76 Million Boomers 83 Million Millennials 19 to 35 91 Million - PowerPoint PPT Presentation

76 Million Boomers 83 Million Millennials 19 to 35 91 Million Millennials 16 to 35

500 Millennial Poll Results 75 Percent Could Live Without the Call Function on Their Device

500 Millennial Poll Results 76 Percent Prefer Texting To Talking as it Fits Better in Their Schedule

500 Millennial Poll Results 63 Percent State Texting Is Less Disruptive Than Talking

500 Millennial Poll Results 19 Percent Admitted to Never Checking Voice Mails

Twitter witter @DrT DrTCJ CJ

Non-Renewals - Dead on Arrival • Mortgage Insurance Deductibility • Residential Mortgage Debt Forgiveness • Residential Energy Savings • Renewables – Wind and Solar • ObamaCare - Some Form, However

Soon-to-Happen Tax Changes????? • Corporate Tax Cut 35 Percent to 15 Percent • US Overseas Corporate Profit Repatriation • Carried Interest Elimination • ObamaCare 3.8% Investment Income Tax Cut • Capital Gains Tax Cut • Middle Class Tax Changes – Some Up, Some Down

Germany OECD Corporate Tax Rates 2000 2016 2,640 Germany 42.2% 35.0% U.S. Basis France 37.8% 34.4% France Italy 37.0% 30.0% Australia Point U.S. 35.0% 27.5% Italy Decline Spain 25.0% 25.0% Spain Australia 34.0% 23.3% Japan 62.6 Japan 30.0% 22.0% S Korea Percent U.K 30.0% 20.0% U.K. Tax Canada 29.1% 15.8% Germany Cut S Korea 28.0% 15.0% Canada

Canada OECD Corporate Tax Rates 2000 2016 1,410 Germany 42.2% 35.0% U.S. Basis France 37.8% 34.4% France Italy 37.0% 30.0% Australia Point U.S. 35.0% 27.5% Italy Decline Spain 25.0% 25.0% Spain Australia 34.0% 23.3% Japan 48.4 Japan 30.0% 22.0% S Korea Percent U.K 30.0% 20.0% U.K. Tax Canada 29.1% 15.8% Germany Cut S Korea 28.0% 15.0% Canada

U.K. OECD Corporate Tax Rates 2000 2016 1,010 Germany 42.2% 35.0% U.S. Basis France 37.8% 34.4% France Italy 37.0% 30.0% Australia Point U.S. 35.0% 27.5% Italy Decline Spain 25.0% 25.0% Spain Australia 34.0% 23.3% Japan 33.3 Japan 30.0% 22.0% S Korea Percent U.K 30.0% 20.0% U.K. Tax Canada 29.1% 15.8% Germany Cut S Korea 28.0% 15.0% Canada

Mega Themes - 2017 • More Jobs Than Ever in History • Retail Boom – 14 Years to Run • Entry Level Homebuyers Returning • High-End Housing Retreating • Inflation Potential -- UPS +4.9% Dec 26th • Commercial Sales Cooling

76 Million Boomers 83 Million Millennials 19 to 35 91 Million Millennials 16 to 35

2016 US Stock Market Performance 13%+ Dow Jones Industrial 9.5% S&P500 7.5% Nasdaq Composite 8.5% Gold 14.9% Silver 45.2% Crude Oil

U.S. Jobs Jobs (Millions) Seasonally Adjusted 146 1.64% Prior 12 Months 144 2.343 Million Net New Jobs in Past 12-Months 142 140 138 136 134 132 130 128 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

U.S. Net Job Gains – Trailing 12-Months Jobs - Millions 4 3 2 1 0 '11 '12 '13 '14 '15 '16 '17

U.S. Leisure & Hospitality Jobs Millions of Jobs Seasonally-Adjusted Recession 16.0 15.5 15.0 14.5 14.0 13.5 13.0 12.5 12.0 +2.25% Past 12 Months 11.5 0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Job Growth Rates - 12 Months Ending December 2016 Washington 3.46% South Carolina 1.98% Montana 0.78% Oregon 3.34% Delaware 1.88% New Jersey 0.75% Florida 3.10% Missouri 1.83% Pennsylvania 0.66% Utah 3.01% Dist of Columbia 1.80% Vermont 0.57% South Dakota 2.52% Texas 1.74% Illinois 0.49% Colorado 2.50% Virginia 1.73% Nebraska 0.39% Tennessee 2.42% Rhode Island 1.36% Connecticut 0.19% California 2.40% Maryland 1.30% West Virginia 0.03% Nevada 2.27% Alabama 1.19% Maine -0.03% Georgia 2.25% Iowa 1.15% Mississippi -0.09% Michigan 2.21% Minnesota 1.12% Alaska -0.12% Hawaii 2.19% New York 1.08% Louisiana -0.34% Idaho 2.16% Indiana 0.99% New Mexico -0.38% New Hampshire 2.12% Wisconsin 0.98% Kansas -0.38% Massachusetts 2.04% Kentucky 0.98% Oklahoma -0.74% Arizona 1.99% Arkansas 0.94% North Dakota -1.80% North Carolina 1.99% Ohio 0.93% Wyoming -3.53%

McAllen-Mission-Edinburg Jobs Jobs (Thousands) Seasonally Adjusted 260 3.17% Prior 12 Months 250 7,900 Net New Jobs in Past 12-Months 240 230 220 210 200 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

U.S. Existing Home Sales & Median Prices Sales Trailing 12 Months Median Price $ Thousands Home Sales 12-Months Millions $250 5.6 5.4 $225 5.2 $200 5.0 $175 4.8 14 '15 '16 Median Price Homes Sales

McAllen-Edinburg-Mission Home Sales & Median Prices Sales Trailing 12 Months Median Price $ Thousands Home Sales 12-Months $150 2,800 $140 2,700 $130 2,600 $120 2,500 $110 2,400 $100 2,300 14 '15 '16 Median Price Homes Sales

McAllen MSA Existing Home Sales Number Per Month 300 250 200 150 100 50 0 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

McAllen MSA Existing Home Sales Average Number Per Month For Prior 12 Months 250 +1.22 Percent 225 200 175 150 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

McAllen MSA Existing Home Prices Median Price $150,000 $125,000 $100,000 $75,000 $50,000 $25,000 $0 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

McAllen MSA Existing Home Prices Median Price Prior 12 Month Average +7.85 Percent $150,000 $125,000 $100,000 $75,000 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

McAllen MSA Residential Building Permits Number of Dwelling Units 10,000 Single Family Multi 8,000 6,000 4,000 2,000 0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 4,674 Permits is the past 12 months, 7,900 New Jobs 1.69 New Jobs Per New Dwelling Unit – 1.25 to 1.5 is Normal

Household Debt Service as a Percent of Household Disposable Income Percent 14 13 12 11 10 9 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 FED Board of Governors, BEA

U.S. Real Retail & Food Service Sales $ Billions – Seasonally Adjusted $190 $180 $170 $160 $150 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Light Weight Vehicle Sales Millions – Seasonally Adjusted Annual Rate 20 16 12 8 4 0 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Bureau of Economic Analysis

Fed Funds Target Rate Increases Basis Months Number Points Duration Increases Increase June 2004 - June 2006 25 17 425 June 1999 - May 2000 12 6 175 March 1997 1 1 25 February 1994 - Feb 1995 13 7 300 Average 231.25 Median 237.5 Source: Federal Reserve Bank of New York

Current Rates Rates November 1, 2016 Treasury Forecasts 12-18 Months Lower Quartile 2.97% 10-Year Treasury 1.81% 1/3rd 3.54% 30-Year Residential 3.54% Median Quartile 4.12% 12-18 Month Outlook 30-Year Residential Rates 12-18 Months Lower Quartile 4.71% Rate Increase Impact - Basis Points 1/3rd 5.28% Lower Quartile 115.6 Median Quartile 5.86% 1/3rd 173.4 Median Quartile 231.3 * 30-Year Residential = 10-Yr +174 bp

Refinance Lending $ Billions MBA Percent Fannie Mae Percent Year Refi Change Year Refi Change 2016 $ 901 2016 $ 922 2017 $ 471 -47.7% 2017 $ 510 -44.7% 2018 $ 410 -13.0% 2018 $ 381 -25.3% 2019 $ 395 -3.7%

U.S. Commercial Real Estate Sales Volume $ Billions – Trailing 12 Months Q4 2016 -10.6% Year-Over-Year $600 $500 $400 $300 $200 $100 $0 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Property and Portfolio Sales $2.5 Million and Up

Texas Commercial Real Estate Sales Volume $ Millions – Trailing 12 Months Q4 2016 -12.7% Year-Over-Year $50 $40 $30 $20 $10 $0 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Property and Portfolio Sales $2.5 Million and Up

Commercial Real Estate Cap Rates Percent – All Property Types, 4 Quarter Moving Average Property and Portfolio Sales $2.5 Million and Up 10% 9% 8% 7% 6% 5% 4% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 US Manhattan Texas

Income Approach to Valuation Income Value = Capitalization Rate

Commercial Real Estate Cap Rates & 10-Year Treasury Percent – All Property Types, End of Quarter TTM Treasury Rate Property and Portfolio Sales $2.5 Million and Up 9 8 7 6 5 4 3 2 1 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 10-Year Treasury TTM Cap Rates

Correlation Coefficients - Cap Rates & T-Bonds Quarterly Data - Q1 2001 - Q3 2016 Correlation Coefficeints Pearson's Product Spearman's Moment Rank Correlation Coefficient 57.500% 54.400% P-Value 0.0001% 0.0001% Probabilty 99.99% 99.99%

19 Days

Days to Drill & Fracture 30 Months Ago -- 40 Days Now – 19 Days

Number of Operating Rigs North American Drilling Rig Counts 1,000 1,500 2,000 2,500 500 0 4-Jan-02 6-Dec-02 7-Nov-03 8-Oct-04 9-Sep-05 11-Aug-06 13-Jul-07 13-Jun-08 15-May-09 16-Apr-10 18-Mar-11 17-Feb-12 18-Jan-13 20-Dec-13 21-Nov-14 23-Oct-15 23-Sep-16

Oil & Gas Exploration Companies Will Boost Spending 7 Percent In 2017