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10 th Annual Economic Forecast Breakfast. Thursday, December 10, 2010. Predictions for 2010. Predictions for 2010. Predictions for 2010. Royal Banks of Missouri Economic Forecast Breakfast. Residential Real Estate. Why Are Buyer’s Fence Sitting?. Availability of credit Market confidence

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10 th annual economic forecast breakfast
10th Annual Economic Forecast Breakfast

Thursday, December 10, 2010

why are buyer s fence sitting
Why Are Buyer’s Fence Sitting?
  • Availability of credit
  • Market confidence
  • Employment security
  • Confidence in the economy overall
it s a great time to buy
It’s A Great Time To Buy
  • Most affordable housing prices

in years

  • Great selection of homes available
  • Motivated sellers
  • Record-low mortgage rates
slide11

St. Louis County Single Family Homes

Average Price comparison 3 years – List price/Sold price

slide12

St. Louis County Single Family Homes

Inventory absorption over 3 years

slide13

St. Louis Metro Single Family Homes

3-year comparison of permits issued

2008 – 2010

St. Louis County St. Charles County

2008 2009 2010 2008 2009 2010

YTD 10/31 393 331 375 1068 990 1248

Annual 465 432 1279 1279

Jefferson County Franklin County

2008 2009 2010 2008 2009 2010

YTD 10/31 496 452 448 83 124 116

Annual 562 561 136 154

HBA of St. Louis & Eastern MO

slide14

Comparison of Multiple Family Homes

St. Louis City Permits Issued

2008 - 2010

HBA of St. Louis & Eastern MO

slide15

St. Louis County

Foreclosures Year-to-Date

slide16

MLS Market at a Glance 2010

St. Louis County

1/1/10 thru 10/31/10

slide17

MLS Market at a Glance 2010

St. Louis City

1/1/10 thru 10/31/10

slide18

MLS Market at a Glance 2010

St. Charles County

1/1/10 thru 10/31/10

slide19

MLS Market at a Glance 2010

Jefferson County

1/1/10 thru 10/31/10

slide20

MLS Market at a Glance 2010

Franklin County

1/1/10 thru 10/31/10

going for the gold

Going for the Gold!

Presented byBob Hardcastle

bob hardcastle delta investment services inc

Bob HardcastleDelta Investment Services, Inc.

Securities & Advisory Services offered through

VSR Financial Services, Inc., Member FINRA/SIPC

A Registered Investment Adviser

Delta Investment Services and VSR Financial are unrelated entities

metals

WHY

BUY AT

THE TOP?

Metals
  • U.S. Dollar
  • $600 billion purchases of treasuries
  • Volatility in the market worldwide
  • Emerging markets

GOLD

PLATINUM

PALLADIUM

SILVER

danger signs
Danger Signs
  • War
    • Korea
    • Afghanistan/Iraq
  • Will it hit U.S.
    • What effect will it have on U.S. markets?
  • Europe
    • Portugal
    • Ireland
    • Greece
    • Spain
bonds
Bonds
  • Last year government
  • This year corporate
  • Floating rate bonds
signs of recovery
Signs of Recovery
  • Small cap
  • Mid cap
what could be the leading investor opportunities
What Could Be The LeadingInvestor Opportunities
  • Metals
    • Silver
    • Palladium
    • Platinum
    • Gold
  • Emerging Markets
    • China
    • Pacific Rim
    • Australia
    • Canada
  • U.S.
    • Infrastructure
    • Small & mid cap
money talk radio
Money Talk Radio
  • Sunday mornings
    • 8 to 10 am
    • KFNS 590AM (The Fan)
    • Also stream online at kfns.com
money talk tv
Money Talk TV
  • Charter CCIN
    • Channel 3 in the city
    • Channel 8 in the county
    • Thursdays & Friday at 2pm
    • Sundays at 4pm
money talk cruise 2012
Money Talk Cruise 2012
  • Pacific Coast
    • Celebrity’s Century
    • May 5th thru

May 13th, 2012

    • Passports are required
slide33

10th Annual Royal Banks Economic Outlook

The St. Louis Economic Outlook for 2011

December 9, 2010

William R. Emmons

Assistant Vice President and Economist

Division of Banking Supervision and Regulation

Federal Reserve Bank of St. Louis

William.R.Emmons@stls.frb.org

33

20m

slide34

The St. Louis Economic Outlook For 2011

  • The national economy
    • The view from the Fed
    • Risks to the national outlook
  • The St. Louis economy
    • The bad news: Jobs
    • The (relatively) good news: Housing and banking conditions

34

slide35

Important Reminder

  • These comments do not necessarily reflect the views of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.

35

slide36

What I Said Last Year (Dec. 10, 2009)....

  • Dec. 2010 Update
  • Employment: 1,300 jobs added in St. Louis metro area during 12 months through Oct. 2010 (+0.1% increase).
    • At this pace, regaining the Feb. 2008 peak will take 57 years.
    • Pace has slowed since Spring.
  • Housing: St. Louis and US house prices are (still) falling.
    • Mortgage distress remains severe.
    • Building permits flat from year ago; still down more than 70% from peak in 2005.
  • CRE: St. Louis metro office and industrial vacancy rates have increased from year ago.
    • Majority of STL banks have higher CRE past-due rates now than a year ago.
  • The St. Louis economy is likely to recover slowly during 2010.
    • St. Louis labor market will remain soft.
      • Housing and mortgage weakness likely to linger beyond 2010.
      • Commercial real-estate markets will suffer from the weak recovery.

36

slide37

The View From the Fed

  • Slow recovery underway
  • Little change in unemployment likely during 2011
  • Low inflation
  • Uncertainty and caution are holding back the recovery

37

slide38

Ben Bernanke: The Current Economic Trajectory Is “Unacceptable“

Percent

Highest projection by an FOMC member

FOMC unemployment projection

Acceptable unemployment range

But why would core inflation rise if unemployment remains elevated?

Acceptable inflation range

Vertical shading represents NBER recession periods

FOMC core-inflation projection

Lowest projection by an FOMC member

38

Source: Federal Reserve Board Projections for fourth quarter of 2010-13, as of Nov. 2010

slide39

The Fed‘s Current Monetary-Policy Strategy*

  • Boost asset prices
  • Maintain stable inflation expectations
  • Increase confidence in the recovery
  • *These are the views of the presenter, not necessarily those of the Federal Reserve Bank of St. Louis or the Federal Reserve System.

39

slide40

Risks to the Outlook

  • Failure to achieve “take-off velocity”
    • Unemployment flat or higher
    • Lower inflation
  • Renewed turbulence—Overseas… in Congress… financial markets
  • Renewed weakness in real-estate markets in the context of household balance-sheet deleveraging

40

slide41

The St. Louis Economy

  • The bad news: Jobs
    • No evidence of sustained hiring
    • Labor force has been shrinking—discouraged workers?
  • The (relatively) good news: Housing and banking conditions
    • We didn’t have a crazy housing boom
      • House prices falling relatively slowly here
      • Mortgage distress is bad, not horrible
    • Banks generally in decent condition

41

slide42

St. Louis Job Market Has Stalled

US

Index levels equal 100 in 1997

St. Louis metro area

Vertical shading represents NBER recession periods

42

Source: Bureau of Labor Statistics St. Louis: Monthly through Oct. 2010; US: Monthly through Nov. 2010

slide43

St. Louis Unemployment Remains Close to US Because Our Labor Force Is Shrinking

Percent

St. Louis metro area

US

Vertical shading represents NBER recession periods

43

Source: Bureau of Labor Statistics St. Louis: Monthly through Oct. 2010; US: Monthly through Nov. 2010

slide44

St. Louis Went Up Less, Is Falling Less

Ratio

US

St. Louis metro area

44

Sources: Zillow.com; Bureau of Economic Analysis Quarterly through Q3.2010

slide45

Near-Term Pressures On Residential and Commercial RE Prices Remain Downward

CRE: Price index equals 100 in 2000;

Home values: Dollars per square foot

National CRE price index

US home values per square foot

St. Louis metro area home values per square foot

45

Sources: MIT Center for Real Estate; Zillow.com Quarterly through Q3.2010

slide46

Share of Mortgages 30+ Days Delinquent or in Foreclosure: Oct. 2005

Lincoln County

Jersey County

Madison County

St. Charles County

Warren County

St. Louis County

City

St. Clair County

Franklin County

Jefferson County

Monroe County

Washington County

Source: Lender Processing Services (LPS)

46

slide47

Share of Mortgages 30+ Days Delinquent or in Foreclosure: Oct. 2006

Lincoln County

Jersey County

Madison County

St. Charles County

Warren County

St. Louis County

City

St. Clair County

Franklin County

Jefferson County

Monroe County

Washington County

Source: Lender Processing Services (LPS)

47

slide48

Share of Mortgages 30+ Days Delinquent or in Foreclosure: Oct. 2007

Lincoln County

Jersey County

Madison County

St. Charles County

Warren County

St. Louis County

City

St. Clair County

Franklin County

Jefferson County

Monroe County

Washington County

Source: Lender Processing Services (LPS)

48

slide49

Share of Mortgages 30+ Days Delinquent or in Foreclosure: Oct. 2008

Lincoln County

Jersey County

Madison County

St. Charles County

Warren County

St. Louis County

City

St. Clair County

Franklin County

Jefferson County

Monroe County

Washington County

Source: Lender Processing Services (LPS)

49

slide50

Share of Mortgages 30+ Days Delinquent or in Foreclosure: Oct. 2009

Lincoln County

Jersey County

Madison County

St. Charles County

Warren County

St. Louis County

City

St. Clair County

Franklin County

Jefferson County

Monroe County

Washington County

Source: Lender Processing Services (LPS)

50

slide51

Share of Mortgages 30+ Days Delinquent or in Foreclosure: Oct. 2010

Lincoln County

Jersey County

Madison County

St. Charles County

Warren County

St. Louis County

City

St. Clair County

Franklin County

Jefferson County

Monroe County

Washington County

Source: Lender Processing Services (LPS)

51

slide52

St. Louis Is Stressed, But Less Than Elsewhere (CA, NV, AZ, FL, Chicago, Atlanta...)

Share of Mortgages 90+ Days Delinquent or in Foreclosure: Oct. 2010

52

Source: Lender Processing Services (LPS)

slide53

Office Vacancy Rates Are Higher Than A Year Ago

St. Louis metro area

Percent

US metro areas

Vertical shading represents NBER recession periods

53

Quarterly through Q3.2010

slide54

Industrial Availability Rates Are Much Higher Than A Year Ago

Percent

St. Louis metro area

US metro areas

Vertical shading represents NBER recession periods

54

Quarterly through Q3.2010

slide55

Most St. Louis Banks Have Below-Average Problem Real-Estate Loans

(Real-estate loans past-due

+

OREO)

as percent of

(Real-estate loans

+

OREO)

St. Louis Bank (20.4%)

Truman Bank (28.3%)

Westbridge Bank (32.6%)

First Bank (16.4%)

Jefferson Bank (13.2%)

Southern Commercial Bank (7.9%)

Bank of Edwardsville (5.2%)

US average, all banks (10.6%)

Royal Banks (2.7%)

55

Source: FDIC Data as of end of Q3.2010

slide56

In Sum: The St. Louis Economic Outlook For 2011

  • A weak national recovery is underway
    • Greatest risks:
      • Slow-motion slide back into recession
      • Shocks to confidence
      • Real-estate relapse
  • The good and bad of the St. Louis economy
    • Housing and banking conditions are better than nationwide average
    • The job market is very weak

56

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www.royalbanksofmo.com

For a COLOR Version of today’s

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