Looking Ahead to 2019: Crosscurrents in the Housing Market

Looking Ahead to 2019: Crosscurrents in the Housing Market Gay Cororaton Research Economist, National Association of REALTORS Virginia Peninsula Association of REALTORS, Inc. General Membership Meeting January 15, 2019

Economic and Housing Market Trends

Q1/2000 Q1/2001 Q1/2002 Q1/2003 Q1/2004 Q1/2005 Q1/2006 Q1/2007 Q1/2008 Q1/2009 Q1/2010 Q1/2011 Q1/2012 Q1/2013 Q1/2014 Q1/2015 Q1/2016 Q1/2017 Q1/2012 Q3/2012 Q1/2013 Q3/2013 Q1/2014 Q3/2014 Q1/2015 Q3/2015 Q1/2016 Q3/2016 Q1/2017 Q3/2017 Q1/2018 Q3/2018 Sustained Economic Growth Since 2010 Driven by Private Consumption and Investment 19000.0 18000.0 17000.0 16000.0 15000.0 14000.0 13000.0 12000.0 11000.0 10000.0 Gross Domestic Product 8.00 6.00 4.00 2.00 0.00-2.00-4.00 Growth Drivers: Private Consumer and Investment Spending Real Gross Domestic Product (SAAR, Bil.Chn.2009$) Two-Sided Smoothed Estimate: Real Potential GDP (SAAR, Private Consumption Net Exports GDP Private Investment Gov't Cons & Inv

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 19 M Jobs Created Since 2010 Total Non-farm Employment Residential Construction Employment 155,000 150,000 145,000 149,024 3000.0 2500.0 2000.0 2396.1 2024.6 140,000 135,000 130,000 125,000 120,000 130,353 1500.0 1000.0 500.0 0.0 1008.7 2002 2004 2006 2008 2010 2012 2014 2016 2018 795.1 All Employees: Construction of Residential Buildings (SA, Thous) All Employees: Specialty Trade Contractors: Residential Construction (SA, Thous)

Jan/2004 Nov/2004 Sep/2005 Jul/2006 May/2007 Mar/2008 Jan/2009 Nov/2009 Sep/2010 Jul/2011 May/2012 Mar/2013 Jan/2014 Nov/2014 Sep/2015 Jul/2016 May/2017 Mar/2018 2007/Mar 2007/Nov 2008/Jul 2009/Mar 2009/Nov 2010/Jul 2011/Mar 2011/Nov 2012/Jul 2013/Mar 2013/Nov 2014/Jul 2015/Mar 2015/Nov 2016/Jul 2017/Mar 2017/Nov 2018/Jul Declining Unemployment Rate is Boosting Wages 12.0 Unemloyment Rate Y/Y Growth of the Average Weekly Wage of Private Sector Employees 10.0 8.0 6.0 4.0 5.6 3.9 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 3.2% 2.0 1.0% 0.5% 0.0 0.0%

Q1/2000 Q2/2001 Q3/2002 Q4/2003 Q1/2005 Q2/2006 Q3/2007 Q4/2008 Q1/2010 Q2/2011 Q3/2012 Q4/2013 Q1/2015 Q2/2016 Q3/2017 Q1/2000 Q2/2001 Q3/2002 Q4/2003 Q1/2005 Q2/2006 Q3/2007 Q4/2008 Q1/2010 Q2/2011 Q3/2012 Q4/2013 Q1/2015 Q2/2016 Q3/2017 Aggregate Corporate Profits Have Increased Sharply, More than Income 2500.0 2000.0 1500.0 1000.0 500.0 Corporate Profits (Billion $, SAAR) 2320.5 350 300 250 200 150 100 50 0 Index of Corporate Profits and Personal Disposable Income (2000 Q1 = 100) 287 215 0.0 Index of Corporate Profits Index of Personal Disposable Income

Jan/2000 Feb/2001 Mar/2002 Apr/2003 May/2004 Jun/2005 Jul/2006 Aug/2007 Sep/2008 Oct/2009 Nov/2010 Dec/2011 Jan/2013 Feb/2014 Mar/2015 Apr/2016 May/2017 Jun/2018 Jan/2012 May/2012 Sep/2012 Jan/2013 May/2013 Sep/2013 Jan/2014 May/2014 Sep/2014 Jan/2015 May/2015 Sep/2015 Jan/2016 May/2016 Sep/2016 Jan/2017 May/2017 Sep/2017 Jan/2018 May/2018 Sep/2018 But Inflation Creeping Up, so Fed Raised Rates 8.0000 6.0000 Federal Funds Rate and Inflation 6.00 Contract Rates on 30-Year Conventional Mortgages Have Increased as the Fed FOMC has Raised the Federal Funds Rate 4.0000 2.0000 5.00 4.00 4.64 0.0000-2.0000 3.00 2.00 2.50-4.0000 1.00 0.00 Federal Open Market Committee: Fed Funds Target Rate: Upper Limit (EOP, %) CPI-U: All Items, 1982-84=100 (Y/Y %Change) FHLMC: 30-Year Fixed-Rate Mortgages: U.S. (%) Federal Open Market Committee: Fed Funds Target Rate: Upper Limit (%)

04/Jan/2018W 18/Jan/2018W 01/Feb/2018W 15/Feb/2018W 01/Mar/2018W 15/Mar/2018W 29/Mar/2018W 12/Apr/2018W 26/Apr/2018W 10/May/2018W 24/May/2018W 07/Jun/2018W 21/Jun/2018W 05/Jul/2018W 19/Jul/2018W 02/Aug/2018W 16/Aug/2018W 30/Aug/2018W 13/Sep/2018W 27/Sep/2018W 11/Oct/2018W 25/Oct/2018W 08/Nov/2018W 22/Nov/2018W 06/Dec/2018W 20/Dec/2018W 03/Jan/2019W Mortgage Rate Rise Halted after Fed s Signaled Fewer Rate Hikes Ahead 5.10 4.90 4.70 4.50 4.30 4.10 3.90 Weekly 30-Year Fixed Mortgage Rates (as of Jan 10, 2019) 4.94 4.45

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 GDP Growth in VA Metro Areas in 2017 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% GDP Growth Virginia Bch-Norfolk-Newport News, VA-NC MSA Richmond, VA MSA Wash-Arlngtn-Alxndria, DC-VA-MD-WV MSA 2.6% 2.1% 1.0% Winchester, VA-WV MSA Richmond, VA MSA Lynchburg, VA MSA Charlottesville, VA Wash-Arlngtn-Alxndria, Staunton-Waynesboro, VA Virginia Bch-Norfolk- Kingsport-Bristol-Bristol, Harrisonburg, VA Blacksbrg-Christnsbrg- Roanoke, VA MSA GDP Growth 2016 2017-3.0%-2.0%-1.0%0.0% 1.0% 2.0% 3.0% 1.0% 0.8% 0.7% 0.6% 0.0% 1.5% 2.7% 2.6% 2.4% 2.3% 2.1%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Contraction in Industry and Government GDP in VA Beach-Norfolk-Newport News Since 2006/07 GDP-Private Industries (Million 2009 Dollars) GDP-Government Spending (Million 2009 Dollars) 65000 60000 55000 50000 $59,897 $58,118 30000 25000 20000 15000 10000 $24,010 $23,706 $8,810 $9,996 45000 5000 0 40000 Richmond VA Beach-Norfolk-Newport News Richmond Virginia Bch-Norfolk-Newport News

Jobs Generated in VA Metro Areas, 2012-2017 Change in Nonfarm Employment ('000) in 2017 from 2012 Washington-Arlington- Washington-Arlington- Richmond, VA MSA Virginia Beach-Norfolk-Newport Charlottesville, VA MSA Winchester, VA-WV MSA Harrisonburg, VA MSA Roanoke, VA MSA Blacksburg-Christiansburg- Staunton-Waynesboro, VA MSA Kingsport-Bristol-Bristol, TN-VA Lynchburg, VA MSA 12.0 6.1 4.1 2.4 2.4 2.1 1.9 1.9 210.6 186.1 58.3 33.1 % Annual Change, 2012-2017 Washington-Arlington- 1.3% Washington-Arlington- 1.4% Richmond, VA MSA 1.8% Virginia Beach-Norfolk- 0.9% Charlottesville, VA MSA 2.2% Winchester, VA-WV MSA 2.0% Harrisonburg, VA MSA 1.3% Roanoke, VA MSA 0.3% Blacksburg-Christiansburg- 0.6% Staunton-Waynesboro, VA MSA 0.8% Kingsport-Bristol-Bristol, TN- 0.3% Lynchburg, VA MSA 0.4%

Employment in Virginia Beach-Norfolk-Newport News

Resident Population In VA Metro Areas, 2012-2017 Change in Resident Population, 2012-2017 Washington-Arlington-Alexandria, 344,362 Washington-Arlington-Alexandria, 280,788 Silver Spring-Frederick-Rockville, 63,574 Richmond, VA MSA 60,883 Virginia Beach-Norfolk-Newport 27,848 Charlottesville, VA MSA 11,144 Winchester, VA-WV MSA 6,936 Harrisonburg, VA MSA 5,961 Lynchburg, VA MSA 5,699 Roanoke, VA MSA 3,572 Staunton-Waynesboro, VA MSA 3,547 Percent Annual Population Growth, 2012-2017 Kingsport-Bristol-Bristol, -0.1% TN-VA Blacksburg-Christiansburg- 0.4% Staunton-Waynesboro, VA MSA 0.6% Roanoke, VA MSA 0.2% Lynchburg, VA MSA 0.4% Harrisonburg, VA MSA 0.9% Winchester, VA-WV MSA 1.0% Charlottesville, VA MSA 1.0% Virginia Beach-Norfolk-Newport 0.3% Richmond, VA MSA 1.0% Silver Spring-Frederick-Rockville, 1.0% Washington-Arlington- 1.2% Washington-Arlington- 1.1%

1999.01 2000.03 2001.05 2002.07 2003.09 2004.11 2006.01 2007.03 2008.05 2009.07 2010.09 2011.11 2013.01 2014.03 2015.05 2016.07 2017.09 2018.11 200801 200809 200905 201001 201009 201105 201201 201209 201305 201401 201409 201505 201601 201609 201705 201801 201809 Housing Market Slowed in 2018 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Existing Home Sales (Seas Adjusted Annual Rate) 0 5,320,000 80 70 60 50 40 30 20 REALTORS Buyer and Seller Traffic Indices Buyer Traffic Index Seller Traffic Index 44

REALTORS Buyer Traffic Index Indicates Slower Homebuying Demand in November 2018

NAR HOME Survey: Still a good time to buy, but less so than in the past

1999.01 1999.11 2000.09 2001.07 2002.05 2003.03 2004.01 2004.11 2005.09 2006.07 2007.05 2008.03 2009.01 2009.11 2010.09 2011.07 2012.05 2013.03 2014.01 2014.11 2015.09 2016.07 2017.05 2018.03 Home Prices Still Appreciating, But at a Slower Pace 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Median Price of Existing Home Sales U.S. Northeast Midwest South West 81 months of y/y price growth since March 2012 Slower y/y price appreciation (4.2% in Nov 2018 compared to 9% in 2012-2013 ) West region had highest median price appreciation since 2012 (100% increase compared to 66% nationally)

Jan/2012 May/2012 Sep/2012 Jan/2013 May/2013 Sep/2013 Jan/2014 May/2014 Sep/2014 Jan/2015 May/2015 Sep/2015 Jan/2016 May/2016 Sep/2016 Jan/2017 May/2017 Sep/2017 Jan/2018 May/2018 Sep/2018 Mar/2007 Oct/2007 May/2008 Dec/2008 Jul/2009 Feb/2010 Sep/2010 Apr/2011 Nov/2011 Jun/2012 Jan/2013 Aug/2013 Mar/2014 Oct/2014 May/2015 Dec/2015 Jul/2016 Feb/2017 Sep/2017 Apr/2018 Nov/2018 Index (Jan 2012=100 Price Appreciation Has Slowed and is Now Converging with Wage Growth 200 190 180 170 160 150 140 130 120 110 100 How Home Prices, Mortgage Payments, and Income Have Increased Over Time Since January 2012 (=100) 186 167 117 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% Median Home Sales Price vs. Wage Growth 4.2% 3.1% Y/Y NAR Median Price Y/Y Wage NAR Median Home Price Ave Weekly Earnings Monthly Mortgage

West Region Has Priciest Metro Areas, But Prices are Falling/Moderating

Y/Y Change in Median List Price on Realtor.com in Nov 2018 in VA Metro Areas

Most Unaffordable Metro Areas: More than 25 Percent of Income Spent on Mortgage

More Houses are Being Built, But Not Enough to Meet Household Formation Q1/2012 Q2/2012 Q3/2012 Q4/2012 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 Q3/2018 2500 2000 1500 1000 1,561 1,234 500 0 Housing starts Net household formation Source: U.S. Census Bureau; household formation is calculated from Housing Vacancy Survey

1999.01 2000.02 2001.03 2002.04 2003.05 2004.06 2005.07 2006.08 2007.09 2008.10 2009.11 2010.12 2012.01 2013.02 2014.03 2015.04 2016.05 2017.06 2018.07 Inventory Still Low But Improving Month s Supply of Existing Homes for Sale 14.0 12.0 10.0 8.0 6.0 3.9 4.0 3.5 2.0 0.0 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% 6 Months Supply is Desirable to Keep Prices from Appreciating Steeply 0.0 5.0 10.0 15.0

Few Homes for Sale Below $500K 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 4.5 3.5 Months' Supply 4.4 5.4 6.8 9.6 4.3 Month s supply by Region: West: 3.2 Midwest: 3.8 South: 4.6 Northeast: 5.1 Month s supply by Price Range: $100-$250K: 3.5 $1M+: 9.6 Northeast Midwest South West U.S.

Jobs Generated vs. Housing Starts Permits Jobs Generated Per Housing Starts Permit During 2014-2017 Charlottesville, VA MSA Richmond, VA MSA Washington-Arlington-Alexandria, DC-VA-MD- Harrisonburg, VA MSA Winchester, VA-WV MSA Virginia Beach-Norfolk-Newport News, VA-NC Blacksburg-Christiansburg-Radford, VA MSA Roanoke, VA MSA Lynchburg, VA MSA Kingsport-Bristol-Bristol, TN-VA MSA 0.2 1.0 1.0 1.6 1.7 2.0 2.5 2.8 3.1 3.1

Properties Still Selling Faster Compared to One Year Ago in Virginia Beach-Norfolk-Newport News (Median Days Listed on Realtor.com)

REALTORS in Nearly Half of States Reported Longer Days on the Market in November 2018

200810 200904 200910 201004 201010 201104 201110 201204 201210 201304 201310 201404 201410 201504 201510 201604 201610 201704 201710 201804 201810 Modest Pickup in First-time Homebuyer Share 55% First-time Buyers as a Percent of Residential Sales* 50% 45% 40% 35% 30% 25% 29% 33% 20% *Source: REALTORS Confidence Index Survey; 2018 Profile of Home Buyers and Sellers shows 33 percent of all homebuyers were first-time buyers

Economic Outlook

Crosswinds in 2019 Headwinds: o Rising mortgage rates o Trade tensions/tariff wars o Government shutdown Tailwinds: o Millennials forming own households o Opportunity Zones o Virginia Beach-Norfolk-Newport News homes are still affordable o Growth promoting local development/infrastructure projects

NAR s U.S. Economic Outlook: Slower Economic and Housing Market NAR's U.S. Economic Outlook: as of January 2019 2017 2018 2019 2020 GDP growth 2.2 3.1 1.9 1.3 Unemployment rate 4.4 3.9 4.1 4.4 30-yr mortgage rate 4.0 4.6 4.9 5.2 Y/Y % chg, existing home sales 1.1-2.9 0 3 Y/Y % chg, median sales price 5.1 4.7 2.5 2.8 Housing starts ('000) 1203 1260 1265 1340

2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2018-Q1 2018-Q2 2018-Q3 Home Sales Lost Momentum During 2013/2014 during Taper Tantrum 5800000 5600000 5400000 5200000 5000000 4800000 4600000 4400000 4200000 4000000 Existing Home Sales (Seasonally Adjusted Annual Rate) 5,223,333 4,940,000 4,763,333

201501 201504 201507 201510 201601 201604 201607 201610 201701 201704 201707 201710 201801 201804 201807 201810 201501 201504 201507 201510 201601 201604 201607 201610 201701 201704 201707 201710 201801 201804 201807 201810 Trade Tensions are Starting to Affect Manufacturing and Trade 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 ISM New Orders Index (> 50 Means Increasing) 51.1 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 ISM New Export and Import Orders (> 50 Means Increasing) 52.7 Export Orders Index Import Orders Index

Jan/1980 Feb/1981 Mar/1982 Apr/1983 May/1984 Jun/1985 Jul/1986 Aug/1987 Sep/1988 Oct/1989 Nov/1990 Dec/1991 Jan/1993 Feb/1994 Mar/1995 Apr/1996 May/1997 Jun/1998 Jul/1999 Aug/2000 Sep/2001 Oct/2002 Nov/2003 Dec/2004 Jan/2006 Feb/2007 Mar/2008 Apr/2009 May/2010 Jun/2011 Jul/2012 Aug/2013 Sep/2014 Oct/2015 Nov/2016 Dec/2017 Rising Rates and US-China Tariffs are Affecting Investor Confidence 30000.00 Dow Jones 30 Industrial Stocks: Average Price 25000.00 20000.00 15000.00 10000.00 5000.00 0.00

Fed Richmond Dec 2018 Manufacturing Survey: More Firms Reported Declining than Increasing Activity (-8) https://www.richmondfed.org/research/regional_economy/surveys_of_business_con ditions/manufacturing/2018/mfg_12_26_18#tab-1

Fed Richmond Dec 2018 Manufacturing Survey: More Firms Reported Increase in Employment than Decrease (+14) But Less So than One Year Ago (18); Wages Rising as Well as Prices Paid for Inputs https://www.richmondfed.org/research/regional_economy/ surveys_of_business_conditions/manufacturing/2018/mfg_ 12_26_18#tab-1

Q1/1993 Q2/1993 Q3/1993 Q4/1993 Q1/1994 Q2/1994 Q3/1994 Q4/1994 Q1/1995 Q2/1995 Q3/1995 Q4/1995 Q1/1996 Q2/1996 Q3/1996 Q4/1996 Q1/1997 Q2/1997 Q3/1997 Q4/1997 Q1/2012 Q3/2012 Q1/2013 Q3/2013 Q1/2014 Q3/2014 Q1/2015 Q3/2015 Q1/2016 Q3/2016 Q1/2017 Q3/2017 Q1/2018 Q3/2018 Impact of Government Shutdown: GDP Growth Falls But Recovers After GDP Growth During Dec 5, 1995 - Jan 6, 1996 (21-day) Government Shutdown GDP Growth During Oct 1-17 2013 (17-day) Government Shutdown 8.0 6.0 7.0 5.0 6.0 4.0 5.0 3.0 4.0 2.0 3.0 1.0 2.0 1.0 0.0 2.7 0.0-1.0-2.0-1.0

Impact of Government Shutdown on Home Sales 25 percent of randomly selected REALTORS surveyed by NAR reported a negative impact from the government shutdown Government shutdown affects home sales via: delayed closings for VA and USDA loans, inability to get IRS income verification missed income for furloughed employees Slowdown in consumer spending https://www.nar.realtor/sites/default/files/documents/2019- government-shutdown-report-01-08-2019.pdf

NAR Update as of Jan 10 EPA: employees are furloughed FHA: HECM will not be endorsed; no new Multi-family commitments GSEs: normal operations; don t require 4506T to close IRS: will process all forms, but delays can be expected if shutdown continue ( 1.2 million backlogs during Oct 1 17 2013 shutdown) NFIP: full and normal operations on sale and re-issuance of policies since Dec 21 USDA: will not issue new rural housing Direct Loans; Guaranteed Loans closed at lender s risk EB-5 and H2-B: DHS cannot approve H2-B visas for new or returning (to the US) workers; no immigrant (I-526) petitions can be filed https://www.nar.realtor/what-a-government-shutdownmeans-for-realtors

1960 1966 1972 1978 1984 1990 1996 2002 2008 2014 2020 2026 2032 2038 2044 2050 2056 Q4/1993 Q2/1995 Q4/1996 Q2/1998 Q4/1999 Q2/2001 Q4/2002 Q2/2004 Q4/2005 Q2/2007 Q4/2008 Q2/2010 Q4/2011 Q2/2013 Q4/2014 Q2/2016 Q4/2017 25 44 Year-Olds Population Will Rise Sharply during 2011-2035 120000 100000 80000 60000 40000 Population 25-44 Years Will Increase by 13 Million from 2011 Through 2035 82,464 95,203 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 Homeownership Rates Among Under 35 to 44 Year-Olds Are Modestly Rising Under 35 35-44 U.S. 64.4 59.5 36.8 20000 0 Source: U.S. Census Bureau

Young Metros Likely to Have More Potential Homebuyers Median Age of Population Harrisonburg, VA Metro Area Blacksburg-Christiansburg-Radford, VA Metro Area Virginia Beach-Norfolk-Newport News, VA-NC Metro Washington-Arlington-Alexandria, DC-VA-MD-WV Charlottesville, VA Metro Area Richmond, VA Metro Area Lynchburg, VA Metro Area Winchester, VA-WV Metro Area Staunton-Waynesboro, VA Metro Area Roanoke, VA Metro Area Bluefield, WV-VA Micro Area Danville, VA Micro Area Kingsport-Bristol-Bristol, TN-VA Metro Area 33.1 34.8 36.1 37.1 38.3 38.8 39.9 40.6 42.9 43.8 44 44.9 45.5 Source: Table S0101 ACS 2017 1 yr estimates

Percent of 18-24 with Bachelor s Degree or Higher Percent of 18-24 With Bachelor's Degree or Higher as of 2017 Washington-Arlington-Alexandria, DC-VA-MD-WV Metro Roanoke, VA Metro Area Richmond, VA Metro Area Lynchburg, VA Metro Area Charlottesville, VA Metro Area Virginia Beach-Norfolk-Newport News, VA-NC Metro Area Harrisonburg, VA Metro Area Winchester, VA-WV Metro Area Kingsport-Bristol-Bristol, TN-VA Metro Area Danville, VA Micro Area 3.6 6.8 6.2 8.2 12.2 11.9 11.4 11 10.1 18.1

VA Opportunity Zones 212 Opportunity Zones designated in VA; 8,761 zones in 50 states, DC, 5 US Territories (35 M people) Located in low-income census tracts (with poverty rate of at least 20 percent or a median family income no greater than 80 percent of the area median income) Designation through Dec 31, 2028 Qualified Opportunity Zone Funds invest at least 90% of capital in O-Zones Benefit: temporary tax deferral of capital gains(from a prior investment) invested in O-Zone Funds ; only 85% of capital gain invested in Ozone is taxed if held for 7 years (pay taxes from outside funds); No capital gains tax on initial funds invested in O-Zond fund and any return from that investment if invested for at least 10 years http://www.dhcd.virginia.gov/index.php/opp-zones.html

VA Opportunity Zones

Thank You.