This Month in Real Estate - December 2009. An online monthly publication from Paul W. Drury and Keller Williams Realty

1. Keller Williams Research
This Month in Real Estate
Released: December 4, 2009
Commentary……………………………………. 2
The Numbers That Drive Real Estate………… 3
Recent Government Action……………………. 9
Topics for Buyers and Sellers…………………. 15
1

2. Steps to Recovery
Small steps to economic recovery continued last month. Among the positive readings was the report
of a third quarter GDP growth rate of 2.8 percent, which followed four consecutive quarterly
declines. This advance comes in well ahead of that of our Canadian neighbors, whose economy was
once anticipated to be the first country out of recession, and by significant margin. Canada posted
marginal 0.4 percent growth. Unemployment fell in November for the first time since April 2008.
A strong rebound in home sales activity from year ago levels also points to a firmer stabilization.
With the extension of the $8,000 federal housing tax credit into spring 2010, first-time buyers will
now have an additional few months to purchase their dream homes. Expansion of the income
restrictions now gives possibilities for higher earners to participate too. And the $6,500 tax credit
now available to established homeowners with five consecutive years or more in their homes
broadens the opportunity landscape. This in turn will allow the housing market more time to find a
more solid footing on a sustainable recovery.
Although economists continue to debate the overall shape of the recovery, it is widely agreed that
the U.S. economy will take a long time to rebound. Unemployment is expected to remain high for
several quarters and the number of underemployed is expected by some economists
to remain a drag on growth prospects. On the brighter side, according to some economists,
a slow and steady growth will likely fair better for the long-term well-being of the
economy. Slower, sustained growth can help prevent dangerous asset bubbles, like the
recent housing and technology bubbles, from growing and bursting.

3. The Numbers That Drive Real Estate
KW Research 3

4. Home Sales
In Millions
Existing home sales recorded another strong gain in October with many buyers
rushing to beat the deadline for the first-time buyer tax credit scheduled to expire
at the end of November. Sales surged 10.1 percent to 6.1 million units over
September sales of 5.54 million and are 23.5 percent above the 4.94 million-unit
level seen last year. Sales activity is at the highest level since February 2007
when it reached 6.55 million.
Seasonally Adjusted Home Sales 6.10
5.24 5.54
4.94 4.89 5.09
4.74 4.71 4.66
4.72
4.54 4.49 4.55
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Latest data release: November 23, 2009
KW Research 4
Source: National Association of Realtors

5. Median Home Price
In Thousands
Low home prices are contributing to extremely favorable affordability conditions.
Existing-home price was $173,100 in October, 5 percent higher from its low in
January but still 7.1 percent below October 2008. Distressed properties, which
accounted for 30 percent of all transactions in October, continue to hold down
the median home price, as they typically sell for 15 to 20 percent less than
traditional homes.
$186 $180 $176 $165 $168 $170 $167 $175 $182 $182 $177 $176 $173
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Latest data release: November 23, 2009
KW Research 5
Source: National Association of Realtors

6. Inventory - Number of homes available for sale
In Millions
“We are getting closer to a general balance between buyers and sellers,”
according to Lawrence Yun, NAR chief economist. The supply of homes is now
at the lowest level in more than two and a half years. Total housing inventory
at the end of October fell 3.7 percent to 3.57 million existing homes available for
sale, representing a seven-month supply at the current sales pace, down from
September’s eight-month supply. Compared to a year ago, there are now 15
percent fewer homes on the market.
Number of Homes Available for Sale
4.1
4.2
4.2
3.9 3.9
3.8 3.8
3.7 3.9 3.7
3.6 3.6
3.6
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Latest data release: November 23, 2009
KW Research 6
Source: National Association of Realtors

7. Mortgage Rates
30-Year Fixed
Remaining at attractive levels for people looking to buy a home or refinance,
historically low interest rates are boosting the market. Rates for 30-year fixed
loans fell to 4.95 percent in October from 5.06 percent the month before. During
the week ended November 25, rates again dropped to the low 4.78 percent
reached in the spring. As the economy enters its recovery phase and concerns
over inflation come back, mortgage rates are expected to go up.
Average Weekly Mortgage Rates
5.59%
5.42%
5.25% 5.29% 5.32%
5.38% 5.25% 5.29%
5.16%
5.12% 5.15%
5.20% 5.14%
5.07% 5.22%
5.01% 5.20% 5.07% 5.03%
4.98% 5.14% 5.12% 5.04%
5.10% 5.08% 4.98%
4.84%
5.04% 5.03% 4.87%
4.86% 5.00% 4.91%
4.96% 4.80% 4.94%
4.91% 4.92%
4.87% 4.83%
4.85% 4.82% 4.82% 4.78%
4.78% 4.78%
1/8
2/8
3/8
4/8
5/8
6/8
7/8
8/8
9/8
10/8
11/8
Source: Freddie Mac KW Research 7

8. Affordability - The percentage of payments family’s income required
to make mortgage
a median
on a median-priced home
% of Income
Unprecedented interest rates, low home prices, as well as the first-time buyer
tax credit are lifting the housing market. All these factors combined are “adding
to the buying power of the typical family, with affordability conditions this year at
the highest on record dating back to 1970,” according to Lawrence Yun, NAR
chief economist. So far this year, the home price-to-income ratio has fallen well
below the historical average of 25 percent. The ratio now stands at 15 percent.
Percent of Income Required for Mortgage Payments on a Median-Priced Home
Well below the
historical
standard of
25%
20.1% 18.5% 19.0% 19.4% 20.0% 23.5% 23.2% 20.9% 17.8% 15.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Affordability as of October every year. Calculations assume a 20% down payment.
KW Research 8
Source: National Association of Realtors

9. Recent Government Action
KW Research 9

10. Government Pressures Lenders Foreclosure Prevention Program
December 2009
The federal government is cranking up the pressure on lenders to increase the
number of borrowers who receive completed mortgage modifications as well as
releasing guidelines for short sales.
Although 650,000 borrowers have received trial modifications, only a small,
undisclosed percentage of those have qualified for final modifications. Mortgage
executives estimate 25-35 percent of those in trial will qualify for the final ones.
Reasons for a trial modifications to fail:
1. Reduced payment isn’t low enough
2. Borrower suffered additional financial setback
3. Borrower didn’t provide a hardship affidavit or
other documents
4. Loan did not pass a “net present value” test
(The test asks - is modification or foreclosure more costly to the investor?)
The Treasury Department will appoint officials to monitor actions of the largest
servicing companies daily. It will also require mortgage companies to report to the
administration plans to increase the number of completed modifications.
Sources: The Wall Street Journal, The Washington Post KW Research 10

11. Short Sale Guidelines Foreclosure Prevention Program
December 2009
Short sales are when the lender accepts less than the borrower owes on a loan. They can
provide a higher sales price and are less harmful to communities than foreclosures but can
be difficult to complete. Second liens, such as a second mortgage on the home, add extra
layer of complication which this program addresses. The borrower will be fully released of
obligations and future debt liability after participating in this program.
The guidelines are aimed at those who are eligible for the loan modification program but:
1. Do not end up qualifying
2. Become delinquent on modification
3. Request a short sale or deed-in-lieu
The program will offer the following incentives for successfully completed short sale or deed-
in-lieu of foreclosure:
Borrower…...………….$1,500
Lender…..………….….$1,000
Second Lien-holder..…$3,000*
* From proceeds of the sale in exchange for releasing liens
The stakes of a successful foreclosure prevention program are high. Experts on the housing
market and the economy are troubled by the high levels of foreclosures that disrupt
neighborhoods and put downward pressure on home prices, causing trouble for both the
stability of the housing market and financial institutions.
Sources: The Wall Street Journal, The Washington Post KW Research 11

12. REO & Neighborhood Support New Fannie Mae Policies
November 2009
In many markets dominated by distressed properties, buyers jumped off the fence in droves
and as a result the number of homes for sale in the first tier of the market decreased
significantly. When a new foreclosure becomes available for sale, it often is snapped up by
investors with cash on hand, leaving the average home buyer looking for a place to live out of
luck.
Fannie Mae introduced a new “First Look” initiative to address this and aid in the stabilization of
neighborhoods.
1. During the first 15 days a Fannie Mae REO is on the market, only buyers who will
live in the home and public entities committed to the best interests of the
community may purchase it.
2. Buyers will have 45 days to close, up from 30 days.
3. Earnest money requirement may be reduced.
This will hopefully give the average home buyer a greater chance of purchasing foreclosures
and provide support to hard-hit neighborhoods, because owner-occupants are more invested in
the long-term vitality of a community whereas investors typically are more invested in their
monetary return from the property.
Another Fannie Mae initiative, “Deed-for-Lease,” further supports neighborhoods by allowing
foreclosed-on owners or their tenants to lease the property for twelve months. Depending on
state laws, once a bank has seized a foreclosed property there can be a lengthy time before
they are legally allowed to sell it. This will likely prevent vacant homes from vandalism and
promote upkeep of the home, neighboring home prices, and the community.
Source: National Association of Realtors KW Research 12

13. Increased Credit Scores New Fannie Mae Policy
November 2009
Fannie Mae is raising its minimum credit score from 580 to 620. This risk
management measure will help protect Fannie Mae from future defaults and
foreclosure by raising their standard and accepting less risky loans.
While risk management is a sound and healthy approach for an entity that the
economy depends on, this underscores the importance that potential home buyers
check their credit report early in the process, allowing more time to clear up any
errors.
Earlier this year, Experian, one of three major credit-reporting bureaus, began
exclusively providing complete credit report information when purchased directly
from Experian or obtained from the government annual credit report.
Source: National Association of Realtors KW Research 13

14. FHA Signals Efforts to Manage Risk
December 2009
In an effort to secure its financial health, the Federal Housing Administration plans to require
borrowers to have more “skin in the game” soon. Over the past three years, FHA’s market
share has boomed from about 2 percent of all new loans to about 30 percent of all new loans
this year and 20 percent of refinances. The escalading volume that the administration is
currently handling calls for stricter requirements as evidenced by FHA’s capital ratios falling
to nearly 0.5 percent well below the minimum of 2 percent.
The agency is still analyzing the levels and time frames it wishes to tighten its standards but
they expect to:
1. Increased minimum down payments
2. Increase minimum credit scores
3. Increase insurance premiums
4. Lower the amount of seller concessions
As one of the major players in the mortgage market, the health of FHA is imperative to the
housing market and flow of credit to home buyers, as well as to the health of the overall
economy. Taking measures to safeguard the agency from needing a government tax payer-
funded bailout is a notable risk management measure.
According to a Keller Williams research study, the typical first-time buyer put down 3.5
percent this year. Those who want to take advantage of the tax credit before the April 30
contract, June 30 closing deadline may want to beef up their savings and check their credit
report now in anticipation of any changes.
Sources: National Association of Realtors, KW Research First Time Home Buyer Survey KW Research 14

15. Topics for Buyers and Sellers
KW Research 15

16. First-Time Home Buyer Survey
What are other first-time home buyers doing?
The tax credit extension and expansion in November has fueled new discussion about
home buyers and the housing market in 2010. Here’s a look at first-time buyers in 2009.
1. The median age is 28, significantly down from where
it was four years ago at 32.
2. Location or Neighborhood was the No. 1 “must-have”
for 36% of buyers.
3. 2 out of 3 sellers paid at least part of the
buyer’s closing costs.
4. 76% used their own savings for the down payment.
5. 1 in 4 had help from their family for the down payment.
For details on the tax credit, check out www.kw.com/kw/2009taxcredit.html
Source: KW Research – First-Time Home Buyer Survey KW Research 16

17. Distressed Property Buyers
As elevated levels of distressed properties are expected to continue for
the next few years, here is a glimpse of buying a distressed property.
1. 27% of foreclosures* were purchased by investors.
2. 47% of distressed* properties were
purchased by first-time buyers.
3. 89% of those first time buyers that
purchased a distressed property were
motivated by the $8,000 tax credit.
4. 7 in 10 agents have seen an increase
in multiple offers.
5. Approximately 3 out of 5 agents discuss the
differences between buying distressed and
traditional properties at the buyer consultation.
* Distressed – Short Sale and REO, Foreclosure – REO Only
Source: KW Research Buying Distressed Property Survey KW Research 17

18. 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 area.
Talk to your Keller Williams agent for assistance
interpreting the conditions in your local market.
Keller Williams associates are equipped with all the knowledge and
information to help navigate you through the process of buying or
selling a home in this challenging market.
KW Research 18

19. About Keller Williams Realty
Founded in 1983, Keller Williams Realty, Inc., is an international real estate
company with more than 74,175 associates and 693 offices located across the
United States and Canada. The company began franchising in 1991, and following
years of phenomenal growth and success, became the third-largest U.S.
residential real estate firm in 2009.
The company has succeeded by treating its associates as partners and shares its
knowledge, policy control, and company profits on a system-wide basis.
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. The company provides associates with all the tools needed to grow and
thrive in today’s market.
www.kw.com
KW Research 19

20. About Paul W. Drury
Originally licensed as an agent in Ohio in 1986, Paul began with Lehman
Johnson Real Estate in Elyria. He acquired his Real Estate Brokerage License in
1992 and became an Associate broker with West Shore Realty. In 1995 he
moved his brokerage license to Continental Realty Investment where he began
to focus on additional work with commercial and investment real estate. During
these years he also performed professional appraisals with The Appraisal House.
In 2001 he began Drury Realty Consulting and worked as an independent Real
Estate Consultant and worked on his own until 2009 when he joined Keller
Williams Realty, Greater Cleveland West. “Being a part of the Keller family
provides me with tools and serves unachievable strictly on my own, provides me
with the tools and networking of a huge national network, while still enabling
me to work, act, and function as the manager of my own business. It’s the best
of both worlds.” – Paul
Paul's Home Page
KW Research 20

21. What we have to offer sellers
Sellers of Real Estate now have access to tools unimaginable just a few years
before. Keller Williams doesn’t spend its money promoting its own name. It
doesn’t have to. It puts its resources into providing the best tools and resources
to its systems, education, and training, thus providing the most professional real
estate team members back into the communities.
Properties put up for sale by Paul are also; listed on KWLS, a national MLS,
implemented by the third largest company in the US; local MLS, the
NEOHREX, Northern Ohio Real Estate Exchange; and on many other national
sites such as Trulia, Zillow, CyberHomes, and others.
Other tools brought to bear by Paul include branding using the properties own
web address with a virtual tour that can be emailed by link or have the link
posted anywhere it can be, to even include Craig’s List and Back Page.
Examples of properties sold recently using this method include:
- 947 Gulf Road in Elyria (sold in 28 days)
- 359 Gayle Drive in Sheffield Lake (sold in 57 days)
- 327 Gayle Drive in Sheffield Lake (sold in 18 days)
KW Research 21

22. Properties currently for sale
Properties currently for sale:
- 37101 Hunters Trail in Avon
- 4435 Porter Road in North Olmsted
- 810 Sandalwood Drive in Elyria
Want your home or property promoted like these?
- Contact Paul for a free, no obligation, consultation
today at 440-385-5650.
KW Research 22

23. What we have to offer buyers
Buyers of Real Estate also have access to tools unimaginable just a few years before.
Since Keller Williams doesn’t spend its money promoting its own name, it puts its
resources into providing the best tools and resources to its systems, education, and
training, thus providing the most professional real estate team members back into the
communities.
Paul is available directly most hours of the day without having to battle assistants and
voice mails (most of the time) and he checks his email constantly.
Buyers can access Paul’s website at www.druryrealty.com and conduct their own
searches through wolfnet IDX and create their own search profiles for searching for
properties anywhere in Ohio. If relocating out of Ohio, Keller Williams offers one of
the finest relocation referral networks in the nation. While we may not be the biggest
firm in Northern Ohio yet, we are in many areas of the national already.
Paul’s website is easy to manage and he can set up search profiles for you so you get
notified at about 8:30 am of any new properties that come available. He also has
profiles set up on national websites such as Trulia providing for greater access to
search tools.
KW Research 23

24. Investors & Shoppers – Foreclosure Watch
Are you shopping for the deal of a century for your new home?
Are you in the market to buy a home at a steep discount and try
and fix it up and “flip it”?
Are you looking for a home for someone else?
Want to know what is happening in your marketplace?
Send Paul an email today and request free market updates at
paul@druryrealty.com
No cost. No commitments. No obligations. No fuss. No kidding.
KW Research 24

25. Follow Paul on line…
Home Web Page On Twitter
www.druryrealty.com - www.twitter.com/PaulWDrury
On Zillow On FaceBook
www.zillow.com/profile/PaulWDrury - www.facebook.com/paul.w.drury
On Trulia On LinkedIn
www.trulia.com/profile/paulwdrury www.linkedin.com/in/paulwdrury
KW Research 25