2018 CAR Market Outlook Joe Kirchner

© 2018 Move, Inc. All rights reserved. Do not copy or distribute.

REALTOR.COM®

MARKET OUTLOOKRealtor.com Economics

January 2018


NATIONALTRENDS

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JOB CREATION CONTINUES173,000 monthly average in past 12 months, Nov saw 228,000

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Source: Bureau of Labor Statistics


CONFIDENCE AT 15+ YEAR HIGHPlans to purchase a home improving markedly

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Source: The Conference Board, Moody’s Analytics


SALES RISING EHS rising, up 3.8% Y/Y in November

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Source: National Association of REALTORS® Existing Home Sales Report


INVENTORY AT RECORD LOWSInventory down 8.7% year-over-year in December

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Source: Realtor.com®


PRICES AT RECORD HIGHSMedian List Price at $270,000, Up 8.0% year-over-year (Dec)

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INVENTORY DIVERGENCE3.4 months for existing and 4.6 months for new

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Source: National Association of REALTORS®, Commerce Department


NEW SALES UPSales up 3.8% for existing and up 26.6% for new Y/Y in Nov

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

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HOUSING STARTSStarts up 12.9% Y/Y in Sep with SF up 13.0% and MF up 12.6%

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Source: Commerce Department


OWNERSHIP RECOVERING?63.9% ownership rate off low; 1.4 M households last 4qs

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Source: Census Bureau


RENT INCREASES HAVE SLOWEDAsking rents down 1.3% y/y in Dec compared to list prices up 8%

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Source: Realtor.com® and Altos Research


CHEAPER TO BUY IN 47% OF COUNTIESSimple monthly cost analysis favors renting now in more places

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Source: Realtor.com® Analysis of HUD Median Rents,

Nielsen Pop-Facts Demographics and Realtor.com® Data

December 2017


HISTORIC AFFORDABILITY DECLINING30-year conforming rate averaged 4.0% in past 12 months

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Source: Moody’s Analytics, Freddie Mac, and National Association of REALTORS®


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Income Percentile

February Affordability Distribution Equality Line

AFFORDABILITY IS RELATIVEHigher income households have more access to available inventory

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Source: realtor.com and National Association of REALTORS®


DEMANDDRIVERS

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100+

Thousands

US Population by Age, End of 2016

DEMOGRAPHICS SET THE TABLEWhen viewed by age, importance of Millennials becomes clearer

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

BoomerXMillennialZ

78 million61 million88 million65 million 29 million


MILLENNIAL OWNERSHIP VARIESStrong correlation with affordable markets

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


0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

change of job/job location

increase in income

desire to live closer to good schools

planning an increase to family size

relocated to a new city

increase in family size

looking for a safer neighhorhood

getting married/moving in with partner

change of family circumstance/composition

favorable home prices

tired of current home

Top 10 Buying Triggers

all 25-34

LIFE DRIVES HOUSING DEMANDEveryone’s tired of waiting and Millennials are building families

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30%

25%

13%

32%

Source: realtor.com Active Home Shopper Survey, September 2016


CREDIT ACCESS IMPROVINGCredit access up 7.0% year-over-year in October

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26%

13%

33%

30%

25%

13%

32%

Source: Mortgage Bankers Association, Haver Analytics


• National Association of REALTORS® Macro Forecast:

• GDP grows 2.5% in 2017, 3.0 in 2018 (vs. 1.5% in 2016)

• Nonfarm payroll employment grows 1.5% in 2017, 1.8% in 2018

• Unemployment declines to 4.4% in 2017, 4.0% in 2018

• 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%

2018 FORECASTKey economic and housing metrics from NAR and realtor.com

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© 2018 Move, Inc. All rights reserved. Do not copy or distribute. 25

LOCATION

LOCATIONLOCATION


LIST PRICES IN COOK COUNTYListing Prices Up in Cook County, 8% Y/Y (Dec 2017)

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Source: Realtor.com


LIST PRICE GROWTH IN CHICAGO METROCook County Saw 8% Growth Year-on-Year (Dec 2017)

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Source: Realtor.com


PRICE GROWTH IN CHICAGO METRO

66% of Zips in Region Experienced List Price Growth Y/Y (Dec 2017)

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Source: Realtor.com


INVENTORY IN COOK COUNTYActive Listings Still Decreasing, But Potentially Stabilizing

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Source: Realtor.com


ACTIVE INVENTORY IN CHICAGO METROSingle Family and Condo Active Listings (Dec 2017)

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Source: Realtor.com


ACTIVE INVENTORY IN COOK COUNTYSingle Family and Condo Active Listings (Dec 2017)

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Source: Realtor.com


AGE OF INVENTORY IN COOK COUNTYInventory Moving Faster Year-on-Year, but Pace Decelerating

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Source: Realtor.com


HOTTEST COUNTIES IN CHICAGO METROQ3 2017

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Source: Realtor.com


HOTTEST ZIPS IN COOK COUNTYQ3 2017

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Source: Realtor.com


GENERATIONAL PROPENSITYInterest by Age Groups (Q3 2017)

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Source: Realtor.com


GENERATIONAL PROPENSITYInterest in Hottest Zips (Q3 2017)

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Source: Realtor.com


RENT PRICES IN CHICAGO METROCook and Other Counties seeing 5.3% Rent Growth Year-on-Year

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Source: Realtor.com® Analysis of HUD Fair Market Rents


RENT VS BUYMonthly Costs Favor Renting Throughout Most of Chicago Metro

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Source: Realtor.com® Analysis of Nielsen Pop-Facts Demographics, HUD Fair Market Rents and Realtor.com Data


HOME OWNERSHIPOverall Rate in Cook County is 58%

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Source: Nielsen Demographics Pop-Facts 2017


MILLENNIAL OWNERSHIP25-34 Rate in Cook County is 33%

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HOUSEHOLD GROWTH 2018-2022Chicago Proper Expected to See Growth, Outer Cook Remains Flat

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THANK

YOU© 2018 Move, Inc. All rights reserved. Do not copy or distribute. 42


LISTING PRICES GREW 8% Y/Y IN DECMedian list price increases are widespread

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December 2017


RENTS RISING Y/Y IN 78% OF COUNTIESRent increases adding to demand for buying

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2017Source: Realtor.com® Analysis of HUD Median Market Rents


JOB CREATION25-34 growth outpacing overall rate growth

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25%

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


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100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

2017 2022

Population by Age (US)

Under 25 25-34 35-44 45-54 55-64 65+

BOOMERS KEEP DISTURBING Boomer wave is causing a major population shift

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15%

13%

13%

33%

18%

12%

13%

32%


13% 13%

Over the next 5 years:

Population grows 4%

65+ grows 18%

55-64 grows 4%

45-54 declines 3%

35-44 grows 4%

25-34 is flat

Under 25 grows 1%

13% 13%


FICO SCORES STABLEAvg FICO score on a closed mortgage was 724 in October

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13%

33%

Source: Ellie Mae and Fair Isaac Corporation


TOTAL REAL ESTATE TRAFFICUp 12.0% Y/Y Nov 2017

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Source: Realtor.com® Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data


0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

I owe more on my current home than it is worth

Having difficulty qualifying for a mortgage

Always overbid by other buyers

Can't sell current home

Currently on a lease

Need to improve credit score

Haven't decided on a specific neighborhood/town

Lack enough funds for down payment

Cannot find a good house in my budget range

Have not yet found a house that meets my needs

Just starting to explore

What's Getting in the Way of Making a Home Purchase?

Repeat First-Time All Buyers

IMPEDIMENTS TO PURCHASEJust starting to explore and inventory challenges reign

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26%

13%

33%

30%

25%

13%

32%

Source: Realtor.com Survey of Buyer Traffic, February 2017


HOTTEST HOMES IN THE LAST 60 DAYSTop Homes Get 20-35 Times More Pageviews than State Avg

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MORTGAGE RATES IN ILLINOIS30-Year-Fixed in IL Low of 3.75% (Sep ‘17), High of 4.3% (Mar ‘17)

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Source: Realtor.com