This document summarizes a presentation given by Lawrence Yun at the NAR Midyear Meetings on May 17, 2007. The presentation discusses trends in local real estate markets and forecasts, showing data on housing prices, sales, construction jobs, mortgage rates and delinquencies, and economic indicators in different cities and regions. It also lists the top markets for growth and global livable cities. The key message is that the housing market needs to be analyzed at the local level as conditions vary significantly between areas.

1. Economic Issues and Residential Real Estate Business Trends Forum NAR Midyear Meetings Washington, D.C. May 17, 2007 Lawrence Yun, Ph.D. Senior Economist NATIONAL ASSOCIATION OF REALTORS® All Real Estate is Local : Local Trends and Local Forecasts

2. Home Price Distribution (2006) Source: NAR

3. New York and Los Angeles Source: NAR $ thousand

4. Atlanta and Columbus Source: NAR $ thousand

5. Orlando and Providence Source: NAR $ thousand

6. Local Markets Are All Different Source: NAR $ thousand

7. Typical U.S. Home Price Source: NAR Ten-fold increase over 38 years for the U.S. What multiple in your local area?

8. Soft or Hard Landing? Source: NAR, Dow Jones, NASDAQ Annual % Change

9. NASDAQ Index Source: NASDAQ

10. Where is the Housing Correction?

11. U.S. New Single-Family Construction Source: Census 33% Tumble

12. U.S. Existing-Home Sales Source: Census 11% Retreat In thousand units

13. Investor (Speculative) Home Sales Source: NAR 29% Fall In thousand units

14. Vacation Home Sales Source: NAR In thousand units

15. Investor-Heavy Markets Now Taking a Hit (Existing-Home Sales: 2006 Q4 vs 2005 Q4) Source: NAR

16. Rapid Change in Prices (1-year Home Price Growth) Source: NAR

17. Construction Jobs Now Falling Source: NAR

18. Income of REALTORS ® Source: NAR

19. Housing’s Contribution to Economy Source: BEA % point contribution to GDP

20. Sub-Par Economic Growth Source: BEA

21. Property Taxes, Transfer Taxes, Impact Fees, Recordation Expenses … Local government spending needs = Inflation rate + population growth Inflation rate = about 3% Population growth = -1% to +8% Government Spending Needs On average = 3% + 1% = 4% At most = 3% + 8% = 11% How much has your local government revenue risen?

22. Fight the Bubble

23. Something is Out of Whack! Income and Price set to Index of 100 in 1990 Source: NAR

24. Mortgage Obligation to Income Manageable Source: NAR %

25. Mortgage Obligation to Income Very High in Some Markets San Diego 45% !!! Source: NAR

26. Mortgage Obligation to Income Historically High in Some Markets Miami Way Above Historical Local Norm Source: NAR

27. Mortgage Obligation to Income Manageable in Boston Region Boston Source: NAR

28. Mortgage Obligation to Income Favorable in Louisville Source: NAR 11% Louisville

29. Renters Beginning to Get Squeezed – U.S. Source: Torto-Wheaton Research %

30. Markets Like Phoenix -- Strong in Jobs but Weak in Housing – Feel the Squeeze Source: Torto-Wheaton Research %

31. Subprime Impact

32. Mortgage Delinquencies Source: MBA Job Losses Housing Boom Housing Slump

33. Mortgage Loan Foreclosures: All Action in the Subprime Markets Source: MBA

34. High Delinquencies Source: MBA Katrina Effect Job Troubles

35. High Foreclosures Source: MBA

36. Rising Foreclosures Source: MBA States with Marked Price Deceleration/Declines

37. Falling Foreclosures Source: MBA Mostly Strong Job Growth and Price Appreciating States

38. FHA Market Share …Revival Ahead? Source: HMDA ??? Estimate

39. Jobs Will Buffer the Subprime Fallout

40. Steady U.S. Job Gains 2 Million in Past 12 months Source: BLS Payroll job changes in thousands

41. Wage Growth Picking Up % Source: BLS

42. Job Gains in Boston Region Source: BLS 12-month net payroll job changes in thousands Still down by 100,000 from peak

43. Job Gains in New Orleans Source: BLS 12-month net payroll job changes in thousands Still down by 100,000 jobs compared to pre-Katrina

44. Job Gains in Seattle Region Source: BLS 12-month net payroll job changes in thousands

45. Jobs in Dallas- Ft. Worth Region Source: BLS 12-month net payroll job changes in thousands

46. Job Gains Tampa-St. Petersburg Region Source: BLS 12-month net payroll job changes in thousands

47. Job Gains Phoenix Region Source: BLS 12-month net payroll job changes in thousands

48. Job Gains Washington D.C. Region Source: BLS 12-month net payroll job changes in thousands

49. Jobs: Detroit Region Source: BLS 12-month net payroll job changes in thousands

50. Rates: Near 45-Year Lows Source: Freddie Mac 1970s 9% average 1980s 13% average 1990s 8% average 2000s 6.5% average

51. Stable Mortgage Rates Source: Freddie Mac

52. Mortgage Rates Retreat But Where are the Buyers? Source: Freddie Mac

53. Dow Jones Industrial Average Source: NYSE

54. Record Household Wealth $ trillion Source: Federal Reserve

55. Expanding World Economy Source: World Bank %

56. U.S. vs Foreign Currencies Source: Federal Reserve

57. Housing Comeback Jobs being created Rates at near historic lows Address tax and insurance problems No further artificial swings by speculators Raise buyer confidence Set the record straight: All Real Estate is Local

58. Existing Housing Inventory Source: NAR

59. New-Home Inventory Source: Census

60. Mortgage Purchase Applications Source: MBA Index

61. Price Correction – Ending? Source: NAR Percent change from a year ago

62. Improving Housing Affordability Source: NAR

63. Housing Market Tracker Based on Real-Time Data from MLSs Sweeping real-time data daily from 14 metro markets Providing early signals on market direction Soon, will sweep data at more frequent intervals – hourly or at every 15-minutes Will sweep data from more MLSs over time To be on Realtor.org site in July (estimated )

64. Latest Daily Home Sales Tracker: Becoming Less Negative Source: NAR

65. Latest Daily Home Price Tracker: Also Less Negative Source: NAR

66. Latest Daily Inventory Tracker: Modest Tightening in Months Supply Source: NAR

67. Economic Outlook The Fed cuts rate in early 2008 4.8% 2.5% 4.6% 2.1% 2007 5.0% 4.8% 10-year Treasury 2.5% 3.2% CPI Inflation 4.8% 4.6% Unemployment Rate 3.0% 3.3% GDP 2008 2006

68. National Housing Outlook -1.0% 5.5% 6.4% 1.46 million 0.86 million 6.29 million 2007 1.4% 1.0% Existing-Home Price Growth 5.1% 5.5% 1-Year ARM 6.7% 6.4% 30-Year FRM 1.52 million 1.80 million Housing Starts 0.94 million 1.05 million New Home Sales 6.49 million 6.48 million Existing-Home Sales 2008 2006

69. Local Forecasts: Who Will be on Top?

70. Top Five Markets (in random order) Nashville Austin Salt Lake City Denver Raleigh-Durham Watch out for these small markets St. George, UT Myrtle Beach, SC

71. Top Global Livable Cities (Ranked by Economist Intelligence Unit) Vancouver 26. Cleveland 26. Pittsburgh Honolulu 33. Boston Chicago 33. Miami Seattle Others: Atlanta, D.C., Detroit, Houston

72. Best Evidence: Household Wealth Accumulation Source: Federal Reserve Median Net Worth $184,400 $4,000

73. Economic Issues and Residential Real Estate Business Trends Forum NAR Midyear Meetings Washington, D.C. May 17, 2007 Lawrence Yun, Ph.D. Senior Economist NATIONAL ASSOCIATION OF REALTORS® All Real Estate is Local : Local Trends and Local Forecasts