2011 Lake of the Ozarks2011 Lake of the OzarksReal Estate SymposiumReal Estate Symposium

Sponsored bySponsored byRE/MAX Lake of the OzarksRE/MAX Lake of the Ozarks

Russ CofanoRuss CofanoChief Executive OfficerChief Executive OfficerMissouri Association of Missouri Association of

RealtorsRealtors

U.S. Housing Market U.S. Housing Market OutlookOutlook

Russ CofanoRuss CofanoChief Executive OfficerChief Executive Officer

MISSOURI ASSOCIATION OF REALTORS®MISSOURI ASSOCIATION OF REALTORS®Presentation at:Presentation at:

4th Annual Real Estate Symposium 4th Annual Real Estate Symposium for the Lake of the Ozarksfor the Lake of the Ozarks

October 27, 2011October 27, 2011

IT’S NOT ABOUT THE NUMBERSIT’S NOT ABOUT THE NUMBERS

U.S. Annual Existing Home SalesU.S. Annual Existing Home Sales

Monthly Existing Home Sales … Monthly Existing Home Sales … Flat Line Outside of Tax CreditFlat Line Outside of Tax Credit

Tax Credit Impact

……Despite Record Low RatesDespite Record Low Rates

……Despite Affordability vs RentDespite Affordability vs Rent(index = 100 in 1980)(index = 100 in 1980)

Economy Losing MomentumEconomy Losing Momentum(GDP growth after recession should be sustained 4% to 5% … (GDP growth after recession should be sustained 4% to 5% …

not 1% as in 1not 1% as in 1stst half in 2011) half in 2011)

Desired Pace

Total U.S. Payroll Jobs – Modest RecoveryTotal U.S. Payroll Jobs – Modest Recovery(1.3 million in the past 12 months)(1.3 million in the past 12 months)

In thousands

6.5 million below prior peak

Housing Equity Housing Equity ((source of funds for source of funds for small business ownerssmall business owners))… Down… Down

Source: Federal Reserve

Consumer Confidence in the TankConsumer Confidence in the Tank

Consumer Confidence in the TankConsumer Confidence in the Tank October 25, 2011October 25, 2011

• The Index now stands at 39.8 The Index now stands at 39.8 (1985=100), down from 46.4 in (1985=100), down from 46.4 in September. September.

• The Present Situation Index decreased The Present Situation Index decreased to 26.3 from 33.3. to 26.3 from 33.3.

• The Expectations Index declined to 48.7 The Expectations Index declined to 48.7 from 55.1 last monthfrom 55.1 last month

Consumer Confidence in the TankConsumer Confidence in the Tank Consumer confidence is now back to levels last Consumer confidence is now back to levels last

seen during the 2008-2009 recession. seen during the 2008-2009 recession.

The Present Situation Index posted its sixth The Present Situation Index posted its sixth consecutive monthly decline, as pessimism about consecutive monthly decline, as pessimism about the current economic environment continues to the current economic environment continues to grow.grow.

Distress Sales: 30% to 40% of Transactions Distress Sales: 30% to 40% of Transactions

Will Remain Significant for Next 2 yearsWill Remain Significant for Next 2 years

Upside PotentialUpside Potential

Serious Delinquent Mortgages … Serious Delinquent Mortgages … Mostly those who took out loans in bubble yearsMostly those who took out loans in bubble years

(90+ days late or in foreclosure process)(90+ days late or in foreclosure process)

In 2010, there were 1.5 million distressed sales … need to wait 2.7 years

Very Low Default Among Very Low Default Among Recent HomebuyersRecent Homebuyers

Fannie and Freddie Backed Mortgage Loan PerformanceFannie and Freddie Backed Mortgage Loan Performance

Fannie MaeFannie MaeVintageVintage

Cumulative Cumulative Default Rate Default Rate after 18 monthsafter 18 months

20022002 3.1%3.1%

20032003 2.5%2.5%

20042004 4.6%4.6%

20052005 4.8%4.8%

20062006 11.6%11.6%

20072007 28.7%28.7%

20082008 12.6%12.6%

20092009 1.2%1.2%

Freddie MacFreddie MacVintageVintage

Cumulative Cumulative Default Rate Default Rate after 18 monthsafter 18 months

20022002 2.7%2.7%

20032003 1.2%1.2%

20042004 2.0%2.0%

20052005 1.8%1.8%

20062006 6.0%6.0%

20072007 22.3%22.3%

20082008 13.7%13.7%

20092009 1.1%1.1%

Source: Federal Housing Finance Agency

Average Credit Score for Average Credit Score for Loan OriginationLoan OriginationNormalNormal 20092009 20102010 IfIf

Fannie Fannie 720720 761761 762762 720720

FreddieFreddie 720720 757757 758758 720720

FHAFHA 650650 682682 698698 660660

15% to 20% Higher Sales

Downside PotentialDownside Potential

Washington Policy Change?Washington Policy Change? QRM and 20% down payment requirement ???QRM and 20% down payment requirement ???

• Affordability (staying within budget) more important than Affordability (staying within budget) more important than down paymentdown payment

Limit mortgage interest deduction for high income and Limit mortgage interest deduction for high income and second homes ???second homes ???• Could crush the working class in resort areasCould crush the working class in resort areas• Cascading impact to middle class homes and hurts Cascading impact to middle class homes and hurts

confidence to buy a homeconfidence to buy a home

Improving Factors for Higher Improving Factors for Higher Home SalesHome Sales

Improving FactorsImproving Factors• Job Creation (though slowly)Job Creation (though slowly)• Stock market recovery from 2008 – Wealth EffectStock market recovery from 2008 – Wealth Effect• Rising rents and larger pool of qualified rentersRising rents and larger pool of qualified renters• Buyers want distressed properties … but at deep discountsBuyers want distressed properties … but at deep discounts• International buyers cashing in on the weakened dollarInternational buyers cashing in on the weakened dollar• Smart money chasing real estateSmart money chasing real estate

Potential Huge Positive … Potential Huge Positive … Lending opens upLending opens up Potential Huge Negative … Potential Huge Negative … Washington policy change(s)Washington policy change(s)

U.S. Housing Market U.S. Housing Market OutlookOutlook

Russ CofanoRuss CofanoChief Executive OfficerChief Executive Officer

MISSOURI ASSOCIATION OF REALTORS®MISSOURI ASSOCIATION OF REALTORS®Presentation at:Presentation at:

4th Annual Real Estate Symposium 4th Annual Real Estate Symposium for the Lake of the Ozarksfor the Lake of the Ozarks

October 27, 2011October 27, 2011

Real Estate at The LakeReal Estate at The LakeWhat is the “Lake” marketWhat is the “Lake” market??

Year Transactions Volume Avg Price

2009 1840 $353 Million $192,000

2010 1807 $328 Million $182,000

Roughly 2% decline in number of transactions & 7% decline in volume.

2010 Market Breakdown2010 Market Breakdown

# of Sales# of Sales VolumeVolume Avg PriceAvg Price

Residential WaterfrontResidential Waterfront 513 $158 Million $307,000 513 $158 Million $307,000 (29%) (50%)(29%) (50%)

Residential OffshoreResidential Offshore 612 $68 Million $111,000 612 $68 Million $111,000 (34%)(34%) (21%)(21%)

CondominiumsCondominiums 451 $73 Million $162,000 451 $73 Million $162,000 (25%) (22%)(25%) (22%)

Totals = 88%Totals = 88% 93%93%

Real Estate at The LakeReal Estate at The LakeHow is 2011 tracking?How is 2011 tracking?

Year Sales -3rd Qtr Volume

2009 1327 248 million 2010 1371 246 million

2011 1418 249 million

More than a 6% increase in the number of sales since 2009

Residential Waterfront SalesResidential Waterfront Sales$200,000 - $500,000 $200,000 - $500,000

Year Avg Sales Price

Sqft Price Per Sqft

2009 $327,000 2210 $148.2010 $307,000 2251 $136.

2011 $298,000 2308 $129.Through 3rd Quarter

13% decline in Price per square foot and 4% increase in size of home since 2009

Residential Waterfront SalesResidential Waterfront Sales$500,000 - $1,000,000 $500,000 - $1,000,000

Year Avg Sales Price

Sqft Price Per Sqft

2009 $637,000 3760 $169.2010 $625,000 3913 $160.

2011 $668,000 4280 $156.Through 3rd Quarter

Approximately a 5% increase in Avg Sales Price, 8% decrease in price per sqft, and a 12% increase in avg sqft

Residential Waterfront SalesResidential Waterfront Sales$1,000,000 & Over $1,000,000 & Over

Year Avg Sales Price

Sqft Price Per Sqft

2009 $1,767,000 6442 $274.2010 $1,854,000 6840 $271.

2011 $1,281,000 6198 $207.Through 3rd Quarter

24% decline in Price per square foot from 2009, 4 % decline in sqft

Offshore Home SalesOffshore Home Sales

Year Avg Sales Price Sqft Price Per Sqft

2009 $118,000 1778 $66.00

2010 $111,000 1847 $60.00

2011 $100,000 1780 $56.00 Through 3rd Quarter

15% Decline in price per square foot since 2009

Condominium SalesCondominium Sales

YearYear # Sales# Sales Avg Price Avg Price AvgAvg Sqft Sqft

2009 4402009 440 $171,000 $171,000 1356 13562010 4512010 451 $162,000$162,000 1347 1347

2011 3592011 359 $161,000 $161,000 1399 1399Through 3Through 3rdrd Quarter Quarter

6% Decline in Average Price since 20096% Decline in Average Price since 2009

Foreclosure Home SalesForeclosure Home Sales

Year # of Sales % of Trans Avg Price

2009 160 14% $118,000

2010 283 25% $105,000

2011 222 25% $91,000Through 3rd Quarter

Average Price down 23% since 2009

Residential InventoryResidential Inventory

7% Decline in number of new residential listings

Real Estate TransactionsReal Estate Transactions

6.5% increase since 2009

In SummaryIn Summary2010 - We are tracking with Last Years numbers

Today – We are tracking with Last Years numbers

2010 -Buyers are still buying, in most cases spending close to what they have in the past, today they just get more for their money

Today – Buyers are still buying, in most cases spending less than they have in the past and getting more for their money

2010 - Foreclosures and Short sales do exist in our market more than in the past.

Today – Foreclosures and Short sales are still here and will continue, but the average price has dropped considerably.

2010 – Transactions and Volume are down slightly

Today – Transactions have increased and Inventory has decreased

Developing the LakeDeveloping the Lake

Neil Stewart, Offco, LLCNeil Stewart, Offco, LLC

Kevin BrownKevin Brown Lands End Properties LLC / PROBUILD Construction Lands End Properties LLC / PROBUILD Construction

Services, LLC / PMP Property Management Services, LLC / PMP Property Management Professionals, LLCProfessionals, LLC

Gary Prewitt, RIS Incorporated Gary Prewitt, RIS Incorporated & Prewitt Enterprises, LLC& Prewitt Enterprises, LLC

Developing the Lake of the OzarksDeveloping the Lake of the Ozarks

The Panel:The Panel:•Neil StewartNeil Stewart•Kevin BrownKevin Brown•Garry PrewittGarry Prewitt

Jeff GreenJeff GreenMissouri Shoreline SupervisorMissouri Shoreline Supervisor

Ameren UEAmeren UE

Lake of the Ozarks Lake of the Ozarks – FERC Project – FERC Project

459459

SHORELINE SHORELINE MANAGEMENT - HISTORYMANAGEMENT - HISTORY

1931 to 19821931 to 1982• Corps of Engineers (COE) administered all activitiesCorps of Engineers (COE) administered all activities

1983 1983 • Union Electric issued residential permits for docksUnion Electric issued residential permits for docks

19871987• Union Electric take lead role in permitting from COEUnion Electric take lead role in permitting from COE

20012001• SMP meetings begin with re-licensing effortSMP meetings begin with re-licensing effort

20052005• Filed first draft of SMP with FERCFiled first draft of SMP with FERC

20062006• Draft SMP reviewed by public and SMT – considerable Draft SMP reviewed by public and SMT – considerable

input input

20072007• New License issued in March New License issued in March

Granted one year to file SMPGranted one year to file SMP 20082008

• Revised SMP submitted to FERC Revised SMP submitted to FERC • FERC posted plan for public commentFERC posted plan for public comment• Environmental Assessment prepared by FERC - no new Environmental Assessment prepared by FERC - no new

decks patios or gazebos mentioned – silent on decks patios or gazebos mentioned – silent on nonconforming structures.nonconforming structures.

2011 2011 • July 26, 2011 FERC issues order modifying submitted SMPJuly 26, 2011 FERC issues order modifying submitted SMP• August 25, 2011 Ameren Missouri files rehearing requestAugust 25, 2011 Ameren Missouri files rehearing request• September 26, 2011 FERC grants rehearing for further September 26, 2011 FERC grants rehearing for further

consideration indicating a final order will be issued.consideration indicating a final order will be issued.

SHORELINE MANAGEMENT - HISTORYSHORELINE MANAGEMENT - HISTORY

Most of Ameren’s existing programs and policies accepted – ATS Most of Ameren’s existing programs and policies accepted – ATS program, CDB program, derelict dock program, permitting, etc.program, CDB program, derelict dock program, permitting, etc.

Docks up to 50 slips now do not require FERC reviewDocks up to 50 slips now do not require FERC review Excavation and dredging permits allowed per COE guidelinesExcavation and dredging permits allowed per COE guidelines Requires a report to be filed with FERC outlining all non-conforming Requires a report to be filed with FERC outlining all non-conforming

structures and encroachments found along the shoreline. For each structures and encroachments found along the shoreline. For each structure identified FERC requires we consider:structure identified FERC requires we consider:

RemovalRemoval Timeline for allowing to remain until removalTimeline for allowing to remain until removal Or prove lands are not needed for project purposes (flooding) Or prove lands are not needed for project purposes (flooding)

and revise the project boundary to resolve the encroachment and revise the project boundary to resolve the encroachment or non-conforming structureor non-conforming structure

Prohibits future permits for decks, gazebos, patios and walkwaysProhibits future permits for decks, gazebos, patios and walkways Outlined unrealistic deadlines and policies for dealing with homes Outlined unrealistic deadlines and policies for dealing with homes

on project property – deadline May 1, 2012.on project property – deadline May 1, 2012.

FERC ORDER HIGHLIGHTSFERC ORDER HIGHLIGHTS

SHORELINE MANAGEMENT – KEY SHORELINE MANAGEMENT – KEY POINTS OF REHEARINGPOINTS OF REHEARING

Revision to the Project Boundary Revision to the Project Boundary • Removal of as many encroachments and non-conforming structures Removal of as many encroachments and non-conforming structures

as possible.as possible. Must demonstrate property removed is not necessary for Must demonstrate property removed is not necessary for

project purposesproject purposes Environmental AssessmentEnvironmental Assessment Agency concurrenceAgency concurrence Mitigation measures if requiredMitigation measures if required Legal survey and any fees to be paid for and provided by the Legal survey and any fees to be paid for and provided by the

ownerowner Conveyance of the parcel by Ameren MissouriConveyance of the parcel by Ameren Missouri

Grandfather all accessory structures in place before March 1, 2008Grandfather all accessory structures in place before March 1, 2008• Decks, patios, gazebos, boat houses, etc.Decks, patios, gazebos, boat houses, etc.

Provided they have a permit or apply and obtain a permit. Provided they have a permit or apply and obtain a permit. Structure would be required to comply with pre- license Structure would be required to comply with pre- license guidelines.guidelines.

Effective immediately all existing Effective immediately all existing accessory structures with a valid accessory structures with a valid permit are authorized and remain in permit are authorized and remain in full force and effect.full force and effect.

Going forward, no permits will be Going forward, no permits will be issued for new construction of decks, issued for new construction of decks, patios, gazebos and similar structures patios, gazebos and similar structures located within the project boundary.located within the project boundary.

SHORELINE MANAGEMENT – KEY SHORELINE MANAGEMENT – KEY POINTS OF REHEARINGPOINTS OF REHEARING

NON-CONFORMING NON-CONFORMING STRUCTURESSTRUCTURES

REHEARING REQUESTREHEARING REQUEST Allowed if permittedAllowed if permitted Issue a permit if Issue a permit if

applied for by July 26, applied for by July 26, 20162016• Non-conforming if no Non-conforming if no

permit is issued by permit is issued by this datethis date

Not allowed if Not allowed if constructed after constructed after March 1, 2008March 1, 2008

REHEARING REQUESTREHEARING REQUEST Allowed if permittedAllowed if permitted Issue a permit if applied Issue a permit if applied

for by July 26, 2016for by July 26, 2016• Cannot cantilever Cannot cantilever

over 3’ from seawallover 3’ from seawall• Non-conforming if no Non-conforming if no

permit is issued by permit is issued by this datethis date

Not allowed if Not allowed if constructed after March constructed after March 1, 20081, 2008

Allowed if permittedAllowed if permitted Must register as a non-confirming Must register as a non-confirming

structure. Does not comply with structure. Does not comply with current or past guidelines.current or past guidelines.

REHEARING REQUESTREHEARING REQUEST

WHAT’S HAPPENING AND WHAT’S HAPPENING AND WHAT’S NEXT?WHAT’S NEXT?

FERC must render a final order on Ameren FERC must render a final order on Ameren Missouri’s rehearing request.Missouri’s rehearing request.

Proposed federal legislation “Landowner Proposed federal legislation “Landowner Protection Act” is pending and proposes to Protection Act” is pending and proposes to limit FERC’s power regarding removal of limit FERC’s power regarding removal of existing structures at Lake of the Ozarks.existing structures at Lake of the Ozarks.

Ameren has begun assembling information Ameren has begun assembling information to revise its project boundary with FERC.to revise its project boundary with FERC.

QUESTIONS?QUESTIONS?

View FERC order and rehearing request at:View FERC order and rehearing request at:

www.amerenmissouri.com/lake (shoreline (shoreline management plan link)management plan link)

Specific property questions? – Shoreline Specific property questions? – Shoreline Management Office: Management Office: 573-365-9208 or 365-9212 or 573-365-9208 or 365-9212 or lake@ameren.comlake@ameren.com

Program Summary &Program Summary &Predictions for Real Estate Predictions for Real Estate

at theat theLake of the OzarksLake of the Ozarks

Our Speakers and Program PlannersOur Speakers and Program Planners

Russ CofanoRuss Cofano Kevin Brown, Neil Stewart, Gary Kevin Brown, Neil Stewart, Gary

PruittPruitt Jeff GreenJeff Green Jeff Krantz – Jeff Krantz – George Bogema & Carrie CaseGeorge Bogema & Carrie Case

So When is the Market So When is the Market going togoing to

Turn Around?Turn Around?

Will we ever get back to the Will we ever get back to the Market that we had in 2005?Market that we had in 2005?

We Have Learned That our Business We Have Learned That our Business Is Very FragileIs Very Fragile

Mortgage CrisisMortgage Crisis Melt Down of Wall StreMelt Down of Wall Stre Extended RecessionExtended Recession 9% Unemployment9% Unemployment Local Issues: DNR, Flood Zones and Local Issues: DNR, Flood Zones and

the Lake Project Boundary.the Lake Project Boundary.

So What Can We Expect For So What Can We Expect For Real Estate at the Lake forReal Estate at the Lake for

2012 and Beyond2012 and Beyond

1. Foreclosure Activity Will Continue 1. Foreclosure Activity Will Continue To Put Pressure on Real Estate ValuesTo Put Pressure on Real Estate Values 2010 Foreclosures (all properties) 2010 Foreclosures (all properties)

25%25% 2011 Foreclosures (all properties) 2011 Foreclosures (all properties)

25%25%

Foreclosures Off Shore PropertiesForeclosures Off Shore Properties

2010 181 out of 500 36%2010 181 out of 500 36% 2011 184 out of 480 38%2011 184 out of 480 38%

Foreclosures Lakefront PropertiesForeclosures Lakefront Properties

2010 41 out of 415 10%2010 41 out of 415 10% 2011 41 out of 457 9%2011 41 out of 457 9%

Prediction for Foreclosure ActivityPrediction for Foreclosure Activity

Economic Recovery will be Slow.Economic Recovery will be Slow. Many Homeowners who purchased Many Homeowners who purchased

property between 2000 and 2008 are property between 2000 and 2008 are underwater.underwater.

Because of these two factors I Because of these two factors I predict that foreclosures will predict that foreclosures will represent 20% to 25% of our market represent 20% to 25% of our market for the next two years.for the next two years.

2. The Real Estate Industry Is 2. The Real Estate Industry Is ShrinkingShrinking

Membership in the National Association of Membership in the National Association of RealtorsRealtors

2007 2007 1,367,0001,367,000 20082008 1,252,0001,252,000 20092009 1,137,0001,137,000 20102010 1,089,0001,089,000 20112011 1,027,000 1,027,000 (25% Drop from 2007)(25% Drop from 2007) 2012 965,000 (Back to the number in 2012 965,000 (Back to the number in

2004)2004)

Local Association of Realtors isLocal Association of Realtors ison the Declineon the Decline

Bagnell Dam Association of RealtorsBagnell Dam Association of Realtors 2007 2007 578578 20082008542542 20092009503503 20102010458458 20112011412 412 (30% decline from 2007)(30% decline from 2007) 20122012Could decline to 350Could decline to 350

3.3. Real Estate Sales Forecast Real Estate Sales Forecast for 2012for 2012

The Real Estate Market at the Lake of the The Real Estate Market at the Lake of the Ozarks Has Reached EquilibriumOzarks Has Reached Equilibrium

Total Sales VolumeTotal Sales Volume 2009200913271327 $248,111,285 $248,111,285 2010201013711371 $245,866,721 $245,866,721 2011201114181418 $249,043,643 $249,043,643

Sales Prediction for Next YearSales Prediction for Next Year

Total Sales VolumeTotal Sales Volume 20122012 8%8% 5%5% Wild Card Chance 10% + IncreaseWild Card Chance 10% + Increase

The Lake of the Ozarks Could be The Lake of the Ozarks Could be Staged for a Dramatic Come BackStaged for a Dramatic Come Back

Consumer Confidence Needs to Consumer Confidence Needs to ImproveImprove

Decline in the Unemployment RateDecline in the Unemployment Rate Stabilization of the Stock MarketStabilization of the Stock Market A More Comfortable Political Agenda A More Comfortable Political Agenda

in Washingtonin Washington Real Improvements in the EconomyReal Improvements in the Economy

Positive Things That Will Jump Start Positive Things That Will Jump Start 20122012

Completion of our Road SystemCompletion of our Road System New Commercial DevelopmentsNew Commercial Developments Low Interest RatesLow Interest Rates Large Inventory of PropertiesLarge Inventory of Properties A Large Number of Consumers Who A Large Number of Consumers Who

Still Have Jobs, Cash and Dreams of Still Have Jobs, Cash and Dreams of Having a Home at the Lake of the Having a Home at the Lake of the Ozarks.Ozarks.

2012 Will Be A 2012 Will Be A Buyer’s ParadiseBuyer’s Paradise

Mortgage Rates Remain at Historic Mortgage Rates Remain at Historic Lows.Lows.

A Strong Inventory of Available A Strong Inventory of Available Properties.Properties.

A Large Number of Sellers Who Will A Large Number of Sellers Who Will Accept Accept Market ValueMarket Value..

For Real Estate At the Lake of the OzarksFor Real Estate At the Lake of the OzarksThere is Light at the End of the TunnelThere is Light at the End of the Tunnel

Thank You For Your Participation in Thank You For Your Participation in the 2011 Lake of the Ozarksthe 2011 Lake of the Ozarks

Real Estate Symposium.Real Estate Symposium.

To download this presentation go to:To download this presentation go to:www.lakeretrends.comwww.lakeretrends.com