This month in real estate. Complete national real estate market forecast and analysis.

1. Keller Williams Research
This Month in Real Estate
Released: October 9, 2009
Commentary……………………………………. 2
The Numbe rs That Drive Real Estate………… 4
Recent Government Action……………………. 10
Topics for Buye rs and Sellers…………………. 14
1

2. Green Shoots of Recovery
U.S. economy slowly mending as hope remains for sustained housing recovery.
For nine percent of Americans seeking employment, it’s tough going out there.
But better economic data is expected in the third quarter, and this projected
improvement should translate into a positive boost for the job market and,
importantly, lead to broader economic stabilization. At the same time, the
housing market remains under pressure from record rates of home
foreclosures.
Currently, the housing market’s main lifelines include the $8,000 tax credit for
first-time buyers and the Federal Reserve’s massive purchase of mortgage-
backed securities. Both of these programs may be running their course,
however, as the tax credit is due to expire at the end of November and the
Federal Reserve is starting to taper off its purchase of mortgages. In lieu of
these government actions, the best hope for a more sustained recovery in the
housing sector is a more normalized balance of inventory. Such a balance
requires continued stabilization in home prices across the country, which will
likely take some time.
KW Research 2

3. Green Shoots of Recovery
. In the meantime, as long as mortgage rates stay low and housing affordable,
there are buying opportunities to be had and willing and able buyers who will
continue to absorb inventory. So while home sales slowed from their strong
pace in July, they continue to be much higher than before the stimulus.
Lawrence Yun, NAR chief economist said, “The recent trend shows broad
improvement in most of the country, but with an expected rise in foreclosures
over the next 12 months we need to maintain a healthy level of ready buyers to
absorb the inventory. An extension of the tax credit is critical to preserve
incentives for financially qualified buyers to enter the market.”
Among the positive developments this month are the jumps in new home
sales, personal income and spending. Increases like these show the economy
is improving, albeit at a slow pace. Personal savings dropped to about 3%,
meaning consumers are actually opening their checkbooks again, while still
maintaining a degree of savings. The unemployment picture still remains
gloomy, but the rate of layoffs decreased for the fourth consecutive month—a
good sign.
KW Research 3

4. The Numbers That Drive Real Estate
KW Research 4

5. Home Sales
In Millions
Existing home sales eased after four consecutive monthly gains, recording 5.1
million transactions. While at 2.7% lower than July, sales remain 3.4% above the
level seen last August. According to Lawrence Yun, NAR chief economist,
“Some of the give-back in closed sales appears to result from rising numbers of
contracts entering the system, with some fallouts and a backlog contributing to a
longer closing process.”
Seasonally Adjusted Home Sales 5.24
5.10
5.10
4.94
4.93 4.89
4.74 4.71
4.72
4.66
4.54 4.55
4.49
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Latest data release: September 24, 2009
KW Research 5
Source: National Association of Realtors

6. Median Home Price
In Thousands
Existing-home price was $177,700 in August, an 8% bounceback from its low in
January but still 12.5% below the level seen last August. Distressed properties,
which accounted for 31% of all transactions in August, continue to downwardly
skew the median price as they typically sell for 15%-20% less than traditional
homes.
$203 $191 $186 $180 $176 $165 $168 $170 $167 $175 $182 $182 $178
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Latest data release: September 24, 2009
KW Research 6
Source: National Association of Realtors

7. Inventory - In Millions
Number of homes available for sale
Total housing inventory at the end of August fell 10.8% to 3.62 million existing
homes available for sale, representing an 8.5-month supply at the current sales
pace, down 8.6% from July’s 9.3-month supply. Compared to a year ago, there
are now 16.4% fewer homes on the market.
4.2 4.2
4.3 4.1
4.3
3.9 3.9
3.8
Number of Homes 3.7
3.6 3.6 3.8
Available for Sale
3.6
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Latest data release: September 24, 2009
KW Research 7
Source: National Association of Realtors

8. Mortgage Rates
30-Year Fixed
Rates for 30-year fixed loans ticked down to 4.94% in September. Having
dropped back toward the ultra low 4.78% in the spring, rates are now at well-
below average levels for people looking to buy a home or refinance. However,
such a low rate will not last forever. As the long term treasury securities rates
rise and concerns over inflation come back, mortgage rates will likely go up.
Average Weekly Mortgage Rates
5.59%
5.42%
5.25% 5.29% 5.32%
5.38% 5.25% 5.29%
5.16% 5.15%
5.12% 5.20% 5.14%
5.07% 5.20% 5.22%
5.01% 5.07%
4.98% 5.14% 5.12% 5.04%
5.10% 5.08%
5.04% 5.03% 4.87% 4.84%4.82%
4.96% 4.80%
4.91% 4.94%
4.85% 4.86%
4.82%
4.78% 4.78%
1/8
1/22
2/5
2/19
3/5
3/19
4/2
4/16
4/30
5/14
5/28
6/11
6/25
7/9
7/23
8/6
8/20
9/3
9/17
10/1
Source: Freddie Mac KW Research 8

9. Affordability - % of Income
The percentage of a median family’s income required to make mortgage payments on a median-priced home
Housing affordability continues to be at record highs this year with the added
stimulus of the first-time buyer credit. Home buyers continue to benefit from low
home prices as well as unprecedented mortgage rates. So far this year,
payment percentages have been the lowest on record dating back to 1970. A
typical mortgage payment on a median-priced home historically has consumed
25% of a middle-income family’s monthly earnings; it’s now taking up only 16%.
% of Income Required for Mortgage Payments on a Median-Priced Home
Well below the
historical
standard 25%
21% 20% 20% 20% 21% 23% 24% 24% 20% 16%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Affordability as of August e very year. Calculations assume a 20% down payment.
KW Research 9
Source: National Association of Realtors

10. Recent Government Action
KW Research 10

11. First-Time Home Buyer Tax Credit Update
September 2009
To qualify for the $8,000 tax credit, first-time buyers must close on their homes by November
30. As closings have been taking between 30 and 60 days to occur, time is running out for first-
time buyers wanting to cash in.
Although an extension to the current bill far is from a certainty, two current may
have the potential to pass before the deadline.
1. S (Senate) bill 1678 would extend the current credit exactly as it is for another
six months, expiring on June 1, 2010.
2. HR (House of Representatives) bill 3590 would extend the tax credit for a
year, but it would add a requirement that only service members who were on
duty overseas for at least ninety days during 2009 would qualify.
A Zillow survey found that one in five potential first-time buyers said an extended tax credit
would be their primary reason to buy in the next six months, while 43% said that it would be
either the primary reason or a significant factor. The cost of extending the current credit “as is”
is a major concern in Congress. This year’s credit is set to come with a price tag of $14 billion,
reaching an expected 2 million new homeowners. During the additional six months, the
Senate’s version of an extension would cost nearly as much and reach nearly as many people
as the current bill.
While it may mean good news for those first-time buyers who miss the deadline, it would be
wise for buyers counting on the tax credit to meet the deadline.
Source: Washington Post, Inman News, Realtor.org KW Research 11

12. Credit Score Impact of Loan Mods
The Obama administration’s Making Home Affordable program intends to help 4-5 million homeowners
refinance their mortgage to stay in their home, thereby reducing the number of foreclosures and
helping to stabilize home prices. However, there may be an unintended consequence to this initiative.
Up until recently, loan modifications were relatively rare and indicated increased credit risk. Many
otherwise creditworthy homeowners who have modified their loan have seen a drop, possibly a large
one, in their credit score. The higher the premodification credit score, the larger the potential drop.
Jack Guttentag, professor of finance at the University of Pennsylvania’s Wharton School of Business,
has said that this may deter people from trying loan modifications, possibly resulting in fewer
modifications and more foreclosures.
A new classification will be added in November that will allow lenders to specify if the modification is a
part of the government program. FICO may also do more in-depth research on load modifications to
gauge if their formula needs to be adjusted.
The consequences of a loan modification are less severe than a foreclosure. Any troubled
homeowner seeking a modification is advised to understand the exact terms of the
modification, work with a nonprofit housing counselor, and ask the lender if the modification
is a part of the government program.
Troubled homeowners who don’t meet modification criteria should speak with their agents
about the possibility of a short sale
Sources: Austin American-Statesman, Bloomberg News KW Research 12

13. Freddie Gets Serious About Helping
September 2009
Freddie Mac has hired a company to go door-to-door
to help troubled homeowners modify their mortgages.
The Titanium Solutions representatives will meet
one-on-one with borrowers in their home to review
requirements, determine necessary documents,
obtain signatures, and walk homeowners through
the modification process.
The representatives will not handle any money from
borrowers in hopes of deterring imposters and fraud.
This unprecedented, proactive approach will hopefully
lead to a greater number of loan modifications, fewer
foreclosures, and stabilized home prices.
Source: Inman News KW Research 13

14. Topics for Buyers and Sellers
KW Research 14

15. Little Improvements, Big Difference
Sellers, Impress Buyers with These Ideas for Under $1,000
With more homes on the market than sales going on now, the competition heats
up among sellers in many markets across the country.
Here are three suggestions that can be done with
the help of a contractor for under $1,000:
1. Beadboard the Bathroom. This “in” yet traditional look creates the feel of a cozy
cottage.
2. Liven up the Lights. Low quality and outdated light fixtures can make a less-than-
impressive picture in some buyers’ eyes. Your local home improvement store will likely have
a large selection of nice light fixtures at affordable prices.
3. Spark up the Fireplace. Adding tile around a wood or stone fireplace can add an
extra wow factor to the home. Because the space is small, you can splurge on more
expensive tile while still keeping the overall cost down.
It’s always a good idea to get advice from your real estate agent before making improvements to your home. As a local
market expert, your agent will have valuable insight on what endeavors will yield the most for your time and money.
Source: CNNMoney.com KW Research 15

16. FHA Continues to Be Popular for Buyers
80% of First-Time Buyers Used FHA Financing
FHA loans continue to be a popular choice. With only 3.5%
required as a down payment, FHA is the easiest way for
first-time buyers to purchase.
So far this year, FHA loans have made up 23% of all loans,
compared to 2% only three years ago.
80% of all first-time home buyers have opted for FHA
as their financing of choice.
With the subprime market gone, FHA caters to those with
less-than-perfect credit and those who don’t have a 20%
down payment. Despite the downside of FHA, such as higher delinquency and
foreclosure rates than conventional loans, FHA has played a major part in
bolstering the troubled housing market this year by making homeownership
more affordable to enter. FHA is taking several measures to address the risk
associated with its loans and currently has no concerns about its financial position.
Source: CNNMoney.com KW Research 16

17. 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 17

18. 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 18

19. 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
www.druryrealty.com
KW Research 19

20. 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, Zilow, 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 using this method include:
- www.947gulfroad.com
- www.359gayledrive.com
- www.327gayledr.com
KW Research 20

21. 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
notifid 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 21

22. Follow Paul at…
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 22