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Mortgage Rates in Houston

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					  Developer Conference
                      Washington DC • September 11, 2007



Lance Ramella
Senior Managing Director
(773) 824-2485
Mike Timmerman, SRA
Managing Director
(239) 649-7733 x203


HANLEY WOOD MARKET INTELLIGENCE




                                                           www.hanleywood.com
                                                           www.builderinfostore.com
  Hanley Wood – A Network Unlike Any Other
  Largest business-to-business media network serving North America's
  residential and commercial construction industries.




Print & electronic media
publications including Builder and
Big Builder                          1   Business Media


14 Tradeshows and events
annually                             2   Exhibitions


Custom publications and brand
communications                       3   Marketing



                                     4
Leading provider of information
and analysis to homebuilders,            Market Intelligence
lenders & manufacturers
Mission Statement &
Overview

Mission Statement: To be the premier provider of high quality market
information, analysis and consulting services to the U.S. residential
development industry.


Company Overview
 Nation’s leading data
   provider for residential
   development industry

                                                       insight:
 Market insight and analysis                         Analytics
                                                    and Consulting


 Track 75 housing markets                            innovative:
                                            information products and reports


 Complete Integrated
                                                      information:
   Solution                                 Detailed active and proposed data



                                financing           product design              site acquisition
Market Intelligence
Division

                       Provide data, analysis, published
                        research, software, and consulting
                        services to the residential home building
                        and development industry



                       Products designed to meet the needs of
                        today’s residential real estate and
                        building professional including:

                                 Information Products
                                 Published Research
                                 Custom Consulting
                                   Services

                       Cover top 75 markets across United
                        States
Some Products….




  Proposed Project Data
  Active Project Data
  GIS Mapping w/Aerials
  Demographics
  Digital Parcel Data Layer
  Resale Data
  Export Custom Reports
    Consulting Services


Strategic Offerings
   Due Diligence
   Site Specific Analysis
   Market & Customer Strategy
   Market Overview Presentations

Custom Consulting
 Absorption Analysis/Infrastructure
  Financing Assistance
 Active Adult / Senior Housing
 Highest and Best Use Analysis
 Market Feasibility Studies
 Strategic Planning and Consulting
 Consumer Research
 Repositioning Recommendations
Consumer
Confidence


                                         Currently
150                      United States      105.3
140                      Pacific             117.8

130
120
110
100
 90
 80
 70
 60
      1Q00
      2Q00
      3Q00
      4Q00
      1Q01
      2Q01
      3Q01
      4Q01
      1Q02
      2Q02
      3Q02
      4Q02
      1Q03
      2Q03
      3Q03
      4Q03
      1Q04
      2Q04
      3Q04
      4Q04
      1Q05
      2Q05
      3Q05
      4Q05
      1Q06
      2Q06
      3Q06
      4Q06
      1Q07
      2Q07
                        United States                Pacific

Source: The Conference Board
 GDP Growth:
 Slowing to a Below-
 Trend Pace


8%

6%

4%

2%

0%

-2%

-4%
  :9 0

           :9 1

                    :9 2

                             :9 3

                                      :9 5

                                               :9 6

                                                        :9 7

                                                                 :9 8

                                                                          :0 0

                                                                                   :0 1

                                                                                            :0 2

                                                                                                     :0 3

                                                                                                              :0 5

                                                                                                                       :0 6

                                                                                                                                :0 7
Q1

         Q2

                  Q3

                           Q4

                                    Q1

                                             Q2

                                                      Q3

                                                               Q4

                                                                        Q1

                                                                                 Q2

                                                                                          Q3

                                                                                                   Q4

                                                                                                            Q1

                                                                                                                     Q2

                                                                                                                              Q3
 Source: Bureau of Economic Analysis, Fannie Mae forecast
Job Growth:
Trends Down, But Still
Good


        2Q07 = 1.47%
                Y-O-Y non-farm employment
                not seasonally adjusted
4%


2%


0%

                   -1.6%                    -1.5%
-2%
       89Q2
       90Q2
       91Q2
       92Q2
       93Q2
       94Q2
       95Q2
       96Q2
       97Q2
       98Q2
       99Q2
       00Q2
       01Q2
       02Q2
       03Q2
       04Q2
       05Q2
       06Q2
       07Q2
Source: Hanley Wood Market Intelligence
                                                                           0%
                                                                                  1%
                                                                                                  2%
                                                                                                            3%
                                                                                                                 4%
                                                                                                                      5%
                                                                                                                           6%
                                                                                                                                7%
                                                                                                                                     8%
                                                                                                                                           9%
                                                                                                                                                  10%
                                                                  Jul-92
                                                                  Jan-93
                                                                  Jul-93
                                                                  Jan-94
                                                                  Jul-94
                                                                  Jan-95
                                                                  Jul-95




                                                                                                      FRM
                                                                                                ARM
                                                                  Jan-96
                                                                  Jul-96
                                                                  Jan-97
                                                                                                                                                              Mortgage Rates




                                                                  Jul-97




                                                                                Federal Funds
                                                                  Jan-98
                                                                  Jul-98
                                                                  Jan-99
                                                                  Jul-99
                                                                  Jan-00
                                                                  Jul-00
                                                                  Jan-01
                                                                  Jul-01
                                                                  Jan-02
                                                                  Jul-02
                                                                  Jan-03


Source: Federal Home Loan Mortgage Corporation; Federal Reserve
                                                                  Jul-03
                                                                  Jan-04
                                                                  Jul-04
                                                                  Jan-05
                                                                  Jul-05
                                                                                                                                     FRM – 6.57%
                                                                                                                                     ARM – 5.67%




                                                                  Jan-06
                                                                  Jul-06
                                                                  Jan-07
                                                                  Jul-07
                                                                                                                                     Federal Funds – 5.25%
                                                                                                                                     August 2007 Statistics
Local Housing Market Specifics
Employment Growth
Orange County-CA, Austin-TX, Houston-TX, Nashville-TN, Salt
Lake City-UT, Wilmington-NC, Raleigh-NC, Charlotte-NC, Orlando-
FL, Atlanta-GA, Louisville-KY 2007* Employment Growth
                                                      Orange County, CA – 15,300
                                                      Austin, TX – 27,900
                                                      Houston, TX – 74,000
                                                      Nashville, TN – 10,500
     100,000                                          Salt Lake City, UT – 25,400
                                                      Wilmington, NC – 6,242
                                                      Raleigh, NC – 14,630
      80,000                                          Charlotte, NC – 24,100
                                                      Orlando, FL – 24,700
      60,000                                          Atlanta, GA – 43,700
                                                      Louisville, KY – 8,300
      40,000
      20,000
             0
     -20,000
     -40,000
     -60,000

               ,C
                  A        TX    ,T
                                    X        TN        UT      ,N
                                                                  C
                                                                     ,N
                                                                        C
                                                                              ,N
                                                                                 C       FL      ,G
                                                                                                    A        KY
                        n,                e,        y,                                o,                  e,
           n ty    us
                     ti       ton hvill          it        to n leigh      tte      nd        nta      ill
         ou      A          us      s         eC        ing      a     arlo      rla      tl a      isv
        C                Ho      Na         ak      ilm         R   Ch         O         A
                                                                                                Lo
                                                                                                  u
     ge                                l tL     W
  an                                 Sa
Or

                   2000         2001        2002         2003        2004           2005      2006         2007*
Note: 2007* is projection
Source: Hanley Wood Market Intelligence Market Snapshots
Population Growth
Orange County-CA, Austin-TX, Houston-TX, Nashville-TN, Salt
Lake City-UT, Wilmington-NC, Raleigh-NC, Charlotte-NC, Orlando-
FL, Atlanta-GA, Louisville-KY
                                                 2007* Population Growth
      150,000                                    Orange County, CA – 8,639
                                                 Austin, TX – 43,943
                                                 Houston, TX – 108,973
      120,000                                    Nashville, TN – 29,287
                                                 Salt Lake City, UT – 16,864
                                                 Wilmington, NC – 12,991
                                                 Raleigh, NC – 38,148
       90,000                                    Charlotte, NC – 47,776
                                                 Orlando, FL – 77,158
                                                 Atlanta, GA – 126,925
       60,000                                    Louisville, KY – 9,200


       30,000

              0
                    A        X       X           N          T        C      C      C         L        A        Y
                  ,C      ,T      ,T         , T ty, U            ,N     , N te, N        ,F       , G lle , K
               ty      tin     on        ille       i           n
                                                             gto alei
                                                                       gh lot           do       ta     i
           oun      Aus ous t      s hv        k eC       in               a r    r lan     t lan uisv
         C                      Na lt La                           R    Ch      O          A
      ge
                          H
                                                   W  ilm                                         Lo
   an                                S a
Or

                     2000        2001         2002        2003        2004        2005        2006         2007*
Note: 2007* is projection
Source: Hanley Wood Market Intelligence Market Snapshots
  Total Permits
  Orange County-CA, Austin-TX, Houston-TX, Nashville-TN, Salt
  Lake City-UT, Wilmington-NC, Raleigh-NC, Charlotte-NC, Orlando-
  FL, Atlanta-GA, Louisville-KY
                                                     2007* Total Permits
          80,000                                     Orange County, CA – 5,300
                                                     Austin, TX – 19,900
                                                     Houston, TX – 67,500
                                                     Nashville, TN – 14,000
          60,000                                     Salt Lake City, UT – 6,600
                                                     Wilmington, NC – 5,750
                                                     Raleigh, NC – 14,200
                                                     Charlotte, NC – 22,300
          40,000                                     Orlando, FL – 24,000
                                                     Atlanta, GA – 51,600
                                                     Louisville, KY – 5,500
          20,000


                   0

                          CA n, TX n, TX e, TN y, U T             ,N
                                                                    C       NC       NC o, FL         GA e, K Y
                      ,                                                  h,       e,               a,
                  nty         ti
                            us ous t
                                    o        ill     it       ton     ig       tt      nd       nt          ill
            Co
              u            A            s hv     k eC     i ng Rale harlo Or la           A tla       uis v
      g   e                      H    Na lt La        ilm                C                        Lo
                                                    W
Or an                                    Sa


                            2000      2001       2002      2003       2004        2005     2006      2007*

 Note: 2007* is projection
 Source: Hanley Wood Market Intelligence Market Snapshots
   Existing Home Price
   Orange County-CA, Austin-TX, Houston-TX, Nashville-TN, Salt
   Lake City-UT, Wilmington-NC, Raleigh-NC, Charlotte-NC, Orlando-
   FL, Atlanta-GA, Louisville-KY

                                                   2007* Existing Home Price
                                                   Orange County, CA – $711,000
   $800,000                                        Austin, TX – $181,500
                                                   Houston, TX – $153,900
   $700,000                                        Nashville, TN – $178,400
                                                   Salt Lake City, UT – $225,200
   $600,000                                        Wilmington, NC – $207,200
                                                   Raleigh, NC – $221,300
   $500,000                                        Charlotte, NC – $202,200
                                                   Orlando, FL – $263,000
   $400,000                                        Atlanta, GA – $172,000
                                                   Louisville, KY – $140,000
   $300,000
   $200,000
   $100,000
           $0

               CA        TX      TX        TN        UT         NC        NC         NC        FL         GA          KY
           ty,       in,      n,       le,       ty,         n,        h,         e,        o,         a,         le,
         n         st       to      vil        Ci         to         ig       ott         nd        nt         il
       ou       Au        us      sh        ke        in g       a le      arl         rla      tl a        isv
     eC                Ho      Na         a        lm           R       Ch           O         A
                                                                                                       Lo
                                                                                                          u
   ng                                lt L       Wi
Or
  a                                Sa

                      2000         2001        2002         2003        2004         2005        2006        2007*
  Note: 2007* is projection
  Source: Hanley Wood Market Intelligence Market Snapshots
Existing Home Inventory
Orange County-CA, Austin-TX, Houston-TX, Nashville-TN, Salt
Lake City-UT, Raleigh-NC, Orlando-FL, Atlanta-GA, Louisville-KY

                                                                        Sep.07 Existing Home Inventory
                                                                        Orange County, CA – 19,649
                                                                        Austin, TX – 10,700
     125,000                                                            Houston, TX – 46,898
                                                                        Nashville, TN – 16,285
                                                                        Salt Lake City, UT – 9,876
     100,000                                                            Raleigh, NC – 10,379
                                                                        Orlando, FL – 34,274
                                                                        Atlanta, GA – 121,271
      75,000                                                            Louisville, KY – 12,368


      50,000

      25,000

                  0

                          CA         ,T
                                          X             TX            ,T
                                                                           N              UT         NC          FL           GA             KY
                      ,
                                  tin           ton
                                                    ,
                                                                  ille               y,           h,          o,           a,           le ,
                  nty           s                            hv                  Cit           ig          nd           nt           il
            Co
              u            Au           u     s        s                    ke             a le       r la         tl a         is v
                                     Ho             Na                  a                 R          O            A
                                                                                                                            Lo
                                                                                                                               u
      g   e                                                        lt L
Or an                                                        Sa

      Jan-07              Feb-07          Mar-07             Apr-07              May-07           Jun-07         Jul-07       Aug-07          Sep-07

Source: HousingTracker.net
Total Net Migration Trends
Orange County-CA, Austin-TX, Houston-TX, Nashville-TN, Salt
Lake City-UT, Wilmington-NC, Raleigh-NC, Charlotte-NC, Orlando-
FL, Atlanta-GA, Louisville-KY
                                         2007* Total Net Migration
                                         Orange County, CA – (16,800)
     150,000                             Austin, TX – 30,200
                                         Houston, TX – 43,600
                                         Nashville, TN – 5,400
     120,000                             Salt Lake City, UT – 1,300
                                         Wilmington, NC – 7,400
                                         Raleigh, NC – 16,300
       90,000                            Charlotte, NC – 29,400
                                         Orlando, FL – 34,900
                                         Atlanta, GA – 56,300
       60,000                            Louisville, KY – 3,900


       30,000

             0
                   A       X        X         N       T   C        C     C      FL , GA         Y
                 ,C    n,T       , T le, T ty, U n, N          , N te, N     o,              ,K
              nty usti       ton       il        i      o   igh lot        d      ta    ille
           ou             us ashv             e C ingt Rale        r    lan Atlan uisv
         C        A    Ho      N           ak     ilm         Ch
                                                                 a   Or            Lo
    n ge                              l tL      W
Or
   a                               Sa

                       2003           2004          2005          2006          2007*
Note: 2007* is projection
Source: Economy.com
Observations


 1) Watch resale market inventory/price.
 2) Limit/control investors.
 3) Control inventory/incentives.
 4) Look for land values to stabilize
   or come down.
 5) Increasing employment growth along with
   higher interest rates.
 7) Increasing growth management.
 Development
 Trends


 Higher-density living
 Small-lot product
 Transit-oriented housing
 Mixed-use developments
 In-fill locations
 Adaptive re-use
 Next-generation MPCs
 Active Adult MPCs
  Developer Conference
                      Washington DC • September 11, 2007



Lance Ramella
Senior Managing Director
(773) 824-2485
Mike Timmerman, SRA                                        QUESTIONS???
Managing Director
(239) 649-7733 x203


HANLEY WOOD MARKET INTELLIGENCE




                                                              www.hanleywood.com
                                                              www.builderinfostore.com

				
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