2. CCSR-HRSR 09-04-2012 SPEC JOINT

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FOR-SALE HOUSING ANALYSIS Realtor/Builder Interviews Maxfield Research Inc. interviewed real estate agents, home builders, and other professionals familiar with Elk River's owner-occupied market to solicit their impressions of the for-sale housing market in the community. Key points are summarized by topic as follows. Market Overview • Real estate activity has picked-up in Elk River this year. Although pricing has yet to rebound, sales transaction activity is increasing and days on market has been declining. A number of Realtors commented on the declining days of market, in many cases appropriately priced homes are selling in 60 days or less. • Elk River has a good reputation and is a sought after community. People are attracted to Elk River for its excellent schools and good transportation options via the Northstar, Highway 169, and Highway 10. • Inventory is significantly low and is at a 12-year low in Elk River. Many sellers continue to restrain from selling their home due to declining values. As a result, some buyers are unable to find housing based on their preferences and price point. Activity could be higher if the supply were balanced. • Single-family housing is the preferred housing type in Elk River. Although Elk River has townhome supply, most townhome sales are bank-owned transactions priced under $100,000. Many investors are seeking out this product for rental property conversions. • Today's record low interest rates have brought some buyers off the fence and into the marketplace. However, there are still many buyers waiting to purchase and desiring to rent in the short term. • The housing market in Elk River, Zimmerman, and Big Lake is improving slowly. However, the real estate market in Otsego, Rogers, and St. Michael has been more active in 2012. • The quality of housing in Elk River has been maintained during the housing downturn, even with the increase of foreclosed properties. • Elk River has a perception of higher property taxes than neighboring communities; this has been a deterrent for some buyers. • The typical home buyer is a family that is seeking a home priced between $200,000 and $250,000. Many seniors looking to downsize have delayed their sale due to decreased values. • The supply of homes priced under $200,000 is low. If those homes are in good condition when entering the market they typically sell quickly. MAXFIELD RESEARCH INC. 73