlook? Home Sales—Have recovered from their lows. Foreclosures—are clearing the market. Price—Stabilizing/Stabilized—depending on market. New Attitudes towards risk, spending, expectations. Housing Affordability High—Interest rates, price. Tax Credit and Higher Loan Limits Raised Sales by 350,000 to 400,000. Extended to move-up market. Outlook. Government Programs: Mixed Results.

25. Housing Outlook--Affordability: Median Mortgage Payment (Principle and Interest) as Percent of Income % Source: NAR

26. Months Supply Months Supply Source: NAR

27. Prices Increasingly In Line With History(Median Home Price to Median Income Ratio) Source: NAR

28. Monthly Home Price TrendsCase-Shiller, Government (FHFA), NARSeasonally Adjusted Data $ thousand FHFA NAR Case-Shiller

29. Housing Starts: Down Significantly New Units Needed 3 million more people each year … 1 to 1.4 million household formation … need to account for 300,000 demolitions …. need 1.3 to 1.7 new units

30. What is the Housing Outlook?Existing Home Sales In thousand units Source: NAR

31. Housing Outlook—Median Home Prices Actual and Forecast % change from a year ago Source: NAR

33. Consumer spending – down to necessities.

34. Bankruptcies – Circuit City, General Growth Properties, Eddie Bauer.

35. Space availability—plentiful.

36. Multi-Family

37. Moderate growth ahead.

38. Foreclosures generally increase rental demand.

39. Supply pipeline – possible overhang.

41. Office Market Fundamentals

42. Office Rent Growth

43. Commercial Market Overview CRE Estimated Value: $6.5 Trillion. Estimated Debt: $3.25 Trillion Bank Debt: $1.7 Trillion; ultimate losses of $115 to $150 Billion. CMBS: $700 Billion; ultimate losses of $65-85 Billion. CRE Issues: Prices, Rents, Vacancies, Inventories, Refinancing, Credit Markets. Economic Outlook. Commercial recovery a year or more away—strongly dependent on employment. Economic Uncertainty: Equity capital difficult to obtain.

44. Commercial Core Property SalesNational, Through November 2009

45. Commercial Real EstateRefinancing—Billions of Dollars

46. Commercial Distressed PropertyRelatively Minimal. Alternatives for Lenders

47. Prices Mixed Due to Low Sales

48. Many Problem Loans Not ResolvedDistressed Problem Potentially Significant Source: Real Capital Analytics

49. Major Changes in Funding SourcesFinancing: Sellers, Assumptions, Regional Banks Source Real Capital Analytics

50. Commercial Market Outlook Negative Absorption, Higher Vacancies, Declining Rents. Pricing and Financing Challenges. CMBS—Modest recovery; insufficient to address maturing debt. Vacancy Rates—2010. Office: National 18.3%, up from 15.8%. Industrial: National 15.2%, up from 13.2%. Retail: 13% up from 11.9%. Multi-Family: 7.6% up from 7.3%. Economic Recovery: Jobs, spending, uncertainties. Commercial Sector--Dependent on Additional Jobs, Consumer Spending.

51. Using NAR Information During A Difficult Economy Examples of NAR Information on Housing Markets. Local Market Reports: http://www.realtor.org/research/subscription_data/09localmarketreports Realtors Confidence Index: http://www.realtor.org/research/research/reps Existing-Home Sales Series: http://www.realtor.org/research/research/ehsdata Prices and Sales at MSA and State levels: http://www.realtor.org/research/research/metroprice Local Market Data: http://www.realtor.org/research/research/ehsdata Commercial Real Estate Market Survey: http://www.realtor.org/research/research/cre_market_survey Commercial Outlook: http://www.realtor.org/research/research/commercialhome

52. Major NAR ReportsProviding Customer Information NAR Profile of Home Buyers and Sellers: Extensive information on the market. NAR Investment and Vacation Home Buyers Survey. NAR Member Profile. NAR Commercial Member Profile. NAR Profile of Buyer’s Home Feature Preferences.

53. Concluding Comments GDP: Weak recovery. Major Issues: Jobs, Consumer Confidence, Consumer Balance Sheets, Financial System/Credit Availability, Deficit. Highly dependent on Administration/Fed actions. U.S. Real Estate Outlook Residential: Distressed real estate: clearing market/lower price. Sales—Have recovered from lows. Price: Varies by individual market-- distressed real estate, consumer expectations/confidence. Bifurcated Markets Commercial: Still declining; slow markets; financing issues. Foreign transactions: U.S. is attractive. Looking Forward: Consumer Confidence, risk management, addressing balance sheets, caution. Jobs, Jobs, Jobs!