Yes, it’s been a long, cold lonely winter—and it feels likewinter has been here for a long time, but at last, the sunis peeking through the clouds, brightening the outlookon our economy and the real estate market. What wasonce despair driven by a constant stream of bad newshas blossomed into growing confidence that the worstof the downturn is over and a gradual recovery is insight by year end.

Positive economic signs:

• The Dow, NASDAQ, and S&P 500 have risen asmuch as 30% over their March 9, 2009 lows• The flow of credit has eased• Consumers are starting to spend again asconfidence is rising• Retail sales are above those in December

• Construction spending rose in March• We are starting to see some results of thestimulus package

And as for real estate:• National home prices remained stable for the pasttwo months1

• The rate of national home price decline tracked by theCase-Shiller Index decreased in March2

• Existing home sales rose 5% in February and 3.2%in March3

• New home sales performed better than expectedin March4

• Inventories of houses for sale have peaked• Mortgage rates are at fifty-year lows

A Message from Lawrence F. Flick, IVChairman and Chief Executive OfficerPrudential Fox & Roach, REALTORS®

1

The Chairman’s Report

SPRING/SUMMER 2009

Here comes the sun Here comes the sun It’s all right…George Harrison

Consumers now believe that it will be all right. InApril, consumer confidence rose sharply, led by a hugegain in expectations.5 This is an important indicator:consumer confidence has traditionally led the way toeconomic recovery.

Employment is a cloud that still hovers on theeconomic horizon. Yet, even here, there are signs oflight: employment fell less than expected in April andunemployment claims have leveled off.

The smiles returning to the facesIt seems like years since it’s been here

LOCAL TRENDS

These national statistics are quite promising, but realestate markets are like the weather—it’s the local forecastthat matters. Is the sun coming out over the PrudentialFox & Roach market as well?

The answer is yes.

• Home sales rose 61% from January to April, 20096

• Month’s supply of inventory dropped from 12.5 inJanuary, 2009 to 8.8 months in April, 2009—a29.6% decrease6

• The foreclosure rate in our area remains low—lessthan ½ of 1%7

Until recently, our market had been insulated from pricedeclines plaguing many areas of the country, but thischanged in 2008:2,8

County Annual Price Decrease

Delaware -0.5%Montgomery -0.6%Mercer -1.4%Atlantic -1.5%Chester -2.4%Gloucester -2.7%Salem -4.2%Burlington -5.0%

Camden -5.2%New Castle -6.0%Bucks -6.1%Philadelphia -8.4%

Since the market’s peak in 2006, home prices havedeclined approximately 14.8%.8

This isn’t necessarily bad. Up until now, houses inour region were considered over-valued and anadjustment was needed in order for the real estatemarket to gain activity. Now, houses are more affordablethan they have been in years.

2

House Price Appreciation 1987-2009:Philadelphia Region v. 10-City Composite

390.0

340.0

290.0

240.0

190.0

140.0

90.0

10-City Composite*Philadelphia Region

%Change 10-City Philadelphia1998 to Peak: +174% +114%From Peak: -30% -14.8%

*Source: Case-Shiller Macro Markets LLC. The 10-City Composite Index includes Boston, Chicago, Denver, Las Vegas,Los Angeles, Miami, New York, San Diego, San Francisco and Washington DC. It does not include Philadelphia.

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

70

60

50

40

30

20

10

0

ABC News Consumer Confidence Index:Ecomonic Expectations

2001

2002

2003

2004

2005

2006

2007

2008

02/0

9

05/0

9

“Economy is Getting Better”

Record Low2%

An increase in real estate activity usually accompaniesspring, and this season is no exception. Our real estateagents are busier than they have been in quite some time.In fact, our area real estate market is experiencingthe largest increase in buyer activity in the past two years.8

I feel the ice is slowly meltingIt seems like years since its been clear

WHY YOU SHOULD BUY A HOME NOW

If you are on the sidelines waiting for things to change,it’s time to get moving:

• Interest rates are at historic lows

• There is a great selection of homes for sale

• Houses are more affordable now than they have beenin years. And now that prices in our area areconsidered undervalued8, they won’t go much lower.Remember, we never truly know the bottom of anymarket until we see it in the rear-view mirror

• Sales activity is increasing and inventory isdecreasing. There is still an oversupply of housinginventory, but pent-up demand is building every dayas those who have been holding off buying a homeenter the market. In the future, there will be morebuyers looking at fewer houses for sale

• If you haven’t owned a home in the past three years,you are considered a first-time home buyer by thefederal government and can receive up to an $8,000 taxcredit if you close on a home by December 1, 2009

• Real estate is a great (if not the best) long-term investment

These factors combine to create the idealconditions to buy.

We are now at the point of maximum opportunity. Butthings won’t stay this way forever. A Pew Research Studyrevealed that 75% of consumers believe now is a good orvery good time to buy a house. As more buyers enter themarket, there will be more competition to obtain the besthomes. There will be fewer houses on the market. And, asthe economy recovers, interest rates will rise.

MY HOUSE ISN’T WORTH WHAT IT WASIN 2006. SHOULDN’T I WAIT UNTIL ITSVALUE RECOVERS?

If your personal circumstances dictate a move, theanswer is no. House prices have declined modestly fromthe peak of the market, but most people did not buywhen prices were at their peak. Even those who did cantake advantage of the price declines when “trading up”to a new home. You will more than make up for anyreduction in the value of your current home with thesavings achieved on a more expensive home (ascompared to what the same house would have costin 2006.)

YOU CAN SELL YOUR HOME NOW

There is an oversupply of houses for sale, but now is thetime for sellers to take advantage of increased buyeractivity. Sellers must acknowledge the modest pricedeclines that have occurred in our market and pricetheir properties accordingly. Properties must also showwell. Your Prudential Fox & Roach sales associates willcreate a pricing and staging strategy that will work toget your home sold. Contact them today, so you canget started!

3

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

00 01 02 03 04 05 06 07 08 09

Mortgage Interest Rates

50

70

30

10

-10

-30

-50

-70

Return on InvestmentJanuary 1, 2000 - December 31, 2008

DOW S&P NASDAQ Real Estate

Source: MSN Money

Source: Westcourt Funds

Optimism

Excitement

Euphoria

Denial

Fear

Panic

DespondencyDepression

Hope

Optimism

Point of maximum riskin investment

Point of maximumopportunity

Risk vs. Opportunity

An Independently Owned and Operated Member of the Prudential Real Estate Affiliates, Inc.

AN INDEPENDENT VIEW

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Joel L. Naroff, Ph. D., is thePresident and founder ofNaroff Economic Advisors. Heserves as Chief Economist forTD Bank and is a consultantto Prudential Fox & Roach,Realtors and The TridentGroup. A nationallyrecognized economic forecastingexpert, Joel was awarded the

Lawrence Klein Award for Blue Chip forecastingexcellence and was the Bloomberg Business News topeconomic forecaster in 2008. In 2007, he received theNational Association of Business Economists OutlookAward and was named the top economic forecaster byMSNBC in 2006.

There has been a dramatic change in the outlook forthe national economy. Pessimism has been replaced bya growing belief that the recession is easing and couldbe over fairly soon. That is changing the dynamics inmany markets and housing is a key beneficiary. For along time, people were sitting on the fence waitingfor a housing bottom and as long as the economycontinued to falter, the belief was that housing priceswould keep falling. That perspective may no longerbe accurate.

In the region, sales seem to be starting to edge up andthat has clear implications for prices. With mortgagerates still quite low, affordability is great and supplyis ample. There is a lot of pent up demand as manypeople have put off making a move. While it is alwaysdifficult to determine the timing on any push backinto the market, it is likely to come as the economybegins to show improvement. The window ofopportunity looks to be open.

Here comes the sun

It’s all right It’s all right.

Rays of light are illuminating the economic horizon andour local real estate market. It’s been said that fortunedoes favor the bold, but in reality, one doesn’t have to be

daring to recognize and take advantage of the tremendousopportunity before us. Don’t be one of the people whowill look back at 2009 and say, “I should have…”

Sincerely,

Lawrence F. Flick, IVChairman and Chief Executive OfficerPrudential Fox & Roach, Realtors®

Sources:1. Federal Housing Finance Agency, April 22, 2009.2. S&P Case-Shiller Index, April 28, 20093. National Association of Realtors, May 4, 2009.4. National Association of Home Builders, April 24, 20095. Conference Board, April 28, 20096. Trend Multiple Listing Service, May 15, 20097. Realty Trac, January 29, 20098. State of the Philadelphia Housing Market: 2009Q1. Kevin C. Gillen, PhD. May 7, 2009