REALTOR.COM MARKET OUTLOOK ®

Realtor.com Economics March 2018

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NATIONAL TRENDS © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

2

JOB CREATION CONTINUES 176,000 monthly average in past 12 months, Jan saw 200,000

Source: Bureau of Labor Statistics

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3

CONFIDENCE AT 15+ YEAR HIGH Plans to purchase a home improving markedly

Source: The Conference Board, Moody’s Analytics

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4

SALES FALLING EHS down 5.5% Y/Y in January

Source: National Association of REALTORS® Existing Home Sales Report

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5

INVENTORY AT RECORD LOWS Inventory down 8.4% year-over-year in February

Source: Realtor.com®

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6

PRICES NEAR RECORD HIGHS Median List Price at $275,000, Up 10.0% year-over-year (Feb)

Source: Realtor.com®

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7

INVENTORY DIVERGENCE 3.4 months for existing and 6.1 months for new

Source: National Association of REALTORS®, Commerce Department

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8

BOTH NEW/EXISTING SALES DOWN Sales down 5.4% for existing and down 1.0% for new Y/Y in Jan

Source: National Association of REALTORS®, Commerce Department

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9

CRISIS SHIFTED NEW HOME MARKET Average spread 2000-2008: 12%; 2009-2017: 33%

Source: National Association of REALTORS®, Commerce Department

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10

HOUSING STARTS UP Starts up 7.3% Y/Y in Jan with SF up 7.6% and MF up 6.7%

Source: Commerce Department

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11

OWNERSHIP RECOVERING 64.2% ownership rate off low; 1.5 M households last 4qs

Source: Census Bureau

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12

LISTING PRICES GREW 10% Y/Y IN FEB Median list price increases are widespread

February 2017 Source: Realtor.com®

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13

RENTS RELATIVELY FLAT Asking rents up 3.1% y/y in Feb compared to list prices up 10%

Source: Realtor.com® and Altos Research © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

14

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

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15

CHEAPER TO BUY IN 46% OF COUNTIES Simple monthly cost analysis favors renting now in more places

February 2018 Source: Realtor.com® Analysis of HUD Median Rents, Nielsen Pop-Facts Demographics and Realtor.com® Data

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16

HISTORIC AFFORDABILITY DECLINING 30-year conforming rate averaged 4.0% in past 12 months

Source: Moody’s Analytics, Freddie Mac, and National Association of REALTORS® © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

17

AFFORDABILITY IS RELATIVE Higher income households have more access to available inventory

Source: realtor.com and National Association of REALTORS® © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

18

DEMAND DRIVERS © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

19

DEMOGRAPHICS SET THE TABLE When viewed by age, importance of Millennials becomes clearer US Population by Age, End of 2016 78 million 61 million 88 million

5,000 65 million

Millennial

Z

4,500

X

29 million

Boomer

4,000

3,000 2,500 2,000 1,500 1,000 500

100+

96

92

88

84

80

76

72

68

64

60

56

52

48

44

40

36

32

28

24

20

16

12

8

4

0

0

Thousands

3,500

Source: Realtor.com® Analysis of US Census Bureau Population Estimates (2016)

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20

MILLENNIAL OWNERSHIP VARIES Strong correlation with affordable markets

Source: Realtor.com® Analysis of Nielsen Demographics PopFacts 2017

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21

JOB CREATION 25-34 growth volatile, no longer outpacing overall rate growth

25%

Source: Bureau of Labor Statistics, Realtor.com® Analysis

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22

LIFE DRIVES HOUSING DEMAND Everyone’s tired of waiting and Millennials are building families Top 10 Buying Triggers all

25-34

tired of current home

favorable home prices

30%

change of family circumstance/composition getting married/moving in with partner looking for a safer neighhorhood

25%

increase in family size relocated to a new city

13%

planning an increase to family size desire to live closer to good schools increase in income

32%

change of job/job location

0%

5%

10%

15%

20%

25%

30%

35%

Source: realtor.com Active Home Shopper Survey, September 2016 © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

23

BOOMERS KEEP DISTURBING Boomer wave is causing a major population shift Population by Age (US) Under 25

25-34

35-44

45-54

55-64

65+

400,000,000 Over the next 5 years:

350,000,000

Population grows 4%

18%

300,000,000

15%

65+ grows 18%

250,000,000

13%

55-64 grows 4%

13%

200,000,000

13%

45-54 declines 3%

12%

13%

35-44 grows 4%

150,000,000

13%

13%

25-34 is flat

13%

100,000,000 50,000,000

Under 25 grows 1%

33%

32%

0

2017

2022 Source: Nielsen Demographics Pop-Facts 2017 © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

24

CREDIT ACCESS DECELERATING Up 5.0% year-over-year in Jan but up avg 8.3% past 12 months

30%

26%

25%

13%

13%

33%

32%

Source: Mortgage Bankers Association, Haver Analytics © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

25

FICO SCORES Avg FICO score on a closed mortgage was 721 in January

13%

33%

Source: Ellie Mae and Fair Isaac Corporation © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

26

TOTAL REAL ESTATE TRAFFIC Up 14.3% Y/Y Jan 2018

Source: Realtor.com® Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

27

IMPEDIMENTS TO PURCHASE Just starting to explore and inventory challenges reign What's Getting in the Way of Making a Home Purchase? Repeat

First-Time

All Buyers

Just starting to explore Have not yet found a house that meets my needs

Cannot find a good house in my budget range Lack enough funds for down payment

Haven't decided on a specific neighborhood/town

25%

Need to improve credit score Currently on a lease

13%

Can't sell current home Always overbid by other buyers Having difficulty qualifying for a mortgage

32%

I owe more on my current home than it is worth

0%

5% 10% 15% 20% 25% 30% 35% 40% 45% Source: Realtor.com Survey of Buyer Traffic, February 2017 © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

28

2018 FORECAST Key economic and housing metrics from NAR and realtor.com • National Association of REALTORS® Macro Forecast: • Real GDP grows 2.9 in 2018 (vs. 2.3% in 2017) • Nonfarm payroll employment grows 1.6% in 2018 (vs. 1.4% in 2017) • Unemployment declines to 3.9% in 2018, (vs 4.4% in 2017)

• realtor.com® housing forecast: • • • • •

Existing home prices appreciate 3.2% Existing home sales grow 2.5% New home sales grow 7% Housing starts increase 3% (SF up 7%) 30-year fixed conforming rate averages 4.6%

© 2017 Move, Inc. All rights reserved. Do not copy or distribute.

29

Economic Research realtor.com® [email protected]

Access market data, research, and presentations at

research.realtor.com

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30

THANK

YOU © 2017 Move, Inc. All rights reserved. Do not copy or distribute.

31

REALTOR.COM® MARKET OUTLOOK

2017 Move, Inc. All rights reserved. Do not copy or distribute. SALES FALLING. EHS down 5.5% Y/Y in January. 5. Source: National Association of REALTORS® Existing Home Sales Report ...

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