The (insert word here) Recovery C Continues ti Maricopa County - PowerPoint PPT Presentation

Net Percentage of Large U.S. Banks Reporting Tougher Standards versus Eased Standards Reporting Tougher Standards versus Eased Standards on Business Loans 1997 – 2013* Source: Federal Reserve, Board of Governors Recession Periods Recession Periods 90% 80% 70% 60% 50% Small Firms 40% Large & g 30% 30% Medium Firms 20% 10% 0% -10% -20% -30% 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 4 2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 * Data as of July 2013 survey. Elliott D. Pollack & Company

Consumer Summary: Consumer Summary: � Jobs are being created at a slow rate. � Those that have jobs are spending a little more but � Those that have jobs are spending a little more but will remain cautious. � Unemployment to remain high, but should trend Unemployment to remain high but should trend lower. � Wealth levels are improving. W lth l l i i Elliott D. Pollack & Company

Business Business Elliott D. Pollack & Company

1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,400 , 200 400 600 800 1975Q1 0 1976Q1 1 1977Q1 Elliott D. Pollack & Company 1 1978Q1 1 1979Q1 1 1980Q1 1 1981Q1 1 1982Q1 1 1983Q1 1 1984Q1 1 1985Q1 1 1986Q1 1 1987Q1 1 Corporate Net Cash Flow 1988Q1 1 (Billions of Dollars, SA) (Billions of Dollars, SA) 1989Q1 1 1990Q1 1 1991Q1 1 1975-2013* 1992Q1 1 Source: BEA 1993Q1 1 1994Q1 1 1995Q1 1 1996Q1 1 1997Q1 1 1998Q1 1 1999Q1 1 2000Q1 1 2001Q1 1 2002Q1 1 * Data through second quarter 2013 2003Q1 1 2004Q1 1 2005Q1 1 2006Q1 1 2007Q1 1 Recession Periods 2008Q1 1 2009Q1 1 2010Q1 1 2011Q1 1 2012 Q1 1 2013 Q1 1 1

Business Spending on Equipment Percent Change from Prior Quarter Percent Change from Prior Quarter 2005 – 2013* Source: Bureau of Economic Analysis Recession Periods 6.0% 4.0% 2 0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% 12 0% *Data through first quarter 2013 Elliott D. Pollack & Company

Business Spending on Plant Percent Change from Prior Quarter Percent Change from Prior Quarter 2005 – 2013* Source: Bureau of Economic Analysis Recession Periods 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 2 0% -4.0% -6.0% -8.0% 8 0% -10.0% -12.0% -14.0% 14.0% *Data through first quarter 2013 Elliott D. Pollack & Company Note: Data smoothed in Q1 & Q2 of 2011

Capacity Utilization Rate 1970 – 2013* 1970 2013* Source: The Federal Reserve Bank of St. Louis Recession Periods 90 85 80 75 70 65 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J *Data through July 2013 Elliott D. Pollack & Company

Business Summary: Business Summary: � Businesses are in better shape. B i i b tt h � Spending on equipment to continue to � Spending on equipment to continue to grow. � Spending on plant will lag until capacity � Spending on plant will lag until capacity utilization goes higher…getting close. � Employment to continue to grow. Elliott D. Pollack & Company

Government Elliott D. Pollack & Company

Total Government Expenditures Percent Change Year Ago Percent Change Year Ago 1970-2012 Source: U.S. Bureau of Economic Analysis 20% 20% 15% 15% 10% 10% 5% 0% Recession Elliott D. Pollack & Company

Federal Government Expenditures Percent Change Year Ago Percent Change Year Ago 1970-2012 Source: U.S. Bureau of Economic Analysis 25% 25% 20% 15% 10% 10% 5% 0% -5% Recession Elliott D. Pollack & Company

State and Local Government Expenditures Percent Change Year Ago Percent Change Year Ago 1970-2012 Source: U.S. Bureau of Economic Analysis 20% 20% 15% 10% 5% 0% -5% Recession Elliott D. Pollack & Company

Federal Surplus (+) or Deficit(-) as Percent of GDP 1950-2017* Source: Office of Management and Budget 4% 2% 0% -2% -4% -6% -8% -10% -12% 1950 0 1953 3 6 1956 9 1959 2 1962 5 1965 1968 8 1 1971 1974 4 1977 7 0 1980 1983 3 6 1986 1989 9 2 1992 1995 5 1998 8 2001 1 2004 4 7 2007 0 2010 3 2013 6 2016 *2012-2017 are estimates Elliott D. Pollack & Company

Individual Income Taxes as Percent of GDP 1980-2017* Source: Office of Management and Budget 11% 10% 10% 9% 8% 8% 7% 6% 5% 4% Personal Income Payments 30 year average *2012-2017 are estimates Elliott D. Pollack & Company

Federal Outlays as Percent of GDP 1980-2017* Source: Office of Management and Budget 26% 24% 24% 22% 20% 18% 18% 16% 14% Outlays 30 year average *2012-2017 are estimates Elliott D. Pollack & Company

G Government Summary: t S � Government no longer a drag on economy in terms of GDP. � Most major issues still ahead of us. Elliott D. Pollack & Company

NATIONAL SUMMARY � No major imbalances � Consumer income growth to continue to be slow be slow � But likely to continue � Housing recovery likely to continue � Business in good shape � Federal government still creating uncertainties uncertainties � Government no longer a big drag on GDP Elliott D. Pollack & Company

Arizona Arizona Elliott D. Pollack & Company

Job Growth 2006 Job Growth 2006 Alaska Source: US BLS Source: US BLS 24 10 10 7 9 5 5 1 4 3 3 15 15 14 14 23 23 8 Hawaii 2 11 11 Jobs growing 6 50 Top 10 Jobs declining Elliott D. Pollack & Company

Job Growth 2010 Job Growth 2010 Source: US BLS Source: US BLS Alaska 8 8 2 2 48 48 18 1 27 39 39 7 7 46 5 9 50 4 23 23 10 6 6 40 40 32 32 41 41 Hawaii 49 43 43 Jobs growing 3 Top 10 Jobs declining Elliott D. Pollack & Company

Job Growth 2013 Job Growth 2013 YTD July 2013 vs YTD July 2012 Source: US BLS Alaska 6 6 50 50 10 1 21 4 4 49 9 2 11 11 5 5 23 7 Hawaii 38 38 8 Jobs growing 3 Top 10 p Jobs declining Elliott D. Pollack & Company

Job Growth 2013 Job Growth 2013 July 2013 vs July 2012 Source: US BLS Alaska 9 9 50 50 16 2 19 8 6 6 29 42 1 24 24 7 7 35 4 Hawaii 40 40 3 10 Jobs growing 5 Top 10 p Jobs declining Elliott D. Pollack & Company

Arizona Rank Employment Growth Employment Growth 1990-2013* Source: Bureau of Labor Statistics 2 2 2 2 2 2 2 2 1 1 2 2 2 2 2 2 2 2 4 5 5 7 8 9 10 17 19 23 30 30 46 49 49 *Year-to-date through July Elliott D. Pollack & Company

Phoenix-Mesa Employment Growth (Ranking among all metro areas greater than 1 000 000) (Ranking among all metro areas greater than 1,000,000) Source: Arizona State University, U.S. Bureau of Labor Statistics Year Rank # MSA’s Year Rank # MSA’s 1991 4 19 2003 3 25 1992 4 19 2004 3 25 1993 2 19 2005 2005 1 1 26 26 1994 1 19 2006 1 27 1995 1 20 2007 9 28 1996 1996 1 1 21 21 2008 2008 24 24 28 28 1997 1 22 2009 24 25 1998 1 23 2010 24 24 1999 3 24 2011 14 25 2000 9 25 2012 6 27 2001 7 26 2013* 5 28 2002 5 25 *Year-to-date, July 2013 Elliott D. Pollack & Company

Greater Phoenix Employment* Greater Phoenix Employment Source: Bureau of Labor Statistics Net Net % % Change Change Change Change Sectors Improving Sectors Improving Change Change Sectors in Decline Sectors in Decline Change Change 10,400 2.9% Trade, Transp, Utilities Other Services -800 -1.3% Education & Health Services 9,100 3.7% Leisure & Hospitality Leisure & Hospitality 8,800 8 800 5 0% 5.0% Construction 8,400 9.4% Government 5,900 3.0% Professional & Bus Services P f i l & B S i 5 700 5,700 2 0% 2.0% Financial Activities 5,000 3.4% Information 400 1.3% Manufacturing 200 0.2% Natural Resources & Mining 0 0.0% *July 2013/ July 2012 Elliott D. Pollack & Company

Top Sources of New Jobs p Arizona Source: Bureau of Labor Statistics Job Growth Wage Total 67,600 $45,237 1 1 Food Services Food Services 10 100 10,100 $16 452 $16,452 2 Health Care 8,900 $47,847 3 Construction 8,200 $47,020 4 Financial Activities 7,400 $59,564 5 Wholesale Trade 6,200 $69,918 6 Administrative Services 5,700 $32,741 7 Retail Trade 4,400 $29,843 *Job growth July 2013/ July 2012 Elliott D. Pollack & Company

Top Sources of New Jobs p U.S. Source: Bureau of Labor Statistics Job Growth Wage Total 2,296,000 $49,200 1 1 Food Services Food Services 387 800 387,800 $16 242 $16,242 2 Administrative services 354,700 $34,870 3 Retail Trade 353,200 $27,729 4 Health Care 322,200 $45,407 5 Professional services 237,900 $83,357 6 Construction 166,000 $52,294 7 Financial activities 124,000 $80,097 *Job growth July 2013/ July 2012 Elliott D. Pollack & Company

Greater Phoenix- Jobs Finally in the Black Jobs Finally in the Black Over last 12 months: 53,100 12 months before that: 40,600 , 12 months before that: 18,100 12 months before that: (24,700) ( , ) 12 months before that: (151,700) * As of July 2013 Elliott D. Pollack & Company

U.S. Has Gained 77% of Lost Jobs U S Has Gained 77% of Lost Jobs 2 Million Jobs (23%) Still to Recover 140,000 140,000 Peak 138 million Jan. 2008 138,000 6 6.7 Mil. Jobs Jobs 136,000 Regained (77%) 134,000 132,000 8.7 Million U.S. Jobs Lost (6.4%) 130,000 Feb. 2010 128,000 Source: U.S. Bureau of Labor Statistics, Thousands of Jobs, Seasonally Adjusted Slide stolen from Lee McPheters… Elliott D. Pollack & Company

Arizona Has Gained 47% of Lost Jobs Arizona Has Gained 47% of Lost Jobs 167,000 Jobs (53%) Still to Recover 2,750 2,750 Peak 2,687,000 Oct. 2007 2,700 2,650 147,000 Jobs ,000 Jobs Regained (47%) 2,600 2,550 2,500 314,000 Arizona 2,450 Jobs Lost (12%) 2 400 2,400 Sept. 2010 2,350 Source: U.S. Bureau of Labor Statistics, Thousands of Jobs, Seasonally Adjusted Elliott D. Pollack & Company

Greater Phoenix Has Gained 47% of Lost Jobs Greater Phoenix Has Gained 47% of Lost Jobs 133,000 Jobs (53%) Still to Recover 2,000 2,000 Peak 1,932,000 July 2007 1,950 118,000 Jobs 8,000 Jobs 1,900 1,900 Regained (47%) 1,850 1,800 1,800 1,750 251,000 Phoenix Jobs Lost (13%) ( ) 1,700 1,700 Sept. 2010 1,650 Source: U.S. Bureau of Labor Statistics, Thousands of Jobs, Seasonally Adjusted Elliott D. Pollack & Company

Employment Levels: p y Greater Phoenix back to Peak in late-2015 or early 2016? Source: ADOA Recession Periods 2,400.0 2,200.0 Peak Peak 2,000.0 1,800.0 1,600.0 1,400.0 1,200.0 1,000.0 5 5 6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n n u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u a a a a a a a a a a a a a a a a a a a a a a J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J J *Based on seasonally unadjusted monthly data Elliott D. Pollack & Company

Arizona Job Losses Exceeded U S Arizona Job Losses Exceeded U.S. Source: Bureau of Labor Statistics, Seasonally Adjusted Data 6.3% 6 3% Overall 11.7% 29.7% Construction 55.3% 19.7% Manufacturing Manufacturing 21.4% 21 4% 8.2% Retail Trade 12.4% 8.0% Trans./ Warehousing 13.3% U S U.S 14.2% Information 20.5% AZ 8.6% Financial 12.5% 11 8% 11.8% Business Services 16.8% Peak to trough 9.0% Leisure & Hospitality job declines 9.3% 3.6% within each within each State Gov State Gov. 13 6% 13.6% industry. 4.0% Local Gov. 12.1% Elliott D. Pollack & Company

WHY? WHY? (1) Significant declines in population flows (2) Steeper housing decline Elliott D. Pollack & Company

(1) P (1). Population l i Flows Elliott D. Pollack & Company

Arizona Population Growth Was p Slow But Still Top 10 in 2012 1 9 9 3 5 4 4 6 6 7 10 2 Percent Change 2012 8 8 U. S. Census Bureau Elliott D. Pollack & Company

Arizona Rank Population Growth Population Growth 1991-2012 Source: Census Bureau 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 4 4 5 6 7 8 14 16 16 19 Elliott D. Pollack & Company

Why did population flows Why did population flows slow? � Slow job growth � High unemployment � Delayed retirement y � Difficulty in selling home � Difficulty in qualifying for a loan � Difficulty in qualifying for a loan Elliott D. Pollack & Company

SRP Residential Utility Hookup Percentage Growth SRP Residential Utility Hookup Percentage Growth Greater Phoenix 2003 – 2013* Source: SRP 5.0% 4.0% 3.0% 2.0% 1 0% 1.0% 0.0% 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1 1 l l 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 0 0 0 0 1 1 1 1 2 2 r n 3 3 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1 t t u p c 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 0 0 0 0 0 0 0 1 1 1 a 0 0 0 0 0 0 0 1 1 J - - - - - - - - - A O - - - - - - - - - - - - - - - - - - - J - - - - - - - - - - - l l l l l l l l l n r n r n r n r n r n r n r n r n r n - r t t t t t t t t t 2 u u u u u u u u u - - p c p c p c p c p c p c p c p c p c 3 p a a a a a a a a a a 1 1 2 J J J J J J J J J A O A O A O A O A O A O A O A O A O A 1 J J J J J J J J J J 1 *Data through April 2013. Elliott D. Pollack & Company

APS: Slowest Growth in over 50 years APS: Slowest Growth in over 50 years 1954 – 2013* 8% r Prior Year 7% 6% omers Over 5% 4% ential Custo 3% 2% Reside 1% 0% 1954 4 1956 6 1958 8 1960 0 1962 2 1964 4 1966 6 1968 8 1970 0 1972 2 1974 4 1976 6 1978 8 1980 0 1982 2 1984 4 1986 6 1988 8 1990 0 1992 2 1994 4 1996 6 1998 8 2000 0 2002 2 2004 4 2006 6 2008 8 2010 0 2012 2 *Data through second quarter 2013 Source: APS Elliott D. Pollack & Company

Greater Phoenix Population Annual Percent Change 1976–2014* Source: Arizona State University & Department of Commerce, Research Administration 6% 5.1% 4.7% 4.6% 4.4% 4.3% 4.3%4.3% 4.2% 4.3% 4.2% 4.2% 4.2% 3.9% 3.8% 3.8% 3.7% 3.7% 4% 3.6% 3.1% 3.3% 3.5% 3.0% 3.0% 3.1% 2.9% 2.7% 2 7% 2.8% 2 8% 2.6% 2.5% 2.4% 1.9% 2.1% 2% 1.8% 1.5% 1.3% 1.1% 0.6% 0.5% 0.3% 0% Recession Periods . * 2013 & 2014 forecast is from Elliott D. Pollack & Co. Elliott D. Pollack & Company

How quickly are population How quickly are population flows going to recover? flows going to recover? No one knows but not as rapidly as we would like rapidly as we would like Elliott D. Pollack & Company

(2) H (2). Housing i Decline Elliott D. Pollack & Company

Fewer people mean fewer Fewer people mean fewer houses. houses. As population growth As population growth slowly increases, excess y inventory will be absorbed. Elliott D. Pollack & Company

Housing Housing Good Not a light switch… Bad Mediocre A dimmer switch… Not great Not great OK OK Good Bad Great Terrible Elliott D. Pollack & Company

WHAT WE HAVE BEEN SAYING WHAT WE HAVE BEEN SAYING… • • Think of what the housing market is going Think of what the housing market is going through as the same as any manufacturer that finds themselves with excess that finds themselves with excess inventory… • As excess inventory is absorbed is absorbed, prices increase. Elliott D. Pollack & Company

Elliott D. Pollack & Company

Greater Phoenix Single Family Permits Source: RL Brown Year Permits % chg 2004 60,872 27.6% 2005 2005 63,570 63 570 4 4% 4.4% 2006 42,423 -33.3% 2007 31,172 -26.5% 2008 12,582 -59.6% 2009 8,027 -36.2% 2010 2010 6 822 6,822 -15.0% 15 0% 2011 6,794 -0.4% 2012 11,615 71.0% 2013* 8,009 7.9% *Data YTD July 2013 v. July 2012 Elliott D. Pollack & Company

Greater Phoenix permits Greater Phoenix permits declined 89.3% from declined 89.3% from peak to trough compared to 75 4% nationally 75.4% nationally Elliott D. Pollack & Company

Single Family Permits g y Greater Phoenix 1975–2016* Source: RL Brown & Elliott D. Pollack & company # Permits (000) 70 63.6 60.9 60 47.7 50 42.4 38.9 40 34.7 36.0 36.2 35.3 31.7 31.2 31 2 29.6 28.9 28.5 30 27.4 23.2 25.0 22.6 22.7 22.3 20.0 18.8 19.4 17.9 18.1 18.4 20 16.0 15.1 13.7 11.5 11.6 12.0 12.6 13.5 11 6 11.6 11 1 11.1 10 6 10.6 10.6 8.7 8.0 6.8 10 6.8 0 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 *2013 – 2016 forecast is from Elliott D. Pollack & Company Elliott D. Pollack & Company

Greater Phoenix Employment* p y Annual Percent Change 1975–2014** Source: Department of Commerce, Research Administration 13.3% 14% 12% 11.2% 10.4% 9.3% 10% 8.7% 7.3% 7.2% 8% 6.6% 5.8% 6.2% 5.4% 5.4% 4.8% 5.9% 5 4% 5.4% 4.6% 4 9% 4.9% 6% 6% 4 6% 4 9% 4.9% 3.7% 3.5% 2.5% 3.0% 3.9% 3.5% 2.6% 4% 3.0% 2.2% 2.4% 1.5% 1.6% 1.5% 2% 1.2% 1.1% 0% -0.1% -0.1% -0.3% -2% -2.5% -1.9% -4% -3.7% -6% -8% 8% -7.9% -10% 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 7 7 7 8 8 8 8 8 9 9 9 9 9 0 0 0 0 0 1 1 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 *Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990. ** 2013 & 2014 forecast is from Elliott D. Pollack & Co. Recession Periods Elliott D. Pollack & Company

Arizona Jobs Regained Since Bottom of Cycle g y Most Industries Yet To Regain Lost Jobs T t l N Total Non Farm F 47% Leisure and Hospitality 104% Financial 75% Local Gov 59% State Gov 54% Prof Services Prof Services 38% 38% Information 35% Trade Trans Utilities 32% R t il Retail 22% Manufacturing 21% Construction 12% Elliott D. Pollack & Company

Arizona Construction Employment is Up by 14,700 Jobs p y p y , And 13% Since Summer of 2011 130 130 July 2013 124,900 125 120 115 110 June 2011 110,200 105 100 Source: U.S. Bureau of Labor Statistics, Thousands of Jobs, Seasonally Adjusted Elliott D. Pollack & Company

…But is Still Down by But is Still Down by 119,400 Jobs (49%) Since Peak 260 260 June 2006 244,300 240 220 200 180 160 July 2013 124,900 140 120 120 100 Source: U.S. Bureau of Labor Statistics, Thousands of Jobs, Seasonally Adjusted Elliott D. Pollack & Company

Greater Phoenix Employment p y Source: U.S. Bureau of Census; Arizona Department of Administration; University of Arizona Forecasting Project YEAR YEAR EMPLOYMENT EMPLOYMENT 1950 74,400 1960 1960 181 700 181,700 1970 327,200 1980 1980 636,200 636,200 1990 1,013,300 2000 1,578,400 2010 1,686,800 2020 2,312,700 (forecast) Elliott D. Pollack & Company

Greater Phoenix Population p Source: U.S. Bureau of Census; Arizona Department of Administration; University of Arizona Forecasting Project YEAR YEAR Population Population 1950 374,000 1960 726,183 6.9% 1970 1,039,807 3.7% 1980 1980 1 600 093 4 4% 1,600,093 4.4% 1990 2,238,498 3.4% 2000 2000 3,251,876 3.8% 3 251 876 3 8% 2010 4,192,887 2.6% 2020 2020 5 011 767 1 8% 5,011,767 1.8% (forecast) Elliott D. Pollack & Company

2010 4,192,887 2020 5,011,767 Net Change g 818,880 , Based on 2.7 persons per HH, Based on 2.7 persons per HH, Greater Phoenix will need 303 000 new housing units 303,000 new housing units this decade. Elliott D. Pollack & Company

If you believe that population forecast, population forecast, it implies an average of more than 22 500 single family units more than 22,500 single family units will be built each year f from 2014 through 2020. 2014 th h 2020 Elliott D. Pollack & Company

The outlook for housing is still excellent Elliott D. Pollack & Company

Distressed Residential Inventory* May 2009 - July 2013 May 2009 July 2013 Greater Phoenix Source: Information Market 70,000 60,000 50,000 40,000 30,000 30,000 20,000 10 000 10,000 0 *Distressed residential inventory includes pending residential foreclosures and residential REO properties Elliott D. Pollack & Company

Single Family Active Listings Greater Phoenix Source: Cromford Report 65,000 55,083 53,760 55,000 46,158 41 976 41,976 37,327 45,000 28,718 35,000 23 113 23,113 22 820 22,820 20,523 20,034 25,000 14,431 11,744 15,000 5,000 -5,000 Elliott D. Pollack & Company

Greater Phoenix Months Supply Single Family Residential Source: Cromford Report 9.7 9.2 10 9 8 6.4 7 6 4.6 5 4.0 4 3.2 3.0 2.9 2.4 3 2.2 1.6 2 1.1 1 0 Elliott D. Pollack & Company

New Residential Foreclosure Notices Greater Phoenix Source: Information Market 10,000 8,675 7,800 8,000 6,062 6,000 4,014 4 014 4,000 3,221 2,367 1,274 1,095 1 095 2,000 2 000 1 087 1,087 983 983 772 682 0 Elliott D. Pollack & Company

Total Pending Foreclosures Greater Phoenix Source: Information Market 47,144 50,000 42,152 40,000 30,000 24,469 24,393 16,829 20,000 7,312 6,894 7,066 10,000 10,000 4,936 , 5,002 3,141 2,483 0 Elliott D. Pollack & Company

Greater Phoenix Single Family L Lender Owned Sales* d O d S l * June 2003 – June 2013 Source: TheWilcoxReport.com 4,247 4,500 4,000 3 500 3,500 3,008 3,000 2,384 2,500 1,381 2,000 1,500 720 1 000 1,000 348 84 104 121 500 9 2 0 Elliott D. Pollack & Company

Arizona Negative Equity Share Arizona Negative Equity Share 2010 Q2 – 2013 Q2 Source: CoreLogic 60 0% 60.0% 52.2% 51.0% 50.0% 39.7% 40.0% 31.3% 30.0% 20.0% 10.0% 0.0% 2010 Q2 2011 Q2 2012 Q2 2013 Q2 Elliott D. Pollack & Company

US Total Vacant Housing Units 1965-2013* Source: US Census Bureau (000) (000) Recession Periods Recession Periods 20,000 18,000 Longer term trend g 16,000 14,000 12,000 10,000 8,000 8,000 6,000 4,000 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 5 7 9 1 4 6 8 0 3 5 7 9 2 4 6 8 1 3 5 7 0 2 6 6 6 7 7 7 7 8 8 8 8 8 9 9 9 9 0 0 0 0 1 1 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 *Data through 2013 Q2 Elliott D. Pollack & Company

Single-Family Vacant Units g y Greater Phoenix 1993–2011 Source: PMHS 120,000 , 102,275 101,625 100,000 83,475 80,000 58,050 60,000 60 000 51,650 51 650 40,000 29,775 23,825 19,325 19,325 24,450 24 450 19 800 19,800 14,725 14,975 17,125 17,525 17,525 15,425 13,72513,750 20,000 13,681 0 0 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 Elliott D. Pollack & Company

More Existing Homes will be More Existing Homes will be Occupied over the Next Few Years 110,000 , 102 275 102,275 100,000 ? ? 90,000 80 000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 0 3 5 7 9 1 3 5 7 9 1 3 5 9 9 9 9 0 0 0 0 0 1 1 1 9 9 9 9 0 0 0 0 0 0 0 0 1 1 1 1 2 2 2 2 2 2 2 2 Elliott D. Pollack & Company

Median Price of New Homes as a Percent of the Median Price of Resale Homes Maricopa County Recession 2000–2013* Source: Information Market 220.0% 200.0% 200.0% 180.0% 160.0% 60 0% 140.0% 120.0% 100.0% 80.0% *data through July 2013 Elliott D. Pollack & Company

Number of Active Subdivisions Greater Phoenix Source: CRA 800 710 693 687 672 663 665 700 607 597 568 568 574 5 600 600 536 512 500 400 322 275 300 255 208 181 200 100 0 Elliott D. Pollack & Company

Greater Phoenix Active Subdivision Count Active Subdivision Count October 2009 – August 2013 Source: Belfiore Consulting 500 450 400 350 300 250 50 Elliott D. Pollack & Company

Greater Phoenix Median Sales Price New and Resale Single Family Source: Cromford Report $300,000 $255,000 $260,000 $255,000 $250,000 $190,061 $184,000 $200,000 $168,950 $142,000 $155,000 $145,000 $150,000 $150,000 $125,000 $125,000 , $125,000 $109,000 $100,000 $ $50,000 $0 Elliott D. Pollack & Company