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1 You re Nobody and Unless You re The Internet, Real Estate, Interest Rates, Bubblettes and the Economy Ted C. Jones, PhD SVP-Chief Economist Stewart Title

2 3 Types of Homebuyers They Work There, They Live There, They Own or Rent Second Homes Investors--Speculators

3 2005 First-Time Homebuyers 43 Percent Put Zero Down Median Down Payment Was 2 Percent 1/3 Interest Only or Minimum Payment Loans January

4 Managing Listings More Than 90 Days Old With No Activity Reduce the price Extend the listing Cancel the listing

5 Florida Existing Home Sales Sales YTD November Cities Change Change Daytona Beach -36.7% -36.5% Fort Lauderdale -27.3% -23.2% Fort Myers-Cape Coral -23.8% -21.4% Fort Pierce-Port St. Lucie -27.4% -33.6% Fort Walton Beach -15.7% -37.1% Gainesville -20.8% -26.9% Jacksonville -10.3% -18.8% Lakeland-Winter Haven -19.0% -35.6% Melbourne-Titusville-Palm Bay -22.3% -22.7% Miami -22.2% -7.7%

6 Florida Existing Home Sales Sales YTD November Cities Change Change Naples -41.3% -45.3% Ocala -9.9% 1.3% Orlando -25.3% -35.8% Panama City -15.4% -14.9% Pensacola -17.2% -27.0% Punta Gorda -26.6% -20.8% Sarasota-Bradenton -35.8% 1.6% Tallahassee -6.6% -13.7% Tampa-St. Petersburg-Clearwater -35.0% -42.6% West Palm Beach-Boca Raton -37.9% -44.9% Totals -26.9% -30.3%

7 Median Sales Price Percent Cities Change Daytona Beach -5.9% Fort Lauderdale -7.4% Fort Myers-Cape Coral -12.5% Fort Pierce-Port St. Lucie -5.1% Fort Walton Beach -7.7% Gainesville 7.3% Jacksonville -0.1% Lakeland-Winter Haven 8.2% Melbourne-Titusville-Palm Bay -12.1% Miami -2.4%

8 Median Sales Price Percent Cities Change Naples -13.5% Ocala 6.1% Orlando 3.5% Panama City -11.8% Pensacola -4.0% Punta Gorda -8.3% Sarasota-Bradenton -18.0% Tallahassee 0.9% Tampa-St Petersburg-Clearwater 2.7% West Palm Beach-Boca Raton -12.1%

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10 Time Bomb Loans

11 Interest Rate Difference Between 30-Year and 1-Year ARM Loans Basis Points The lower the difference, the better reason to get a fixed-rate mortgage loan Aug Jan Jun Nov Apr Sep Feb Jul Dec- 06

12 Percent of Loans That Are ARMS Percent 40.0% 35.0% 30.0% 25.0% 20.0% Aug- 03 Jan- 04 Jun- 04 Nov- 04 Apr- 05 Sep- 05 Feb- 06 Jul- 06 Dec- 06

13 US Treasury Yield Curve Percent Fed Funds Rate January Jan mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr

14 Up 60 to 80 Basis Points July 07 Ted s 2007 Forecast For 30-Year Loans

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16 Percent of Homebuyers That First Found Their Home Purchased on the Internet 30% 25% 24% 20% 15% 10% 5% 0% 15% 11% 8% 4% 2% 0% '95 '97 '99 '01 '03 '04 '05

17 Percent of Homebuyers That First Found Their Home Purchased in the Newspaper 10% 8% 9% 8% 8% 7% 7% 6% 5% 5% 4% 2% 0% '95 '97 '99 '01 '03 '04 '05

18 Percent of Homebuyers That First Found Their Home Purchased By the Real Estate Agent 60% 50% 40% 50% 50% 49% 48% 41% 38% 36% 30% 20% 10% 0% '95 '97 '99 '01 '03 '04 '05

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20 US Job Growth Rates December Comparison CAGR 1 Year 1.40% 2 Years 1.44% 3 Years 1.48% 5 Years 0.81% 10 Years 1.18% 0.00% 0.50% 1.00% 1.50%

21 US Job Growth Percent Change from Same Month Prior Year 2.0% 0.0% '00 '01 '02 '03 '04 '05 '06-2.0% Million Net New Jobs in Past 12 Months

22 United States Building Permits Single Multi Year Family Family Total 95 1,009, ,268 1,348, ,083, ,827 1,442, ,074, ,003 1,458, ,198, ,211 1,626, ,258, ,150 1,679, ,212, ,234 1,612, ,235, ,126 1,636, ,350, ,904 1,771, ,473, ,856 1,901, ,616, ,737 2,073, ,676, ,770 2,148,104 06p 1,501, ,383 1,966,790

23 Jobs Per Dwelling Normal markets typically create 1.25 to 1.5 net new jobs per new dwelling unit. United States Last 12 Months New Jobs 1,787,000 Residential Permits 1,966,790 New Jobs Per Dwelling 0.91

24 Cleveland Job Growth Rates November Comparison CAGR -0.16% 1 Year -0.20% 2 Years 3 Years 0.00% -0.54% 5 Years -0.10% 10 Years -0.75% -0.25% 0.25% -1,700 Jobs in Past 12 Months

25 Cleveland Job Growth Rates Percent Change from Same Month Prior Year 4.0% 2.0% 0.0% -2.0% '00 '01 '02 '03 '04 '05 '06-4.0% US Cleveland

26 Cleveland Office Markets Downtown Percent Vacant A Percent Vacant B Percent Vacant Suburban Office Percent Vacant Source: CBRE

27 Cleveland-Lorain-Elyria Building Permits Single Multi Year Family Family Total 95 5,679 1,863 7, ,046 1,353 7, ,733 1,123 6, ,290 1,168 7, ,841 1,077 7, ,184 1,219 7, , , , , , , , , , ,652 06p 4, ,440

28 Jobs Per Dwelling Normal markets typically create 1.25 to 1.5 net new jobs per new dwelling unit. Cleveland Last 12 Months New Jobs (1,700) Residential Permits 5,450 New Jobs Per Dwelling (0.31)

29 Cleveland Existing Housing Sales Number Sold -7.6 Percent Last 11 Months 3,000 2,500 2,000 1,500 1, Jan Mar May Jul Sep Nov

30 Cleveland Existing Housing Sales Median Price -3.8 Percent November 2005 to November 2006 $200,000 $190,000 $180,000 $170,000 $160,000 $150,000 Jan Mar May Jul Sep Nov

31 Commoditization of Transaction Fees 30 Free Stock Trades Per Month Combined Balances of $25,000 or More Checking Savings CD FDIC-Insured IRA Excludes Options and Mutual Funds

32 Hedge Funds Exploit Market Inefficiencies $1.337 Trillion Assets 9,228 Funds 20 Percent Lost Money in 2006 Hedge Funds Have NO SEC Reporting Requirements

33 Hedge Funds Number of Funds 10,000 8,000 6,000 4,000 2, '00 '01 '02 '03 '04 '05 '06 Source: Hedge Fund Research Inc., Chicago

34 Hedge Funds Assets Billions of Dollars $1,400 $1,200 $1,000 $800 $600 $400 $200 $ '00 '01 '02 '03 '04 '05 '06 Source: Hedge Fund Research Inc., Chicago

35 Amaranth Advisors Energy-Tilted Hedge Fund Formerly $9 Billion in Assets 32-Year Old Trader Lost $6 Billion in One Week on Natural Gas Futures

36 Largest US Endowments Invested $40 Billion in Hedge Funds in 2006 Totaling 18 Percent of Their Assets Pensions and Investments, December 25, 2006

37 Gasoline refiners who add ethanol can claim a 51-cent-per-gallon tax credit. August 7, 2006

38 Each bushel (of corn) yields around 2.8 gallons of ethanol. August 7, 2006

39 America s entire corn crop would satisfy just 12% of gasoline consumption, leaving no corn to feed livestock and humans. August 7, 2006

40 Lack of Leadership & Integrity Headline: Acting police chief in La Coste gets job permanently San Antonio Express News November 23, 2006

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42 Lack of Leadership & Integrity Andrew Aston became La Coste police chief Tuesday by a 3-2 City Council vote and the votes against him came from council members with relatives charged with crimes since he went from reserve officer to acting chief in August. San Antonio Express News November 23, 2006

43 2007 Economic Concerns Some Bubbles Do Exist Time Bomb Loans Cold War II Terrorists Inflation (and Cap Rates) Pandemic (bird flu..) More Hedge Funds Will Fail Energy: US Imports 64 Percent of Oil Extreme Partisan Politics

44 You re Nobody and Unless You re The Internet, Real Estate, Interest Rates, Bubblettes and the Economy Ted C. Jones, PhD SVP-Chief Economist Stewart Title

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