Economic & Housing Market Forecast

Economic & Housing Market Forecast Presented by Ryan Brault - Regional Director October 2 nd, 2018 1

The Economy Overall US 2

State of the Economy Job Growth Rate Remaining Strong Unemployment Rate Holding at Low Levels Housing Production Continues to be Strong High Consumer Confidence Rising Interest Rates 3

Unemployment Rate Trend Unemployment Rate Trend 19.0% 17.0% 15.0% 13.0% 11.0% 9.0% Expanded Unemployment Rate (U-6) 7.7% 7.0% 5.0% 3.0% Official Unemployment Rate 3.9% Source: U. S. Bureau of Labor Statistics 4

ISM Purchasing Managers Index 65.0 60.0 55.0 50.0 45.0 ISM - Purchasing Managers Index, 2014-2018 GROWTH NO GROWTH 60.2 40.0 35.0 30.0 RECESSION 25.0 20.0 Source: Institute of Supply Management 5

Consumer Confidence Index Long Term Trend Consumer Confidence Index, 2001-Present 150 140 130 120 110 100 90 GROWTH 80 70 STATIC 60 50 RECESSION 40 30 20 10 0 2Q01 2Q02 2Q03 2Q04 2Q05 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16 2Q17 2Q18 Source: Conference Board 6

Mortgage Rates Will Rise as Inflation Rises 7

Mortgage Rate Trend History 9% Key Interest Rate History, 1998-2018 30 Yr Rate 10 Year T-Bill Fed Funds Rate 8% 7% 6% 5% 4% 4.57% 3% 2% 1% 0% Source: Freddie Mac Primary Mortgage Market Survey, Federal Reserve Bank of NY 8

30 Year Fixed Rate Mortgages - History and Forecast 9

Refinancing Trends Refinancing Percentage of All Mortgages 70% 65% 60% 67.0% 61.8% 65.3% 66.0% 59.4% 62.7% 55% 50% 51.6% 53.0% 54.8% 50.2% 45% 40% 43.2% 35% 36.7% 30% Source: Mortgage Bankers Association 10

Median Annual Home Price - History and Forecast 11

Median Annual Home Price Changes - History and Forecast 12

Median Household Income - History and Forecast 13

Median Home Price Affordability & Home Buyer Power Affordability & Home Buying Power $400,000 Existing Home Price New Home Price Existing Home Affordability New Home Affordability 80.0% $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% % of Households That Can Afford Median Price Home $0 0.0% Source: Freddie Mac Primary Mortgage Market Survey, Metrostudy 14

Longest US Economic Expansions 15

Annual Residential Permit Activity 16

Year-over-Year Percent Changes of Major Housing Components 15.0% Improvement Deterioration Neutral 13.1% 10.0% 5.0% 7.8% 5.9% 6.7% 2.8% 3.1% 4.2% 10.2% 3.3% 1.7% 1.1% 0.0% -5.0% -5.2% -2.9% -2.4% -10.0% -15.0% -12.1% www.metrostudy.com 17

Vacant Developed Lot Inventory & Annual Starts 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 VDL Inventory Annual Starts www.metrostudy.com 18

Annualized Starts & Closings 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Annual Starts Annual Closings www.metrostudy.com 19

Annualized Starts & Closings by Price Range 30% 25% 20% 15% 10% 5% 0% <$150k $150K- $250k $250k- $300k $300k- $400k $400k- $500k $500k- $600k $600k- $700k $700k- $800k $800k+ Annual Starts Annual Closings www.metrostudy.com 20

Annualized Starts & Closings by State 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Annual Starts Annual Closings www.metrostudy.com 21

Annual Starts and Closings by Market Dallas/Ft.Worth Houston Central Florida Atlanta Phoenix/Tucson Southern California Denver/Colorado Springs Northern California Austin Salt Lake City Raleigh/Durham Charlotte Central California San Antonio Philadelphia Region Las Vegas Tampa Seattle Suburban Maryland Northern Virginia Nashville Jacksonville South Florida Twin Cities Chicago Sarasota/Bradenton Indianapolis N Jersey-NY Suburbs Boise San Diego Portland Naples/Ft.Myers NC Triad Reno St.George/Mesquite Albuquerque South Florida Condo Annual Starts Annual Closings 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 www.metrostudy.com 22

Residential Remodeling Index Top 20 Remodeling Markets 2Q18 23

Residential Remodeling Index Bottom 20 Remodeling Markets 2Q18 24

Residential Remodeling Index One Year Forecast 25

Residential Remodeling Index Longer Term Outlook 26

Residential Remodeling Index National Index & Forecast 27

Conclusions 28

Conclusions THE RISING IMPACT OF TARIFFS 4Q 17 20%+ tariff imposed on Lumber imports. 1Q 18 10% tariff imposed on aluminum imports. 1Q 18 25% tariff imposed on steel imports. ECONOMIC IMPACT OF TARIFFS ON $150B IN CHINESE IMPORTS Increase in construction costs by at least $2,000 per house. Increase in construction timelines. 29

Conclusions THE HEADLINES 30

Conclusions INFLATION WILL BE IMPACTED BY DEBT, WHICH LEADS TO In Trillions of Dollars $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Change in US Debt From Taking to Leaving Office $8.59 $8.28 $5.85 $1.86 $1.55 $1.40 $0.12 $0.22 $0.30 Nixon Ford Carter Reagan GHWBush Clinton GWBush Obama Trump* Reduced economic growth Higher interest rates Weaker Dollar Higher taxes Higher risk of financial collapse 31

Jun-76 Dec-76 Jun-77 Dec-77 Jun-78 Dec-78 Jun-79 Dec-79 Jun-80 Dec-80 Jun-81 Dec-81 Jun-82 Dec-82 Jun-83 Dec-83 Jun-84 Dec-84 Jun-85 Dec-85 Jun-86 Dec-86 Jun-87 Dec-87 Jun-88 Dec-88 Jun-89 Dec-89 Jun-90 Dec-90 Jun-91 Dec-91 Jun-92 Dec-92 Jun-93 Dec-93 Jun-94 Dec-94 Jun-95 Dec-95 Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Conclusions 2-10 YEAR TREASURY SPREAD AS PREDICTOR OF RECESSION 4.00 2-10 TREASURY YIELD SPREAD (DIFFERENCE BETWEEN THE 2-YEAR AND 10-YEAR TREASURY YIELDS 3.00 2.00 1.00 0.00-1.00-2.00-3.00 Source: FRED Economic Data (Federal Reserve Bank of St. Louis) 32

Conclusions Trade War Impacts 33

Conclusions Trade War Impacts 34

Conclusions NAFTA Breakup Impacts 35

Conclusions Homeownership By Age Group - US 36

Conclusions Population by Age & Generation - US 37

Conclusions Household Distribution & Buying Patterns by Generation 38

Population Growth Continuing Trend of Population Moving West and South Source: US Census Bureau 39

Population Growth 40

Conclusions 41

Case Schiller Market Comparison YOY Building Momentum Losing Momentum 42

HOUSING SUPPLY AND DEMAND TRENDS AND FORECASTS 155,000,000 HOUSING DEMAND AND SUPPLY PATTERNS United States 145,000,000 Units Demand/Supplied 135,000,000 125,000,000 115,000,000 105,000,000 95,000,000 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 prj Jan-20 prj Jan-21 prj Jan-22 prj Jan-23 prj Jan-24 prj Total Housing Supply Total Housing Demand * Over/Under supply measures based on current jobs-to-housing relationship relative to long-term relationship betw een jobs and housing. Source: Bureau of Labor Statistics; Moody's Analytics; Metrostudy www.metrostudy.com 43

HOUSING VALUE AND AFFORDABILITY $350,000 HOUSING VALUATION PATTERNS United States $300,000 Median Housing Value $250,000 $200,000 $150,000 $100,000 $50,000 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 prj Jan-20 prj Jan-21 prj Jan-22 prj Jan-23 prj Jan-24 prj Historical/Forecast Home Price Income Supported Home Price Source: Bureau of Labor Statistics; Moody's Analytics; Metrostudy www.metrostudy.com 44

RESIDENTIAL MARKET OPPORTUNITY/RISK INDEX United States 2nd Quarter 2018 Housing Housing Market is Over/ Median Ann. Price Equilibrium 30-Yr. Median Market is Over/ O/R Index Home Mkt. Land Mkt. Buy/Sell Year Demand Supply Underbuilt Home Price Change Home Price Mtg. Rate HH Income Undervalued (100=Equil.) Health Health Land 1990 100,002,365 102,734,934 2,732,569 2.7% Overbuilt $99,635 - $88,958 10.10% $31,468 $10,677 10.7% Overvalued 94.9 Weak Weak Sell 1991 99,189,591 103,697,494 4,507,904 4.3% Overbuilt $101,711 2.1% $96,731 9.29% $32,107 $4,981 4.9% Overvalued 95.5 Weak Weak Sell 1992 99,707,155 104,810,312 5,103,157 4.9% Overbuilt $104,000 2.3% $106,491 8.34% $32,662 $2,491 2.4% Undervalued 97.3 Weak Weak Sell 1993 101,862,135 106,033,106 4,170,971 3.9% Overbuilt $105,257 1.2% $119,832 7.30% $33,466 $14,576 13.8% Undervalued 101.4 Weak Stable Buy/Sell 1994 105,232,886 107,391,644 2,158,757 2.0% Overbuilt $107,257 1.9% $110,571 8.40% $34,516 $3,314 3.1% Undervalued 99.5 Weak Stable Buy/Sell 1995 108,222,121 108,711,454 489,334 0.5% Overbuilt $108,508 1.2% $118,868 7.96% $35,807 $10,361 9.5% Undervalued 102.5 Stable Stable Buy/Sell 1996 110,654,430 110,123,732 530,698 0.5% Underbuilt $113,262 4.4% $123,915 7.85% $37,266 $10,653 9.4% Undervalued 103.2 Stable Stable Buy/Sell 1997 113,745,809 111,551,380 2,194,429 2.0% Underbuilt $118,439 4.6% $132,089 7.62% $39,097 $13,651 11.5% Undervalued 104.8 Stable Strong Buy 1998 116,935,403 113,148,108 3,787,295 3.3% Underbuilt $125,629 6.1% $147,549 6.93% $41,110 $21,920 17.4% Undervalued 107.6 Stable Strong Buy 1999 120,031,261 114,796,260 5,235,002 4.6% Underbuilt $132,452 5.4% $147,216 7.42% $43,315 $14,765 11.1% Undervalued 106.5 Strong Strong Buy 2000 122,862,291 116,374,142 6,488,148 5.6% Underbuilt $143,166 8.1% $142,212 7.98% $44,521 $953 0.7% Overvalued 103.7 Strong Strong Buy 2001 123,154,889 117,994,452 5,160,437 4.4% Underbuilt $155,222 8.4% $157,889 6.96% $45,073 $2,666 1.7% Undervalued 103.6 Strong Strong Buy 2002 122,043,221 119,728,775 2,314,446 1.9% Underbuilt $170,437 9.8% $163,573 6.56% $45,071 $6,864 4.0% Overvalued 100.1 Strong Stable Buy/Sell 2003 121,992,838 121,611,648 381,190 0.3% Underbuilt $186,675 9.5% $177,844 5.81% $45,657 $8,831 4.7% Overvalued 98.8 Strong Stable Buy/Sell 2004 123,566,573 123,664,252 97,679 0.1% Overbuilt $210,235 12.6% $181,043 5.84% $46,927 $29,193 13.9% Overvalued 95.8 Stable Weak Sell 2005 125,941,409 125,790,875 150,534 0.1% Underbuilt $239,491 13.9% $186,093 5.87% $48,783 $53,398 22.3% Overvalued 93.4 Stable Weak Sell 2006 128,455,917 127,614,997 840,920 0.7% Underbuilt $250,061 4.4% $181,550 6.45% $50,972 $68,511 27.4% Overvalued 92.2 Weak Weak Sell 2007 130,158,424 129,005,330 1,153,095 0.9% Underbuilt $249,635 (0.2%) $189,815 6.33% $53,014 $59,820 24.0% Overvalued 93.4 Weak Weak Sell 2008 129,698,716 129,903,549 204,832 0.2% Overbuilt $216,563 (13.2%) $197,527 6.02% $53,746 $19,036 8.8% Overvalued 97.3 Weak Weak Sell 2009 124,327,833 130,482,243 6,154,410 4.7% Overbuilt $190,142 (12.2%) $216,399 5.01% $53,084 $26,257 13.8% Undervalued 100.8 Weak Stable Buy/Sell 2010 123,671,959 131,082,274 7,410,315 5.7% Overbuilt $195,752 3.0% $219,991 4.71% $52,492 $24,239 12.4% Undervalued 98.9 Weak Stable Buy/Sell 2011 125,426,267 131,702,632 6,276,365 4.8% Overbuilt $187,477 (4.2%) $225,930 4.47% $52,793 $38,453 20.5% Undervalued 102.8 Stable Stable Buy/Sell 2012 127,798,963 132,527,203 4,728,241 3.6% Overbuilt $194,834 3.9% $251,266 3.65% $53,640 $56,432 29.0% Undervalued 106.2 Stable Strong Buy 2013 130,080,264 133,512,560 3,432,296 2.6% Overbuilt $215,256 10.5% $247,013 3.94% $54,809 $31,758 14.8% Undervalued 102.6 Stable Stable Buy/Sell 2014 132,539,993 134,554,511 2,014,518 1.5% Overbuilt $227,752 5.8% $246,135 4.17% $56,205 $18,383 8.1% Undervalued 101.4 Strong Stable Buy/Sell 2015 135,289,463 135,725,265 435,803 0.3% Overbuilt $240,393 5.6% $264,448 3.85% $58,112 $24,055 10.0% Undervalued 102.8 Stable Stable Buy/Sell 2016 137,702,980 136,919,844 783,136 0.6% Underbuilt $253,508 5.5% $280,005 3.65% $60,011 $26,497 10.5% Undervalued 103.5 Stable Strong Buy 2017 139,873,555 138,189,153 1,684,402 1.2% Underbuilt $269,600 6.3% $277,216 3.99% $61,962 $7,616 2.8% Undervalued 101.7 Stable Stable Buy/Sell 2018est 141,951,681 139,570,183 2,381,498 1.7% Underbuilt $285,506 5.9% $263,352 4.68% $64,441 $22,154 7.8% Overvalued 98.9 Strong Stable Buy/Sell 2019prj 143,653,002 141,036,076 2,616,926 1.9% Underbuilt $291,216 2.0% $248,105 5.45% $66,661 $43,111 14.8% Overvalued 96.9 Stable Weak Sell 2020prj 144,647,026 142,554,162 2,092,864 1.5% Underbuilt $294,711 1.2% $246,609 5.77% $68,457 $48,102 16.3% Overvalued 96.1 Stable Weak Sell 2021prj 144,471,214 143,996,344 474,869 0.3% Underbuilt $295,300 0.2% $249,893 5.83% $69,415 $45,408 15.4% Overvalued 95.6 Weak Weak Sell 2022prj 143,505,715 145,294,303 1,788,589 1.2% Overbuilt $290,871 (1.5%) $257,404 5.67% $70,109 $33,467 11.5% Overvalued 95.7 Weak Weak Sell 2023prj 142,009,655 146,397,569 4,387,915 3.0% Overbuilt $284,472 (2.2%) $267,712 5.39% $70,670 $16,760 5.9% Overvalued 96.1 Weak Weak Sell www.metrostudy.com 45

MARKET OPPORTUNITY RANKINGS SELECT METRO AREAS IN THE UNITED STATES 2nd Quarter 2018 2018 Est. Jobs & Housing 2018 Jobs-to-Housing 2018 Home Prices Median Year 2018 Year 2018 Near- Year 2006 Non-Farm Equili- Equili- H.Hold Under/(Over) Under/(Over) Term Under/(Over) REGION Jobs Housing Ratio brium Median brium Income Supplied Valued Risk Valued - United States 148,823,614 139,570,183 1.07 to 1.0 1.05 to 1.0 $285,347 $263,113 $64,436 1.7% -7.8% Moderate -27.4% 1 San Luis Obispo-Paso Robles-Arroyo Grande, CA CBSA 119,359 122,689 0.97 to 1.0 0.90 to 1.0 $612,604 $597,362 $75,674 7.5% -2.5% Low -38.6% 2 Trenton, NJ CBSA 272,332 149,327 1.82 to 1.0 1.72 to 1.0 $274,192 $282,867 $82,295 5.9% 3.2% Low -25.6% 3 San Francisco-Redwood City-South San Francisco, CA MD 1,135,304 674,734 1.68 to 1.0 1.50 to 1.0 $1,450,825 $1,291,039 $117,506 12.1% -11.0% Low -22.6% 4 Riverside-San Bernardino-Ontario, CA CBSA 1,496,161 1,553,002 0.96 to 1.0 0.88 to 1.0 $344,400 $284,060 $61,716 9.0% -17.5% Low -40.7% 5 West Palm Beach-Boca Raton-Delray Beach, FL MD 635,566 680,369 0.93 to 1.0 0.88 to 1.0 $359,011 $342,061 $66,671 6.7% -4.7% Low -39.9% 6 Merced, CA CBSA 68,308 86,546 0.79 to 1.0 0.73 to 1.0 $253,978 $217,047 $51,219 8.2% -14.5% Low -47.5% 7 New York-Newark-Jersey City, NY-NJ-PA CBSA 9,783,262 8,063,726 1.21 to 1.0 1.17 to 1.0 $479,285 $519,691 $79,007 3.8% 8.4% Low -33.3% 8 Stockton-Lodi, CA CBSA 238,229 248,680 0.96 to 1.0 0.89 to 1.0 $367,955 $314,125 $63,745 7.2% -14.6% Low -45.1% 9 Modesto, CA CBSA 177,786 178,799 0.99 to 1.0 0.93 to 1.0 $312,372 $260,990 $57,590 7.4% -16.4% Low -43.9% 10 Miami-Fort Lauderdale-West Palm Beach, FL CBSA 2,678,205 2,601,288 1.03 to 1.0 0.97 to 1.0 $350,286 $326,858 $56,137 5.7% -6.7% Low -41.0% 11 Fresno, CA CBSA 352,879 338,178 1.04 to 1.0 0.98 to 1.0 $265,008 $234,771 $52,379 6.2% -11.4% Low -40.4% 12 Cape Coral-Fort Myers, FL CBSA 265,734 402,806 0.66 to 1.0 0.62 to 1.0 $250,119 $212,158 $56,881 6.4% -15.2% Low -41.8% 13 Oakland-Hayward-Berkeley, CA MD 1,183,076 1,036,669 1.14 to 1.0 1.09 to 1.0 $813,278 $743,169 $98,201 5.1% -8.6% Low -36.6% 14 San Antonio-New Braunfels, TX CBSA 1,065,522 847,973 1.26 to 1.0 1.19 to 1.0 $214,873 $187,532 $60,855 5.7% -12.7% Low -9.3% 15 Baltimore-Columbia-Towson, MD CBSA 1,413,085 1,204,613 1.17 to 1.0 1.15 to 1.0 $269,852 $290,196 $85,292 2.1% 7.5% Low -32.4% 16 Boston-Cambridge-Nashua, MA-NH NECTA 2,786,673 1,970,747 1.41 to 1.0 1.36 to 1.0 $484,207 $466,413 $90,566 4.0% -3.7% Low -22.1% 17 Atlanta-Sandy Springs-Roswell, GA CBSA 2,814,512 2,458,059 1.15 to 1.0 1.09 to 1.0 $199,198 $174,685 $68,654 5.5% -12.3% Low -19.1% 18 Salinas, CA CBSA 141,171 147,354 0.96 to 1.0 0.91 to 1.0 $602,684 $523,799 $68,239 5.4% -13.1% Low -40.7% 19 Deltona-Daytona Beach-Ormond Beach, FL CBSA 205,316 310,491 0.66 to 1.0 0.63 to 1.0 $200,422 $172,048 $49,589 5.5% -14.2% Low -40.2% 20 North Port-Sarasota-Bradenton, FL CBSA 309,515 451,658 0.69 to 1.0 0.66 to 1.0 $285,105 $273,870 $56,890 3.5% -3.9% Low -42.2% 21 San Diego-Carlsbad, CA CBSA 1,476,536 1,218,298 1.21 to 1.0 1.16 to 1.0 $624,545 $577,027 $75,391 4.1% -7.6% Low -35.0% 22 Chicago-Naperville-Elgin, IL-IN-WI CBSA 4,755,211 4,001,788 1.19 to 1.0 1.16 to 1.0 $258,411 $257,874 $72,729 2.8% -0.2% Low -27.8% 23 Detroit-Warren-Dearborn, MI CBSA 2,044,839 2,020,354 1.01 to 1.0 0.97 to 1.0 $185,703 $161,795 $62,419 4.8% -12.9% Low -13.1% 24 Provo-Orem, UT CBSA 258,466 186,970 1.38 to 1.0 1.32 to 1.0 $341,036 $293,616 $77,089 5.0% -13.9% Low -5.7% 25 Cincinnati, OH-KY-IN CBSA 1,113,599 981,475 1.13 to 1.0 1.10 to 1.0 $170,036 $160,705 $64,665 3.4% -5.5% Low -10.6% www.metrostudy.com 46

MARKET OPPORTUNITY RANKINGS SELECT METRO AREAS IN THE UNITED STATES 2nd Quarter 2018 2018 Est. Jobs & Housing 2018 Jobs-to-Housing 2018 Home Prices Median Year 2018 Year 2018 Near- Year 2006 Non-Farm Equili- Equili- H.Hold Under/(Over) Under/(Over) Term Under/(Over) REGION Jobs Housing Ratio brium Median brium Income Supplied Valued Risk Valued 76 El Paso, TX CBSA 318,487 291,728 1.09 to 1.0 1.09 to 1.0 $156,000 $148,687 $45,339 0.3% -4.7% High -19.4% 77 Columbia, SC CBSA 401,290 351,006 1.14 to 1.0 1.15 to 1.0 $167,946 $166,117 $57,756-0.6% -1.1% High -10.7% 78 Winston-Salem, NC CBSA 266,936 298,340 0.89 to 1.0 0.89 to 1.0 $156,072 $145,920 $50,121 0.2% -6.5% High -10.9% 79 Dallas-Fort Worth-Arlington, TX CBSA 3,710,883 2,896,909 1.28 to 1.0 1.25 to 1.0 $254,911 $198,228 $69,980 2.8% -22.2% High -4.1% 80 Palm Bay-Melbourne-Titusville, FL CBSA 219,299 284,531 0.77 to 1.0 0.75 to 1.0 $221,584 $172,835 $54,699 2.8% -22.0% High -36.8% 81 Waco, TX CBSA 123,059 109,884 1.12 to 1.0 1.10 to 1.0 $150,775 $127,632 $48,912 1.6% -15.3% High -4.3% 82 Bakersfield, CA CBSA 261,016 295,681 0.88 to 1.0 0.88 to 1.0 $240,544 $216,295 $51,940 0.6% -10.1% High -45.7% 83 Austin-Round Rock, TX CBSA 1,063,861 840,191 1.27 to 1.0 1.26 to 1.0 $306,537 $272,210 $77,558 0.7% -11.2% High -4.5% 84 Memphis, TN-MS-AR CBSA 654,387 609,393 1.07 to 1.0 1.07 to 1.0 $172,611 $152,941 $54,187 0.5% -11.4% High -14.9% 85 Baton Rouge, LA CBSA 409,634 357,096 1.15 to 1.0 1.16 to 1.0 $198,460 $191,770 $57,271-1.2% -3.4% High -24.0% 86 Spokane-Spokane Valley, WA CBSA 250,058 250,489 1.00 to 1.0 1.00 to 1.0 $230,811 $213,853 $57,346-0.5% -7.3% High -24.9% 87 Houston-The Woodlands-Sugar Land, TX CBSA 3,094,996 2,648,044 1.17 to 1.0 1.17 to 1.0 $225,530 $199,818 $65,970 0.2% -11.4% High -9.0% 88 Huntsville, AL CBSA 239,273 186,526 1.28 to 1.0 1.30 to 1.0 $199,066 $190,679 $61,436-1.1% -4.2% High -10.7% 89 Virginia Beach-Norfolk-Newport News, VA-NC CBSA 793,184 777,113 1.02 to 1.0 1.04 to 1.0 $229,023 $225,937 $68,527-1.7% -1.3% High -28.4% 90 Birmingham-Hoover, AL CBSA 540,807 528,953 1.02 to 1.0 1.03 to 1.0 $197,902 $179,207 $56,523-0.4% -9.4% High -11.7% 91 Greensboro-High Point, NC CBSA 366,820 340,839 1.08 to 1.0 1.09 to 1.0 $164,074 $153,105 $48,391-1.0% -6.7% High -13.5% 92 Des Moines-West Des Moines, IA CBSA 373,359 286,585 1.30 to 1.0 1.32 to 1.0 $200,889 $189,661 $70,861-1.2% -5.6% High -9.9% 93 Albuquerque, NM CBSA 396,071 368,206 1.08 to 1.0 1.10 to 1.0 $207,430 $202,360 $55,063-1.8% -2.4% High -17.9% 94 San Jose-Sunnyvale-Santa Clara, CA CBSA 1,119,714 716,500 1.56 to 1.0 1.44 to 1.0 $1,381,169 $1,022,838 $121,910 8.2% -25.9% High -24.7% 95 Little Rock-North Little Rock-Conway, AR CBSA 363,165 315,131 1.15 to 1.0 1.18 to 1.0 $145,586 $140,957 $52,940-2.0% -3.2% High -12.8% 96 Myrtle Beach-Conway-North Myrtle Beach, SC-NC CBSA 171,222 297,504 0.58 to 1.0 0.60 to 1.0 $212,722 $224,379 $50,373-3.6% 5.5% High -27.4% 97 Tucson, AZ CBSA 384,577 455,376 0.84 to 1.0 0.86 to 1.0 $225,207 $207,429 $50,615-1.7% -7.9% High -35.7% 98 Omaha-Council Bluffs, NE-IA CBSA 504,663 408,705 1.23 to 1.0 1.26 to 1.0 $180,774 $167,833 $64,636-1.9% -7.2% High -12.8% 99 Killeen-Temple, TX CBSA 146,391 167,881 0.87 to 1.0 0.89 to 1.0 $163,085 $140,314 $56,575-1.5% -14.0% High 4.7% 100 College Station-Bryan, TX CBSA 120,240 107,024 1.12 to 1.0 1.14 to 1.0 $210,928 $168,038 $45,300-1.7% -20.3% High -0.1% www.metrostudy.com 47

KEY TAKEAWAYS FOR 2018 AND BEYOND Tax reform is hurting high priced markets California, New York, Washington Tariffs hurt the economy especially the new home industry. Rising mortgage rates are just beginning, and inflationary pressures are slowly building. National debt will slow economic growth. The national housing market will continue to be significantly under supplied. The national housing market will become increasingly over valued, but the risk of a price collapse is small due to under supply. The surge in the remodeling/renovation market will continue. Uncertainty spawned by policies of the current administration may bring forward the pending recession. Overall, we re in the bottom of the 7 th inning of a challenging and rewarding housing market in an environment of under supply and increasing costs.

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Follow Up Questions Ryan Brault Regional Director rbrault@metrostudy.com (480)588-1585 John Ralston Director of Business Development jralston@metrostudy.com (602)369-5043 1201 S. Alma School Rd, #9750 Mesa, AZ 85210 50