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Elevated Mortgage Rates Push Housing Sentiment Even Lower

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Consumers Now Point to Mortgage Rates, not Home Prices, as Primary Hindrance to Affordability The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased by 2.4 points in September to 64.5, as elevated mortgage rates further dampened already-pessimistic consumer housing sentiment. Five of the HPSI’s six components decreased month over month, including the components measuring perceived homebuying and home-selling conditions. In September, 16% of consumers reported that it’s a good time to buy a home, matching the all-time survey low set last year. Additionally, 63% said it was a good time to sell a home, down 3 percentage points compared to the prior month. Only 17% of consumers indicated that they expect mortgage rates to go down over the next 12 months. Overall, the full index is up 3.7 points year over year. “Mortgage rates persistently over 7 percent appear to be deepening the malaise consumers feel about the home purchase market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first. Notably, the share of consumers expressing pessimism about homebuying conditions hit a new survey high in September, with 84% now indicating that it’s a bad time to buy a home. On the sell side, respondents also listed unfavorable mortgage rates as the top reason why they believe it’s a bad time to sell a home. This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon, but it also may reflect the worry of some homeowners that sale values might be suppressed slightly if the pool of qualified homebuyers is constrained by elevated mortgage rates.” Duncan continued: “Consumers are also not seeing much affordability relief in sight, as they continue to expect home prices to increase in the next 12 months. They also indicated that their personal economic situations are showing signs of strain, including lower year-over-year household incomes and a reduced sense of job security. In our view, all of this points to home purchase affordability remaining a problem for the foreseeable future, which we forecast will keep home sales sluggish into next year.” Home Purchase Sentiment Index – Component Highlights Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in September by 2.4 points to 64.5. The HPSI is up 3.7 points compared to the same time last year. Read the full research report for additional information. About Fannie Mae’s Home Purchase Sentiment IndexThe Home Purchase Sentiment Index® (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey® (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making.

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The median U.S. asking rent was little changed from a year earlier for the sixth straight month as an increase in the number of rentals made it harder for landlords to boost prices The median U.S. asking rent rose 0.4% year over year to $2,011 in September—the sixth straight month in which rents were little changed from a year earlier. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Prior to that, rent growth had been slowing rapidly for roughly a year, coming back down to earth after a surge in prices during the pandemic. The median asking rent fell 2% from a month earlier in September. “Rents have flattened because a boom in apartment building in recent years has flooded the market with supply, but they haven’t yet posted a substantial decline because there’s still demand for rentals—especially as high mortgage rates keep many would-be homebuyers and sellers on the sidelines,” said Redfin Economics Research Lead Chen Zhao. “There are still a lot of apartments under construction that will continue to hit the market, which should keep rents from increasing much in the near-to-medium term. But construction has started to slow, which should eventually help bolster rent prices.” The Number of New Apartments Hitting the Market Continues to Rise—But Construction Has Started to Slow The number of completed apartment buildings in the U.S. rose 32% year over year to a seasonally adjusted annual rate of 433,000 in August, the most recent month for which data is available. But the number of apartment buildings on which construction has started declined 41% year over year to a seasonally adjusted annual rate of 334,000. Building starts are a leading indicator of what’s happening in the housing market, whereas building completions are a lagging indicator. Building may be slowing, but landlords are still facing more competition than they’re used to as new rentals continue to hit the market. Sometimes, their competition is an individual homeowner who’s renting their home out instead of selling—either because they don’t want to lose their low mortgage rate, they didn’t get a good offer, or both. “Last year, conversations with home sellers were hard. I had a lot of discussions about how they needed to lower their price expectations because the market had turned,” said David Palmer, a Redfin Premier real estate agent in Seattle. “But this year, they have a better understanding of the market. We’re now having the property management conversation earlier: ‘Do you have a rental plan if we can’t sell your home?’” As rising rental supply leads to rising vacancies, some landlords are handing out concessions, such as a free month’s rent, to attract tenants without having to lower asking rents on paper. That’s good news for renters at a time when the median asking rent is still just 2.1% ($43) below its record high. The jump in supply isn’t the only factor that has caused rents to flatten; slowing household formation, economic uncertainty and affordability challenges have also contributed. Rents Rise in the Midwest, Fall in the West In the Midwest, the median asking rent rose 5% year over year to a record $1,436. There was also an increase in the Northeast, where the median asking rent climbed 3.1% to $2,482. Asking rents fell 1.6% to $2,413 in the West and declined 0.3% to $1,653 in the South. The rental market has softened substantially in the West and South in part because those markets saw outsized rent growth during the pandemic. Rents skyrocketed as people flooded into Sun Belt cities including Phoenix, Miami and Dallas. But once the rental boom in those regions cooled, prices had relatively more room to fall. Apartment construction in the Sun Belt has also been especially robust, contributing to the cooldown in rents. In the West, tech layoffs have likely contributed to the region’s sluggish rental market. While rents in the West and South have been cooling, these regions’ rental markets have started to stabilize in recent months as the impact of the pandemic price boom moves further into the rearview mirror and layoffs ease. To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/redfin-rental-report-september-2023

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Political unrest/global economic health, office occupancy and valuations, housing shortage and artificial intelligence (AI) among key issues shaping real estate’s near future The Counselors of Real Estate®, a global organization of commercial property advisors, released its annual report on the Top Ten Issues Affecting Real Estate® for the upcoming year. Since 2012, the report has identified the current and emerging issues Counselors expect to have the most significant influence on real estate. As the real estate industry faces an extraordinary era of unpredictability, the effect of political unrest and global economic health is the leading concern of the 1,000-member organization in its 2024 report, with office occupancy and valuations, the housing shortage and artificial intelligence (AI) rounding out the top four issues. “The Counselors of Real Estate proactively recognizes crucial themes so we can pinpoint trends and note their evolution and subsequent bearing on real estate,” said William McCarthy, CRE®, global chair of The Counselors of Real Estate. “This past year has been challenging for some and opportunistic for others as the economy, office market and innovation continues to evolve and impact the market. Additionally, the housing shortage and infrastructure issues continue to cause disruption.” “This next year will be crucial to real estate with the upcoming election at the local, regional and national level,” said McCarthy. “All eyes are on the future as we navigate these disruptions with a purpose for developing solutions and a better understanding of how the issues may impact and change the many professional disciplines in commercial real estate.” 2024 Top Ten Issues Affecting Real Estate The full 2024 Top Ten Issues Affecting Real Estate report can be viewed online or downloaded as a PDF. About The Counselors of Real Estate® The Counselors of Real Estate® is an international consortium of commercial property professionals from leading real estate, financial, law, valuation, and business advisory firms, as well as real property experts in academia and government. Membership is selective and extended by invitation. Counselors practice in 22 countries and offer expertise in more than 60 real estate disciplines across all asset classes. Counselors have resolved the dispute between the developer of the World Trade Center and its insurers post September 11, led the privatization of U.S. Army Housing, developed a multi- billion-dollar, 10-year master plan for Philadelphia Public Schools, created and endowed the MIT Center for Real Estate, and valued both the Grand Canyon and Yale University. SOURCE The Counselors of Real Estate®

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Challenges remain with high financing costs, limited inventory, and competition from other buyers, but most investors see better times ahead. Real estate investors believe that market conditions have improved and will continue to get better in the coming months according to the Fall 2023 Investor Sentiment Survey from RCN Capital, conducted by market intelligence firm CJ Patrick Company. Almost three quarters of the investors surveyed (72%) said market conditions for investing were better or the same as a year ago, and 75% believed conditions would improve or remain stable over the next six months. “Despite higher home prices, higher financing costs, and limited inventory, real estate investors continue to express optimism about market opportunities today and in the months ahead,” said RCN Capital CEO Jeffrey Tesch. “Investors continue to play an important role in the housing market – according to a recent report from CoreLogic, more than one in four home sales is to an investor, and we continue to see interest from both rental property buyers and fix-and-flip investors in our business.” The Fall 2023 Investor Sentiment Survey is the second quarterly report from RCN Capital taking the pulse of real estate investors across the country, identifying market challenges and opportunities, and getting feedback on current trends and events. Click the image below to view the PDF. Investor sentiment on the current state of the real estate market improved from the Spring 2023 Survey, with 49% saying conditions are better than they were a year ago compared to 30% in the spring. Views on the market six months from now also improved, with 44% believing conditions will improve, up from 30% in the prior survey. Despite the optimism, investors are moving forward prudently: only 22% plan to buy more properties than they did a year ago; 39% plan to buy the same number; and 39% plan to buy fewer. “Interestingly, fix-and-flip investors seem much more optimistic about future opportunities – 50% of them believe that conditions will improve over the next six months compared to just 24% of rental property investors,” noted Rick Sharga, CJ Patrick Company CEO. “That may be an indication that flipping activity has bottomed out, but may also be a reflection of current challenges in the rental market, with rates continuing to decline even as more rental inventory comes online.” Investors continued to see the impact of higher mortgage rates in their local markets. Over 30% have seen a decline in demand for owner-occupied homes; almost 21% have seen an increase in demand for rental properties; and 37% have noted both trends. Recession Seems Likely, but Home Prices Expected to RiseDespite being somewhat optimistic about the market environment going forward, over half of those surveyed (53%) believed that the US would enter a recession in 2023 or 2024. Only 18% said that the country would avoid a recession, while 29% were unsure. But even with a recession looming, investors overwhelmingly believe that home prices will continue to increase – almost 53% expect home prices to go up, 22% believe prices will remain about the same, and 24% believe they’ll decrease. High Finance Costs, Limited Inventory, Competition Remain Main ChallengesObstacles cited by investors in the fall survey mirrored those mentioned most often in the spring survey, and remain the main concerns by investors in the months ahead. The high cost of financing was the biggest issue among investors, being mentioned almost 76% of the time, while lack of inventory was mentioned over 42%. Competition from other buyers clearly remains an issue in today’s low inventory environment, with competition from institutional investors noted by 33% of the respondents and competition from consumer homebuyers by 29%. Other challenges mentioned frequently included difficulty in securing a loan (22%) and supply chain delays (22%). Most Investors Stay Close to HomeA new question added to the fall survey asked investors where they purchased their investment properties. Most focus close to home – 44% purchase within their hometown, and 79% within their home state. There were no significant differences in purchase distances between fix-and-flip and rental property investors. About RCN CapitalRCN Capital is a South Windsor, CT-based national, direct, private lender. Established in 2010, RCN provides commercial loans for the purchase or refinance of non-owner-occupied residential properties. The company specializes in new construction financing, short-term fix & flip and bridge financing, and long-term rental financing for real estate investors. For more information on RCN Capital and RCN’s loan programs, visit www.RCNCapital.com. About CJ Patrick CompanyFounded in 2019, CJ Patrick Company is a Market Intelligence and Business Advisory firm working with companies in the real estate and mortgage industries. Visit www.cjpatrick.com for more information. SOURCE RCN Capital CONTACTS: Erica LaCentra, RCN Capital, 860.432.4782, elacentra@rcncapital.com; Rick Sharga, CJ Patrick Company, (949) 322-4583, rick@cjpatrick.com

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Severe hail events 18% more frequent in the first half of 2023 than prior three years. Severe hail events in the United States – storms which delivered hail of at least one inch in size within a metropolitan area – increased by almost 18% in the first half of 2023 compared to the average number of events over the same period during the past three years, according to data produced by Verisk (Nasdaq: VRSK), a leading provider of global data analytics and technology. The State of Texas was especially hard hit during the first six months of the year, with eight of the top ten metro areas experiencing the most severe hail events occurring in Texas metro areas. The Verisk analysis compares the number of severe hail events during the first half of 2023 to the average of the previous three years, and sorts these events by Census Region and Metropolitan Areas. There were regional variances observed in the data: the Southern and Western Regions experienced an above-average hail season; the Mountain and South Central Regions had very high hail activity; the Midwest had average levels of hail activity; and the Northeast, which typically has the least amount of hail activity, was below average. “Extreme weather events continue to increase, and severe hail can cause significant damage to both residential and commercial properties,” said Patrick Pollard, SVP Verisk Weather Solutions. “It’s important for mortgage lenders, servicers, and investors to consider this when managing their risk and financial exposure.” Twenty-seven metro areas experienced at least 20 severe hail events during the first half of the year, with 16 of those metros located in Texas. Louisiana and Florida each had three metro areas with at least 20 severe hail events; Oklahoma, Mississippi, and Arkansas had two each. The Dallas metro area had the most severe events with 35, followed by Amarillo with 34, and Jackson, Mississippi and Miami with 31 each. The rest of the top 10 metros with the highest number of severe hail events included Abilene and Longview (29 each), Wichita Falls (28), Houston (27), and San Antonio and Killeen (26 each). Metro 2023 Hail Days Three-Year Average Dallas-Fort Worth-Arlington, TX 35 22 Amarillo, TX 34 20 Jackson, MS 31 15 Miami-Ft. Lauderdale, FL 31 14 Abilene, TX 29 15 Longview, TX 29 12 Wichita Falls, TX 28 14 Houston, TX 27 15 San Antonio, TX 26 17 Killeen-Temple, TX 26 10 Monroe, LA 24 13 Baton Rouge, LA 22 15 Orlando-Kissimmee, FL 22 15 Jacksonville, FL 22 12 Athens, TX 22 8 Ardmore, OK 21 13 Meridian, MS 21 12 Shreveport-Bossier City, LA 21 10 Palestine, TX 21 9 Jacksonville, TX 21 8 Oklahoma City, OK 20 17 Little Rock-Conway, AR 20 15 Texarkana, TX-AR 20 12 Bonham, TX 20 11 Sherman-Denison, TX 20 11 Paris, TX 20 10 Sulphur Springs, TX 20 7 Significant Variances in Hail Events Between Regions There were 1,300 severe hail events across the country through the end of June in 2023, up from an average of 1,105 such events during the prior three years. The South had 721 hail events, by far the most in the country, and an increase of almost 26% compared to the three-year average. The Midwest experienced 354 severe hail events, an almost identical number to the average of 355. The West had 186 events, an incredible 48% increase from the prior three years, while the Northeast saw activity drop by about 30%, from 51 to 39. These events can cause significant damage and be very costly. Verisk noted that roof damage is one of the most common effects of severe hail events, and of the 1.8 million residential claims for roof damage in 2022, hail loss accounted for 82% of residential assignments and 80% of commercial assignments. For more information, visit https://www.verisk.com/insurance/capabilities/weather-risk/ About Verisk Verisk is a leading strategic data analytics and technology partner to the global insurance industry. It empowers clients to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud and make informed decisions about global risks, including climate change, extreme events, ESG and political issues. Through advanced data analytics, software, scientific research and deep industry knowledge, Verisk helps build global resilience for individuals, communities and businesses. With teams across more than 20 countries, Verisk consistently earns certification by Great Place to Work and fosters an inclusive culture where all team members feel they belong. Verisk is traded on the Nasdaq exchange and is a part of the S&P 500 Index and the Nasdaq-100 Index. For more information, please visit www.verisk.com. Contact: Rick Sharga CJ Patrick Company (949) 322-4583 rick.sharga@cjpatrick.com

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CoreLogic®, a leading global property information, analytics and data-enabled solutions provider, released its monthly Loan Performance Insights Report for July 2023. For the month of July, 2.7% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 0.3 percentage point decrease compared with 3% in July 2022 and a 0.1% increase from June 2023. To gain a complete view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency. In July 2023, the U.S. delinquency and transition rates and their year-over-year changes, were as follows: U.S. mortgage performance held strong in July, with both overall delinquency and foreclosure rates still hovering near record lows. Only Idaho saw overall delinquencies rise year over year, but rates in that state remain very low. Meanwhile 16 metro areas posted slight annual delinquency upticks, a drop from the previous month, when 31 metros posted increases. With hurricane season in full swing in the late summer and early fall, some areas of the U.S. could see typical seasonal delinquencies rise later this year and into 2024. “Overall U.S. mortgage delinquencies remained near a record low in July, with the share of homes entering that status or progressing to later stages either unchanged or lower,” said Molly Boesel, principal economist for CoreLogic. “Since most borrowers have substantial amounts of home equity, those who have locked in low mortgage rates that do enter later stages of delinquency will most likely not experience foreclosures.” “And while home equity gains have slowed from their former rapid pace,” Boesel continued, “CoreLogic projects that home price growth will pick up over the next year. Borrowers should continue to build equity over the coming months, even if at a more moderate rate.” State and Metro Takeaways: The next CoreLogic Loan Performance Insights Report will be released on October 26, 2023, featuring data for August 2023. For ongoing housing trends and data, visit the CoreLogic Intelligence Blog: www.corelogic.com/intelligence. Source: CoreLogic