November 25 2020 Covid19 Economic Industry Update Economic

November 25, 2020 Covid-19 Economic & Industry Update

Economic Impacts Retail Sales Year-Over-Year Percent Change Food services & drinking places • • Nonstore retailers Miscellaneous store retailers General merchandise stores Sporting goods, hobby, musical, books Clothing/accessories stores Gasoline stations Health & personal care stores Food & beverage stores • Building material/garden equipment Electronics & appliance stores Furniture & home stores Motor vehicle & parts dealers -15. 0% -10. 0% -5. 0% 0. 0% 5. 0% 10. 0% 15. 0% 20. 0% 25. 0% 30. 0% Source: U. S. Census Bureau, Advance Monthly Retail Trade Survey, November 17, 2020 Retail sales growth slowed to 0. 3% on a monthly basis but was up 5. 7% over the year. The five sectors experiencing double-digit growth were a continuation of pandemic trends including internet sales, home improvement materials and food & beverage stores, among others. On the downside, food and drinking places and gasoline stations, reflecting closures/ restrictions and fewer commutes, experienced steep declines.

Economic Impacts Seasonally Adjusted Percent Change, Monthly NAHB/Wells Fargo Housing Market Index 100 11/2020 1 90 0. 9 80 0. 8 70 0. 7 60 0. 6 50 0. 5 40 0. 4 30 0. 3 20 0. 2 10 0. 1 0 2007 - 2008 - 2009 - 2010 - 2011 - 2012 - 2013 - 2014 - 2015 - 2016 - 2017 - 2018 - 2019 - 202001 -01 01 -01 01 -01 01 -01 Source: NAHB/Wells Fargo Housing Market Index, November 17, 2020 0 • • Homebuilder confidence broke another record in November, rising from 85 to 90. The component measuring current sales of single-family homes drove the increase, rising by six points, although all components performed well.

Economic Impacts • Top 5/Bottom 5 for Median House Price Growth (Year-Over-Year Percent Change Q 3 20 v. Q 3 19) 30. 0% 27. 3% • 27. 1% 25. 0% 21. 5% 20. 6% 20. 0% • 15. 0% 9. 0% 10. 0% 8. 7% 8. 2% 7. 3% 6. 5% 5. 0% • Source: National Association of Realtors ® lu r lu no Ar Ur ba n Ho n An La s Ve ga bo s r ve De n rk Yo on , gt in W ilm Ne w NC ty ise Bo on , st Ki ng Ci NY L w , F ie es tv Cr Br id ge po rt, CT 0. 0% Existing home sales increased 26. 6% year-overyear in October. Median home prices followed suit, increasing by nearly 16%. At the current paces of sales, only 2. 5 months of inventory remain on the market, a series low. The appeal of smaller cities was evident in the data as they witnessed the largest increases, although all markets experienced house price growth.

Economic Impacts Thousands of Units Seasonally Adjusted Annual Rates Housing Permits 1400 1200 Single-family 1 Multifamily • 0. 9 10/20 1000 800 0. 8 0. 7 0. 6 0. 5 600 400 2007 - 2008 - 2009 - 2010 - 2011 - 2012 - 2013 - 2014 - 2015 - 2016 - 2017 - 2018 - 2019 - 202001 -01 01 -01 01 -01 01 -01 0. 4 0. 3 0. 2 0. 1 0 • Multifamily permitting activity in October was at its lowest level since Q 1 2016, down more than 30% year-overyear, as slowing demand amid robust completions caused builders to press the pause button. Single-family permits topped one million for the third month in a row, a trend not seen since 2007. Source: U. S. Census Bureau and U. S. Department of Housing and Urban Development, New Residential Construction, November 18, 2020.

Economic Impacts Thousands of Units Seasonally Adjusted Annual Rates Housing Starts 1400 Single-family Multifamily 1200 1000 800 1 0. 9 • 0. 8 0. 7 0. 6 0. 5 600 400 2007 - 2008 - 2009 - 2010 - 2011 - 2012 - 2013 - 2014 - 2015 - 2016 - 2017 - 2018 - 2019 - 202001 -01 01 -01 01 -01 01 -01 0. 4 10/20 0. 3 0. 2 0. 1 0 • Multifamily housing starts were off 20% from last year but remain in line with 2017 and 2018 averages. Given weak permitting activity, starts can be expected to moderate further. Single-family starts increased 14% over the year, as mortgage rates remained low and home-buyer demand showed no signs of letting up. Source: U. S. Census Bureau and U. S. Department of Housing and Urban Development, New Residential Construction, November 18, 2020.

Economic Impacts • Back to Normal Index Feb 29 2020=100, Not Seasonally Adjusted 120 100 80 11/18/20 • 60 40 • 20 20 9/ /2 10 9/ 29 /2 02 0 8/ 29 /2 02 0 7/ 29 /2 02 0 /2 29 6/ 02 /2 29 5/ Sources: CNN Business, Moody’s Analytics 02 0 0 4/ 29 /2 02 0 02 /2 29 3/ 2/ 29 /2 02 0 0 The Back to Normal Index tracks twelve high frequency data series plus monthly employment figures, using February 29, 2020 as the baseline for “normal. ” The Index dropped by half a point last week with no real improvement seen in more than a month. Seated diner data, hours worked and business confidence brought the Index down, while increases in air passenger traffic and mortgage activity were not large enough to offset the negative impacts.

Apartment Industry Impacts Did you Receive 100% of Rents for the Months of September/October? Yes 70. 0% 64. 8% No • 61. 9% 60. 0% 50. 0% 40. 0% 38. 1% 35. 2% 30. 0% 20. 0% 10. 0% September Source: Avail Survey of Landlords and Renters, October 2020 October • Avail has partnered with the Urban Institute to research the non-institutional half of the rental market. The percentage of smaller owners receiving full rent payments through the end of the month decreased 2. 9 percentage points in October to just 61. 9%.

Apartment Industry Impacts How are you Currently Financing your Monthly Rental Payments? • Earned Wages from Employment Unemployment/Government Assistance Borrowing from Friends or Family • Savings or Saved Funds Borrowing on Credit Cards Personal Loans 0. 0% 10. 0% 20. 0% Source: Avail Survey of Landlords and Renters, October 2020 30. 0% 40. 0% 50. 0% 60. 0% 70. 0% For jobless renters, unemployment benefits and other government assistance have been the number one source of rental payments. With COVID-19 infections surging across the country as unemployment benefits begin to expire, rental payments can be expected to weaken in the new year without further fiscal stimulus.

Apartment Industry Impacts Hardest Hit Metro Areas for Rent Collection (Percent of Households Making No Payment Through November 13) • New Orleans Las Vegas New York • Seattle Indianapolis Boston San Jose Portland • Los Angeles Greensboro, NC 0. 0% 2. 0% 4. 0% 6. 0% Source: Real. Page, Inc. Rent Payments November 1– 13, 2020. 8. 0% 10. 0% 12. 0% 14. 0% 16. 0% The bottom ten markets for rent payments generally change little from week to week. 34 of the 51 metros tracked by Real. Page experienced declines in rent collections from the same period last year. 17. 2% of households in Class C properties made no payment through the middle of the month.

Apartment Industry Impacts October 2020 Top/Bottom Markets (Year-Over-Year Rent Growth) • 8. 0% 6. 0% 5. 0% 3. 9% 4. 0% 3. 8% 3. 4% • 2. 0% 0. 0% -2. 0% -4. 0% -3. 7% -3. 6% -3. 1% -6. 0% -8. 2% -10. 0% -10. 2% -12. 0% Inland Empire Sacramento Las Vegas Phoenix Indianapolis San Jose Source: National Multifamily Report October 2020 by Yardi Matrix San Washington Francisco DC Austin Boston Multifamily rents were flat for the third consecutive month in October, falling 0. 6% yearover-year. Secondary and tertiary markets are performing the best, as high costs and limited community amenities drive outmigration from gateway markets.