Re Insights Graphs Oct

Portland AreaMetro Market Report, Second Quarter 2009

Local Trend

Prices are down compared to a year earlier and continue to weaken

13 2%1-year Appreciation (2009 Q2)

4 3%

Today's Market…

Current Median Home Price (2009 Q2)

U.S.Price Activity

-13.9%

Portland

$246,200 $174,433-16.2%

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

-20%-15%-10%-5%0%5%10%15%20%25%

2009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Q42000 Q2

Median Price (Red Line) and One-year Price Growth

Sales in the second quarter remain sluggish compare to the national average

U.S.

Those who bought early in the boom still hold some equity

Most buyers in this market have access to government backed finacing

-$39,633$6,8009-year (36 q) Housing Equity Gain

$418,750

Oregon

not comparable

$729,250

-13.2%

Ratio of Conforming to Local Median 59%

$67,7003-year (12-quarter) Housing Equity Gain

7-year (28 q) Housing Equity Gain$75,700

-$37,300

Conforming Loan Limit

3-year Appreciation (2009 Q2)

*State Existing Home Sales (2009 Q2 vs 2008 Q2) -15.2%

Home Sales and Construction Growth

4.3%$7,233

-2.9%

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

-20%-15%-10%-5%0%5%10%15%20%25%

2009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Q42000 Q2


0

20

40

60

80

100

120

-50%-40%-30%-20%-10%0%10%20%30%40%

2009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Q42000 Q2

State Home Sales (Red Line) and Sales Growth1,000s

gg p g( )

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

-20%-15%-10%-5%0%5%10%15%20%25%

2009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Q42000 Q2


0

20

40

60

80

100

120

-50%-40%-30%-20%-10%0%10%20%30%40%

2009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Q42000 Q2

State Home Sales (Red Line) and Sales Growth1,000s

U.S.

Not Comparable

-0.2%

not comparable

Low construction will help to maintain a 39 0%

The economy of Oregon has contracted more than the rest of the nation

Excess supply reduction could result in price escalation over the longer-term if, in

the future, there is rapid and robust increase in demand

** Single-Family Housing Permits (Jul 2009)

Long-term average for 12-month Sum of 1-Unit Building Permits (1,000s)

-3.3%

45 3%

12-month Sum of 1-unit Building Permits through Jul 2009 (1,000s)

Not Comparable

-2.6%3-year (36 month) Job Growth Rate

Local Fundamentals

-3.7%

2,953

13,793

1-year Job Additions (Jul)

-10.2%

Portland

-5.5%

Portland

12-month change (2009 - Jul)

36-month change (2009 - Jul)

-11.0%

Oregon

1-year (12 month) Job Growth Rate

-56,800

3-year Job Additions (Jul)

Local Economic Outlook

State Economic Activity Index

-37,500

Drivers of Local Supply and Demand…

U.S.

U.S.

The current level of construction is 78.6% below the long-term average

Weak compared to other markets

not comparable

The rate of job loss is accelerating

Over the last 12 months, local employment has fallen sharply and will

create a drag on demand

-0.9%

ptight supply and to stablize prices-39.0%g y g ( )

12-month sum vs. a year ago -45.3%

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

Construction: 12-month Sum of Local Housing Starts (Historical Average Shown in Red Dashed Line)

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

Construction: 12-month Sum of Local Housing Starts (Historical Average Shown in Red Dashed Line)

15.4%

Affordability

15.0%17.2%

19.5%Portland

Ratio for 2008

Good relative to the nationHistorical Average

19.6%Monthly Mortgage Payment to Income

Ratio for 2009 Q2Improving and historically strong; should

help demand for housing

U.S.

23.2%

0%

5%

10%

15%

20%

25%

20082006200420022000199819961994199219901988198619841982

Affordability - Local Mortgage Servicing Cost-to-Income (Historical Average Shown in Red Dashed Line)

0%

5%

10%

15%

20%

25%

20082006200420022000199819961994199219901988198619841982


0%

5%

10%

15%

20%

25%

2009 Q22009 Q12008 Q42008 Q32008 Q22008 Q12007 Q42007 Q3

Recent Trend - Local Mortgage Servicing Cost to Income(Historical Average Shown in Red Dashed Line)

0%

5%

10%

15%

20%

25%

20082006200420022000199819961994199219901988198619841982


0%

5%

10%

15%

20%

25%

2009 Q22009 Q12008 Q42008 Q32008 Q22008 Q12007 Q42007 Q3

Recent Trend - Local Mortgage Servicing Cost to Income(Historical Average Shown in Red Dashed Line)

Median Home Price to Income

Good compared to national average

Local affordabiltiy has improved, but could be better

7.1

Historical Average 5.6Ratio for 2009 Q2 6.1

PortlandRatio for 2008 7.1

6.27.2

U.S.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

20082006200420022000199819961994199219901988198619841982

Ratio of Local Median Home Price to Local Average Income(Historical Average shown in Red Dashed Line)

With the demise of Lehman Brothers in the fall of 2008, risk in the financial markets surged as depicted by the blue bar above. Mortgage rates fell as prospects for growth withered. Recently, rates have flat-lined while the 10-year Treasurey

bond rate is on the rise. This reduction of the spread between these two rates is a signal that the financial markets view the mortgage industry as less risky.

The Mortgage Market

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2.02.53.03.54.04.55.05.56.06.57.0

2009 Q2Q42008 Q2Q42007 Q2Q42006 Q2Q42005 Q2Q42004 Q2

30-year Fixed Mortgage Rate and Treasury Bond

Spread (left axis) 30-Year FRM (Right axis) 10-Year Treasury Bond (Right Axis)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

20082006200420022000199819961994199219901988198619841982


0.00

0.50

1.00

1.50

2.00

2.50

3.00

2.02.53.03.54.04.55.05.56.06.57.0

2009 Q2Q42008 Q2Q42007 Q2Q42006 Q2Q42005 Q2Q42004 Q2

30-year Fixed Mortgage Rate and Treasury Bond

Spread (left axis) 30-Year FRM (Right axis) 10-Year Treasury Bond (Right Axis)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

20082006200420022000199819961994199219901988198619841982


Portland

Looking Deeper….

U.S.Monthly Market Data - June 2009

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

State Total Foreclosure Rate vs. U.S Average(U.S. Average in Blue Dashed Line)

Source: Mortgage Bankers' Association

10.4%

12.5%

89.6% 87.5%

10.4% 12.5%

1.1% 2.2%

0.4% 1.1%

15.6% 18.4%

8.8% 17.6%

7.3% 14.0%

2.5% 8.0%

Source: First American CoreLogic, LoanPerformance data

The "foreclosure + REO rate" is the number of mortgages, by metro area, that are either in the foreclosure process or have completed the foreclosure process and are owned by banks divided by the total number of mortgages for that area.

Locally, today's foreclosure rate is low relative to the nationional average

There has been a large local increase versus a year ago

ALT-A: Foreclosure + REO

Rate Today's local rate is low compared to the national average

SUBPRIME: Foreclosure + REO

Rate

There has been a large local increase versus a year agoPRIME:

Foreclosure + REO Rate

A large local increase occurred compared to a year ago

Compared to the nationional average, today's local rate is low

The Portland market has a lower share of subprime loans than average

Market Share: Prime (blue) vs.

Subprime + Alt-A

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%



1.1%

0.4%

Jun-09Jun-08

2.2%1.1%

Jun-09Jun-08

15.6%8.8%

Jun-09Jun-08

7.3%2.5%

Jun-09Jun-08

18.4%17.6

%

Jun-09Jun-08

14.0%8.0%

Jun-09Jun-08

89.6%

10.4%

87.5%

12.5%

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%



1.1%

0.4%

Jun-09Jun-08

2.2%1.1%

Jun-09Jun-08

15.6%8.8%

Jun-09Jun-08

7.3%2.5%

Jun-09Jun-08

18.4%17.6

%

Jun-09Jun-08

14.0%8.0%

Jun-09Jun-08

89.6%

10.4%

87.5%

12.5%

Re Insights Graphs Oct

Business

Transcript of Re Insights Graphs Oct