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2011 CONSUMER MARKET ASSESSMENT

March 2011

Prudential Real Estate

Global Communications

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Survey Background

Objective:

Gather current insights on the factors impacting buyer/seller real estate decisions in today’s economy.

Methodology:

The study was conducted as an online survey among a national random sample of Americans.

Respondents are aged 25-64 with a household income of at least $50,000, and either they recently bought/sold a home or they are considering to buy/sell a home.

Total Respondents: 1,253

Target sample of Americans “in the market” for buying or selling a home

500 “Recent Transactors” – Bought/sold home within the last year

500 “Likely Transactors” – Indicated they are likely to buy/sell home within next year

253 “Contemplators” – Considered buying/selling within last year, but did not

Total data are straight averages and not weighted to reflect all Americans

Survey Period: January 20 – 27, 2011

Survey developed by Prudential Real Estate and Relocation Services and Prudential Global Market Research

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Optimism about the market is guarded

• Agree volatility of U.S. economy makes them cautious about investing in a new home at this time

68%

• Have confidence that recovery of real estate market and property values will happen in next year or two

68%

• Believe that real estate is a good investment despite the market volatility of the past few years

86%

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49%

47%

59%

89%

House-hunters recognize a good opportunity

Think: It is a good time to buy

Feel: Cautiously optimistic about buying or selling a home in today’s market

Agree: Excited about buying a home due to momentum of economic recovery

Agree: Even though my house is worth less, I know I can buy a new house at a lower price

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Americans striving to “move up” is a driving force;Yet opportunities abound in all segments

34%

21%

45%Move up

Scale down

Stay same

Overall goal in buying/sellingBased on Total Respondents

Among those who want to “move up”

64% More space or property

57% Good time to buy

49% Nicer house

41% Better neighborhood

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Challenges of a complex market inhibit actions

Practical• Just haven’t

found the home I want yet

• Waiting for right opportunity

• Lack of focus/time

Economy• Worry home values

haven’t stopped dropping

• Instability of economy

• Worry about not being able to sell current home

• Not confident in setting right price for home

• Worry about employment

Personal Finance• Trying to save

more money• Not sure about

finances

• Nervous about new mortgage

Reasons that contemplators have not yet bought or sold home…

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Challenging the logic of “buyers are sellers”

58%61%

More interested in buying

Less interested in selling

Yet

Impact of the recession on consideration to buy or sell a homeBased on Total Respondents

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Emotions run high with the thought of selling

77%

67%

60%

58%

Uncertainty of selling existing home in order to afford new home is a big concern

Won’t buy new home until confident I can sell existing home at fair price and in timely way

I feel my home is worth more than what real estate agents tell me

Rationally understand good time to buy, but my emotions and concerns hold me back

Based on Likely Transactors and Contemplators

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In reality, very few show sellers remorse – even in a down market 78% are satisfied with recent sale

“I regret selling my home in the past year”

Feeling about final price paid in sale of home:

Resentful, as I did not get what my house was really worth

A bit disappointed about price

Mostly just grateful that I was able to sell my home at all given the market conditions

Very satisfied with the final price paid in the recent sale of my home 32%

46%

16%

6%

11%

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• For me personally, I see pricing as one of the greater challenges in selling a home

90%Agree

• I think the marketing of my home is one of the greatest challenges faced in trying to sell a home

88%Agree

The greatest challenges of selling…

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Buyer and sellers are humbled by market conditions

8%

33%

54%

5%Novice

Amateur

Self-reported level of knowledge of residential real estate market

Based on Total Respondents

Expert

Semi-Pro

92% agree: Given the dynamics and challenges of today’s real estate market, it is more important than ever to work with a good Realtor® for the best success in buying or selling a home

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93% 65%

Despite guidance of agents, many stick to their guns

I believe I can rely on a professional real estate agent to help me price my home competitively

I am not willing to compromise on pricing until after I market my home at the price I want

Based on respondents who did/want to sell

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Rational philosophy of pricing often becomes clouded by emotion and doubts

Higher Price

Reduce visits Confuse expectations

Raise doubt as to worth

Limit bid activity

At market or below

Attracts more visitors

Meets expectations

Offers buyer flexibility

Draws more bids

In Evaluating Concept of Pricing a Home…

96% Agree this concept makes sense

63% Would still be inclined to price home above market averages

61% Would need agent or evidence to better convince them of this claim

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Sellers may need to be carefully coached to be more realistic about pricing strategy

47%26%

53%74%

Price right at or slightly below market, hoping to attract more visits, bids, etc

Price slightly higher than market, hoping to find buyer willing to pay more

Many homes could meet my needs, I’d rather get a good price

Willing to pay top of the market for home that specifically suits my needs

Strategy when…

Selling a Home Buying a Home

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Real estate agents seen as “helpful”; today’s market presents prime opportunity to prove “vital”

24%

60%

15%I could not navigate today’s real estate market without agent

A good agent is very important in helping me successfully buy/sell home

Agent is helpful, but not imperative