Presentable Market Data

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1 Presentable Market Data Chuck Carr 2317 Briarleigh Way Dunwoody, GA Office: Cell:

2 Current Market Overview Understanding three views of the current market allows Buyers to maximize their ability to evaluate properties, receiving the highest value in their home search and Sellers to position their property to maximize money in their pocket while minimizing time on market: Macro View: National Market National Media Coverage Metro View: Atlanta Market Quarterly FMLS Market Report Micro View: Your Community Comparative Market Analysis

3 Metro Areas Included Cherokee Forsyth 36 FMLS Areas Douglas E. Cobb N. Fulton Gwinnett W. Cobb Inside Perimeter DeKalb Paulding

4 Keller Williams Realty continues to rank number 2 in total sales of Condos, Townhomes and single family detached homes Keller Williams is the only top five company to increase its Atlanta market share every year since 2003, in all types of markets

5 Cumulative monthly sales of single family detached houses continue to lag further behind those of 2007 through 1Q 2008 Through 1Q 2008, sales are -33.8% compared to 1Q 2007

6 2008 sales were lower in each month, compared to the same months in 2007 March 2008 sales will continue to increase somewhat as lag processing catches up, but will remain significantly lower than in either of the last two years

7 Metro Atlanta sales of detached residences were down substantially in 1Q 2008, compared to both 1Q 06 and 1Q 07 The trend toward market slowing accelerated during 2007, continuing with larger quarterly percentage declines each quarter, through 1Q 2008

8 Segmenting sales by price range shows that,while all price ranges were lower, except the $2.0M+ segment, the $200K- $749K ranges had the largest percentage declines Sales in the price range above $2.0M nearly doubled, although the numbers are very small

9 The rate of decline in number of home sold, vs. the same quarter one year earlier, has accelerated since the early 2007

10 Not all segments of the Atlanta home market have declined in 2008 and the degree of slowing varies by segment For example, sales of New homes priced in the $2.0M+ range increased compared to those of the comparable 2007 period The largest impact of market slowing came in sales of homes in the $200K-$749K price ranges Overall, 1Q 2008 sales were down 34% compared to 1Q 2007 NEW <$200K 197 (-33%) RESALE 3,336 (-27%) TOTAL 3,533 (-27%) $200- $499K 699 (-42%) 2,093 (-40%) 2,792 (-41%) $ K 122 (-38%) 298 (-39%) 420 (-39%) Comparison to 1Q 2007: 1Q 2008 Sales $750- $999K 52 (-34%) 89 (-13%) 141 (-22%) $1.0- $1.9M $2.0M+ Total 49 (-33%) 60 (-33%) 109 (-33%) 12 (+140%) 17 (+21%) 29 (+53%) Better Same Worse 1,131 (-39%) 5,893 (-33%) 7,024 (-34%)

11 Median sales prices declined for the first time in 1Q 2008 The median of sales price in 1Q 2008 was -6.6%, compared to 1Q 2007 This decline is due to a change in the mix of homes sold to the lower price ranges

12 The mix of sales by price range shifted toward lower-priced homes in 1Q 2008 Homes which sold for less than $200K represented nearly 5% more of the homes sold in 1Q 2008 compared to 1Q 2007, while the percentage of those selling at prices above $200K dropped by a like percentage With sales of lowerpriced homes representing a larger portion of total home sales, the median sales price fell in 1Q 2008

13 The median sales price as a percentage of original list price has continued the decline started in 4Q 2006 The slower market environment forces Sellers to negotiate away more of their original listing price The 1Q 2008 median S/L price ratio of 93% is the lowest recorded in the last three years

14 The median % S/L price ratio normally declines in the higher price ranges 1Q 2008 sales show that market slowing has decreased the median S/L price ratio in all price ranges, with the greatest decline falling in the <$200K price range and the lowest overall ratio falling in the $1.0M-$1.9M price range

15 It appears from this chart that Sellers are continuing to set original listing prices at levels above what the market will pay The monthly trend since January, 2007, is toward lower S/L percentages, with Sellers having to negotiate larger decreases from their asking prices

16 The median of Days- On-Market (DOM) increased in each quarter of 2007 and remains at the high levels of 1Q and 4Q 2007 The 4Q 2007 median DOM was the highest of any quarter in the last 3 years and 1Q 2008 was nearly as the same

17 Higher priced properties normally take longer to sell than lower priced properties Despite the overall high level of time on market, small YTD decreases in median DOM occurred in all price segments, except the <$200K price range, where the increase was only 8%

18 Looking at market segments by New/Resale and sales price range, reveals that median days on market decreased in nearly all segments, vs. the comparable year-ago period NEW <$200K 132 Days +15% 1Q 2008 Days on Market $200- $499K 124 Days -5% $ K 135 Days -12% $750- $999K 157 Days -13% $1.0- $1.9M $2.0M+ Total 132 Days -28% 129 Days -62% 128 Days -4% The <$200K price 76 Days 70 Days 78 Days 89 Days 114 Days range increased slightly RESALE +10% -4% -14% -18% -6% for both new and resale homes and with the largest number of 77 Days 80 Days 93 Days 116 Days 127 Days TOTAL +8% -5% -14% -6% -11% homes being sold in that range, it weighted the overall median Comparison to 1Q 2007: DOM to 80 days Better Same Worse 72 Days -57% 92 Days -50% 74 Days +3% 80 Days +0%

19 The increasing trend towards Sellers paying some, or all, of their Buyer s closing costs appears to have leveled off at a level of near 75% of transactions Seller s should be aware of this Buyer need during contract negotiations and include these costs when estimating net proceeds of sale

20 Typically, fewer Buyers ask for Seller-paid closing costs in higherpriced home sales However, all price ranges include some transactions with Sellerpaid closing costs

21 Sellers agreeing to pay some or all of their Buyer s closing costs reduce their net percentage of original list price by an additional 1.4% of their original list price Allowance should be made for Seller-paid closing costs when estimating the net proceeds to Seller in a sales transaction

22 The percentage of transactions in which the Seller was required to reduce the listing price in order to attract a Buyer, increased substantially throughout 2007 and rose to a new high of 50% of transactions during 1Q 2008 This rate is much above the typical high end of the range (35%) for price reductions, indicating an increasing level of Buyer price resistance in the current market

23 Even though price reductions were more frequent in 2007 overall, fewer price reductions were necessary in higher sales price ranges, possibly due to Sellers taking an overpriced property off the market rather than reducing the price

24 When a price reduction is required, the Seller negotiates down to a lesser portion of the Original Listing Price than a Seller not requiring a price reduction This difference across the metro area typically ranges between 4-6 percentage points less for a Seller required to take a price reduction, but was 8.9 percentage points in 1Q 2008 In 1Q 2008, the 8.9 point difference would amount to a reduction of -$19,000, at the median sales price, compared to a Seller without a price reduction

25 Q 2008 Quarterly Metro Market Profile The stress in the market for sellers of homes priced below $200K becomes more obvious with the drop of 13.2% of the listing price when a price reduction is required At prices above $200K, the difference in % S/L between each successively higher price range becomes greater, showing that the penalty for a price reduction becomes ever greater For example, the % S/L ratio for a price-reduced property in the $2.0M+ price range, drops by19.2% compared to 6.5% for a non-price reduced property, which would amount to a difference of -$254,000 to the seller of a $2.0M property

26 Even after taking a price reduction, Sellers realize an equal, or lesser portion of their new list price than those Sellers not required to reduce their price Had these price-reduced properties been correctly priced originally, they could likely have sold in less time at an equal or higher price

27 Even after taking a price reduction, Sellers realize an equal, or lesser portion of their new list price than those Sellers not required to reduce their price, in nearly all of the price ranges Sellers of price reduced properties in higher price ranges ($1.0M+) still realized much less of their new list price than non-price reduced Sellers

28 When a price reduction is required, more time is needed to attract a buyer Typically, Sellers with a price reduction need 2-3 times longer to sell their property than Sellers not required to reduce their listing price The likely results are higher carrying costs, greater inconvenience due to keeping the house in showing condition and delay in finding and moving to a new home

29 Higher-priced properties normally take longer to sell, but when a price reduction is necessary, the time can become much longer For example, the Seller of a price-reduced <$200K property, required 3.2 times longer to sell Conversely, Sellers pricing their property correctly for the current market are able to sell much more quickly and at higher percentages of their asking price

30 Failed listings are shown here as a percentage of total finalized listings Failed listings as a percent of total finalized listings (exp., WD, closed) rose during the 2 nd half of 2006, reaching a peak in January, 2007 before falling back slightly, then rose again to new highs later in late 2007 and early 2008 The consistently higher rate since the 2 nd half of 2006 is further evidence of Buyer price resistance, since listings usually fail due to overpricing

31 We now know that in 1Q 2008, out of every 100 finalized listings, 70 failed to sell and 30 sold Of the 30 sold listings, 15 (50%) had a price reduction before a Buyer was found Therefore, if 70 failed due to overpricing and another 15 required a price reduction in order to sell, there were 85 out of every 100 listings that were overpriced in 1Q 2008

32 The supply of active listings continued to grow through most of 2007 and into 2008 Listing inventory is expressed as the number of months it would take to sell the currently active listings, at the average monthly sales rate over the most recent 12 months Supply has increased by 58% since January, 2007

33 The listings supply is larger in all market segments, compared to a year ago Inventory is expressed in number of months required to sell the current inventory, at the average sales rate over the most recent 12 months NEW RESALE TOTAL February 2008 Supply of Listings <$200K % % % $200K- $499K % % % $500K- 749K % % % $750K- $999K % % % $1.0M- $1.9M $2.0M+ Total % % % % % % % % % of inventory generally are higher at higher price ranges and for new homes Comparison to February, 2007: Better Same Worse

34 The number of active listings grew dramatically from Jan., 2007 through Aug., 2007, while sales remained relatively flat The number of listings and sales both began monthly declines in September, due in part to the seasonal nature of home sales The usual months supply of listings determined by dividing the current number of listings by the average Annual sales, results in a 10.9 months supply however, by dividing current active listings by 1Q 2008 average sales, results in a 14.6 months supply, which may be a warning that supply could still be increasing relative to sales, in 2008

35 Summary Home sales were sharply lower in 1Q Conditions in the financial markets have contributed to a protracted slowing nationally, which has now gained momentum in the Atlanta metro area. Median sales prices have declined in Atlanta for the first time since the decline began, with a 7% drop in 1Q 2008 compared to 1Q This resulted in a lower than normal S/L ratio, also. On the positive side, the median of Days on Market was stable vs. the same quarter in 2007, with declines even occurring in all but the lowest price range (<$200K) and the percentage of transactions with Seller-paid closing costs was also stable. Buyer price resistance caused the percentage of transactions following a price reduction to increase to the highest level of the past 3 years (50%) and the percentage of failed listings to remain at a very high level (70%), due to overpricing for the current market. The inventory of active listings has resumed growth after a slight decline in December, Using the 1Q 2008 sales rate, it would take 14.6 months to sell the March inventory of listings. Conclusion: The Atlanta real estate market is currently in a strong Buyer s market, which will only be changed by a return to a more normal balance between demand (Buyers) and supply (Sellers). Those Sellers who priced their properties in line with the current market reality found success in selling their properties in a median of 96.6% of their original listing price, in a median of 40 days on market. As more Sellers realize the necessity of pricing with the current market, a return to steady growth in the Atlanta home sales market will occur.

36 Relevance to Sellers: Median sales prices are lower in 2008 compared to the previous year, driven down by Buyer price resistance. The mix of sales in 2008 has changed toward lower-priced homes, which could be an indication that entry-level credit problems are declining. If so, that could set the stage for recovery in the broader market as move-up buyers become more able to sell their homes. The biggest concern for Sellers in 2008 has to be the high inventory of homes for sale at all price levels, causing pressure on them to price properties more attractively in order to attract buyers. Market slowing will continue until the inventory returns to more normal rates until then, greater care must be taken in pricing at, or below, the current competition in order to sell within normal time periods. Sellers should pay particular attention to comparing their price and condition to currently active listings, rather than the traditional focus on those which sold several months ago under different market conditions. Attractive pricing and above-average condition are the keys to a successful sale in any market, but are essential now. Relevance to Buyers: Builders are offering more attractive pricing and Buyer incentives to work down high new home inventory. New home prices have fallen less (-1.7%) than resales (-7.5%), which may make resales a better value. Market slowing will present better values to Buyers of both resale and new homes as Sellers are required to reduce list prices and be willing to negotiate more, selling at lower S/L percentages. Properties that have been price-reduced may set up a more favorable negotiating environment for Buyers, causing anxious Sellers to negotiate away more of their listing price. Buyers should ask their Sellers to pay some, or all, of Buyer s closing costs.