APRIL 2020

The Top Five Questions We Must Be Able to Answer

Be smart…be patient…but most of all – stay safe.

1.) When is the economy going to recover?

2.) Are we going into a recession?

3.) Is this going to be like 2008?

4.) What about all those job losses?

5.) What should I do right now?

Be smart…be patient…but most of all – stay safe.

When is the economy going to recover?

Be smart…be patient…but most of all – stay safe.

The ‘pause button’ has been hit on the American economy.

Goldman Sachs JP Morgan Morgan Stanley

Quarter 2Quarter 1

As of 4/1/2020Subject to Change

Quarter 3

Major Financial Institutions Calling for a Rapid ‘V’ Type Recovery

2020 GDP

0% GDP Growth

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”

John Burns Consulting

Harvard Business Review

“It’s worth looking back at history to place the potential impact path of Covid-19 empirically. In fact, V-shapes monopolize the empirical landscape of prior shocks, including epidemics such as SARS, the 1968 H3N2 (“Hong Kong”) flu, 1958 H2N2 (“Asian”) flu, and 1918 Spanish flu.”

Are we going into a recession?

Be smart…be patient…but most of all – stay safe.

Recession DOES NOT Equal Housing Crisis

“With the exception of two recessions, the Great Recession from 2007-2009, & the Gulf War recession from 1990-1991, no other recessions have impacted the U.S. housing market, according to Freddie Mac Home Price Index data collected from 1975 to 2018.”

Doug BrienCEO of Mynd Property Management

6.1%3.5%

-1.9%

6.6%

-19.7%

1980 1981 2001

HOME PRICE CHANGE During Last 5 Recessions

1991 2008

CoreLogic

Is this going to be like 2008?

Be smart…be patient…but most of all – stay safe.

Mark FlemingChief Economist at First American

“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

-51%

-4.6%-10%

-4.1%S&P 500

Annual Home Price DEPRECIATION

Housing & Mortgage Crash

2007 2008 2009

Black Knight & S&P 500

Correction

10/2007 to 3/2009

“What 9/11 has in common with what is happening today is that this shock has also generated fear, angst and anxiety among the general public. People avoided crowds then as they believed another terrorist attack was coming and are acting the same today to avoid getting sick. The same parts of the economy are under pressure ─ airlines, leisure, hospitality, restaurants, entertainment ─ consumer discretionary services in general.”

David Rosenberg Chief Economist ofGluskin Sheff + Associates Inc.

-45%

8.6% 6.6% 8.5%

2000 2001 2002

S&P 500 Correction

9/2000 to 10/2002

Annual Home Price APPRECIATION

Dot.com & 9/11 Crash

Black Knight & S&P 500

8.6%

6.5%

8.5% 8.7%

12.5%

11.4%

2000 2001 2002 2003 2004 2005

4.4%5.2% 5.5%

6.4%

4.8% 4.7%

2014 2015 2016 2017 2018 2019

The 6 years leading up to the housing crash

The last 6 years

Annual Home Price Appreciation

Black Knight

0

100

200

300

400

500

600

700

800

900

June2004

June2005

June2006

June2007

June2008

June2009

June2010

June2011

June2012

June2013

June2014

June2015

June2016

June2017

June2018

June2019

Today

MORTGAGE CREDIT AVAILABILITY INDEX

The taller the graph, the easier it is to get a loan

Housing Bubble 2006: 868.7

Today:181.3

MBA

Months Inventory of Homes for Sale

8.2

3.1

2007 TodayNAR

Total Home Equity Cashed Out by Refinance in Billions

Year Dollars

2005 $263B

2006 $321B

2007 $240B

Total $824B

Year Dollars

2017 $71B

2018 $87B

2019 $74B*

Total $232B

Then… Now…

*Using the first 3 quarter estimates from Freddie Mac and estimating $20B for the 4th quarter

Freddie Mac

37%of all homes are owned

‘free and clear’

26.7% of the mortgaged homes have at least 50% equity

ATTOM Data

of all homes in America have at least 50% equity

Americans are sitting on tremendous equity.

Bloomberg

53.8%

25.4%

14.8%

2006 TODAY

Percent of Median Income Needed to Purchase a Median-Priced Home

Zillow & NAR

What about all those job losses?

Be smart…be patient…but most of all – stay safe.

59.5%

4.1%

6.1%

2.7%

7.1%

6.6%

4.1%

9.8%

Food Services and Drinking Places

(Servers and Bartenders)

Other

Accommodation Industry

Health Care Office Workers

Child Day Care Workers

Temporary Help Services

Retail Trade (Stores)

Construction Workers

Breakdown of U.S. Bureau of Labor StatisticsApril 3, 2020 Unemployment Report

Goldman Sachs JP Morgan Morgan Stanley

Quarter 2Quarter 1

As of 4/1/2020Subject to Change

Quarter 3

Major Financial Institutions Calling for a Rapid ‘V’ Type Recovery

2020 GDP

0% GDP Growth

15%

6-8%

5%4%

2020 2021 2022 2023

Goldman Sachs’Unemployment Rate

Projections

Steve Rattner

U.S. Bureau of Labor Statistics, NAR

7.5%

6%

9.6%

0

2

4

6

8

10

12

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1989 1995 2000 2005 2010 2015 2019

Unemployment Rates and Home Sales Do Not Have a Direct Relationship

Exis

tin

g H

om

e Sa

les

(Bar

s)U

nem

plo

ymen

t Rate (Lin

e)

1

2

3

4

Year Rate

1930 8.7%

1931 15.9%

1932 23.6%

1933 24.9%

1934 21.7%

1935 20.1%

Year Rate*

2020 15%

2021 6-8%

2022 5%

2023 4%

2024

2025

Year Rate

2008 7.3%

2009 9.9%

2010 9.3%

2011 8.5%

2012 7.9%

2013 6.7%

Great Depression Great Recession Current Crisis

Current Unemployment Rates compared to past financial crises

*Goldman Sachs Projections,which are subject to change

N/A

What should I do right now?

Be smart…be patient…but most of all – stay safe.

Homeownership is an important source of wealth creation, enabling current

homeowners and succeeding generations to move up the economic ladder.

1. Prospect for leads

2. Nurture those leads

3. Close those leads

“My results do suggest that, in the absence of the panic, the declines in employment, consumption and output in the early stages of the Great Recession would have been significantly less severe.”

Ben Bernanke

ResourcesSlide Slide Title Link

6 Rapid ‘V-Type’ Recovery

https://www.calculatedriskblog.com/2020/03/the-economic-outlook.htmlhttps://markets.businessinsider.com/news/stocks/us-recession-coronavirus-gdp-plunge-2q-forecast-economy-morgan-stanley-2020-3-1029023137https://www.foxbusiness.com/markets/coronavirus-gdp-impact-bigger-than-financial-crisis-j-p-morgan

7 John Burns Consulting Quote https://www.realestateconsulting.com/march-19-2020-housing-survival-to-date/

8 Harvard Business Review Quote https://hbr.org/2020/03/what-coronavirus-could-mean-for-the-global-economy

11 Doug Brien Quotehttps://www.nreionline.com/investment/investors-turn-safe-haven-us-real-estate-wake-coronavirus

12 Home Price Change - 5 Recessions https://www.corelogic.com/blog/2019/03/housing-recessions-and-recoveries.aspx

14 Mark Fleming Quotehttps://blog.firstam.com/economics/why-the-housing-market-may-weather-coronavirus-impact-better-than-the-great-recession

15, 17-18 Crashes & Pricing https://www.blackknightinc.com/black-knights-december-2019-mortgage-monitor-2/

16 David Rosenberghttps://business.financialpost.com/investing/david-rosenberg-stop-looking-to-2008-this-crisis-is-more-like-9-11

19 Mortgage Credit Availability Indexhttps://www.mba.org/news-research-and-resources/newsroomhttps://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index

20 Months Inventory of Homes for Sale nar.realtor

21 Total Home Equity Cashed Out http://www.freddiemac.com/research/datasets/refinance-stats/index.page

22 Americans Are Sitting on

https://www.bloomberg.com/news/articles/2019-07-17/close-to-40-of-u-s-homes-are-free-and-clear-of-a-mortgagehttps://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-2019-year-end-home-equity-and-underwater-report/

ResourcesSlide Slide Title Link

23 Median Income for a Median Home

http://zillow.mediaroom.com/2018-09-06-Mortgage-Burden-Exceeds-Historic-Levels-in-10-of-the-Largest-U-S-Marketshttps://www.nar.realtor/sites/default/files/documents/hai-01-2020-housing-affordability-index-2020-03-13.pdfhttps://www.zillow.com/research/affordability/

25 U.S. Posts Record Layoffshttps://www.marketwatch.com/story/jobless-claims-leap-record-66-million-at-end-of-march-as-coronavirus-triggers-mass-layoffs-2020-04-02

26 U.S. Labor Statistics Report https://www.bls.gov/news.release/empsit.nr0.htm

27 V-Type Recovery

https://www.calculatedriskblog.com/2020/03/the-economic-outlook.htmlhttps://markets.businessinsider.com/news/stocks/us-recession-coronavirus-gdp-plunge-2q-forecast-economy-morgan-stanley-2020-3-1029023137https://www.foxbusiness.com/markets/coronavirus-gdp-impact-bigger-than-financial-crisis-j-p-morgan

28 Unemployment Rate Projections Steve Rattner’s Twitter Account @SteveRattner

29 Unemployment Rates & Home Sales

https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-saleshttps://data.bls.gov/timeseries/LNU04000000?years_option=all_years&periods_option=specific_periods&periods=Annual+Datahttps://data.bls.gov/timeseries/LNS14000000

30 Current Unemployment Rates https://www.thebalance.com/unemployment-rate-by-year-3305506

32 Homeownership Quotehttps://www.nar.realtor/research-and-statistics/research-reports/home-price-gains-by-years-of-tenure

34 Ben Bernanke Quote https://www.brookings.edu/bpea-articles/the-real-effects-of-the-financial-crisis/

35 Housing Wire Quote Housingwire.com | Premium (subscription required)

36 Mark Davison Quote Marc Davison’s Twitter Account @marcLdavison

“How can you differentiate yourself during a pandemic? By creating educational content that keeps your clients and prospects informed during these dark times.”

Housing Wire

Marc Davison

CHIEF CREATIVE OFFICER

1000watt

ResourcesSlide Slide Title Link

43, 63, 75 Confidence Indexhttps://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index

44-46,54, 56,57 Existing Home Sales https://www.nar.realtor/topics/existing-home-sales

48-50 New Home Saleshttp://www.census.gov/construction/nrs/pdf/newressales.pdfhttp://www.census.gov/newhomesaleshttp://www.census.gov/construction/nrs/pdf/newressales.pdf

51 Total Home Saleshttp://www.census.gov/construction/nrs/pdf/newressales.pdfhttps://www.nar.realtor/topics/existing-home-sales

52,53 Pending Home Saleshttps://www.nar.realtor/research-and-statistics/housing-statistics/pending-home-sales

58-60 Case Shillerhttp://us.spindices.com/indices/real-estate/sp-case-shiller-20-city-composite-home-price-index

61CoreLogic Forecasted YOY % Change in Price

https://www.corelogic.com/downloadable-docs/marketpulse/17-mktplse-0320-00-the-marketpulse-vol-9-issue-3-march-2020-screen-032420.pdf

64-70 Inventoryhttps://www.nar.realtor/topics/existing-home-saleshttp://www.census.gov/construction/nrs/pdf/newressales.pdf

Slide Slide Title Link

72 -74 Foot Traffic http://nar.realtor/infographics/foot-traffic

77, 78, 80, 81

Mortgage Rateshttp://www.freddiemac.com/pmms/pmms_archives.htmlhttp://www.freddiemac.com/research/forecast/20191220_optimism_heading_into_2020.page?

79 Mortgage Rate Projections

http://www.freddiemac.com/research/forecast/http://www.fanniemae.com/portal/research-insights/forecast.htmlhttps://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentaryhttps://www.nar.realtor/research-and-statistics

83, 84 Mortgage Credit Availabilityhttps://www.mba.org/news-research-and-resources/newsroomhttps://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index

85-89Days To Close, FICO Scores, DTI

http://www.elliemae.com/resources/origination-insight-reportshttps://static.elliemae.com/pdf/origination-insight-reports/EM_OIR_FEBRUARY2020.pdf

Resources

Average Days on the Market

NAR

Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020

Since January 2014

EXISTINGHome Sales

NAR

7.2%

2.9%

4.0%

8.2%

11.5%

U.S. Northeast Midwest South West

Y-O-Y by regionEXISTING Home Sales

NAR

enero febrero marzo abril mayo junio julio agosto septiembre octubre noviembre diciembre

2018 2019 2020

Census & NAR

Ventas de casas existentesen miles

enero febrero marzo abril mayo junio julio agosto septiembre octubre noviembre diciembre

2018 2019 2020Census & NAR

Ventas de casas nuevas en miles

jun-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan 2020

Census

New Home Salesannualized in thousands

2%6%

18% 18%

11%9%

4%

Under $150K $150-$199K $200-299K $300-$399K $400-$499K $500-$749K Over $750K

New Home Sales% of sales by price range

Census

3.3

3.7

3.93.8

3.7

3.3

3.1

2.9 2.9

2.7

3.0

3.2 3.2

3.6 3.6

3.43.5

3.6

3.4

3.2

3.5

3.1 3.13.0

3.3 3.3

New Homes Selling Fast(median months from completion to sold)

Census

Census & NAR

334

368

468

520

598 594 595 589

506 517

456481

378403

enero febrero marzo abril mayo junio julio agosto septiembre octubre noviembre diciembre

2019 2020

Total de las ventas de las casas en miles

100 = Historically Healthy Level

PENDING Home Salessince 2014

NAR

9.4%

5.9%

14.9%

7.1%

10.8%

U.S Northeast Midwest South West

Pending Home SalesYear-Over-Year By Region

NAR

Northeast

South

Jan2012

Jan2013

Jan2014

Jan2015

Jan2016

Jan2017

Jan2018

Jan2019

Jan2020

Percentage ofDistressed Property Sales

35%

January 2012 - Today 2%

4%

NAR

Home Prices

8.0%

8.2%

7.9%

8.2%

8.1%

U.S. Northeast Midwest South West

Y-O-Y by region

EXISTING Home Prices

NAR

-9.8%

0.0%

17.2%19.5%

21.9%

16.7%

$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+

% -9.8% 0.0% 17.2% 19.5% 21.9% 16.7%

% Change in Salesfrom last year by Price Range

NAR

Year-Over-Year

PRICECHANGES

Case Shiller

S&P Case Shiller

Jun 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020

Jan

201

4

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

t

Oct

No

v

Dec

Jan

201

5

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

t

Oct

No

v

Dec

Jan

201

6

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

t

Oct

No

v

Dec

Jan

201

7

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

t

Oct

No

v

Dec

Jan

201

8

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

t

Oct

No

v

Dec

Jan

201

9

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

t

Oct

No

v

Dec

Jan

202

0

S&P Case Shiller

Year-Over-Year PRICE CHANGES20 City Composite

Case Shiller

3.0%

2.6% 2.5% 2.4%2.2%

2.0% 2.0% 2.1% 2.2%

2.6%2.8%

3.1%

Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2020

Year-Over-Year PRICE CHANGES20 City Composite

Case Shiller

S&P Case Shiller

CoreLogic

Forecasted Year-Over-Year % Change in Price

HOUSINGINVENTORY

Seller Traffic Index

NAR

January2011

January2012

January2013

January2014

January2015

January2016

January2017

January2018

January2019

January2020

Months Inventory ofHOMES FOR SALE

2011 - Today

NAR

Jan-18 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-19 Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan-20 Feb

Months Inventory of HOMES FOR SALE

last 2 years

NAR

3.8

4.1

4.3 4.34.2

4.0 4.03.9

3.7

3.03.1 3.1

Mar Apr May June July Ago Sep Oct Nov Dec Jan Feb

Months Inventory of HOMES FOR SALELast 12 Months

NAR

January 2014 January 2015 January 2016 January 2017 January 2018 January 2019 January 2020

% 7. 5. 3. 6. 6. 5. 5. 4. 6. 5. 5. -0 -0 -0 2. -0 1. 0. -4 -1 -3 -4 -1 -3 -2 -1 -1 -3 -9 -5 -5 -1 -6 -1 -9 -6 -7 -6 -6 -9 -8 -7 -9 -6 -6 -1 -9 -1 -9 -8 -7 -6 -6 0. 0. 2. 1. 2. 4. 6. 4. 2. 2. 1. 2. 0. -1 -2 -2 -4 -5 -9 -1 -9

Year-over-Year Inventory Levels

NAR

HOUSING SUPPLY Year-Over-Year

2.4%1.7%

2.7%

0.0%

-1.6%

-2.6% -2.7%

-4.3%

-5.2%

-9.0%

-11.3%

-9.8%

Mar Apr May June Jul Aug Sep Oct Nov Dec Jan 2020 Feb

Last 12 Months

JunMar Apr May

NAR

5.8

6.1

6.7

5.4

6.0

5.55.3 5.4 5.5 5.5

5.1 5.0

Mar Apr May Jun Jul Aug Sep Oct Nov Dec 20-Jan

New Home Inventory Last 12 Months

Census

months supply

6.5

6.1

5.8

6.1

6.7

5.4

6.0

5.55.3

5.45.5 5.5

5.15.0

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

2019 2020

New Home Inventorymonths supply

Census

BUYERDEMAND

Jul 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan-20

Foot Trafficindicator of future sales

NAR

Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb

Foot Trafficindicator of future sales

Last 12 Months

NAR

January February March April May June July August September October November December

2019

2020

Foot Trafficindicator of future sales

NAR

Buyer Traffic Index

NAR

INTERESTRATES

2/1 3/1 4/5 5/3 6/7 7/5 8/2 9/6 10/411/1 12/6 1/3 1/31 3/7 4/4 5/2 6/6 7/3 8/1 9/5 10/3 11/712/5 1/2 2/6 3/5 4/2Freddie Mac

Mortgage RatesFreddie Mac 30-Year Fixed Rate

3.95%

3.33%

1/7

/16

2/4

3/3

4/7

5/5

6/2

7/7

8/4

9/1

10

/6

11

/3

12

/1

1/5

/20

17

2/2

3/2

3/3

0

4/2

7

5/2

5

6/2

2

7/2

0

8/1

7

9/1

4

10

/12

11

/9

12

/7

1/4

/20

18

2/1

3/1

4/5

5/4

6/7

7/5

8/2

9/6

10

/4

11

/1

12

/6

1/3

/20

19

1/3

1

3/7

4/4

5/2

6/6

7/3

8/1

9/5

10

/3

11

/7

12

/5

1/2

/20

20

2/6

3/5

4/2

30-Year FixedRate Mortgages

from Freddie Mac

3.97

Freddie Mac

3.33%

Mortgage Rate Projections

QuarterFreddie

MacFannie Mae

MBA NARAverage

of All Four

2020 2Q 3.8 3.3 3.3 3.7 3.52%

2020 3Q 3.8 3.2 3.3 3.8 3.52%

2020 4Q 3.8 3.2 3.4 3.9 3.57%

2021 1Q 3.8 3.1 3.6 4.0 3.47%

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

Rate 3.7 3.6 3.5 3.8 4.2 4.0 3.9 3.9 4.3 4.5 4.6 4.8 4.4 4 3.7 3.7 3.8 3.8 3.8 3.8

Freddie Mac

Mortgage RatesFreddie Mac 30-Year Fixed Rate

- Actual- Projected

2016

2017 20182019

2020

3.8 3.8 3.8 3.8

2020 Q1 2020 Q2 2020 Q3 2020 Q4Freddie Mac

1/4

2/1

3/1

4/5

5/3

6/7

7/5

8/2

9/6

10

/4

11

/1

12

/6

1/3

1/3

1

3/7

4/4

5/2

6/6

7/3

8/1

9/5

10

/3

11

/7

12

/5

1/2

2/6

3/5

4/2

January 2018 – Today Actual Interest Rates

Mortgage RatesFreddie Mac

30-Year Fixed Rate

2020

Q2 Q3 Q4

Where Are They Going?

Q1

Mortgage Credit Availability

YES NO MAYBE

Apr2013

Jan2014

Jan2015

Jan2016

Jan2017

Jan2018

Jan2019

Jan2020MBA

Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association

Mortgage Credit Availability

0

100

200

300

400

500

600

700

800

900

June2004

June2005

June2006

June2007

June2008

June2009

June2010

June2011

June2012

June2013

June2014

June2015

June2016

June2017

June2018

June2019

February2020

Historic Data for the MORTGAGE CREDIT AVAILABILITY INDEX

(a report from the Mortgage Bankers Association)

MBA

45

4344

45

43

4546

47 47

51

48

43

Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb

Average Days To Close A Loan

All Closed Loans as per Ellie Mae

Last 12 Months

726728 728

731 731

734

737 737 736 735

738 738

Mar Apr May Jun Jul Aug Sept Oct Nov Dec ene Feb

All Closed Loans as per Ellie Mae

FICO® Score RequirementsLast 12 months

0.04% 0.58%

8.11%

17.24%

23.50%

36.97%

13.56%

500-549 550-599 600-649 650-699 700-749 750-799 800+

FICO® Score Distribution

49.47% All Closed Loans as per Ellie Mae

Average FICO® Scorefor Closed Purchase Loans

by Loan Type

All Closed Loans as per Ellie Mae

738 755

678

711

All Loans Conventional FHA VA

37 36

44 42

All Loans* Conventional FHA VA

Average Back End DTIfor Closed Purchase Loans by Loan Type

All Closed Loans as per Ellie Mae