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									Dr. James P. Gaines
 Research Economist
  Real Estate Center
Texas A&M University
                       1
  recenter.tamu.edu
“Big Picture” Economic Themes on a
      Modern-Day Depression
   1.    Credit Contraction
   2.    Price/Asset Deflation
   3.    Household Wealth Devastation
   4.    Profit Compression
   5.    Employment Destruction
   6.    Inventory Reduction

   7.     Federal Government Intrusion
        a. New Laws and Regulations
        b. Stimulus Programs
        c. Nationalized institutions or industries:
             FNMA, FHLMC, auto, banks?
                                                      2
The New Dollar




                 3
                    Pop Quiz:
             How Much is $1 TRILLION?
• 1 plus 12 zeros: 1,000,000,000,000
• Committed more than $2 Trillion in Fed stimulus
  programs
• FY09 Deficit about $1.6 Trillion; Total National Debt is
  $10.7 Trillion - $36,000 for every man, woman and child
• Interest on the debt is about $500 Billion per year, fourth
  largest expenditure in Federal budget (Medicare-
  Medicaid, SS, defense)
• Majority of Debt (65%) is held by China (22%), Japan
  (18.5%), UK (11%), Caribbean Banking Centers (7%) and
  Oil Exporting Countries* (6%)

* Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates,
Algeria, Gabon, Libya, and Nigeria.                                                                             4
How Much is a Trillion Dollars ?

The United States of America has
  been a country for 233 years

        (or 85,045 days)
How Much is a Trillion Dollars ?
            $1,000,000,000,000
                  85,045
                     =
              $11.7 million


 The US government would have to spend
         $11.7 million dollars a day
for each day since the country was founded
          to reach just $1 trillion.
How Much is a Trillion Dollars ?
How many Americans would it take
     to pay off $1 trillion ?

If Americans worked every day of
    the year for 8 hours per day
      and earned $20 per hour
     And paid 100% income tax
How Much is a Trillion Dollars ?
         $1,000,000,000,000
            ($20*365*8)
                =
            17,123,287
 It would take 17 million workers,
who work every day of the year at
$20 per hour to pay back $1 Trillion
     $1 Trillion Can …
• Pay rent for every renter in the US
  for 3 years
• Pay mortgage payment for every
  homeowner for 14 months
• Buy every home foreclosed in 2007
  and 2008

           Source: Mint.com/blog and wallstats.com   9
Length of US Recessions 1900-Present




                              10
            Source: Merrill Lynch April 2009
Percent Growth in Real GDP Since 2000
                                                                                  Seasonally Adjusted Annual Rate
 8.0                                                                                                            7.5

 7.0            6.4

 6.0
                                                                                                                                                                                         4.8                                    4.8 4.8
 5.0
                                                                                                                                                                          3.8
 4.0                                                                                                      3.5                           3.5 3.6
                                                                                                                               3.0                         3.0
                                                                                                                                                                                                                                                             2.8
 3.0                           2.1
                                                                   2.7
                                                                            2.2
                                                                                  2.4
                                                                                                                         2.7
                                                                                                                                                     2.5            2.6                           2.7


 2.0                                          1.2
                                                             1.6
                                                                                                 1.2                                                                               1.3
                                                                                                                                                                                                                 1.5
        1                                                                                                                                                                                                                                           0.9
                                                                                                                                                                                                        0.8
 1.0                                                                                       0.2                                                                                                                         0.1
 0.0
                                                                                                                                                                                                                                             -0.2
-1.0                  -0.5           -0.5                                                                                                                                                                                                                          -0.5


-2.0                                                -1.4


-3.0
-4.0
-5.0
-6.0
                                                                                                                                                                                                                                                                            -6.2
-7.0
       1Q2000

                      3Q2000

                                     1Q2001

                                                    3Q2001

                                                                   1Q2002

                                                                                  3Q2002

                                                                                                 1Q2003

                                                                                                                3Q2003

                                                                                                                               1Q2004

                                                                                                                                            3Q2004

                                                                                                                                                           1Q2005

                                                                                                                                                                          3Q2005

                                                                                                                                                                                         1Q2006

                                                                                                                                                                                                        3Q2006

                                                                                                                                                                                                                       1Q2007

                                                                                                                                                                                                                                    3Q2007

                                                                                                                                                                                                                                                    1Q2008

                                                                                                                                                                                                                                                                   3Q2008
                                                                                                                                                                                                                                                              11
                                                                                  Source: Bureau of Economic Analysis
                                                                                                           -1.0
                                                                                                                  0.0
                                                                                                                        1.0
                                                                                                                              2.0
                                                                                                                                    3.0
                                                                                                                                          4.0
                                                                                                                                                5.0
                                                                                                                                                      6.0
                                                                                                                                                            7.0
                                                                                                      Jan-87
                                                                                                      Jul-87
                                                                                                      Jan-88
                                                                                                      Jul-88
                                                                                                      Jan-89
                                                                                                      Jul-89
                                                                                                      Jan-90
                                                                                                      Jul-90
                                                                                                      Jan-91
                                                                                                      Jul-91
                                                                                                      Jan-92
                                                                                                      Jul-92
                                                                                                      Jan-93
                                                                                                      Jul-93
                                                                                                      Jan-94
                                                                                                      Jul-94
                                                                                                      Jan-95
                                                                                                      Jul-95
                                                                                                      Jan-96
                                                                                                      Jul-96
                                                                                                      Jan-97
                                                                                                      Jul-97
                                                                                                      Jan-98
                                                                                                      Jul-98
                                                                                                      Jan-99
                                                                                                      Jul-99




                                                                 Source: Bureau of Labor Statistics
                                                                                                      Jan-00
                                                                                                      Jul-00




Yr/Yr Rate of Change in the Monthly Index, US Urban, All Items
                                                                                                      Jan-01
                                                                                                      Jul-01
                                                                                                      Jan-02
                                                                                                      Jul-02
                                                                                                      Jan-03
                                                                                                      Jul-03
                                                                                                      Jan-04
                                                                                                      Jul-04
                                                                                                                                                                  Overall Inflation Rate




                                                                                                      Jan-05
                                                                                                      Jul-05
                                                                                                      Jan-06
                                                                                                      Jul-06
                                                                                                      Jan-07
                                         12




                                                                                                      Jul-07
                                                                                                      Jan-08
                                                                                                      Jul-08
                                                                                                      Jan-09
               Consumer Confidence Index At
                      All-time Low
130
120
                                                                                                                     Jul-07, 111.9
110
100
 90
 80
 70
 60
 50               Consumer confidence has fallen 78% since July 2007
 40
 30
 20                                                                                                                                             Feb-09, 25

 10
                                          Jan-03
      Jan-01




                        Jan-02




                                                               Jan-04




                                                                                 Jan-05




                                                                                                   Jan-06




                                                                                                                     Jan-07




                                                                                                                                       Jan-08




                                                                                                                                                          Jan-09
               Jul-01




                                 Jul-02




                                                      Jul-03




                                                                        Jul-04




                                                                                          Jul-05




                                                                                                            Jul-06




                                                                                                                              Jul-07




                                                                                                                                                 Jul-08
                                                   Source: The Conference Board (1985=100)                                                                         13
                                    Debt Service Payments as a Percent of
                                        Disposable Personal Income
                               15
                                             It would take either a 25% slice
                                             in debt, a 32% surge in income
Percent of Disposable Income




                               14            or a 200bp plunge in interest
                                             rates to achieve a 10.5% D-I
                                             ratio.
                               13


                               12


                               11


                               10
                                    1Q1980
                                             1Q1981
                                                      1Q1982
                                                               1Q1983
                                                                        1Q1984
                                                                                 1Q1985
                                                                                          1Q1986
                                                                                                   1Q1987
                                                                                                            1Q1988
                                                                                                                     1Q1989
                                                                                                                              1Q1990
                                                                                                                                       1Q1991
                                                                                                                                                1Q1992
                                                                                                                                                         1Q1993
                                                                                                                                                                  1Q1994
                                                                                                                                                                           1Q1995
                                                                                                                                                                                    1Q1996
                                                                                                                                                                                             1Q1997
                                                                                                                                                                                                      1Q1998
                                                                                                                                                                                                               1Q1999
                                                                                                                                                                                                                        1Q2000
                                                                                                                                                                                                                                 1Q2001
                                                                                                                                                                                                                                          1Q2002
                                                                                                                                                                                                                                                   1Q2003
                                                                                                                                                                                                                                                            1Q2004
                                                                                                                                                                                                                                                                     1Q2005
                                                                                                                                                                                                                                                                              1Q2006
                                                                                                                                                                                                                                                                                       1Q2007
                                                                                                                                                                                                                                                                                                1Q2008
                                                                                                                                                                                                                                                                                                         1Q2009
                                                                                                                                                                                                                                                                                                             14
                                                                                                                              Source: Federal Reserve Board
What to Expect: 2009: Not a Good Year
• Low interest rates
• Federal bailout of the banks/financial institutions
  gears up in earnest – not sure about housing
• Negative GDP growth first two quarters (at least)
• Mortgage rates fall, but tighter underwriting
• Foreclosures bottom-out by year end, maybe
• Very low inflation to deflation
• Significant job losses for first half, at least
• What will Federal government do next?
                                                   15
      What Have We Learned In 2
             Millennia?
The budget should be balanced, the Treasury
should be refilled, public debt should be
reduced, the arrogance of officialdom should
be tempered and controlled, and the assistance
to foreign lands should be curtailed lest
Rome become bankrupt.

People must again learn to work, instead of
living on public assistance."
                            Cicero - 55 BC
 Change one word ROME for USA and the story is the same one.
                      Scary, isn’t it?
                                                               16
The Republic of Texas !!
1   United States                    8 Canada
2   Japan                            9 Spain
3   Germany                          10 Brazil
4   China                            11 TEXAS
5   United Kingdom                   12 Russia
6   France                           13 India
7   Italy

                                                                17
      Source: World Bank and U.S. Bureau of Economic Analysis
  The Texas Outlook for 2009
• Still vulnerable to US conditions, especially
  in capital markets
• Economy still strongly tied to energy
• Texas job growth 1% to 1.5% IF no major
  downsizing in energy industry
• Texas housing markets generally strong
  but “spotty”
• Fall in overall residential demand: tighter
  credit, less investment buying, less second
  home
• Significant decline in commercial real
  estate                                      18
                                  Percent Change




                             -4
                             -3
                             -2
                             -1
                              0
                              1
                              2
                              3
                              4
                              5
                              6
                              7
                              8
                                                               9




                             -5
                    Jan-01
                    Apr-01
                    Jul-01
                    Oct-01
                    Jan-02
                    Apr-02
                    Jul-02
                    Oct-02
                    Jan-03
                    Apr-03
                    Jul-03
                    Oct-03
                    Jan-04
                    Apr-04
                    Jul-04
                    Oct-04
                    Jan-05
                                         Texas


                    Apr-05




Source: BLS, SAAR
                    Jul-05
                    Oct-05
                    Jan-06
                    Apr-06
                    Jul-06
                    Oct-06
                    Jan-07
                    Apr-07
                    Jul-07
                    Oct-07
                    Jan-08
                                                                  US, Texas and Hood County

                                                   Hood Co.




                    Apr-08
                    Jul-08
                             US




                    Oct-08
             19




                    Jan-09
                                                              Annual Employment Growth Rates for
                                               $10
                                               $30
                                               $40
                                               $50
                                               $60
                                               $80
                                               $90




                                               $20
                                               $70
                                              $100
                                              $110
                                              $130
                                              $140

                                              $120
                                         Jan-85
                                         Jul-85
                                         Jan-86
                                         Jul-86
                                         Jan-87
                                         Jul-87
                                         Jan-88
                                         Jul-88
                                         Jan-89
                                         Jul-89
                                         Jan-90
                                         Jul-90
                                         Jan-91
                                         Jul-91
                                         Jan-92
                                         Jul-92
                                         Jan-93
                                         Jul-93
                                         Jan-94
                                         Jul-94
                                         Jan-95
                                         Jul-95
                                         Jan-96
                                         Jul-96
                                         Jan-97
                                         Jul-97
                                         Jan-98
                                         Jul-98
                                         Jan-99
                                         Jul-99
                                         Jan-00
                                         Jul-00



Source: Federal Reserve Bank of Dallas
                                         Jan-01
                                         Jul-01
                                                                            Crude per Barrel




                                         Jan-02
                                         Jul-02
                                         Jan-03
                                         Jul-03
                                         Jan-04
                                         Jul-04
                                         Jan-05
                                         Jul-05
                                         Jan-06
                                         Jul-06
                                         Jan-07
                                         Jul-07
                                                                   Price of West Texas Intermediate




                                         Jan-08
                                                  Jun-08, 133.93




                                         Jul-08
                                         Jan-09
          20
                                                                                 Dollars per MCF




                                                                                                                       $11

                                                                                                             $10




                                                     $1
                                                          $2
                                                               $3
                                                                    $4
                                                                                     $6
                                                                                                   $8
                                                                                                        $9




                                                                                $5
                                                                                            $7
                                            Jan-95
                                            Jul-95
                                            Jan-96
                                            Jul-96
                                            Jan-97
                                            Jul-97
                                            Jan-98
                                            Jul-98
                                            Jan-99
                                            Jul-99
                                            Jan-00
                                            Jul-00
                                            Jan-01
                                            Jul-01
                                            Jan-02
                                            Jul-02
                                            Jan-03
                                            Jul-03
                                            Jan-04
                                            Jul-04



Source: Energy Information Administration
                                            Jan-05
                                            Jul-05
                                                                                                                   10.33




                                            Jan-06
                                            Jul-06
                                            Jan-07
                                            Jul-07
                                            Jan-08
                                                                                                                    10.82




                                            Jul-08
                                            Jan-09
                                            Jul-09
                                                                                                                             US Average Wellhead Natural Gas Price




                                                                         4.26




                                            Jan-10
                                                                                                                                                                                                           1,000




                                                                         100
                                                                                             200
                                                                                                   300
                                                                                                                         400
                                                                                                                               500
                                                                                                                                     600
                                                                                                                                           700
                                                                                                                                                 800
                                                                                                                                                                               900




                                                                     0
                                                            Jan-85
                                                            Sep-85
                                                            May-86
                                                            Jan-87
                                                            Sep-87
                                                            May-88
                                                            Jan-89
                                                            Sep-89
                                                            May-90
                                                            Jan-91
                                                            Sep-91
                                                            May-92
                                                            Jan-93
                                                            Sep-93
                                                            May-94
                                                            Jan-95
                                                            Sep-95
                                                            May-96
                                                            Jan-97
                                                            Sep-97
                                                            May-98
                                                            Jan-99
                                                            Sep-99
                                                            May-00
                                                                                                                                                 Rigs peaked at 1,445 in August 1981




                                                            Jan-01
                                                                               Apr-99, 186




                                                            Sep-01
Source: Baker Hughes, Federal Reserve Bank of Dallas
                                                                                                                                                 Rig count has fallen by 197 rigs or 21.3%




                                                            May-02
                                                            Jan-03
                                                            Sep-03
                                                            May-04
                                                                                                                                                                                                               Texas Rotary Rig Count




                                                            Jan-05
                                                            Sep-05
                                                            May-06
                                                            Jan-07
                                                            Sep-07
                                                       22




                                                            May-08
                                                                                                         Apr-09, 401.4




                                                            Jan-09
                                                                                                                                                                                             Sep-08, 927
                                                  105
                                                                    120
                                                                          125
                                                                                130




                                                        110
                                                              115
                                         Jan-95
                                         Jun-95
                                                                                  (1987=100)

                                         Nov-95
                                         Apr-96
                                         Sep-96
                                         Feb-97
                                         Jul-97
                                         Dec-97
                                         May-98
                                         Oct-98
                                         Mar-99
                                         Aug-99
                                         Jan-00
                                         Jun-00
                                         Nov-00
                                         Apr-01
                                         Sep-01
                                         Feb-02
                                         Jul-02
                                         Dec-02
                                         May-03
                                         Oct-03
                                         Mar-04


Source: Federal Reserve Bank of Dallas
                                         Aug-04
                                         Jan-05
                                         Jun-05
                                         Nov-05
                                         Apr-06
                                         Sep-06
                                         Feb-07
                                         Jul-07
                                         Dec-07
                                         May-08
           23
                                                                                               Texas Index of Leading Indicators




                                         Oct-08
                        10,000
                                 12,000
                                          14,000
                                                   16,000
                                                            18,000
                                                                     20,000
                                                                              22,000
                                                                                       24,000
              Jan-90
                                                                                                26,000
               Jul-90
              Jan-91
               Jul-91
              Jan-92
               Jul-92
              Jan-93
               Jul-93
              Jan-94
               Jul-94
              Jan-95
               Jul-95
              Jan-96
               Jul-96
              Jan-97
               Jul-97
              Jan-98
               Jul-98
              Jan-99




Source: BLS
               Jul-99
              Jan-00
               Jul-00
              Jan-01
               Jul-01
              Jan-02
               Jul-02
              Jan-03
               Jul-03
              Jan-04
               Jul-04
              Jan-05
               Jul-05
              Jan-06
               Jul-06
              Jan-07
                                                                                                         Hood County Employment




               Jul-07
              Jan-08
24




               Jul-08
              Jan-09
   Hood County Employment
26,000
                                                                                                                                                    24200
24,000
                                                                                                                                            22869

                                                                                                                                    21903
22,000                                                                                                        21432 21304 21441
                                                                                                      20586

20,000                                                                                 19461 19611



18,000
                                                                               16725
                                                                       15962
16,000                                                         15350
                                                       14865
                                               14070
14,000                                 13204
                        12753 12826
         12254 12452
12,000

10,000
                                                        1996
          1990

                 1991

                         1992

                                1993

                                        1994

                                                1995



                                                                1997

                                                                        1998

                                                                                1999

                                                                                        2000

                                                                                               2001

                                                                                                       2002

                                                                                                               2003

                                                                                                                      2004

                                                                                                                             2005

                                                                                                                                     2006

                                                                                                                                             2007

                                                                                                                                                         2008
                                                               Source: BLS                                                                          25
                                                      10.0
                                                             12.0
                                                                    14.0
                                                                           16.0
                                                                                  18.0




                        0.0
                              2.0
                                    4.0
                                          6.0
                                                8.0
               Jan-90
               Jan-38
               Jan-86
               Jan-34
               Jan-82
               Jan-30
               Jan-78
               Jan-26
               Jan-74
               Jan-22
               Jan-70
               Jan-18
               Jan-66
               Jan-14
               Jan-62
               Jan-10
               Jan-58
               Jan-06
               Jan-54
               Jan-02




 Source: BLS
               Jan-50
               Jan-98
               Jan-46
               Jan-94
               Jan-42
               Jan-90
               Jan-38
               Jan-86
               Jan-34
               Jan-82
               Jan-30
               Jan-78
               Jan-26
               Jan-74
               Jan-22
               Jan-70
                                                                                         Hood County Unemployment Rate




               Jan-18
26




               Jan-66
               Jan-14
The Mortgage and
 Capital Markets


                   27
                                                                         Net Percent




                                                                             0




                                                       -75
                                                             -50
                                                                   -25
                                                                                       25
                                                                                            50
                                             Q1-1992
                                             Q1-1993
                                             Q1-1994
                                             Q1-1995
                                             Q1-1996
                                             Q1-1997
                                             Q1-1998
                                             Q1-1999
                                             Q1-2000
                                             Q1-2001
                                                                                                 From Large Firms




                                             Q1-2002
                                             Q1-2003

Federal Reserve Senior Loan Officer Survey
                                             Q1-2004
                                             Q1-2005
                                             Q1-2006
                                             Q1-2007
                                             Q1-2008
                                             Q1-2009
                                                                                                                    Banks Reporting Stronger Loan Demand
Total Delinquency & Foreclosure Filings
                 2008
  • US 3,132,382, up 43%
  • Texas 127,833, down 15.0%
    – California 831,228, up 80%
    – Florida 498,020, up 78%
    – Ohio 144,151, up -6%
    – Michigan 141,572, up 4%
    – Arizona 152,707, up 118%
    – Nevada 123,183, up 89%
    – Virginia 66,536, up 175%
                                             Source: RealtyTrac, Inc.
      Data include all default, delinquency and foreclosure filings reported. The same property often has more than one filing.
          Monthly Foreclosure Filings
120,000
              Texas foreclosures have been
110,000
              modest compared to US trend.
100,000
 90,000
              US foreclosures were up 19% in 2008.
              Texas was down 30.5%.
                                                                                                                                                  US
 80,000
 70,000
 60,000
 50,000                                                                                                                Jan-Feb YTD 2009 filings :
                                                                                                                       US up 41%, Texas is down
 40,000
                                                                                                                       29%

                                                                                                                                             Texas
 30,000
 20,000
 10,000
     0
                            Oct-05




                                                                                   Oct-06




                                                                                                                                         Oct-07




                                                                                                                                                                                               Oct-08
                                     Dec-05




                                                                                            Dec-06




                                                                                                                                                  Dec-07




                                                                                                                                                                                                        Dec-08
                                                                                                     Feb-07
          Jun-05




                                              Feb-06



                                                                 Jun-06




                                                                                                                       Jun-07




                                                                                                                                                           Feb-08



                                                                                                                                                                             Jun-08




                                                                                                                                                                                                                 Feb-09
                                                                                                              Apr-07
                                                       Apr-06




                                                                                                                                                                    Apr-08
                   Aug-05




                                                                          Aug-06




                                                                                                                                Aug-07




                                                                                                                                                                                      Aug-08
                                                                                            Source: RealtyTrac, Inc.                                                                                        30
                                                                Data include Notices of Trustee Sales plus Notices of Foreclosure Sale
                   US Mortgages in Foreclosure
           15.0
                    at the End of the Quarter
           14.0                                                                          13.7
                                      US has approximately 6.9
           13.0                       million subprime loans or
           12.0                       about 12.1% of total of 56.8
           11.0                       million mortgage loans.
           10.0
            9.0                                                      Subprime Loans
Percent of Loans




            8.0
            7.0
            6.0
            5.0
            4.0                                                                           3.3
            3.0
            2.0                                                         All Loans        1.9
            1.0                       Prime Loans
            0.0
                   1Q2003




                   4Q2004




                   3Q2006




                   2Q2008
                   1Q1998
                   2Q1998
                   3Q1998
                   4Q1998
                   1Q1999
                   2Q1999
                   3Q1999
                   4Q1999
                   1Q2000
                   2Q2000
                   3Q2000
                   4Q2000
                   1Q2001
                   2Q2001
                   3Q2001
                   4Q2001
                   1Q2002
                   2Q2002
                   3Q2002
                   4Q2002

                   2Q2003
                   3Q2003
                   4Q2003
                   1Q2004
                   2Q2004
                   3Q2004

                   1Q2005
                   2Q2005
                   3Q2005
                   4Q2005
                   1Q2006
                   2Q2006

                   4Q2006
                   1Q2007
                   2Q2007
                   3Q2007
                   4Q2007
                   1Q2008

                   3Q2008
                   4Q2008
                     Source: Mortgage Bankers Association, National Delinquency Survey
                         Texas Mortgages in Foreclosure
                   8.0
                           at the End of the Quarter
                                                             Subprime Loans
                   7.0
                                                                                                6.0
                   6.0

                   5.0
Percent of Loans




                   4.0
                                Texas has approximately
                   3.0          475,000 subprime loans or
                                about 12.2% of total of 3.9
                   2.0          million mortgage loans.
                                                                               All Loans        1.5

                   1.0                                    Prime Loans                           0.7


                   0.0
                         1Q1998
                         2Q1998
                         3Q1998
                         4Q1998
                         1Q1999
                         2Q1999
                         3Q1999
                         4Q1999
                         1Q2000
                         2Q2000
                         3Q2000
                         4Q2000
                         1Q2001
                         2Q2001
                         3Q2001
                         4Q2001
                         1Q2002
                         2Q2002
                         3Q2002
                         4Q2002
                         1Q2003
                         2Q2003
                         3Q2003
                         4Q2003
                         1Q2004
                         2Q2004
                         3Q2004
                         4Q2004
                         1Q2005
                         2Q2005
                         3Q2005
                         4Q2005
                         1Q2006
                         2Q2006
                         3Q2006
                         4Q2006
                         1Q2007
                         2Q2007
                         3Q2007
                         4Q2007
                         1Q2008
                         2Q2008
                         3Q2008
                         4Q2008
                            Source: Mortgage Bankers Association, National Delinquency Survey
The US Housing Market
       The “Un-Magnificent” Seven:
                  California
                    Florida
                    Nevada
                    Arizona
                     Ohio
                   Michigan
             (fill in the blank)
                               33
  National Housing Market 2008
            Summary
Existing Home Sales declined 12%
Median Existing Home Prices fell by 14.6%; months
 inventory increased from 8.7 to 10 months
New Home Sales declined 37.5%, months of
 inventory ballooned to 13.6 months
New Home Construction plummeted 36%
1990’s underwriting; ample funds for prime
 mortgages and FHA
Refis dominating the mortgage market
Affordability operative market word
         New and Existing SF Home Sales U.S.
7,000                                                                                                                                                                                                                   1,450

6,500            Existing SF sales are down                                                                                                                                                                             1,350
                 33% from 2005 peak (left
6,000            scale) 9.1 months supply                                                                                                                                                                               1,250

5,500                                                                                                                                                                                                                   1,150

5,000                                                                                                                                                                                                                   1,050

4,500                                                                                                                                                                                                                   950

4,000                                                                                                                                                                                                                   850

3,500                                                                                    New SF sales are down                                                                                                          750
                                                                                         76% from 2005 peak
3,000                                                                                    (right scale) 12.2                                                                                                             650

2,500                                                                                    months supply                                                                                                                  550

2,000                                                                                                                                                                                                                   450

1,500                                                                                                                                                                                                                   350

1,000                                                                                                                                                                                                                   250
                                                     Jul-00




                                                                                                                                                Jul-05
                 Jul-98



                                   Jul-99




                                                                       Jul-01



                                                                                          Jul-02



                                                                                                            Jul-03



                                                                                                                              Jul-04




                                                                                                                                                                  Jul-06



                                                                                                                                                                                    Jul-07



                                                                                                                                                                                                      Jul-08
        Jan-98



                          Jan-99



                                            Jan-00



                                                              Jan-01



                                                                                Jan-02



                                                                                                   Jan-03



                                                                                                                     Jan-04



                                                                                                                                       Jan-05



                                                                                                                                                         Jan-06



                                                                                                                                                                           Jan-07



                                                                                                                                                                                             Jan-08



                                                                                                                                                                                                               Jan-09
                                                                                                                                                                                                                        35
                                            Sources: US Census Bureau , NAR, NAHB, NBER, 000s of units
(000, SAAR)         Annual New Home Sales
1,400      Average Annual Sales
           by Decade:                                                                                          -74% 2005 Peak
1,300      60s          513                                                                                    to Current
                                                                                                                                           1,283

           70s          656                                                                                                        1,203
1,200      80s          609
           90s          698
                                                                                                                                1,088
1,100      00-06      1,055                      -50% 1977                    -28% 1986
           07-09        533                      Peak to Trough               Peak to Trough                                                 1,051
                                                                                                                            972
1,000
                                                                                                                          909
                                                                                                                 885881877
 900
                                                 820                                                           805
                                                       818
 800          -28% 1972
                                                                              748
                                                                                                           758
                                                                                                                                                   776
              Peak to Trough    718                    709
                                                                        688
                                                                               672675              666670665
 700                        657
                                  633
                                           647                        639            650
                                                                   622
                                                                                                 608
              575
 600    560565                           550             545
                                      519
                   488490 486                                                       535
 500            461      449                                 436
                                                                                                                                           483
                                                                                           507

 400                                                           413

 300                                                                                                                                             309



 200
        1970




        1987




        2002
        1963
        1964
        1965
        1966
        1967
        1968
        1969

        1971
        1972
        1973
        1974
        1975
        1976
        1977
        1978
        1979
        1980
        1981
        1982
        1983
        1984
        1985
        1986

        1988
        1989
        1990
        1991
        1992
        1993
        1994
        1995
        1996
        1997
        1998
        1999
        2000
        2001

        2003
        2004
        2005
        2006
        2007
        2008
        2009
                                                                                                                                              36
                                        Source: US Census Bureau, NAHB, Real Estate Center
        Existing SF Sales and Months
8,000
                  Inventory                                     12.0
7,500    SF Sales         Months Inventory                      11.0
7,000                                                           10.0
6,500                                                           9.0
6,000                                                           8.0
5,500                                                           7.0
5,000                                                           6.0
4,500                                                           5.0
4,000                                                           4.0
3,500                                                           3.0
3,000                                                           2.0
2,500                                                           1.0
2,000                                                           0.0
        Jan-95




         Jul-97




        Jan-00




         Jul-02




        Jan-05




         Jul-07
        Oct-03
        Oct-98




        Oct-08
        Sep-96




        Sep-01




        Sep-06
        Jun-05
        Jun-95




        Feb-97

        Dec-97



        Mar-99



        Jun-00




        Feb-02

        Dec-02



        Mar-04




        Feb-07

        Dec-07
        Nov-95




        Nov-00




        Nov-05
        Apr-96




        Apr-01




        Apr-06
        May-98



        Aug-99




        May-03



        Aug-04




        May-08
                                                                37
                    Source: NAR, SA Annual Sales in Thousands
                                          Existing Home Sales
            7,000

                                                                                                                                                           6,179
                                    1978-1982 sales declined 50%                                                                                        5,959
            6,000
                                    2005-2009YTD sales down 34%                                                                                    5,443
                                                                                                                                                                5,677



                                                                                                                                              4,974                4,939
            5,000                                                                                                                    4651  4733
                                                                                                                                        4604
                                                                                                                                  4495
                                                                                                                                                                        4,350

                                                       3987                                                                                                                  4,050
                                                                                                                             3964
            4,000                                         3828                                                            3797
Thousands




                                                    3646
                                                                                       3478 3483                 3544519
                                                                                                                    3
                                                                                          3428                3427
                                                                                  3122                   3150
                                                 3066                                           3010
                                                                2972                               2914885
                                                                                                      2
            3,000                                                             2817
                                                                           2684
                                         2480                      2418
                                    2334
                                 2254 2273
                              2021                                      1990
            2,000
                       1 1
                    1567593613



            1,000


               0
                     1968

                            1970

                                   1972

                                          1974

                                                  1976

                                                         1978

                                                                 1980

                                                                         1982

                                                                                1984

                                                                                       1986

                                                                                              1988

                                                                                                     1990

                                                                                                            1992

                                                                                                                   1994

                                                                                                                           1996

                                                                                                                                   1998

                                                                                                                                          2000

                                                                                                                                                 2002

                                                                                                                                                         2004

                                                                                                                                                                 2006

                                                                                                                                                                         2008
                                                                                                                                                                        38
                                                                Source: US Census Bureau, NAHB
    Annual U.S. Median Home Price Percent
                   Change
 20.0%
 18.0%
 16.0%                                     14.4%
                                       13.5%
 14.0%                             12.6%                                                                                    12.2%
                                               11.7%
 12.0%                 10.7%
                           10.3%
 10.0%   8.5%                                                                                                             8.3%
                7.8% 8.2%
                   7.7%       7.9%                                                                                     7.5%
  8.0%                                            6.8%                6.6%
                                                                   6.4%
                                                                                                                    7.0%
                                                                                                                 6.3%
            5.5%                                                             5.9%   5.5%                5.4%
                                                                                                     5.2%
  6.0%                                                          4.3%     4.3%                     4.8%        4.3%
                                                          3.7%                               4.0%          3.8%
                                                                                          3.4% 3.1%
  4.0%                                                 2.1%
                                                             3.0%               2.9%   2.7%
                                                                                                                                 1.3%
  2.0%
  0.0%
 -2.0%                                                                                                                            -1.8%
 -4.0%
 -6.0%
 -8.0%
-10.0%
-12.0%
-14.0%
                                                                                                                                        -14.6%
-16.0%
-18.0%
-20.0%
          1976




          2008
          1969
          1970
          1971
          1972
          1973
          1974
          1975

          1977
          1978
          1979
          1980
          1981
          1982
          1983
          1984
          1985
          1986
          1987
          1988
          1989
          1990
          1991
          1992
          1993
          1994
          1995
          1996
          1997
          1998
          1999
          2000
          2001
          2002
          2003
          2004
          2005
          2006
          2007
                                                                                                                                          39
                                                                 Source: NAR
$250,000
                       US Median Home Prices
                                                                                  7/06
           At 2001 Trend, 2008 median prices should                             $230,900
$225,000   be between $185,000 and $190,000.

$200,000   2007 = $217,900

$175,000



$150,000



$125,000



$100,000
                                       2008 = $175,000, down 14.6%;
                                       February 2009 = $164,600, down
 $75,000                               another 15% Y/Y and 39% from
                                       peak.
 $50,000
           Jan-92




           Jan-98




           Jan-04
           Jan-90
           Jul-90
           Jan-91
           Jul-91

           Jul-92
           Jan-93
           Jul-93
           Jan-94
           Jul-94
           Jan-95
           Jul-95
           Jan-96
           Jul-96
           Jan-97
           Jul-97

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

           Jul-04
           Jan-05
           Jul-05
           Jan-06
           Jul-06
           Jan-07
           Jul-07
           Jan-08
           Jul-08
           Jan-09
                                                                                           40
                      Source: NAR, Real Estate Center at Texas A&M University
    Implications for Housing
• Will a taxable “tax credit” help stimulate
  buyers?
• Last year reported 1-2 million vacant
  homes , now it’s up to 6 million
• No incentives to buy foreclosed homes
• Homebuilder concessions putting
  downward pressure on the markets
• Stocks of homebuilders appear to have
  bottomed, and M&A coming
• Bank examiners bias against ADC loans
  Implications for Commercial Real
                Estate
• Heavy downward rent pressure in industrial,
  office and retail
• Cap rates revert back to 2002 levels
• Big wave of foreclosures coming unless TALF
  extended to CMBS and whole loans
• No new office, retail or industrial construction
  until 2012 or 2013
• FRANNIE financing lead to gross overbuilding
  in multi-family
Texas & Hood
   County
  Housing
   Market      43
                           Texas MSAs 2008
                                       Change from           Median          Change from    Months'
                          Sales
                                          2007                Price             2007       Inventory
Amarillo                   3,009            down 9%           $124,600          up 5%          5.7
Austin                     22,404          down 20%           $188,200          up 2%          5.4
Beaumont                   2,107           down 15%           $130,100          up 3%          6.9
Brownsville                 908            down 16%           $92,700          down 19%        Na
Bryan–College Station      2,471           down 2%            $144,200          up 4%          5.0
Corpus Christi             3,773           down 16%           $138,900          up 2%          9.4
Dallas                     50,291          down 16%           $156,100         down 2%         5.8
El Paso                    4,776           down 23%           $134,600          up 2%         11.2
Fort Worth                 9,658           down 16%           $117,100         down 1%         5.6
Houston                    65,070          down 16%           $151,800           flat          5.8
Laredo                      970             down 8%           $123,200         down 8%         8.8
Longview-Marshall          2,297           down 11%           $125,000          up 1%          6.5
Lubbock                    3,245            down 7%           $110,300          up 6%          5.3
Port Arthur                 924             down 9%           $114,700           up 8%         6.3
San Antonio                19,367          down 19%           $148,400           flat          7.6
Tyler                      3,078           down 14%           $133,800           Flat         10.2
Victoria                    854             down 7%           $126,100          up 5%          5.9
Waco                       2,330            down 1%           $111,000         Down 4%         7.6
TEXAS                     231,371          down 16%           $146,900           flat          6.4
                        Source: Real Estate Center at Texas A&M University                           44
          Annual Texas Home Sales
310,000
                                                                                                                                                                      292,805
290,000         2007 = about 6% decline from 2006.
                                                                                                                                                                                275,582
                2008 = 16% less than ’07                                                                                                                    266,842
270,000         2009 = sales down 10% to 15% from 2008 to
250,000         2001-2003 levels                                                                                                                  241,020
                                                                                                                                                                                          231,371
230,000                                                                                                                                 216,147
                                                                                                                                                                                                     208,234
210,000                                                                                                               196,401
                                                                                                                             201,528
                                                                                                                                                                                               196,665
                                                                                                            188,738
190,000                                                                                           184,056

                                                                                        170,638
170,000
                                                                              146,395
                                                                    138,123
150,000
130,000                               116,604
                                                122,134
                                                          121,823
                            107,107
110,000   100,047 99,619

 90,000
 70,000
 50,000
             1990




                                                                                           1998




                                                                                                                                                                         2006
                     1991

                               1992

                                         1993

                                                   1994

                                                             1995

                                                                       1996

                                                                                 1997



                                                                                                     1999

                                                                                                               2000

                                                                                                                         2001

                                                                                                                                 2002

                                                                                                                                           2003

                                                                                                                                                     2004

                                                                                                                                                               2005



                                                                                                                                                                                   2007

                                                                                                                                                                                             2008

                                                                                                                                                                                                         2009p
                                                                                                                                                                                                    45
                                            Source: Real Estate Center at Texas A&M University
                                                                                  $100,000
                                                                                                        $120,000
                                                                                                                   $130,000
                                                                                                                                         $150,000
                                                                                                                                                    $160,000




                                                                                             $110,000
                                                                                                                              $140,000




                                                              $80,000
                                                                        $90,000
                                                     Jan-98
                                                     May-98
                                                     Sep-98
                                                     Jan-99
                                                     May-99
                                                     Sep-99
                                                     Jan-00
                                                     May-00
                                                     Sep-00
                                                     Jan-01
                                                     May-01
                                                     Sep-01
                                                     Jan-02
                                                     May-02
                                                     Sep-02
                                                     Jan-03
                                                     May-03
                                                     Sep-03
                                                     Jan-04
                                                     May-04
                                                     Sep-04
                                                     Jan-05
                                                     May-05

Source: Real Estate Center at Texas A&M University
                                                     Sep-05
                                                                                                                                                               3-Month Moving Average




                                                     Jan-06
                                                                                                                                                               Texas Median Home Price




                                                     May-06
                                                     Sep-06
                                                     Jan-07
                                                     May-07
                                                     Sep-07
                                                     Jan-08
                                                     May-08
                                                     Sep-08
                                  46




                                                     Jan-09
                                                     May-09
          Texas SF Building Permits
180,000
                   1984 82% of 1983 peak                                                        2006 98% of 2005 peak                                                                      166,203
                                                                                                                                                                                                163,032
160,000            1985 66% of 1983 peak                                                        2007 72% of 2005 peak
                                                                                                                                                                             151,384
                   1986 57% of 1983 peak                                                        2008p 48% of 2005 peak
140,000            1987 43% of 1983 peak                                                        2009e 36% of 2005 peak                                                   137,493
                   1988 35% of 1983 peak
                                                                                                                                                                  122,913
                                                                                                                                                                                                      120,366
120,000                                                                                                                                                  111,915
                                                                                                                                                    108,782
                             103,252                                                                                                      101,928
                                                                                                                                      99,912
100,000
                                    84,565                                                                              83,132
                                                                                                                             82,228
                      78,714                                                                                                                                                                                 80,000
 80,000                                                                                                 70,452
                                                                                                   69,964    70,421
          67,870
               66,161                      67,964
                                                  59,143                                    59,543                                                                                                                   60,000
 60,000
                                                                                     46,209
                                                         43,975
                                                                          38,233
 40,000                                                              36,658
                                                                35,908



 20,000

     0
                                                                                  1990




                                                                                                                                                        2000
            1980
                   1981
                          1982
                                 1983
                                        1984
                                               1985
                                                      1986
                                                             1987
                                                                    1988
                                                                           1989


                                                                                         1991
                                                                                                1992
                                                                                                       1993
                                                                                                              1994
                                                                                                                     1995
                                                                                                                            1996
                                                                                                                                   1997
                                                                                                                                          1998
                                                                                                                                                 1999


                                                                                                                                                               2001
                                                                                                                                                                      2002
                                                                                                                                                                             2003
                                                                                                                                                                                    2004
                                                                                                                                                                                            2005
                                                                                                                                                                                                   2006
                                                                                                                                                                                                          2007


                                                                                                                                                                                                                         2009
                                                                                                                                                                                                                 2008p
                                          Source: US Census Bureau, Real Estate Center at Texas A&M                                                                                                                      47
                                                                                                                                             10%
                                                                                                                                                      11%




                                  -9%
                                        -8%
                                              -7%
                                                    -6%
                                                          -5%
                                                                -4%
                                                                      -3%
                                                                            -2%
                                                                                  -1%
                                                                                        0%
                                                                                             1%
                                                                                                  2%
                                                                                                       3%
                                                                                                            4%
                                                                                                                 5%
                                                                                                                      6%
                                                                                                                           7%
                                                                                                                                8%
                                                                                                                                     9%
                         1Q1997
                         2Q1997
                         3Q1997
                         4Q1997
                         1Q1998
                         2Q1998
                         3Q1998
                         4Q1998
                         1Q1999
                         2Q1999
                         3Q1999
                         4Q1999
                         1Q2000
                         2Q2000
                                                                                                                                US 4Q2008 = -8.3%




                         3Q2000
                                                                                                                                Texas 4Q2008 = 0.3%




                         4Q2000
                         1Q2001
                         2Q2001
                         3Q2001
                         4Q2001
                         1Q2002
                         2Q2002
                                                                                             Texas

                         3Q2002
                         4Q2002
                                                                                                                                US




                         1Q2003
                         2Q2003
                         3Q2003
                         4Q2003




Source: OFHEO, 4Q2008
                         1Q2004
                         2Q2004
                         3Q2004
                         4Q2004
                                                                                                                                                            Purchase Only Index Change Year over Year




                         1Q2005
                         2Q2005
                         3Q2005
                         4Q2005
                         1Q2006
                         2Q2006
                         3Q2006
                         4Q2006
                         1Q2007
                                                                                                                                                                                                        US and Texas Appreciation




                         2Q2007
                         3Q2007
                         4Q2007
                         1Q2008
                    48




                         2Q2008
                         3Q2008
                         4Q2008
 US Texas and Hood County Median Home Price
$250,000
           Texas remains a housing bargain, but not
$225,000
           by as much.
           The gap between the US and Texas
$200,000
           median price widened to 33%, but has
           narrowed to 16%
$175,000


$150,000


$125,000


$100,000


 $75,000


 $50,000
                  1990
           1989


                         1991
                                1992
                                       1993
                                              1994
                                                     1995
                                                            1996
                                                                   1997
                                                                          1998
                                                                                 1999
                                                                                        2000
                                                                                               2001
                                                                                                      2002
                                                                                                             2003
                                                                                                                    2004
                                                                                                                           2005
                                                                                                                                  2006
                                                                                                                                         2007
                                                                                                                                                2008
                                                                                                                                                49
            Source: NAR, Granbury Association of Realtors®, Real Estate Center at Texas A&M University
         Hood County SF Sales and Average
                Days on Market
        1200                                                                                                120
                                                                                       Average
                                   Annual                                              Days on
        1100        110             Sales              1,073                           Market               110

        1000                        970                                      962                       99   100
                                      97




                                                                                                                 Average Days on Market
        900     860                                                                                         90
                                                                                                  843
Sales




        800                                                                                                 80
                                                             77                   76
        700                                                                                                 70
                   2008 Sales down about 12% from 2007 or
        600                                                                                                 60
                            about equal to 2004.
        500                                                                                                 50

        400                                                                                                 40
               2004                 2005                2006                 2007                2008
                                                                                                            50
               Source: Granbury Association of Realtors®, Real Estate Center at Texas A&M University
     Hood County SF Median Price
$165,000
                                                                            $160,000               $161,000
$160,000    Median Price is up 17% since 2004

$155,000                                              $154,250

$150,000

$145,000

$140,000                         $139,000
           $137,500
$135,000

$130,000

$125,000
               2004                 2005                  2006                 2007                 2008
                                                                                                           51
           Source: Granbury Association of Realtors®, Real Estate Center at Texas A&M University
  Hood County SF Price Distribution
120
          2004                2008                          2004 Median Price = $137,500
100
                                                            2008 Median Price = $161,000
 80

 60

 40

 20

  0




                                                                                              52
      Source: Granbury Association of Realtors®, Real Estate Center at Texas A&M University
Demographics
    2000 – 2008 States with
Population Increases > 1 million
                                 Population                                Percent                             2008
   State                          Increase                                Increase                           Population
Texas                            3,475,163                                  16.7%                           24,326,974
California                       2,885,016                                   8.5%                           36,756,666
Florida                          2,345,527                                  14.7%                           18,328,340
Georgia                          1,498,932                                  18.3%                            9,685,744
Arizona                          1,369,573                                  26.7%                            6,500,180
North
                                 1,175,914                                  14.6%                            9,222,414
Carolina
                                            Source: U.S. Census Bureau
    Table 4: Cumulative Estimates of the Components of Resident Population Change for the United States, Regions, States, and
                          Puerto Rico: April 1, 2000 to July 1, 2008 (NST-EST2008-04),) December 22, 2008                       54
            Texas Is An Urban State
2007 and 2040 Texas Metropolitan Area Population Estimates
                                     2007                       2040
                                                                                       Percent
         MSA                        Population                Population
                                                                                       Increase
                                    (millions)                (millions)
       Austin                           1.6                         4.0                150.0%
Dallas-Ft. Worth                        6.1                        14.8                142.6%
      Houston                           5.6                         11.7               108.9%
   San Antonio                          2.0                         3.2                 60.0%
 Total 4 MSAs                          15.3                        33.7                120.3%
 Total All MSAs                        21.0                        41.5                 97.6%
        Texas                          23.8                        44.9                 88.7%
 Percent In MSAs                     88.2%                       92.6%
                                                                                                      55
Source: U.S. Census Bureau; Texas State Data Center 2008 Population Projections, 2000-2007 Scenario
Central Texas Triangle




                         56
Lake Granbury Today




                      57
Lake Granbury in 2050?




                         58
                    Projected Texas Population
  (000s)

45,000
                                                                                    2000 - 2030
                           At 50% 1990-2000 rate of immigration
                           At 2000-2007 rate of immigration                                                                                                                                 41,118

40,000                     At 100% 1990-2000 rate of immigration
                                                                                                                                                                                       37,285

                Between 9 and 18 million more
35,000
                residents between 2005 and 2030
                                                                                                                                                32,737
                                                                                                                                                                              31,831
                                                                                                                                       30,858

30,000
                                                                                                                              28,006




25,000                                                               24,327

                                            22,811

           20,946

20,000



15,000
             2000

                    2001

                           2002

                                  2003

                                         2004

                                                2005

                                                       2006

                                                              2007

                                                                       2008



                                                                                    2010

                                                                                           2010

                                                                                                  2010



                                                                                                         2015

                                                                                                                2015

                                                                                                                       2015



                                                                                                                                2020

                                                                                                                                         2020

                                                                                                                                                  2020



                                                                                                                                                         2025

                                                                                                                                                                2025

                                                                                                                                                                       2025



                                                                                                                                                                                2030

                                                                                                                                                                                         2030

                                                                                                                                                                                                2030
                                                                              ...




                                                                                                                                                                                       59
                                  Source: U.S. Census Bureau, Texas State Demographer 2008 Projections
    Averaging the projections results in an
   increase of 13.9 million people by 2030.
Over the next 25 years, equivalent of adding:

     another 12-county Dallas-Ft.
     Worth metropolitan area, plus
       another 10-county Houston
         metropolitan area, plus

     another 8-county San Antonio
        metropolitan area, plus
          another Corpus Christi
                                           60
                            Texas Age Distribution 2005-2030
650,000                                                                                                                                               650,000

600,000                                                          Boomers                                                                              600,000

550,000
                            2005                                                                                                                      550,000
                                                                                                                                                                              2010                                    Boomers
500,000                                                                                                                                               500,000

450,000                                                                                                                                               450,000

400,000                                                                                                                                               400,000

350,000                                                                                                                                               350,000

300,000                                                                                                                                               300,000

250,000                                                                                                                                               250,000

200,000                                                                                                                                               200,000

150,000                                                                                                                                               150,000

100,000                                                                                                                                               100,000

 50,000                                                                                                                                                50,000

      0                                                                                                                                                     0
          0

              5




                                                                                                                                          85+
                  10

                       15

                            20

                                 25

                                       30

                                             35

                                                       40

                                                                  45

                                                                            50

                                                                                      55

                                                                                                60

                                                                                                          65

                                                                                                                    70

                                                                                                                              75

                                                                                                                                    80




                                                                                                                                                                                                                                                          85+
                                                                                                                                                                        10

                                                                                                                                                                             15

                                                                                                                                                                                  20

                                                                                                                                                                                       25

                                                                                                                                                                                            30

                                                                                                                                                                                                 35

                                                                                                                                                                                                      40

                                                                                                                                                                                                                 45

                                                                                                                                                                                                                      50

                                                                                                                                                                                                                           55

                                                                                                                                                                                                                                60

                                                                                                                                                                                                                                     65

                                                                                                                                                                                                                                          70

                                                                                                                                                                                                                                               75

                                                                                                                                                                                                                                                     80
                                                                                                                                                                0

                                                                                                                                                                    5
                                                            Age                                                                                                                                            Age

650,000                                                                                                                                               650,000

                                                                                                                                                      600,000

                                        2020
600,000

550,000                                                                                                                                               550,000
                                                                                                                                                                                                 2030
                                                                                                     Boomers                                          500,000
                                                                                                                                                                                                                                          Boomers
500,000

450,000                                                                                                                                               450,000

400,000                                                                                                                                               400,000

350,000                                                                                                                                               350,000

300,000                                                                                                                                               300,000

250,000                                                                                                                                               250,000

200,000                                                                                                                                               200,000

150,000                                                                                                                                               150,000

100,000                                                                                                                                               100,000

 50,000                                                                                                                                                50,000

     0                                                                                                                                                     0                                                                                    61
                                                                                                                                                                        10


                                                                                                                                                                             15


                                                                                                                                                                                  20


                                                                                                                                                                                       25


                                                                                                                                                                                            30


                                                                                                                                                                                                 35


                                                                                                                                                                                                      40


                                                                                                                                                                                                                 45


                                                                                                                                                                                                                      50


                                                                                                                                                                                                                           55


                                                                                                                                                                                                                                60


                                                                                                                                                                                                                                     65


                                                                                                                                                                                                                                          70


                                                                                                                                                                                                                                               75


                                                                                                                                                                                                                                                     80
                                                                                                                                                                0


                                                                                                                                                                    5




                                                                                                                                                                                                                                                          85+
                  10


                       15


                            20


                                  25


                                        30


                                                  35


                                                            40


                                                                       45


                                                                                 50


                                                                                           55


                                                                                                     60


                                                                                                               65


                                                                                                                         70


                                                                                                                                   75


                                                                                                                                         80
          0


              5




                                                                                                                                                85+




                                                                 Age                                                                                                                                       Age
 Projected Hood County Population
  (000s)

120,000
                                                                                      2000 - 2030
                           At 50% 1990-2000 rate of immigration
                           At 2000-2007 rate of immigration                                                                                                                              102,569

100,000                    At 100% 1990-2000 rate of immigration
                Most likely between 42 and 56 thousand                                                                                                                                  88,466

                more residents between 2005 and 2030,
 80,000                                                                                                                                           77,730
                90% and 120% more residents
                                                                                                                                         70,861
                                                                                                                                                                                65089

 60,000                                                                                                                         56,847

                                                                       50,573
                                              46,802
           41,463
 40,000



 20,000



       0
             2000

                    2001

                            2002

                                    2003

                                           2004

                                                  2005

                                                         2006

                                                                2007

                                                                         2008



                                                                                      2010

                                                                                             2010

                                                                                                    2010



                                                                                                           2015

                                                                                                                  2015

                                                                                                                         2015



                                                                                                                                  2020

                                                                                                                                           2020

                                                                                                                                                    2020



                                                                                                                                                           2025

                                                                                                                                                                  2025

                                                                                                                                                                         2025



                                                                                                                                                                                 2030

                                                                                                                                                                                             2030

                                                                                                                                                                                                    2030
                                                                                ...




                                                                                                                                                                                        62
                                   Source: U.S. Census Bureau, Texas State Demographer 2008 Projections
Recent Economic Trends Affecting Local
        Economic Development
• In-sourcing jobs to small-medium towns with
  affordable labor and cost of living
• Texas is the second most preferred state for
  retiree relocations
• Attracting new residents becoming equally
  important as attracting new jobs
• Regional approach to economic development
  fast recognized as best practice

                                                 63
Dr. James P. Gaines
 Research Economist
  Real Estate Center
Texas A&M University
                       64
  recenter.tamu.edu

								
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