TRENDS IN HOUSING




                YEAR-END 2009
SECTION ONE

 THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET

  The Washington housing market in the 4th quar-         ...
THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET

  Frederick counties – where foreclosures led to the re-               ...
THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET

  According to Freddie Mac, the average 30-year fixed-                 ...
THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET

  NAVIGATING THE MARKET                                      Seller exp...
THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET

  good. The index is based on three components. Two of                 ...
THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET

  In the Washington metro area, the Federal Housing Fi-                ...
THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET

  The Federal Housing Administration has recently
  changed its policy ...
SECTION THREE
 POLICY SPOTLIGHT:
 EXTENSION & EXPANSION OF THE FEDERAL HOME BUYER CREDIT

  Congress passed legislation in...
SECTION FOUR

 ASK DELTA




 Q        How will rising mortgage interest rates
          affect activity in the housing ma...
SECTION FIVE

  SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET


                        CHANGE IN EXISTING HOME VALUES  ...
SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET


                                           DISTRICT OF COLUMBIA         ...
SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET


                                    DISTRICT OF COLUMBIA                ...
SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET


                              MEDIAN SOLD PRICE                         ...
SECTION SIX

  LOCAL SPOTLIGHT: THE DISTRICT

  The District of Columbia was founded in 1790 and is                       ...
SECTION SEVEN

 REGIONAL SPOTLIGHT: MONTGOMERY COUNTY

  Montgomery County is conveniently located adjacent         cember...
SECTION EIGHT

  THE WASHINGTON REGIONAL ECONOMY AND OUTLOOK

  We believe the Washington metro area economy is           ...
THE WASHINGTON REGIONAL ECONOMY AND OUTLOOK

  Coincident Index                                                           ...
THE WASHINGTON REGIONAL ECONOMY AND OUTLOOK

  We believe GRP declined 0.5% during 2009, once the
  numbers are finalized....
METHODOLOGY

  SINGLE-FAMILY HOUSING DATA

  Northern Virginia is defined as Arlington, Fairfax,
  Fauquier, Loudoun, and ...
ABOUT MRIS AND DELTA ASSOCIATES

   MRIS                                                                               Del...
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2010 Trends In Housing of Northern Virginia

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Housing data from the MIRS system. Data shows housing tredns of northern Virginia. If you read into it, you'll find some good news. if you can wait it out.

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2010 Trends In Housing of Northern Virginia

  1. 1. TRENDS IN HOUSING YEAR-END 2009
  2. 2. SECTION ONE THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET The Washington housing market in the 4th quar- MARKET INDICATORS ter of 2009 continued to show signs of recovery, WASHINGTON METRO AREA as prices rose modestly from the previous year and Figure 1 AT YEAR-END 2009 SECTION ONE homes sold more quickly. Volume continued to pick up due to near-record low interest rates, Federal incen- tives, reduced prices and an improving economy. Although unit sales volume is down 12.3% from the previous quarter, it is up 18.9% from one year ago. | Sales volume in the 4th quarter has contracted com- T H E WA S H I N GTO N M E T R O A R E A F O R- S A L E H O U S I N G M A R K E T pared to the 3rd quarter’s sales volume, likely due to the expected expiration of the Federal tax credit for first-time homebuyers as well as seasonality. The Washington region continues to add high-paying jobs, which is fostering housing demand, even as it loses lower-paying jobs. As the national economy gains * Sales pace as of December 2009. Pace is ratio of total for-sale inventory to current month’s sales. traction, Washington will see burgeoning strength in Source: MRIS, Delta Associates; January 2010. the region’s housing market. As of year-end 2009, all four major market indicators have improved com- pared to one year earlier. MARKET CONDITIONS WASHINGTON METRO AREA (See Figures 1 and 2) Figure 2 AT YEAR-END 2009 The average price of a Washington-area home is $376,188 in the 4th quarter of 2009. The metro-wide price of homes sold in the 4th quarter of 2009 was down 2.7% from the 3rd quarter of 2009, but it was 2.2% higher than in the 4th quarter of 2008. This is the first time metro-wide prices have risen on a trailing 12- month basis since the 4th quarter of 2007. Prices remain highest in the Core jurisdictions of the District, Arlington and Alexandria. The average sales price of a Core home in the 4th quarter of 2009 is $486,328, up 2.2% from the 3rd quarter and 2.2% 3 lower than one year ago. In the District, the average price in December 2009 was up 14.6% from one year Source: Delta Associates; January 2010. earlier. In Alexandria, the average sales price in De- cember 2009 was up 3.0% compared with December HOME PRICES BY SUB-AREA* 2008; Arlington posted price increases of 14.5% for WASHINGTON METRO AREA the same 12-month period. (See Figure 3) Figure 3 YEAR-END 2009 The area’s Inner ring of Fairfax, Montgomery and Prince George’s counties (and Falls Church and Fair- fax cities) experienced price declines of 5.4% from the 3rd quarter; the average price in the 4th quarter of 2009 was $374,044, which is down 5.1% from one year ago. Fairfax County home prices rose 12.0% from December 2008 to December 2009. In Montgomery County, prices climbed 4.6% over the same period; Prince George’s home prices fell 18.1%. The Outer suburbs of Loudoun, Prince William and *Core: DC, Arlington, Alexandria. Inner: Fairfax, Montgomery, Prince George’s; Fairfax City and Falls Church. Outer: Loudoun, Prince William, Frederick. Source: MRIS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  3. 3. THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET Frederick counties – where foreclosures led to the re- HOME SALES AVERAGE PRICE CHANGE gion’s steepest price declines in 2006 through 2008 WASHINGTON METRO BY SUB-AREA* – showed a slight drop over the quarter, but had the Figure 4 2003 - 2009 SECTION ONE strongest yearly price gain of the sub-areas. The aver- age sales price of an Outer home in the 4th quarter is $297,544, down 0.5% from the 3rd quarter and up 11.9% from one year ago. In Prince William County, the average sales price in December 2009 increased 22.4% from one year earlier. In Loudoun, home prices | rose 10.8% from December 2008 to December 2009; T H E WA S H I N GTO N M E T R O A R E A F O R- S A L E H O U S I N G M A R K E T Frederick posted declines of 9.2% year-over-year. (See Figure 4) In 2009 the number of homes sold metro-wide is up 11.4% from 2008, indicating a return of buyers to the market. (See Figure 5) *Core: DC, Arlington, Alexandria. Inner: Fairfax, Montgomery, Prince George’s; Fairfax City and Falls Church. Outer: Loudoun, Prince William, Frederick. Home prices at the metro level in the 4th quarter of Source: MRIS, Delta Associates; January 2010. 2009 were higher than one year earlier, with Outer ju- risdictions showing the most improvement as the only AVERAGE SALES PRICE FOR EXISTING HOUSES sub-area with a price increase. The Core and the Inner WASHINGTON METRO BY SUB-AREA* suburbs continue to experience a drop in prices after a Figure 5 2002 - 2009 bounce in the 2nd quarter; prices in the Outer suburbs approximate those seen in the 3rd quarter of 2008. Given this mixed performance, it is too early to tell whether this market has passed the bottom, but rising unit volume and declining days on market bode well for recovery. We think that in the Washington metro, the bottom has likely passed. (See Figure 6) As buyer activity has increased, properties are selling more quickly. For the Washington region, homes sold in an average of 72 days, down from 81 days in the 3rd quarter and 104 days one year ago. *Core: DC, Arlington, Alexandria. Inner: Fairfax, Montgomery, Prince George’s; Fairfax City and Falls Church. 4 Outer: Loudoun, Prince William, Frederick. In the Core, time on market fell to 73 days, down Source: MRIS, Delta Associates; January 2010. from 79 days in the 3rd quarter and 75 days one year ago. Properties in the Core are selling at a rate slight- AVERAGE DAYS ON MARKET - EXISTING HOUSES ly below the region’s long-term average of 76 days. WASHINGTON METRO AREA BY SUB-AREA* Time on market in the Outer suburbs now averages Figure 6 2002 - 2009 59 days, down 11 days from the previous quarter and down 51 days from one year ago. Homes are taking the longest to sell in the Inner suburbs – 76 days – down from 86 days in the previous quarter and 109 days one year ago. *Core: DC, Arlington, Alexandria Inner: Fairfax, Montgomery, Prince George’s; Fairfax City and Falls Church. Outer: Loudoun, Prince William, Frederick. Source: MRIS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  4. 4. THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET According to Freddie Mac, the average 30-year fixed- first-time homebuyer tax credit. The November 2009 rate mortgage at the end of December 2009 was index, which is published by the National Association 5.14%, exactly the same as one year earlier. Rates bot- of REALTORS®, was 15.5% higher than the November SECTION ONE tomed at 4.71% in the first week of December before 2008 reading. Pending home sales signal optimism in rising again, though they still remain low by historical the market; however, some contracts are taking lon- standards. The rate for a 15-year fixed-rate mortgage ger than normal to settle as appraisers and lenders was 4.45%. are grappling with a recalibrating market. The Na- tional Association of REALTORS® affordability index A combination of low rates and the Federal $8,000 rose 23.4 points from November 2008 to November | tax credit for first-time home buyers has helped lure 2009. The affordability index incorporates median T H E WA S H I N GTO N M E T R O A R E A F O R- S A L E H O U S I N G M A R K E T many buyers from the sidelines. Although some buy- home prices, median incomes and average mortgage ers are facing higher lending thresholds – larger down rates to broadly gauge the national homebuying cli- payments, better cash reserves – buyer activity picked mate. up in 2009 compared to 2008. Lower prices continue to propel sales volume, and Recent market statistics indicate that buyer and seller the region persists in working through its inventory expectations are moving toward each other, helping overhang. The Washington area has an average of to bring the market into balance. The average time 5.3 months of for-sale inventory at December 2009, on market in the Washington area is 72 days. This down from 7.3 months’ worth one year ago. In recent duration is slightly below the long-term average of 76 years, Washington area average prices tend to rise days, and it is the lowest time on market since the when the ratio of inventory to sales is below 6 months’ 3rd quarter of 2006. However, sellers remain discon- worth. Lender constraints may hinder a quick rise in nected from market conditions on pricing. The aver- prices, but the gap between supply and demand is age selling price in the 4th quarter of 2009 is 93.7% closing in the Washington area. (See Figure 7) of list price, up 50 basis points from the 3rd quarter but indicating that sellers are still making generous In most jurisdictions the ratio of inventory to sales fell concessions to facilitate sales. in the 4th quarter of 2009 compared to one year ago. Fauquier County has the highest ratio in the region In November, the national pending-home sales in- at 9.0 months’ worth of inventory at December 2009. dex, a forward-looking indicator of contracts signed Jurisdictions with ratios higher than last year at this (but not settled) for previously owned homes, fell time include Prince William County, Alexandria and 16.0% from the October reading after a surge of Fairfax City. Falls Church has just 3.1 months’ worth activity in the preceding months as homebuyers at- of inventory at December 2009, the lowest in the re- tempted to beat the original deadline for the federal gion. (See Figure 8) 5 PRICE CHANGE AND INVENTORY MONTHS OF FOR-SALE INVENTORY WASHINGTON METRO WASHINGTON METRO AREA Figure 7 2003 - 2009 Figure 8 DECEMBER 2008 vs. DECEMBER 2009 *Months of inventory at current sales pace for last month in each quarter. *Pace is ratio of total for-sale inventory to current month’s sales. Source: MRIS, Delta Associates; January 2010. Source: MRIS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  5. 5. THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET NAVIGATING THE MARKET Seller expectations remain loftier than the market, but the gap between buyer and seller demands is The Washington area housing market appears to be in closing. The average sales price in the 4th quarter of SECTION ONE recovery. Home prices in the metro are slightly high- 2009 is 93.7% of list price, the highest share in more er than they were one year ago, and the 4th quarter than two years. Sellers continue to make concessions shows increased volume from last year. The Federal to buyers to facilitate sales, but those concessions are $8,000 tax credit for first-time homebuyers has been shrinking. successful at luring reluctant buyers off the sidelines. This tax credit, coupled with near-record-low interest Building activity in the region remains tight, as the | rates, has continued to spur buyer activity. market is not yet expanding and lending activity is still T H E WA S H I N GTO N M E T R O A R E A F O R- S A L E H O U S I N G M A R K E T constrained by the national Credit Crunch. According Steady buyer activity – especially in the lower price to the Census, the annualized number of permits for brackets – has helped the region work through its ex- new housing nationally in November 2009 (the most cess inventory. As a result, the ratio of inventory to recent data available) was 584,000, up 6.0% from sales is now 5.3 months and is approaching a healthy the October number and up from the record low of balance between buyers and sellers. Well-priced prop- 498,000 set in April 2009. The number of permits erties in desirable neighborhoods are seeing multiple issued in November 2009 was down 7.3% from the offers, another indication of the slowly shifting mar- number issued in November 2008. (See Figures 10 ket. As demand and supply come into balance, and 11) we should see continued price traction in coming quarters. (See Figure 9) The number of housing starts fell 12.4% from Novem- ber 2008 to November 2009, as oversupply remains A healthy apartment market is helping to facilitate a concern in many metropolitan areas. In the near housing demand, particularly among first-time buyers. term, new-home buyers will help to work through the The region’s stabilized vacancy rate for investment- excess inventory of existing newly built homes. grade apartments (Class A and B) is 4.3% in the 4th quarter of 2009, down from 4.9% in the 3rd quarter Concerns about the economy and job security con- and at the same level as one year ago. With a nation- tinue to affect builder confidence. The National Asso- al vacancy rate of 7.6%, Washington boasts one of the ciation of Home Builders/Wells Fargo Housing Mar- lowest apartment vacancy rates in the nation. ket Index of builder confidence was 16 in December 2009, down one point from November and its lowest point since June of 2009. An index below 50 indicates that more builders view sales conditions as poor than 6 TOTAL ACTIVE LISTINGS CONSTRUCTION STARTS AND BUILDING PERMITS* WASHINGTON METRO AREA, ALL HOUSING TYPES UNITED STATES Figure 9 2003 THROUGH 2009 Figure 10 2000 THROUGH NOVEMBER 2009 *For privately owned housing units, seasonally adjusted and annualized. Source: MRIS, Delta Associates; January 2010. Source: Census Bureau, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  6. 6. THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET good. The index is based on three components. Two of long-term interest rates rise in the aftermath of them – measuring current sales conditions and the sales heavy deficit spending by the Federal govern- expectations for the next six months – fell from Novem- ment. SECTION ONE ber; the measure gauging traffic of prospective buyers remained unchanged for the third month in a row. CONSUMER SPENDING GETS A BOOST AS INCOMES RISE Home refinancings continued to surge in the 3rd quarter with record low interest rates, although tough U.S. personal incomes rose in November for the fifth credit standards are still stifling volume. According month in a row, providing some confidence as con- | to Freddie Mac’s Quarterly Refinance Review, sumers began the holiday season. Consumer spend- T H E WA S H I N GTO N M E T R O A R E A F O R- S A L E H O U S I N G M A R K E T homeowners cashed out $20 billion in home equity ing increased in November following a rise in overall in the 3rd quarter of 2009. The aggregate amount personal income, according to the Commerce De- of $60 billion that was cashed out during the first partment. Spending rose 0.5% from October, after three quarters of the year is the smallest volume of increasing 0.6% the previous month and falling 0.6% equity extraction over the first three quarters of a year from August to September. The Commerce report also since 2000. The likely cause of the decline is that showed that personal income increased 0.4% from Oc- homeowners have a smaller equity cushion. Half of tober after increasing 0.3% for three months in a row. those refinancing in the 3rd quarter of 2009 lowered As the recession moderates consumers are spending their annual mortgage interest rate by an average more; however, gains continue to be measured. Retail of 110 basis points below the previous rate. Freddie sales continue to be a barometer of consumer senti- Mac reports that among those who refinanced, 64% ment; slow improvement will not help bring about a of prime borrowers who refinanced a conventional, robust recovery. second-lien mortgage either kept the same principal balance or reduced it. This figure is the highest such We expect this same pattern to hold true for hous- share in six years. Conversely, the share of refinancing ing – a slow but steady increase in home sales as the resulting in higher loan amounts fell to a new six-year recession gives way to recovery. low of 36% in the 3rd quarter from 38% last quarter. WASHINGTON OUTPERFORMS THE NATION The Mortgage Bankers Association reported a small increase of 1% in seasonally adjusted refinancing ap- By most measures, the Washington metro area hous- plications from October to November. We expect ing market is performing better than most other metro refinancings to slow dramatically in 2010-11 as areas. 7 CONSTRUCTION BUILDING PERMITS BY STATE SELECTED MID-ATLANTIC JURISDICTIONS Figure 11 2000 THROUGH NOVEMBER 2009 *For privately owned housing units. Through November 2009, annualized. Source: Census Bureau, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  7. 7. THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET In the Washington metro area, the Federal Housing Fi- expect that renewed demand will continue to nance Agency (formerly OFHEO) reported a 0.3% an- yield yearly price gains, with gains first apparent nual decline in home prices for the 12 months ending in the Outer suburbs, but extending to the other SECTION ONE September 2009, compared to a decrease of 12.2% sub-areas by late 2010/early 2011. for all of 2008. FHFA reported a national average home price decline of 3.8% for the 12 months ending THE APPRAISAL QUESTION: September 2009. In contrast, the National Associa- CONTINUED DEBATE tion of REALTORS reported a national average home decline of 11.2%, and a Washington area decline of Appraisals are a key component of any home sales | 2.5% for the 12 months ending in the 3rd quarter of involving a mortgage. The appraisal – ordered by the T H E WA S H I N GTO N M E T R O A R E A F O R- S A L E H O U S I N G M A R K E T 2009. (FHFA and NAR use different methodologies to lender – sets the market value of the house. During calculate price changes.) (See Figure 12) the housing boom, appraisers came under fire for lax standards, leading to overvalued mortgages. As the From October 2008 to October 2009, Washington national housing market declined, parties on all sides home prices fell 2.8%, according to the Case-Shiller of transactions raised concerns that it was difficult to index, placing 5th in a tie with Boston among major accurately assess the market value of homes. metro areas for 12-month performance. Washing- ton placed 9th for seasonally-adjusted monthly price In an effort to increase transparency and accountabil- gains, tied with Minneapolis, with a 0.2% price in- ity among lenders, buyers and appraisers, the Home crease from September to October. By contrast, Phoe- Valuation Code of Conduct (HVCC) was established nix, Las Vegas and Detroit saw annual price declines between Freddie Mac, the Federal Housing Finance in excess of 15%. Agency and the New York State Attorney General. It took effect on May 1, 2009; Freddie Mac and Fannie WASHINGTON HOUSING OUTLOOK Mae will no longer purchase mortgages that do not comply with the HVCC. The Washington housing market has entered the recovery phase of the cycle. We expect that The code applies to 1- to 4-unit single-family loans a combination of continued Federal impact on sold to Fannie Mae or Freddie Mac. The HVCC aims to the Washington housing market and a recover- establish independence of appraisers from lenders or ing labor market will continue to bring gains to other third parties who might influence the develop- the Washington housing market. The pace of the ment, result or review of an appraisal. recovery may be uneven; however, in 2010, we 8 ANNUAL ESCALATION OF EXISTING HOME SALE PRICES Figure 12 *12-Month change through 3rd quarter. Source: National Association of Realtors, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  8. 8. THE WASHINGTON METRO AREA FOR-SALE HOUSING MARKET The Federal Housing Administration has recently changed its policy to include modification to its ap- praisal requirements as well. The FHA will reaffirm SECTION ONE its current policy regarding appraiser independence and geographic competence. In addition, brokers and bank employees who earn commissions on mort- gages will be barred from ordering appraisals and ap- praisals older than four months will not be valid. | Since the HVCC has gone into effect many lenders are T H E WA S H I N GTO N M E T R O A R E A F O R- S A L E H O U S I N G M A R K E T choosing to work with appraisal management compa- nies (AMCs) to select appraisers. Many in the industry have found fault with the increased use of AMCs say- ing that the resulting reduction in appraiser fees and increase in the time it takes to complete an appraisal have negatively impacted the market. In addition, real estate professionals have argued that the process for appealing valuations is too lengthy, causing deals to collapse before an appeal can be considered. Although the HVCC is due to expire at the end of 2010, government-sponsored entities such as Fannie Mae and Freddie Mac may continue to require that mortgages comply with all or part of the code. RESPA UPDATES TAKE EFFECT In early January new Federal rules governing mort- gages took effect with a new standard form for Good Faith Estimates. The update of the Real Estate Settle- ment Procedures Act (Respa) was announced in No- vember 2008 by the Department of Housing and Ur- ban Development and took effect January 1, 2010. The new rules mandate a new standard Good Faith 9 Estimate that will assist consumers in comparing loan offers from multiple lenders. The new estimate form requires lenders to combine all the fees charged into one origination charge. Consumers may then com- pare the interest rate as well as the adjusted origina- tion charge, which includes points used to lower the interest rate and other fees charged. Good Faith Estimates have always existed, however there was no standard format, making it difficult for consumers to compare lenders equally. The Respa update will require that lenders and mortgage brokers give consumers the estimate form within three days of receiving a loan application. Lenders are not allowed to increase the origination fee from the estimate and are also restricted from increasing other charges not included in the origination fee such as recording charges or title insurance by more than 10%. TREND S IN HOUSING YEAR-END 2009
  9. 9. SECTION THREE POLICY SPOTLIGHT: EXTENSION & EXPANSION OF THE FEDERAL HOME BUYER CREDIT Congress passed legislation in early November 2009 increase from the previous tax credit legislation in- that extended and expanded the $8,000 Federal first- come limits of $75,000 for individuals and $150,000 S E C T I O N T H R E E | E X T E N S I O N & E X PA N S I O N O F T H E F E D E R A L H O M E B U Y E R C R E D I T time home buyer tax credit introduced in the Housing for joint income tax filers. Anyone who collects the and Economic Recovery Act of 2008. The $24 bil- tax credit but sells their home within three years must lion bill expanded unemployment benefits, provided return the credit. tax benefits to businesses with operating losses, and expanded the housing program to more buyers while The Federal home buyer tax credit has had a no- extending the original deadline to April 2010. The ticeable impact on the housing market since its in- tax credit portion of the bill is expected to cost $10.8 ception. The National Association of REALTORS® billion. (NAR) has estimated that 350,000 transactions may not have occurred nationally without the tax credit. Under this new legislation first-time buyers will re- This figure represents approximately 7.0% of NAR’s ceive the same $8,000 tax credit previously offered, estimated 2009 total of 5.01 million existing home but will have until April 30, 2010 to enter into a con- sales. Locally, we estimate that 1,900 transactions tract on a home and until June 30, 2010 to close on may not have occurred in 2009 if not for the Federal that home. tax credit. NAR’s annual Profile of Home Buyers and Sellers for 2009 showed first-time buyers account- The new bill also extends the tax credit to existing ho- ing for a record 47% of national home sales, up meowners. Current homeowners who are purchasing from 41% in 2008. It is very likely that this increase a new primary residence were eligible for a $6,500 can be attributed to the first-time homebuyer credit. tax credit as of December 1, 2009 if they have lived in The National Association of Home Builders estimates their home for at least five consecutive years during that the extended and expanded tax credit will gen- the previous eight years. erate 180,000 additional home sales nationally. Both provisions are limited to homes with a purchase price of less than $800,000. In addition, individuals making more than $125,000 per year and couples making more than $225,000 per year are not eligi- ble. These new income limits represent a substantial 11 TREND S IN HOUSING YEAR-END 2009
  10. 10. SECTION FOUR ASK DELTA Q How will rising mortgage interest rates affect activity in the housing market? currently. As the Fed withdraws its current level of support that spread will likely increase, causing mort- gage interest rates to rise. A Interest rates on 30-year fixed rate mortgages The Mortgage Bankers Association’s (MBA) recent MBA fell to an historical low of 4.71% in Decem- Mortgage Finance Forecast projects 30-year fixed rate ber of 2009 according to Freddie Mac’s weekly mortgage interest rates to increase to 5.7% by the end survey. This is the lowest rate since the survey of 2010 and 6.2% by the end of 2011. began in 1971. The Federal Reserve’s program to purchase mortgage-backed securities has helped to Projected increases in mortgage interest rates coupled hold mortgage interest rates down despite turmoil in with the expiration of the Federal tax credit will re- the financial markets. (See Figure 14) sult in a decrease in sales and refinancing activity na- tionally. Although the Federal tax credit for first-time The Federal Reserve ramped up its purchase of homebuyers was recently extended and expanded to mortgage-backed securities in 2008 to prevent the include current homeowners who meet specific crite- collapse of the mortgage finance market. As of No- ria, this legislation will expire by April 30, 2010. vember 2009 Federal Reserve purchase of agency mortgage-backed securities accounted for about 80% The MBA projects that mortgage originations will de- of new securities issued by Fannie Mae and Freddie crease from almost $2.0 trillion in 2009 to about $1.5 Mac. The Fed’s purchase program is scheduled to trillion in 2010. Purchase originations are expected phase out during the first quarter of 2010, leaving to increase from $718 billion in 2009 to $804 billion SECTION FOUR government sponsored enterprises (GSEs) such as during 2010 and refinance originations are projected Fannie Mae, Freddie Mac and Ginnie Mae without a to fall from $1.246 trillion to $693 billion in the next government buyer and reliant on private investors to year. purchase mortgage-backed securities. While an increase in mortgage interest rates may slow The Fed’s exit and concerns about the stability of the turnaround in the national market, the local im- | GSEs may cause an increase in the spread of mort- pact is likely to be less of a hindrance due to a more A S K D E LTA gage rates over Treasury bonds. According to The robust increase in jobs and consumer sentiment. Wall Street Journal, activity by the Federal Reserve has caused these spreads to drop from approximately 2.8 percentage points in 2008 to 1.35 percentage points 12 MORTGAGE RATES Figure 14 30-YEAR FIXED RATE *At December 2009. Source: Freddie Mac, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  11. 11. SECTION FIVE SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET CHANGE IN EXISTING HOME VALUES AVERAGE DAYS ON MARKET - EXISTING HOUSES SELECT METRO AREAS WASHINGTON METRO AREA Figure 15 Figure 16 1996 THROUGH 2009 SECTION FIVE | S U M M A R Y D ATA O N T H E M I D - AT L A N T I C H O U S I N G M A R K E T Source: FHFA, GMU Center for Regional Analysis, Delta Associates; January 2010. Source: MRIS, GMU Center for Regional Analysis, Delta Associates; January 2010. Summary: Summary: The Washington area saw a -0.3% change in exist- The average time on the market in 4th quarter 2009 was ing home values for the 12 months ending September 72 days, down from 81 days at 3rd quarter and 104 days 2009 (per FHFA data), ahead of the national average of one year earlier. -3.8%. SALES VOLUME SALES PRICE CHANGE - TRAILING 12 MONTHS WASHINGTON METRO AREA, ALL HOUSING TYPES WASHINGTON METRO AREA Figure 17 1999 THROUGH 2009 Figure 18 DECEMBER 2008 vs. DECEMBER 2009 13 Source: MRIS, Delta Associates; January 2010. Source: MRIS, GMU Center for Regional Analysis, Delta Associates; January 2010. Summary: Summary: The 2009 sales volume was 56,954 homes: 11.4% high- Prices posted strong gains in December after showing er than in 2008. Sales unit volume in the 4th quarter increases in September and November. On a 12-month of 2009 was 18.6% higher than in the 4th quarter of trailing basis, prices in December 2009 were 9.9% high- 2008, adding to the momentum gained in the 2nd and er than in December 2008. 3rd quarters at the height of the selling season and due to the anticipation of the end of the Federal tax credit for first-time homebuyers. TREND S IN HOUSING YEAR-END 2009
  12. 12. SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET DISTRICT OF COLUMBIA NORTHERN VIRGINIA HOUSING MARKET INDICATORS HOUSING MARKET INDICATORS Figure 19 2003 THROUGH 2009 Figure 20 2003 THROUGH 2009 SECTION FIVE | S U M M A R Y D ATA O N T H E M I D - AT L A N T I C H O U S I N G M A R K E T Includes: Arlington, Fairfax, Fauquier, Loudoun, and Prince William Counties; Alexandria, Fairfax, and Falls Church Cities. Source: MRIS, Delta Associates; January 2010. Source: MRIS, Delta Associates; January 2010. Summary: Prices rose 2.6% in the 4th quarter of 2009 Summary: The average price in the 4th quarter of 2009 from the previous quarter, and were 4.5% lower than one fell 2.6% from the 3rd quarter, and is 10.5% higher than year earlier. Average time on market in the 4th quarter one year earlier. Time on market averaged 53 days in is 82 days, down from 89 days in the 3rd quarter but up the 4th quarter – the lowest of any sub state area and from 77 days one year ago. Unit sales volume in 2009 is below the regional average. Unit sales volume for 2009 16.7% higher than in 2008. is 3.8% higher than 2008 volume. SUBURBAN MARYLAND BALTIMORE AREA HOUSING MARKET INDICATORS HOUSING MARKET INDICATORS Figure 21 2003 THROUGH 2009 Figure 22 2003 THROUGH 2009 14 Includes: Anne Arundel, Carroll, Harford, Howard, Includes: Frederick, Prince George’s, and Montgomery Counties. and Baltimore Counties; Baltimore City. Source: MRIS, Delta Associates; January 2010. Source: MRIS, Delta Associates; January 2010. Summary: Prices fell 5.5% in the 4th quarter of 2009 Summary: The average sales price in the 4th quarter of from the previous quarter. Year-over-year prices are 2009 fell 6.1% from the previous quarter and was 7.5% down 10.5%. Average days on market fell to 95 from lower than one year earlier. Time on market averaged 107 in the previous quarter. Unit sales for 2009 are 113 days in the 4th quarter, down from 117 days in the 25.6% higher than in 2008. previous quarter. Unit sales for 2009 are 3.0% higher than the 2008 total. TREND S IN HOUSING YEAR-END 2009
  13. 13. SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET DISTRICT OF COLUMBIA NORTHERN VIRGINIA SINGLE-FAMILY SALES SINGLE-FAMILY SALES Figure 23 4TH QUARTER 2008 vs. 4TH QUARTER 2009 Figure 24 4TH QUARTER 2008 vs. 4TH QUARTER 2009 SECTION FIVE | S U M M A R Y D ATA O N T H E M I D - AT L A N T I C H O U S I N G M A R K E T Thousands of Dollars Thousands of Dollars Includes: Arlington, Fairfax, Fauquier, Loudoun, and Prince William Counties; Alexandria, Fairfax, and Falls Church Cities. Source: MRIS, Delta Associates; January 2010. Source: MRIS, Delta Associates; January 2010. SUBURBAN MARYLAND BALTIMORE AREA SINGLE-FAMILY SALES SINGLE-FAMILY SALES Figure 25 4TH QUARTER 2008 vs. 4TH QUARTER 2009 Figure 26 4TH QUARTER 2008 vs. 4TH QUARTER 2009 15 Thousands of Dollars Thousands of Dollars Includes: Frederick, Prince George’s, and Montgomery Counties. Includes: Anne Arundel, Baltimore, Carroll, Harford, and Howard Counties; Baltimore City. Source: MRIS, Delta Associates; January 2010. Source: MRIS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  14. 14. SUMMARY DATA ON THE MID-ATLANTIC HOUSING MARKET MEDIAN SOLD PRICE MEDIAN SOLD PRICE SELECTED WASHINGTON METRO AREA JURISDICTIONS SELECTED BALTIMORE METRO AREA JURISDICTIONS Figure 27 DECEMBER 2008 vs. DECEMBER 2009 Figure 28 DECEMBER 2008 vs. DECEMBER 2009 SECTION FIVE | S U M M A R Y D ATA O N T H E M I D - AT L A N T I C H O U S I N G M A R K E T Source: MRIS, Delta Associates; January 2010. Source: MRIS, Delta Associates; January 2010. SALES BY DAYS ON MARKET Figure 29 4TH QUARTER 2009 16 Source: MRIS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  15. 15. SECTION SIX LOCAL SPOTLIGHT: THE DISTRICT The District of Columbia was founded in 1790 and is the month of December 2009 was up 14.6% from home to all three branches of the United States gov- one year earlier. The 4th quarter 2009 average sales ernment as well as numerous foreign embassies and price is down 18.5% from a peak in the 2nd quarter government agencies. Many organizations such as of 2008. The District has not experienced the severe professional associations, non-profit firms, law firms, price volatility that many other jurisdictions in the lobbying groups and finance firms have established metro area have during the housing crisis. headquarters in the District in order to be near the (See Figure 30) Federal government. The city’s resident population is nearly 600,000 and growing; however, during the Homes in this area have sold less quickly than in the work week the city’s population can swell to more Washington region as a whole, likely due to the high- than 1 million as commuters from surrounding areas er average price. The average time on market in the enter the city for work. 4th quarter of 2009 was 82 days in the District, longer than the regional average of 72 days, but far below The Washington metro area was recently ranked third the city’s recent high of 105 days in the 1st quarter SECTION SIX on a list of “2009 Best Cities” by Kiplinger’s Personal of 2009. Finance magazine, notably for its healthy economy, superior higher education and eclectic culture. The As of mid-January 2010, there are 1,297 actively District continues to rank high on “best of” lists for marketing properties for sale, of which 285 are in walk ability, employment opportunity, and healthy liv- foreclosure or are being marketed as a short sale. | ing and has increasingly drawn a high number of “cre- There are an additional 375 homes under contract, L O C A L S P O T L I G H T: T H E D I S T R I C T ative class” workers composed of occupations such as of which 160, or 43%, are in foreclosure or are being scientists, engineers, authors and other knowledge marketed as a short sale. workers and intellectuals that are associated with a high level of economic growth. The average sales price in the District of $482,075 in the 4th quarter of 2009 represented a 2.6% increase from the 3rd quarter, and a decline of 4.5% from the 4th quarter of 2008. However, the average price for 17 AVERAGE SALES PRICE EXISTING HOUSES - DISTRICT OF COLUMBIA Figure 30 1ST QUARTER 2007 - 4TH QUARTER 2009 Source: MRIS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  16. 16. SECTION SEVEN REGIONAL SPOTLIGHT: MONTGOMERY COUNTY Montgomery County is conveniently located adjacent cember of 2009. The 4th quarter 2009 average sales to the District. Incorporated cities and municipalities price is down substantially from the peak over the past in this jurisdiction include Bethesda, Wheaton, Rock- three years in the 3rd quarter of 2007, by 34.2%. ville, Gaithersburg, Germantown, Friendship Heights, (See Figure 31) Takoma Park, Chevy Chase and Kensington. Mont- gomery County covers nearly 500 square miles of The average time on market in the 4th quarter of 2009 land area and is Maryland’s most affluent and most was 73 days in Montgomery County, a decrease from SECTION SEVEN populous county. last quarter’s average of 87 days and below a high of 118 days in the 1st quarter of 2009. (See Figure 32) Transportation options are plentiful due to the coun- ty’s close proximity to the District. There are current- As of mid-January, there are 1,876 actively marketing ly twelve Metro stations in two corridors on the red properties for sale, of which 161 are in foreclosure line in Montgomery County. Rail link by Amtrak and and 415 are listed as a short sale. There are an ad- MARC train is also available. Access to the regional ditional 621 homes under contract, of which 361, or | road network is convenient with I-95, the Capital Belt- 58.1%, are in foreclosure or are being marketed as a R E G I O N A L S P O T L I G H T: M O N T G O M E R Y C O U N T Y way, I-270, and several other large arteries within the short sale. county’s borders. As of December 2009, Montgomery County has a Montgomery County is a significant employment cen- 4.9-month ratio of inventory to sales, down from 8.1 ter with 26 large firms with 1,300 or more employees. months at December 2008. That ratio is below the The largest employer in the county is the National In- regional average of 5.3 months and is one indica- stitutes of Health with over 16,000 employees. Other tor of an improving housing market. However, until large employers in the county include Lockheed Mar- foreclosures and short sales abate further, meaning- tin, Giant Food, Montgomery College, GEICO and ful price traction is not possible. Overall, Montgomery IBM. County seems to be at the cusp of a housing recov- ery, though the county may see further declines in the The average sales price in Montgomery County of short-term. $425,636 in the 4th quarter of 2009 represented a 4.3% decline from the 3rd quarter. However, average prices climbed 4.6% from December of 2008 to De- 18 AVERAGE SALES PRICE BY QUARTER AVERAGE DAYS ON MARKET EXISTING HOUSES - MONTGOMERY COUNTY EXISTING HOUSES - MONTGOMERY COUNTY Figure 31 1ST QUARTER 2007 - 4TH QUARTER 2009 Figure 32 1ST QUARTER 2007 - 4TH QUARTER 2009 Source: MRIS, Delta Associates; January 2010. Source: MRIS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  17. 17. SECTION EIGHT THE WASHINGTON REGIONAL ECONOMY AND OUTLOOK We believe the Washington metro area economy is Job Change by Sector currently in recovery, as the worst of the recession’s impact is behind us. Although conditions remain The top three sectors leading job growth are sluggish, a slow recovery is underway. Government, Education/Health, and Professional/ SECTION EIGHT Business Services – with a total of 27,000 new jobs Payroll employment declined 15,300 in the added to the economy in these three sectors. Washington metro area over the 12 months ending November 2009. This represents a decline of 0.5%, The Government sector gained 17,300 jobs during compared to the national decline of 3.5% during the last 12 months, with 76% of these jobs created in this period. However, the region has a relatively the Federal government. low unemployment rate and one of the strongest | economic bases in the country, buoyed by Federal T H E WA S H I N GTO N R E G I O N A L E C O N O M Y A N D O U T LO O K The Education and Health sector gained 5,200 stimulus administration. (See Figure 33) jobs in the previous 12 months, with most of these positions in the health field. Job Change The Professional and Business Services sector With 3.0 million payroll jobs, the Washington metro gained 4,500 jobs during the last 12 months. area ranks the fourth largest job base among metro areas, behind New York, the LA Basin and Chicago. Unemployment Rate However, Dallas/Fort Worth follows the Washington metro area closely. The Washington area unemployment rate is 6.1% at November 2009, up 180 basis points from one year Despite a net job loss of 15,300 payroll positions in earlier. the metro area, four of the twelve sectors grew jobs over the past 12 months. The region continues to The Washington metro area has the lowest grow high-end jobs even as it sheds low-end jobs. unemployment rate among comparable metros and However, it is Government hiring, rather than private compares favorably to the national rate of 10.0% in sector activity, that is generating most of the job November 2009. The U.S. rate remained at 10.0% creation. when preliminary December data was released. (See Figure 34) Washington was affected by the national recession, but it is outperforming other large metropolitan areas. Over the 12 months ending November 2009, more than 437,000 jobs were shed in the LA Basin and Chicago. 19 PAYROLL JOB CHANGE UNEMPLOYMENT RATES LARGE METRO AREAS LARGE METRO AREAS Figure 33 12 MONTHS ENDING NOVEMBER 2009 Figure 34 NOVEMBER 2008 vs. NOVEMBER 2009 Source: BLS, Delta Associates; January 2010. Source: BLS, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  18. 18. THE WASHINGTON REGIONAL ECONOMY AND OUTLOOK Coincident Index Procurement spending is projected to rise 13.2% in 2009, once the numbers are finalized, to $75.3 billion The Washington Coincident Index, which represents in current year dollars, accounting for 53% of all Fed- the current state of the Washington metro area econ- eral funds flowing into the area economy. This level of SECTION EIGHT omy, was 104.0 in September 2009, below the 20- procurement spending supports about 550,000 pri- year average of 107.9. However, the index remains vate sector jobs. above the low of 103.8 experienced in February. Procurement funding will build upon already-estab- Although the index is lingering around the level expe- lished government initiatives to increase the con- rienced during the slowdown of 2001, it remains well centration of Federal government contractors in the | above the level experienced during the early 1990s Washington area. While there has been some T H E WA S H I N GTO N R E G I O N A L E C O N O M Y A N D O U T LO O K recession. (See Figure 35) speculation about the Obama Administration tightening the rules on government contracting, The Washington Region’s Core Industries it is unlikely to reduce the amount spent, in our judgment. The Washington area’s gross regional product (GRP) was $401.3 billion in 2008, an increase of 3.1% from Washington Area Economic Outlook revised 2007 figures. We expect GRP in the metro area to have edged down 0.5% during 2009, once We expect the Washington metro area economy the numbers are finalized. to slowly recover during 2010. We believe the lo- cal economy hit bottom during the 1st half of 2009 Approximately one-third of the Washington metro and recovery is now underway. However, we expect GRP is generated by the Federal government – the the speed of recovery to be slow, as consumers and region’s most important core industry. A core industry companies remain cautious. is one that imports capital and exports a good or ser- vice. Total Federal spending in the Washington metro We expect consumer confidence will edge up moder- area was up in 2008 to $134.8 billion (a revised fig- ately during 2010. Consumer confidence is currently ure from our prior reporting), a 7.8% increase from very low and will remain challenged until healthy job 2007. (See Figure 36) growth is reported. 20 COINCIDENT INDEX CORE ECONOMIC SECTORS WASHINGTON METRO AREA IN CURRENT YEAR DOLLARS Figure 35 1988 - 2009 Figure 36 WASHINGTON METRO AREA Note: Figures are estimates. * At September 2009. Procurement figures do not include US Postal Service and FAA purchases. Source: GMU Center for Regional Analysis, Delta Associates; January 2010. Source: Dr. Stephen Fuller, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  19. 19. THE WASHINGTON REGIONAL ECONOMY AND OUTLOOK We believe GRP declined 0.5% during 2009, once the numbers are finalized. This decline is less severe com- pared to the national decline of 2.5%. The decline lo- cally is due to retail spending and construction – the SECTION EIGHT two hardest hit industries in the metro area, which are taking longer to recover. Conditions should stabilize in 2010 with a GRP rise of 2.7%. This compares to the national GDP rise of a projected 2.5%. Given these factors, in consultation with Dr. Stephen | Fuller of George Mason University, we project that T H E WA S H I N GTO N R E G I O N A L E C O N O M Y A N D O U T LO O K 21,000 payroll jobs were eliminated in the metro area in 2009, once the numbers are finalized, and that 23,900 jobs will be generated in 2010. (See Figure 37) PAYROLL JOB GROWTH WASHINGTON METRO AREA Figure 37 2000 – 2011 Note: Data restated since 2000 consistent with redefinition of metro area in March 2005. 21 Source: Dr. Stephen Fuller, Delta Associates; January 2010. TREND S IN HOUSING YEAR-END 2009
  20. 20. METHODOLOGY SINGLE-FAMILY HOUSING DATA Northern Virginia is defined as Arlington, Fairfax, Fauquier, Loudoun, and Prince William Counties; Alexandria, Fairfax, and Falls Church Cities. Suburban Maryland is defined as Frederick, Montgomery, and Prince George’s Counties. The Washington Metro Area describes all of the jurisdictions listed above and the District of Columbia. The Baltimore Metro Area is defined as Anne Arundel, Baltimore, Carroll, Harford, and Howard Counties; Baltimore City. BUREAU OF LABOR STATISTICS METRO AREA DEFINITIONS COMMERCIAL REAL ESTATE DATA Atlanta Atlanta-Sandy Spring-Marietta, GA Office, Apartments, Condominiums Austin Austin-Round Rock, TX Northern Virginia is defined as Arlington, Fairfax, Boston Loudoun, and Prince William Counties; Alexandria, Boston-Cambridge-Quincy, MA-NH (Metropolitan NECTA) Fairfax, and Falls Church Cities. Chicago Chicago-Naperville-Joliet, IL-IN-WI Suburban Maryland is defined as Frederick, (Non-Metropolitan Division) Montgomery, and Prince George’s Counties. M E T H O D O LO GY Dallas-Fort Worth Dallas-Forth Worth-Arlington, TX The Washington Metro Area is defined by all of the jurisdictions listed above, plus the District of Denver Denver-Aurora, CO + Boulder, CO Columbia. Houston The Baltimore Metro Area is defined as Anne Arundel, Houston-Sugar Land-Baytown, TX Baltimore, Carroll, Harford, and Howard Counties, LA Basin 29 plus Baltimore City. Los Angeles-Long Beach-Glendale, CA (Metropolitan Division) Riverside-San Bernardino-Ontario, CA Santa Ana-Anaheim-Irvine, CA (Metropolitan Division) Retail New York Northern Virginia is defined as Arlington, Fairfax, New York-Northern New Jersey-Long Island, NY-NJ-PA Loudoun, and Prince William Counties; Alexandria, Phoenix Fairfax, and Falls Church Cities. Phoenix-Mesa-Scottsdale, AZ San Antonio Suburban Maryland is defined as Montgomery and San Antonio, TX Prince George’s Counties. San Francisco Bay San Francisco-Oakland-Fremont, CA + San Jose- The Washington Metro Area is defined by all of the Sunnyvale-Santa Clara, CA jurisdictions listed above, plus the District of Columbia. South Florida Fort Lauderdale-Pompano Beach-Deerfield Beach, FL Miami-Miami Beach-Kendall, FL West Palm Beach-Boca Raton-Boyton Beach, FL Washington Washington-Arlington-Alexandria, DC-VA-MD-WV (Non-Metropolitan Division) TREND S IN HOUSING YEAR-END 2009
  21. 21. ABOUT MRIS AND DELTA ASSOCIATES MRIS Delta Associates Metropolitan Regional Information Systems, Inc. (MRIS) Delta Associates, the research affiliate of Transwestern, is the nation’s largest Multiple Listing Service. MRIS is a firm of experienced professionals offering consulting serves nearly 50,000 real estate professionals spanning and data services to the commercial real estate industry Maryland, the District of Columbia, Northern Virginia, for over 25 years. The firm’s practice is organized in four and parts of West Virginia and Pennsylvania – a total of related areas: 22,000 square miles. • Consulting, research and advisory services for Customers currently have access to over 66,000 active commercial real estate projects, including market listings, an archive of 3.1 million “comparable” listings studies, market entry strategies, asset performance and close to 5.5 million public records containing tax, enhancement studies, pre-acquisition due assessment, and deed transfer information about prop- diligence, and financial and fiscal impact erties throughout the region. The cutting edge technol- analyses. ogy designed by MRIS keeps real estate professionals’ business ahead of the curve. • Valuation services for real estate companies and fractional interests in them. MRIS is owned by 25 Shareholder REALTOR® Associa- tions and governed by brokers who rely heavily on input • Distressed asset recovery services to include from the agents, brokers, and shareholders serving on property performance analyses and enhancement A B O U T M R I S A N D D E LTA A S S O C I AT E S vital committees. studies, debt structuring evaluation and note valuations, portfolio assembly due diligence, When measuring both listing and selling agent activity, valuations and litigation support. MRIS subscribers generated more than $36 billion in sales volume and engaged in over 102,000 transactions • Subscription data for select metro regions for in 2008. office, flex/industrial, retail, condominium, and apartment markets. For more information on MRIS, please visit: Delta’s Trends in Housing team includes: Greg Leisch, mris.com Chief Executive; David Weisel, President, Consulting Division; Alexander (Sandy) Paul, National Research Director; and Alyson Bode, Senior Associate. For more information on Delta Associates, please visit DeltaAssociates.com 30 Headquarters Headquarters 9707 Key West Avenue 500 Montgomery St. Suite 200 Suite 600 Rockville, Maryland 20850 Alexandria, VA 22314 301.838.7100 703.836.5700 © 2010 MRIS. All rights reserved. You may neither copy nor disseminate this report. If quoted, proper attribution is required. Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, Census Bureau, Commerce Department, CoStar, Delta Associates, Department of Housing and Urban Development, Dr. Stephen Fuller and John McClain at GMU’s Center for Regional Analysis, Federal Housing Finance Agency, Federal Reserve, Freddie Mac, Internal Revenue Service, Kiplinger’s Personal Finance, Maryland Dept. of Business & Economic Development, Morgan Stanley Research, Mortgage Bankers Association, MRIS, NAHB, NAR, Primary Mortgage Market Survey®, Standard & Poor’s, The New York Times, The Wall Street Journal, The Washington Post, Treasury Department, USA Today, U.S. News & World Report, Washington Business Journal. TREND S IN HOUSING YEAR-END 2009

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