ECONOMIC FOCUS

Volume 15, Issue 03 For the week of January 24, 2011 Homeownership Makes $ense Bring on the buyers! At last, the housing market is beginning to make sense again. The ownership line is finally crossing over the rental line on the great Homeownership graph. It is now more expensive to rent than to buy a home in 72% of major metropolitan areas across the US, according to the Trulia Rent vs. Buy Index released Monday. This is due to rising demand for rentals and falling home prices combined with low interest rates. Pete Flint, chief executive and co-founder of Trulia says: "Since the start of the Great Recession, many former homeowners have flooded the rental market… Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets." The index compared the median list price and rent paid for a two-bedroom home in 50 cities. It then assigned a price-to-rent ration to each city with 15 signifying a buyer's market and 21 or more signifying a renter's market. The space between the two numbers signifies a balanced market. The cost to rent includes rent and insurance. The cost of ownership includes mortgage principal and interest, closing costs, property taxes, hazard insurance and any homeowner association dues. Not surprising, the most affordable markets are Las Vegas and Miami where the price-to-rent ration is 6 and where the foreclosure rates have topped the charts. Las Vegas was atop the foreclosures list in Q3 with one in every 25 homes was in foreclosure. The index reported that homeownership was cheaper in the metro areas of San Francisco, Seattle, New York and Kansas City, MO, all of whom had price-to-rent ratios over 21. Other metros like Oakland, Sacramento, Los Angeles, Miami and Phoenix are experiencing elevated rates of unemployment or foreclosures and close economic centers with projected job growth are still more affordable to renters. This is truly great news for the Housing Industry. Key Economic Reports Released This Week RELEASE DATE ECONOMIC INDICATORS RELEASED BY CONSENSUS Wt. INFLUENCE ON INTEREST RATES Mon 01/24 1:00 pm et Weekly Bill Auction Dept. of the Treasury N/A **  If strong demand  If weak demand Tue 01/25 9:00 am et Case-Shiller HPI for November '10 S&P Case-Shiller HPI -1.6% * Undetermined Tue 01/25 10:00 am et Consumer Confidence Index for January '11 Conference Board 54.5% **  If above consensus Error! Filename not specified. If below consensus Tue 01/25 2:00 pm et FOMC Meetings 01/25-26 Fed Open Market Committee Federal Reserve Board No rate change Weakness Bias **** Determines Policy Wed 01/26 7:00 am et MBA Mtg Apps Survey for week ending 01/21 Mortgage Bankers Association of America N/A * Undetermined Wed 01/26 10:00 am et New Home Sales for December '10 Bureau of the Census Dept. of Commerce 300k **  If above consensus! s  If below consensus Wed 01/26 2:15 pm et FOMC Policy Statement Fed Open Market Committee Federal Reserve Board No rate change Weakness Bias **** Determines Policy Thu 01/27 8:30 am et Jobless Claims for week ending 01/22 Bur. of Labor Statistics Department of Labor 405k *  If about! ve consensus  If below consensus Thu 01/27 8:30 am et Durable Goods Orders for December '10 Bureau of the Census Dept. of Commerce 1.2% **  If above con! sensus  If below consensus Thu 01/27 10:00 am et Pending Home Sales Index for November '10 National Association of Realtors 0.2% *  If above cons! ensus  If below consensus Fri 01/28 8:30 am et Gross Domestic Prod (GDP) Q4 '10 advance Bur. of Econ. Analysis Dept. of Commerce 3.7% ****  If ab! ove consensus  If below consensus Fri 01/28 8:30 am et Employment Cost Index for Q4 '10 Bur. of Labor Statistics Department of Labor 0.9% ****  If above ! consensus  If below consensus Fri 01/28 10:00 am et Consumer Sentiment for January ' 11 University of Michigan 73.0% *  If above consensus Error! Filename not specified. If below consensus * Low Importance ** Moderate Importance *** Important **** Very Important

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