REALTOR.COM MARKET OUTLOOK

REALTOR.COM MARKET OUTLOOK Realtor.com Economics May 2018

MOST COMPETITIVE SEASON ON RECORD Key expectations from realtor.com Existing Home Sales Struggle to Break Out Supply: Inventory, Prices, Affordability Demand: Aging Millennials, Rents How Shoppers React Current Conditions & Trends California, Cross Market Demand Hot Markets, Generational Shopping Optimism Ahead? 2

HOME SALES TREND SIDEWAYS EHS down 1.8% Y/Y in March; Approx 5.5 million sales pace since mid-2015 Source: National Association of REALTORS Existing Home Sales Report 3

INVENTORY & AFFORDABILITY 4

INVENTORY AT RECORD LOWS Inventory down 5.8% year-over-year in April Source: Realtor.com 5

PRICES AT RECORD HIGHS Median List Price at $290,000, Sales Price on Track to Surpass $263,300 (June 2017) Source: Realtor.com and National Association of REALTORS 6

CRISIS SHIFTED NEW HOME MARKET Average spread 2000-2008: 12%; 2009-2017: 33% Source: National Association of REALTORS, Commerce Department 7

HISTORIC AFFORDABILITY DECLINING Still 2-3 years away from affordability horizon on prices & rates Source: Moody s Analytics, Freddie Mac, and National Association of REALTORS 8

AFFORDABILITY A Different Measure: Pros and Cons NAR Affordability Index Sales Prices Backward Looking (Con) Actual Market Price (Pro) Median Price Point Median Income Family Easy to interpret REALTORS Affordability Distribution Listing Prices Forward Looking (Pro) May sell for more/less (Con) Prices of All Listings Income of All Families More work to interpret 9

AFFORDABILITY HEATMAP Source: realtor.com and National Association of REALTORS 10

TOP AFFORDABLE STATES 30 th Percentile vs. 60 th Percentile Income State Ohio 39% Indiana 38% Kansas 37% Michigan 35% Iowa 33% Pennsylvania 31% Missouri 30% 30 th %tile Affordability State Ohio 71% West Virginia 69% Alaska 68% Indiana 68% Kansas 68% Iowa 67% Missouri 66% 60 th %ile Affordability Source: realtor.com and National Association of REALTORS 11

LEAST AFFORDABLE STATES 30 th Percentile vs. 60 th Percentile Income State Rhode Island 3% D.C. 4% California 4% Oregon 6% Arizona 6% Massachusetts 7% Nevada 7% 30 th %tile Affordability State Hawaii 27% Oregon 29% California 30% D.C. 34% Colorado 34% Montana 35% Idaho 35% 60 th %ile Affordability Source: realtor.com and National Association of REALTORS 12

ACUTE AFFORDABLE INVENTORY SHORTAGE More than 250,000 fewer starter homes (<$200k) now vs. May 2015 Source: realtor.com 13

DEMAND DRIVERS 14

DEMAND DRIVERS: MILLENNIALS SHIFT TO OWN Gen Z Entering the Rental Market 5,000 4,500 US Population by Age, End of 2016 65 million 88 million 61 million 78 million 29 million Z Millennial X Boomer Thousands 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100+ Source: Realtor.com Analysis of US Census Bureau Population Estimates (2016) 15

CHEAPER TO RENT IN 59% OF COUNTIES Simple monthly cost analysis favors renting now in more places April 2018 Source: Realtor.com Analysis of HUD Median Rents, Nielsen Pop-Facts Demographics and Realtor.com Data 16

RENTS RISING Y/Y IN 73% OF COUNTIES Rent increases adding to demand for buying 2018 Source: Realtor.com Analysis of HUD Median Market Rents 17

CONFIDENCE AT 15+ YEAR HIGH Plans to purchase a home continue uptrend Source: The Conference Board, Moody s Analytics 18

HOW HOME SHOPPERS REACT Survey of March home shoppers Sticking Around: Nearly three-quarters of shoppers started their search in 2017 Know It s Tough: 35 percent of shoppers anticipate a lot of competition and 94 percent are actively employing strategies to compete Key Strategy Categories: (1) Stay Informed and (2) Use Cash Remain Optimistic: More than 70 percent expect to close in 2018 Rising Rents a Trigger: Millennials cited rising rent as a reason for home purchase Adjusting to Market Conditions: Roughly 4 in 5 shoppers have adapted their home search to cope with rising interest rates and home prices Key Adjustments: (1) Smaller home, (2) Less expensive home, (3) Different neighborhood, (4) Larger Down Payment, (5) Increase monthly budget 19

CURRENT CONDITIONS 20

TOP 8 CA COUNTIES BY OUTBOUND TRAFFIC Areas Have 1.3 to 6.1 Times More Outbound Traffic County Outbound/Inbound Views Ratio Median List Price (March 2018) Santa Clara, CA 6.1 1,299,000 Alameda, CA 4.8 799,000 San Mateo, CA 4.4 1,504,000 San Francisco, CA 3.0 1,298,000 Los Angeles, CA 2.0 690,000 Orange, CA 1.7 849,000 Marin, CA 1.4 1,344,000 Sonoma, CA 1.3 713,000 Source: Realtor.com 21

CROSS MARKET DEMAND Shoppers From Santa Clara Look to Sacramento 22

HOTTEST MARKETS Areas see short time on market and lots of views per listing 11 Hottest Markets April Rank April Median Age of Inventory (Days) Views per Listing vs. US Midland, TX 1 30 2.7 Boston-Cambridge-Newton, MA-NH 2 31 2.3 San Francisco-Oakland-Hayward, CA 3 24 1.8 Columbus, OH 4 32 2.3 Vallejo-Fairfield, CA 5 31 2.0 Colorado Springs, CO 6 30 1.7 Racine, WI 7 37 2.2 Sacramento--Roseville--Arden-Arcade, CA 8 34 1.8 Stockton-Lodi, CA 9 32 1.8 Ann Arbor, MI 10 36 2.0 San Jose-Sunnyvale-Santa Clara, CA 11 19 1.6 Source: Realtor.com 23

HOTTEST MARKETS West Coast, Rocky Mountains, and Midwest are Hottest Source: Realtor.com 24

GENERATIONAL PROPENSITY Interest in Zips by Age Groups in N. Illinois (Q1 2018) Source: Realtor.com 25

PHOENIX AND PITTSBURGH ATTRACT SENIORS Minneapolis attracts ages 35-44; Cincinnati is top among 25-34 26

AMAZON HQ2 CITIES 19 U.S. candidate cities plus Toronto Source: Realtor.com Depiction of Amazon Announcement 27

JEFF BEZOS VS. HQ2 CITY HOUSING Bezos $112 Billion net worth could purchase all active listings in each city Area Multiple Atlanta 7.1 Austin 25.4 Boston 13.6 Chicago 5.1 Columbus 57.8 Dallas 11.0 Denver 15.3 Indianapolis 72.7 Los Angeles 3.5 Miami 2.4 Area Multiple Nashville 24.8 Philadelphia 13.9 Pittsburgh 39.2 Raleigh 41.6 Washington, DC 70.7 Newark 87.6 Montgomery, MD 47.2 New York City 3.0 Northern Virginia 14.7 COMBINED 0.51 Source: Realtor.com Analysis 28

OPTIMISM AHEAD 29

SIGN THAT LISTINGS DECLINE IS SLOWING? Not a turnaround, but decline has to slow before stopping Source: Realtor.com 30

Economic Research realtor.com economics@realtor.com @RDC_Economics Access market data, research, and presentations at https://www.realtor.com/research 2018 Mov e, Inc. All rights reserved. 31 Do not copy or distribute.

THANK YOU 2018 Mov e, Inc. All rights reserved. 32 Do not copy or distribute.