Key economic indicators in America’s residential real estate market.

1. 1
U.S. Housing Market Health Check
Key economic indicators in America’s residential real estate market
Prepared by Nima Wedlake
Thomvest Ventures Research May 2020

2. Thomvest Ventures Overview
About Thomvest
Thomvest is a cross-stage venture capital with offices in San Francisco and Toronto. Our firm
has invested more than $500M since its founding, and we primarily focus on opportunities in
the fields of real estate technology, financial technology, cybersecurity and cloud infrastructure.
The capital we invest is our own, enabling us to be more creative, flexible and patient with our
entrepreneurial partners.
For more information on Thomvest, visit our website or contact this report’s author, Nima
Wedlake.
‣ Real Estate’s Tech-Enabled Future: Opportunities
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‣ Market Map: 140+ Real Estate Tech Companies
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‣ The Evolution of Crypto and Blockchain — a VC
Perspective
Additional Research from Thomvest
Our Real Estate Technology Portfolio

3. 3
I. Impact of COVID-19 on Housing
Relative to the Great Recession, the
U.S. housing market is “healthier”
— fewer subprime mortgages,
lower borrower debt-to-income,
and more equity in homes.
A sustained period of
unemployment may contribute to
increased mortgage defaults, in
lieu of government intervention.
The volume of new listings and
home showings is down in March &
April due to shelter-in-place orders
and general market unease.

4. -40%
-20%
0%
20%
Jan
1
Jan
7
Jan
13
Jan
19
Jan
25
Jan
31
Feb
6
Feb
12
Feb
18
Feb
24
M
ar1
M
ar7
M
ar13
M
ar19
M
ar25
M
ar31
A
pr6
A
pr12
A
pr18
Pending Home Sales, Year-over-Year Percent Change (2019 vs. 2020)
Source: Redfin, Data shown as a 7-day rolling average & includes data from the 90+ U.S. markets in which Redfin operates
Home sale volume
declined precipitously
in March as reported
COVID-19 cases spread
quickly across the U.S.
- U.S. pending sales are down 40% for
the seven days ending on April 18
compared to the prior year.
- New listings are also down — in the
first week of April, listings declined
27% compared to a year ago.
- There are currently just over
750,000 homes for sale in the U.S.
compared to just under 1 million
homes for sale at this time last year.
- The number of new listings typically
grows by about 50% from March 1
to early April, but this year fell 19%
as the COVID-19 pandemic
worsened.
-45% Decline in Pending Home
Sales Compared to 2019
COVID-19 Declared a National
Emergency on March 13

5. Weekly U.S. Home Showings Normalized to First Week of January (2019 vs. 2020)
Source: ShowingTime
Early data on home
tours suggests a
pronounced drop-off in
buyer interest as a
result of COVID-19
- Home showings in the U.S. dropped
meaningfully in mid-March as
shelter-in-place orders became
more widespread nationally,
according to ShowingTime.
- The initial drop in showing activity
experienced throughout much of
the country in the early weeks of
the COVID-19 pandemic has given
way to modest signs of stabilization.
- The data points represent a rolling
weekly average in ShowingTime’s
100 top markets, with each market
recording tens of thousands of
appointments in 2019 and 2020.
-50%
-25%
0%
25%
50%
Jan
12
Jan
19
Jan
26
Feb
2
Feb
9
Feb
16
Feb
23
M
ar1
M
ar8
M
ar15
M
ar22
M
ar29
A
pr5
A
pr12
A
pr19
A
pr26
M
ay
3
2019 % Change from First Week of January
2020 % Change from First Week of January
-48.9% Decline in Home Showings
Compared to Jan 12, 2020
COVID-19 Declared a National
Emergency on March 13

6. Indicators of Mortgage Borrower Credit Quality, 2007 vs. 2020
Source: Black Knight & Urban Institute
Credit quality of today’s
mortgage borrowers is
higher than that of
borrowers prior to the
Great Recession
- Today’s homeowners are in stronger
equity positions relative to 2007 —
fewer have mortgages (62% vs.
68%) and those that do have a lower
loan-to-value ratio (53.3% vs.
61.8%).
- There are fewer high-risk mortgage
products today, including 60%
fewer subprime loans and 75%
fewer adjustable rate mortgages.
- The mortgage payment to income
ratio is lower today relative to 2007
(20.9% vs. 31.8%) — however, a
sustained period of unemployment
may impact borrowers’ ability to
make mortgage payments.
Metric
Great Recession
(Entering 2007)
COVID-19
(February 2020)
Percent of Homeowners w/ a Mortgage 68.4% 62.9%
Number of Active Mortgages 53.7M 52.9M
Percent of Homeowners w/ Less Than 10% Equity 14.5% 6.6%
Total Market CLTV 57.4% 52.3%
Average Current CLTV 61.8% 53.3%
Average DTI at Origination 34.5 33.5
Average Original Credit Score 708 736
Average Current Credit Score 713 747
Mortgage Delinquency Rate 4.92% 3.28%
Mortgage Payment to Income Ratio 31.8% 20.9%
Number of Active Subprime Loans 5.1M 1.98M
Number of Active ARM Mortgages 12.89M 3.2M
ARM Mortgages Scheduled to Reset w/in 3 Years 4.95M 320K
GNMA/GSE Share 63% 75%

7. 10%
Unemployment
15%
Unemployment
20%
Unemployment
30%
Unemployment
18.8%
13.1%
10.3%
7.5%
5%
10%
15%
20%
Great Recession Peak
(January 2010)
Current
(February 2020)
3.7%
14.3%
Projected Non-Current Rate Based on Unemployment Rate
Based on analysis by Black Knight
Observed Non-Current Rate
Jan. 2010 & Feb. 2020
Impact of Unemployment Rate Scenarios on Mortgage Performance
Source: Black Knight
However, sustained
unemployment may
increase the likelihood
of missed or delayed
mortgage payments
- Unemployment peaked at 10%
during the Great Recession — at
this peak, 14.3% of mortgages were
non-current.
- “Non current” refers to loans in any
stage of delinquency or foreclosure.
- More than 20 million Americans
have filed for unemployment as a
result of the COVID-19 pandemic.
- The right-hand chart models
potential non-current mortgage
rates should unemployment persist
over the next several months,
according to Black Knight.
- In response to the pandemic, many
lenders have announced mortgage
forbearance programs in order to
temporarily ease the payment
burden.
Great Recession
(Peak UE, Jan. 2010)
Current
(Feb. 2020)
10%
Unemployment
15%
Unemployment
20%
Unemployment
30%
Unemployment

8. II. Housing Affordability & Supply
Home prices are at historical
highs following steady
appreciation since the Great
Recession.
Home prices have been buoyed by
low mortgage rates and limited
housing supply due in part to a
drop-off in new home
construction.
Demographic tailwinds and
relative affordability may lead to
sustained housing demand over
the next several years.

9. The current national
home price index has
eclipsed 2007 levels
S&P/Case-Shiller U.S. National Home Price Index, 1987-2019
- Home prices have grown rapidly in
the years following the Great
Recession.
- Between 2012 and 2020, home
prices grew 5.8% annually,
compared to 8.7% annual home
price appreciation between 1999
and 2007.
- Home prices dropped about 35%
between mid-2006 and early 2009
in the first nationwide decline since
the Great Depression.
- They have since recovered, and are
now at 115% of their prior peak level
in 2007.
Source: S&P Dow Jones Indices LLC
100
150
200
250
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
184.6
Mar. ’07
- The National Home Price Index tracks the purchase price and resale value of single-family homes. It covers the nine major U.S. census divisions.
- The 10-city covers Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, DC.
5.8%
CAGR
8.7%
CAG
R
214.7
Jan. ’20

10. Median U.S. Home Price to Household Income Ratio, 1987-2019
Source: Zillow Research
2.5x
3.0x
3.5x
4.0x
4.5x
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
3.8x in Q3 2019
4.1x in Q2 2006
In relation to house-
hold income, home
prices have reached
near record highs
- Home prices relative to household
income have yet to surpass its prior
peak during the Great Recession.
- Median household income is up
more than 10% over the last decade,
whereas home prices have
increased by 45% over the same
period.
- The high price-to-income ratio in
2006 points to lax credit standards
during that period which de-
prioritized income in the
underwriting process.
- The ratio compares the median price of homes to the median level of household income in a given area.
- It utilizes the Zillow Home Value Index, which is a measure of home values for a given metro.

11. U.S. Mortgage and Rent Affordability (% of Income), 1981-2019
Source: Zillow Research
10%
20%
30%
40%
50%
Q
11981
Q
11983
Q
11985
Q
11987
Q
11989
Q
11991
Q
11993
Q
11995
Q
11997
Q
11999
Q
12001
Q
12003
Q
12005
Q
12007
Q
12009
Q
12011
Q
12013
Q
12015
Q
12017
Q
12019
Mortgage
Rent
31.2% in Q3 2019
16.4% in Q3 2019
Historically low
mortgage rates have
improved mortgage
affordability
- While home prices have increased,
mortgage costs as a percentage of
household income has actually
declined over the last decade.
- This is due in part to: declining
mortgage rates, tightened credit
standards, and wage growth.
- However, rent affordability
continues to decline as demand for
rental housing has outpaced the
rate of unit growth.
- Since 2008, rental demand in the
U.S. has grown by 20% while
housing units have grown by only
6%.
- Mortgage affordability is calculated by determining the mortgage payment for the median house price
(using ZHVI) and the 30-year fixed mortgage rate during that time period (from Freddie Mac).
- Rent affordability utilizes the Zillow Rent Index, which tracks the monthly median rent in the U.S.

12. Mortgage and Rent Affordability by Metro (% of Income), 2001-2019
Source: Zillow Research
Mortgage Rent
20%
40%
60%
80%
2001 2007 2013 2019
20%
40%
60%
80%
2001 2007 2013 2019
20%
40%
60%
80%
2001 2007 2013 2019
San Francisco Bay Area New York, NY Los Angeles Area, CA
10%
20%
30%
40%
2001 2007 2013 2019
10%
20%
30%
40%
2001 2007 2013 2019
10%
20%
30%
40%
2001 2007 2013 2019
Chicago, IL Dallas-Fort Worth, TX Seattle, WA
10%
20%
30%
40%
2001 2007 2013 2019
10%
20%
30%
40%
2001 2007 2013 2019
10%
20%
30%
40%
2001 2007 2013 2019
Atlanta, GA Detroit, MI Phoenix, AZ
Across U.S. metro
areas, real estate
affordability varies
widely
- In supply-constrained markets like
San Francisco, mortgage payments
represent more than 40% of
household income.
- Across most markets, rental prices
have grown steadily relative to
income.

13. U.S. Age Distribution (in Millions), 2019
Source: U.S. Census Bureau, Population Division; Population estimate as of July 2019
3.5M
4.0M
4.5M
5.0M
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
4.81M
28 year-olds
Median Age of First-
Time Homebuyer
4.46M
33 year-olds
An impending boom in
first-time buyers may
drive continued
demand for housing
- The median age of a first time
homebuyer is 33— there are 4.4
million 33 year-olds in the U.S. vs.
more than 4.8 million 28 year-olds.
- As Americans in their late twenties
age into the home purchase market
over the next 2-4 years, we expect a
period of sustained housing
demand.
- However, we also expect
accelerated supply of properties
over the next decade as baby
boomers transition out of their
homes.
- About 9 million properties are set to
hit the market from 2017 through
2027 as baby boomers start to die in
larger numbers, according to Zillow.

14. The homeownership
rate declined sharply
between 2006–2016,
and has yet to recover
U.S. Homeownership Rate (% Owner-Occupied Homes), 1974-2019
Source: U.S. Census Bureau
61%
62%
63%
64%
65%
66%
67%
68%
69%
70%
Q
4
1974
Q
4
1977
Q
4
1980
Q
4
1983
Q
4
1986
Q
4
1989
Q
4
1992
Q
4
1995
Q
4
1998
Q
4
2001
Q
4
2004
Q
4
2007
Q
4
2010
Q
4
2013
Q
4
2016
Q
4
2019
65.1% in Q4 2019
62.9% in Q2 2016
69.1% in Q3 2006
- Trends in housing preferences and
affordability continue to move
consumers toward rentership vs.
ownership.
- 18% of current renters “want to own
a home” compared to 42% of
renters in 2016, according to
Freddie Mac.
- High student debt and delayed
personal milestones also contribute
to rental demand in lieu of
homeownership.
- The homeownership rate is
calculated by dividing the number
of owner-occupied homes by the
total number of occupied
households.

15. 750
1,500
2,250
3,000
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Annual U.S. Housing Construction Starts (in Thousands of Units), 1980-2019
Source: Federal Reserve Bank of St. Louis
1.73M
Average annual starts, 2000-2007
948K
Average annual starts, 2008-2019
New construction
starts have yet to
recover following the
Great Recession
- Lack of new housing supply is a
major contributor to home price
appreciation — housing
completions have trailed household
growth in every year since following
the Great Recession.
- Rising construction costs may play a
role in lack of building: the per-
square-foot hard costs for
constructing multifamily housing in
California climbed 25 percent over
the last decade.

16. For Sale Housing Inventory (in Millions) and Months of Supply, 1999-2019
Source: National Association of Realtors
5
10
15
20
1M
2M
3M
4M
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
For Sale Inventory Months of Supply
Homes available for
sale are at multi-year
lows, which exacerbate
housing supply issues
- Compared with December of 2018,
inventory levels were down 8.5%.
This marks seven straight months of
year-over-year declines and is a
record-setting low since 1999.
- The lack of housing supply is
leading to fewer “months of supply”
— meaning homes are selling faster
than they have historically.
- Historically, six months of supply is
associated with moderate price
appreciation, and a lower level of
months’ supply tends to push prices
up more rapidly.
- In February, sales of existing houses
surged 6.5% from the previous
month to a seasonally adjusted
annual rate of 5.77 million units —
the highest level in February since
2007.
Average of 1.4 million
homes for sale in 2019
Average of 3.9 months
of supply in 2019
- “For sale inventory” refers to the average number of properties marked as active on the market.
- "Months of supply" refers to the number of months it would take for the current inventory of homes on
the market to sell given the current sales pace.

17. 17
III. Mortgage Activity
Cumulative mortgage debt in the
U.S. has surpassed 2008 levels,
however quarterly origination
volume has not eclipsed pre-
recession volumes.
Credit standards have tightened
following the Great Recession, and
mortgage default rates are near
historical lows.
Origination volume for second
mortgages and cash-out
refinances are down significantly
relative to 2006-levels.

18. Total U.S. Mortgage Debt Balance (in Trillions, USD), 2003-2019
Source: New York Fed Consumer Credit Panel/Equifax
$2T
$4T
$6T
$8T
$10T
$12T
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$9.56T in Q4 2019
$9.29T in Q3 2008
Total outstanding
mortgage debt has
surpassed Great
Recession levels
- While total debt has grown, its
growth rate over the last several
years is much lower (3%) than
annual debt growth seen prior to
the Great Recession (12%).
- Home values have grown more
rapidly in the period following the
Great Recession — the aggregate
value all U.S. owner-occupied
homes is more than $30 trillion.
12%
CAGR
3% CAGR

19. 200
400
600
800
1000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Mortgage Credit Availability Index, 2004-2020
Source: Mortgage Bankers Association
152.1 in March 2020
Peak of 868.7 in June 2006
Credit availability has
risen slightly, but is not
near Great Recession
levels
- Credit availability spiked during the
Great Recession, and declined
sharply due to regulatory changes,
as well as updates to bank
underwriting policies.
- The Mortgage Credit Availability
Index is calculated using several
factors related to borrower
eligibility (credit score, loan type,
loan-to-value ratio, etc.).
- The credit availability index
dropped sharply in March 2020, as
a result of tightening credit
standards during the COVID-19
pandemic.
- The recent decline in credit
availability is primarily impacting
the jumbo and non-QM space —
jumbo credit availability
experienced a 36.9% month-over-
month decline.

20. Quarterly U.S. Mortgage Originations (in Billions, USD), 2003-2019
Source: New York Fed Consumer Credit Panel/Equifax
$200B
$400B
$600B
$800B
$1,000B
$1,200B
Q
4
2003
Q
4
2004
Q
4
2005
Q
4
2006
Q
4
2007
Q
4
2008
Q
4
2009
Q
4
2010
Q
4
2011
Q
4
2012
Q
4
2013
Q
4
2014
Q
4
2015
Q
4
2016
Q
4
2017
Q
4
2018
Q
4
2019
$752B in Q4 2019
Peak of $1.06T in Q3 2003
Mortgage origination
volume has stayed
relatively consistent
over the last decade
- Mortgage originations spiked in the
years preceding the Great
Recession, driven by relaxed credit
standards and an active housing
market.
- In Q4 2019, origination volume
reached its highest level in more
than a decade, driven primarily by a
drop in mortgage rates.

21. $200B
$400B
$600B
$800B
$1,000B
$1,200B
Q
4
2003
Q
4
2004
Q
4
2005
Q
4
2006
Q
4
2007
Q
4
2008
Q
4
2009
Q
4
2010
Q
4
2011
Q
4
2012
Q
4
2013
Q
4
2014
Q
4
2015
Q
4
2016
Q
4
2017
Q
4
2018
Q
4
2019
<620 620-659 660-719 720-759 760+
20%
40%
60%
80%
% Originations 760+
U.S. Mortgage Originations by Credit Score (in Billions, USD), 2003-2019
Source: New York Fed Consumer Credit Panel/Equifax
Originations have
shifted to borrowers
with strong credit
scores
- Prior to the Great Recession, only
20%-30% of mortgage originations
were to borrowers with credit
scores 760 or higher.
- Following the housing crisis, credit
standards tightened meaningfully —
in Q4 2019 nearly two-thirds of
originations were to 760+
borrowers.

22. Number of U.S. Mortgage and Home Equity Accounts (in Millions), 2003-2019
Source: New York Fed Consumer Credit Panel/Equifax
20M
40M
60M
80M
100M
120M
Q
4
2003
Q
4
2004
Q
4
2005
Q
4
2006
Q
4
2007
Q
4
2008
Q
4
2009
Q
4
2010
Q
4
2011
Q
4
2012
Q
4
2013
Q
4
2014
Q
4
2015
Q
4
2016
Q
4
2017
Q
4
2018
Q
4
2019
Peak of 98.1M accts. in Q1 2008
Peak of 24.2M accts. in Q4 2007
Mortgage
Home Equity
80.9M accts. in Q4 2019
15.0M accts. in Q4 2019
The total number of
active mortgages is
nearly 20 million less
than its 2008 peak
- While total mortgage debt is at a
record high, the aggregate number
of mortgages is low relative to
historical standards.
- This is driven by a decrease both the
number of Americans who own a
home, as well as the number of
homeowners with a mortgage.
- 63% of homeowners have a
mortgage — the lowest level since
at least 2005.

23. Quarterly U.S. Cash-Out Refinance Volume (in Billions, USD), 1994-2019
Source: Freddie Mac
$20B
$40B
$60B
$80B
$100B
Q
11994Q
11995Q
11996Q
11997Q
11998Q
11999Q
12000Q
12001Q
12002Q
12003Q
12004Q
12005Q
12006Q
12007Q
12008Q
12009Q
12010Q
12011Q
12012Q
12013Q
12014Q
12015Q
12016Q
12017Q
12018Q
12019
Home Equity Cashed Out
2nd Mortgages/HELOC Consolidation
Cash-out refinancings
have dropped to less
than $25 billion per
quarter
- Home equity withdrawal amounts
ballooned between 2005 and 2007
to more than $80 billion per quarter.
- Cash-out refinancings have
increased over the last five years,
but quarterly volume is less than
25% of levels reached during the
Great Recession.

24. Tappable Equity of U.S. Mortgage Holders (in Trillions USD), 2004-2019
Source: Black Knight
$2T
$4T
$6T
$8T
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$2.2T in 2011
Aggregate home equity
in excess of mortgage
balances reached $6.3T
in 2019
- “Tappable Equity” is the equity
available on all residential
properties with an existing
mortgage, before reaching a current
CLTV of 80%.
- Tappable equity reached an all-time
high of $6.3 trillion in 2019.
- The average owner with tappable
equity has $140,000 available to
borrow against.
- Housing equity as a share of
aggregate home values has grown
from 36.7% in 2009 to 60.4% in
2019, according to the Urban
Institute.
$6.3T in 2019

25. Mortgages rates are at
historical lows — which
contributes to home
price appreciation
Average Rate for Conforming 30-Year Fixed Rate Mortgage, 1972-2020
Source: Freddie Mac Primary Mortgage Market Survey
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
- Despite historically high home
prices, home affordability is low
relative to historical standards due
to a dramatic decline in mortgage
rates.
- For context, every 100 basis point
decrease in mortgage interest rate
increases “buying power” by ~15%
— meaning prospective buyers can
afford to purchase more expensive
homes.
3.45% in March 2020
6.57% in August 2007

26. New Seriously Delinquent (90+ Days) Balances by Loan Type (% of Balance), 2003-2019
Source: New York Fed Consumer Credit Panel/Equifax
0%
2%
4%
6%
8%
10%
Q
4
2003
Q
4
2004
Q
4
2005
Q
4
2006
Q
4
2007
Q
4
2008
Q
4
2009
Q
4
2010
Q
4
2011
Q
4
2012
Q
4
2013
Q
4
2014
Q
4
2015
Q
4
2016
Q
4
2017
Q
4
2018
Q
4
2019
Mortgage
Home Equity
.85% in Q4 2019
1.1% in Q4 2019
Delinquency rates for
mortgages and home
equity loans are near
historic lows
- Following the Great Recession,
mortgage delinquency rates have
stayed low by historical standards.
- 30 days or more delinquency rate
for January 2020 was 3.5% — the
rate was the lowest for a January in
at least 20 years.
- Delinquency rates are closely
correlated to unemployment — as
such, unemployment caused by the
COVID-19 pandemic may lead to a
spike in non-current mortgages

27. Number of Consumers with New Foreclosures and Bankruptcies (in Thousands), 2003-2019
Source: New York Fed Consumer Credit Panel/Equifax
200
400
600
800
1000
Q
4
2003
Q
4
2004
Q
4
2005
Q
4
2006
Q
4
2007
Q
4
2008
Q
4
2009
Q
4
2010
Q
4
2011
Q
4
2012
Q
4
2013
Q
4
2014
Q
4
2015
Q
4
2016
Q
4
2017
Q
4
2018
Q
4
2019
New Foreclosure New Bankruptcy
The frequency of
foreclosures and
bankruptcies in the U.S.
is down meaningfully
- Approximately 71,000 individuals
had a new foreclosure notation
added to their credit reports in Q4
2019, remaining very low by
historical standards.