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30-Year mortgage interest rate 4.5%

DOW down 15% from September

A looming trade war with China

Government shutdown started December 22nd

Oct.-Dec. 2018 new home sales flat compared to Oct.-Dec. 2017(after Jan.-Sept. sales being +6% compared to Jan.-Sept. 2017)

DO YOU REMEMBER NEW YEAR’S DAY 2019?

There Was Reason for Some Concern…

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THE AUSTIN MSAHistorical Trend in Annual Job Growth: 2010-2019

AnnualJob Growth

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Source: TWC

• Approx. 350,000 Jobs Created in the Last 10 Years (Avg. of 35,000/Year)• Total Employed Went From 760,000 to +1.1 Million• Unemployment Rate Was 7.4% in Dec. 2009, Dropped to 2.5% as of Nov. 2019

THE AUSTIN MSAHistorical Trend and Forecast in Total Population: 1940-2050

Source: U.S. Census & City of Austin

Population

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

1940 1950 1960 1970 1980 1990 2000 2010 2019 2020 2030 2040 2050

2.2 Mil.1.7

Mil.

Region’s Population Increased by +500,000 in the Last Decade

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THE AUSTIN MSAHistorical Trend in Annual Apartment and Single Family Permits: 2010-2019

Source: Austin Investor Interests & St. Louis FED

0

5,000

10,000

15,000

20,000

25,000

30,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Single Family ApartmentsAnnual UnitsAdded

Last 10 Years+68,0000 New Apartments Built+117,000 New Homes Added+185,000 Housing Units Added in the Last Decade

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EMERGENCE OF EAST AUSTIN AS AN EMPLOYMENT AND HOUSING MARKET

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ER1

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Apartments Comp. or /UC=3,454 Units in 17 Projects

Office Space Comp. or /UC=701,501 SF in 8 Projects

THE DOMAIN…AND NOW BURNET ROAD

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ROCK ROSE

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Indigo Ridge: Sam Bass & FM 1431 in Cedar Park

• +5 million SF of Office, Retail, Residential, Hotel &Entertainment

• $1.5 Billion Investment• Home to USTA Austin

The District in Round Rock$200 million

The District: IH 35 & SH 45 in Round Rock

• +1 million SF of Office, Retail, Residential & Hotel

• $200 Million investment

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North Pointe: SH 130 and Pflugerville Parkway

• 2.3 Million SF of Office, Retail, Residential & Hotel

• $200 Million Investment

ULI Emerging Trends 2020: Top 10 Markets#10 Seattle

#7 Orlando

#8 Atlanta

#4 Charlotte

#3 Nashville#2 Raleigh

#5 Boston

#9 Los Angeles

#6 DFW

#1 Austin

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Overall R.E. Prospects Home Building Prospects

Source: ULI Emerging Trends 2020

ULI Emerging Trends 2020: Top 25 Markets

OUR HOUSING MARKETS

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THE APARTMENT MARKET

THE AUSTIN APARTMENT MARKETOccupancy & Rental Rate Trends

$0.75

$0.85

$0.95

$1.05

$1.15

$1.25

$1.35

$1.45

$1.55

80%82%84%86%88%90%92%94%96%98%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

Occupancy Rate Avg. City-Wide Rent

Source: Austin Investor Interests

Average Occupancy

Rate 1,000 SF Avg. Apt. Rent = $1,540/Mo.

AverageRentalRate

3Q19 City-Wide Avg. Rent = $1.54/SF3Q19 City-Wide Avg. Occ. = 94.9%

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The Resale Market

THE AUSTIN RESALE MARKETMonths of Supply of Listings & Average Sales Price (SF, TH & Condo)

Source: Texas A&M Real Estate Center

MOS of Listings Has Been <4 MOS for 89 Months

0

1

2

3

4

5

6

7

8

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000Average Sales Price Months of Inventory

AverageSales Price

MOS of Inventory

36,502 Closings Last 12 Months (+5%)Average Sales Price $390,509 (+2.4%)Median Sales Price $306,568 (+2.5%)

ER2

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THE LUXURY MARKET

THE AUSTIN LUXURY MARKET-NEW & RESALEActive Listings, MOS & Sales Last 12 MOS +$750,000

Source: MLS

Jan ‘20 Overall MOS of Active Listings +$750,000 = 4.3 MOS(Down from 5.1 MOS in January 2019)

3.0 3.75.4

13.1

0

2

4

6

8

10

12

14

0

200

400

600

800

1,000

1,200

$750K-$1Mil. $1Mil.-$1.5Mil $1.5Mil.-$2Mil +$2 Mil

Active Listings Sales Last 12 Months MOS Active Listings

MOS ActiveListings

Jan. ‘194.3

Jan. ‘193.7

Jan. ‘197.4

Jan. ‘1912.6

Sales/Listings

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THE AUSTIN LUXURY MARKET-NEW CONSTRUCTIONActive Listings, MOS & Sales Last 12 MOS +$750,000

Sales/Listings

MOS ActiveListings

Source: MLS

Jan. ‘20 Overall MOS of Active Listings +$750,000 = 6.4 MOS(Up from 5.7 MOS in January 2019)

Jan. ‘194.8

Jan. ‘195.8

Jan. ‘195.3

4.94.2

5.8

9.0

012345678910

0

25

50

75

100

125

150

175

$750K-$1Mil. $1Mil.-$1.5Mil $1.5Mil.-$2Mil +$2 Mil

Active Listings Sales Last 12 Months MOS Active Listings

Jan. ‘195.5

THE NEW HOME MARKET

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0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Source: Federal Reserve Bank of St. Louis

THE AUSTIN MSA NEW HOME MARKETSingle Family & 2 to 4 Unit Permit Trend: 1990 to November 2019Annual

SF PermitsNovember 2019 Annual Permits Issued = 18,268 Units

THE U.S. HOME BUILDER EQUITY MARKETSDow Jones Indexes Tracking Home Building Industry

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

DJ U.S. Home Const. Total Return Index DJ U.S. Home Const. Index

Source: Dow Jones

Both Indexes Up+45% in 2019

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2019 Top 50 Master Planned Communities(John Burns Real Estate Consulting)

• A great start to the year…Strong spring market

• Interest rates falling further fueled sales

• Some builders spec caution early 2019 meant they never caught up

• Many builders continued to raise prices in 2019 (to slow pace, due to cost increases, etc.) with little resistance from buyers.

• Continued push by many builders to move down in price How? 1) Location 2) Lot size 3) Features

• Land challenges persist (price, entitlements, time)

MAJOR THEMES IN NEW HOME MARKET IN 2019

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Trend in Home Prices

Source: FHFA

Annual Home Price Change Trend: 3Q99 to 3Q19

Annual Price Change Annual Price

Change

-10%

-5%

0%

5%

10%

15%

20%

-10%

-5%

0%

5%

10%

15%

20%

Austin Dallas San Antonio Houston

3Q18 to 3Q19Austin = 4.6%Dallas = 3.8%

Houston = 4.2%San Antonio = 5.7%

Austin Home Price Index +42% Last 5 Years

+84% Last 10 Years

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Annual Home Price Change Trend: 3Q99 to 3Q19Peer Cities

Source: FHFA

Annual Price Change Annual Price

Change

-15%

-10%

-5%

0%

5%

10%

15%

20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Austin Atlanta Nashville Raleigh Charlotte

Annual Home Price Change Trend: 3Q99 to 3Q19Peer Tech Cities

Source: FHFA

Annual Price Change

Annual Price Change

-25%-20%-15%-10%-5%0%5%10%15%20%25%30%35%

-25%-20%-15%-10%

-5%0%5%

10%15%20%25%30%35%

3Q99

1Q00

3Q00

1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12

3Q12

1Q13

3Q13

1Q14

3Q14

1Q15

3Q15

1Q16

3Q16

1Q17

3Q17

1Q18

3Q18

1Q19

3Q19

Austin Denver San Jose Portland Seattle

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The Austin Metropolitan AreaTrend in Median Home Price & Median Family Income

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Median Home Price Median Family Income

Source: NAR & U.S. Census

Income/Home Price

2.7X3.0X

3.8X

4.1X

$172,2002006

$315,9002018

$263,3002015

$193,1002010

$76,925$69,525$62,808$64,451

Multiplier of Median Home Price to Median Family IncomeMajor Texas Markets & Selected Tech Centers

Multiplier

4.13.8 3.7 4.0 3.9 3.4 4.0 4.2

5.7 5.35.7

9.2

10.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

Austin DFW Houston S. Antonio Charlotte Atlanta Nashville Raleigh Denver Portland Seattle San Fran San Jose

2018 Median Household Income 2Q19 Med Home Price

Source: NAR & U.S. Census

MedianHome Price

Multiplier Multiplier

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• Can we (again) deliver enough lots in the right locations at the right price?

• Will interest rates remain at historic lows?

• The math of jobs to starts (are we playing catch-up?)

• The last 3 major recessions arrived unannounced, how will the next one arrive?

2020 FORECAST-PRIMARY INFLUENCING FACTORS

THE AUSTIN ECONOMY-JOB CREATIONAnnual Trend in Job Growth/Loss (Dec. ‘79 to Dec. ‘19)

(greyed areas represent U.S. recessions)

Source: TWC

Annual Job Growth

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

Dec

-79

Dec

-80

Dec

-81

Dec

-82

Dec

-83

Dec

-84

Dec

-85

Dec

-86

Dec

-87

Dec

-88

Dec

-89

Dec

-90

Dec

-91

Dec

-92

Dec

-93

Dec

-94

Dec

-95

Dec

-96

Dec

-97

Dec

-98

Dec

-99

Dec

-00

Dec

-01

Dec

-02

Dec

-03

Dec

-04

Dec

-05

Dec

-06

Dec

-07

Dec

-08

Dec

-09

Dec

-10

Dec

-11

Dec

-12

Dec

-13

Dec

-14

Dec

-15

Dec

-16

Dec

-17

Dec

-18

Dec

-19

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For further information, contact:Eldon Rude, Principal360° Real Estate Analytics512‐796‐7850erude@360reanalytics.com