Almost Boring: Residential Housing in 2015 DR. JIM GILKESON, CFA CFA SOCIETY OF ORLANDO APRIL 9, 2015

Where We’ve Been  2005: Is the Sky Falling?  2007: What a Difference a Year Makes  2008: Where Do We Go From Here?  2009: Reading the Tea Leaves  2010: The Good, the Bad, and the Ugly  2012: Have We Hit Bottom?  2013: (Very) Cautious Optimism  2014: Will Slow & Steady Win the Race?  2015: Almost Boring 4/9/2015 Jim Gilkeson, PhD, CFA 2

What We’ll Talk About Today  Price  Volume (Sales)  Delinquency/Foreclosure  Financing  Supply  Demand  Wrap Up 4/9/2015 Jim Gilkeson, PhD, CFA 3

Prices (constant quality) 4/9/2015 Jim Gilkeson, PhD, CFA 4

Median Home Prices New homesExisting homes 4/9/2015 Jim Gilkeson, PhD, CFA 5

Repeat Sales Price Indices 4/9/2015 Jim Gilkeson, PhD, CFA 6

FHFA HPI (repeat sales) 4/9/2015 Jim Gilkeson, PhD, CFA 7

Florida Price Appreciation 4/9/2015 Jim Gilkeson, PhD, CFA 8 MSA1-year5-year Miami11.80%25.02% Ft Lauderdale9.48%32.29% Jacksonville8.71%3.88% Ft Myers8.19%31.74% Tampa/St. Pete7.41%15.10% West Palm Beach7.26%27.52% Orlando5.66%9.17% Sarasota5.10%19.25% FLORIDA7.85%17.32%

Sales Volume (US) 4/9/2015 Jim Gilkeson, PhD, CFA 9

Sales Volume (local) 4/9/2015 Jim Gilkeson, PhD, CFA 10

Orlando Sales and Prices 4/9/2015 Jim Gilkeson, PhD, CFA 11

Bank Problem Loans: Federal Reserve Data 4/9/2015 Jim Gilkeson, PhD, CFA 12

Mortgage Delinquencies: U.S. banks (OCC) 4/9/2015 Jim Gilkeson, PhD, CFA 13

Florida Foreclosures 4/9/2015 Jim Gilkeson, PhD, CFA 14 U.S.Florida FL rankOrlando Foreclosure Inventory1.4%3.5%3rd3.2% 1-year change-0.6%-2.9%-3.3% Completed foreclosures552,048111,3211st15,053 Serious Delinquency4.0%7.7%2nd7.4%

Distressed Sales 4/9/2015 Jim Gilkeson, PhD, CFA 15

Conventional Mortgage Rate 4/9/2015 Jim Gilkeson, PhD, CFA 16

4/9/2015 Jim Gilkeson, PhD, CFA 17 Net Residential Mortgage Lending Depository Institutions. + Credit Unions GSE Agency/GSE Pools ABS Issuers Finance Co + REITS Other Net borrowing1,

FHA Share of Financings 4/9/2015 Jim Gilkeson, PhD, CFA 18

Orlando Financing Sources: Cash is still King 4/9/2015 Jim Gilkeson, PhD, CFA 19

Single Family Starts 4/9/2015 Jim Gilkeson, PhD, CFA 20

Housing Market Index 4/9/2015 Jim Gilkeson, PhD, CFA 21

4/9/2015 Jim Gilkeson, PhD, CFA 22 Household Wealth Balance Sheet of Households & Nonprofit Organizations (in $trillions) Δ04-14 Assets % Tangible % Household Real Estate % Financial % Deposits % Credit Market % Corporate Equities % Mutual Fund Shares % Businesses Owned % Pension Entitlements % Liabilities Home Mortgages % Consumer Credit % Net Worth %

Affordability Index (income/cost) 4/9/2015 Jim Gilkeson, PhD, CFA 23

Consumer Confidence 4/9/2015 Jim Gilkeson, PhD, CFA 24

4/9/2015 Jim Gilkeson, PhD, CFA 25 Population Trends 07/01/2014 Population (millions) '13-'14 Growth United States % Florida % Orlando MSA2.32.2%

4/9/2015 Jim Gilkeson, PhD, CFA 26 National Housing Survey It is a good time to: BUYSELL Jan-1064%10% Jan-1168%10% Jan-1271%11% Jan-1369%23% Jan-1465%38% Jan-1567%44%

4/9/2015 Jim Gilkeson, PhD, CFA 27 National Housing Survey Personal financial situation is getting: BETTERWORSE Jan-1044%17% Jan-1144%12% Jan-1244%14% Jan-1343%19% Jan-1444%14% Jan-1548%11%

4/9/2015 Jim Gilkeson, PhD, CFA 28 National Housing Survey The economy is on the: RIGHT trackWRONG track Jan-1031%62% Jan-1134%57% Jan-1230%61% Jan-1339%53% Jan-1439%54% Jan-1544%49%

Wrap Up  National  Housing is affordable  Mortgage rates low  Foreclosures and delinquencies back to normal  New housing starts still half of normal  Confidence is growing but not strong 4/9/2015 Jim Gilkeson, PhD, CFA 29

Wrap Up  Orlando  Volume stable at peak but prices well below peak  Housing affordable  Population growing again  Starts half of pre-peak normal  Still quite a few problem loans  43% of 2014 sales were cash 4/9/2015 Jim Gilkeson, PhD, CFA 30