By Kent Colton, PhD, Gopal Ahluwalia and Jay Shackford January 11, 2013 Copyright 2013 The Colton Housing Group

Source: U.S. Census Bureau *Forecast by Colton, Ahluwalia and Shackford 2 Chart 1 Copyright 2013 The Colton Housing Group

Source: U.S. Census Bureau *Forecast by Colton, Ahluwalia and Shackford 3 Chart 2 Copyright 2013 The Colton Housing Group

Source: U.S. Census Bureau *Forecast by Colton, Ahluwalia and Shackford 4 Chart 3 Copyright 2013 The Colton Housing Group

Source: National Association of Realtors *Forecast by Colton, Ahluwalia and Shackford 5 Chart 4 Copyright 2013 The Colton Housing Group

Source: U.S. Census Bureau 6 Chart 5 Copyright 2013 The Colton Housing Group

Source: 7 Chart 6 Copyright 2013 The Colton Housing Group Total StartsAverage Annual Starts S.F.M.F.TotalS.F.M.F.Total ,0662,9968,0621, , ,9651,7256, , ,5911,1847,7951, , ,2111,6927,9031, , ,6501,7289,3781, , , ,

*June 2010 Source: U.S. Census Bureau 8 Chart 7 Copyright 2013 The Colton Housing Group

* June 2010 Source: U.S. Census Bureau 9 Chart 8 Copyright 2013 The Colton Housing Group

10 Chart 9 Copyright 2013 The Colton Housing Group million 18.3 % 12% 14.2% million * “ Doubled-up” households are defined as those that include at least one “additional” adult - in other words, a person 18 years or older who is not enrolled in school and is not the householder, spouse, or cohabitating partner of the household. Source: U.S. Census Bureau Households that are doubling up

11 Copyright 2013 The Colton Housing Group million 27.7% 30% Chart 10 Source: U.S. Census Bureau

Source: Demographic Challenges & Opportunities for U.S. Housing Market. Prepared for the Bipartisan Policy Center, March Chart 11 Copyright 2013 The Colton Housing Group Householder Age OBSERVEDLOWMEDIUMHIGH ,7635,5345,4015,2475,5705,5985,5915,9506, ,88418,29817,95717,22217,13318,41019,57819,59822, ,32723,96821,29121,70320,06422,14121,90222,57923, ,40521,29324,90722,27122,43822,41523,04822,55823, ,36414,24721,34024,15522,01824,26722,27524,36522, ,62511,50813,50520,39522,74620,55523,04020,69923, ,7568,2058,71610,84816,09310,97816,41311,10916, ,6482,4283,5994,5946,1684,6556,3274,7156,488 TOTAL 91,771105,480116,716126,435132,229129,019138,533131,573145,034

GenerationPopulation in millions) Education (some college) MarriedHave Children Lived with at Least One Family Member <17 years old61 Echo Boomers ( ) (17-31 yrs old) 6554%21%20%47% Baby Bust ( ) (32-46 yrs old) 6149% 29% (at this stage) 43% Baby Boomers8136% 50% (at this stage) 30%39% Seniors (Before 1946) Chart 12 Notes:  Generational shifts will have significant impact on housing in next two decades.  Echo Boomers represent a long term opportunity for housing recovery but they are struggling in job market and the present economic environment.  According to NAR Survey 2011 profile of home buyers/sellers year olds represent 31% of all recent purchases.  Echo Boomers are more racially and ethnically diversified than Baby Boomers (65% of the Baby Boomers are, and 55% of Echo Boomers are Caucasians). Echo Boomers are more likely to be college educated – have better potential than previous generation. Echo Boomers are marrying later and have children later. Copyright 2013 The Colton Housing Group

* Rate in 3 rd Qtr 2012 Source: U.S. Census Bureau 14 Chart 13 Copyright 2013 The Colton Housing Group

YearAnnual RateYearAnnual Rate 2012* * Annual Rate 3 rd Qtr 2012 Source: U.S. Census Bureau 15 Chart 14 Copyright 2013 The Colton Housing Group

Source: U.S. Housing Market Conditions/HUD 16 Chart 15 Copyright 2013 The Colton Housing Group * Change in homeownership rd Qtr 2012 Less than 35 yrs39.9%38.5%38.6%40.8%43.0%39.1%37.8%36.3%-6.7% yrs68.1%66.3%65.2%67.9%69.3%65.0%63.5%61.8%-7.5% yrs75.9%75.2% 76.5%76.6%73.5%72.7%72.0%-4.6% yrs79.5%79.3%79.5%80.3%81.2%79.0%78.5%76.9%-4.3% 65 yrs and over74.8%76.3%78.1%80.4%80.6%80.5%80.9%81.4%+0.8% U.S.63.9% 64.7%67.4%68.9%66.9%66.4%65.5%-3.4% Note: Homeownership rate declined from peak of 68.9% in 2005 to 65.5% (decline of 3.4%) in 3 rd Qtr The decline in homeownership varies significantly among different population segments. Among less than 35 years old, homeownership declined from43.0% in 2005 to 36.3% in 3 rd Qtr 2012 (decline of 6.7%) and among years old, homeownership declined from 69.3% in 2005 to 61.8% in 3 rd Qtr 2012 (decline of 7.5%).

Source: Federal Housing Finance Agency 17 Chart 16 Copyright 2013 The Colton Housing Group Los AngelesSacramentoLas Vegas Riverside/San BernardinoPhoenixMiami Ft. LauderdaleWash DC , ,487444,958394,375471,000355,000444,000436,000443, ,000258,000178,000262,000218,000302,000294,000396,000 Los AngelesSacramentoLas Vegas Riverside/San BernardinoPhoenixMiami Ft. LauderdaleWash DC %122.5%97.2%135.5%77.5%122.0%118.0%121.5% %-42.0%-54.9%-44.4%-38.6%-32.0%-32.6%-10.6% %29.0%-11.0%31.0%9.0%51.0%47.0%98.0% Percentage Change

Source: Federal Housing Finance Agency 18 Chart 17 Copyright 2013 The Colton Housing Group AtlantaSeattleChicagoBostonRaleighDenverDallasHouston , ,000297,000301,000347,000234,000254,000238,000247, ,000269,000225,000311,000254,000257,000256,000298,000 AtlantaSeattleChicagoBostonRaleighDenverDallasHouston %48.5%50.5%73.5%17.0%27.0%19.0%23.5% %-9.4%-25.2%-10.4%8.5%1.2%7.6%20.6% %34.5%12.5%55.5%27.0%28.5%28.0%49.0% Percentage Change

19 Chart 18a Sources: SP/Case-Shiller top 10 and 20 market indexes through 3 rd qtr 2012 (base year 2000) (base year 2000). Copyright 2013 The Colton Housing Group

20 Chart 18b Note: 10-city and 20-city composite indexes are monthly, and chart shows change in price during first twelve months starting from January 2001 over January National index on the right scale is quarterly index, and chart shows change in prices during first quarter 2001 over first quarter 2000 and so on. Copyright 2013 The Colton Housing Group

Note: Index calculates the share of homes actually sold that a household earning the median income could afford to buy. Source: NAHB * 3 rd Qtr Chart 19 Copyright 2013 The Colton Housing Group

22 Copyright 2013 The Colton Housing Group

23 Chart 21 Copyright 2013 The Colton Housing Group

Source: Inside Mortgage Finance 24 Chart 22 Copyright 2013 The Colton Housing Group

* 1st Quarter 2012 Source: Mortgage Bankers Association 25 Chart 23 Copyright 2013 The Colton Housing Group

26 Source: American Housing Survey, 2009, Department of Housing and Urban Development; First American CoreLogic (2 nd Qtr 2012) Chart 24 Copyright 2013 The Colton Housing Group

27 Chart 25 Source: First American CoreLogic (2 nd Qtr 2012) Copyright 2013 The Colton Housing Group

28 Chart 26 Source: First American CoreLogic (2 nd Qtr 2012) Copyright 2013 The Colton Housing Group

29 Chart 26 cont. Source: First American CoreLogic (2 nd Qtr 2012) Copyright 2013 The Colton Housing Group

Source: BUILDER magazine 30 Chart 27 Copyright 2013 The Colton Housing Group

Source: U.S. Census Bureau 31 Chart 28 Square Feet Copyright 2013 The Colton Housing Group

Source: U.S. Census Bureau 32 Chart 29 Copyright 2013 The Colton Housing Group

Source: Federal Reserve Board 33 Chart 30 Copyright 2013 The Colton Housing Group *Note: During 3 rd Qtr 2012 homeowners equity increased by $1.2 trillion over 3 rd Qtr 2011.

Source: U.S. Census Bureau 34 Chart 31 Copyright 2013 The Colton Housing Group Unemployment Rate (% - Axis Inverted)

Copyright 2013 The Colton Housing Group 35 * 2 nd Qtr 2012 Source: Bureau of Economic Analysis, Department of Commerce Chart 32

Copyright 2013 The Colton Housing Group 36 * 2 nd Qtr 2012 Source: Bureau of Economic Analysis, Department of Commerce Chart 33

37 Chart 34 Copyright 2013 The Colton Housing Group

38 Chart 35 Copyright 2013 The Colton Housing Group

39 Note: In 2008, 2009, and 2010, over 95% of all mortgage backed securities have passed through Fannie Mae, Freddie Mac and Ginnie Mae. Source: Inside Mortgage Finance Housing Finance Copyright 2013 The Colton Housing Group Chart 36

40 Source: The State of the Nation’s Housing, Joint Center for Housing Studies of Harvard University, Table A-6, Page 39. Chart 37 Foreclosure Rate Share of US Loans in Foreclosure Share of US Households with Mortgages Foreclosure Rate Share of US Loans in Foreclosure Share of US Households with Mortgages United States Missouri Florida Louisiana California Utah Illinois Kentucky New York Oklahoma New Jersey Alabama Ohio Idaho Arizona Iowa Georgia Hawaii Texas Mississippi Michigan New Mexico Nevada Kansas Pennsylvania Maine Maryland Delaware Indiana Arkansas North Carolina Rhode Island Minnesota New Hampshire Virginia Nebraska Massachusetts District of Columbia Colorado Vermont Washington West Virginia Wisconsin Montana South Carolina South Dakota Connecticut Wyoming Oregon Alaska Tennessee North Dakota Copyright 2013 The Colton Housing Group

U.S. Population is Growing –- About 30 million between 2010 and Source: U.S. Census Bureau. Chart (est.) 2 Less than 15 years Yrs (Gen Y-Born ) yrs (Gen X-Born ) yrs (Baby Boomers-Born ) yrs (Baby Boomers-Born ) yrs or older (Born before 1946) Total of years and years million estimate by U.S. Census Bureau. Breakdown of estimates, in part, by Colton, Ahluwalia, and Shackford – 2010 – Estimated 2020 (in millions) Copyright 2013 The Colton Housing Group

42 Chart 39 Copyright 2013 The Colton Housing Group * 3 rd Qtr 2012