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48
Economic & Real Estate Economic & Real Estate Trends and Outlook Trends and Outlook d Presented to Windermere Eastside Februar y 8 th , 2011 815 Western Avenue, Suite 400 Seattle, WA 98104 206.442.9200 Presented by: Matthew Gardner Managing Principal

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Page 1: Matthew Gardner Economic Report

Economic & Real EstateEconomic & Real EstateTrends and OutlookTrends and Outlook

dPresented toWindermere Eastside

February 8th, 2011815 Western Avenue, Suite 400

Seattle, WA 98104

206.442.9200

y

Presented by:Matthew Gardner

Managing Principal

Page 2: Matthew Gardner Economic Report

H W B H B f ?Have We Been Here Before…?Not Necessarily!

Page 3: Matthew Gardner Economic Report

U.S Economic OutlookU.S Economic Outlook

Page 4: Matthew Gardner Economic Report

Fact 1.Fact 1.Fact 1.Fact 1.The Economy is Growing.The Economy is Growing.The Economy is Growing.The Economy is Growing.

Page 5: Matthew Gardner Economic Report

GDP Growth ForecastGDP Growth ForecastBelow Par Growth, but 5.0

6.0

Growth None the Less! 2 0

3.0

4.0

Less!

I Want to 0.0

1.0

2.01 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 f) f) f) f)

See Growth Above the Historic 3% 3 0

-2.0

-1.0

2003

-Q

2003

-Q

2003

-Q

2003

-Q

2004

-Q

2004

-Q

2004

-Q

2004

-Q

2005

-Q

2005

-Q

2005

-Q

2005

-Q

2006

-Q

2006

-Q

2006

-Q

2006

-Q

2007

-Q

2007

-Q

2007

-Q

2007

-Q

2008

-Q

2008

-Q

2008

-Q

2008

-Q

2009

-Q

2009

-Q

2009

-Q

2009

-Q

2010

-Q

2010

-Q

2010

-Q

2010

-Q

2011

-Q

1 (f

2011

-Q

2 (f

2011

-Q

3 (f

2011

-Q

4 (f

Historic 3% Average.

-5.0

-4.0

-3.0

Source: Gardner Economics LLC & BEA

Economic & Real Estate Forecast

February 8 2011

% annualized growth rate-7.0

-6.0

Page 6: Matthew Gardner Economic Report

Fact 2.Fact 2.Fact 2.Fact 2.We Are Creating Jobs.We Are Creating Jobs.gg

Page 7: Matthew Gardner Economic Report

U.S. Job Losses U.S. Job Losses Have Turned Have Turned PositivePositive

4,000

Positive…Positive…

2,000A Recovery Appears to Be U d

-2 000

0Underway; However, the Pace of

-4,000

-2,000Improvement is Under Par.

-6,000

-8,00012-month payroll job changes; in thousands

Source: BLS – Seasonally Adjusted Figures – Data through January 2010

Economic & Real Estate Forecast

February 8 2011

Page 8: Matthew Gardner Economic Report

11%600 000

Monthly U.S. Payroll ChangeMonthly U.S. Payroll Change

10%

11%

300 000

400,000

500,000

600,000Net Jobs Added

Unemployment Rate

Need 150,000-175 000 N

9%

0

100,000

200,000

300,000

Rate

ed175,000 New Positions Per Month for Unemployment

7%

8%

-300,000

-200,000

-100,000

0

nem

ploy

men

t

Net

Jobs

Add

e

Rate to Drop.

Recent Declines Due to So Called

6%

-600,000

-500,000

-400,000

300,000 U“Disenchanted” Workers. This Will Likely Push Up Again Before

4%

5%

-900,000

-800,000

-700,000

,Up Again Before It Comes Down.

Source: BLS – Seasonally Adjusted Figures – Data Through January 2011

Economic & Real Estate Forecast

February 8 2011

Page 9: Matthew Gardner Economic Report

How Many Years to Get the How Many Years to Get the J b M k B k N l?J b M k B k N l?Job Market Back to Normal?Job Market Back to Normal?

Jobs added per month

Assumed new jobs needed for growing

population perHow many years?

population per month

100 000 100 000Treading water

and never back to100,000 100,000 and never back to normal!

200,000 100,000 6.3 yearsy300,000 100,000 3.2 years400,000 100,000 2.1 years

Economic & Real Estate Forecast

February 8 2011

Page 10: Matthew Gardner Economic Report

Private Sector Showing Private Sector Showing Job Growth!Job Growth!Job Growth!Job Growth!

400

The Private Sector Added 0

200

Jobs EveryMonth Since Last March

-200

020

05 -

Jan

2005

-A

pr

2005

-Ju

l

2005

-O

ct

2006

-Ja

n

2006

-A

pr

2006

-Ju

l

2006

-O

ct

2007

-Ja

n

2007

-A

pr

2007

-Ju

l

2007

-O

ct

2008

-Ja

n

2008

-A

pr

2008

-Ju

l

2008

-O

ct

2009

-Ja

n

2009

-A

pr

2009

-Ju

l

2009

-O

ct

2010

-Ja

n

2010

-A

pr

2010

-Ju

l

2010

-O

ct

000’

s

Last March.-400

In 0

-800

-600

Source: BLS – Seasonally Adjusted Figures – Data Through January 2011

Economic & Real Estate Forecast

February 8 2011-1,000

Monthly payroll job changes

Page 11: Matthew Gardner Economic Report

Upswing In the Job Upswing In the Job Market Market Apparent?Apparent?

We Have Swung

Apparent?Apparent?

1.0%

1974 1981 1990

2001 2008

Swung Upward but It Will Take

1 0%

-0.5%

0.0%

0.5%

1.0%

Empl

oym

ent

Years To get Back to Pre-Recession -2.5%

-2.0%

-1.5%

-1.0%

elat

ive

to P

eak

Eth

Levels.

Is the -4.5%

-4.0%

-3.5%

-3.0%

ativ

e Jo

b Lo

ss R

eM

ont

Is the Recovery √-shaped?

-6 5%

-6.0%

-5.5%

-5.0%

Perc

ent C

umul

a

Source: BLS & Gardner Economics –Data through January 2011

Economic & Real Estate Forecast

February 8 2011

-7.0%

-6.5%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

P

Number of Months After Peak Employment

Page 12: Matthew Gardner Economic Report

Fact 3.Fact 3.Fact 3.Fact 3.Consumer Confidence, Although Consumer Confidence, Although , g, g

Low, is Clearly Off the Bottom.Low, is Clearly Off the Bottom.

Page 13: Matthew Gardner Economic Report

Consumer ConfidenceConsumer Confidence200

160

180

200ConfidencePresent SituationExpectation Index

Expectations Have 120

140

160 Expectation Index

Improved, as has Overall Confidence. 80

100

Nice Uptickin January! 40

60

0

20

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

Source: Conference Board – Data through January 2011

Economic & Real Estate Forecast

February 8 2011

Jan-

00

Aug-

00

Mar

-0O

ct-0

May

-02

Dec

-02

Jul-0

3

Feb-

04

Sep-

04A

pr-0

5

Nov

-05

Jun-

06Ja

n-07

Aug-

07

Mar

-08

Oct

-08

May

-09

Dec

-09

Jul-1

0

Page 14: Matthew Gardner Economic Report

U.S. Economic ForecastU.S. Economic Forecast

• Moderate GDP Expansion 2 5% in the Next 2• Moderate GDP Expansion 2.5% in the Next 2 Years. (Historical Average is 3%.)

• 1.5 Million Job Additions Annually in the Next 2 Years.

• Unemployment Rate of 8% in 2012… and back to a Normal 6% by 2015.back to a Normal 6% by 2015.

• Inflation Concerns?

Page 15: Matthew Gardner Economic Report

U.S. Real EstateU.S. Real Estate

Page 16: Matthew Gardner Economic Report

Fact 4.Fact 4.Fact 4.Fact 4.3030--Year Fixed Mortgage Rates are Year Fixed Mortgage Rates are g gg g

Still at Generational LowsStill at Generational Lows

Page 17: Matthew Gardner Economic Report

9 00%

3030--Year Fixed Mortgage RatesYear Fixed Mortgage Rates

8.00%8.50%9.00%

The Fed Started Buying Fannie & Freddie Debt

(QE2)

6 50%7.00%7.50%

Fannie & Freddie Debt.Suppresses Rates, but the Recent

5.50%6.00%6.50%the Recent

Increase is Due to Better than

4 00%4.50%5.00%

10-Year Treasury Yield

than Expected Economic

3.00%3.50%4.00%

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

yAlmost Hits 4%News.

Dec

-99

Mar

-00

Jun

-00

Sep

-00

Dec

-00

Mar

-0Ju

n-0

Sep

-0D

ec-0

Mar

-02

Jun

-0Se

p-0

2D

ec-0

2M

ar-0

3Ju

n-0

3Se

p-0

3D

ec-0

3M

ar-0

4Ju

n-0

4Se

p-0

4D

ec-0

4M

ar-0

5Ju

n-0

5Se

p-0

5D

ec-0

5M

ar-0

6Ju

n-0

6Se

p-0

6D

ec-0

6M

ar-0

Jun

-0Se

p-0

7D

ec-0

Mar

-08

Jun

-08

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

Dec

-10

Source: Freddie Mac –Month End Figures Through January 6, 2011.

Economic & Real Estate Forecast

February 8 2011

Page 18: Matthew Gardner Economic Report

11 00%

3030--Year Fixed Mortgage RatesYear Fixed Mortgage Rates

9.00%

10.00%

11.00%4-Year Forecast

6 00%

7.00%

8.00%Mortgage Rates Have to Increase

4.00%

5.00%

6.00%Eventually as Economic Growth

2.00%

3.00%Growth Stimulates Inflationary P

0.00%

1.00%

990

991

992

993

994

995

996

997

998

999

000

001

002

003

004

005

006

007

008

009

010

prj

prj

prj

prj

Pressures.

19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 2020

11

2012

20

13

2014

Source: Gardner Economics & Freddie Mac

Economic & Real Estate Forecast

February 8 2011

Page 19: Matthew Gardner Economic Report

Fact 5.Fact 5.Fact 5.Fact 5.I’m Not the Only Economist WhoI’m Not the Only Economist WhoI m Not the Only Economist Who I m Not the Only Economist Who

Sees a Better Future!Sees a Better Future!

Page 20: Matthew Gardner Economic Report

MacromarketsMacromarkets Surveys 100 Economists about Surveys 100 Economists about h H P i O l kh H P i O l kthe Home Price Outlook.the Home Price Outlook.

Expected Home Price Change by YearExpected Home Price Change by Year(Case Shiller Index)

Year YoY Change Cumulative2010 -1.13% -1.13%2011 0 17% 1 27%2011 -0.17% -1.27%2012 1.94% 0.69%2013 2 86% 3 61%2013 2.86% 3.61%2014 3.45% 7.21%2015 3.67% 11.18%2015 3.67% 11.18%

Page 21: Matthew Gardner Economic Report

Fact 6.Fact 6.Fact 6.Fact 6.LongLong--Term Path to Self Reliance Term Path to Self Reliance ggMay be Helped from LongMay be Helped from Long--Term Term

Housing Wealth Gains.Housing Wealth Gains.

Page 22: Matthew Gardner Economic Report

Median Family Net WorthMedian Family Net Worth20072007

$250 000

$300,000

2007

20072007

2010 data to be published

in 2012 by2001 2004

$200,000

$250,000 2007

in 2012 by the Federal

Reserve. 1995

1998

$150,000

$100,000

1995 1998 2001 2004

$50,000

2007

Source: Federal Reserve

$0

Renter HomeownerEconomic & Real Estate Forecast

February 8 2011

Page 23: Matthew Gardner Economic Report

The Seattle AreaThe Seattle AreaEconomyEconomy

Page 24: Matthew Gardner Economic Report

Seattle’s Employment SituationSeattle’s Employment Situation

40

60

0

20

40

Year-over-Year we See E l t

-20

00

00

- J

an

00

0 -

Ju

l

00

1 -

Jan

00

1 -

Ju

l

00

2 -

Jan

00

2 -

Ju

l

00

3 -

Jan

00

3 -

Ju

l

00

4 -

Jan

00

4 -

Ju

l

00

5 -

Jan

00

5 -

Ju

l

00

6 -

Jan

00

6 -

Ju

l

00

7 -

Jan

00

7 -

Ju

l

00

8 -

Jan

00

8 -

Ju

l

00

9 -

Jan

00

9 -

Ju

l

01

0 -

Jan

10

- J

uly

Employment Growth, but Improvement i Still U d

-60

-40 20 20

20 20

20 20

20 20

20 20

20 20

20 20

20 20

20 20

20 20

20

20

1is Still Under Par.

-100

-80

-120Source: BLS – Seasonally Adjusted – Through December 2010

12-month payroll job changes; in thousandsEconomic & Real Estate Forecast

February 8 2011

Page 25: Matthew Gardner Economic Report

Private Sector EmploymentPrivate Sector Employment

40

60

Gains Regionally

0

20Regionally have Been Driven by th P i t

-20

02

00

0 -

Jan

20

00

- J

ul

20

01

- J

an

20

01

- J

ul

20

02

- J

an

20

02

- J

ul

20

03

- J

an

20

03

- J

ul

20

04

- J

an

20

04

- J

ul

20

05

- J

an

20

05

- J

ul

20

06

- J

an

20

06

- J

ul

20

07

- J

an

20

07

- J

ul

20

08

- J

an

20

08

- J

ul

20

09

- J

an

20

09

- J

ul

20

10

- J

an

20

10

- J

ulythe Private

Sector, Where We H S

-60

-40 2 2 2 2 2 2 2 2 2 2 2 2Have Seen Positive Growth Si L

-100

-80Since Last August.

-120Source: BLS – Not Seasonally Adjusted – Through December 2010

12-month payroll job changes; in thousandsEconomic & Real Estate Forecast

February 8 2011

Page 26: Matthew Gardner Economic Report

Local Employment SituationLocal Employment Situation

4,600Professional & Business Services

NET EMPLOYMENT CHANGE BY NAICS CLASSIFICATION

Declines are Improving.

I H t1,300

1,700

2,400

Information

Education & Health Services

Trade

I am Happy to See Growth in the Professional

-100

-100

1,300

Leisure & Hospitality

State Government

Other Manufacturing

Professional Services & InformationSectors -1,000

-600

-600

Federal Government

TWU 1/

Local Government

Sectors.

-2,200

-1,200

-1,100

Financial Activities

Other Services

Aerospace Product and Parts Manufacturing

Source: WA State – Seasonally Adjusted YoY Growth - Data Through December 2010

Economic & Real Estate Forecast

February 8 2011

-5,300

-6,000 -4,000 -2,000 0 2,000 4,000 6,000

Construction

Page 27: Matthew Gardner Economic Report

Unemployment Rate Still Below Unemployment Rate Still Below the National Averagethe National Averagethe National Averagethe National Average

1.0% PERCENTAGE POINTS ABOVE/(BELOW) NATIONAL RATE

In a Holding 0.2%

0.4%0.5%

0.4%0.5%

Pattern for Now. -0.1%

-0.4% -0.4%

-0.2% -0.2%-0.3%

-0.4%-0.5%

0.0%

-0.9%

-0.5%

-0.8%-0.7%

-1.0%

-0.8%-0.8%-1.0%

-1.6%

-1.8%

-1.6%

-1.5%

SOURCE: BEA & WA ESD

Economic & Real Estate Forecast

February 8 2011

-2.0%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Page 28: Matthew Gardner Economic Report

We Will Start Regaining Jobs This We Will Start Regaining Jobs This YearYearYearYear

HISTORIC AND PROJECTED ANNUAL EMPLOYMENT CHANGE

EmploymentG th Will

60,000

80,000

Growth Will be Slow, but Still Positive.

40,000

YMEN

T

0

20,000

EMPL

OY

-20,000

SOURCE: WA ESD & Gardner Economics Forecast

-40,000

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

2008

2009

2010

2011

f20

12 fEconomic & Real

Estate ForecastFebruary 8 2011

Page 29: Matthew Gardner Economic Report

Puget Sound Employment SituationPuget Sound Employment Situationg p yg p y

Job Growth Will Be From the Center Out.

We Will Still Fare Better Than All West Coast States.

Job Drivers? The 5 B’s…..

Page 30: Matthew Gardner Economic Report

Th S l ATh S l AThe Seattle AreaThe Seattle AreaResidential MarketResidential MarketResidential MarketResidential Market

Page 31: Matthew Gardner Economic Report

Case Shiller IndexCase Shiller Index

Year SeattleSan

FranciscoLos

AngelesSan

Diego MiamiLas

Vegas PhoenixYear Seattle Francisco Angeles Diego Miami Vegas Phoenix

2000 6.7% 28.6% 10.1% 16.3% 8.9% 5.4% 5.9%

2001 4.6% -4.3% 8.8% 10.0% 12.5% 7.7% 5.3%

2002 3 9% 13 8% 18 0% 19 9% 14 0% 7 1% 4 6%

Some Areas That Saw the Biggest 2002 3.9% 13.8% 18.0% 19.9% 14.0% 7.1% 4.6%

2003 7.4% 9.0% 20.6% 18.5% 13.3% 17.0% 7.9%

2004 11.4% 19.1% 22.8% 25.1% 22.2% 42.3% 20.4%

2005 17 1% 13 6% 20 7% 6 3% 28 9% 10 6% 42 0%

Corrections are Showing Improvement.

2005 17.1% 13.6% 20.7% 6.3% 28.9% 10.6% 42.0%

2006 11.2% -1.2% 1.5% -3.8% 4.7% 0.5% -0.1%

2007 0.5% -10.6% -13.3% -14.6% -17.1% -15.0% -14.8%

11 8% 29 2% 23 6% 22 9% 26 8% 29 4% 31 2%

I am Not a Fan of this Index!

2008 -11.8% -29.2% -23.6% -22.9% -26.8% -29.4% -31.2%

2009 -4.4% 9.6% 2.9% 5.4% -6.5% -16.9% -4.0%2010 YoY

-4.71% 0.44% 0.62% 2.1% -3.54% -3.48% -6.35%YoY

SOURCE: S&P Case Shiller –Non-Seasonally Adjusted - YTD Data through Nov. 2010

Economic & Real Estate Forecast

February 8 2011

Page 32: Matthew Gardner Economic Report

h l hh l hWhere Are We Relative to the Where Are We Relative to the Past?Past?Past?Past?

Page 33: Matthew Gardner Economic Report

Resale Inventory LevelsResale Inventory LevelsKi CKi C

b

King CountyKing County12,000

December Inventory = 6 868 Units 8 000

10,000

6,868 Units.

Last There in 6,000

8,000

Jan ‘10 and May ‘07.

2 000

4,000

0

2,000

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 0 0

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 34: Matthew Gardner Economic Report

Resale Inventory LevelsResale Inventory LevelsE idE id

b

EastsideEastside4,500

December Inventory = 2 268 Units 3 000

3,500

4,000

2,268 Units.

Last There in 2,000

2,500

3,000

Jan ‘10 and December ‘07

1,000

1,500

,

07.

0

500

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 0 0

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 35: Matthew Gardner Economic Report

Resale Sales TransactionsResale Sales TransactionsKi CKi C

b

King CountyKing County3,500

December Sales = 1 200 Units 2,500

3,000

1,200 Units.

Classically 1 500

2,000

Cyclical Pattern but Now Off the

1,000

1,500

Now Off the Bottom

0

500

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 0 0

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 36: Matthew Gardner Economic Report

Resale Sales TransactionsResale Sales TransactionsE idE id

December EastsideEastside

1,200

Sales = 403 Units.

800

1,000

Another Classically 600

800

Cyclical Pattern, but Clearly Off 200

400

Clearly Off the Bottom.

0

200

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 0 0

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 37: Matthew Gardner Economic Report

Average List PricesAverage List PricesKi CKi CKing CountyKing County

$800,000

List Prices are Still In Decline

$700,000

$750,000

Decline.

Last Seen in $600,000

$650,000

April ‘04.$500,000

$550,000

$400,000

$450,000

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 0 0

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 38: Matthew Gardner Economic Report

Average List PricesAverage List PricesE idE id

$

EastsideEastside$1,200,000

At $845,000, List Prices are Back at $1,000,000

$1,100,000

are Back at October 2004 Levels.

$800 000

$900,000

$700,000

$800,000

$500,000

$600,000

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 0 0

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 39: Matthew Gardner Economic Report

Average Sale PricesAverage Sale PricesKi CKi C

$

King CountyKing County$650,000

$456,0000 in December; $500 000

$550,000

$600,000

December; last Seen July 2005. $400,000

$450,000

$500,000

$300,000

$350,000

,

$200,000

$250,000

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 0 0

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 40: Matthew Gardner Economic Report

Average Sale PricesAverage Sale PricesE idE id

$ i

EastsideEastside$900,000

$609,000 in December; Prices have $700 000

$800,000

Been Bouncing Around but we Can See

$600,000

$700,000

Can See Tangible Improvement.

$400 000

$500,000

$300,000

$400,000

02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10

Source: NWMLS & Gardner Economics LLC – SF Resale Product

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-0

Oct

-0

Apr

-1

Oct

-1

Economic & Real Estate Forecast

February 8 2011

Page 41: Matthew Gardner Economic Report

Transactions by TypeTransactions by TypeKi CKi CKing CountyKing County

Housing Transaction Volume By Type

Distressed Units Have

51575,000

6,000

Units Have Increased but Sales

37803971

3,000

4,000

Appear to be Slowing.

9721297

826 812

2,000

582 591 434670

972

447826 812

0

1,000

Sep '08 to Dec '08 Sep '09 to Dec '09 Sep '10 to Dec '10

Source: Gardner Economics LLC

Economic & Real Estate Forecast

February 8 2011

Sep 08 to Dec 08 Sep 09 to Dec 09 Sep 10 to Dec 10

Resale New Foreclosure Fore. Sale

Page 42: Matthew Gardner Economic Report

Transactions by TypeTransactions by TypeKi CKi CKing CountyKing County

Further Declines in

10.62%12.23%

8.16%

Sep '08 to Dec '086.66%12.47%

Sep '10 to Dec '10

Declines in New Construction

12.23%

19.91%

Activity.

68.99%

60.96%

New

Resale

Foreclosure

Source: Gardner Economics LLC

Economic & Real Estate Forecast

February 8 2011

Fore. Sale

Page 43: Matthew Gardner Economic Report

Real Estate Real Estate ConclusionsConclusions

• Buyers Are Still Looking For Deals & Uncertainty Remains?Uncertainty Remains?

• Continued Job Growth Will Add Confidence to the Market.

• Uncertainty in the Condo Market Remains• Uncertainty in the Condo Market Remains.

Page 44: Matthew Gardner Economic Report

Real Estate Real Estate ConclusionsConclusionsContCont….….

Price Stability Should Continue with the• Price Stability Should Continue with the Eastside Fairing Better than Most.

• Expect Transactional Velocities to Be Modestly Higher than 2010Modestly Higher than 2010.

• Distressed Units Will Still Weigh on the Market.

• Interest Rate Increases May Get Buyers Off• Interest Rate Increases May Get Buyers Off the Fence.

Page 45: Matthew Gardner Economic Report

Punxsutawney Phil Saw His Shadow Punxsutawney Phil Saw His Shadow Y d S I P di i E l ThY d S I P di i E l ThYesterday, So I am Predicting an Early Thaw Yesterday, So I am Predicting an Early Thaw

in the Economy!in the Economy!

Page 46: Matthew Gardner Economic Report

Follow My Thoughts!Follow My Thoughts!

www.MasterBuildersInfo.com

http://blog.windermere.com/

SeattleEcon

Page 47: Matthew Gardner Economic Report

Questions?

© Gardner Economics LLC 2011h d b dThe Preceding Presentation may not be Copied

or Distributed without Prior WrittenPermission of

Gardner Economics LLC

Page 48: Matthew Gardner Economic Report

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