The document provides an overview of recent real estate market trends and topics for home buyers, sellers, and owners. Key points from the first section include improving employment conditions and consumer confidence contributing to a 1.4% increase in existing home sales in October. The supply of homes for sale declined 2.2% in October while mortgage rates remained near historic lows. The second section discusses reform proposals for Fannie Mae and Freddie Mac on Capitol Hill and extending conforming loan limits. The final section outlines considerations for home buyers when deciding to purchase and highlights local market conditions as most impactful.

1. Commentary 2
Released: The Numbers That Drive Real Estate 3
December 2011 This Month in Washington 8
Topics for Home Buyers, Sellers, and Owners 11
Brought to you by:
KW Research

2. Commentary
One of the key drivers of homes sales, the employment rate, is beginning to show
promising signs of a turnaround. The four-week average for jobless claims, as of
November 19, was 394,250, a drop of 3,250 from the previous four weeks, and at the
lowest levels since April. Consumer confidence also rose 15 points in the last month, and
is now at its highest point since July of this year. Eric Green, Chief Market Economist at
TD Securities Inc. said, “The trend remains very constructive. Jobless claims are back
below 400,000, which seems to be the pivot point in terms of a strengthening labor
market as opposed to a weakening one.”
In addition to improving employment conditions, home affordability also improved as
interest rates fell further, opening the door for more first-time home buyers who accounted
for 34% of the sales in October, an increase from 32% last month and over loast year.
The western United States saw the greatest increase in home sales, which were up 4.4%
month to month and up over 15% from last year.
A strengthening job market, along with encouraging signs from the housing sector,
including a 10% jump in pending sales for October, are strong economic forces. While
mortgage lending still remains a challenge, these forces may send a signal to banks to
relax lending regulations and allow for a more rapid recovery.
Sources: US Department of Labor, Bloomberg, National Association of Realtors KW Research 2

3. Home Sales 4
The Numbers That Home Price 5
Drive Real Estate Supply of Inventory
Mortgage Rates
6
7
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4. Home Sales
In Millions
Existing homes sales improved 1.4% in October, or to an annual pace of 4.97 million, a
13.5% increase from October of last year. Even more dramatic, was the jump in pending
home sales, which surged in October by 10.4% from September, and were up 9.2% from
October 2010. This jump in pending sales could lead to a strong fourth quarter as signs
continue to point to a pent-up demand brought on by current lending conditions of
mortgage providers.
Original Tax Credit
Scheduled to Expire
5.2 5.1
4.9 5.0
4.4 5.0 4.8
Expanded Tax Credit Expired
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Latest Data Release: October 20, 2011. Source: National Association of Realtors “Home Sales” refer to transactions that include
single-family, townhomes, condominiums, and co-ops. “Contract Failures” refer to those caused by declined mortgage applications, failures in loan underwriting from KW Research 4
appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.

5. Home Price
In Thousands
The national median home price in the U.S. saw a small decline in October to $162,500,
from $165,800 in September. This number can be affected by the sale of distressed
properties, which typically sell at discounted prices. Distressed properties accounted for
28% of homes sales in October. Yet despite a drop in the median price from last
September, the Federal Housing Finance Authority reported that seasonally adjusted
prices rose 0.2% in the third quarter from the second quarter in 2011, which could be an
early sign of appreciating home prices.
$170.6
$168.8 $171.2
October ’10-’11 October ’09-’10
$169.3
$159.8 $162.5
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Latest Data Release: October 20, 2011
Source: National Association of Realtors
KW Research 5

6. Supply of Inventory
In Months
By the end of October, the total number of homes on the market had fallen 2.2% to 3.33
million homes, which represents 8 months of inventory at the current sales pace. Since
a record high of 4.58 million homes in July 2008, the inventory of homes for sale has
been steadily declining. When homes sell faster than they come on the market, the
market comes from its current favor toward buyers into balance or in favor of sellers.
This can trigger an appreciation in home prices and lead the way to a stronger recovery..
Tax Credit Expired
10.6
9.6 9.5
9.1
8.3 8.0
8.3
More than 6 months = Buyer’s Market
Less than 6 months = Seller’s Market
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Latest Data Release: October 20, 2011
Source: National Association of Realtors
KW Research 6

7. Mortgage Rates
30-Year Fixed
Mortgage rates continue to push lower, dropping to 3.98% from 4.23% in October of
2010, offering historic affordability to today’s home buyers. While mortgage lending
conditions continue to be a challenge, more and more people are seeing the advantage of
buying a home sooner rather than later. Lawrence Yun, NAR chief economist, said, “Home
sales have been plodding along at a sub-par level while interest rates are hovering at record
lows and there is a pent-up demand from buyers who normally would have entered the
market in recent years. We hope this indicates more buyers are taking advantage of the
excellent
affordability conditions.”
Type Rate
30-Year Fixed 3.98%
15-Year Fixed 3.30%
5/1 ARM 2.91%
Historical Average 8.90%
Source: Freddie Mac; December 1, 2011 KW Research 7

8. This Month in Washington
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9. This Month in Washington
“Reform” is the Word
A slow economic recovery, sub-par home sales, and upcoming elections have
ignited a plethora of ideas on Capitol Hill regarding housing affordability and
financing reform. Many of these conversations revolve around the government
backed and largest sources of mortgage funds, Fannie Mae and Freddie Mac.
From elected officials to presidential hopefuls, it seems everyone is talking reform
these days.
A group of Democrats from the House of Representatives have challenged the
government backed and largest sources of mortgage funds in the US, Fannie Mae
and Freddie Mac, to produce a strong argument as to why these institutions have
refused to reduce principal for borrowers, whose homes are worth less than the
mortgage amount. Up to this point both organizations have argued that reducing
the principal amounts on these upside down mortgages would have detrimental
effects on the overall housing market, and say that their other programs have been
more effective and less costly than writing down these loans. Whether or not this is
true is what the House of Representatives wants to determine, and they have given
Fannie Mae and Freddie Mac until December 9 to prove it.
KW Research 9

10. This Month in Washington
“Reform” is the Word (cont.)
This challenge from Congress is only the latest of many, as Fannie Mae and Freddie
Mac have been under fire since the beginning of the housing crisis in 2006-2007.
Congressman Scott Garrett recently introduced a bill that would entirely replace these
government sponsored entities with a private alternative. Presidential hopeful Rick
Perry also champions the privatization of these institutions, to remove the tax burden
from the citizens.
While it is still unclear if and what will happen, there is a large building consensus
regarding the level of compensation received by the executives at Fannie Mae and
Freddie Mac. Congress and the Senate are both expected to send legislation to the
desk of President Obama by the end of this year, ending hefty bonuses paid to these
executives and aligning their salaries with federal workers. This legislation would be a
substantial pay decrease, considering that total compensation (salary and bonuses)
for 12 executives at these firms totaled more than $35 million in 2009 and 2010.
Sources: Reuters, Huffington Post, Rick Perry.org, Associated Press
KW Research 10

11. This Month in Washington
Conforming Loan Limits Extended
The President signed a bill reinstating loan limits for FHA and VA loans through the
end of 2013. Before expiring in October, the previous maximum loan limit was
$729,750 in the priciest areas for government-backed or sponsored entities including
FHA, VA, Fannie Mae, and Freddie Mac. On October 1, the limit returned to $625,500
in those most expensive areas. The return to the $729,750 level does not extend to
Fannie Mae and Freddie Mac. Overall, this is expected to have minimal impact as
loans in this range account for a small share of overall loans. However, buyers and
sellers in high-end markets with homes in that price range now have more mortgage
options, which can lead to a more affordable mortgage.
Sources: HousingWire.com, NationalMorgageProfessional.com
KW Research 11

12. Topics for Home Buyers, Sellers,
and Owners
Brought to you by:
KW Research

13. Deciding to Buy
When first-time home buyers decide they are ready to buy, it is important for them to begin
the process by carefully assessing their values, wants, and needs—both for the short and
long term. This is a critical step since consultation sessions normally start with the buyers’
values. Afterward, buyers can explore their wants and needs and, once defined, determine
actual criteria.
A recent study shows how important the following home-buying factors were to buyers:
• List Price: 72%
• Location: 69%
• Neighborhood: 55%
• Floor Plan: 37%
• Square Footage: 28%
• Schools: 22%
By having the home-buying criteria in mind before walking into a consultation, buyers are off
to a better start when meeting with their real estate agent. The consultation allows buyers to
fill in any missing gaps within their values, wants, and needs.
Source: KW Market Navigator and KW Research KW Research 13

14. 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 your
real estate market.
Talk to your KW associate for assistance interpreting the
conditions in your local market.
KW associates are equipped with the knowledge and information to help
you navigate the home-buying or selling process in this challenging
market.
KW Research 14

15. About Keller Williams Realty
Keller Williams Realty Inc. is the second-largest real estate
franchise operation in the United States, with 700 offices and more
than 80,000 associates in the United States and Canada. The
company has grown exponentially since the opening of the first
Keller Williams Realty office in 1983, and continues to cultivate its
agent-centric culture that emphasizes access to leading-edge
education and promotes an economic model that rewards
associates as stakeholders. The company also provides specialized
agents in luxury homes and commercial real estate properties. For
more information, or to search for homes for sale visit Keller
Williams Realty online at
www.kw.com
KW Research 15

16. 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 in 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