Wayne "SHORTY" Short

Wichita, KS employers (mostly aviation companies) have announced 1,500 proposed Lay-offs for the next few months. The majority of these companies are taking a pro-active approach to tightening up their staff in the chance that they will have fewer sales in the next year and may lose some of the record orders they now have. Another view was giving the companies an opportunity to get rid of some Dead Wood ( weak employees) that they no longer needed.

Because of these lay offs and the down turn in the national economy, Wichita State university has revised their 2009 Jobs forecast downward but at the same time they are still projecting an increase in jobs for 2009. The projection now is 1,650 additional jobs with half being in the aviation field.

The WSU leading index has declined but stil remains only slightly below it's all time high of 128. The index signals change to the Wichita economy six months in the future.

Existing home sales fell by 9% in October in the Midwest. The median price fell by 6.7% to $149,400. The Average home price fell in all 9 major cities tracked by the index but rose in two smaller cites; Wichita, KS and Omaha, NE. The report showed a 10% increase in the average sales price in Wichita to $127,000. Part of the reason for this large increase was the lessor numbers on buyers in the lower price ranges and the very stable market that Wichita has had over the last 5-7 years. Wichita prices in the preceding 5 years went up only 15.3% compared to double digit gains every month in many parts of the country. Over all sales are down in Wichita approaching the 20% range but the dramatic drop in interest rates just before Thanksgiving may reverse this trend.

STRONGEST HOUSING MARKETS

National Association of Realtors strongest housing markets, by price appreciation, for third quarter 2008:

Source: National Association of Realtors

Steady but slow appreciation is the hallmark of the Wichita, KS metro housing market which in the 3^rd quarter of 2008, propelled it to the fourth-best market in the United States in Average home appreciation.

The Strongest price gains were affordable markets with healthy economies. A number of Mid-American cities meet these criteria.

Sales are down in the Wichita area but that is tempered by an equal drop in active properties on the market.

November 20, 2008 Meeting with

Regional VP of Countrywide Home Loans and staff.

The following is notes and observations from a very frank meeting about the economy, short sales and foreclosures with representatives of the Mortgage industry, Title officers and top Wichita real estate agents.

90% of all foreclosures were caused by job loss, divorce and health issues.

The Huge LTV loans gave no wiggle room to borrowers when they got in trouble.

90% of all requests for short sales have at least one issue of Fraud connected to them. This is why the lenders are taking so long to approve these cases. Most lenders will wait till the loan is in default at least 90 days before taking any action. 50% of lenders will not process short sales at all.

8 out of 10 short sales that are written will not close. It takes from 2-6 months to do a short sale if only one lender is involved, double that time if there is a 2^nd or 3^rd lien against the property.

Prior to 1960 only 4% of all loans were by investors. From 1960 to 2000 that number doubled, in the next 6 years it doubled again. Now the number is approaching 26%.

1.5 trillion has been invested by foreign investors to buy homes in the U.S.

Immigrant buyers have some of the lowest default ratios of home loans.

The greatest defaults in home loans are loans issued in the last two years.

Sub Prime loans were originally started as a way for less the qualified buyers to own real estate. It was thought that after they cleaned up their credit that they would re-finance the loans to "A" paper loans. In fact less than 5% of these loans were ever upgraded. Maybe if a person has a poor payment history, this does not change with time.....

Buy and Bail: This was a practice where a person knew they could not sell a home or were so upside down that they would have a huge loss if they did sale. The buyer bought a new home in their local market or where they were transferred to and leased their present home. Once the loan closed on their new home they stopped making payments on the old home and let it go back to the bank. There were a number of web sites promoting this along with some mortgage lenders and Realtors. Now the new lenders will not count as income the lease payment on the old home.

40% of all sales in the U.S. in the past few months have been of Foreclosed or "Short" sale home.

Over 1 trillion in homes value has been lost in the last year. 2.6 trillion in stock values just since the Presidential election.

Good news: Wichita, KS has the 4^th best value increase of homes in the United States so far in 2008 with average values going up from $118,800 to $125,300. We did not have a housing bubble. Average increase in values for the previous 5 years was 15.3%.

Bank of America and Countrywide have committed to a 8.5 billion re-write of home loans.

In the 1900's most home loans were a 40% LTV, it took 50 years to go to a 52%LTV, 40 more years to go to a 89% LTV and 10 years to go to almost a 100% LTV. Now equity in the home....This is where the problem started.

Wichita, Economic and city update

The United Way of the Plains has raised its highest total of funds via pledges in the history of the Charity. Over $16,000,000 has been pledged to the United Way Campaign. This is another indication of the strength of the Wichita and Central Kansas economy.

Wichita teacher, Vanessa Martinez was one of 80 educators across the United States honored by the Milken Family Foundation as top educators and teachers for 2008. Martinez was awarded a check for $25,000 for her excellent work in an Elementary school.

The Wichita school system Bond Campaign passed during the November elections. Over $350 million was approved for improving schools, recreation facilities, swimming pools, tennis courts in the Wichita area. This bond issue is on top of a previous Quarter Million Bond issue that was passed over 6 years ago to improve schools and build new elementary and Secondary schools. Wichita schools will now be able to compete with the suburban school districts that had been the beneficiary of the growth in small towns and suburban areas adjacent to Wichita.

The Wichita Police department's crackdown on gangs in the last couple of years is bearing fruit. Gang related homicides have dropped 40% from a year ago and aggravated assaults are down 31%. In the last year almost 200 gang members have been arrested and charged with over 360 crimes. Wichita police plan to continue the crackdown the rest of this year and in to 2009.

August, 2008, Wichita, KS Real Estate Update

Wichita's housing market is bucking the National trend in number of foreclosures. The national rate is 1.6% of all loans and the Wichita area is running at about ½ of the rate.

During July sales were 11.2% below last years levels (the 2^nd best on record). That rate was twice as good as June's levels when closings were 22.2% below June, 2007.

In August, MSN asked "Sperling's Best Places" to do an analysis of cities above 500,000 populations and find the best cities for their "2008 MSN Real Estate Most Livable, Bargain markets". Wichita, KS ranked #1 on their list. Wichita is one of the most affordable places in the study and some of the best Numbers in job growth and employment thanks to the boom in Agriculture & Ethanol, oil and gas production and employment needs in manufacturing.

Additional reasons given for Wichita's # 1 ranking were short commute times, appreciation of home values, arts and entertainment areas, the new arena and the strong community feel of the metro area.