Welcome to the Fall 2007 Crystal Ball Seminar!

Welcome to the Fall 2007 Crystal

Ball Seminar!

THE NEW AMERICAN

HOME

PRODUCT OBSOLESCENCE

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Underserved MarketsWe are Still We are Still

Building As Building As If Every If Every Buyer is a Buyer is a Nuclear Nuclear Family…Family…

But The Truth Is The Average Home The Average Home

Square Footage is Square Footage is UPUP 46% 46%

The Average The Average Household Size Household Size is is DownDown 23% 23%

AT LEAST 1/3 OF AT LEAST 1/3 OF YOUR BUYERS YOUR BUYERS

WORK WORK FULL TIMEFULL TIME FROM HOMEFROM HOME

86 million people in this 86 million people in this country are singlecountry are single

51% of all adult women 51% of all adult women in this country are in this country are

single.single.

UP NEXT . . .

David Murphy –

SalesTraq of New Mexico

“Sub Prime Fallout!!!!”

Over this 20 month stretch, the average base price rose only + 1.1%

Over the following 3 month stretch, the average base price rose + 14.2%!!!

Over the next 4 month stretch, the average base price decreased - 3.3%

But what is the big picture telling us?

Up +69%Since Jan. 2001

Observation:

Our local bubble is leaking air.

“Average” & “Median” percentage increase for Albuquerque (Year over year comparison)

* NEW HOME BROCHURE BASE ASKING PRICE (Single Family Homes)

November 2006 average = $256,174

November 2007 average = $253,847

0.9% decrease

Source: SalesTraq of New Mexico - www.salestraq.com/albuquerque

That’s the first year over year average price decrease since February of 2004

In the months ahead, base prices of new homes will continue to

decline. This will be accomplished primarily by downgrading the

“standard features”.

Price Prediction:

The new homes of the future will continue to be designed

and driven largely by the need for “energy efficiency”

Certainty:

Residential Housing Update

in the Albuquerque Area

Jim Folkman Executive Vice President

Home Builders Association of Central New Mexico

November 8, 2007

Single Family Permit History

0100020003000400050006000700080009000

10000

'87

'90

'93

'96

'99

'02

'05

'08

'11

Number ofPermits

Blah bah

Blah

Blah

Blah

Down-Turn Significance

Profound and direct effect on home construction industry and economy of New Mexico.

$1.3 billion industry in ABQ Metro.

$65.9 million in GRT Revenues

Reminds us that our industry is, inevitably and historically, cyclical in nature

Magnitude of Foreclosure Problem

Currently 732,000 foreclosures in process

Another 410,000 soon to be in process 46% of all mortgages placed in recent

years had less than 5% DP

Magnitude of Foreclosure Problem

One third during same time were sub-prime Adjustable rates could go from, say,

7.5% to 11% at adjustment point Foreclosure rate in NM is currently

ranked 44th, but that will probably change

Where Will Homes and Communities Be Built

in the Future? Fewer and fewer stand-alone subdivisions

More and more master-planned and mixed-use communities

Fewer than 14,000 lots left in COA, which is a 4-5 year supply

Over 170,000 in planning by master- planned communities

Increasing opportunities in redevelopment

SALESTRAQTM

Of New Mexico

More information at www.Salestraq.com

and

www.CrystalBallSeminars.com