Austin MSA Market Update

October 2020

Source: National Title – Austin Market Update 1 Impact of COVID19 on the US

1. Federal Funding/Debt 2. Employment 3. Loan Forbearance 4. Business Closures 5. Impact on Young Adults 6. Consumer Confidence 7. eCommerce 8. Work-from-home/ZOOM towns 9. Office Market 10.Interest Rates

Source: Texas National Title – Austin Market Update 2 1. Federal Funding/Debt

Overall, 11 Trillion authorized for addressing COVID19 issues 2.3 Trillion

5.0 Trillion disbursed 2.3 Trillion

US Debt – 27 Trillion US Budget Deficit 2020 – 3 Trillion (at least) US Unfunded Liabilities – 154.8 Trillion

Source: https://www.covidmoneytracker.org/ US Debt to GDP 56.10% in 2000 – 137.7% today Source: Texas National Title – Austin Market Update 3 )9(A,-<$B,&5#

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• Loans in forbearance have declined 16 straight weeks

• 3.5 million loans now in forbearance

• Additionally, 1.06 million borrowers are past due 30 days

Source: https://www.mba.org/2020-press-releases/september/share-of-mortgage-loans-in-forbearance-declines-to-701 Source: Texas National Title – Austin Market Update 5 4. Business Closures

Source: https://www.yelpeconomicaverage.com/business-closures-update-sep-2020.html Source: Texas National Title – Austin Market Update 6 4. Business Closures

Austin: 1,500 business closures 10% of closures are Restaurants

Increased Bankruptcies for 2020 and 2021

Source: https://www.yelpeconomicaverage.com/business-closures-update-sep-2020.html Source: Texas National Title – Austin Market Update 7 4. Business Closures

Store Closures Retail Store Closings so far in 2020 Coresight Research estimates that between 20,000 and 25,000 stores could close in the US in 2020

This dwarfs 2019’s 9,000 store closures

https://www.businessinsider.com/25000-us-stores-to-close-in-2020-crippling-malls-2020-6 Source: Texas National Title – Austin Market Update 8 5. Young Adults

26.6 million Young Adults (18 to 29) now living at home.

COVID and other pressures have pulled 8 million renters/buyers out of the market compared to the historic norm.

Source: https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-of-young-adults-in-the-u-s-live-with-their-parents-for-the-first-time-since-the-great-depression/ Source: Texas National Title – Austin Market Update 9 K9(0$5G=,&'(0$5/>;&5"& M*+&0@#1!M*+O)<#+2#!O1*@!4GGG!(*!/#A(#@F#1!4G4G

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Source: Texas National Title – Austin Market Update 11 8. Work-from-home/ZOOM towns ZOOM TOWNS and Work-from-home lessons

1) Technology works better than expected ZOOM and other Collaboration Tools, High-speed Internet, Webcams & Noise Cancelling Microphones

2) It will make sense for some employees to work from home – estimates are around 1/3 of job descriptions can WFH long term. Others will work from home a % of the time.

3) Some % of employees do not want to work from home (home too small, no office, too many distractions)

4) Increased demand for homes with home offices, acreage and pool in lower cost, but still highly desirable cities/communities – ZOOM Towns (Truckee California)

Source: https://www.globest.com/2020/09/22/remote-works-appeal-shows-signs-of-fading/?slreturn=20200828104027 Source: Texas National Title – Austin Market Update 12 9. Post Pandemic Office Market Office Market and Employers

VOCON surveyed 50 companies employing 450,000 from the FIRE sector, technology, legal services, consulting, advertising, architecture, design and engineering.

The survey shows there has been a 40% decrease in productivity since the start of the remote work model during the pandemic and 25% of employees report work-from-home fatigue.

“It’s time to return to work. The workplace and our culture is our differentiator and our secret sauce when it comes to delivering our work and securing talent.”

Ruth Porat, CFO of Google parent conglomerate Alphabet:

“We believe when people are together, that's a critical element for collaboration. It's collaboration within teams and across teams, and it's serendipity. We look forward to having people back in the office." In- person collaboration "within teams and across teams" is key to fostering innovation.

Source: https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5tZWdhcGhvbmUuZm0vQkxNNTA5MzQwOTU1Mg== ; https://www.vocon.com/productivity-drops-as-work-from-home-fatigue-sets-in-survey-of-employers-finds/ Source: Texas National Title – Austin Market Update 13 10. Interest Rates – Fed Funds Target Rate Fed pledges to keep interest rates near zero for years

September 16, 2020 – CNN Business

The Federal Reserve purchase more assets and lower interest rates for even longer than it previously expected.

The Federal funds rate remained unchanged at zero to a quarter percentage point, and will stay there until America's labor market has recovered "consistent with the Committee's assessments of maximum employment" and the inflation rate has risen to 2%, and is on track to exceed that level for some time.

Given the country is still down 11.5 million jobs since February and the consumer price inflation rate over the past 12 months stood at 1.3% last month, this seems like a long way off.

A survey of Fed officials showed the group expects rates to remain at or near zero through 2023

Source: https://www.cnn.com/2020/09/16/economy/federal-reserve-september-meeting/index.html Source: Texas National Title – Austin Market Update 14 10. Interest Rates - Mortgage 30 Year Mortgage Rates

COVID19

Source: http://www.freddiemac.com/pmms/# Source: Texas National Title – Austin Market Update 15 Pre-pandemic economy

Source: Texas National Title – Austin Market Update 16 Texas Population Growth

Source: https://www.census.gov/newsroom/press-releases/2019/popest-nation.html Source: Texas National Title – Austin Market Update 17 Source: https://gov.texas.gov/uploads/images/business/TXataGlance-08.png Source: Texas National Title – Austin Market Update 18 Austin Population

• Austin ranks first among the top 50 largest metros for new residents as a percent of total population.

• The top cities people moved from: • Houston • Dallas • San Antonio • New York • Los Angeles

Source: Chamber of Commerce Source: Texas National Title – Austin Market Update 19 Austin Job Market – Pre-Pandemic

• Over 7,200 High Tech employers in the Austin metro area.

• Jobs in Austin’s tech industries total 161,433, or 15.8% of all jobs, compared to 8.7% nationally. (2018)

• High tech jobs are growing at twice the rate of the total overall job growth rate in Austin.

• STEM occupations account for over 11% of all jobs in the Austin MSA in 2019, making Austin the 6th most concentrated in STEM among large U.S. metros.

• Austin becomes a true Tech City with Apple, Facebook, Army Futures Command, Google, and Amazon. Now you see Highway 130 potentially becoming a Tech Corridor.

• Army Futures Command and other Public/Private Innovation Centers point to Austin becoming the labor force that is most in demand.

Source: Greater Austin Chamber of Commerce Source: Texas National Title – Austin Market Update 20 Critical Tech Skills and Innovative Labor Force

• Army Futures Command – 30 billion initiative • Austin Innovation District • Blacklocus/Home Depot Innovation Center – Part of 11 Billion initiative • Blue Prism Global Tech Innovation Center • Comcast Austin Tech Center • Condé Nast Digital Innovation Center • DELL EMC’S HPC Innovation Lab • GM Innovation Center 680,000 Square-feet • HEB Innovation Center - 81,000 Square-feet • Shell Innovation Center – StudioX – Launched September 2020 • Texas Innovation Center - UT • Walmart/Microsoft Tech Incubator

Source: Lots of googling Source: Texas National Title – Austin Market Update 21 US Real Estate Market Today

Source: Texas National Title – Austin Market Update 22 Sales of Previously Owned US Home Sales – August 2020 The seasonally adjusted annual rate of 6 million units in August is the highest reading since December of 2006 The median existing house price increased to a record $310,600

Source: https://tradingeconomics.com/united-states/existing-home-sales Source: Texas National Title – Austin Market Update 23 NAHB/Wells Fargo Housing Market Index (HMI) September’s index reading is the highest on record

Source: https://tradingeconomics.com/united-states/nahb-housing-market-index Source: Texas National Title – Austin Market Update 24 US New Home Sales Through August 2020 Sales of new single-family homes in the jumped 4.8 percent from the previous month to a seasonally adjusted annual rate of 1,011 thousand in August of 2020. New home sales in the South increased 13.4%

14 year high

Source: https://tradingeconomics.com/united-states/new-home-sales Source: Texas National Title – Austin Market Update 25 Source: https://showingindex.stats.showingtime.com/docs/lmu/x/UnitedStates?src=page Source: Texas National Title – Austin Market Update 26 US Resale inventory as of September 2020

“Nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the U.S. housing inventory. As a result, home prices are accelerating at double last year’s pace while homes sell 12 days faster than last year, on average.”

Realtor.com

Source: https://www.realtor.com/news/real-estate-news/u-s-buyers-face-significant-inventory-shortages/ Source: Texas National Title – Austin Market Update 27 Source: https://www.forbes.com/sites/ellenparis/2020/09/29/the-housing-market-inventory-shrinks-while-home-prices-climb/#7ea5f5277d68 Source: Texas National Title – Austin Market Update 28 Austin Real Estate Market Today

Source: Texas National Title – Austin Market Update 29 Austin MSA Jobs Report through August 2020

• Austin added 19,800 jobs in August, narrowing pandemic- related job losses to 54,100 (non-seasonally adjusted numbers)

• Austin’s trailing 12 month job loss rate of 2.7% is less than the declines seen in all other major metros.

• Austin has recovered back to 76% of its pre-pandemic employment level.

• Austin's seasonally adjusted unemployment rate has declined 4 months in a row and is now at 5.4% for August.

Source: https://www.austinchamber.com/blog/09-22-2020-job-growth-unemployment Source: Texas National Title – Austin Market Update 30 [0&()+!J/[!>+#@A,*=@#+(!C%(#!U![0E0&(!4G4G

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The September report was released 10/7 with 56,800 Job Postings. There were 24,100 new (first-time) job postings in September 2020, representing 42 percent of Available Job Postings.

Source: https://www.austinchamber.com/blog/austin-job-postings-report-sep-2020 Source: Texas National Title – Austin Market Update 32 Median Sales Price – Austin compared to other cities

Austin

Source: Texas National Title – Austin Market Update 33 Barton Creek Coronado Hills Cedar Creek Lakeway North Austin/Gracywoods Lost Creek/Westlake/Rollingwood

Source: https://www.texasnationaltitle.com/mls-statistics-heat-map Source: Texas National Title – Austin Market Update 34 Inventory: “Every year we think, ‘We’re hitting new record lows, it can’t get worse,’ but then it does.” Danielle Hale, chief economist for Realtor.com.

Source: Texas A&M Real Estate Center Source: Texas National Title – Austin Market Update 35 August 2020 Central Texas Housing Market Report – Austin Board of Realtors

Austin MSA – 11%

Source: https://www.abor.com/statsaug20/ Source: Texas National Title – Austin Market Update 36 August 2020 Central Texas Housing Market Report – Austin Board of Realtors

Austin MSA – 12%

Source: ABOR Source: Texas National Title – Austin Market Update 37 August 2020 Central Texas Housing Market Report – Austin Board of Realtors

Austin MSA – 44%

Source: ABOR Source: Texas National Title – Austin Market Update 38 August 2020 Central Texas Housing Market Report – Austin Board of Realtors

Austin MSA – 1.4 Months

Source: ABOR Source: Texas National Title – Austin Market Update 39 Number of Home Sales – All MLS Areas Through August 2020

Source: ABOR Source: Texas National Title – Austin Market Update 40 Total Listings - All MLS Areas Through August 2020

Source: ABOR Source: Texas National Title – Austin Market Update 41 Median Sales Price - All MLS Areas Through August 2020

Source: ABOR Source: Texas National Title – Austin Market Update 42 Average Sales Price - All MLS Areas Through August 2020

Source: ABOR Source: Texas National Title – Austin Market Update 43 Months of Inventory - All MLS Areas Through August 2020

Source: ABOR Source: Texas National Title – Austin Market Update 44 Source: ABOR Source: Texas National Title – Austin Market Update 45 Source: ABOR Source: Texas National Title – Austin Market Update 46 Sales from For Condo Sale March to Transactions Late through September 9/29/2020

Source: https://www.condojoe.com/charts Source: Texas National Title – Austin Market Update 47 For Condo Sale Transactions through 9/29/2020

Source: https://www.condojoe.com/charts Source: Texas National Title – Austin Market Update 48 For Condo Sale Transactions through 9/30/2020

Source: https://www.condojoe.com/charts Source: Texas National Title – Austin Market Update 49 Record job growth for 2020 and 2021 Austin is putting people back to work and growing new jobs

Austin could set a record in 2020 for the amount of jobs brought to the city through corporate relocations.

Twenty-eight (28) relocating companies have announced 9,325 new jobs so far this year, compared to 58 such companies announcing 4,658 new jobs in 2019.

The best year on record, going back to 2004, was 2018, with 9,424 jobs announced.

The Economic Development and Tourism office, part of Gov. Greg Abbott’s office, has 196 active relocation or expansion projects in its pipeline right now, a significant increase over the normal number of projects.

Source: Opportunity Austin, the economic development initiative of the Austin Chamber of Commerce https://www.austinchamber.com/about/opportunity-austin Source: Texas National Title – Austin Market Update 50 Savills World Tech Cities Index 2019

1. New York 17. Beijing 2. San Francisco 18. Tel Aviv 3. London 19. Dublin 4. Amsterdam 20. Hong Kong 5. Boston 6. Singapore 21. Barcelona 7. Los Angeles 22. Melbourne 8. Austin 23. Seoul 9. Stockholm 24. Shenzhen 10. Copenhagen 25. Hangzhou 11. Toronto 26. Chengdu 12. Seattle 13. Tokyo 27. Santiago 14. Paris 28. Buenos Aires 15. Shanghai 29. Bengaluru 16. Berlin 30. Cape Town

Source: https://www.savills.com/impacts/new-technology/savills-tech-cities-index.html Source: Texas National Title – Austin Market Update 51 BAE Systems, the aerospace and defense contractor, to employ more than 1,400 at a $150 million, 390,000-square-foot facility

BAE Systems is a 24 Billion global UK based company.

Other Austin defense industry companies include Army Futures Command, Applied Research Laboratories and the Army Research Laboratory, Textron, the Defense Innovation Unit and the Air Force’s AFWERX Austin

Source: Texas National Title – Austin Market Update 52 Circuit of the America’s expansion

COTA plans for an 11-story hotel, water park and a NASCAR coming to COTA May 2021 children’s amusement park. Additionally potential projects such as condos, indoor and outdoor sports complexes and retail space are also planned.

Source: https://statesman-tx-app.newsmemory.com/?publink=3d2f8fa82 Source: Texas National Title – Austin Market Update 53

AUTOMOTIVE (TESLA) - Manufacturing Plants worldwide ENERGY (SOLAR CITY) - Energy Capture & Storage Systems TELECOMMUNICATIONS (STARLINK) - Worldwide, low cost, High-speed Internet Service Provider AEROSPACE (SPACEX) - Worldwide, Lowest Cost Rocket Launch System Most Successful Reusable Rocket System Successful Astronaut Orbiting and ISS Docking System ARTIFICIAL INTELLIGENCE (NEURALINK, OPENAI) - Brain Chip Company INFRASTRUCTURE () – TRANSPORTATION (HYPERLOOP) –

Source: https://statesman-tx-app.newsmemory.com/?publink=3d2f8fa82 Source: Texas National Title – Austin Market Update 54 Giga Texas! Austin to build Tesla’s new Cybertruck, , Model Y and Model 3

“Tesla should be a magnet for an entire ecosystem of business and suppliers that support automotive plants and their employees.” Site Selection Magazine – September 2020

Source: https://siteselection.com/issues/2020/sep/texas-thirteen-ways-of-looking-at-a-blockbuster.cfm#gsc.tab=0 Source: Texas National Title – Austin Market Update 5557 • 2,100 acres purchased for $97,000,000 • 1.1 billion electric vehicle plant on 280 acres • Counting Parking Lots – nearly 8 million square feet • Other options for the remaining 1,800 acres • Separate research and development and design facilities • Battery manufacturing and operations • Test driving area as well

• Tesla ranked as the world's best-selling plug-in and battery electric passenger car manufacturer in 2019 • Tesla has a market share of 17% of the plug-in segment and 23% of the battery electric segment • In 2020, the company surpassed the 1 million mark of electric cars produced • The Model 3 ranks as the world's all-time best-selling plug- in electric car, with more than 500,000 delivered • Tesla cars accounted for 81% of the battery electric vehicles sold in the United States in the first half of 2020 – during a Pandemic! • Walmart Canada has ordered 130 Semi Trucks

Source: Texas National Title – Austin Market Update 5658 TIMELINE •Announced July 22 •Work Started within 10 days •Today (October 8th) is day 77 of Construction •December 31st 2019 – Dry in (?) •May 2021 – Completion (?)

Source: Texas National Title – Austin Market Update 5759 How TESLA Manufacturing has evolved

Model 3 in Fremont, CA Model 3 in Shanghai, China

Source: Source: Texas National Title – Austin Market Update 5860 Source: Texas National Title – Austin Market Update 59 Source: https://en.wikipedia.org/wiki/Tesla,_Inc.#:~:text=Tesla%20global%20vehicle%20sales%20increased,with%20more%20than%20500%2C000%20delivered. Source: Texas National Title – Austin Market Update 6064 TESL A

Source: Marketplace Real Estate Group Source: Texas National Title – Austin Market Update 61