1. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Slow and Steady Wins the Race: Housing Market Outlook David Stiff, Principal Economist, Case-Shiller November 19, 2014

2. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Agenda  U.S. Economy  U.S. Housing Markets  Boston Housing Market  Demographics (the “Millennials”)  Globalization and Real Estate Markets 2

3. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Trying to Close a Large Output Gap Gross domestic product, $ bil 2009, SAAR Sources: Bureau of Economic Analysis, Congressional Budget Office $5.6 trillion in lost output, about $46,000 per household

4. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Households Have Deleveraged % of disposable income Sources: Federal Reserve, Bureau of Economic Analysis

5. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Banking System is Well Capitalized Commercial banks Source: FDIC

6. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Businesses Are Highly Profitable … After-tax corporate profit margin, % Sources: Bureau of Economic Analysis, National Federation of Independent Business

7. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential … but Wage Growth Continues to Lag Employment cost index, total compensation, Y/Y % change Source: Bureau of Labor Statistics

8. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Houses Are Cheap (U.S.) % of median family income Sources: NAR, Freddie Mac, HUD, Census Bureau, CoreLogic (calculation) (2014 dollars) Median P & I Payment Median Asking Rent Jul-1971$818 Jul-2006$1,340$726 Jul-2014$811$747

9. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Home Sales Inching Upward U.S. single-family home sales, ths, SAAR Sources: NAR, U.S. Census Gap because of foreclosure sales and limited new construction Increases due to homebuyer tax credits

10. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Distressed Sales No Longer Dominating Markets Share of U.S. home sales, SA Source: CoreLogic Decrease due to homebuyer tax credits

11. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Housing Market Has Regained Balance Months supply of single-family homes, existing and new, U.S. Sources: National Association of Realtors, U.S. Census

12. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Big Price Bounces in the “Sand” States Change in single-family home prices, July 2011 to July 2014 12 Source: CoreLogic Case-Shiller

13. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Difficult to Buy a House with Less Income Source: U.S. Census

14. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Mortgage Lenders Are Too Cautious 14 Source: CoreLogic

15. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Average annual appreciation since 1976 (4.8%) Sources: CoreLogic, Moody’s Analytics Price Appreciation is Moderating U.S. single-family home prices, Y/Y % change

16. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Houses Are Cheap (Boston) % of median family income Sources: Freddie Mac, HUD, Census Bureau, CoreLogic (calculation) (2014 dollars) Median P & I Payment Median Gross Rent Jul-2006$1,940$1,211 Jul-2014$1,447 $1,281 (2013)

17. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Very Limited Inventory … Months supply of homes, Boston metro area Sources: Greater Boston Association of Realtors

18. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential … is Restraining Sales Activity Home sales, SA, Boston metro area Source: Greater Boston Association of Realtors

19. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Largest Price Gains in Towns Inside I-495 Change in single-family home prices, July 2011 to July 2014 19 Source: CoreLogic Case-Shiller

20. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Sources: CoreLogic, Moody’s Analytics Average annual appreciation since 1976 (6.3%) Price Appreciation is Moderating Single-family home prices, Y/Y % change, Boston metro area

21. “Boomers” Have Entered Their Prime Earnings Years (slide from 2001) Age of Householder Households, 1990, millions Households, 2000, millions Change, 1990 to 2000, millions Median Household Income, 2000, $ thousands Home Ownership Rate, 2000 15 to 245.15.40.3$27.717.0% 25 to 3420.418.1-2.3$44.546.1% 35 to 4420.624.43.8$53.266.7% 45 to 5414.520.76.2$58.275.8% 55 to 6412.513.91.4$45.080.1% 65 to 7411.711.4-0.3$23.082.8% 75 and Over8.411.43.0$18.976.9% All Ages93.2105.312.1$42.167.0%

22. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential The “Millennials” Will Drive Markets 22 Sources: Census, Pew Research Center, NAR, Freddie Mac, CoreLogic Early Baby BoomLate Baby BoomGeneration XMillennials Born1946 to 19541955 to 19641965 to 1980After 1980 Age in 201460 to 6850 to 5934 to 4918 to 33 Population (2013)30.2 mil43.8 mil65.7 mil70.2 mil Unemp. rate (age 25 to 32) 5.7% (in 1979) 7.3% (in 1986) 5.8% (in 1995) 8.2% (in 2013) P&I payment median home (2013 dollars) $1,380 (in 1979) $1,216 (in 1986) $1,035 (in 1995) $748 (in 2013)

23. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Careers Starting Well (for College Grads) … Median annual earnings full-time workers ages 25 to 32, $ 2012 23 Sources: U.S. Census, Pew Research Center Early Boomers (1979)

24. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential … but Jobs Needed to Form New Households

25. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Millennials Are Moving Into the Housing Market … Population Source: U.S. Census Largest Age Cohort Median Age of First-Time Homebuyers

26. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential … Driving a Rebound in Apartment Construction Housing starts, ths, SAAR, 12-month average, U.S. Source: U.S. Census Bureau

27. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential More Multi-Family Development in Boston 27

28. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential 28

29. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential U.S. Real Estate Became Less Expensive Home price indexes, 2000:Q1=100 29 Sources:The Economist, National Bureau of Statistics of China, Standard & Poor's, Teranet and National Bank United States China Canada

30. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Global Markets Drive U.S. Interest Rates Treasury securities holdings, $ bil Sources: Federal Reserve, U.S. Treasury

31. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Globalization Leads to Greater Volatility Financial crises vs. capital mobility 31

32. ©2014 CoreLogic, Inc. All rights reserved. Proprietary & Confidential Summary  U.S. economic recovery is accelerating (slowly)  U.S. housing markets will continue steady improvement  Increasing sales and construction activity  Moderating price appreciation  Boston housing market constrained by limited inventory  “Millennials” will be as important as “Boomers”  Increasing direct and indirect effects of globalization on local real estate markets 32