CoreLogic S&P Case-Shiller Home Price Index Update A Compass Report for the San Francisco Metro Area, January 29, 2019

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1 CoreLogic S&P Case-Shiller Home Price Index Update A Compass Report for the San Francisco Metro Area, January 29, 2019 The CoreLogic S&P Case-Shiller Home Price Index does not evaluate median sales price changes, but employs its own proprietary algorithm to measure home price appreciation over time. Since its indices cover large areas for example, the San Francisco Metro Area is comprised of 5 counties which themselves contain communities and neighborhoods of widely varying home values, the C-S chart numbers do not refer to specific prices, but instead reflect prices as compared to those prevailing in January 2000, which are all designated as having a consistent value of. Thus a reading of signifies that home prices have appreciated 150% above the price prevailing in January Case-Shiller divides all the house sales in the SF metro area into thirds, or tiers. Thus the third of sales with the lowest prices is the low-price tier; the third of sales with the highest sales prices is the high-price tier; and the third in between is the mid-price tier. The price ranges of these tiers changes as the market changes. The 3 tiers experienced dramatically different bubbles, crashes and recoveries over the past 18 years, to a large degree determined by how badly the tier was affected by the subprime financing crisis. The low price tier was worst affected huge bubble, huge crash, most dramatic recovery and the high-price least affected (but still deeply affected). Most of the house sales in expensive counties such as San Francisco, Marin and San Mateo, as well as affluent communities in other Bay Area counties are in the "high price tier", and many would qualify for an ultra-high-price tier, but C-S does not break that out. All the local counties, to varying degrees, have sales in all 3 price tiers. The Index is published 2 months after each month delineated the November index was released 1/29/19 and reflects a 3-month rolling average, so in effect, it is looking into a rear-view mirror at the market 3 to 5 months ago. The 5 counties in our Case-Shiller Metro Statistical Area are San Francisco, Marin, San Mateo, Alameda and Contra Costa: Alameda and Contra Costa are by far the largest markets; SF itself comprises only about 7% of house sales in the metro area. We believe the Index generally applies to the other Bay Area counties as well. There are many dozens, if not hundreds, of unique real estate markets found in such a broad region, with different dynamics, moving at varying speeds, sometimes even moving in different directions. How the C-S Index applies to any particular property is impossible to say without a specific comparative market analysis.

2 CoreLogic S&P Case-Shiller Home Price Index: Appreciation since United States vs. San Francisco Metro-Area (Overall, Aggregate Index) Not seasonally adjusted 275 San Francisco Metro Area Aggregate Index United States Index Nov. 200 Based on a January 2000 value of : 267 = a value 167% above that of January Market peak January 2000 price = Early 1990 s recession SF earthquake Mid-late 1990 s recovery Dot-com peak & crash Financing Financial markets crash Market decline & recession Market recovery; Bay Area hightech boom This chart reflects all 3 SF Metro Area home-price tiers aggregated into one overall appreciation trend line. *The C-S Index 5-county San Francisco Metro Statistical Area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month specified and reflects a 3-month rolling average. The chart reflects all price segments in the metro area, and San Francisco County is only a small percentage of overall metro area house sales.

3 CoreLogic S&P Case-Shiller Home Price Index: Appreciation since United States vs. San Francisco Metro-Area High-Price-Tier Index Not seasonally adjusted San Francisco Metro Area High-Price Index United States Index Nov Appreciation trend lines since are similar, but SF had a more significant downturn after the earthquake, then a dramatic up and down with the dotcom bubble. Since early, the latest hightech boom increased SF Bay Area home price appreciation far above the national rate. This chart reflects the SF Metro Area high-price tier s recovery SF earthquake Early 1990 s recession January 2000 price = Dot-com peak & crash Mid-late 1990 s recovery Market peak Financing Financial markets crash Market decline & recession Market recovery; Bay Area hightech boom Based on a January 2000 value of : 261 = a value 161% above that of January *The C-S Index 5-county San Francisco Metro Statistical Area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month specified and reflects a 3-month rolling average. The high-price tier reflects the top third of home sales in the SF metro area, which applies to the city of San Francisco better than other tiers.

4 San Francisco Bay Area Real Estate Market Cycles Home Price Increases & Declines, by Percentage, 1984 Present Approximate % value changes based upon S&P Case-Shiller High-Tier Home- Price Index for 5-county metro area. Market Peaks & Bottoms Approximate Percentage Changes A simplified, smoothed-out graph* + 88% Per CoreLogic S&P Case-Shiller Index for Bay Area High-Price-Tier Houses % Chart updated through Nov. Index + % Dotcom Pop - 10% % Underwriting standards collapse New hightech boom % - 11% Since 1980, market gains to new peak values have typically lasted 5 to 7 years. Except for the dotcom bubble/9-11 adjustment, market declines/recessions have typically lasted 3 to 4 years. However, that doesn t mean that present and future cycles will necessarily play out the same way: Booms can last longer than expected and market adjustments/ declines can come suddenly and unexpectedly. * The years between market peaks and bottoms are not accurately represented, but entered as straight lines between high and low points to illustrate percentage changes over time. Shorter-term fluctuations are not reflected on this chart. All numbers are approximate and subject to revision.

5 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 CoreLogic S&P Case-Shiller Home Price Index Short-Term Changes by Price Tier, San Francisco 5-County Metro Area* Low-Price Tier Houses - lowest third of sales Mid-Price Tier Houses - middle third of sales High-Price Tier Houses - top third of sales Autumn In spring, appreciation rates between the 3 Case-Shiller price tiers started to diverge, with the lower price tiers appreciating fastest. In summer, that dynamic began to change Numbers reflect home prices based on a January 2000 value of : 291 = a value 191% above that of Jan *Includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month delineated and reflects a 3-month rolling average. Each house-price tier represents one third of the number of total sales. All numbers approximate and subject to revision.

6 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 CoreLogic S&P Case-Shiller High-Tier Home Price Index - Present, San Francisco 5-County Metro Area* High Tier Price Houses: San Francisco METRO AREA* Seasonality in appreciation: Since, per Case-Shiller, home prices have typically surged most during the spring selling season. Prices then often plateau in summer Case-Shiller price changes are based on January 2000 value of : 261 = a value 161% above that of January *The C-S Index 5-county San Francisco Metropolitan Statistical Area (MSA) includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. Most of San Francisco, southern Marin, San Mateo and central Contra Costa house sales are high tier. The Index measures a 3-month rolling average. Reports are released 2 months after the month delineated. These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision.

7 CoreLogic S&P Case-Shiller High-Price-Tier Home Index Short-Term Changes, San Francisco 5-County Metro Area* High Tier Price Houses, San Francisco 5-County METRO AREA* According to the latest Case-Shiller Index, Bay Area houses in the upper third of prices appreciated 5% in the past 12 months, and approximately 88% since the recovery began in. However, appreciation rates vary widely by county, city and neighborhood. 235 Numbers reflect home prices based on a January 2000 value of : = a price 160% above that of Jan Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 *The C-S Index 5-county San Francisco Metropolitan Statistical Area (MSA) includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The majority of the house sales in San Francisco, Marin and San Mateo are in the high price tier. The Index is published 2 months after the month delineated and reflects a 3-month rolling average. Short-term fluctuations are much less important than long-term trends.

8 CoreLogic S&P Case-Shiller Home Price Index since San Francisco Metro Area Trends by House-Price Tier* Not seasonally adjusted SF Metro Low-Price Tier SF Metro Mid-Price Tier SF Metro High-Price Tier Starting in, home-price trends began to dramatically diverge between price segments (or tiers): Lower price tiers saw much higher appreciation rates through during the subprime bubble, then much larger % crashes All 3 tiers have seen big recoveries since. In summer, small price declines began to appear, as yet qualifying only as short term changes s recovery SF earthquake Early 1990 s recession January 2000 price = Dot-com peak & crash Mid-late 1990 s recovery Market peak Financing Financial markets crash Market decline & recession Market recovery; Bay Area hightech boom Based on a January 2000 value of : = a value 150% above that of January 2000 Nov *The C-S Index 5-county San Francisco Metro Statistical Area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month specified and reflects a 3-month rolling average. Each price tier reflects one third of housing stock. Where these tiers range in prices varies as the market changes.

9 CoreLogic S&P Case-Shiller Home Price Index Present, All Price Tiers, House Prices San Francisco 5-County Metro Area* January Data Points Case-Shiller divides market into thirds by price and number of sales: low, mid and high price Low-Price Tier Homes Mid-Price Tier Homes High-Price Tier Homes Due to subprime loans, bubble inflates much more for low-price tier homes Based on January 2000 value of : 294 = a value 194% above that of January 2000 Previous market peak Previous Low-Price-Tier Peak Previous Mid-Price-Tier Peak Previous High-Price-Tier Peak 125 dotcom peak Financial markets crash Market recovery peak, then early nineties recession January 2000 price = : Beginning of huge appreciation trend Market decline & recession *The C-S Index 5-county San Francisco Metro Statistical Area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month specified and reflects a 3-month rolling average. Graph not proportional from January data points except for last entry as noted. All numbers approximate and subject to revision.

10 S&P Case-Shiller High-Tier Home Price Index, Present Real Estate Cycles, SF Bay Area San Francisco 5-County Metro Area* January Data Points High Tier Price Houses, January Data Points Recession, Recovery, Exuberance, Correction 30 Years of Cycles January 2000 Price = Previous Market Peak Dot-Com Pops : Beginning of Huge Appreciation Trend Based on January 2000 Value of : 261 = a value 161% above January Late Eighties Jump/ Early Nineties Recession to 2011 Market Decline & Doldrums Market Crash Market Recovery Data points above are for January of each year, except as noted. *The C-S Index 5-county San Francisco Metro Statistical Area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month specified. In August, the high tier began at $1.23 million. Graph not proportional from

11 CoreLogic S&P Case-Shiller Mid-Tier Home Price Index, Present Real Estate Cycles, SF Bay Area San Francisco 5-County Metro Area* January Data Points Mid Tier Price Houses, January Data Points Financing Inflates Based on January 2000 value of : 277 = a value 177% above that of January 2000 Previous Market Peak Dot-Com Big 182 Market Crash January 2000 Price = : Beginning of Huge Appreciation Trend Late Eighties Jump/ Early Nineties Recession Market Decline & Doldrums 2007 to Last Reading: November - Market Recovery Price changes based on January 2000 value =. Data points above are for January of each year, except as noted. *The C-S Index 5-county San Francisco Metro Statistical Area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month specified. Graph not proportional from All numbers approximate and subject to revision.

12 CoreLogic S&P Case-Shiller Low-Tier Home Price Index, Present Real Estate Cycles, SF Bay Area San Francisco 5-County Metro Area* January Data Points Low Price Tier Houses, January Data Points, except last reading Previous Market Peak Subprime Inflates January 2000 Price = 270 Very Big Market Crash Based on January 2000 value of : 291 = a value 191% above that of January Market Decline & Doldrums 2007 to Last reading: November - Market Recovery : Beginning of Huge Appreciation Trend 52 Late Eighties Jump/ Early Nineties Recession Price changes based on January 2000 value =. Data points above are for January of each year, except as noted. *The C-S Index 5-county San Francisco Metro Statistical Area includes San Francisco, Marin, San Mateo, Alameda and Contra Costa counties. The Index is published 2 months after the month specified. Graph not proportional from

13 S&P Dow Jones Indices LLC, S&P/Case-Shiller U.S. National Home Price More information: Compass is a real estate broker licensed by the State of California, DRE Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.