OHIO ECONOMICS FORUM AND FORECAST

OHIO HOUSING CONFERENCE 2014
OHIO ECONOMICS FORUM AND
FORECAST
YEAR 5 OF THE POST-GREAT RECESSION RECOVERY: WHERE
OHIO AND ITS REGIONS STAND AND WHERE THEY ARE
HEADING
DANIEL J. HOGAN, DIRECTOR, RESEARCH
RED Capital Group, LLC
November 4, 2014
AGENDA
•Recent Economic Trends and Econometric Forecasts
• Gross State Product
• Statewide level
• Major Ohio Regional Economies
• Payroll Employment
• Personal Income
•Regional Performance and Performance Variance
• Payroll Employment
• Personal Income
• Home Prices
• Apartment Rent Trends
11/3/2014 | 2
OUTPUT OF GOODS AND SERVICES
11/3/2014 | 3
NOMINAL OHIO GROSS STATE PRODUCT GROWTH VS. U.S. GDP
GROWTH: THE VIEW FROM 2013
6%
5.3%
5%
3.9%
4%
3.9%
3.1%
3%
2%
3.8%
3.5%
2.1%
1%
0%
-1% -0.3%
US NOM GDP FORECAST
US NOMINAL GDP
OHIO NOM GSP
OHIO GSP FORECAST
-2%
-3%
-3.1%
-4%
2008
2009
2010
11/3/2014 | 4
2011
2012
2013f
2014f
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
2015f
2016f
NOMINAL OHIO GROSS STATE PRODUCT GROWTH VS. U.S. GDP
GROWTH: THE NEW AND IMPROVED UPDATED VIEW
Annual Gross State Product Growth
8%
4.9%
6%
5.7%
5.7%
3.9%
3.1%
4%
4.2%
3.5%
4.0%
3.6%
2%
0%
0.4%
US NOM GDP FORECAST
US NOMINAL GDP
OHIO NOM GSP
OHIO GSP FORECAST
-2%
-3.2%
-4%
2008 2009 2010
11/3/2014 | 5
2011
2012
2013 2014f 2015f 2016f 2017f 2018f
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
What Accounts for Ohio’s Strong 2011 Performance?
Contribution to Net GSP Growth by Industry
Non-durable Goods Mfg
23.8%
Durable Goods Mfg
23.7%
Business Services
15.8%
Education & Health Care
5.1%
Financial Services
4.5%
Energy Extraction/Utilities
1.5%
0%
OHIO GSP Increased by $24.4 billion
11/3/2014 | 6
10%
20%
Source: Bureau of Economic Analysis
Data and RED Capital Research
Calculations
30%
What Accounts for Ohio’s Strong 2012 Performance?
Contribution to GSP Growth by Industry
Non-durable Goods Mfg
6.8%
9.1%
Durable Goods Mfg
Business Services
16.4%
Education & Health Care
7.5%
Financial Services
28.0%
Energy Extraction/Utilities
11.0%
0%
OHIO GSP Increased by $25.4 billion
11/3/2014 | 7
10%
20%
Source: Bureau of Economic Analysis
Data and RED Capital Research
Calculations
30%
What Accounts for Ohio’s Slower 2013 Growth?
Year-over-year Change in GSP Growth Contribution by
Industry
OHIO GSP Increased only $16.7
billion
-12%
Remainder
-30%
Financial Services
Business Services
Durable Goods Manuf
Education & Health Care
Energy Extraction/Utilities
-50%
-55%
-65%
-87%
Non-durable Goods
-92%
11/3/2014 | 8
Source: Bureau of Economic Analysis
Data and RED Capital Research
Calculations
2013
Utica Region Natural Gas Production: Stagnating?
Source: U.S. Energy Information
Administration, Drilling Productivity Report
October 2014
11/3/2014 | 9
An Upward Revision of 2013 GSP is Likely. Revised Forecast May
look Something Like this ….
6%
5.7%
4.5%
5%
4%
4.2%
3%
3.5%
4.0%
3.6%
2%
1%
0%
-1%
U.S. GDP
OHIO GSP
-2%
-3%
2009 2010
2011
11/3/2014 | 10
2012
GDP FORECAST
OHIO FORECAST
2013 2014f 2015f 2016f 2017f 2018f
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
How We Stacked Up Against our BIG 10 Rivals in 2012
2012
Annual Gross State Product Growth
6.0%
5.7%
5.5%
5.0%
5.1%
4.6%
U.S.
4.5%
4.0%
4.0%
IL
4.0%
IN
3.5%
3.3%
MI
OH
PA
3.0%
2.5%
2.0%
U.S.
11/3/2014 | 11
IL
IN
MI
OH
Sources: Bureau of Economic Analysis
data and RED Capital Research
calculations
PA
Ohio Metropolitan Gross Domestic Product Growth
Metropolitan Area
2011 GDP Growth
2012 GDP Growth
2013 GDP Growth
Akron – Canton
2.8%
5.4%
1.5%
Cincinnati
3.8%
6.1%
3.4%
Cleveland
4.3%
5.3%
2.1%
Columbus
4.5%
7.5%
5.1%
Dayton
4.4%
4.0%
0.9%
Mansfield
3.7%
2.5%
1.5%
Springfield
5.2%
4.9%
2.2%
Toledo
8.9%
5.6%
0.7%
Youngstown
9.7%
2.3%
-1.8%
4.9%
5.7%
3.1%
OHIO
11/3/2014 | 12
Ohio MSA Compound GDP Growth: 2003 – 2013 / 2010 – 2013
Metropolitan Area
2010 - 13 GDP Growth
2003 – 2013 GDP Growth
Akron – Canton
3.2%
2.9%
Cincinnati
4.4%
3.3%
Cleveland
3.9%
2.6%
Columbus
5.7%
3.5%
Dayton
3.1%
1.8%
Mansfield
2.6%
0.1%
Springfield
4.1%
1.8%
Toledo
5.0%
2.8%
Youngstown
3.3%
1.6%
4.5%
2.9%
OHIO
11/3/2014 | 13
Highlights and Conclusions
•From the perspective of relative economic output and
competitiveness, Ohio is in its best shape in two decades
• Output growth was faster than the U.S. average 2010 – 2012
• Despite preliminary data to the contrary, most likely in 2013 as well
•Balanced leadership from core industries
• Manufacturing
• Northern Tier from Toledo to Cleveland / Akron
• Skilled services (financial, business, education and health care)
• Cleveland, Cincinnati and most prominently Columbus
• Energy
• Akron, Canton, Youngstown
•Although plenty of room for improvement remains
• Heading in the right direction
• Likely to keep pace with the nation with respect to output growth
• Benefiting from increasing diversification, boding well for the future
11/3/2014 | 14
PAYROLL EMPLOYMENT
11/3/2014 | 15
Payroll Job Growth Trend Forecast
4.0%
3.7%
Year-on-year Growth
3.5%
US PAYROLLS
US PAYROLL FORECAST
OH PAYROLLS
OHIO MANUFACTURING PAYROLLS
3.0%
2.2%
2.5%
2.0%
1.7%
1.5%
Moderating GDP
Growth after 1H16
1.0%
0.5%
0.7%
0.8%
0.0%
1Q11
1Q12
1Q13
11/3/2014 | 16
1Q14
1Q15
1Q16
1Q17
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
1Q18
1Q19
Translated to Ohio Net Payroll Jobs Created
Net Payroll Jobs
Net Jobs (000)
92.2
100
67.0
80
80.0
62.8
62.4
45.9
60
22.6
40
20
13.8
-38.1
(20)
(40)
2010
2011
2012
2013
2014
2015
2016
2017
2018
OH_PR = c + OH_PR(-3) + OH_PR(-2) + OH_PR(-1) + US_PR(-2) US_PR(-1) + US_PR + FHFA_US(-2) + GDP(-2)
+ OH_MFG_PR + BAA(-4) + FED_FUNDS(-1)
ARS = 98.7% Durbin-Watson State = 2.01
11/3/2014 | 17
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
The Manufacturing Outlook: Quite Positive
Net Jobs (000)
24.3
25
18.1
20
17.7
22.1
19.6
15.5
14.5
15
5.8
10
5
-8.9
(5)
(10)
2010
2011
2012
2013
2014
2015
2016
2017
2018
MFG = C + DU_09Q1 + FMG(-3) + MFG(-2) + MFG(-1) + IP(-2) + IP(-1) + OUTPUT GAP + 10-YR UST + US_PR
ARS = 97.4% Durbin-Watson State = 2.00
11/3/2014 | 18
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Drivers of the Manufacturing Rebound
8,000
Change in Total Payroll Jobs
7,000
6,000
5,000
6,900
T12M Aug 2013
5,700
T12M Aug 2014
3,600
4,000
3,000
2,000
1,600
1,400
1,000
(1,000)
(2,000)
(3,000)
100
500
(1,900)
Fabricated Metals
11/3/2014 | 19
Machinery
Transportation
Equipment
Food
Service Industry Weak Points
8,000
Change in Total Payroll Jobs
6,000
6,500
7,000
4,200
4,600
4,000
2,000
0
1,400
-2,000
-4,000
-6,000
(3,200)
(5,000)
-8,000
T12M Aug 2013
-10,000
T12M Aug 2014
(10,100)
-12,000
Finance
11/3/2014 | 20
Pro, Sci & Tech
Colleges
Retail Trade
How We Stacked Up Against our BIG 10 Rivals over the T12M
12 Mo. Ended 9/14 vs. 12 Mo. Ended 9/13
Annual Payroll Job Growth
2.0%
1.8%
1.8%
1.5%
U.S.
1.0%
1.0%
IL
IN
0.9%
0.7%
0.7%
MI
OH
PA
0.5%
0.0%
U.S.
11/3/2014 | 21
IL
IN
MI
OH
Sources: Bureau of Labor Statistics data
and RED Capital Research calculations
PA
Highlights and Conclusions
•Current Employment Survey data suggest that Ohio job
creation trends were weaker over the past year than earlier in
the recovery
• Largely due to slower growth or job cuts in construction, retail trade
and the service industries
• Unfortunately, skilled services industries were prominent among the
sectors exhibiting slower growth
•Conversely, manufacturing employment growth was
surprisingly robust
• Leadership from the automobile and energy sectors
• Positive implications for metro areas with high employment
concentrations in these industries
11/3/2014 | 22
How are the State’s Urban Regions Faring?
Cleveland
Toledo / Lima
Akron-Canton
DaytonSpringfield
Columbus
Cincinnati
11/3/2014 | 23
Youngstown
Metropolitan Winners and Losers: Primary Markets
35,000
Change in Total Payroll Jobs
30,000
T12M Aug 2013
T12M Aug 2014
Columbus accounts for
about 57% of the State’s
job growth slowdown
over the past 12 months.
29,700
25,000
20,000
19,500
17,200
13,100
15,000
10,000
7,600
5,000
700
0
CINCINNATI
11/3/2014 | 24
CLEVELAND
Sources: Bureau of Labor Statistics
COLUMBUS
Metropolitan Winners and Losers: Secondary Markets
Change in Total Payroll Jobs
10,000
8,000
8,200
T12M Aug 2013
T12M Aug 2014
5,800
6,000
4,500
4,000
2,600
2,000
900
300
0
1,000
(900)
-2,000
AKR-CANT
11/3/2014 | 25
DAYT-SPRNGFLD
TOLEDO-LIMA
Sources: Bureau of Labor Statistics
YNGSTWN
Highlights and Conclusions
• Metros with the heaviest concentrations in skilled service industries
experienced the most dramatic recent slowdowns in job growth
• Columbus
• Dayton – Springfield
•Large metros with balanced economies featuring concentrations in
services and manufacturing maintained good forward momentum
• Cincinnati
• Cleveland
•Among smaller cities, metros in the Utica Shale region recorded the
best performances
• Akron-Canton
• Youngstown
•Markets with heavy exposure to the auto industry sustained cyclical
gains made in recovery’s early stage but posted slower recent growth
• Toledo
• Lima
11/3/2014 | 26
Payroll Job Creation Forecasts: Cincinnati MSA
Net Payroll Job Growth (000)
Cincinnati MSA
20
16.8
15
10
16.1
17.4
13.3
9.9
10.4
5
6.9
0
2011
2012
2013
2014f
2015f
2016f
2017f
CI_PR = C + CI_PR(-6) + CI_PR(-5) + CI_PR(-4) + CI_PR(-3) + CR_PI(-2) + CR_PI(-1) +US_PR(-4) + US_PR(-3)
+ US_PR(-2) + US_PR(-1) + US_INC(-1) + FED_FUNDS(-1) + FED_FUNDS
11/3/2014 | 27
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Payroll Job Creation Forecasts: Cleveland MSA
Net Payroll Job Growth (000)
Cleveland MSA
18.2
20
15
10
9.9
7.3
8.8
5
4.8
0
(2.5)
(0.4)
-5
2011
2012
2013
2014f
2015f
2016f
2017f
CL_PR = C + DU_94Q1 + CL_PR(-8) + CL_PR(-5) + CL_PR(-4) + CL_PR(-3) + CL_PR(-2) + CL_PR(-1) + US_PR(1) + US_PR + 10YR_UST(-4) + 10YR_UST(-3)+ SP500(-3) + IP(-1) + CL_INC(-3)
11/3/2014 | 28
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Payroll Job Creation Forecasts: Columbus MSA
Net Payroll Job Growth (000)
Columbus MSA
40
30
30.1
23.1
22.7
20
10
6.8
11.8
5.5
0
2011
2012
2013
2014f
2015f
2016f
2.8
2017f
CO_PR = C + DU_96Q4 + DU_13Q4 + CO_PR(-5) + CO_PR(-4) + CO_PR(-3) + CO_PR(-2) + CO_PR(-1) + US_PR(-1) + US_PR + GDP(-3)
11/3/2014 | 29
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Payroll Job Creation Forecasts: Akron-Canton MSA
Net Payroll Job Growth (000)
Akron-Canton MSA
10
8
8.0
6.2
8.6
5.9
6
6.2
5.9
4
4.6
2
0
2011
2012
2013
2014f
2015f
2016f
2017f
AK_PR = C + AK_PR(-5) + AK_PR(-4) + AK_PR(-3) + AK_PR(-2) + AK_PR(-1) + US_PR(-1) + US_PR + NGDP(-2) + PCEY
11/3/2014 | 30
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Payroll Job Creation Forecasts: Dayton-Springfield
Net Payroll Job Growth (000)
Dayton-Springfield MSA
6
5.4
3.4
4
2
(0.1)
0.7
1.4
0
-2
-4
2011
2012
2013
(2.5)
2014f
2015f
2016f
(2.9)
2017f
DAY_PR = C + DU_02Q1 + DU_96Q1 + DAY_PR(-4) + DAY_PR(-3) + DAY_PR(-2) + DAY_PR(-1) + US_PR(-1) + US_PR + FHFA_US + GDP(-3)
11/3/2014 | 31
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Payroll Job Creation Forecasts: Youngstown-Warren MSA
Net Payroll Job Growth (000)
Youngstown
4
3
3.0
2.0
2
2.0
1
1.0
0
(0.1)
-1
-2
2011
2012
(0.7)
2013
2014f
2015f
2016f
(1.9)
2017f
YO_PR = C + DU_94Q3 + DU99Q3 + YO_PR(-6) + YO_PR(-5) + YO_PR(-4) + YO_PR((-3) + YO_PR(-2) + YO_PR(-1) + US_PR(-1) + US_PR +
NGDP(-5) + TEN_YEAR(-5) + BAA(-4)
11/3/2014 | 32
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Net Payroll Job Growth (000)
Payroll Job Creation Forecasts: Northwest Ohio
7
6
5
4
3
2
1
0
-1
-2
0.6
Lima
0.0
Toledo
0.4
5.7
3.9
3.6
0.2
0.3
2.4
2.7
0.0
(0.0)
2011
2012
2013
2014f
2015f
2016f
(1.5)
(0.2)
2017f
TOL_PR = C + DU_94Q3 + TOL_PR(-1) + US_PR(-1) + US_PR + IP(-1) + IP + NGDP(-5) + TEN_YEAR(-5) + BAA(-4)
11/3/2014 | 33
Sources: Bureau of Labor Statistics and
RED Capital Research Forecast
Payroll Employment Forecast Highlights
•Our models project good growth in 2015,
followed by a decelerating trend in the forecast
out-years
•The most probable outcome is that Ohio payroll
growth decelerates across the board but remains
positive throughout the 5-year forecast period
•Akron and Cincinnati seem best positioned to
weather the slowdown
•On paper, Columbus also should perform better
than average, but recent data are comprehensibly
weak, and models project that weakness to
continue
11/3/2014 | 34
PERSONAL INCOME GROWTH
11/3/2014 | 35
Personal Income Growth: Ohio vs. U.S. Average
U.S. P.I. Growth
10%
OH P.I. Growth
10%
8%
8%
6%
6%
4%
4%
2%
2%
0%
0%
-2%
U.S. Average
U.S. Forecast
Ohio Forecast
Ohio Historical
-4%
1Q00 1Q02 1Q04 1Q06 1Q08 1Q10 1Q12 1Q14 1Q16 1Q18
11/3/2014 | 36
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
-2%
-4%
How We Stacked Up Against our BIG 10 Rivals over the T4Q
12 Mo. Ended 6/14 vs. 12 Mo. Ended 6/13
Annual Personal Income Growth
3.0%
2.7%
2.7%
2.5%
2.3%
2.3%
2.2%
U.S.
IL
IN
2.0%
MI
OH
PA
1.5%
1.2%
1.0%
U.S.
11/3/2014 | 37
IL
IN
MI
OH
Sources: Bureau of Labor Statistics data
and RED Capital Research calculations
PA
Personal Income Growth: Cincinnati vs. Ohio Average
Ohio Growth
8%
7%
CI Growth
Ohio Historical
Cincinnati
Ohio Forecast
Cinc Average
8%
7%
6%
6%
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
0%
-1%
-1%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 38
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
Personal Income Growth: Cleveland vs. Ohio Average
Ohio Growth
8%
7%
Ohio Historical
Cleveland
Ohio Forecast
Cleve Forecast
CLE Growth
8%
7%
6%
6%
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
0%
-1%
-1%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 39
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
Personal Income Growth: Columbus vs. Ohio Average
COL Growth
10%
Ohio Growth
10%
8%
Ohio Historical
Columbus
Ohio Forecast
COL Forecast
8%
6%
6%
4%
4%
2%
2%
0%
0%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 40
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
Personal Income Growth: Akron vs. Ohio Average
Growth
Ohio Growth
10.0%
7.5%
10.0%
Ohio Historical
Ohio Forecast
AK Forecast
Akron-Canton
7.5%
5.0%
5.0%
2.5%
2.5%
0.0%
0.0%
-2.5%
-2.5%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 41
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
Personal Income Growth: Dayton-Springfield vs. Ohio Average
DAY PI Growth
10.0%
Ohio Growth
10.0%
7.5%
Ohio Historical
Ohio Forecast
Dayton
Dayton Forecast
7.5%
5.0%
5.0%
2.5%
2.5%
0.0%
0.0%
-2.5%
-2.5%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 42
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
Personal Income Growth: Toledo vs. Ohio Average
Growth
Ohio Growth
10.0%
10.0%
7.5%
Ohio Historical
Ohio Forecast
Toledo Forecast
Toledo
7.5%
5.0%
5.0%
2.5%
2.5%
0.0%
0.0%
-2.5%
-2.5%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 43
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
Personal Income Growth: Youngstown vs. Ohio Average
Ohio Growth
10.0%
Ohio Historical
Ohio Forecast
YTW PI Growth
10.0%
7.5%
7.5%
5.0%
5.0%
2.5%
2.5%
0.0%
0.0%
-2.5%
-2.5%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 44
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
Personal Income Growth: Lima vs. Ohio Average
Ohio Growth
9.0%
LIMA Growth
9.0%
7.5%
Ohio Historical
Ohio Forecast
Lima
Lima Forecast
7.5%
6.0%
6.0%
4.5%
4.5%
3.0%
3.0%
1.5%
1.5%
0.0%
0.0%
-1.5%
-1.5%
-3.0%
-3.0%
1Q11
1Q13
11/3/2014 | 45
1Q15
1Q17
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
1Q19
Ohio Metro Personal Income Product Growth Rankings
1990- 2012
Post-Recession
2Q14 – 2Q19
Forecast
YOUNGSTOWN
3.0%
5.0%
5.1%
COLUMBUS
4.9%
4.5%
4.5%
CINCINNATI
4.3%
4.1%
4.0%
CLEVELAND
3.3%
4.1%
4.0%
AKRON-CANTON
3.7%
3.6%
3.8%
DAYTON-SPRNGFLD
3.2%
3.2%
3.4%
LIMA
3.1%
3.3%
2.6%
TOLEDO
3.0%
2.5%
2.0%
OHIO
3.8%
`4.4%
3.6%
Metropolitan Area
Sources: Bureau of Economic Analysis
data and RED Capital Research Forecast
11/3/2014 | 46
Forecast Highlights
• In the decade before the Great Recession, Ohio personal income
growth materially trailed the national average, averaging 3.9%
annually from 2000 – 2009, compared to 5.0% for the U.S.
• Following the Recession, Ohio relative performance improved. Ohio
incomes increased at an average rate of 3.6%, only 40 basis points
below the 4.0% national average.
•Data indicate that Ohio kept pace with the U.S. average over the past
18 months and surpassed our regional rivals.
•Regionally
• Youngstown and Columbus stand out as strong performers and our
forecast equations indicate that they will continue to outperform the rest
of the state through 2019, with positive implications for apartment rents
and home prices
• Northwest Ohio lagged state averages over this period and is expected to
remain slower than state average growth for the forecast period
11/3/2014 | 47
SINGLE- AND MULTIFAMILY HOUSING MARKET CONDITIONS
11/3/2014 | 48
Home Price Appreciation: Ohio vs. U.S. Average
U.S. HPI Growth
12%
OH HPI Growth
12%
10%
10%
8%
8%
6%
3.2% 6%
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
-8%
1Q00
-8%
1Q02
11/3/2014 | 49
1Q04
1Q06
1Q08
1Q10
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
1Q12
1Q14
Home Price Appreciation: Ohio vs. U.S. Average
U.S. P.I. Growth
8%
OH P.I. Growth
8%
6%
6%
3.2%
4%
4%
2%
2%
0%
0%
U.S. Average
-2%
U.S. Forecast
Ohio Forecast
-4%
-2%
-4%
1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19
11/3/2014 | 50
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
How We Stacked Up Against our BIG 10 Rivals over the T12M
12 Mo. Ended 6/14 vs. 12 Mo. Ended 6/13
8%
7.2%
Home Price Index Growth
7%
6%
5.2%
U.S.
5%
IL
IN
4%
MI
3%
OH
2.1%
2%
1.4%
1.2%
1.8%
1%
0%
U.S.
11/3/2014 | 51
IL
IN
MI
OH
Sources: Federal Housing Finance Agency
data and RED Capital Research
calculations
PA
PA
Home Price Appreciation: Akron-Canton vs. Ohio Average
OHIO HPI CHG
6%
AK-CA HPI CHG
6%
5%
5%
4.2%
4%
4%
3%
3%
2%
2%
1%
1%
0%
0%
-1%
-1%
Ohio Historical
Ohio Forecast
Akron-Canton
+100 bps Chg in Constant
-2%
-3%
-4%
-2%
-3%
-4%
-5%
-5%
1Q11
1Q12
1Q13
1Q14
1Q15
1Q16
1Q17
1Q18
1Q19
AK_HPI = C AK_HPI(-5) AK_HPI(-4) AK_HPI(-3) AK_HPI(-2) AK_HPI(-1) FHFA_US(-1) FHFA_US BAA(-2) AK(-1)
Significant negative constant (-3.1%) weights against Akron growth despite relatively positive job growth interest rate environment.
11/3/2014 | 52
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
Asking Rent Growth: Akron MSA and Canton MSA
4%
3.2%
Year-on-Year Growth
3%
2%
1%
0.8%
0%
Reis Top 63 History
Akron History
Canton History
-1%
-2%
4Q09 4Q10
4Q11
4Q12
4Q13 4Q14
Sources: Reis, Inc.
11/3/2014 | 53
4Q15
4Q16
4Q17
4Q18
Home Price Appreciation: Cincinnati vs. Ohio Average
OHIO HPI CHG
CINC HPI CHG
4%
4%
2.7%
3%
3%
2%
2%
1%
1%
0%
0%
-1%
Ohio Historical
-1%
-2%
Ohio Forecast
-2%
-3%
CINC Forecast
-3%
-4%
Cincinnati
-4%
-5%
-5%
-6%
-6%
1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10
CI_HPI = C CI_HPI(-6) CI_HPI(-5) CI_HPI(-4) CI_HPI(-3) CI_HPI(-2) CI_HPI(-1) FHFA_US(-1) FHFA_US BAA(-2) CI(-1)
C = +1.0%
11/3/2014 | 54
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
Effective Rent Growth: Cincinnati MSA
Avg. Occ 3Q14: 96.7%
Year-on-year Growth
4%
3.2%
3%
2.6%
3.2%
2%
1.9%
1.9%
2.8%
1.7%
1%
0%
RED 46 Market Average
-1%
Cincinnati History
-2%
4Q09 4Q10
4Q11
11/3/2014 | 55
4Q12
4Q13 4Q14
4Q15
4Q16
Sources: Reis, Inc. History, RED Capital
Research Forecast
4Q17
4Q18
Home Price Appreciation: Cleveland vs. Ohio Average
OHIO HPI CHG
CLE HPI CHG
5.0%
5.0%
3.3%
2.5%
2.5%
0.0%
0.0%
-2.5%
Ohio Historical
Ohio Forecast
CLE Forecast
Cleveland
+50 BPS CHG IN CONSTANT
-5.0%
-7.5%
-2.5%
-5.0%
-7.5%
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19
CCCI_HPI(-6)
CI_HPI(-5)
CI_HPI(-4)
CI_HPI(-3)
CI_HPI(-2)
CI_HPI(-1)
FHFA_US(-1) FHFA_US BAA(-2) CI(-1)
CL_HPI(-1)
AK_HPI(-1)
FHFA_US(-1)
FHFA_US
INDEX(-2)
BAA(-1)
CC==-2.0%
– 2.0%
11/3/2014 | 56
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
Effective Rent Growth: Cleveland MSA
Avg. Occ 3Q14: 97.3%
4%
Year-on-year Growth
3%
1.7%
2%
1.8%
2.2%
1.9%
1.9%
1.6%
1%
0%
RED 46 Market Average
-1%
Cleveland History
-2%
4Q09 4Q10
4Q11
11/3/2014 | 57
4Q12
4Q13 4Q14
4Q15
Sources: Reis, Inc. Historyand RED
Capital Research Forecast
4Q16
4Q17
4Q18
Home Price Appreciation: Columbus vs. Ohio Average
OHIO HPI CHG
COL HPI CHG
5.8%
6%
6%
4%
4%
2%
2%
0%
0%
Ohio Historical
Ohio Forecast
COL Forecast
Columbus
+25 BPS CHG IN CONSTANT
-2%
-4%
-2%
-4%
-6%
-6%
1Q09
1Q11
1Q13
1Q15
1Q17
CO_HPI = C CO_HPI(-1) FHFA_US(-1) FHFA_US BAA(-1) CL(-1)
C = -1.0%
11/3/2014 | 58
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
1Q19
Effective Rent Growth: Columbus MSA
Avg. Occ 3Q14: 95.1%
5%
Year-on-year Growth
4%
3.4%
3%
2.4%
2.6%
2%
2.5%
2.2%
1.5%
1%
0%
RED 46 Market Average
-1%
Columbus History
-2%
4Q09 4Q10
4Q11
11/3/2014 | 59
4Q12
4Q13
4Q14
4Q15
Sources: Reis, Inc and RED Capital
Research Forecast
4Q16
4Q17
4Q18
Home Price Appreciation: Dayton-Springfield vs. Ohio Average
OHIO HPI CHG
4%
DAY HPI CHG
4%
2%
0.9%
2%
0%
0%
-2%
-2%
Ohio Historical
Ohio Forecast
DAY Forecast
Dayton
+25 BPS CHANGE TO CONSTANT
-4%
-6%
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19
DAY_HPI C DAY_HPI(-2) DAY_HPI(-1) OH_HPI(-1) OH_HPI FHFA_US BAA(-3)
C = – 1.1%
11/3/2014 | 60
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
-4%
-6%
Effective Rent Growth: Dayton MSA
5%
Avg. Occ 3Q14: 95.1%
Year-on-year Growth
4%
3%
2.4%
2.3%
2%
2.5%
2.2%
1.6%
1.9%
1%
0%
RED 46 Market Average
-1%
Dayton History
-2%
4Q09 4Q10
4Q11
4Q12
4Q13 4Q14
Sources: Reis, Inc.
11/3/2014 | 61
4Q15
4Q16
4Q17
4Q18
Home Price Appreciation: Toledo vs. Ohio Average
OHIO HPI CHG
TOL HPI CHG
6%
4.2%
6%
4%
4%
2%
2%
0%
0%
-2%
Ohio Historical
Ohio Forecast
TOL Forecast
Toledo
+50 BPS CHG TO CONSTANT
-4%
-6%
-8%
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19
TOL_HPI C TOL_HPI(-5) TOL_HPI(-4) TOL_HPI(-3) TOL_HPI(-2) TOL_HPI(-1) FHFA_US(-1) FHFA_US FED_FUNDS(-1) BAA(-2)
C = – 1.2%
11/3/2014 | 62
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
-2%
-4%
-6%
-8%
Asking Rent Growth: Toledo MSA
4%
Year-on-Year Growth
3%
2.3%
2%
1%
0%
Reis Top 63 History
-1%
Toledo History
-2%
4Q09 4Q10
4Q11
4Q12
4Q13 4Q14
Sources: Reis, Inc.
11/3/2014 | 63
4Q15
4Q16
4Q17
4Q18
Home Price Appreciation: Youngstown vs. Ohio Average
OHIO HPI CHG
YO HPI CHG
4%
4%
3%
3%
2%
2%
1%
1%
0%
0%
0.3%
-1%
-1%
-2%
-2%
-3%
-3%
-4%
-5%
-6%
Ohio Historical
Ohio Forecast
YO Forecast
Youngstown
-7%
-4%
-5%
-6%
-7%
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19
YO_HPI C YO_HPI(-5) YO_HPI(-4) YO_HPI(-3) YO_HPI(-2) YO_HPI(-1) AK_HPI(-1) FHFA_US(-1) FHFA_US FED_FUNDS(-2) NGDP
C = 0.8%
11/3/2014 | 64
Sources: Federal Housing Finance Agency
and RED Capital Research Forecasts
Asking Rent Growth: Youngstown MSA
4%
Year-on-Year Growth
3%
2%
1.0%
1%
0%
Reis Top 63 History
-1%
Youngstown History
-2%
4Q09 4Q10
4Q11
4Q12
4Q13 4Q14
Sources: Reis, Inc.
11/3/2014 | 65
4Q15
4Q16
4Q17
4Q18
Metro Rankings: Home Appreciation / Rent Growth
Year-ended June 30, 2014
Metro
Akron-Canton
Home Value
Appreciation
Rank
Rent
Growth
Rank
4.2%
T2
3.2%
1
0.8%
8
Canton
Cincinnati
2.7%
5
2.8% / 3.2%
2
Cleveland
3.3%
4
1.6% / 1.7%
6
Columbus
5.8%
1
2.6% / 3.4%
3
Dayton
0.9%
6
1.9% / 2.4%
5
Toledo
4.2%
T2
2.3%
4
Youngstown
0.3%
7
1.0%
7
11/3/2014 | 66
THANK YOU!
11/3/2014 | 67

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