Housing Slowdown Impact on Commercial Real Estate

Inventory Shortage & Interest Rate Spike Stifle Home Sales

•Mortgage rates hit 7-year high in 4Q 2018, sparking slowdown in home sales

•Limited entry-level home construction creates barriers to entry for first-time buyers

•Existing owners reluctant to sell after locking in historically low mortgage rates – remodels favored

Tight Home Sales Market Bolsters Commercial Housing

Apartment: Lower homeownership & unaffordability boost rental demand – Vacancy at 18-year low

Seniors Housing: Still-elevated home prices support seniors selling and unlocking equity in their homes to move into seniors housing

Ripple Effect Indirectly Supporting Other CRE Sectors

Retail: Unwillingness to move supports home related retail for remodels – Home Depot and Lowe’s

Self-Storage: Growing renter pool and smaller home layouts drive need for storage to supplement space