New Haven-Milford Area Local Market Report, Third Quarter 2020 including the impact of COVID-19 on the local economy Today's Market…

Median Price (Red Line) and One-year Price Growth $300,000 25%

20% $250,000 15% $200,000 10%

$150,000 5%

0% $100,000 -5% $50,000 -10%

$0 -15% 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3

Local Price Trends Price Activity New Haven U.S. Local Trend Current Median Home Price (2020 Q3) $280,000 $309,100 1-year (4-quarter) Appreciation (2020 Q3) 12.9% 11.6% Prices continue to grow relative to last year 3-year (12-quarter) Appreciation (2020 Q3) 1.0% 22.2% 3-year (12-quarter) Housing Equity Gain* $2,900 $56,167 Gains in the last 3 years have extended the 7-year (28 quarters) Housing Equity Gain* $53,700 $102,233 trend of positive price growth after the recession 9-year (36 quarters) Housing Equity Gain* $44,600 $139,867 *Note: Equity gain reflects price appreciation only

New Haven U.S. Conforming Loan Limit** $510,400 $765,600 Most buyers in this market have access to FHA Loan Limit $331,760 $765,600 government-backed financing Local Median to Conforming Limit Ratio 55% not comparable Note: limits are current and include the changes made on January 1st 2020.

Local NAR Leadership The New Haven-Milford market is part of region 1 in the NAR governance system, which includes all of , , , , , and . The 2021 NAR Regional Vice President representing region 1 is Donna Cusson. Benefits of Ownership: Total Equity Appreciation

Total Equity Accrued to Owner by Year and Quarter of Purchase $100,000

$90,000

$80,000 $71,413 $70,000

$60,000

$50,000

$40,000 $36,206

$30,000

$20,000

$10,000

$0 2007 Q3 2009 Q3 2011 Q3 2013 Q3 2015 Q3 2017 Q3 2019 Q3

Total Equity Gained** through 2020 Q3 from quarter in which home was of purchased Price Activity NewHaven U.S. Local Trend 1-year (4-quarter) $36,206 $16,096 3-year (12-quarter)* $17,030 $47,598 Price appreciation and principle payments 5-year (20-quarter)* $68,313 $80,260 in the last 3 years have boosted total equity 7-year (28 quarters)* $80,696 $109,512 growth since the recession 9-year (36 quarters)* $83,036 $147,140 *Note: Equity gain reflects price and principle payments since purchase, prevailing 30-year fixed rate mortgage at time of purchase and a 10% downpayment. Downpayment is not included in total equity Drivers of Local Supply and Demand…

Local Economic Outlook New Haven U.S.

Not 12-month Job Change (Sep) -17,900 Comparable Emplyoment continues to decline and will Not weigh on demand in some areas 12-month Job Change (Aug) -14,600 Comparable Not Unemployment has risen since the same 36-month Job Change (Sep) -11,300 Comparable period last year, but New Haven's labor market has been more resilient than the Current Unemployment Rate (Sep) 7.1% 7.9% national average Year-ago Unemployment Rate 3.4% 3.5% Local employment growth is poor and 1-year (12 month) Job Growth Rate -6.1% -3.9% needs to improve

Share of Total Employment by Industry New Haven-Milford Area U.S.

Natural Resourc 4.1%Natural 11.1 Natural R5.7% Resources/ Natural Construction #N/A #N/AMining/Con #N/A #N/A Resources/M ining/Constru 8.6% struct Government #N/AGovernment #N/AManufacturi ConstruOtherc 8.6% ct 4.1% 15.4% Manufacturin 11.9% ng Services 5.7% ManufacturingOther 8.3% 22.5 Manufac 1.9% g 8.3% 3.8% Services Leisure & 1.9% Trade/Transport4.0% a 18.3% 49.6Hospitality Trade/Tr 14.3% Leisure & Trade/Trans 9.3% InformationHospitality 1.3% 3.4portation/Uti Informa1.9% Trade/Transp 7.5% lities ortation/Utilit Financial Activ 4.4% 11.918.3% Financia14.3% ies Educ. & 14.3% Prof. & Busine 11.5% 31.1 Professi14.3% Health Information Educational Educ. & Healt 28.9%Services 78.3 1.3% Educatio16.3% Financial & Health 28.9% Financial Information Activities Services Leisure & Hos 7.5% 20.4 Leisure 9.3% Activities 1.9% 4.4% 16.3% Other Services 4.0% 10.8Prof. & Other S 3.8% 14.3% Business Government 11.9% 32.2Services 95.9% Governm15.4%Professional 97.1% 11.5% & Business #N/A #N/A #N/A #N/AServices #N/A #N/A #N/A #N/A 14.3% 12-month Employment Change by Industry in the New Haven-Milford Area (Sep - 2020) Goods Producing NA Information -300 Natural Resources/Mining/Construction -700 Financial Activities -300 Natural Resources and Mining NA Prof. & Business Services -200 Construction NA Educ. & Health Services -1,800 Manufacturing -1,700 Leisure & Hospitality -6,900 Service Providing Excluding Government NA Other Services -500

Trade/Transportation/Utilities -2,700 Government 500

State Economic Activity Index Connecticut U.S. -9.5% -4.9% The economy of Connecticut is still in 12-month change (2020 - Sep) recession, but improved modestly from last -3.9% 0.6% month's -10.49% change 36-month change (2020 - Sep) New Housing Construction Local Fundamentals New Haven U.S.

12-month Sum of 1-unit Building Permits through The current level of construction is 14.4% 233 not comparable Sep 2020 below the long-term average Reduced construction will limit new supply 8-year average for 12-month Sum of 1-Unit 272 not comparable to the market, allowing demand to catch up Building Permits with inventory more quickly Construction is on the rise relative to last Single-Family Housing Permits (Sep 2020) 8.4% 10.2% year, suggesting that the local inventory has 12-month sum vs. a year ago stabilized

Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) 450 400 350 300 250 200 150 100 50 0

State Total Foreclosure Rate vs. U.S Average (U.S. Average in Blue Dashed Line) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

Source: Mortgage Bankers' Association Affordability

Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, U.S. Average in Green)

30%

25%

20%

15%

10%

5%

0% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Monthly Mortgage Payment to Income New Haven U.S. Ratio for 2019 8.9% 16.0% Historically strong, but weaker than the Ratio for 2020 Q3 9.2% 15.4% second quarter of 2020 Historical Average13.0% 18.4% More affordable than most markets

Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 16%

14%

12%

10%

8%

6%

4%

2%

0% 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3

Median Home Price to Income New Haven U.S.

Ratio for 2019 1.6 2.8 The price-to-income ratio rose, but is better Ratio for 2020 Q3 1.8 3.1 than the historic average Historical Average 2.0 2.7 Affordable compared to most markets Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, U.S. Average in Green) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

The Mortgage Market

30-year Fixed Mortgage Rate and Treasury Bond Yield 280 6.0%

240 5.0% 200 4.0% 160 3.0% 120 2.0% 80 40 1.0% 0 0.0% 2015 Q3 Q1 2016 Q3 Q1 2017 Q3 Q1 2018 Q3 Q1 2019 Q3 Q1 2020 Q3

Spread (left axis) 30-Year FRM (Right axis)

In the third quarter of the year, the 30-year fixed rate hit an all-time low, as investors were skeptical about the recovery of the economy from the shutdowns. According to the mortgage finance provider Freddie Mac, the 30-year fixed rate mortgage dropped to 2.95 percent in Q3 2020 from 3.67 percent a year earlier. In the meantime, in August, the Fed announced the adoption of a more flexible policy that will seek to achieve inflation that averages 2 percent over time. This means that a period where inflation is above 2 percent can compensate for a period when inflation is below 2 percent. This significant change can keep interest rates low for longer periods, which could translate into both long periods of cheap mortgages and stronger job market. Thus, more and more homebuyers and homeowners are expected to take advantage of these ultra-low rates. Looking ahead, NAR is forecasting the 30-year fixed rate mortgage to average 3.1 percent for both 2020 and 2021. REALTOR® Price Expectations

REALTOR® Price Expectations for the Next 12 Months (U.S. Average in Blue Dashed Line) 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0%

Source: NAR

REALTOR® Price Expectations Connecticut U.S. REALTORS® expect weaker price growth 2020 - Sep 0.0% 1.7% in Connecticut than in the U.S. in the next 12 months. Their price expectations for the local market remained at the same level as a Prior 12 months 0.0% 1.5% year ago. Geographic Coverage for this Report The New Haven area referred to in this report covers the geographic area of the New Haven-Milford metro area as officially defined by the Office of Management and Budget of the U.S. Government. The official coverage area includes the following counties:

New Haven County

More information on the OMB's geographic definitions can be found at https://obamawhitehouse.archives.gov/omb/bulletins_default/