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Brought to you by: KW Research 2 The Numbers That Drive Real Estate 3 Recent Government Action 10 Topics for Home Buyers, Sellers, and Owners Released: December 7, 2010 Commentary 12

Commentary The housing market continues its uneven and gradual recovery without the aid of the tax credit. Experts believe this will be the trend moving forward. Interest rates hit another record low but have started moving back up as the overall economy improves. Despite a less-than-expected employment report, consumers seem to be feeling brighter about the future. While the Consumer Confidence Index about the Present Situation rose only slightly, the Expectation Index showed substantial improvement. As we enter into the holiday gift-buying season, consumers are expected to be out shopping and buying more gifts for under the tree this year. Department stores with online presence did particularly well, with a 38% increase compared to last year according to industry reports. Overall reports indicate a 13 -24% increase in retail sales from last year. Consumer spending accounts for about half of all economic activity in the US; as long as consumers are spending and using debt responsibly, this is a positive indicator for economic growth. This march back up continues to provide excellent opportunities: an ample selection of homes, affordable prices, and historically low interest rates. Experts anticipate both the economy and the housing market will continue on a path to a complete recovery. Sources: Bloomberg. com, nytimes. com, wsj. com KW Research 2

Brought to you by: KW Research 4 Home Price 5 Inventory 6 Mortgage Rates 8 Affordability The Numbers That Drive Real Estate Home Sales 9

Home Sales In Millions Home sales dropped slightly in October, compared with the previous month, despite a temporary moratorium on foreclosures, which have recently represented more than one third of sales activity. Sales were up 15% from July when the tax credit expiration caused a drop-off in sales. The most significant indicator of a market rebound, however, appears to be the October pending sales report. A 10. 4% increase in pending sales, which measures homes under contract, signals stronger home sales activity in the coming months as the homes under contract close. First-Time Home Buyer Tax Credit Scheduled to expire November 30 Octobe Extended and Expanded Home Buyer Tax Credit Renewed November 7 Must have contract signed by April 30 Must close by June 30 Tax Credit Is Expired Gradual Recovery Without Tax Credit r ’ 09 -’ 1 0 October ’ 08 -’ 09 Latest Data Release: November 23, 2010 Source: National Association of Realtors KW Research 4

Home Price In Thousands Home prices have shown considerable stability when compared with the previous several years. October’s median home price declined slightly, down less than 1% from the previous month and year. A recent study shows an increased interest in smaller homes. Smaller homes often mean smaller price tags, depending on location. While the market currently provides many opportunities for buyers, sellers look forward to the general trending upward of home price as the market’s stability without government support grows deeper roots. 2007 -8 2008 -9 2009 -10 Latest Data Release: November 23, 2010 Source: National Association of Realtors, relocation. com KW Research 5

Inventory - Number of homes available for sale In Millions There are fewer homes on the market. Total inventory fell to 3. 86 million in October from 4 million in September. As lending standards continue to loosen and return to historical norms, more people will be able to buy their first home, move up, or invest and take advantage of the abundant opportunities in the current market – including historically low interest rates, highly affordable prices, and an ample but shrinking selection of homes. October ’ 08 -’ 0 9 October ’ 09 -’ 10 Latest Data Release: November 23, 2010 Source: National Association of Realtors KW Research 6

Supply of Inventory In Months Month’s supply of inventory measures how many months it will take to sell all the homes that are for sale, if no new homes come on the market and buyers continue to buy at the same pace or rate. The month’s supply of homes on the market fell to 10. 5 months. While still at a relatively high level, months of inventory has shrunken substantially since July’s 12. 5 months. October ’ 08 -’ 09 er Octob 0 ’ 09 -’ 1 Latest Data Release: November 23, 2010 Source: National Association of Realtors KW Research 7

Mortgage Rates 30 -Year Fixed Mortgage rates hit another record low of 4. 17% on November 11 after which they rose to close to 4. 4% for the remainder of the month. Historically low rates have contributed to real savings for buyers who will continue to realize those savings for as long as they own the home. As overall economic recovery gains traction, rates must rise to keep inflation in check. Industry economist Lawrence Yun anticipate srates to be between 5. 4% and 6% by the end of 2011. 30 -Year Average – 8. 90% 1 -Year Average – 4. 71% Source: Freddie Mac KW Research 8

Affordability - The percentage of a median family’s income required to make mortgage payments on a median-priced home Percentage of Income Housing is at record affordability levels. Prospective home buyers stand to benefit from the lowest mortgage rates in decades, as well as advantageous home prices. The home price-to-income ratio continues to remain well below the historical standard. Stabilizing home prices and rising interest rates are anticipated to begin drawing affordability back up toward more normal levels. Historical Standard: 25% Affordability as of October every year. Calculations assume a 20% down payment. Source: National Association of Realtors KW Research 9

Recent Government Action Brought to you by: KW Research Conforming Loan Limits Extended 11

Conforming Loan Limits Extended In Most Expensive Markets Qualifying for a mortgage is often dependent on whether or not that mortgage will be backed by a government sponsored entity (GSE), such as Fannie Mae and Freddie Mac. Fannie, Freddie, and the Federal Housing Administration (FHA) account for more than 90% of the mortgage market. There are limits to the size of a mortgage that GSEs will back. Generally, the limit is $417, 000 to $729, 750 in high priced markets. In July 2008, the housing recovery bill raised the limit in high cost areas to a maximum of $729, 750 from $417, 000 everywhere. These limits were set to expire at the end of the year and have now been extended through September of 2011. Banks have already begun increasing loans above the limits, also known as jumbo loans. The extension of conforming loan limits will provide more time for banks to beef up their jumbo lending and give the housing market time to strengthen, supporting a smoother transition to less government support. Sources: Rutgers, Housing. Wire. com, wsj. com, National Association of Realtors KW Research 11

Topics for Home Buyers, Sellers, and Owners Brought to you by: KW Research Prime Time yo Buy 12

Prime Time to Buy Homes Have Never Been More Affordable For most individual home buyers, there are only a few factors that really matter: • Can I afford this home? • Is it a good investment? • Does it meet my family’s needs? So it’s a bit surprising that the most important housing statistic has gone largely unreported: homes have never been more affordable. Affordability, measured by the median mortgage payment on the current median-priced home ($171, 000) as a percentage of the median household income ($62, 141), is lower than it’s been in a generation. The chart below shows affordability at a record level, having significantly improved since the height of the recent housing boom in 2006. At 14. 4% of median income, affordability is at an all time advantageous level! For more reasons why now is the prime to buy, check out: 7 Reasons Why Now Is a Great Time to Buy a Home! Sources: National Association of Realtors, Keller Williams Realty 7 Reasons Why Now Is a Great Time to Buy a Home! KW Research 13

Your Local Market Although it is important to stay informed about what is going on in the national economy and housing market, many different factors impact the real estate market in your own area. Call The Birschbach Team @ 608 -444 -4194 for assistance interpreting the conditions in your local market. We are equipped with the knowledge and information to help you navigate through the home-buying or selling process in this challenging market. KW Research 14

About Keller Williams Realty Founded in 1983, Keller Williams Realty, Inc. is an international real estate company with more than 80, 000 associates and 686 offices across the United States and Canada. The company began franchising in 1991 and, after years of phenomenal growth and success, became third-largest U. S. residential real estate firm in 2009. The company has succeeded by treating its associates as partners and sharing its knowledge, policy control, and company profits on a systemwide basis. By focusing on helping associates realize their fullest potential, Keller Williams Realty is known as an industry leader in its family culture, unmatched education, profit-sharing business model, phenomenal coaching program, and technology offerings. www. kw. com KW Research 15

The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources. You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Keller Williams Realty, Inc. does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involve some degree of risk. Keller Williams Realty, Inc. , will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate. KW Research 16

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