January 2023 – Page 2

HouseCanary Issues Latest Report on U.S. Rental Market Trends for the Second Half of 2022

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In the Second Half of 2022, Renters Experienced Less Difficulty Finding Single-Family Rentals, as Rental Listing Inventory Experienced a 93% Year-Over-Year Increase and Days on Market Increased 52% Year-Over-Year The East Coast and Industrial Midwest Continued to Be Hotspots for Real Estate Investment Opportunities Due to Dramatic Single-Family Rental Listing Price Increases Since H2 2021 Southern States Experienced Largest Increases in Median Monthly Single-Family Rental Listing Prices, Making Up 70% of the Top Ten List for H2 2022 HouseCanary, Inc., a national brokerage known for its real estate valuation accuracy, released its latest National Rental Report, which compares insights from H2 2021 and H2 2022 to explore trends shaping the U.S. rental market for single-family detached listings, including price and supply shifts across the nation’s top 65 metropolitan statistical areas (“MSAs”) with the most rental market activity. The report can be downloaded and viewed here. HouseCanary tracks listing volume, new listings and median listing price information for 46 states and 204 individual MSAs. The findings in today’s report represent an aggregation and summary of all single-family detached listing records between January 2020 and December 2022. Chris Stroud, Co-founder and Chief of Research at HouseCanary, commented: “In the second half of 2022, inventory for single-family rentals almost doubled since the same period in 2021, indicating reduced competition among renters for single-family homes across the country. However, demand for rentals remained strong, with median list prices sustaining historical highs. We expect strong demand for rentals to persist in 2023 as analysts predict the Federal Reserve will continue hiking rates for the foreseeable future.” Following a thorough analysis of the aggregated data, HouseCanary’s report identified the following key findings about the rental market for single-family detached listings in the second half of 2022: Additional findings can be reviewed in the full report here. About HouseCanary Founded in 2013, national real estate brokerage HouseCanary empowers consumers, financial institutions, investors, and mortgage lenders, with industry-leading services including valuations, forecasts, and transactions. These clients trust HouseCanary to fuel acquisition, underwriting, portfolio management, and more. Learn more at www.housecanary.com. Contacts Longacre Square PartnersCasie Connolly / Ashley Areopagitahousecanary@longacresquare.com

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Profits on Typical Sales Nationwide Rise from 45 percent to 51 Percent; National Median Home Price for Full Year Up 10 Percent to $330,000; Home Sellers Continue Staying in Their Homes Less Than Six Years ATTOM, a leading curator of real estate data nationwide for land and property data, released its Year-End 2022 U.S. Home Sales Report, which shows that home sellers nationwide realized a profit of $112,000 on the typical sale in 2022, up 21 percent from $92,500 in 2021 and up 78 percent from $63,000 two years ago. Despite a market slowdown in the second half of last year, profits rose from 2021 to 2022 in 98 percent of housing markets with enough data to analyze. The latest nationwide profit figure, based on median purchase and resale prices, marked the highest level in the United States since at least 2008. The $112,000 profit on median-priced home sales in 2022 represented a 51.4 percent return on investment compared to the original purchase price, up from 44.6 percent last year and from 32.8 percent in 2020. The latest profit margin also represented a high point since at least 2008. “It seems pretty likely that home seller profits peaked for this cycle in 2022,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “Median prices have declined on a monthly basis since mortgage rates doubled between January and October and are likely to decline further in many markets across the country in 2023, reducing profitability for home sellers.” Both raw profits and ROI have improved nationwide for 11 straight years, shooting up again in 2022 as the national median home price increased 10 percent to $330,000 – yet another annual record. At the same time, though, profits increased at a slower pace than in 2021, reflecting a year when the nation’s decade-long housing boom stalled. The national median home value dipped 8 percent over the second half of last year as home-mortgage rates doubled, consumer price inflation soared to a 40-year high and the stock market slumped. Those forces cut into the amounts potential home buyers could afford, generating multiple headwinds that threaten to further erode the housing market, cutting demand and potentially pushing seller profits down. Total sales last year declined after rising in eight of the previous 10 years. Among 157 metropolitan statistical areas with a population greater than 200,000 and sufficient sales data, those in western and southern states reaped the highest returns on investment in 2022. The West and South regions had 14 of the 15 metro areas with the highest ROIs on typical home sales last year, led by Hilo, HI (100 percent return on investment); Lake Havasu City-Kingman, AZ (88.4 percent); Spokane, WA (86.2 percent); Fort Myers, FL (85.4 percent) and Port St. Lucie, FL (84.8 percent). Prices up at least 10 percent in more than half the country as most markets again hit new highs The U.S. median home price increased 10 percent in 2022, hitting another all-time annual high of $330,000. The full-year median home-price appreciation in 2022 fell below the 17.6 percent nationwide gain in 2021. Still, the latest increase in the national median value remained among the best over the past decade. Since 2012, when the U.S. housing market was just starting to recover from the Great Recession of the late 2000s, the national median price has grown 120 percent. Median prices rose from 2021 to 2022 in all but two of the 157 metropolitan statistical areas around the U.S. with a population of 200,000 or more and sufficient home price data in 2022. Values shot up at least 10 percent in 85 of those metros (54 percent). Those with the biggest year-over-year increases were in Florida, led by Naples, FL (median up 26.9 percent); Fort Myers, FL (up 26.7 percent); Lakeland, FL (up 25.7 percent); Port St. Lucie, FL (up 24.6 percent) and Ocala, FL (up 23.8 percent). The largest median-price increases in metro areas with a population of at least 1 million in 2022 came in Tampa, FL (up 21.9 percent); Raleigh, NC (up 17.9 percent); Austin, TX (up 17.9 percent); Orlando, FL (up 17.7 percent) and Tucson, AZ (up 17.2 percent). Typical home prices in 2022 reached new peaks in 153 of the 157 metros analyzed (97 percent), including New York, NY; Los Angeles, CA; Chicago, IL; Dallas, TX, and Houston, TX. Metro areas where median prices dropped in 2022, or rose by the smallest amounts, were Davenport, IA (down 2 percent); Shreveport, LA (down 1.7 percent); Baltimore, MD (up 2.7 percent); Pittsburgh, PA (up 2.7 percent) and Toledo, OH (up 2.8 percent). Profit margins increase in 90 percent of nation Profit margins on typical home sales improved from 2021 to 2022 in 141 of the 157 metro areas with sufficient data to analyze (90 percent). That happened as the 10 percent jump in sale prices nationwide in 2022 surpassed the 5 percent increases recent sellers had been paying when they originally bought their homes. Nine of the 10 largest increases in investment returns were in Florida, led by Fort Myers, FL (ROI up from 51 percent in 2021 to 85.4 percent in 2022); Ocala, FL (up from 49.7 percent to 82.4 percent); Naples, FL (up from 44.7 percent to 74.4 percent); Port St. Lucie, FL (up from 62.8 percent to 84.8 percent) and Miami, FL (up from 42.9 percent of 64.1 percent). Aside from Miami, the largest ROI gains from 2021 to 2022 in metro areas with a population of at least 1 million were in Orlando, FL (ROI up from 42.2 percent to 62.2 percent); Tampa, FL (up from 53.8 percent to 73.8 percent); Jacksonville, FL (up from 43.7 percent to 58.4 percent) and Las Vegas, NV (up from 48.8 percent to 59.8 percent). The biggest decreases in investment returns from 2021 to 2022 came in Salem, OR (ROI down from 82.7 percent to 43.1 percent); Atlanta, GA (down from 43.9 percent to 36 percent); Boise, ID (down from 75.9 percent to 68.9 percent); Prescott,

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The Atlanta Housing Board of Commissioners approved a Strategic Plan that calls for the creation and preservation of 10,000 housing units over the next five years. “We are excited to embark upon a five-year journey that we believe is ambitious and achievable, and aligned with Mayor Andre Dickens’ goal of building and preserving 20,000 affordable housing units over eight years,” said Larry Stewart, chair of the AH Board of Commissioners. “This plan’s implementation is critical to the health of Atlanta’s neighborhoods. Along with our civic and development partners, we intend to serve as a significant voice and execution arm for building and preserving affordability to address Atlanta’s growing housing crisis.” The Strategic Plan sets forth the following six goals: Goal 1: Create or Preserve 10,000 Affordable Housing UnitsGoal 2: Enhance Housing Assistance Resources for Atlantans in NeedGoal 3: Create Opportunities for Individuals, Families, and Children to ThriveGoal 4: Build or Expand Partnerships to Pool Resources and Maximize Impact for the Benefit of FamiliesGoal 5: Communicate the Impact of Atlanta Housing’s Work to AtlantaGoal 6: Strengthen Atlanta Housing Operations In order to reach the 10,000-unit goal, AH will activate more than 300 acres of its vacant land to achieve 5,000 new units, or half of the overall goal. The other half will come from preserving existing units. Both creation and preservation of units will require an AH investment of more than $250 million, with $220 million allocated toward creation of new units and $30 million allocated toward preservation. To supplement these efforts, a dashboard, available on the corporate website, helps to increase transparency and chart progress. The dashboard includes a map of the current state of AH’s voucher-based programs, including public housing, HomeFlex, and other sites. It also pinpoints AH’s priority development sites, along with projected unit counts. The plan’s people-centered approach is key. “The people of Atlanta need affordable housing now more than ever. We want to make Atlanta a more inclusive community by connecting our residents to safe, quality homes across the city,” said Eugene E. Jones, Jr., president and CEO of Atlanta Housing. “In keeping aligned with our people-focused mission, another important component of this plan is to help our residents attain self-sufficiency, which is vital if we are to maximize our impact and deliver on our vision of a more affordable Atlanta with healthy, thriving neighborhoods.” To view the plan, click here. SOURCE Atlanta Housing; HOUSING AUTHORITY OF CITY OF ATLANTA

CREFC Q4 2022 Survey Shows Improving Sentiment for CRE Finance Markets

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The CRE Finance Council (CREFC), the industry association that exclusively represents the $5.5 trillion commercial and multifamily real estate finance industry, announced the results of its Fourth-Quarter 2022 CREFC Board of Governors (BOG) Sentiment Index. The Sentiment Index, initiated in the fourth quarter of 2017, captures the pulse of various industry constituents, including balance sheet and securitized lenders, loan and bond investors, private equity firms, debt funds, servicers, and rating agencies. CREFC’s quarterly Sentiment Index is derived from the Board’s responses to nine core questions on the state of the CRE finance market. The Sentiment Index tracks the market pre-COVID, during COVID, and today as we continue to recover from the worst of the pandemic’s impact. 4Q 2022 Survey: Outlook Improves After Five Consecutive Quarterly Declines Overall sentiment increased to 68.6 in 4Q 2022, up 12% from 61.4 in the prior quarter, which marked the lowest level since the survey’s inception. This was the first positive shift following five consecutive quarterly declines. While an improvement, the index remains in negative territory given the continued uncertainty surrounding inflation, rising interest rates, and a looming recession. In addition, property valuation uncertainty will continue to challenge lenders and investors in the coming year. The BOG’s sentiment was flat to slightly upward in all nine questions. The questions with the most significant movements revolved around expectations for investor demand for CRE assets, borrower demand for financing, and liquidity in the CRE debt capital markets. In 3Q 2022, only 11% of the Board expected more demand by investors for CRE assets, with 64% expecting less demand. In the current quarter, 22% expect more demand, with 55% expecting it will be lower. Regarding borrower demand for financing, 15% of the Board expected more demand in 3Q 2022, with 68% anticipating less demand. In the current quarter, 29% expect more demand, with 51% expecting lower demand. Liquidity expectations also saw a positive shift in 4Q 2022. In the prior quarter, 62% expected a contraction in liquidity, with only 8% expecting an improvement. In the current quarter, 47% expect a contraction, with 18% anticipating better conditions. In addition, the rising rate environment continues to weigh heavily on the BOG, with 84% expecting rates to negatively impact the industry in the current quarter, compared to 98% in the prior quarter. Finally, overall sentiment for all CRE finance businesses remained firmly negative. In 3Q 2022, 2% indicated a positive outlook, with 89% expressing an unfavorable view. In the current quarter, a still small 4% held a positive outlook, with 75% holding a negative view. Sentiment for the industry peaked in 2Q 2021 when the survey found that 83% had a favorable opinion, with only 3% having an opposing view. This quarter’s survey also included two open-ended questions for the Board, separate from the questions comprising the Index. The additional questions sought to gain Board insights on topical issues facing the market. The first question asked the Board’s projection for the Federal Reserve’s benchmark policy rate in 2023 in contrast to its current target range between 4.25% and 4.50%. The median response was 5.00%, with 29% expecting the rate to fall between 4.75% and 5.00% and 24% expecting the rate to be greater than 5.00%. Finally, members were asked to predict total private-label CMBS and CRE CLO issuance in 2023. The median response from the Board was $90 billion, or 10% lower than the full-year 2022 issuance of $100 billion. “This most recent survey accurately captures the concerns of the industry at large at this time,” said CREFC Executive Director Lisa Pendergast. “While not a cause for celebration by any means, we hope this is the beginning of a positive streak. The reality remains that the Fed will continue to raise rates and the potential of an economic downturn still exists. We remain optimistic, however, that we are in a much better position and stronger place than we were in 2008, and we will continue to be a resource and a voice for our industry and members in these uncertain times.” About CREFC’s Board of Governors Sentiment Index The CRE Finance Council (CREFC) is the trade association for the commercial real estate finance industry. Over 300 companies and nearly 18,000 individuals are members of CREFC. CREFC’s members serve a critical role in the US economy by financing office buildings, industrial and warehouse properties, multifamily housing, retail facilities, hotels, and other types of commercial and multifamily real estate. Nearly 60 senior executives in the commercial real estate finance markets represent CREFC’s Board of Governors and hail from every sector of the commercial real estate lending and mortgage-related debt investing markets. CREFC Governors include balance sheet and securitized lenders, loan and bond investors, mortgage bankers, private equity firms, loan servicers, rating agencies, attorneys, accountants, and others. CREFC’s Governors serve up to six years on CREFC’s Board and are all senior members in their firms and the industry. CREFC’s BOG Sentiment Index aims to gauge quarter-to-quarter shifts in market conditions for the CRE finance market and the outlook for the future. The Sentiment Index equally weights the responses to each question and then sums those weighted responses to create a single index. Media contact:Morgan McGinnismmcginnis@Prosek.com SOURCE CRE Finance Council

keep more properties and cash flow in 2023

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David Olds is the founder of Ez REI Closings, a real estate wholesale company based in Chattanooga, TN. He moved to Chattanooga in the middle of the crash in 2009 and built his business from the ground up, and he is on the show today to share his story. Listen now to learn more about Ez REI Closings and the lessons David learned through the years as a real estate investor! Quotables “No matter what the market is, always be looking for opportunities to grab long-term cash flowing assets.” “I think a lot of our customers are experiencing, what I heard at a conference the other day, a reversion. It’s not really a correction, it’s definitely not a crash, but it’s reverting back to normal.” “Anybody that’s been around just a little bit and has a fully scaled-out business, they’re doubling down right now.” “As soon as rates flatten and stabilize, it’s going to be a feeding frenzy. It’s going to be unbelievable.” “I promise you, keep some of these properties. Get some financing, buy Sub-To, learn creative financing – whatever you have to do, but build that portfolio so you can get to the end faster.” “It’s, in my opinion, the best investment vehicle in the world because it’s inflation indexed, it’s residual income, and it has an underlying asset.”

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Elevated Mortgage Rates and Home Prices Expected to Continue to Limit Housing Activity Despite ending the year on a stronger-than-anticipated footing, the economy is still expected to slip into a modest recession beginning in the first half of 2023, according to the January 2023 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. The ESR Group views the current rate of consumption as unsustainable relative to disposable income and forecasts that an eventual retrenchment of the consumer will be a major factor in the upcoming economic contraction. The ESR Group predicts Q4/Q4 GDP growth for 2023 to be negative 0.6 percent, one-tenth lower than its previous forecast. Noting cooling inflationary pressure in the past three Consumer Price Index (CPI) reports, the ESR Group believes the Federal Reserve is likely nearing its eventual terminal rate but notes that upside risk remains for tighter-for-longer monetary policy should a recession be delayed or avoided altogether, or, alternatively, if inflation measures fail to further cool. Further, the ESR Group expects a cumulative 6.7 percent home price decline over the next two years as housing affordability remains unsustainably stretched. A repeat of the Great Financial Crisis is not expected, however, as far fewer borrowers are facing interest rate shocks, loan workout and modification programs are more robust, and aggregate residential real estate and the broader financial system are substantially less leveraged compared to the 2006-2008 period. Instead, housing affordability is forecast to gradually improve over the longer term due to a combination of home price declines, modestly lower mortgage rates, and stronger-than-usual nominal income growth. Ongoing affordability challenges and the “lock-in effect” — in which many current homeowners have a financial disincentive to list their homes due to the higher mortgage rate environment — have the ESR Group expecting existing home sales activity to remain constrained, creating an avenue for the new home sales trend to comparatively outperform existing home sales in coming years. “There are economic signals pointing to recession but also signs that a ‘soft landing’ may be in the offing,” said Doug Duncan, Senior Vice President and Chief Economist, Fannie Mae. “In our view, the balance still suggests a modest recession, particularly if the Federal Reserve maintains its focus on labor market tightness. While limited and tentative signs of a slowing labor market are appearing, overall, labor remains robust. The market sees the Federal Reserve easing in the second half of the year, which can be interpreted either as a view that the recession is forthcoming or that the slowdown in inflation will lead to a less restrictive monetary posture. If the latter occurs, the lower accompanying rates will likely set the stage for a pickup in housing activity going into 2024, as can be seen in our latest forecast. However, if the market is wrong – and the Federal Reserve does as it has stated it will do and holds the federal funds target at the terminal rate longer to ensure no inflation resurgence – then the accompanying rate decline and associated revival in housing activity will likely be delayed. In either case, we expect 2023 to be a slow year for the housing market.” Visit the Economic & Strategic Research site at fanniemae.com to read the full January 2023 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here. SOURCE Fannie Mae