The document provides an economic outlook and analysis of international markets from Lawrence Yun, Chief Economist at the National Association of Realtors. It includes the following key points: 1) Existing home sales in the US are recovering, with the best year in 5 years, though investors currently make up a larger share of the market than owner-occupants. 2) Housing demand is rising in Miami, though with fewer homes for sale, while home prices are increasing substantially in Miami and Phoenix. 3) The visible housing inventory in the US is at an 8-year low while new construction is at a 50-year low, indicating a shortage. 4) Most Miami realtors have worked

1. Economic Outlook
and
International Markets
Lawrence Yun, Ph.D.
Chief Economist
NATIONAL ASSOCIATION OF REALTORS®
Presentation at Miami International Real Estate Congress
Miami, Florida
November 6, 2012

2. Existing Home Sales Recovery:
Best in 5 years
8
In million units
7 7.08
6 6.52
5
5.02
4 4.62
4.12 4.34 4.18 4.26
3
2
1
0
2005 2006 2007 2008 2009 2010 2011 2012
est.

3. Investors in the Market;
and Homeowner buyers Neutral
Investor Sales In thousands
2500
2000
1500
1000
500
0
2005 2006 2007 2008 2009 2010 2011 2012 est.
Owner-occupant Sales In thousands
6000
5000
4000
3000
2000
1000
0
2005 2006 2007 2008 2009 2010 2011 2012 est

4. 25,000
29,000
31,000
33,000
35,000
39,000
41,000
27,000
37,000
1980 - Q1
1981 - Q3
1983 - Q1
1984 - Q3
1986 - Q1
1987 - Q3
1989 - Q1
1990 - Q3
1992 - Q1
1993 - Q3
1995 - Q1
1996 - Q3
1998 - Q1
Rental Households
1999 - Q3
2001 - Q1
2002 - Q3
2004 - Q1
2005 - Q3
2007 - Q1
2008 - Q3
2010 - Q1
2011 - Q3
Investors also seeing rising # of renters

5. 0
1
2
3
4
5
-1
2000 - Jan
2000 - Jul
2001 - Jan
2001 - Jul
2002 - Jan
2002 - Jul
2003 - Jan
2003 - Jul
2004 - Jan
2004 - Jul
2005 - Jan
2005 - Jul
2006 - Jan
2006 - Jul
2007 - Jan
2007 - Jul
2008 - Jan
% change from one year ago
2008 - Jul
2009 - Jan
2009 - Jul
2010 - Jan
2010 - Jul
Investors seeing Rising Rent
2011 - Jan
2011 - Jul
2012 - Jan

6. Visible Housing Inventory
(Existing inv. At 8-year low; New inv. at 50-year low)
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
- Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan
Existing New

7. Miami Housing Demand
Miami Housing Demand
• 2011 Record High Home Sales
• 2012 slight decline (down 3%)
Lower Transactions because of Fewer Inventory
• 24% fewer homes on the market for sale
Shorter Days on Market
• median days on market is only 43 days
Source: MAR

8. Home Prices Rising
Miami up 7% from one year ago
Phoenix up 19% from one year ago
300
250
Phoenix
200
150
Miami
100
50
0
Source: Case-Shiller

9. 0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.5
5.0
4.0
2000 - Q1
2000 - Q3
2001 - Q1
2001 - Q3
2002 - Q1
2002 - Q3
2003 - Q1
2003 - Q3
2004 - Q1
2004 - Q3
2005 - Q1
2005 - Q3
2006 - Q1
2006 - Q3
2007 - Q1
2007 - Q3
2008 - Q1
2008 - Q3
2009 - Q1
2009 - Q3
million units
2010 - Q1
2010 - Q3
2011 - Q1
2011 - Q3
2012 - Q1
Shadow Inventory … Falling
2014 … 8%
(Seriously delinquent mortgage + homes in foreclosure process)
2013 … 15%
2012 … 25%
2011 … 33%
2010 … 33%
Market Share
Distressed Sales

10. 0
2
4
6
8
10
12
14
%
2005 - Q1
2005 - Q2
2005 - Q3
2005 - Q4
2006 - Q1
2006 - Q2
2006 - Q3
2006 - Q4
2007 - Q1
2007 - Q2
2007 - Q3
2007 - Q4
AZ
2008 - Q1
2008 - Q2
2008 - Q3
MI
2008 - Q4
2009 - Q1
2009 - Q2
CA
2009 - Q3
2009 - Q4
2010 - Q1
2010 - Q2
in Non-Judicial States
2010 - Q3
2010 - Q4
2011 - Q1
Foreclosures Rapidly Falling
2011 - Q2
2011 - Q3
Example: Seriously Delinquent Mortgages in AZ, CA , MI
2011 - Q4
2012 - Q1
2012 - Q2

11. 0
2
4
6
8
10
12
%
2005 - Q1
2005 - Q2
2005 - Q3
2005 - Q4
2006 - Q1
2006 - Q2
2006 - Q3
2006 - Q4
2007 - Q1
• Vacant property
2007 - Q2
2007 - Q3
2007 - Q4
2008 - Q1
2008 - Q2
CT
2008 - Q3
2008 - Q4
IL
2009 - Q1
2009 - Q2
2009 - Q3
2009 - Q4
2010 - Q1
2010 - Q2
• Missed Mortgages for 6 months or longer
2010 - Q3
2010 - Q4
2011 - Q1
2011 - Q2
2011 - Q3
Example Seriously Delinquent Mortgages in CT and IL
2011 - Q4
2012 - Q1
Foreclosures Clogged in Judicial States
2012 - Q2
Should a trigger be set up to foreclose without a court approval?

12. 0
5
15
20
25
10
%
2005 - Q1
2005 - Q2
2005 - Q3
2005 - Q4
2006 - Q1
2006 - Q2
2006 - Q3
2006 - Q4
2007 - Q1
2007 - Q2
2007 - Q3
2007 - Q4
2008 - Q1
2008 - Q2
2008 - Q3
2008 - Q4
2009 - Q1
2009 - Q2
2009 - Q3
2009 - Q4
2010 - Q1
Shadow in Florida
2010 - Q2
Seriously Delinquent Mortgages
2010 - Q3
2010 - Q4
2011 - Q1
2011 - Q2
2011 - Q3
2011 - Q4
2012 - Q1
2012 - Q2

13. 500
1000
1500
2000
2500
0
2000 - Jan
2000 - Jul
2001 - Jan
2001 - Jul
2002 - Jan
Source: Census, HUD
2002 - Jul
2003 - Jan
2003 - Jul
Thousand units (annualized)
2004 - Jan
2004 - Jul
2005 - Jan
multifamily
2005 - Jul
2006 - Jan
2006 - Jul
2007 - Jan
2007 - Jul
single-family
Housing Starts
2008 - Jan
2008 - Jul
2009 - Jan
2009 - Jul
2010 - Jan
2010 - Jul
2011 - Jan
(Well Below 50-year average of 1.5 million each year)
2011 - Jul
2012 - Jan
Long-term Average

14. Miami - Ft. Lauderdale Metro
Housing Permits
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
1990
2000
1980
1982
1984
1986
1988
1992
1994
1996
1998
2002
2004
2006
2008
2010
2012

15. Most Miami REALTORS® Have Worked with an
International Client in the Past 12 Months

16. 2012 International Survey
Realtors® with International Clients
Percentage of Respondents
40%
38%
36%
34%
32%
32%
30%
28% 28% 27%
28%
26%
26%
23%
24%
22%
20%
2007 2008 2009 2010 2011 2012

17. Global Buyers buying Where?
Percent of International Sales by State
35%
30%
25%
20%
15%
10%
5%
0%
Arizona California Florida Georgia Nevada New York Texas
2007 5% 16% 10% 2% 2% 4% 8%
2008 5% 11% 9% 3% 2% 4% 7%
2009 7% 13% 23% 1% 1% 2% 11%
2010 11% 12% 22% 5% 3% 4% 8%
2011 6% 12% 31% 2% 2% 3% 9%
2012 7% 11% 26% 4% 2% 4% 7%

18. Global Buyers from Where?
Percent of International Sales by Country
30%
25%
20%
15%
10%
5%
0%
Brazil Canada China France Germany India Japan Mexico Russia U.K.
2007 2% 11% 5% 3% 3% 6% 1% 13% 1% 12%
2008 2% 24% 8% 3% 4% 6% 1% 9% 2% 12%
2009 1% 18% 5% 2% 4% 9% 1% 10% 1% 11%
2010 1% 23% 8% 3% 4% 5% 1% 10% 3% 9%
2011 3% 23% 9% 3% 4% 7% 1% 7% 1% 6%
2012 3% 24% 11% 3% 3% 6% 1% 8% 2% 6%

19. Responses to How Do You Get Most of Your Clients?
Personal Contacts, Previous Clients, Online Marketing
Important in Obtaining Clients

20. Economy Growing, though Slowly
(No Fresh Recession because of Housing Recovery)
Real GDP Growth Rate
4
%
3
2
1
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
-1
forecast forecast
-2
-3
-4

21. Payroll Jobs Changes
(December to December)
3
In millions
2
1
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
-1
forecast forecast
-2
-3
-4
-5
-6

22. Unemployed and Underemployed
… 6 to 7 million more than normal
In thousands
Source: BLS 22

23. Florida Jobs
Slowly Coming Around
In thousands
8200
8000
7800
7600
7400
7200
7000
6800
6600
6400
6200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
- Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan - Jan

24. 1000
2000
4000
5000
6000
7000
9000
3000
8000
0
1939 -…
1942 -…
1945 -…
In thousands
1948 -…
1951 -…
1954 -…
1957 -…
1960 -…
1963 -…
1966 -…
1969 -…
1972 -…
1975 -…
1978 -…
1981 -…
1984 -…
1987 -…
1990 -…
Nonfarm Payroll Jobs
1993 -…
1996 -…
Florida Jobs from 1940
1999 -…
2002 -…
2005 -…
2008 -…
2011 -…
(When will the state run out of land?)

25. 1,000
1,500
2,000
2,500
3,000
3,500
500
0
2005 - Jan
2005 - Jun
2005 - Nov
2006 - Apr
2006 - Sep
2007 - Feb
2007 - Jul
2007 - Dec
2008 - May
2008 - Oct
2009 - Mar
2009 - Aug
2010 - Jan
2010 - Jun
2010 - Nov
2011 - Apr
2011 - Sep
S&P 500 (Almost 100% from low point)
2012 - Feb
NASDAQ (More than 100% increase from low point)
S&P 500
NASDAQ

26. 0.0
10.0
40.0
50.0
60.0
70.0
30.0
20.0
2008 - Jan
2008 - Apr
2008 - Jul
2008 - Oct
2009 - Jan
2009 - Apr
2009 - Jul
2009 - Oct
Buyer
2010 - Jan
2010 - Apr
2010 - Jul
2010 - Oct
Seller
Foot Traffic
2011 - Jan
2011 - Apr
2011 - Jul
2011 - Oct
2012 - Jan
2012 - Apr
2012 - Jul

27. 75
85
95
105
110
115
70
80
90
100
2007 - Jan
2007 - Apr
Source: NAR
2007 - Jul
2007 - Oct
2008 - Jan
2008 - Apr
2008 - Jul
2008 - Oct
Homebuyer Tax Credit
2009 - Jan
2009 - Apr
2009 - Jul
2009 - Oct
2010 - Jan
2010 - Apr
(Seasonally Adjusted)
2010 - Jul
2010 - Oct
2011 - Jan
2011 - Apr
2011 - July
2011 - Oct
2012 - Jan
2012-Apr
2012 - Jul
Monthly Pending Home Sales Index

28. Housing Recovery Occurring
• Tight Access to Mortgage
• More All-Cash purchases
• What happens when Mortgage Accessibility
Opens Up?

29. -200
-100
0
100
200
300
400
500
2001 - Q1
$ billion
2001 - Q3
2002 - Q1
2002 - Q3
2003 - Q1
2003 - Q3
2004 - Q1
2004 - Q3
2005 - Q1
2005 - Q3
2006 - Q1
2006 - Q3
2007 - Q1
2007 - Q3
2008 - Q1
(excluding Federal Reserve)
2008 - Q3
2009 - Q1
2009 - Q3
Financial Industry Profits
2010 - Q1
2010 - Q3
2011 - Q1
2011 - Q3
2012 - Q1

30. Monetary Policy by Federal Reserve
(no change to 2014)
Fed Funds 30-year Mortgage
%
7
6
5
4
3
2
1
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
forecast forecast forecast
Modestly higher rates could help home sales as banks re-staff mortgage
work for home purchase applications and less refinance applications.

31. Consumer Price Inflation
(Slightly Above Fed’s preferred 2% core inflation rate)
All Items Core
%
5.00
4.00
3.00
2.00
1.00
0.00
2005 2006 2007 2008 2009 2010 2011 2012 2013
-1.00 forecast forecast

32. Risks to Forecast
• Washington Policy
– QRM 20% down payment requirement?
– Basel 3 … capital rule that punishes private mortgage with
low down payment and commercial loans
– Trim mortgage interest deduction?
– Capital gains tax on home sale?
– Fiscal Cliff on January 1, 2013 … if no new compromised
budget, then:
• Automatic deep cuts to military and domestic spending
• Automatic higher taxes
• 3% shaved off GDP … Fresh Economic Recession

33. Forecast Summary
2011 2012 2013
History Forecast Forecast
Existing Home Sales 4.26 million 4.64 million 5.05 million
New Home Sales 301,000 368,000 575,000
Housing Starts 612,000 776,000 1,128,000
Existing Home Price $166,100 $176,100 $185,200
GDP Growth +1.8% +2.1% +2.5%
Payroll Job Gains +1.7 million +1.7 million +2.2 million
Fed Funds Rate 0.1% 0.1% 0.1%
30-yr Mortgage 4.7% 3.7% 4.0%

34. Existing Home Sales
In million units

35. Median Home Price

36. Commercial Real Estate

37. Commercial Investments
Sales Slow in 2012.Q3
billions $ Volume Source: Real Capital Analytics
$80
$70
$60
$50
$40
$30
$20
$10
$0
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12
200% Year-Over-Year % Change
100%
0%
-100%
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

38. Commercial Investments
Cap Rates Continue Downward Trend
Avg Cap Rates by Sector
10.0%
9.5%
Sub - Office
9.0% Industrial
8.5%
Retail
8.0%
7.5%
7.0%
6.5%
6.0% CBD - Office
Apartment
5.5%
Source: Real Capital Analytics
5.0%
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

39. 110
130
150
170
190
210
90
2000 December
April
August
2001 December
April
August
2002 December
April
August
2003 December
April
August
2004 December
Apartment
April
August
2005 December
April
Retail
August
2006 December
April
August
2007 December
Industrial
April
August
Moody's/RCA CPPI - Composite Indices
2008 December
April
Office
August
2009 December
April
August
2010 December
April
August
Commercial Investments—Apartment Prices Rise
2011 December
April
Source: Real Capital Analytics

40. Global Economy

41. 50000
100000
150000
200000
250000
0
1992 - Jan
1993 - Feb
1994 - Mar
1995 - Apr
1996 - May
1997 - Jun
1998 - Jul
1999 - Aug
2000 - Sep
2001 - Oct
2002 - Nov
2003 - Dec
2005 - Jan
2006 - Feb
2007 - Mar
2008 - Apr
2009 - May
2010 - Jun
U.S. International Trade
(Doubles every 10 years)
2011 - Jul
2012 - Aug
Exports
Imports

42. Economic Growth
Country GDP Growth
2012 forecast
U.S. 2%
Canada 2%
Mexico 4%
Brazil 1%
U.K. 0%
France 0%
Germany 1%
EU overall -1%
Russia 4%
India 6%
China 8%
Japan 2%

43. 10-Year Government Borrowing Rate
Country 10-Year Interest Inflation Rate
Rate
U.S. 1.7% 2.0%
Canada 1.8% 1.2%
Mexico 7.7% 4.1%
Brazil 9.7% 5.3%
U.K. 1.8% 2.2%
France 2.2% 1.9%
Germany 1.5% 2.0%
EU overall n/a 2.5%
Russia 7.7% 5.1%
India 8.2% 9.7%
China 3.2% 1.9%
Japan 0.8% -0.3%

44. Rising World Population
10
9 In billion
8
7
6
5
4
3
2
1
0
1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100

45. For Daily Update and Analysis
• Twitter
@NAR_Research