Reamiamibeach Keeping Curren 2007 10

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    October 2007

    Keeping Current Matters

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    Supply

    December 2003 August 2005 July 2007

    Months supply of inventory on the market

    9

    8

    7

    6

    54

    3

    2

    1

    Source: NAR

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    Inventory vs Sales -Aug

    3,119

    36,309

    Inventory Sales

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    Demand

    Ho

    usessoldinmillions

    5

    5.5

    6

    6.5

    7

    7.5

    Source: NAR

    2007 NAR Projections (month to month)Actual Sales

    2004 2005 2006 Jan Feb March April May June July Aug

    Actual sales August 2006 vs. August 2007 were off12.8%

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    9/29/2007

    Demand

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    Nationally, Moody's is projecting an average price declineof 7.7 percent. That's a jump from the 6.6 percent totalprice drop that the company was forecasting in June andmore than twice that of last October's forecast of a 3.6percent price decrease.

    "The housing market is in a free fall," said Mark Zandi,chief economist with Moody's Economy.com

    9/28/2007

    Value

    http://www.ocregister.com/
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    Since 1994, Kenneth Heebner, has managed the $1.7 billionCGM Realty Fund. It has the best 10-year record of all real-estate-focused mutual funds, up an average 19.7% a yearduring the past decade, according to Morningstar Inc.

    Fall 2006: I see about a 50% decline in the inflatedcoastal markets.

    September 2007: I think the decline in housing priceswill be broader and deeperthan I originally thought.

    9/10/2007

    - as quoted in the Wall Street Journal

    Value

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    "In markets where home prices almost doubled infour years, you could easily see price cuts of20% to 30%," said Thomas Lawler, a housingeconomist based in Vienna, Va.

    Value

    9/22/2007

    http://online.wsj.com/home
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    9/2007

    Value

    Ms. ZelmanPresidentZelman & Associatesa housing related research firm

    "This recession in housing is more severe than the 1990and 1991 downturnand it will be longer in duration."

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    Alan Greenspan, the former chairman of the FederalReserve, told the Financial Times that US house prices arelikely to fall significantly from their present levels and thedecline "is going to be larger than most people expect."

    9/16/2007

    Value

    http://www.ft.com/
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    Goldman Sachs noted that it is bearish on the housing

    market seeing home prices 13% to 14% over-valued.

    Goldman is of the opinion that it could take "several"years for home prices to reach fair value.

    Value

    9/9/2007

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    Challenge is good for the soul!

    It is the Law that any difficulties

    that can come to you at any time,

    no matter what they are, must be

    exactly what you need most at the

    moment, to enable you to take the

    next step forward by overcoming

    them. The only real misfortune,the only real tragedy, comes

    when we suffer without learning

    that lesson."- Emmet Fox

    I could have just used my imagination !

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    Value

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    9/29/2007

    Value

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    Rates

    5.5

    6

    6.5

    7

    7.5

    8

    8.5

    2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

    Source for historical rates: Freddie Mac

    http://www.freddiemac.com/
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    Rates

    Source: HSH

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    U.S. Mergers and Acquisitions in 2007

    The Fed Cut

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    9/19/2007

    The Fed Cut

    http://online.wsj.com/home
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    With unusual flair, the Federal Reserve slashed short-term interest rates by a more-than-expected 1/2 point.The average 30-year fixed-rate mortgage respondedby rising, closing the nation's leading survey of

    mortgage prices at an average 6.80%.9/21/2007

    The Fed Cut

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    Mortgage Crisis

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    The benefits of a better FICO score are dramatic for mortgages. Raising ascore from a range of 580-619 to 660-699 could save someone with a 30-year, $300,000 fixed mortgage $5,148 in one year, according to FairIsaac's Web site.

    Mortgage Crisis

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    Up 115% from

    last August!The jump in foreclosure filingsthis month might be thebeginning of the next wave ofincreased foreclosure activityRealtyTrac Chief ExecutiveJames J. Saccacio said.

    Foreclosures

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    First American Corp.s Christopher Cagan has doneresearch which investigates the correlation between

    foreclosures as a percentage of total sales and the sizeof the discount buyers typically receive when purchasing

    foreclosure properties. For example, in areas whereforeclosure sales accounted for 0.5 percent of total sales,the median discount was 3.8 percent; whereas in areas

    where foreclosures made up 8.9 percent of sales, the

    median discount was 20.0 percent.

    Foreclosures

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    As of June 30, the non-owner occupied (loans to buyerswho do not plan to live in the house) share of defaultedloans (90 days of more past due or in foreclosure) was 32percent in Nevada, 25 percent in Florida, 26 percent inArizona and 21 percent in California, compared with 13percent in the rest of the nation. These investors aremuch more likely to default on their mortgages if they

    see the value of their investments falling due to falling

    home prices.

    Vacancy Rate

    9/6/2007

    http://www.mbaa.org/
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    FOR ACCIDENTAL LANDLORDS

    Here's some advice for novices from property managers, agents and other experts:

    Talk to the neighbors: Make sure they know you'll be renting and encourage them to tell you aboutany issues that come up. Then check back in from time to time to make sure everything's working out.

    Know the laws: State and local governments regulate everything from how many smoke detectors

    must be installed in a house to how long landlords have to return tenants' security deposits. Failing toknow the rules can lead to lawsuits, civil penalties or worse.

    Keep up with maintenance: Many owners assume that since a property is a rental, they don't need toworry about routine maintenance. Not so, say experts. Keeping up with repairs will help draw bettertenants and will prevent bigger maintenance bills down the line.

    Study the market: Rental agents say many landlords set their rents based on their expenses, ratherthan on what the market will bear. Then they wonder why their units don't rent.

    Vet prospective tenants: Credit scores alone aren't enough. Dig into credit reports, verify income andmake sure to call references. But make sure not to run afoul of discrimination laws, which bar landlordsfrom rejecting tenants based on age, marital status and other factors.

    --Ben Casselman

    9/21/2007

    Vacancy Rate

    http://online.wsj.com/home
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    The Good News

    0

    10

    20

    30

    40

    The graph shows theamount of subprime

    adjustable-ratemortgages hittingresets(in billions of dollars)

    Source: First American

    2007 2008

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    9/24/2007

    Countrywide Financial Corp, the largest U.S. mortgage lender,said on Monday it expects to modify terms on nearly 25,000home loans this year to help people avoid foreclosures. The

    company said it has already modified more than 17,000 homeloans this year, and provided assistance on about 35,000

    mortgages, including through repayment plans, postponementsof payments and refinancings.

    The Good News

    http://www.reuters.com/home
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    It proves there is a pent up demand. There are home

    buyers out there who are willing to buy a home if

    they think they are getting an attractive price.

    Larry Sorsby, CFO

    After selling 2,100 homes in three days(10 times greater than their weekly average)

    during a 30% off sale.

    The Good News

    http://www.khov.com/Home/Brands/KHV/BrandHome.htm