4.0 Strategic Market Analysis Summary

4.1 Economic Outlook

The financial crisis began in 2007 with the breakdown of the U.S. residential mortgage market. As a result, residential real estate prices in the hardest-hit areas such as Florida are well below replacement value, leading many analysts to conclude that prices still nearly at the bottom. At the same time, the Canadian dollar remains very strong against the U.S. dollar. Any investment in U.S. assets is likely to provide a decent return over time based on foreign exchange gains alone. The overall housing market inched ahead of activity reported in 2012, which was considered a recovery year by market experts.

The Company will be actively engaged in two primary business strategies, developing residential properties and the rental of completed properties. The Company's two prong approach to real estate will allow the business to grow successfully in the rapidly changing real estate market. More importantly, this strategy will allow the Company to offset the risks from each business unit so that there is a diversified balance in the Company's real estate portfolio. This is especially important as the business uses leverage to finance the acquisition of its properties.

4.2 Industry and Market Analysis

The U.S. Economic Census estimates that there are 21,300 companies that specialize in the construction of new residential units in the United States. On an annualized basis, these companies generate fees of $43.9 billion dollars while concurrently providing jobs to more than 520,000 people. In each of the last five years, aggregate payrolls have exceeded $20 billion dollars.

All signs point to stabilization for the Southwest Florida local housing market as evidenced in the 2014 Annual Market Report released by the Naples Area Board of REALTORS, which tracks home listings and sales within Collier County (excluding Marco Island). Overall pending and closed sales for homes over $300,000 increased by double digits in 2013.

At the beginning of the year, 74 percent of sales were traditional, while 26 percent were non-traditional short sale and foreclosed properties; but by December, traditional sales rose to 83 percent of all sales. This report indicates a tremendous market shift to home sales in the over $300,000. Closed sales of homes in the over $300,000 price categories increased by 22.5 percent in 2013. Reported data confirms that Naples in a predominately cash buyers' market, cash purchases make up more than half of all home sales in Collier County.

The report shows a clear and steady demand for housing in Naples in 2013 with the most impressive activity in the $300,000 and above category, which realized a 62 percent increase in closed sales from 260 units sold in 2012 to 397 units sold in 2013.

. Overall closed sales increased 27 percent from 1,366 in 2012 to 1,730 in
. Median prices for single family homes in the $300,000 category increased by 17 percent from $350,000 in 2012 to $409,000 in 2013.
. Overall inventory decreased by 18 percent from 6,557 properties in 2012 to 5,403 properties in 2013.
. Closed sales in the single-family market rose 11 percent, while closed sales in the multi-family or condo market rose 8 percent.
. The days on the market are down 14% overall.
. Average price per square foot for Naples FL was $172, an increase of 8.2% compared to the same period last year.
The report indicates the housing market is behaving in a "normal" manner. The solid incremental growth in the middle priced markets, is a good sign that housing market has recovered. Demand for newly constructed homes has increased in all price segments and in all neighborhoods.