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Big Budgets From Out-of-Town Homebuyers Are Edging Out Locals in Popular Destinations Like Phoenix & Las Vegas

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Nationwide, 31.5% of Redfin.com users looked to move to a different metro area in the first quarter, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. This is up from 30.3% in the fourth quarter of 2020 and 26% a year earlier, and the highest share since Redfin started tracking migration in 2017. The upswing in people moving from one area to another since the start of the pandemic is due partly to remote workers moving to relatively affordable areas in search of larger homes with more outdoor space. One consequence of pandemic-driven migration is that out-of-towners are driving up home prices and making it difficult for local residents to win bidding wars. Out-of-towners have significantly bigger budgets than locals in the most popular migration destinations The average housing budget for out-of-towners moving to Phoenix, the number-one migration destination for Redfin.com users in the first quarter, was $627,000, 23% higher than the $510,000 average budget for local buyers. In Austin, the next-most popular destination, out-of-towners had an average budget of $855,000, 32% higher than the average local budget. Next comes Las Vegas, where the average out-of-towner had a $582,000 budget, 16% higher than locals. “Remote work is here to stay for many Americans. The long-term cultural shift is disseminating money once concentrated on the coasts throughout the country,” said Redfin Chief Economist Daryl Fairweather. “Affluent remote workers are able to get more for their money by moving from job centers like the Bay Area to more affordable places like Phoenix and Las Vegas. But local residents looking to buy their first home are losing out because of the big budgets flowing into their hometowns. Many local buyers, particularly those who aren’t selling a home to fund their purchase, are being forced to compromise. They’re searching for smaller homes in farther-flung neighborhoods, or even dropping out of the search altogether.” Phoenix home-sale prices were up 20% year over year to $366,000 in March, and they were up 28.2% to $427,000 in Austin and 13.9% to $336,000 in Las Vegas. But even with significant increases, prices in those destinations are much lower than the places migrants are moving in from. In the San Francisco Bay Area, the top origin for people moving to Austin, the typical home sold for $1.43 million in March, and in Los Angeles, the top origin for people moving to Phoenix and Las Vegas, it was $774,000. “Not only are a lot of remote workers moving to Las Vegas, but many people are moving here and bringing their businesses with them, setting up shop in Nevada,” said local Redfin real estate agent Lori Garlick. “Inventory is so low that the market is frustrating for locals, first-time buyers and people who don’t have big down payments. Potential buyers are waiting in line to tour anything with a pool and a nice-sized lot. But if a buyer doesn’t have a budget big enough to pay over list price and throw in other incentives for the seller, like waiving the appraisal fee, they’re just not going to get the house.” The average housing budget for out-of-towners moving to Nashville in the first quarter was $719,000, 48% higher than the $485,000 average budget for local buyers, a bigger premium than any other metro. It’s followed by Atlanta, where out-of-towners have an average budget of $698,000, 33% higher than the average local budget. Atlanta, where 26% of Redfin.com users searching for homes in the first quarter were from out of town, was the fifth-most popular migration destination in the first quarter. Nashville, where 39% of Redfin.com users searching for homes in the first quarter were from out of town, is also a popular destination. Out-of-towners have bigger budgets than locals in 32 of the 35 cities included in Redfin’s budget analysis. San Francisco, San Jose and Fremont, CA (part of the Oakland metro) are the only cities where locals have higher budgets than migrants. That stands to reason, as the Bay Area has the highest median income in the country, which means locals are likely able to afford higher-priced homes than those moving in from other areas. Relatively affordable metros continue to pick up in popularity Dallas and Atlanta were the next-most popular destinations for people looking to move to a different area, meaning they—along with Phoenix, Austin, and Las Vegas—had the biggest net inflows of Redfin.com users in the first quarter. A net inflow is a measure of how many more Redfin.com home searchers looked to move into a metro than leave, out of a sample of 2 million users. Relatively affordable inland metros are typically the most sought-after for Redfin.com users looking to leave their home metro, a trend that has intensified with the pandemic. Net inflow of home searchers has increased significantly from a year ago in all of the top 10 migration destinations. Migrants are looking to move away from New York, the Bay Area and Los Angeles In terms of places people are looking to leave, New York, the Bay Area, Los Angeles, Washington, D.C., and Seattle top the list of places with the biggest net outflow in the first quarter. A net outflow is a measure of how many more Redfin.com home searchers looked to leave a metro than move in, out of a sample of 2 million users. Expensive coastal cities tend to be the places Redfin.com home searchers are looking to leave; in fact, the list of places with the biggest net outflow is the same as it was in the fourth quarter of last year. But as is the case with inflow to the most popular destinations, net outflow has shot up over the last year, more than doubling in seven of the top 10 places migrants are looking to leave. To read the full report, including charts, methodology and additional metro-level data on the budget differences between locals and out-of-towners, please visit: https://www.redfin.com/news/q1-2021-housing-migration-trends-budget

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Invigorate Finance is a closed loan mortgage conduit aggregator that specializes in the creation of new and improved lending programs and the aggregation of these residential and business purpose loans. Invigorate Finance is offering solutions to lenders not found in the industry before now, including an innovative suite of loan products and a process that insulates risk and streamlines origination, asset management, servicing, and structured finance with a collaborative approach and emphasis on the client experience. “Ed Fay and I have known each other for a long time and by teaming up we are bringing together a level of experience, skills, and a quality of service that no other aggregator can match,” said McGuinness. “It is an exciting combination that allows Invigorate Finance to fully optimize the power of mortgage loan aggregation and enhance execution for lenders and investors alike.” McGuinness, an industry veteran with over 25 years of experience in the space, has previously held senior management and executive roles with Colony American Finance n/k/a CoreVest American Finance, WinWater Home Mortgage/PremiumPoint Investments, and Deutsche Bank. At WinWater/Premium Point, amongst other things, she was the head of the deal team as they were the first hedge-fund issuer of residential mortgage-backed securities collateralized by newly originated mortgage loans. McGuinness was named a 2019 HousingWire Vanguard, winner of a 20/20 Women of Vision Award by Women’s Mortgage Banking Magazine and was profiled as a significant Woman in Real Estate by REI Ink Magazine. According to Ed Fay, “Invigorate Finance is bringing the market to the next level with enhanced products and exemplary customer service in a way that takes full advantage of Jen McGuinness’ impressive business experience, full life of loan execution skills, and significant industry knowledge. I am excited about what we are doing.” About Invigorate FinanceInvigorate Finance is a closed loan mortgage conduit aggregator that specializes in the creation and aggregation of new and improved lending programs and structured solutions in the residential mortgage, business purpose, and commercial spaces. For more information visit www.InvigorateFinance.com

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Ongoing Supply-Demand Imbalance Shaping Housing Forecast as Mortgage Rates and Home Prices Tick Up Full-year 2021 real GDP growth expectations improved to 6.8 percent, including 9.1 percent annualized growth in the second quarter, due primarily to the continued easing of virus-related social restrictions and stimulus-driven consumer spending, according to the April 2021 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. Economic activity rebounded sharply following February’s weather-related pullback, and the acceleration is expected to continue through the second quarter before tapering in the second half of the year. Given the unprecedented nature of last year’s pandemic-induced slowdown, risks to this part of the forecasted recovery remain elevated. Uncertainties to the forecast include the extent of consumers’ willingness to tap into their accumulated savings and return to previously COVID-restricted activities; they also include well-publicized supply chain disruptions, the pace of inflation, and both monetary and fiscal policy uncertainty. While housing demand remains strong, the ESR Group revised its annual home sales forecast slightly downward due to continued supply constraints and a modestly higher outlook for mortgage rates. Even so, home sales and purchase mortgage originations in 2021 are expected to rise 6.2 percent and 14.5 percent, respectively, year over year. Additionally, given the continued supply-demand imbalance, home prices are forecast to rise 8.0 percent in 2021 – up from the previously forecast 4.2 percent – before decelerating to 2.9 percent annualized in 2022, as measured by the FHFA Home Price Index. “The ramp-up we’d previously forecast for the economy is underway, as evidenced by, among other measures, increasing airline passenger reservations and restaurant bookings,” said Doug Duncan, Senior Vice President and Chief Economist. “Vaccinations are continuing to roll out, and consumers appear to be increasingly looking toward post-pandemic life. While inflationary pressure is growing, our latest forecast update suggests that in the near-term interest rates will remain steady at borrower-friendly levels. In fact, despite the recent increases, mortgage rates remain near historical lows, which we expect will help maintain strong housing demand in 2021. Duncan added: “An above-average pace of renters converting to first-time homebuyers is continuing, with many migrating into the suburbs from denser urban areas. However, strong consumer demand for housing continues to hit up against a lack of supply, limiting sales and bolstering home prices, which we expect will further compound affordability concerns in the months ahead as homebuilders also wrestle with input supply restraints.” Visit the Economic & Strategic Research site at fanniemae.com to read the full April 2021 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.

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First American Financial Corporation (NYSE: FAF),a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, released First American’s proprietary Potential Home Sales Model for the month of March 2021. March 2021 Potential Home Sales Potential existing-home sales decreased to a 6.26 million seasonally adjusted annualized rate (SAAR), a -0.1 percent month-over-month decrease. This represents a 79.7 percent increase from the market potential low point reached in February 1993. The market potential for existing-home sales increased 23.6 percent compared with a year ago, a gain of 1,197,267 (SAAR) sales. Year-over-year comparisons will be very large in the months to come, as the housing market came to a halt last year at this time when the pandemic shut down the economy. Housing rebounded sharply in the summer. Currently, potential existing-home sales is 527,022 million (SAAR), or 7.8 percent below the pre-recession peak of market potential, which occurred in April 2006. Market Performance Gap The market for existing-home sales outperformed its potential by 5.6 percent or an estimated 348,600 (SAAR) sales. The market performance gap increased by an estimated 146,600 (SAAR) sales between February 2021 and March 2021. Chief Economist Analysis: Millennials, Still Low Rates Fueling Demand “After hitting its highest point since 2007 last month, housing market potential fell modestly in March, according to our Potential Home Sales Model. Housing market potential remains near the 13-year high point, but the severely limited supply of homes for sale and an uptick in mortgage rates pulled market potential for existing-home sales off its February peak,” said Mark Fleming, chief economist at First American. “Annual comparisons of housing market potential will be very large for the next few months, as the housing market came to a halt last year at this time when the pandemic shut down the economy. However, housing market potential is 16.5 percent higher than two years ago and will remain strong due to a demographic-fueled shift away from renting to home owning driven by millennials aging into homeownership and accelerated by still low mortgage rates.” What’s the Deal with Rising Mortgage Rates? “On a month-over-month basis, mortgage rates increased by the greatest amount since February 2018, contributing to a $13,000 decline in house-buying power nationally. Historically and relative to one year ago, mortgage rates remain low,” said Fleming. “Yet, for homeowners who locked in rates below 3 percent, modestly higher rates in a historically low inventory environment may disincentivize some from selling their homes thus preventing more supply from reaching the market. In March, the dip in house-buying power resulted in a decline of 55,600 potential home sales. “Potential home buyers ready to make the switch from renting to owning may need to adjust their price points given modestly higher mortgage rates. But rates aren’t everything. Buying a home is a lifestyle choice and a large cohort of millennials are reaching prime buying age, and the new normal likely includes more work-from-home options, giving potential home buyers more geographic flexibility, helping to boost home sales,” said Fleming. “In March, household formation contributed to a gain of approximately 4,300 potential home sales. This demographic tailwind is expected to persist. “Adding fuel to the housing demand fire is the increase in the personal savings rate, which climbed to an all-time high in April and remains above the historical average as pandemic-driven restrictions have limited discretionary spending,” said Fleming. “For young people that are still employed, increased savings can be used as a down payment, which is typically the biggest hurdle for first-time home buyers.” The Problem is Supply “Existing homeowners today are sitting on record amounts of equity, which could be used to move out and move up. Rising house appreciation contributed to a gain of approximately 33,300 potential home sales in March. However, while many homeowners may want to use their equity to buy something bigger and better, they first must find something to buy,” said Fleming. “The fear of not finding something to buy in an environment of historically low inventory is one reason tenure length reached a high of just over 10.5 years. In March, homeowners staying put and a lack of new construction collectively contributed to a loss of just over 6,100 potential home sales.” Spring Market Housing Market Will Remain Hot “While the market potential for existing-home sales slipped off its 13-year high, the housing market remains hot as the spring home-buying season hits its stride. According to the most recent NAR existing-home sales report, homes in February were selling at the fastest pace on record, and house price appreciation is accelerating,” said Fleming. “The rapid pace of sales and rising prices indicate that the month-over-month moderation is due to the lack of supply, not a lack of demand. The issue is inventory – you can’t buy what’s not for sale. “However, as widespread vaccinations prompt the economic recovery to pick up speed, consumers and lenders will likely grow more confident. Similarly, a safer environment may prompt equity-rich homeowners who were unwilling to open their homes to showings during the peak of the pandemic, to finally put their homes on the market,” said Fleming. “More supply will help ease this super sellers’ market. But, if you think modestly higher mortgage rates will substantially cool a hot spring home-buying season, you’re overlooking a key driver of housing demand: demographics.”

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New Residential to combine NewRez and Caliber platforms into premier financial services company New Residential Investment Corp. (NYSE: NRZ; “New Residential” or the “Company”) announced that it has entered into a definitive agreement with an affiliate of Lone Star Funds (“Lone Star”) to acquire Caliber Home Loans, Inc. (“Caliber”). With this acquisition, New Residential intends to bring together the platforms of Caliber and NewRez LLC (“NewRez”), New Residential’s wholly owned mortgage originator and servicer. The transaction is intended to close as quickly as possible, subject to various approvals and customary closing conditions, and is targeted for the third quarter of 2021. “We believe this is a terrific acquisition for our Company,” said Michael Nierenberg, Chairman, Chief Executive Officer and President of New Residential. “Over the years, Caliber’s experienced team has built a differentiated purchase-focused originator with an impressive retail franchise and solid track record in customer retention. The combination of NewRez and Caliber’s platforms will create a premier financial services company with scale, talent, technologies and products to accelerate our mortgage company objectives and generate strong earnings for our shareholders. With this acquisition, we have significantly strengthened our capabilities to perform across interest rate environments.” “We are excited to be joining the New Residential family,” said Sanjiv Das, Chief Executive Officer of Caliber. “By combining platforms with NewRez, we will join another industry pioneer that has complementary strengths and is committed to delivering the dream of homeownership. Our combination of strategies will allow us to accelerate our leading position in purchase lending, grow our digital direct to consumer and broker initiatives, and further propel our retail franchise. As we leverage our digitization investments, we will make the entire mortgage process faster, easier and more efficient. We are thrilled to have the opportunity to deepen our customer relationships, expand our customer reach and provide more industry-leading products and options to our customers.” “This transaction is yet another important milestone for NewRez as we continue to expand our business, grow our customer reach and provide more options to support our homeowners and clients,” said Baron Silverstein, President of NewRez. “Combining with Caliber’s platform emphasizes our commitment to positioning our business for long-term success while continuing to deliver significant value for our customers, our partners and our employees.” Transaction Details Under the terms of the agreement, which were unanimously approved by New Residential’s board of directors, New Residential will pay a cash consideration of $1.675 billion, or approximately 1.0x expected tangible book value at closing1, to acquire Caliber. ABOUT NEW RESIDENTIAL New Residential is a leading provider of capital and services to the mortgage and financial services industry. The Company’s mission is to generate attractive risk-adjusted returns in all interest rate environments through a portfolio of investments and operating businesses. New Residential has built a diversified, hard-to-replicate portfolio with high-quality investment strategies that have generated returns across different interest rate environments over time. New Residential’s portfolio is composed of mortgage servicing related assets (including investments in operating entities consisting of servicing, origination, and affiliated businesses), residential securities (and associated called rights) and loans, and consumer loans. New Residential’s investments in operating entities include its mortgage origination and servicing subsidiary, NewRez, and its special servicing division, Shellpoint Mortgage Servicing, as well as investments in affiliated businesses that provide services that are complementary to the origination and servicing businesses and other portfolios of mortgage related assets. Since inception in 2013, New Residential has a proven track record of performance, growing and protecting the value of its assets while generating attractive risk-adjusted returns and delivering over $3.6 billion in dividends to shareholders. New Residential is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. New Residential is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm, and headquartered in New York City. ABOUT NEWREZ NewRez is a leading nationwide mortgage lender and servicer. As a lender, NewRez focuses on offering a breadth of industry-leading products, supported by a loan process that blends both human interaction and the benefits of technology into an unparalleled customer experience. Founded in 2008 and licensed to lend in 50 states, NewRez is headquartered in Fort Washington, Pennsylvania and operates multiple lending channels, including Direct to Consumer, Joint Venture, Wholesale and Correspondent. The servicing business operates through NewRez Servicing, the performing loan servicing division, Shellpoint Mortgage Servicing, the special servicing division. NewRez also has several affiliates that perform various services in the mortgage and real estate industries. These include Avenue 365 Lender Services, LLC, a title agency, and eStreet Appraisal Management LLC, an appraisal management company. NewRez is member of the New Residential family. ABOUT CALIBER Caliber is a proven leader in the U.S. mortgage market with a diversified, customer-centric, purchase-focused platform with headquarters in Coppell, Texas. Caliber is an approved Seller/Servicer for both Fannie Mae and Freddie Mac, an approved issuer for Ginnie Mae and is an approved servicer for FHA, VA and the USDA. Caliber carries multiple servicer ratings from Standard & Poor’s, Moody’s, Fitch and DBRS.

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Sprout Mortgage, the innovative force in non-QM residential lending, announced the appointment of a new Chief Information Officer, effective immediately. Henry Santos is the new Executive Vice President and Chief Information officer. “I’m excited about Henry joining our team of senior leaders to advance our mission of continued technological innovation and strengthen our position as the preeminent provider of non-QM residential lending nationwide,” said Michael Strauss, CEO of Sprout Mortgage. “Sprout is fortunate to have a person with Henry’s skill, proven track record, and history of innovation among its leaders.” “The addition of Henry to Sprout’s executive team shows that we are attracting highly experienced leaders who will continue to drive the firm to exceed its goals,” said Shea Pallante, President of Sprout Mortgage. “I look forward to working with the entire Sprout team to extend our commitment to innovation and high-quality client experience by investing in technology that allows our brand to attain sustainable, competitive market advantages,” said Mr. Santos. About Henry Santos EVP, Chief Information Officer Henry is responsible for the strategy, execution, and performance of the Sprout enterprise technology ecosystem. He leads the firm’s efforts to transform the Sprout Mortgage brand into a digital, highly automated experience that leverages data and advanced computer engineering solutions. Henry is focused on bringing modern technology and subject matter expertise into closer cooperation, particularly to reduce the rising cost of origination and distribution. Prior to joining Sprout, Henry served as the Global Director of Housing Finance and Real Estate Services at Infosys. Previous experience includes head of Housing Finance and Lending Solutions at IBM, and roles at Fidelity National Information Systems, Capco, and Accenture — all in global leadership positions driving customized solutions for lenders and participants in the lending ecosystem. Henry has a Bachelor of Arts degree from Columbia University and a Master’s in Human Development from Harvard University. About Sprout Mortgage Sprout Mortgage is a leading nationwide non-QM lender whose innovative products, powerful technology, and precision underwriting provide tailored lending solutions for residential real estate investors, self-employed borrowers, and those with recent credit events. Sprout provides modern lending solutions to help a broad range of consumers and the brokers and lenders who serve them. For more information, visit https://www.sproutmortgage.com or call 844-664-6100.