Ted C. Jones, PhDChief Economist

Stewart Title

Pandemics & Seismic Events

Annual Streaming Prices

$72

$84

$108 $120

$132

$49,653

1967 – An Economic Forecast for

2020

What Changes,What Stays the SameWhat’s to

Come

The beat goes on, the beat goes on

Drums keep pounding a rhythm to the brain

La de da de de, la de da de da

Sonny & Cher

Charleston was once the rage, uh huh

History has turned the page, uh huh

The mini skirts, the current thing, uh huh

Teenybopper is our newborn king, uh huh

Sonny & Cher

Recession is Defined as Two or MoreQuarters of Negative GDP Growth

Recession

3.1%Q1 2019

2.0%Q2 2019

2.1%Q3 2019

2.1%Q4 2019

-32.9%Q2 2020

-4.6%2020

+25%Q3 2020

+5.8%2021

-5%Q1

“It’s All About Jobs”

Ted C. Jones Most Used Fact

125

130

135

140

145

150

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 20

U.S. JobsJobs (Millions) Seasonally Adjusted

Added 4.76 Million Net Jobs in June 2020 2020 Peak-to-Trough Down 14.661 Million

April 2020

June 2020

LeisureAnd

Hospitality-45.8%

March toApril 2020

U.S. Leisure & Hospitality Employment

8

10

12

14

16

18

20

$0

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Leisure & Hospitality Employment - MillionsRecession

State Business Tax Environments 2020

240

260

280

300

320

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Vermont JobsJobs (Thousands) Seasonally Adjusted

-17.1 Percent 54,100 Net Lost Jobs

12 Months Ending May

2,100

2,200

2,300

2,400

2,500

2,600

2,700

2,800

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Miami-Ft Lauderdale-West Palm Beach MSA JobsJobs (Thousands) Seasonally Adjusted

Trough

June 2020

Florida13.0%

Lost

Florida42.7%

Recovered

WhatKindOf

Jobs

Total Jobs

Employment Supersector Thousands June February

Total 2,486.6 100.0% 100.0%

Mining & Logging 0.8 0.5% 0.5%

Construction 140.4 5.3% 4.8%

Manufacturing 86.4 8.8% 8.5%

Trade-Transport-Utilities 572.2 18.6% 18.5%

Information 47.9 1.9% 1.9%

Financial Activities 188.5 6.4% 5.8%

Professional and Business Service 419.5 14.5% 14.1%

Education and Health Services 379.3 16.7% 16.3%

Leisure & Hospitality 254.3 7.5% 10.7%

Other 106.2 3.7% 3.9%

Government 291.1 16.1% 15.0%

Miami MSA Supersector Job AnalysisSeasonally Adjusted June 2020

Percent of Jobs

Recessions + Oil Prices

$0$20$40$60$80$100$120$140

$0'72'74'76'78'80'82'84'86'88'90'92'94'96'98'00'02'04'06'08'10'12'14'16'18'20

West Texas Intermediate Crude OilRecession

$0

$20

$40

$60

$80

$100

$120

$140

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

West Texas Intermediate Crude

$40.71 July Average

West Texas Intermediate Crude Oil Price$ Per Barrel

Average Barrels

Per Day

Millions Total Extraction Support

2015 8.879 521.9 197.5 324.4

2019 12.232 419.7 150 269.7

Change 37.8% -19.6% -24.1% -16.9%

U.S. Oil Production

Oil Field Worker Employment

Jobs Thousands

Production +38% Jobs -20%

CEO Steve Hafner projects25% of all restaurants will permanently closedue to the Coronavirus

25%

May 15, 2020

85%

June 15, 2020

X 70% = 59.5%Independent Restaurants That

May Permanently Close

Residential Interest Rates + Recession

0.02.55.07.510.012.515.017.5

$0'72'74'76'78'80'82'84'86'88'90'92'94'96'98'00'02'04'06'08'10'12'14'16'18'20

Conventional Mortgage Rate - PercentRecession

30-Year Conventional Residential Mortgage Rates

2.75%

3.25%

3.75%

4.25%

4.75%

5.25%

J F M M A M J J A S O N D

2.88%

Percent

2017

2018

20192020

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Residential Lending - $ Trillions

Residential Lending Volumes & Interest Rates

30-Year Conventional Mortgage Rates

2%

3%

4%

5%

6%

7%

8%

$0.0

$1.0

$2.0

$3.0

$4.0

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

21

Lending & Forecast – Fannie Mae Historical Interest Rates – Freddie Mac

Forecast

ResidentialLendingForecast

US Existing Home Sales & Median Prices

3.5

4.0

4.5

5.0

5.5

6.0

$175

$200

$225

$250

$275

$300

'14 '15 '16 '17 '18 '19 '20

Median Home Price - $ ThousandsSales – SeasonallyAdjusted AnnualizedRate Millions

0

100

200

300

400

500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2018 2019 2020

U.S. Existing Single Family Home SalesMonthly Sales – Not Seasonally Adjusted - Thousands

-6.6% Year-To-Date-2.1% June 2020 vs June 2019

0

10

20

30

40

50

60

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2018 2019 2020

U.S. Existing Condo-Co-op Home SalesMonthly Sales – Not Seasonally Adjusted - Thousands

-18.4% Year-To-Date-14.5% June 2020 vs June 2019

US Existing Home Sales & Median Prices

4.8

5.0

5.2

5.4

5.6

$175

$200

$225

$250

$275

$300

'14 '15 '16 '17 '18 '19 '20

Median Home Price - $ ThousandsSales – Prior 12 Months

Millions

Miami MSA SFR Home Sales & Median Prices

42,000

44,000

46,000

48,000

$200

$250

$300

$350

$400

'14 '15 '16 '17 '18 '19 '20

Median Home Price - $ Thousands Sales – Prior 12 Months

Jan Feb Mar Apr May June

Miami 18.2% 9.9% 0.9% -32.7% -48.0% -11.6%

USA 11.8% 7.9% 4.8% -16.1% -29.5% -2.1%

Single Family Home Sales Monthly 2020Year-Over-Year Percent Change

Miami Townhouse-Condo Sales & Median Prices

38,000

40,000

42,000

44,000

46,000

48,000

$125

$150

$175

$200

$225

'14 '15 '16 '17 '18 '19 '20

Median Home Price - $ Thousands Sales – Prior 12 Months

Townhouse-Condo Home Sales Monthly 2020Year-Over-Year Percent Change

Jan Feb Mar Apr May June

Miami 11.8% 6.7% 2.3% -41.3% -59.3% -28.4%

USA 6.7% 5.9% -2.2% -34.0% -46.7% -14.5%

Net Dwelling Jobs

New Unit Per New

Year Jobs Permits Dwelling

2013 71,500 19,921 3.59

2014 89,900 15,259 5.89

2015 79,300 23,450 3.38

2016 59,100 18,742 3.15

2017 41,500 19,723 2.10

2018 47,400 19,553 2.42

2019 28,900 20,688 1.40

Total 417,600 137,336 3.04

Miami-Fort Lauderdale-West Palm Beach

Jobs & Residential Dwelling Unit Permits

1.25 to 1.5Net NewJobs Per

New DwellingIs Normal

Under Built

DrTCJ

DrTCJ

$0

$100

$200

$300

$400

$500

$600

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

20

US Commercial Real Estate Sales Volume

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up

$0

$5

$10

$15

$20

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

20

Miami Commercial Real Estate Sales Volume

$ Billions – Trailing 12 Months

Property and Portfolio Sales $2.5 Million and Up

U.S. Commercial Real Estate Sales Q2 2020

$ Billions

2007 155.594$

154.588$

127.375$

132.497$

2008 61.163$ -60.7%

47.868$ -69.0%

42.569$ -66.6%

26.139$ -80.3%

2009 13.769$ -91.2%

14.290$ -90.8%

17.207$ -86.5%

23.618$ -82.2%

2010 19.673$ -67.8%

U.S.CommercialReal Estate

Sales -69%

8 Years to Recover Back

To$500 Billion

Annual

Comparisons toSame Quarter 2007

$ Billions

2007 4.870$

3.977$

4.239$

3.041$

2008 1.265$ -74.0%

1.555$ -60.9%

1.393$ -67.1%

1.148$ -62.3%

2009 0.254$ -94.8%

0.319$ -92.0%

0.969$ -77.1%

1.145$ -62.4%

2010 0.579$ -54.2%

FloridaCommercialReal Estate

Sales -67%

8 Years to Recover Back

To$16 Billion

Annual

Comparisons toSame Quarter 2007

Year $ Billion

'06 4.74$

'07 6.63$

'08 1.09$

'09 0.55$

'10 1.32$

'11 1.49$

'12 1.89$

'13 4.23$

'14 5.16$

'15 7.49$

'16 3.59$

'17 2.65$

'18 5.07$

'19 4.71$

FloridaHotelSales

91.7% Plunge

8 Years to Recover

FloridaHotel

AverageSalesPrice

Per Unit

-46.6% Value5 Years to Recover

2007-2009 RevenueDrop of 19.3%

Year Per Unit

'06 123,380$

'07 111,274$

'08 141,009$

'09 75,360$

'10 83,031$

'11 98,732$

'12 101,836$

'13 139,964$

'14 168,649$

'15 156,290$

'16 136,378$

'17 114,346$

'18 157,532$

'19 200,441$

Value Impacts – Commercial Real Estate

• Cap Rates – Risk Component• Demand – Rent Component• Vacancy & Collection Loss

U.S. & Miami Cap Rates

6%

7%

8%

9%

10%

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 ''17 '18 '19 '20

Cap Rate

US Miami

Commercial Cap Rates

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

'05 '06 '07 '08 '09

Hotel

All

Apartments

Office

RetailIndustrial

Gain

Trough Peak BP

Hotel 8.62% 9.02% 40

Industrial 6.93% 8.18% 124

Office 6.54% 7.97% 143

Retail 6.65% 7.73% 108

All 6.72% 7.38% 66

Apartments 5.92% 7.00% 108

2005-2009-10% Value

Just Cap Rate

August 2020

Commercial Property Price Index

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Expected Short Recession, Deep – But Out by Q4 Entered Downturn with Best Wage Growth in 10 Years

Record Low Interest RatesCheap Energy fuels the economy, helps almost EVERYONE

Manufacturing Short-term Comebackreplacing China on many fronts – medical, parts, pharma

2020-2021 Economic Outlook Ted’s Take

DrTCJ

• U.S. Manufacturing LONGTERM Comeback• Hastening Paperless Real Estate Transaction Process• Remote Everything – Notary, Closings, Appraisals…..• Drive-Thru Everything • Office Demand – Permanently Down, Industrial Up• Leisure & Hospitality Direct Hit from the Blast + RE• Oil Prices Remain Low – 99.5% of Consumers Win• Contractual Rent Terms – force majeure redux

What’s to Come - Permanent Ted’s Take

http://blog.stewart.com

DrTCJ

Ted C. Jones, PhDChief Economist

Stewart Title

Pandemics & Seismic Events