West Valley Market Update

MIKE ORR: Founderwww.cromfordreport.com

mike@cromfordreport.com

© 2011 www.cromfordreport.com

March 15, 2011

Major Trends - Positive

• Economy & job situation improving• Low prices stimulating stronger demand for homes– Growth in demand is coming primarily from investors

• Buy & hold strategy growing in importance• Great time to be a landlord– Low purchase price– Rents steady, plenty of tenants– Excellent cash flow

• Foreclosure wave now well into a long slow decline• Supply has been declining since late November 2010

© 2011 www.cromfordreport.com

Major Trends - Negative

• Strong shift from ownership to rental occupancy• Finance difficult for would-be owner-occupiers• More loans now underwater – Average sales prices down nearly 13% since June 2010

• Arizona population peaked in 1Q 2009*• Out-migration started late 2007*– Significantly affects demand in south and west inner valley

• Maricopa has 206,000 fewer people than we thought

* Source = Marshall Vest, University of Arizona

© 2011 www.cromfordreport.com

Pricing

Supply

Demand

Foreclosures

Where Has the Foreclosure Crisis Hit Hardest?

More Than 35% of Single Family Homes Foreclosed Since 2006

More Than 20% of Single Family Homes Foreclosed Since 2006

Fewer Than 2% of Single Family Homes Foreclosed Since 2006

Short Term Outlook

• Overall demand now outpacing supply• Downward pricing pressure eased• Investor demand is key to low-end market• Signs of recovery above $300,000 • Continued weakness in areas with highest

population declines

© 2011 www.cromfordreport.com