SE Michigan Residential Real Estate Recovery Are we there yet or is it over?

SE Michigan Residential Real Estate Recovery Are we there yet or is it over?

Changing View of Residential Transactions

Changing View of Residential Transactions 2015 Short Sales 3% Leases Bank 11% Owned 6% Traditional Home Sales 80%

January 1992 October 1992 July 1993 April 1994 January 1995 October 1995 July 1996 April 1997 January 1998 October 1998 July 1999 April 2000 January 2001 October 2001 July 2002 April 2003 January 2004 October 2004 July 2005 April 2006 January 2007 October 2007 July 2008 April 2009 January 2010 October 2010 July 2011 April 2012 January 2013 October 2013 July 2014 April 2015 30.00% Case-Shiller Metro Detroit Annual Appreciation Rate Trend 20.00% 10.00% 0.00% -10.00% -20.00% -30.00%

January 2013 February 2013 March 2013 April 2013 May 2013 June 2013 July 2013 August 2013 September 2013 October 2013 November 2013 December 2013 January 2014 February 2014 March 2014 April 2014 May 2014 June 2014 July 2014 August 2014 September 2014 October 2014 November 2014 December 2014 January 2015 February 2015 March 2015 April 2015 May 2015 June 2015 July 2015 August 2015 September 2015 October 2015 November 2015 25.00% Year over year Price Changes by Month Chase-Shiller Metro Detroit 20.00% 15.00% 10.00% 5.00% 0.00%

January 1991 November 1991 September 1992 July 1993 May 1994 March 1995 January 1996 November 1996 September 1997 July 1998 May 1999 March 2000 January 2001 November 2001 September 2002 July 2003 May 2004 March 2005 January 2006 November 2006 September 2007 July 2008 May 2009 March 2010 January 2011 November 2011 September 2012 July 2013 May 2014 March 2015 140.00 Case-Shiller Metro Detroit Value Index Trend 85%+- Back to Peak 2006 Values 120.00 100.00 80.00 60.00 40.00 20.00 0.00

Metro New Construction Starts Census Detroit-Warren-Livonia 25000 20000 15000 10000 5000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 New Construction Starts - Census Bureau - Detroit-Warren-Livonia

Single Family New Construction Summary SE Michigan Peak Permits: 2004 21,808 Bottom of Market: 2009 1,333 permits 94% drop in permits peak to bottom 2015 7,217 permits - 33% back to peak Historical Average around 14,000 permits

Median Years of Homeowner Tenure before Moving Pent-Up Seller Demand Forbes

1909 1912 1915 1918 1921 1924 1927 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 DEMOGRAPHICS SET THE TABLE Population and Its Characteristics Define the Future 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 US Live Births by Year and Generation Boom X Y Z Source: US National Center for Health Statistics

Q1-2000 Q3-2000 Q1-2001 Q3-2001 Q1-2002 Q3-2002 Q1-2003 Q3-2003 Q1-2004 Q3-2004 Q1-2005 Q3-2005 Q1-2006 Q3-2006 Q1-2007 Q3-2007 Q1-2008 Q3-2008 Q1-2009 Q3-2009 Q1-2010 Q3-2010 Q1-2011 Q3-2011 Q1-2012 Q3-2012 Q1-2013 Q3-2013 Q1-2014 HOUSEHOLDS ARE GROWING BUT SO ARE RENTERS Causing Homeownership rates to fall below historical averages Households and Home Ownership 120,000 115,000 110,000 105,000 100,000 95,000 Households Home Ownership Rate 70.0 69.0 68.0 67.0 66.0 65.0 64.0 63.0 90,000 62.0 Source: Commerce Department

More Buyers than Listings At or above list price 22% of the time Listing Inventory Still Declining, but the decline is slowing 31% Selling in 10 days or less, 54% in 30 days or less Still a few more Buyers than sellers but balancing At or above list price 17% of the time Listing Inventory Rising 24% Selling in 10 days or less, 63% in 30 or less Listings increasing faster than buyers Listing inventory rising At or above list price 17% of the time 13% Selling in 10 days or less and 23% in 30 or less

18 16 14 Months Supply of Inventory by Age of Listing Oakland County 13 16.8 12 10 $0-250K 8 6 4 2 3 5.4 1.4 1.5 1.7 2 2.8 4.3 4.8 7.8 $251-500K $500K+ 0 Overall 0-10 days 11-30 days Over 90 Days

Market Velocity Indicators

15.00% Oakland County Price per Square Foot Trend 10.00% 5.00% 0.00% Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16-5.00% -10.00% -15.00% -20.00% Per SF $500k+ Per SF $250-500k Per SF under $250k

15.00% Oakland County Value Per Square Foot $1,000,000 Year over Year Trend 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% Oakland $1mm + Per SF Trend

15% Selected Cities $ Per Square Foot Trends Year over Year Change 10% 5% 0% -5% -10% -15% WB/FH $ Per SF Trend RO $ Per SF Trend Birm Area $ Per SF Trend Troy $ Per SF Trend

2016 SE MI Housing Forecast Under $250K $250-500K Over $500K Home Sales +2% +4% +2% Listings Inventory -1% to 2% +7 to 10% +12 to 17% Appreciation +5% +2% -2 to 0% Interest Rates 4.0% to 4.75%

Thank You

Housing Headwinds Regulation Dodd/Frank: CFPB and TRID (Consumer Financial Protection Bureau and Truth-in-Lending Integrated Disclosure) Slow wage growth International economic uncertainty Low For Sale inventories at key price points Housing Affordability is getting tighter Moving from a Recovery to a Normalized Market

Housing Tail Winds Low Interest Rates (International Uncertainty) Steady employment and wage growth Household Formation growth (Gen X&Y as homeowners Moving back to historical homeownership rates Low Inventories pushing up equities, releasing pent up Sellers

Hot and still hot - but less so markets Hot - Starter markets Gen X & Y Inner Ring and Urban Markets - Royal Oak bungalow, Midtown Loft Strong but less hot Where Boomers hang out - Outer Ring Suburban Markets - Milford or Rochester Hills - 4 bedroom colonial

City of Detroit Summary

80% Detroit Sale Price Distribution 76% 70% 60% 59% 50% 40% 30% Feb/Mar 16 Mar/April 14 20% 10% 0% 19% 10% 9% 2% 3% 11% 6% 5% Under $1000 $1k-25K $26-50K $51-100K Over $100K

2.00% 1.50% Appraiser Home Value Opinions Compared to Homeowner Estimates 1.43% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% 0.18% -0.13% -0.40% -0.69% -1.15% -1.40% -2.00% -2.50% -3.00% -2.33% -2.65% -2.00% -1.98% -1.87% -1.80% -1.75% Jan Feb Mar April May June July Aug Sept Oct Nov Dec Jan Feb 1.43% 0.18% -0.13% -0.40% -0.69% -1.15% -1.40% -2.33% -2.65% -2.00% -1.98% -1.87% -1.80% -1.75%

60.00% Oakland County Over $500,000 Homes For Sale and Sold Year over Year % Change Trends 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% -10.00% Homes for Sale Trend Homes Sold Trend

25.0% Oakland County - Under $250,000 Homes For Sale and Sold Year over Year % Change Trends 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% Homes For Sale Trend Homes Sold Trend

50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Oakland County $250,000 - $500,000 Homes For Sale and Sold Year over Year % Change Trends Homes for Sale Trend Homes Sold Trend

50% Selected Oakland Cities - For Sale Inventory Trends Year over Year Comparison 40% 30% 20% 10% 0% -10% -20% -30% -40% WB/FH RO Area Birm Area Troy

Case Shiller Year-Over-Year PRICE CHANGES 20 City Composite S&P Case Shiller 1/2016

Homeowners Renters 67% Living with Parents

Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 800 700 600 500 400 300 200 100 0 Oakland County $250,000 - $500,000 For Sale and Under Contract Trends 4000 3500 3000 2500 2000 1500 1000 500 0 Properties Under Contract Trend Listing Inventory Trend

Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 180 160 140 120 100 80 60 40 Oakland County Over $500,000 - For Sale and Under Contract Trends 2000 1800 1600 1400 1200 1000 800 600 400 Properties Under Contract Trend Listing Inventory Trend

Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 1300 1200 1100 1000 900 800 700 Oakland County For Sale and Under Contract Trends Under $250,000 5500 5000 4500 4000 3500 3000 2500 2000 Properties Under Contract Trend Listing Inventory Trend

Homeowners Renters 60% 67% Living with Parents

First Time Home Buyers 52.9 % of all buyers were first time buyers last month according to the First-Time Buyer Mortgage Share Index by AEI s International Center on Housing Risk AEI s International Center on Housing Risk

Percentage of Homes with Positive Equity by State CoreLogic

Number of Households in millions Census

Homeownership Rates 1995-Today Census