2. 2015 Economic Forecast Appraisal Institute Sacramento Sierra Chapter Presented By John Schleimer, MIRM President, Market Perspectives Residential Real Estate

3. Source: US Census Bureau

4. Source: Moody’s Analytics

6. Source: US Bureau of Labor Statistics

7. Sources: US Census Bureau, NAHB

8. Rank Q4 2016 Bottom 20% 20% to 40% 40% to 60% 60% to 80% Top 20% The Long Road Back to Normal < 75% 76% - 80% 81% - 93% 94% - 101% 102% < Relative to Normal This map shows how the states rank in the return to more normal levels of housing production. By the end of 2016, the top 40% will be back to near normal production levels. The bottom 20% will be below 75% of normal production.

9. Sacramento Region New Home Sales Source: The Gregory Group New Home Database Inconsistent Sales: 4Q14 651 3Q14608 2Q14808 1Q14672 4Q13382 3Q13582 2Q13724 1Q13770 2000 = 12,216 2004 = 17,155 2011 = 1,668 2012 = 2,782 2014 = 2,739

10. Sacramento Region New Home Inventory Source: The Gregory Group New Home Database From 375 active projects in 2007 to just over 100 today

11. Sacramento Region New Home Pricing Source: The Gregory Group New Home Database 2000 median price = $261,900 2005 median price = $459,900 or up 76% 2011 median price = $295,970 or down 36% 2014 median price - $417,880 or up 41% from trough and 10% from 2005 high

12. Source: MLS, The Gregory Group Existing home sales down 6% from 2013 to 2104

13. Source: MLS, The Gregory Group Inventory remaining low means seller’s market but puts pressure on pricing

14. Source: MLS, The Gregory Group Distressed property sales trending positively… down half from 2013

15. Existing home market is affordable alternative to new homes National price average between a new home to similar resale is 15% Current Sacramento area average difference is 26%

16. “Drivers” of Housing Markets Non-farm job growth

17. Recent MSA Non-Farm Job Growth 2012 at 18,800 2013 at 22,600 2014 estimate at 18,500

18. “Drivers” of Housing Markets Non-farm job growth Good paying jobs

19. “Drivers” of Housing Markets Non-farm job growth Good paying jobs Good consumer confidence

20. “Drivers” of Housing Markets Non-farm job growth Good paying jobs Good consumer confidence Immigrating households

21. “Drivers” of Housing Markets Non-farm job growth Good paying jobs Good consumer confidence Immigrating households Housing affordability

23. Affordability Score Card Sacramento = 48% Placer = 44% San Francisco = 15% California = 30% United States = 57% Source: CAR, 3 rd quarter 2014

24. Let’s see what John’s crystal ball says about the housing market for 2015

25. 2015 Concerns… New home sales remain inconsistent at 3,000±

26. 2015 Concerns… New home sales remain inconsistent at 3,000± Land and lot prices remain too high

27. 2015 Concerns… New home sales remain inconsistent at 3,000± Land and lot prices remain too high Affordability becoming more of an issue – especially for new homes

28. 2015 Concerns… New home sales remain inconsistent at 3,000± Land and lot prices remain too high Affordability becoming more of an issue Resale market about the same at 25,000± sales

29. 2015 Concerns… When will the Millennials become home buyers?

30. 2015 Concerns… When will the Millennials become home buyers? Will household incomes start to grow?

31. 2015 Positives… Synergism of downtown, the railyard and West Sacramento

32. 2015 Positives… Synergism of downtown, the railyard and West Sacramento Re-opening of North Natomas

33. 2015 Positives… Synergism of downtown, the railyard and West Sacramento Re-opening of North Natomas Expansion of West Roseville

34. 2015 Positives… Synergism of downtown, the railyard and West Sacramento Re-opening of North Natomas Expansion of West Roseville 55+ housing market

35. Questions?