Start your 2016 with a look at what to expect in the residential and commercial real estate markets at our annual Market Outlook. Jonathan Smoke, Chief Economist with REALTOR.com, share his predictions for our industry’s top emerging trends and opportunities.

1. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
REALTOR.COM
MARKET OUTLOOK
Jonathan Smoke
Chief Economist
January 7, 2016

2. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
JOB CREATION SOFTENED IN AUG-SEP
211,000 jobs created in November, 2.6 million jobs in last 12 mos.
2
Source: Bureau of Labor Statistics
-
2.0
4.0
6.0
8.0
10.0
12.0
120.0
125.0
130.0
135.0
140.0
145.0
2000.01
2000.05
2000.09
2001.01
2001.05
2001.09
2002.01
2002.05
2002.09
2003.01
2003.05
2003.09
2004.01
2004.05
2004.09
2005.01
2005.05
2005.09
2006.01
2006.05
2006.09
2007.01
2007.05
2007.09
2008.01
2008.05
2008.09
2009.01
2009.05
2009.09
2010.01
2010.05
2010.09
2011.01
2011.05
2011.09
2012.01
2012.05
2012.09
2013.01
2013.05
2013.09
2014.01
2014.05
2014.09
2015.01
2015.05
2015.09
Millions
Employment and Unemployment
Nonfarm Employment Unemployment Rate

3. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
THANK TRID FOR NOVEMBER DIP
Sales down 4% over ’15 in Nov; new high for median $ in June
3
Source: National Association of REALTORS® Existing Home Sales Report
$0
$50,000
$100,000
$150,000
$200,000
$250,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
2000.01
2000.05
2000.09
2001.01
2001.05
2001.09
2002.01
2002.05
2002.09
2003.01
2003.05
2003.09
2004.01
2004.05
2004.09
2005.01
2005.05
2005.09
2006.01
2006.05
2006.09
2007.01
2007.05
2007.09
2008.01
2008.05
2008.09
2009.01
2009.05
2009.09
2010.01
2010.05
2010.09
2011.01
2011.05
2011.09
2012.01
2012.05
2012.09
2013.01
2013.05
2013.09
2014.01
2014.05
2014.09
2015.01
2015.05
2015.09
Existing Home Sales and Prices
EHS SAAR Med Exist Home Price

4. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
INVENTORY HAS BEEN A CONSTRAINT
Demand continues to exceed supply
4
Source: National Association of REALTORS®, Commerce Department
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2000.01
2000.05
2000.09
2001.01
2001.05
2001.09
2002.01
2002.05
2002.09
2003.01
2003.05
2003.09
2004.01
2004.05
2004.09
2005.01
2005.05
2005.09
2006.01
2006.05
2006.09
2007.01
2007.05
2007.09
2008.01
2008.05
2008.09
2009.01
2009.05
2009.09
2010.01
2010.05
2010.09
2011.01
2011.05
2011.09
2012.01
2012.05
2012.09
2013.01
2013.05
2013.09
2014.01
2014.05
2014.09
2015.01
2015.05
2015.09
Months' Supply of Homes for Sale
Existing New

5. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
NEW CONSTRUCTION SOLIDLY UP
Growth accelerating; in Nov SF up 15% and MF up 20% y/y
5
Source: Commerce Department
0
500
1,000
1,500
2,000
2,500
Thousands
Residential Construction
Single-Family Starts Multi-Family Starts

6. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
INVENTORY NOW PAST PEAK BUT…
Not falling as fast and age of inventory not growing like normal
6
Source: Realtor.com®
0
20
40
60
80
100
120
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Listings and Median Age of Inventory
Listings Median Age of Inventory

7. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
RENTS RISING FASTER THAN PRICES
Rents up 14% y/y in November compared to home prices up 7.5%
7
Source: Realtor.com® and Altos Research
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
$1,900
$2,000
$150,000
$170,000
$190,000
$210,000
$230,000
$250,000
$270,000
National Home Price and Rent Trends
Median Existing List Price Median Asking Rent

8. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
LISTING PRICES GREW 7.5% Y/Y IN NOV
Median list price increases are widespread
8
Source: Realtor.com®
November 2015

9. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 9
RENTS RISING Y/Y IN 68% OF COUNTIES
Rent increases adding to demand for buying
2015
Source: Realtor.com® Analysis of HUD Fair Market Rents

10. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
NEARING THE END OF THIS ERA
Low rates and prices enabled incredible affordability
10
Source: Moody’s Analytics, Freddie Mac, and National Association of REALTORS®
165
3.94
0
2
4
6
8
10
12
14
16
18
20
0
50
100
150
200
250
Jan-71
Jan-72
Jan-73
Jan-74
Jan-75
Jan-76
Jan-77
Jan-78
Jan-79
Jan-80
Jan-81
Jan-82
Jan-83
Jan-84
Jan-85
Jan-86
Jan-87
Jan-88
Jan-89
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Affordability and Mortgage Rates
Housing Affordability Index (left axis) Ave 30-year fixed conv % (right axis)

11. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 11
CHEAPER TO BUY IN 77% OF COUNTIES
Simple monthly cost analysis favors buying
Source: Realtor.com® Analysis of HUD Fair Market Rents,
Nielsen Pop-Facts Demographics and Realtor.com® Data

12. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
CONFIDENCE RECOVERING FROM FALL
Plans to purchase a home up, pointing to strong spring
12
Source: The Conference Board, Moody’s Analytics
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0
20
40
60
80
100
120
140
160
2000.01
2000.06
2000.11
2001.04
2001.09
2002.02
2002.07
2002.12
2003.05
2003.10
2004.03
2004.08
2005.01
2005.06
2005.11
2006.04
2006.09
2007.02
2007.07
2007.12
2008.05
2008.10
2009.03
2009.08
2010.01
2010.06
2010.11
2011.04
2011.09
2012.02
2012.07
2012.12
2013.05
2013.10
2014.03
2014.08
2015.01
2015.06
2015.11
Consumer Confidence Index Plans to Purchase

13. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 13
DEMAND
DRIVERS

14. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96
Thousands
US Population by Age
14
DEMOGRAPHICS SET THE TABLE
When viewed by age, importance of Millennials becomes clearer
Source: Realtor.com® Analysis of US Census Bureau Population Estimates (2014)
BoomXYZ
80 million61 million83 million57 million 38 million

15. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 15
LIFE DRIVES HOUSING DEMAND
Today’s Millennial home shoppers are propelled by success
26%
13%
33%
30%
25%
13%
32%
Source: BDX Home Shopper Insights Panel, Summer 2015
8
8
12
9
18
13
27
26
28
24
14
14
18
19
20
22
28
32
34
35
0% 25% 50%
Desire to live closer to work/office
Desire to live closer to good schools
Increase in family size
Planning to increase family size
Change of family circumstance/composition
Increasing rent
Favorable interest rates
Favorable home prices
Tired of current home
Increase in income
% of respondents
Top 10 millennial triggers
69% of Millennial
shoppers indicate
some form of
change in family
size* as a trigger
*Change in Family Size includes: Change of family circumstances/composition, Increase in family size, Decrease in family size, Planning to increase family
size, Upcoming decrease in family size, Older parent moving into my home, Getting married/moving in with partner.
ALLMILLENNIAL

16. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 16
BOOMERS KEEP DISTURBING
Boomer wave is causing a major population shift
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
2015 2020
Population by Age (United States)
Under 25 25-34 35-54 55+
Over the next 5 years:
Population grows 4%
55+ grows 12%
35-54 declines 1%
25-34 grows 1%
Under 25 grows 1%
27%
26%
13%
33%
30%
25%
13%
32%
Source: Nielsen Demographics Pop-Facts 2015

17. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
CREDIT ACCESS SLOWLY IMPROVING
Mortgage access up 11% year-over-year in November
17
26%
13%
33%
30%
25%
13%
32%
Source: Mortgage Bankers Association, Haver Analytics
127.4
0
100
200
300
400
500
600
700
800
900
1000
Mortgage Credit Availability Index
Mar-2012=100

18. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
300-499
4.9 500-549
7.6
550-599
9.4
600-649
10.3
650-699
13
700-749
16.6
750-799
18.2
800-850
19.9
FICO Population
Distribution (Apr 2015)
18
CREDIT SCORES SEE SOME CHANGES
In November the average FICO score on a closed mortgage loan
was 721; the average denied score was 651
26%
13%
33%
13%
Source: Ellie Mae and Fair Isaac Corporation
300
350
400
450
500
550
600
650
700
750
800
2011.08
2011.10
2011.12
2012.02
2012.04
2012.06
2012.08
2012.10
2012.12
2013.02
2013.04
2013.06
2013.08
2013.10
2013.12
2014.02
2014.04
2014.06
2014.08
2014.10
2014.12
2015.02
2015.04
2015.06
2015.08
2015.10
Average FICO Score by Closed and
Denied Applications
Closed Denied 2014 Median FICO (713)

19. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Thousands
Thousands
Real Estate Web Unique Visitors by Age
21-34 35-54 55+ All Traffic (Right Axis)
DEMAND IN 2015 HAS BEEN STRONG
Traffic up 15% over November 2014; 21-34 year olds up 24%
19
Source: Realtor.com® Analysis of comScore Media Metrix® Real Estate Category Unique Visitor Data
30% of 55+, 50% of 35-54, and 56% of 21-34 in November

20. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 20
LOCATION
LOCATION
LOCATION

21. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
JOBS NEARLY RECOVERED
Unemployment rate down substantially
21
Source: BLS, Moody’s Analytics
0.00
2.00
4.00
6.00
8.00
10.00
12.00
3,600,000
3,800,000
4,000,000
4,200,000
4,400,000
4,600,000
4,800,000
Jan-90
Sep-90
May-91
Jan-92
Sep-92
May-93
Jan-94
Sep-94
May-95
Jan-96
Sep-96
May-97
Jan-98
Sep-98
May-99
Jan-00
Sep-00
May-01
Jan-02
Sep-02
May-03
Jan-04
Sep-04
May-05
Jan-06
Sep-06
May-07
Jan-08
Sep-08
May-09
Jan-10
Sep-10
May-11
Jan-12
Sep-12
May-13
Jan-14
Sep-14
May-15
Employment and Unemployment Rate in Chicago MSA
Total Nonfarm Employment (SA) Unemployment Rate (% SA)

22. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
NEW CONSTRUCTION OFF LOWS
Starts remain well off peak and far from normal
22
Source: Commerce Department, Moody’s Analytics
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Jan-90
Aug-90
Mar-91
Oct-91
May-92
Dec-92
Jul-93
Feb-94
Sep-94
Apr-95
Nov-95
Jun-96
Jan-97
Aug-97
Mar-98
Oct-98
May-99
Dec-99
Jul-00
Feb-01
Sep-01
Apr-02
Nov-02
Jun-03
Jan-04
Aug-04
Mar-05
Oct-05
May-06
Dec-06
Jul-07
Feb-08
Sep-08
Apr-09
Nov-09
Jun-10
Jan-11
Aug-11
Mar-12
Oct-12
May-13
Dec-13
Jul-14
Feb-15
Sep-15
New Construction Starts in Chicago MSA
Single-Family Multi-Family

23. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
LIST PRICES KEEP SOME MOMENTUM
List prices up 6% Y/Y in Cook County (November 2015)
23
Source: Realtor.com

24. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
FOCUS ON CHICAGO AREA
Half of zips seeing 5%+ growth Y/Y (November 2015)
24
Source: Realtor.com

25. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
INVENTORY TIGHTENED IN 2015
Active listings down 12% Y/Y in Cook County (November 2015)
25
Source: Realtor.com

26. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
ACTIVE INVENTORY BY COUNTY
Single family and condo active listings (November 2015)
26
Source: Realtor.com

27. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
FOCUS ON CHICAGO AREA
Single family and condo active listings (November 2015)
27
Source: Realtor.com

28. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
AGE OF INVENTORY
Inventory moves fastest in Cook County (November 2015)
28

29. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
HOTTEST ZIPS LAST FOUR MONTHS
Based on supply and demand
29
Source: Realtor.com

30. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
MILLENNIAL PROPENSITY
25-34 interest relative to other age groups (November 2015)
30
Source: Realtor.com

31. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
BOOMER PROPENSITY
50-64 interest relative to other age groups (November 2015)
31
Source: Realtor.com

32. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
HOTTEST HOMES LAST 60 DAYS
Top homes get up to 13 times more views than metro average
32

33. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
RENT VS BUY
Monthly costs favor buying in all but Lake and DuPage Counties
33
Source: Realtor.com® Analysis of Nielsen Pop-Facts Demographics, HUD Fair Market Rents and Realtor.com Data

34. © 2016 Move, Inc. All rights reserved. Do not copy or distribute.
HOUSEHOLD GROWTH 2015-2020
Growth hot spots throughout the region
34
Source: Nielsen Demographics Pop-Facts 2015

35. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 35
ENDING ON A POSITIVE NOTE
1. Location, location, location. Home is about that special refuge. Home
is personal. But finding a home in the right neighborhood takes effort
and turns out best with the help of an expert local REALTOR®.
Here by Alessia Cara
2. Rents are rising, it’s cheaper to buy a home in 77% of the country,
and real estate is viewed very positively, especially by young
people—owning is cool again. Welcome to My House!
My House by Flo Rida
3. Planning to buy in 2016? Don’t mess around. More than 85% of
buyers who plan to purchase in 2016 are focused on the spring and
summer.
Mess Around by Cage the Elephant
4. We all benefit from the occasional Smoke break.
Smoke Break by Carrie Underwood
Courtesy of DJ Smokey Smoke

36. © 2016 Move, Inc. All rights reserved. Do not copy or distribute. 36
Jonathan Smoke
Chief Economist
realtor.com®
jonathan.smoke@realtor.com
@SmokeonHousing
703.634.9193