2010 12-07 international forum

transcript

December 7, 2010

NVAR International Year-End

Celebration

What’s happening in our market?• Northern Virginia market:

– In some ways we are like the rest of the country

– In others ways we are very different– And in many ways, we have one of the best

markets in the nation!

Have we hit the bottom?-Indicators say “yes” and “no”!

-Recovery is slow and painful

-First time buyers and cash investors drove first half of 2010 recovery

-Prices up, inventory weak but we see fewer short sales (thank goodness)

Today’s Real Estate Market

• 30-year mortgage rate is at generational lows, under 5%

• National median-home price is stabilizing, $170,000

• Inventory is still very high• Foreclosures more of a problem than

short sales

Source: NAR

The U.S. market today• The economy is growing….slowly

• The private sector is finally creating some jobs, corporate profits are up

• Consumer confidence remains low, though clearly off bottom

Source: NAR

Local Signs of RecoveryHome prices stabilizing with small increases

Investors still purchasing inventory with cash

Job losses and unemployment show improvement in our region

Economy will continue to slowly expand in 2011

Source: Gerald L. Gordon ,PH.DPresident and CEO, Fairfax County Economic Development Authority

Recent Major Economic Development Activity in Fairfax County

• Northrop Grumman selects Fairfax County for new corporate headquarters, joining

• CSC• Hilton Worldwide• Science Applications International Corporation• Volkswagen of America• More on the way!

Northern Virginia Market • Population is growing• New jobs are being created• Unemployment around 5% and (would

be lower if population were not growing)• Prices up, inventory steady• Foreclosure/Short Sales market

shrinking

Unemployment rate is only 4.5%

Our schools provide a quality workforce

Our area has the highest median family income in the U.S.

Major companies relocated here, VW, Hilton, CSC, SAIC………

Listed as one of the safest communities in America

Source: Jerry Gordon, President and CEO of the Fairfax EDA

Benefits of Living in Fairfax County

NVAR home prices starting to rise

NVAR statistics on pricesRecord high $569,826 June, 2007Record low $376,669 Jan., 2009

2010 first half average sales price - $472,762

October average sales price- $ 470,882• Over 7% increase over last year

NAR: Record number of first-time homebuyers(Survey finds most buyers applied for tax credits)

• First-time homebuyers accounted for half of all home sales from July 2009 through June 2010 based on 8,449 responses to a survey sent nationwide. This is the highest share of first-time-buyer purchases in the history of the survey, which dates back to 1981.

Tax Credit was Huge Success1 million additional buyers1 million fewer inventory unitsReduced months supply by 2 to 2.5 monthsPreserved Housing Wealth by nearly $1 trillionLimited future foreclosures

Long Standing Housing Policy• Mortgage Interest Deduction

– If eliminated, estimated about a 15% loss in home values

• FHA– Self-financing without ever needing taxpayer

funds, but threatened• Fannie and Freddie

– Made big mistakes and need to be restructured

Home Ownership Matters Campaign

• Aggressive media & consumer outreach

• Research, white papers

• Coalition building

Support NAR's Call For Action by calling your Representatives to ask their help in defending home ownership and the Mortgage Interest Deduction.

They need to hear from YOU today.

realtoractioncenter.com/realtor-party/click-to-call-midFor more info, please visit

• Suggested Talking Points

I am a constituent and a REALTOR®.

I have been on the front lines of the housing crisis.

I can assure you that even talk of changing MID harms an already fragile market.

I am strongly opposed to the Deficit Commission's proposal to limit or eliminate the Mortgage Interest Deduction.

News reports saying that Congress threatens to repeal or limit MID will keep potential buyers on the sidelines and further delay the housing recovery.

Suggested Talking Points

• Please oppose any efforts to reduce or eliminate the Mortgage Interest Deduction in any future deficit reduction proposals or legislation.

• Thank you for helping to ensure the ongoing recovery of the housing market.

• As a member of the National Association of REALTORS®, I appreciate your belief that home ownership matters.

• If you call outside of office hours, please leave a voice mail communicating the message above.

Public Awareness Campaign: What Matters Most ?

• “What Matters Most ?” reminds homeowners, buyers and sellers alike that homeownership remains the foundation of the American Dream. The advertising materials underscore the value that REALTORS® bring to communities and their clients, and explain that REALTORS® are prepared—to show you options, answer your questions and guide you home.

NAR Real TV ad let’s watch

Why Buy?• Get a good deal now

• Low mortgages

• Save on taxes

• It’s yours!

• A better home

• Forced savings

• A lot to choose from

• Sooner or later -- the market will clear

Homeownership Rate for Selected Years (1900 – 2010)

First-time Buyers

MedianHousehold

Income$59,900

MedianAge30

Median Square Feet

Home Owners' Net Worth Is More Than 40 Times That of

Renters

Housing Wealth Gains

Economists Expect Price Increases in Upcoming Years

Northern Virginia Region already beyond these national estimates

San Diego Orange Cty Boston Houston Buffalo Washington Columbia

% change from one year ago

Source: Lawrence Yun, Ph.D.,Chief Economist and Senior Vice-President of NAR

Sample Markets with Price Increases

Home SalesDipping in 3rd quarter of 2010, then rising

Pending Contracts on Existing Homes

708090

100110120130

Tax Credit Impact

Existing Home Sales

Source: NAR

Housing StartsGradually rising

New Homes Construction

500,000new starts

in 2010

2.1 millionIn 2006

Future Housing Shortage?Year Housing Starts Historical Normal Cumulative

Surplus/Deficit

2003 1.85 million 1.6 million + 0.25 million

2007 1.34 million 1.6 million +1.02 million

2009 0.55 million 1.6 million - 0.73 million

2010 forecast 0.68 million 1.6 million -1.65 million

2011 forecast 0.95 million 1.6 million - 2.30 million

Source: Lawrence Yun, Ph.D.,Chief Economist and Senior Vice-President of NAR

Dr. Yun’s predictions

• “Over the next 12 months, I will be watching Lexington, KY and Washington, DC to outperform the rest of the country”!

• May, 2010

County Active New Pending Sold AverageSale

MedianSale

Alexandria City 907 242 179 120 $462,796 $435,500

Arlington County

938 310 183 172 $558,039 $506,250

Fairfax City 121 41 26 19 $381,000 $375,000

Fairfax County 5220 1499 1199 911 $456,433 378,000

Falls Church City

59 22 14 7 $592,257 $488,400

NVAR Counties- October, 2010 Stats

Supply and Demand (NVAR)

2010 Sold Listings October

1,9011,498

1,1231,457 1,604

2004 2005 2006 2007 2008 2009 2010

1,2321,604 1,6011,542

2006 2007 2008 2009 2010

2010 Under Contracts October

2010 Ave. Sales Price (NVAR) October

$520,829

$427,502 $424,510

$524,236$470,882

100,000

200,000

300,000

400,000

500,000

600,000

2006 2007 2008 2009 2010

Record High- $578,689 (June 2006)Record Low- $376,669 (January 2009)

Economic GrowthSlow growth, but still

positive

NAR Challenges in the Coming Years

• Ensure flow of capital into the Real Estate market

• Creating access to affordable property insurance

• Preserving the value of homeownership• Improving professionalism of REALTORS®• Fighting the attack on Home Ownership• MID……are you ready for the fight?

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Happy Holidays