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Boise When Will It Be Normal Again 1st Quarter 2010

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The normalcy report is a forecasting report for business owners and CEOs. In the past forecasts have been based on the previous years activity but it is difficult when you compare teh best of time, …

The normalcy report is a forecasting report for business owners and CEOs. In the past forecasts have been based on the previous years activity but it is difficult when you compare teh best of time, just 5 years ago to the worst of times (the last two years). The Normlalcy Report is about what is normal. Based on what normal is and where the market is currently this report will help you gain clarity.

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  • 1. THE “NORMALCY” REPORT BOISE - WHEN WILL IT BE “NORMAL” AGAIN? THE DEFINITIVE REPORT ON THE ECONOMIC FUTURE OF ADA/CANYON COUNTIES HOMEBUILDING INDUSTRY AND RELATED INDUSTRIES REPORT 1ST QUARTER 2010 BY Douglas Swallow Trey Langford Founder Founder Organizational Genetics Build Idaho Risk Mitigation and Performance Advertising Strategists & Improvement Advisors Internet Advisors
  • 2. Copyright 2010 © by Douglas E. Swallow All rights reserved. No Part of this report may be used or reproduced in any manner whatsoever without written permission from Douglas E. Swallow. For information and/or questions regarding this Report, please call (702) 303-1047, email doug@organizationalgenetics.com or write Organizational Genetics at 411-F Deinhard Lane, McCall Idaho 83638 2
  • 3. THE “NORMACLY” REPORT Welcome to our quarterly national, local, and homebuilding and related industries economic analysis and forecast for Ada and Canyon Counties. This analysis is of the 1st quarter of 2010. The normalcy report is a new type of economic analysis; one based on the normalcy theory of econom- ics and normalcy index. This new theory and index increases the clarity with which CEO’s see the eco- nomic landscape over traditional methodologies. As a colleague of mine said, “its not going to endear the hearts of academia or economist, but it does tells us what traditional economic theory cannot, which is where the economy is relative to the new normal, what the new normal looks like, and how long it will most likely take to reach full normalcy.” By knowing where the national and local economies are relative to normal, as well as, the key eco- nomic measures for a particular industry; business owners and CEO’s in that industry can make more accurate business projections, manage risk, and communicate to their partners, investors, lenders, and employees what’s really going on in their environment and what it means to them and the company. The recession has hit the homebuilding, banking and related businesses sectors of Ada and Canyon Counties economy’s harder than most. To help in the recovery, we will be providing this quarterly report free of charge to the owners, CEO’s, and industry leaders in homebuilding, land development, banking, and related businesses, until the market returns to normal. My name is Douglas Swallow. I am an organizational and human performance scientist, consultant, and founder of Organizational Genetics (OG). For nearly 30 years, I have been conducting organizational 3
  • 4. THE “NORMACLY” REPORT performance research and helping owners and CEO's, and their key executives be better, do better, and build better performing companies and workforces. Trey Langford, co-developer of the Ada/ Canyon Counties normalcy report is an advertising strategist and internet advisor. He has been in advertising since 1991. We are both in the business of helping owners and CEO’s improve the per- formance of their businesses and reduce risk. Trey does this by developing advertising and internet strategies that maximize new customers and return on advertising dollars. He does this by taking the time to truly understanding each client’s value orientation, unique value proposition, business objectives, and available financial resources. From this perspective he formulates world-class performing advertising strategies. I empower owners and CEO’s to reduce risk and increase results by providing them with world’s leading CEO dashboard instrument panel. A panel of Instruments that empower CEO’s to see with more than twice the clarity of the average CEO the performance capability of an organization and the markets in which it operates. I then provide them with today’s leading organizational, leadership, and employee performance paradigms and programs for optimizing their performance capability and the capability of their managers and employees. The combination of the world’s leading CEO instrument panel, paradigms and human performance development programs enhances owners and CEO’s ability to decrease risk and increase cash flow, profitability or EBITDA, sales, and CSI. 4
  • 5. THE “NORMACLY” REPORT The term CEO dashboard refers to the collective set of reports a CEO uses to navigate his or her or- ganization. The number of instruments on a CEO dashboard varies by size of company and degree of market competitiveness. The number of instruments on a CEO dashboards range from less than 5 to over 150. Regardless of the size of company, included in every business owner’s or CEO’s set of reports is a collection of reports that tell them what’s going on in the market and what the future holds one, three, and five years down the road, as well as, estimates on what the long term future holds, 10 and 20 years down the road. In talking with owners and CEO’s about the recession, I repeatedly heard the external environment assessment instruments on their dashboard’s didn’t accurately tell them what was going on in the market, what the changes in economic key performance measures meant, when they would return to normal, or what the short and long term outlooks were for the markets in which they operated. Enter the normalcy theory of economics and index. At the center of the normalcy report is the normalcy index. A ten point index that classifies each key performance measure between the worst data point of all time and the best. 1.0 is the worst data point of all time, 5.0 is normal, and 10.0 is the best. The classification of a key performance measure, either side of normal, is determined by a percent- age. A measure is considered normal when it is less than 10% above or below normal. It is below 5
  • 6. THE “NORMACLY” REPORT or above normal when it varies 10% to 19% from normal. A poor classification is for any measure greater than 20% below normal, but less than a top five worst data point of all time. A very good classification is for all measures between 20% and 29% above normal. An excellent classi- fication is for all measures greater than 30% above normal. The balance of classifications are as they are titled. The Normalcy Index is as follows and its data sets have been color coded in for ease and rapid interpretation. THE OG NORMALCY INDEX 1. Worst data point of all time 2. Top five worst data points of all time 3. Poor 4. Below normal 5. Normal 6. Above normal 7. Very Good 8. Excellent 9. One of the best data points of all time 10. Best data point of all time The Normalcy Report includes an introduction i.e. when will it get back to normal, the normalcy index, the bottom line, actionable intelligence summary of each key performance measure, and an overview of each key performance measure with charts, where appropriate. Trey and I met and teamed up a year ago to help owners and CEO’s reduce risk and improve results. At the time, I had just developed the 1st prototype of the normalcy report on the Las Vegas, Nevada 6
  • 7. THE “NORMACLY” REPORT market. We decided to develop one together for owners and CEO’s in the homebuilding and related businesses sector of the Ada and County market areas. If you would like a customized version of this or future reports with your logo on the front and each page, as well as, as your own introduction and company story to send to lenders, shareholders, and/ or customers, we would be happy to do so for the opportunity for Trey and I to introduce our busi- nesses and show you how we can help you and your business. If you would like to take advantage of this opportunity just email or call Trey at Trey@buildidaho.com or (208) 724-9636. Additionally, if you would like us to provide an overview of this analysis to a professional group of yours, we would be happy to do so. Trey and I would like to help you and your business perform better in these difficult times. Please email or call us at the addresses or numbers listed below, schedule an appointment, take advantage of our offer. Thank you. Douglas Swallow Trey Langford Founder Founder Organizational Genetics Build Idaho Doug@orggenetics.com Trey@buildidaho.com (208) 325-7887 (208) 724-9636 7
  • 8. BOISE - WHEN WILL IT GET BACK TO NORMAL? The recovery has begun. This analysis indicates the national normalcy index is improving rapidly and now stands at 86.6% of normal. The Ada and Canyon county’s economies normalcy index is trending at 36% below normal. The homebuilding and related industries index for greater Treasure Valley is 50% of normal. The national economic normalcy index is projected to reach normalcy by the end of the 1st quarter of 2011 and full normalcy, by 2nd quarter of 2013. The local economy will trail these dates by one year. Homebuilding and related industries will achieve normalcy by the end of the 1st quarter of in 2014. The Ada/Canyon County Homebuilding and Related Industries Normalcy Index is comprised of 21 key performance measures; six national, five local, and ten specific to the homebuilding industry. On the following page is the Ada/Canyon County Homebuilding and Related Industries Normalcy Index. 8
  • 9. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 9
  • 10. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 10
  • 11. THE BOTTOM LINE The bottom line is the homebuilding and related industries sector of the Ada and Canyon county economies have two to three years of tough times to go. Yes, the future is exceptionally bright. In five to seven years there will be more demand than the industry can handle. Its true, nearly all of the key economic indicators have bottomed and most have improved, with the exception of fore- closures. The level of notices of default continue coming in a record levels. Although the latest declines in unemployment are encouraging several other key indicators remain at their all time worst levels. That’s the bad news. The good news is even as bad as it is, and its bad, the homebuilding and related industries sector of the economy is still a $300,000,000 to $350,000,000 dollar a year in- dustry in the Treasure Valley. Companies have had to reduce their workforces by 40% to 60% and wring every non-essential dime out of their operating budgets, but those who are able to re- align their business models and adopt pro-active business development strategies, can and are cash flowing and in many cases making a profit. The bottom line is the homebuilding sector of the Ada and Canyon County economies are trend- ing at nearly 1,800 units and $350,000,000 in annualized revenue today. It will get better, but both economies together have lost over 24,000 jobs. It won’t be normal until the Ada and Canyon Counties add these jobs back and realistically this is two and half to three years from now. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 11
  • 12. U.S. Leading Economic Key Performance Measures Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 12
  • 13. 1. NATIONAL GROSS DOMESTIC PRODUCT (GDP): POOR The national economy is recovering relatively quickly. In just 3 quarters the economy, as measured by its out- put or gross domestic product, has recovered nearly 72% of what it lost in the great recession of 2008 and 2009. Current trends indicate by the end of 3rd quarter of this year the economy will be producing more than it did at its high in the 2nd quarter of 2008. In the 1st quarter of 2010 the economy grew by $105.2 billion dol- lars to 13.254 trillion dollars. The all time high for GDP was 13.415 trillion dollars. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 13
  • 14. 2. CONSUMER CONFIDENCE: POOR The consumer confidence level re- mains 40% below normal. The con- sumer confidence is considered nor- mal when it is between 70 and 90, and high in excess of 90. Should the majority of the other vari- ables stabilize by the end of the sec- ond quarter of 2010, it can be ex- pected the consumer confidence index will be back to 70 by the end of the 1st quarter of 2011. The first quarter was virtually identical to the 4th quarter. In the fourth quarter the index averaged 50.67, In the first quarter the average was 51.7. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 14
  • 15. 3. U.S. STOCK MARKET: NORMAL The stock market or in particular the Dow Jones Industrial Average is a leading economic indicator of the health of the national economy. Normal is defined by fair market stock prices for the companies which make-up the Dow Jones Industrial Average. The new “normal” is projected to be between 10,000 and 12,000. For the first three months of the year, Dow Jones Industrial Average was in the normal range at 10,430.69. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 15
  • 16. 4. GAS / OIL PRICES: POOR When not normal, gas and oil prices are a leading de-stabilizer of the U.S. economy. The new normal range for unleaded gas is projected to be $2.60 to $2.80 per gallon. The average price for a gallon of unleaded gasoline is currently $2.89. The ten year average price for a barrel of oil has been $60.00. At the end of the 4th quarter the price per barrel was $79.4, which is down from the high of $145.2. Currently, the price stands at $84.0 per barrel. The new normal is projected to be between $68 and $78 dollars per barrel. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 16
  • 17. 5. U.S. UNEMPLOYMENT RATE: ONE OF THE TOP FIVE WORST DATA POINTS OF ALL TIME The new normal for the U.S. unemployment rate will be 4.8% and 5.8%. The current rate is 9.7%, which is unchanged from the 4th quarter of 2009. Presently, there are 138,133,000 people are employed in the U.S.. Since the recession began in the 1st quarter of 2008 the U.S. labor force lost approximately 7,275,000. To achieve normalcy the U.S economy need to add this number of jobs. As of the date of this report the U.S. Department of Labor reported its first monthly gain of the recovery of 290,000 jobs. The U.S economy can create between 2.0M and 3.0M jobs per year. At an optimistic rate of 2.5M new jobs per year, unemployment will be back to the new normal by the end of the 1st quarter of 2013. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 17
  • 18. 6. MORTGAGE INTEREST RATES: EXCELLENT The 30-year average interest rate percentage, excluding the highs of 1981 through 1983, have histori- cally averaged 7.5%. For the past ten years interest rates have remained below 7.5%. The rate fluctu- ated throughout 2009 and ended precisely where it started at 5.14%. At the end of the 1st quarter of 2010 the rate was 5.07%. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 18
  • 19. Ada/Canyon Counties Local Economic Key Performance Measures Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 19
  • 20. 1. ADA/CANYON COUNTIES POPULATION LEVEL, LONG TERM 1. OUTLOOK, AND HOUSEHOLDS: NORMAL Despite the current recession, Ada and Canyon Counties are projected to see substantial growth in the coming decade. According to Proximity One, SRC Demographics, and the Idaho state Demographers Of- fice, over the next ten years population levels in Ada and Canyon counties combined are projected to in- crease by 298,805 or by 45.23%. The number of households is expected to increase by 108,371 by 2020. Over the next five years the figure is projected to increase by 25,782 or an average of 5,156. Between 2014 and 2020 the figure is expected to increase by 82,589 or 13,764 per year. ADA/CANYON COUNTIES HISTORICAL GROWTH: % Change in Population Annual Number of Number of Percent In- Year Population Change Years Growth Households Households crease 2020 est. 894,796 192,232 6 years 27.36% 324,201 82,589 34.18% 2014 est. 702,564 106,573 5 years 17.87% 241,612 25,782 11.95% 2009 est. 596,027 159,836 9 years 36.64% 215,830 57,404 36.23% 2000 436,191 137,793 10 years 46.18.% 158,426 49,667 45.67% 1990 298,398 108,759 Sources: Proximity One, SRC Demographics, and Idaho Department of Labor/ State Demographer Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 20
  • 21. 2. ADA/CANYON COUNTY UNEMPLOYMENT LEVEL: ONE OF THE WORST DATA POINT OF ALL TIME Recovery has begun. Although the first quarter BOISE MSA HISTORICAL EMPLOYMENT: data did not indicate this, April data showed a de- crease in the unemployment rate. Ada County un- Year/ Increase/ employment rate dropped 15% from 9.7% to (January Total Nonfarm Decline From % Annual Figures) Employment Previous Year Growth 8.2%. Canyon County’s unemployment rate de- clined 16% from 11.2% to 9.4%. Boise Meridian, 2010 244,500 (11,600) (4.5%) Nampa, and Caldwell all posted significant de- 2009 256,100 (12,200) (4.5%) clines in their unemployment rates. The normal 2008 268,300 (1,800) (0.07%) unemployment rate for both counties is 4% to 5%. 2007 270,100 13,400 5.2% 2006 256,700 13,200 5.5% Revised Idaho Department of Labor figures sug- gest job loss since the beginning of the recession 2005 243,400 12,200 5.3% are higher than previously reported. Since the be- 2004 231,200 1,600 0.07% ginning of the recession Ada and Canyon Coun- 2003 229,600 2,700 1.2% ties have now shed 25,600 jobs, 4,300 more than Source: Idaho Department of Labor reported in our last report. This adjustment sug- gest now that the recovery is underway, it will re- quire 24 to 36 months to recover these loses. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 21
  • 22. 3. IDAHO GROSS STATE PRODUCT: POOR The total value of goods and services in Idaho grew modestly in 2008 to $52.7 billion dollars, a 1.2% increase from 2007’s revised total of $52.2 billion. The depth of the recession offset productivity gains in the first half of 2008, holding the annual increase to its lowest level since 1986. The 2008 growth rate was 47th nationally. Between 2002, following the recession, and 2007 Idaho’s gross state product rose 44%, eight points higher than the national average and was the 13th highest rate in the nation. Sources: U.S. Bureau of Labor Statis- tics and Idaho Department of Labor. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 22
  • 23. 4. AIR TRAFFIC: POOR Passenger levels through the Boise Air Terminal continue to decline. 1st quarter figures declined 3% or 16,600. With the projected improvements in the national and regional economies, annualized figures, while currently trending at the lowest level in 10 years, we project will recover to the 2009 level by year-end. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 23
  • 24. 5. ADA/CANYON COUNTIES IN-MIGRATION: BELOW NORMAL Revised 2009 new residents figures, as defined by drivers licensed relinquished, indicate 8,606 in Ada County and 3,450 in Canyon County. Since 2005, 74,017 licenses have been relinquished, 50,697 in Ada County and 19,388 in Canyon County. The combined aver- age for the last five years has been 14,803. 2009 Ada County In-Migration by State In Ada County twenty-four percent (24%) of new residents come from California. Twelve percent (12%) are relocating All Other States California Minnesota Virginia 24% 21% from Washington and ten (10%) are from Oregon. New resi- 2% 1% Alaska Florida 2% dents from Utah, Nevada, and Arizona comprise 17% of new 2% Montana Washington 12% 3% residents. Canyon County in-migration is virtually identical Colorado Nevada 3% Texas Arizona Utah Oregon with the exception of Oregon at 15%. 3% 5% 5% 7% 10% Ada and Canyon County's In-Migration 2005 - 2009 14000 11485 11647 12000 10336 10000 8623 8606 8000 Ada County 6000 4264 4488 3771 3415 3450 4000 Canyon County 2000 0 2005 2006 2007 2008 2009 Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 24
  • 25. Ada/Canyon Counties Homebuilding and Related Industries Economic Key Performance Measures Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 25
  • 26. 1. NEW HOME PERMITS: POOR In the 1st quarter of 2010, Ada and Canyon Counties had a combined permit level of 440 units. Based on an imputed 1st quarter permit recovery percentage of 25% the annualized permit level is trending at 1,760 or 3.6% less than initially forecasted. The annual new normal permit level is projected to be 4,200. It is an- ticipated permit levels will cross this point in 2015 with the annualized projected increase of 20% for the balance of the decade. The years shaded in blue below indicate the recovery rate for each of the last three recessions. Ada/Canyon Counties Historical Permit Analysis New Normal Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 26
  • 27. 2. NEW HOME SALES (CLOSINGS): ONE OF THE TOP FIVE WORST DATA POINTS OF ALL TIME In the first quarter of 2009 new home sales came in at 256 units. The number of pending new home sales also came in at 256 units. Historically, the first quarter of the year generates between 30% and 35% of the annual sales. However, due to the nature of the recession and recovery, we anticipate sales will increase in each of the next three quarters and the yearend figure will come in between 1,500 and 1,700 units. The projected new normal is 3,400 units and it is anticipated it will reach this level by 2015. Ada and Canyon Counties New Home Sales 1998 - 2015 8,000 7,000 6,728 6,000 5,612 5,000 4,494 4,139 3,974 4,000 3,738 3,211 3,209 3,298 3,312 2,893 2,760 3,000 2,564 2,137 2,300 1,920 2,000 1,660 1,600 1,000 - '98 '99 '00 '01 '03 '04 '05 '06 '07 '08 '09 '02 'T-10 'P-11 'P-12 'P-14 'P-15 'P-13 Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 27
  • 28. 3. DEGREE OF MARKET COMPETITIVENSS: ONE OF THE FIVE WORST DATA POINTS OF ALL TIME The degree of market competitiveness indicator is comprised of two measures: adjusted permits to number of builders and closings to number of active subdivisions. The first is one of the five worst data points of all time the other the worst data point of all time. The first measure is determined by the total number of permits, less the number of permits by the top 3 builders. The remaining figure is divided by the num- Canyon County Adjusted ber of active builders. The adjusted permit to builder Permit Per Active Builder Level ratio in 2010 in Ada County is trending at 2.90. In 5.00 4.29 Canyon County the figure increased in the 1st quar- 4.04 4.00 3.04 3.01 ter to 1.82. Normal is projected to 4.0. 3.00 1.70 1.82 2.00 1.00 0.00 2005 2006 2007 2008 2009 2010 Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 28
  • 29. 3. DEGREE OF MARKET COMPETITIVENSS: ONE OF THE TOP FIVE WORST DATA POINTS OF ALL TIME Conversely, closings per subdivision has declined from a high of 31.5 in 2005 to the lowest level on re- cord at 4.16. According to New Home Trends there are 384 active single family detached subdivisions in Ada and Canyon counties, chasing a projected annualized permit level of 1,600 units. The number of finished unsold lots totals 17,770 or approximately 46 lots per subdivision on the average. To achieve equilibrium with the number of subdivisions remaining constant and selling at an annualized pace of 24 units per year, the permit level will need to increase to 9,200 permits per year. Based on the projected new normal of 4,200 permits per year, 24 unit per year absorption rate per site, the two mar- kets will support 175 subdivisions or 46% of the current number of active subdivisions. What this analysis does not tell us is the concentration of subdivisions by market segment and/or neighborhood/submarket consumer preferences. This additional analysis could indicate one or more market segments and areas have insufficient lots relative to demand, while others may have substan- tially more inventory. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 29
  • 30. 4. AVERAGE SFD RESIDUAL LAND PRICES PER ACRE: ONE OF THE TOP FIVE WORST DATA POINTS OF ALL TIME Residual land prices per acre in Ada county declined 12.9% to an estimated $38,831 in the first quarter of 2010. According to Mike Pennington the average new home sales price in Ada County declined $26,199 in the first quarter of 2010 from $202,112 at the end of December of 2009 to $175,913 at the end of March of 2010. In Canyon County the residual land prices per acre declined 8.8% to an estimated $25,367 in the first quarter of 2010. The average new home sales price in Ada County declined in the first quarter $12,477 from $140,607 in December of 2009 to $128,130 in March of 2010. The aforementioned figures were based on a residual raw lot cost of 6% of sales price with an aver- age density of 3.3 units per acre. While base sales prices are the leading variable in the model there are eight other variables, which include: lot size, density, average square footage, direct and indirect construction costs, improvement costs, soft costs, and net margin. Note actual average residual land prices per acre vary by sub-market and market segment. The numbers reflect herein are an av- erage of all sub-markets and single family detached market segments in Ada and Canyon counties. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 30
  • 31. 5. FORECLOSURES: WORST DATA POINT OF ALL TIME According to Idaho Data Providers, first quarter notices of default reseeded from the all time high in the 4th quarter of 2009 of 2883 to 2408. Notices of default in Ada County increased each month of the quarter: 408 in January, 420 in February, and 597 in March. In Canyon County 983 notices of default were filled in the 1st quarter. The monthly figures were 365 in January, 266 in February, and 352 in March. Normalcy for quarterly notices of default range between 250 and 400. Bank owned listings now comprised 41% of the listings on MLS. The quarterly level of notices of default exceed the currently quarterly sales rate of existing homes by 233%. Ada/Canyon Counties Quarterly Notics of Default 3500 3000 2883 2408 2500 2268 2117 2150 2000 1540 1430 1500 1083 1149 1000 861 606 457 478 500 0 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 2007 2008 2009 2010 Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 31
  • 32. 8. EXISTING HOME MLS LISTING INVENTORY: ONE OF THE TOP FIVE WORST DATA POINTS OF ALL TIME Ada and Canyon counties end of year existing home MLS listings are both at top five worst data points of all time. Currently, Ada County supply to sales ratio is 7.15 months. Normal is 4 months. The current level of listings is trending at 2,856 or 90% higher than the projected new normal of 1,500. Canyon County’s current supply to sales ratio is 7.4 months. Normal is also 4 months. The current level of listings of 1,336 or 37% higher than the projected new normal of 975. Data provided by Mike Pennington. Ada County MLS Existing Home Listings Canyon County MLS Existing Home Listings 1998 - 2010 1998 - 2010 3000 2856 1600 2731 2662 1419 1400 1336 2500 2455 1281 1231 1200 2000 1782 1000 New Normal 925 881 899 832 810 New Normal 1483 1500 800 761 1375 1301 1307 705 1120 608 600 557 990 1000 880 812 400 500 200 0 0 98 99 00 01 02 03 04 05 06 07 08 09 T-10 98 99 00 01 02 03 04 05 06 07 08 09 T-10 Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 32
  • 33. 6. REAL ESTATE FINANCING: ONE OF THE TOP FIVE WORST MARKETS OF ALL TIME The real estate financing picture remained unchanged in the first quarter on the heals of the continued decline in quality of the local economy and additional bank closures throughout the country. New project financing remains virtually nonexistent at this time, regardless of net worth, backstops, or relationships. However, purchaser secured construction financing is available. Normalcy in the real estate lending segment of the economy is not expected until early 2012. 7. NEW HOME CONSTRUCTION COSTS: POOR According to Franklin Building Supply, construction costs increased sharply in the first quarter. Lumber costs increased 23% or $2.20 to $2.30 per foot. Finish products are also up sharply be cause of the earthquake in Chili. The ports used to ship pine and other materials were destroyed. The construction materials market eroded quickly in the first quarter, but as some predict, it is nothing compared to what will happen when we see a substantial rise in demand. The housing starts pace remains under 700,000, less than half the historical level and 1/4th the high point in 2008. When demand returns and the starts level gets closer to the 1,000,000 per year pace the true impact of the last two years of devastation on the supply chain will drive costs up sharply. Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 33
  • 34. 9. EXISTING HOME SALES: BELOW NORMAL In 2009, 6,301 existing home sold. The new Total Existing Home Sales normal is projected to be between 6,500 and 12000 10517 7,000. Population and recession recovery es- 9404 10000 timates suggest the level of existing home 7987 8000 New Nornal 6814 7030 sales will increase by 7% in 2010 and 10% 5823 6301 6244 6000 4955 5192 5102 per year their after for balance of the decade. 4266 4287 4000 At this pace existing homes will double in the 2000 next ten years to over 13,000. 0 98 99 00 01 02 03 04 05 06 07 08 09 T-10 Ada County Existing Home Sales Total Existing Home Sales 8000 12000 6917 10517 7000 6229 9404 10000 6000 5616 New Nornal 4950 4948 7987 5000 8000 New Nornal 7030 4395 4337 4200 6814 6301 6244 3765 3798 3747 5823 4000 6000 3299 3320 4955 5192 5102 4266 4287 3000 4000 2000 2000 1000 0 0 98 99 00 01 02 03 04 05 06 07 08 09 T-10 98 99 00 01 02 03 04 05 06 07 08 09 T-10 Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 34
  • 35. 10. EXISTING HOME SALES DAYS ON THE MARKET: ONE OF THE FIVE WORST DATA POINTS OF ALL TIME The Ada County Days on Market Index is one Ada County DOM of the five worst data points of all time. Since 2010 2000, the average number of days on the 2008 market in Ada county has been 61.2. The 2006 current level is 93, and increase of 7 days 2004 over the 2009 average. This figure sets the 2002 new high over the 2003 figure which was 89 2000 days. 0 15 30 45 60 75 90 The Canyon County Days on Market index is Canyon County DOM also one of the worst data points of all time. 2010 2009 Over the past decade the average number of 2008 2007 days on the market in Canyon County has 2006 2005 been 72.1. The current level is 92. An in 2004 2003 crease of 18 days over the 2009 average of 2002 2001 74. Normal in Canyon county is considered 2000 60. 0 20 40 60 80 100 Copyright 2010 © by Douglas E. Swallow and Trey Langford, All rights reserved 35
  • 36. INTRODUCTION TO ORGANIZATIONAL GENETICS: My name is Douglas Swallow. I am an organizational and human performance scientist, consultant, and founder of Organizational Genetics (OG). Since 1980, I have helping business owners, CEO’s and their managers be better, do better, and build better performing company’s and workgroups; by providing them with the tools and paradigms to elevate their clarity with which they see their environment, reduce risk, and maximize their performance capability and the perform- ance capability of their workgroups. Budgets for CEO and organizational development have never been tighter. It is also never been more important to miti- gate risk wherever possible, maximize sales, and optimize the productivity of every workgroup, manager, employee, and product. I would like the opportunity to share with you the most powerful insights into each of these areas and show you how you can significant reduce risk and increase your organization's results in these unprecedented times. Over the past 28 years, my research has resulted in the identification of 14 breakthrough paradigms and development of nearly 100 software based technologies. It has taken me across America and around the world and provided me the op- portunity to work closely with nearly 150 CEO's and talk about how to mitigate risk and achieve world-class results with over 4,000 more. 36
  • 37. INTRODUCTION TO ORGANIZATIONAL GENETICS: In 1997, I made an accidental discovery that genetic structure of all living organisms is identical in form and function to strategic foundation on which all organization's operate and was able to create an instrument that allows CEO’s to see, for the first time, their organization’s DNA and performance capability of each gene. The subsequently study of the DNA profiles of 100's of company's has led to the answers to the three most sought after questions in business today, the 7 trigger elements that enable and inhibit an organization from producing world-class results, and the tools and process to safely see and adjust organizational DNA. What I would like to do is share with you my research and provide you with the opportunity to be better, do better, and build a better performing company. My first two consultations are free. Every client's needs are unique and available financial resources different. All pro- grams are customized. They range is duration from one day to multi-year and in price from $2,500 to over $2,000,000. My return on consultant ratio for the past 15 years has ranged between $20:1 and $230:1. To schedule your free intro- duction to the theory of Organizational Genetics email of call me, Douglas Swallow at Doug@orggenetics.com. or on my cell at (702) 303-1047. To learn more about my company, please go to my website at www.orggenetics.com. 37
  • 38. BUILD IDAHO: ADVERTISING STRATEGISTS & INTERNET ADVISORS THE resource for maximizing your advertising dollar and driving the most prospects to your business. What’s the best advertising strategy in a weak economy that won’t be back to normal for at least two years? Is it to stop advertising eliminate and zero out the advertising budget? Is it to align the budget with revenue projections? Is it to develop a tough market advertising strategy and budget? What is the best advertising strategy for tough times? If your are reading the normalcy report it is highly unlikely that this is your first rodeo i.e. your first recession, and it will not be your last. Funding an advertising budget is a tough sell to shareholders in recessions, especially when the com- pany has laid off a significant percentage of employees and is reaching into its rainy day reserves to make up for cash shortfalls, is difficult, if not impossible. But if one was so inclined to undertake the challenge, what would he or she need to make the argument? That’s where I come in, my name is Trey Langford. I have been helping CEO’s with their advertising issues, budgets, and strategies for over 15 years and I would like to help you. Build Idaho is not an advertising agency and does not make money off the advertising budget or from advertising placement or vendor mark-ups. I make money the old fashion way, I earn it, by delivering results, i.e. advertising strategies the deliver traffic, leads, prospects, or hits. Build Idaho is a business that has two revenue streams: consult- ing and a website. Consulting is billed on an hourly basis advertising strategies and internet marketing. My website is for consumers seeking a new home and businesses seeking to reach these customers. 38
  • 39. BUILD IDAHO: ADVERTISING STRATEGISTS & INTERNET ADVISORS I would like to provide you with a free assessment of your advertising and internet budgets and strategies. It simple, its quick, and best of all its free. What you will receive is my 2010 advertising and internet cost benchmark report, a zero budget strategy and probable out comes assessment, and a minimum adverting and internet budget. With this assessment and tools, you will be able to determine the short and long term impact of eliminating all advertising dollars, develop a high return on advertising (ROA) dollar tough market advertising and internet strategy, and sell that strategy to your shareholders and lenders. For those of you in the homebuilding and related industries you may or may not be aware that the return on adver- tising ratios for each of the advertising mediums change in difficult times. In difficult times the highest return on ad- vertising dollars and lowest cost per lead is the internet. My site, BuildIdaho.com is currently generating 9,800 visi- tors per month, 40% of which are from out of state. If you would like to explore how for as little as $75.00 per month you can bring 3 to 5 new qualified leads to your business, I would like to talk with you. To schedule an appointment email or call me today Trey@BuildIdaho.com or (208) 724-9636 39