Knoxville Area
Metro Market Report, First Quarter 2009
Today's Market…
Median Price (Red Line) and One-year Price Growth 1,000s
25% $180
20% $160
$140
15%
$120
10% $100
5% $80
$60
0%
$40
-5% $20
-10% $0
2002 - Q3 2003 - Q3 2004 - Q3 2005 - Q3 2006 Q3 2007 - Q3 2008 - Q3 2009 -
Q1 Q1 Q1 Q1 - Q1 Q1 Q1 Q1
Knoxville U.S. Local Trend
Price Activity
Current Median Home Price (2009 - Q1) $138,600 $167,633
Prices are down from a year ago, but
1-year Appreciation (2009 - Q1) -5.1% -8.8% pp
appear to have stabalised
3-year Appreciation (2009 - Q1) 3 1%
-3.1% 22 7%
-22.7%
3-year (12-quarter) Housing Equity Gain -$4,400 -$49,267
Those who bought early in the boom still
7-year (28 q) Housing Equity Gain $3,600 -$31,367 hold some equity
9-year (36 q) Housing Equity Gain $20,300 $633
State Home Sales (Red Line) and Sales Growth 1,000s
30% 25
25%
20% 20
15%
10%
15
5%
0%
10
-5%
-10%
-15% 5
-20%
-25% 0
2002 - Q3 2003 - Q3 2004 Q3 2005 Q3 2006 Q3 2007 - Q3 2008 - Q3 2009 -
Q1 Q1 - Q1 - Q1 - Q1 Q1 Q1 Q1
Home Sales and Construction Growth Tennessee U.S.
*State Existing Home Sales (2009 - Q1) -18.4% -8.2% Weak compared to recent state average
*versus same quarter, year-ago
1
Local Supply and Demand…
Local Economic Outlook Knoxville U.S.
1-year Job Additions (2009 - Apr) -11,700 Not Comparable Weak for this market and could impact
3-year Job Additions (2009 - Apr) -6,900 Not Comparable demand
State Economic Activity Index Tennessee U.S.
12-month change (2009 - Apr) -4.4% -3.2% Contracting faster than the rest of the
36-month change (2009 - Apr) -1.2% 0.9% nation
Local Fundamentals Knoxville U.S.
1-year (12 month) Job Growth Rate -3.5% -1.6% Weak compared to other markets
3-year (36 month) Job Growth Rate -2.1% 0.7% Weaker than most metro areas
1-year Job Gain to New Single-Family Homes -6.7 -0.1 Weak compared to the national average
3-year Job Gain to New Single-Family Homes -0.7 4.7 Weak compared to the nation
** Single-Family Housing Permits (2009 - Apr) -45.9% -42.2% Important to reduce supply
**Rolling 12-month sum vs. a year ago
Affordability - Local Mortgage Servicing Cost-to-Income
(Historical Average Shown in Red Dashed Line)
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Monthly Mortgage Payment to Income Knoxville U.S.
Ratio for all of 2008 12.4% 20.7% Good local affordability
Ratio for 2009 - Q1 11.3% 17.7% Improving and historically strong
Historical Local Average 13.9% 23.2% Good relative to the nation
2
Recent Trend ‐ Local Mortgage Servicing Cost to Income
(Historical Average Shown in Red Dashed Line)
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2007 - Q4 2008 - Q1 2008 - Q2 2008 - Q3 2008 - Q4 2009 - Q1
Median Home Price to Income Knoxville U.S.
Ratio for 2008 4.3 7.2 Good Relative to Local History
Historical Local Average 4.4 7.2 Good Compared to Nation Average
Ratio of Local Median Home Price to Local Average Income
(Historical Average shown in Red Dashed Line)
4.8
4.7
4.6
4.5
4.4
4.3
4.2
4.1
4.0
3.9
3.8
3
Looking Deeper….
State Total Foreclosure Rate vs. U.S Average
(U.S. Average in Red Dashed Line)
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Source: Mortgage Bankers' Association
Monthly Market Data - February 2009 Knoxville U.S.
PRIME Market Share 87.7% 84.5% Lower subprime exposure than average
SUBPRIME and Alt-A Market Share 12.3% 15.5% Strong Compared to the Nation
There has been a large local increase
TOTAL F l R t
Foreclosure + REO Rate 0 6%
0.6% 1.7%
1 7%
versus a year ago
TOTAL Foreclosure + REO Rate (same period, 1- Compared to the nationional average,
0.3% 0.8%
year earlier ) today's local rate is low
There has been a large local increase
SUBPRIME Foreclosure + REO Rate 7.0% 14.6%
versus a year ago
SUBPRIME Foreclosure + REO Rate (same Locally, today's foreclosure rate is low
5.4% 11.6%
period, 1- year earlier) relative to the nationional average
A large local increase occurred compared
ALT-A Foreclosure + REO Rate 3.5% 12.1%
to a year ago
ALT-A Foreclosure + REO Rate (same period, 1- Today's local rate is low compared to the
2.2% 5.5%
year earlier) national average
Monthly Foreclosure data provided by First American CoreLogic, LoanPerformance data
4
The Mortgage Market
30-year Fixed Mortgage Rate and Treasury Bond
8.0 3.00
7.0 2.50
6.0 2.00
5.0 1.50
4.0 1.00
3.0 0.50
2.0 0.00
Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4
Spread (right axis) 30-Year FRM 10-Year Treasury Bond
5