2009 Local Market Reports - 3rd Quarter Every housing market is unique. These Local Market Reports (LMRs) — which reflect data available through 3rd Quarter 2009 — provide insights into the fundamentals and direction of the nation\'s largest metropolitan housing markets. Each downloadable report evaluates a number of factors affecting home prices, including: The health of the local job market Foreclosure rates Housing inventory Debt-to-income and mortgage-servicing-costs-to-income ratios

1. Boulder Area
Local Market Report, Third Quarter 2009
Today's Market…
Median Price (Red Line) and One-year Price Growth
$450,000 20%
$400,000 15%
$350,000
10%
$300,000
$250,000 5%
$200,000 0%
$150,000
-5%
$100,000
$50,000 -10%
$0 -15%
2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
Boulder U.S. Local Trend
Price Activity
Current Median Home Price (2009 Q3) $358,300 $177,900
Prices are down compared to a year
1-year Appreciation (2009 Q3) -0.9% -11.7% earlier and continue to weaken
3-year Appreciation (2009 Q3) -2.5%
2 5% 0.5%
0 5%
3-year (12-quarter) Housing Equity Gain -$9,200 $867 Real estate remains a long-term
7-year (28 quarters) Housing Equity Gain $46,600 -$45,900 investment: those who bought early in the
9-year (36 quarters) Housing Equity Gain NA $3,467 boom still hold some equity
Conforming Loan Limit* $460,000 $729,250 Not all buyers have access to
Local Median to Conforming Limit Ratio 78% not comparable government-backed financing in this
k t
*Note: the 2009 loan limits for FHA and the GSEs were extended through 2010.
State Home Sales (Red Line) and Sales Growth
1,000s
160 30%
140 25%
20%
120 15%
100 10%
5%
80
0%
60 -5%
40 -10%
-15%
20 -20%
0 -25%
2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
Home Sales and Construction Growth Colorado U.S.
Sales growth during the third quarter
State Existing Home Sales
-14.1% 5.9% remains sluggish compared to the
(
(2009 Q3 vs 2008 Q3))
national average

2. Drivers of Local Supply and Demand…
Local Economic Outlook Boulder U.S.
Not
1-year Job Change (Sep) -9,800 Job losses are a problem and will weigh
Comparable
on demand, but layoffs are declining
Not
1-year Job Change (Aug) -11,500 which could help buyer confidence
Comparable
Not Unemployment has risen since the same
3-year Job Change (Sep) -6,000
Comparable period last year, but Boulder's labor
Current Unemployment Rate (Sep) 5.5% 9.8% market has been more resilient than the
Year-ago Unemployment Rate 4.1% 6.2% national average
1-year (12 month) Job Growth Rate -5.8% -3.1% Weak compared to other markets
State Economic Activity Index Colorado U.S.
The economy of Colorado is weaker than
12-month change (2009 - Sep) -4.3% -3.2%
the rest of the nation, but improved
36-month change (2009 - Sep) -0.3% -1.1% modestly from last month
Local Fundamentals Boulder U.S.
12-month Sum of 1-unit Building Permits through The current level of construction is 89.3%
122 not comparable
Sep 2009 (1,000s) below the long-term average
Excess supply reduction could result in
Long-term average for 12-month Sum of 1-Unit price escalation over the longer-term if, in
1,137
, not comparable
p
Building Permits (1,000s)
(1 000s) the future there is rapid and robust
future,
increase in demand
Single-Family Housing Permits (Sep 2009) Low construction will help to maintain a
-39.9% -34.9%
12-month sum vs. a year ago tight supply and to stabilize prices
Construction: 12-month Sum of Local Housing Permits
(Historical Average Shown in Red Dashed Line)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

3. Affordability
Affordability - Local Mortgage Servicing Cost-to-Income
(Historical Average Shown in Red Dashed Line)
25%
20%
15%
10%
5%
0%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Monthly Mortgage Payment to Income Boulder U.S.
Ratio for 2008 18.8% 19.5% Historically strong and an improvement
Ratio for 2009 Q3 17.0% 15.6% over the second quarter of this year
Historical Average 21.0% 23.2% Good relative to the nation
Recent Trend - Local Mortgage Servicing Cost to Income
(Historical Average Shown in Red Dashed Line)
25%
20%
15%
10%
5%
0%
2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3

4. Median Home Price to Income Boulder U.S.
Ratio for 2008 6.8 7.1 Local affordability has improved and is
Ratio for 2009 Q3 6.8 6.2 below the historical average
Historical Average 7.5 7.2 More expensive than most markets
Ratio of Local Median Home Price to Local Average Income
(Historical Average shown in Red Dashed Line)
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
The Mortgage Market
30-year Fixed Mortgage Rate and Treasury Bond Yield (%)
3.0 7.0
6.5
2.5 6.0
2.0 5.5
5.0
1.5 4.5
4.0
1.0 3.5
0.5 3.0
2.5
0.0 2.0
2004 Q3 Q1 2005 Q3 Q1 2006 Q3 Q1 2007 Q3 Q1 2008 Q3 Q1 2009 Q3
Spread (left axis) 30-Year FRM (Right axis) 10-Year Treasury Bond (Right Axis)
The spread between the 30-year fixed rate mortgage and the 10-year Treasury bond fell again in the third quarter and
stands close to the historic average. This decline of the spread suggests that the financial markets view the risk on
mortgage debt as close to a "normal" state and that the private sector will buy up excess demand if yields rise.
Consequently, the Fed is likely to phase out its program of buying up mortgages in the secondary market to keep rates low,
leaving the private sector to fill the void. Mortgage rates are likely to rise in first or second quarter of 2010 as the Fed exits
the mortgage market.

5. Looking Deeper….
State Total Foreclosure Rate vs. U.S Average
(U.S. Average in Blue Dashed Line)
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Source: Mortgage Bankers' Association
Monthly Market Data -
August 2009 Boulder U.S.
12.3
8.1% The B ld
Th Boulder market h a l
k t has lower share of
h f
Market Share: %
91.9% 87.7% subprime loans than the average market,
Prime (blue) vs.
91.9 87.7 but rising prime foreclosures are
Subprime + Alt-A
% % becoming a problem
8.1% 12.3%
There was a substantial increase versus
0.7% 2.3%
PRIME: 0.5 0.7 2.3% July of this year
% 1.7%
Foreclosure + REO %
Rate Compared to the national average,
0.5% 1.7%
Jul-09 Aug-09 Jul-09 Aug-09 today's local rate is low
There has been a large local increase
12.3% 18.0%
SUBPRIME: 12.3 18.8 versus a year ago
% % 18.0
Foreclosure + REO 9.4%
%
Rate Locally, today's foreclosure rate is low
9.4% 18.8%
Jul-09 Aug-09 Jul-09 Aug-09 relative to the national average
A large local increase occurred compared
4.5% 14.5%
ALT-A: 14.5 to July of this year
4.5% 12.1
3.6% %
Foreclosure + REO %
Rate The August rate for Boulder is low
3.6% 12.1%
Jul-09 Aug-09 Jul-09 Aug-09 compared to the national average
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.
Source: First American CoreLogic, LoanPerformance data