National Economy and Real Estate Market: Rich Macaluso – President – Orange Coast Title Company 2018 Market Forecast 3/7/18 National Economy and Real Estate Market: Good News National Economy: Unemployment is very low. Down to 4.1%. Wage Growth jumped 2.9 % in January year over year. Interest Rates rising slowly but still very low. Inflation rate remains low. Tax Reform in December is positive to economy with mostly positive impact on Real Estate Market. Capital Gains treatment. 2nd home deduction. 1031 Tax Deferred Exchanges Survived. Small Business Optimism is at highest level in 4 decades from a November reading prior to Tax Reform. GDP recorded two straight quarters of above 3% and Q4 was 2.5% and as Tax Reform shows impact in 2018and beyond 3-4% growth is projected. Consumer Confidence hit its best reading in 2017 since late 2000. 122.1 DJIA rose 25.08% in 2017 and NASDAQ rose 28.24% and S&P rose 19.42%. Saving rates are rising and price of gas is down.

National Economy and Real Estate Market: Rich Macaluso – President – Orange Coast Title Company 2018 Market Forecast 3/7/18 National Economy and Real Estate Market: Good News National Real Estate Market Fannie Mae “Home Purchase Sentiment Index” (HPSI) reached an All-Time High of 89.5 in January 2017. 64% of Americans live in markets where it is cheaper to buy than to rent. The 110.9 million households in the US on 12/31/2007 were split between 75.2 million owners and 35.7 million renters. The 120.2 million households on 12/31/2017 were split between 77.2 million owners and 43.0 million renters. NAHB HMI (National Home Builders Housing Market Index) reached 74 in December 2017. It has only reached 74 six times since 1998 when it peaked at 78. Millennial home buyers are reaching peak home-buying years and showing increasing signs of desiring to own a home.

National Economy and Real Estate Market: Rich Macaluso – President – Orange Coast Title Company 2018 Market Forecast 3/7/18 National Economy and Real Estate Market: Challenges: Inventory or availability is low and projects to continue low in the existing home markets. New Home Building is slowly improving. Home Prices continue to rise and affordability weakening as salaries and wages have not kept up (hopefully January ’18 wage growth is just the start).

Inland Empire Housing Market: Rich Macaluso – President – Orange Coast Title Company 2018 Market Forecast 3/7/18 Inland Empire Housing Market: Single Family purchase price was up 6.6% year over year Jan ’17 to Jan ’18 while volume dropped 2.3%. Condo prices rose 12.2% same period and volume was down 4.7%. Affordability is a major concern. Availability is a burden on the market as we believe demand is high and supply is low. We expect that homebuilders will partially fill that gap of supply to meet the demand in the IE. We continue to under build to the demand.

Title Industry Outlook: Rich Macaluso – President – Orange Coast Title Company 2018 Market Forecast 3/7/18 Title Industry Outlook: Capital and Surplus in the Title Insurance Industry is robust providing great protection for those with policies. $4.4 Billion. Seven consecutive profitable years. Claims experience continues to improve – approximately 5% in 2017. 70% of premium $ are spent on risk elimination in the search, exam and closing process. The industry expects title orders from purchase activity to rise by 7% from ’17 to ’18. Title orders from refinance activity to slow by almost 30% ’17 to ’18 to the lowest level in over four years.