1. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -1- © Your Castle, Inc. 2011 Denver Real Estate Trends: Update 8/5/2014 Homes Home: 9430 Owl Lane, Boulder. $2.99MM. Courtesy of Sotheby's. Metro Denver Real Estate Market Trends Charles Roberts Broker/Owner - Your Castle Real Estate Board Director & Education Chair – Denver Metro Association of Realtors cell: 303-523-3837 email: croberts@yourcastle.org

2. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -2- © Your Castle, Inc. 2011 Sales vs. inventory 2007 – 2013. Inventory levels are still historically low. Source: Gary Bauer, Metrolist 30,827

3. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -3- © Your Castle, Inc. 2011 Source: Your Castle Real Estate analysis, Metrolist Note:DSF = Detached Single Family Home Denver Metro (DSF only, not condos or townhomes) Sales Prices in $000 Peak (1987) to trough (1988): $105 to 101K -4% Peak (2006) to trough (2009): $322K to $241K: -25% Average Annual Appreciation = 6% Denver Metro Home Prices: Peak - 2006 Trough - 2009

4. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -4- © Your Castle, Inc. 2011 Denver metro average home price by month. 2012 and 2013 have both seen dramatic increases over 2011. Price growth in 2014 has posted slight gains over 2013. Denver Metro – Average Home Price $ thousands Source: Your Castle Real Estate, Metrolist Note: These stats are composite MLS, which includes Boulder

5. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -5- © Your Castle, Inc. 2011 Showings / Active Listing DSF + CND for YCRE. 2009 - 2014 Source: Your Castle Real Estate analysis, Centralized Showing Service First tax credit Second tax credit 2012 2011 2009 2010 2014 2013 Showings / Active Listing / Month

6. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -6- © Your Castle, Inc. 2011 Source: Your Castle Real Estate analysis (7/6/14), Metrolist # Active Listings As of 7/6/14 # Sold Listings 7/1/13 – 6/30/14 Price Change July’12-June’13 vs. July’13-June’14 Avg Px Chg= +8% Months of Inventory As of 7/1/14 Avg = 1.2 % Listings UC As of 7/6/14 Avg DOM = 29 Avg DOM = 74 Avg = 53% Denver Homes (no condos or townhomes) Based on above-grade SF Avg DOM = 28 Avg DOM = 29 Avg DOM = 37 Avg DOM = 48 Inventory by Home Size

7. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -7- © Your Castle, Inc. 2011 Our amazing pent-up demand for home ownership! 1.Home formation (e.g., marriages) increasing dramatically! 2.The inflow of immigrants is rebounding strongly! 3.The population of metro Denver increases about 1.5% per year. What a great place to live! 4.People who lost homes can finally buy again! 5.Those who could buy in the downturn but didn’t are realizing the mistake they made! 6.Home prices are rising so renters don’t want to miss out forever! 7.Renters are completely getting priced out of the rental market! 8. Is legalized marijuana bringing more residents to Colorado?

8. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -8- © Your Castle, Inc. 2011 Why Sellers Aren’t Selling Some potential move-up buyers are holding back while they weigh whether to abandon a phenomenally low interest rate on their current mortgage in order to buy a different home Afraid of being caught without a home when they sell. There’s nothing for them to buy. They think the up cycle is near the end. They don’t know they can qualify for a new home.

9. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -9- © Your Castle, Inc. 2011 Source: Census Bureau, Your Castle Real Estate analysis. Great Depression -89% World War II -81% Great Recession -72% New construction declined significantly in the last recession. Number of New Home Starts (thousands)

10. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -10- © Your Castle, Inc. 2011 Source: Census Bureau, Denver Chamber of Commerce, Metrolist, Your Castle Population (thousands) DSF Transactions Recession Hyper-boom Denver Market Cycles Does this look like an impending crash?

11. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -11- © Your Castle, Inc. 2011 Long term interest rates… over the longterm. Source: Freddie Mac, Your Castle Real Estate http://www.freddiemac.com/pmms/pmms_archives.html 30 year fixed rate: 1971-2013 ’70s Avg = 9%’80s Avg = 13%’90s Avg = 8%’00s Avg = 6.5% $1610 Payment, P+I, $200K loan $2210$1470$1260$965 $170,000 Max home $60K person can afford $125,000$190,000$220,000$290,000 Current = 4% 30 year fixed rate: 2011-13 ’10s Avg = 4.1%

12. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -12- © Your Castle, Inc. 2011 Par Mortgage Rate’s for 30 Year Fixed

13. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -13- © Your Castle, Inc. 2011 Consumer Confidence Index

14. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -14- © Your Castle, Inc. 2011 Data Source: The Conference Board 90.9 in July, ‘14 X

15. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -15- © Your Castle, Inc. 2011 Condos

16. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -16- © Your Castle, Inc. 2011 Denver Metro (Condo & Townhomes only, no DSF) Sales Prices in $000 Historical context. The average Denver condo price from 1972 to 2014 has mostly been a march upwards: appreciating 5.5% per year. 2013 saw condo prices hit all time highs. 1Q14 is continuing the trend. Source: Your Castle Real Estate, Metrolist Note:CND = Condo; DSF = detached single family home Peak (1985) to trough (1989): $83K to $56K -33% Trough (1989) to Recovery (1994) $56K to $80K +44% Peak (2004) to trough (2009): $191K to $157K -15%

17. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -17- © Your Castle, Inc. 2011 Your client asks you: “Should I rent or buy?”

18. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -18- © Your Castle, Inc. 2011

19. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -19- © Your Castle, Inc. 2011 Long term, real estate is still part of the “American Dream”

20. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -20- © Your Castle, Inc. 2011 http://www.trulia.com/rent_vs_buy/ Rent vs. Buy Analysis So Cool!!!

21. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -21- © Your Castle, Inc. 2011 Invest in Real Estate?

22. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -22- © Your Castle, Inc. 2011 Let’s say your client has an extra $100,000 to invest… Should they invest in: An annuity? Bonds? Gold? The S&P 500? Rental properties?

23. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -23- © Your Castle, Inc. 2011 Total Income Years S&P 500 Gold Cash Purchase Bonds Annuity Purchase 4 props with Financing

24. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -24- © Your Castle, Inc. 2011 25 year trend for vacancy and average rents in Denver metro (5+ unit buildings). Vacancy at just below 6% seems to be the magic number for rent growth. Vacancy for 1-4 unit buildings is 1.7%!! 5+ are at 4.4%. High Vacancy Avg = 9.9% Low rent growth Avg = 1.4% / yr High rent growth Avg +6.6% / yr Vacancy Rate by Quarter % Median Rent by Quarter ($) High Vacancy Avg = 8% Low rent growth Avg = 1.1% / yr Source: Apartment Association of Metro Denver Low Vacancy Avg = 4.7% Low Vacancy Avg = 5% High rent growth Avg +4.2% / yr

25. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -25- © Your Castle, Inc. 2011 Vacancy Rates are at all-time lows! 20042005 2006 2007 2008 2009 2010 2011 ’12 ’13 ‘14 13.1% 1.5% 5.2% 4.2% 4.0% 7.1% 9.5% 13% 10% 8% 6% 3% Vacancy rates in Denver Metro for 1-4 unit properties 3.6% 1.6%1.7% 2.0%

26. Lon Welsh 303-619-0633 LonWelsh@YourCastle.orgLonWelsh@YourCastle.org -26- © Your Castle, Inc. 2011 Key messages for homes. In 2013, we saw strong growth in sales price and volume. Inventory, which is tight now, will not get better (from buyer’s point of view) until at least 4Q 2014 (probably later). We expect continued moderate price increases for homes. MetricPerformanceObservations Average Home Price $ 2Q13 vs. 2Q12: +12% 3Q13 vs. 3Q12: +12% 4Q13 vs. 4Q12: +9% 1Q14 vs. 1Q13: +9% 2Q14 vs. 2Q13: +8% Prices jumped +8.5% in 2012. 2013 was up another 9%. This was driven by the lack of inventory on the low and middle range of the market. So far in 2014 prices have risen 8%. Small homes will continue, for at least one more year, to outpace most other size categories, in our view. MOI : Months of Inventory 07/01/13: 2.0 MOI 10/01/13: 1.7 MOI 01/01/14: 1.4 MOI 04/01/14: 1.2 MOI 07/01/14: 1.7 MOI MOI has been stable to declining for 24 months. The bottom smaller 50% of the market (homes up to 1805 sq. feet) have approximately 0.7 MOI – a very strong seller’s market. The luxury market is balanced, with 6.9 MOI for the largest 10% of homes in the Denver area. Denver still remains a strong sellers market at all price points for at least another year. Showings per Active Listing per Month 2Q 2010: 6.9 2Q 2011: 9.1 2Q 2012: 11.6 2Q 2013: 14.2 2Q 2014: 16.9 Showings are a good leading indicator for UC… which predicts sales. Showings in 2Q14 were up from 2Q13. In 2014 the amount of new inventory is actually lower than this time last year. Showings per listing will be higher if there is less to choose from. As in 2012 and 2013, the number of “desirable” homes that are priced right will still sell rapidly with lots of showings. Under Contract (UC) 03/31/13: 4,781 06/30/13: 6,541 09/30/13: 4,897 03/31/14: 5,420 06/30/14: 5,866 UC is the best leading indicator of sales. At the end of 2Q14, homes under contract were up 11.8% from the first half of ‘13. Showings were up, too. We anticipate 3Q14 unit volume will remain at least as strong as ’13. Number Sold 2Q13 vs. 2Q12: +21% 3Q13 vs. 3Q12: +25% 4Q13 vs. 4Q12: +16% 1Q14 vs. 1Q13: +8% 2Q14 vs. 2Q13: +5% 2012 unit sales were +12% vs. 2011. 2013 was up +16% from 2012. Through the first half of the year, sales volume is up 6% from ‘13. Price increases have not (yet) brought extra inventory in the market. It’s inevitable that increased prices will increase inventory, but its impossible to know when. We expect to see some additional inventory in 2014. Inventory 06/30/12: 5,883 09/30/13: 5,232 12/31/13: 4,426 03/31/14: 3,739 06/30/14: 5,288 Inventory levels continue to stay low, especially for smaller homes. This will continue to drive price increases on the low end. With prices above pre-Recession highs, essentially all sellers should be able to afford to list and sell their homes. Almost no one is “underwater” in Denver. Inventories should increase. Source: Your Castle Real Estate analysis, MLS base data Notes: As of 7/6/2014. This does NOT include Colorado Springs, Ft Collins, Boulder, Summit/Vail or any other non-Denver market. As a result, our stats will not match MLS by design (MLS includes some non-Denver markets).