Prices Rise But Market Sags in August .

@ www.rlbrownreports.
com
Published by Greg Burger/RL Brown
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“Prices rise but market sags in August….”
While Mr. Bernanke declares that “The recession is over … we are in a recovery” …. We must absolutely anticipate that
there will be times ahead when it won’t be just “up, up, and away”. At least in housing. The headlines shout that Wall
Street is back to normal with bonuses, risk, high profits, and even newly discovered ways to juice up their profits with
securitized instruments akin to shell games. The housing industry knows that the months ahead will be like slogging
through the mire and muck in some far off and unfriendly land.
We hasten to add that we do indeed believe that we have seen the worst in the local new housing debacle, and that we
are indeed at the beginnings of recovery of new housing here in Phoenix, and we have some evidence of that in the
August housing market data that we have compiled. But, recovery is a complex event, and many will fail to understand
what it means for them in the near and mid terms.
The good news this month in metro Phoenix

housing is that the median new home price for the
month rose to $197,948 from last month’s low point
of $183,750 which matched prices in the summer of
2004.
Certainly one month doesn’t confirm a change in the

trend of sliding median new home prices, but a new
path has to have a beginning, and August could
represent that new start and be a sign of a change
of pricing direction for the new home market.
Those of you who follow home builder month to

month same plan/same subdivision price changes in
our housing product data tables recognize that there
have been a growing number of upward price
change instances, even while much of the current
new home sales velocity still is in highly discounted
product. [Continued on Page 3]
Volume 298 – The Phoenix Housing Market Letter by RLBrownReports – Greg Burger/RL Brown
Copyright 2009 – RLBrownReports – All rights reserved including the right to reproduce or quote from. Page 1
@ www.rlbrownreports.com

AUGUST 2009 METRO PHOENIX HOUSING MARKET DATA
[Source: The Sales and Permit Report – V297]
Copyright 2009 RLBrown Reports – All rights reserved
NEW HOME CLOSINGS Aug-09

SALES BY MONTH 754
SAME MO LAST YEAR 1634
PERCENT CHG -53.86%
YTD CLOSINGS 6,615
YTD CLOSINGS LAST YR 14,527
PERCENT CHG -54.46%
AVG NEW PRICE 258,913
MED NEW PRICE 197,948
PERMITS Aug-09
PERMITS BY MONTH 696
SAME MO LAST YR 970
PERCENT CHG -28.25%
YTD PERMITS 5,301
LAST YTD PERMIT 10,708
PERCENT CHG -50.49%
RESALES Aug-09
RESALES BY MONTH 7,886
SAME MO LAST YR 5,285
PERCENT CHG 49.21%
YTD RESALES 62,292
LAST YTD RESALES 37,373
PERCENT CHG 66.68%
AVG RES PRICE 165,806
MED RES PRICE 123,500
This data and all of the contents of the Market Letter are protected by US Copyright laws and cannot be reprinted,
redistributed, copied, or otherwise reproduced without the written permission of the copyright holder. This table with 12
months data is contained in Volume 298 of The Sales and Permit report, available at www.rlbrownreports.com

The trend in median resale home prices in August also remained positive, supporting a four month improving trend after
bottoming out in April 2009.1
Most observers agree that

resale housing must see
improvements in price [as
well as demand] before new
home activity can expect
much from any economic
recovery.
At least in this market, we

have seen prices improve
from a low of $`113,000 in
April to this month’s
$123,500, representing a
9.29% upward change over
the last 4-5 months.
Obviously, there are many

factors at play, including
the multiple offers which we constantly hear about anecdotally, the possibility that lenders are withholding units from the
market to drive prices up, that investors disenchanted with Wall Street dominate the market, that government tax credits
have artificially boosted market activity putting upward pressures on prices, and more. But, it is clear that resale prices
are indeed firming up, and that has always been a sign of a strengthening marketplace.
The disappointing news for local housing in August comes from both the sales and permit activity and both new and
resale homes in the metro area. Permits fell. New home closings fell. Resales fell. The graphics on the next page show
how August failed to measure up.
Our RLBrownHousingReports have been the “gold standard” for housing data and analysis for 25 years. Our data is not recycled from other
sources, but is carefully developed from actual government records of individual permit and sales transaction and other documents by our own
staff … all of whom have been with us for many years. The data is fresh and all of our data is available in formats that can be easily used for
detailed specific analysis that meets your targeted needs. Micro data is our specialty, and custom market reports and analysis are our forte. Call
Greg at 480-614-0211 for all of the details or visit www.rlbrownreports.com .
1
This data set includes both sales by brokers and sales by owners and includes transactions in Pinal County. The data
set is included in MAGIC-Pro.

The downward trend in new
home permits suggests that
at least part of the
improvement that we have
seen over the last 6 months
or so has indeed been the
result of home builders
producing units for the federal
tax credit buyers.
Since permits are obviously

taken out several months
ahead of anticipated delivery
that sounds like a reasonable
explanation.
The clear danger for the

market is that there is a
possibility that absent that tax
credit stimulus, the permit
trend will fall back to the
November thru March pace.
That squares somewhat with

the relatively flat track of new
home closings going back to
January 2009 … a track
which was the beneficiary of
those tax credits.
The real insight into what is

happening can’t come from
the broad stats like those
above, but requires a detailed
study of the trends within
mini-markets and by price
and product categories.

There are those that say the
resale home market is
running out of steam … or
at least the steam
generated by the investor
buyer component of the
market.
On the other hand, we talk

regularly with Realtors who
place all of the blame on the
lenders who won’t accept
the real market value for
their REO’s and their
candidates for short sales.
We need to remember that

the investor market is very
fickle, and even the slightest
confidence-damaging news can spook investors, especially those who are treading in unfamiliar investment waters with
residential real estate. There is plenty of bad economic news yet to come to keep these prospective buyers very skittish.
The table below depicts this month’s condo conversion activity.
CONDO CONVERSIONS Aug-09

SALES BY MONTH 34
SAME MO LAST YR 146
PERCENT CHG -76.71%
YTD CLOSINGS 442
LAST YTD CLOSINGS 1,247
PERCENT CHG -64.55%
AVG COE PRICE 128,590
MED COE PRICE 112,727

“Fortunes rise and fall on market share capture…”
Management job performance often isn’t measured as much on profit as it is on growth of market share capture, and while
earnings per share is vitally important, market share penetration is the focus. Success in down markets often can’t be
measured in profits but can clearly be judged by a careful examination of shifts in market share. Gains of share in down
markets portend strong profits in the coming good markets. Bad times are viewed as good times for increasing market
share, and a failure to do so in bad times is often the #1 measure of management and product performance.
On the pages that follow we have examined the changes in market share capture by homebuilders here in the metro
Phoenix housing market using the permit and closing data. Using data from our proprietary records that go back into the
1980’s we have chosen to look at the period from 1999 to the first seven months of this year, 2009. This unique
proprietary data allows us the luxury of being able to perform historical and current analysis from both the macro view as
we do here as well as the very micro perspective, like from a specific price range or product type in a finite local
competitive market area.
We have calculated the market share capture of the leading builders over that period and then have examined it for
building permit activity and for closing activity. To make the comparison easier, we have created a series of graphs and
tables that allow easy comparisons of market share trends by builder over the period, including both the good times and
the bad times we have seen over this period.
In some cases market share performance was impacted by gains through acquisition of another company. In other cases
it was impacted by the demise of other companies that forfeited their shares as they left the market. It is interesting to
track the majors as well as the performance of the regional and local powerhouse builders. It is also interesting to look for
suggestions as to what future marketshare trends for various builders will be like under current management parameters.
TOP 8 HOMEBUILDER PERFORMANCES – 1999-2009 – MARKETSHARE CAPTURE OF ESCROW CLOSINGS
BUILDER 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009YTD
15.8960 18.4186 14.4780 12.5779 14.3663 15.9603 14.3837 12.3214 17.0535 27.2674 20.7405
PULTEDELWEBB % % % % % % % % % % %
DRHORTON 12.0921 10.6632 12.4677 14.7870 16.7404 16.2394 14.8119 15.9166 23.3908 30.4000 16.9860
COMBINED % % % % % % % % % % %
RICHMONDAMERICAN 5.3612% 4.8065% 7.1226% 6.1504% 8.3462% 7.0211% 6.2684% 7.2645% 9.7870% 7.8147% 7.5350%
TAYLORMORRISON 0.0000% 0.0000% 0.0000% 0.0000% 0.1475% 0.1861% 1.3346% 4.4838% 5.3322% 8.2189% 7.4573%
SHEAHOMES 9.8630% 9.6083% 9.6957% 8.0823% 7.1113% 6.9310% 6.5442% 4.8211% 5.3920% 7.8737% 6.9653%
MERITAGEHOMES 2.6043% 5.8934% 5.1462% 5.4331% 3.6607% 4.2985% 5.5144% 6.6584% 4.5864% 5.1284% 6.7064%
FULTONHOMES 4.1921% 4.1002% 5.7302% 5.5513% 4.9657% 5.0549% 5.5985% 3.2305% 2.6202% 3.6042% 6.0073%
LENNARHOMES 7.4027% 6.2420% 5.5610% 7.4669% 4.7224% 4.7908% 4.3164% 6.6859% 6.5327% 4.9347% 5.4376%

The next graph depicts the historical performance of the next 10 homebuilders and compares their market share capture
of new home closings.

The performance of the local homebuilder community using permits as the measurement produces a more complex
picture, especially over the last several years. The red bars are the share capture for the first seven months of 2009.
This data can be of great value to serious students of trends in past performance as a means to project future
performance as well as the identification of best practices for performance drivers.
Naturally, we can make the underlying data available for those desiring to look further into the subjective performance of
any Phoenix homebuilder. Give Greg a call at 480-614-0211.
“Our view of the marketplace and other important matters….”
The “speech season” is upon us as fall is just around the corner, and we have spent some time this week preparing for an
address to a major housing conference that draws its attendance from around the state and for several more on the
calendar. As we did our homework, we were reminded of how the government actions that were so immediate for Wall
Street have not been forthcoming for the housing industry … or more accurately, for the beleaguered consumers whose
homes have been foreclosed upon and whose families have been impacted.
The lending community, while being blamed for all of the bad loans, has been very slow to respond to a government effort
for loan modification that was about as poorly conceived as any program in recent memory. In fact, even those
institutions that received huge amounts of federal money to save their businesses have largely been allowed to ignore
modification at any reasonable level or to pay lip service only.
The suggestions of those in industry and government that have some knowledge about housing have been ignored in
favor of policies that have been largely protective of mortgage backed securities investors, hedge funds that hold the
securities and those that originated and rated them.
The wave of subprime foreclosures hit and is now washing on, leaving the debris of broken homes and families and
ruined neighborhoods and the opportunity for small-time investors to buy real estate at prices unheard of for many years.
The paper net worth of millions of families and the credit ratings of large numbers of consumers that our economy relies
upon has been wrecked.
The $8,000 tax credit worked … but was too little and too late for the housing industry, and is about to expire without
much “noise” in a Washington environment too busy with grandiose schemes to patronize more vocal special interests. It
should be renewed and coupled with some of the suggestions of Sheila Bair of the FDIC.
Economists are universally proclaiming the recession over, and a recovery underway.
As you already know, we believe that this housing market has indeed bottomed out, and that there are signs that recovery
is under way in certain price ranges, product types, and neighborhoods. The challenge is to identify just what recovery
will look like!
Smart builders are already moving to take advantage of the market opportunity that they have identified, and every day
we see more builders stirring, seeking market data from us, asking for highly targeted analysis, and focusing on a market
recovery effort that is realistic and will be profitable for them. Many are starting with the series of Competitive Market Area
analysis reports that we offer on our website at really affordable prices. Others use MAGIC-Pro to easily generate
closely-defined CMA analysis for cheap land now available and to quantify plan and product opportunity through best

selling plan data and pricing history data. Others are still hunkered down, waiting for someone to lead them to the
promised land …. again.
It will not make much difference to those builders that the market has bottomed out and that a recovery is wheezing along
in some market segments, because once they finish discounting and selling their old product in their old subdivisions, they
have no plan, no vision, and little understanding of what life in housing in 2010 and 2011 will be like.
Look at 2003 for a clue. There is growing evidence that the market of 2010-2012 will closely resemble that 2003 period,
and we had a solid group of home builders that did very well in 2003.
In addition to being interesting to look at, there are some valuable insights available in the market share data that we have
developed and included herein as well as in the detailed data behind this handful of charts and tables. There have been
some big changes … and some of those presented opportunity in the down market for some homebuilders.
Those at the very top probably won’t see much change, but it is easy to identify the up-and-comers isn’t it! The proof is
already demonstrated even though we have just begun the recovery process, and the data suggests that along about
2012 there will be some serious pressure from “below” on some of those historical market leaders.
Recovery of this housing market, even to the 2003 level, will not happen if some things don’t change. Foreclosures
cannot be allowed to cascade through the Alt-A and Prime Loan borrowers like they were allowed in the sub-prime
community. If those millions of home loans are allowed to just collapse, there will be no recovery. If no programs more
substantive than the current modification effort are forthcoming, all bets are off for the local economy and for housing.
Job preservation, unemployment relief, mortgage moratoria, and aggressive job creation strategies must be successful for
recovery to take hold. An unemployed consumer can’t make his mortgage payment or can’t buy a home, and can’t lead
the consumer spending surge that will grow jobs.
A broke and disfunctional state government without a plan can’t lead an effort at economic stability, job creation,
improvement of education, and confidence, let alone an economic and housing recovery. Governance is not a childish
game.
This housing market has weathered a level 5 storm and it is time to rebuild and recover. We will tell our audience
tomorrow that while the storm isn’t over, there are clear signs that the surge has passed for now.
The tidal wave from commercial properties has yet to hit, and the financial impact of loan defaults will be huge across the
nation and clearly here in Phoenix. In addition to the local banks and regional banks that are expected to be hit hardest
we can expect impact and defaults from those building owners who are not professional real estate investors, including
the medical professionals and others who have opted for condo offices.

Vacancy rates have soared and foreclosures will continue to grow. The impact on the local economy, on regional banks
willingness to finance housing development, and on job creation in our community will be felt for several years.
All of these things will temper the housing recovery we have discussed above and should be factored into homebuilders
expectations.
If we can help you and your firm develop and execute your recovery plans, help your bank or investors understand the
future opportunities for your assets, or just come before your group to share our market data and insights, just give us a
call. We answer our own phones!
Greg Burger RL Brown
Affordable reports and data tables to assist you in participating in the market recovery…
MAGIC – The most sophisticated and comprehensive analysis tool of this housing market available … affordable,
complete, easy to use. Contains all you need to perform fully fleshed feasibility and analysis of all or any part of this
housing market.
The Sales and Permit Report – An affordable printed monthly report detailing the monthly sales and permits for each
active subdivisions Valley-wide. This report has been published continuously since 1985.
Vacant Lot Analysis – A COMPREHENSIVE ANALYSIS OF THE VACANT LOT INVENTORY IN ACTIVE
SUBDIVISIONS, analyzed by market area, by price range, by lot size, and by velocity.
Lot Tracker Tool – A new land sales tracking tool. Five years worth of land sales, aggregated for easy comparison.
Subcontractor Permit Report – A prospecting tool for subs of all types. What builder is starting what?
Custom Lot Buyer Report - Names and addresses of the most recent buyers of custom home lots.

Custom Home Permit Report - The most recent custom home starts, with buyers/builders contact information.
Subcontractor Plan Report – Product data re current builder offerings. Prices, sq ftg, features, and more.
The Annual Report 2008- The most comprehensive statistical abstract of this housing market available anywhere,
covering 1985 thru 2008...
The Sales and Permit E-Report - The “bible” of permit and closing data by subdivision with the last 12 month’s permits
and closing, by month, by subdivision … in Xls format.
Virtual Air Photo Book – 2nd quarter 2009 housing data overlaid on Microsoft Virtual Earth. The most current and
effective air photo based housing report in the region … save hundreds over the competition.
Project specific market and feasibility analysis – Half the price of competing analysis, written by RL Brown. These are
the most authoritative analysis works in the region.
Best selling plans report … identified from among some 4,000 floor plans available from over 300 builders.
Competition Product Report … the pricing history and plan features of all of the plans currently offered in the region,
updated every month. A report in Microsoft Excel.
Builder and Subdivision Market Share Report. - The market share capture by area and price range category of every
subdivision in the region … update monthly. The real gauge of subdivision performance. A printed report.
The new Commercial Land transaction report - Commercial land transactions valley-wide.
Condo Conversion Report – Detailed tracking of the sales activity of all of the condo conversions in the region.
Custom Competitive Market Area analysis - You define the area and we create the competitive market area analysis.
Accurate, timely data, very affordable.
GIS tools including polygons and geo-indexed data.
Custom housing market data reports – designed to your specifications.
And more …. See www.rlbrownrports.com or call Greg at 480-614-0211.
PS …. We are naturally flattered when we hear that you have emailed or passed out copies of this US Copyright
protected market letter to your friends, associates and clients.

Prices Rise But Market Sags in August .

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@ www.rlbrownreports.

The good news this month in metro Phoenix

Certainly one month doesn’t confirm a change in the

Those of you who follow home builder month to

[Source: The Sales and Permit Report – V297]

Copyright 2009 RLBrown Reports – All rights reserved

NEW HOME CLOSINGS Aug-09

Most observers agree that

At least in this market, we

Obviously, there are many

Since permits are obviously

The clear danger for the

That squares somewhat with

The real insight into what is

On the other hand, we talk

We need to remember that

The table below depicts this month’s condo conversion activity.

CONDO CONVERSIONS Aug-09

TOP 8 HOMEBUILDER PERFORMANCES – 1999-2009 – MARKETSHARE CAPTURE OF ESCROW CLOSINGS

“Our view of the marketplace and other important matters….”

Greg Burger RL Brown

GIS tools including polygons and geo-indexed data.

Custom housing market data reports – designed to your specifications.

And more …. See www.rlbrownrports.com or call Greg at 480-614-0211.

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