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CE & CLE FAQs are available under the Texas TIPS tab at www.stewart.com/texas

 If you have questions after the presentation, please e- mail the presenter or your favorite Texas underwriting counsel.  In order to obtain a CE Certificate or CLE Credit, you must listen to the webinar for a minimum of 55 minutes, obtain the password provided at the end of the presentation and follow the instructions as given. 2

ATTORNEY INFORMATION Because of opinions expressed by the Texas Department of Insurance (TDI) concerning rebates, legal credit is available only to:  Attorneys who own title agencies that are Stewart Title Guaranty Agents  Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities  Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity We welcome any other lawyers to listen, but cannot provide continuing education credit to you. 3

Ted Jones on Texas Economic Forecast By: Ted C. Jones, PhD Chief Economist Stewart Title Guaranty Company July 20, 2017

Things Change

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 Thank Talking

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

Twitter witter @DrT DrTCJ CJ

Millennial Study 49% LIV IVING AT HOME

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

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 150 1.55% Prior 12 Months 145 2.238 Million Net New Jobs in Past 12-Months 140 135 130 125 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

U.S. Leisure & Hospitality Jobs Millions of Jobs The Blood Pressure Test of the U.S. Economy Seasonally-Adjusted Recession 16.5 16.0 15.5 15.0 14.5 14.0 13.5 13.0 12.5 +2.01% Past 12 Months 12.0 11.5 0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

U.S. Average Hourly Earnings $US Per Hour +2.5% Latest 12-Months $26 $25 $24 $23 $22 $21 $20 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Job Growth Rates - 12 Months Ending May 2017 Utah 3.28% North Carolina 1.60% New Jersey 1.06% Florida 2.73% South Carolina 1.60% Iowa 0.97% Nevada 2.71% Maryland 1.60% Pennsylvania 0.92% Idaho 2.43% New York 1.59% New Mexico 0.89% Colorado 2.40% Montana 1.58% Delaware 0.89% Oregon 2.37% California 1.47% Ohio 0.75% Georgia 2.36% Rhode Island 1.45% Connecticut 0.66% Washington 2.36% Dist of Columbia 1.43% Illinois 0.58% Texas 2.22% New Hampshire 1.43% Maine 0.55% Tennessee 1.95% Wisconsin 1.39% Vermont 0.54% Arizona 1.83% Kentucky 1.38% Louisiana 0.48% Alabama 1.82% Indiana 1.36% Mississippi 0.23% Arkansas 1.80% Hawaii 1.25% Oklahoma 0.15% Michigan 1.73% South Dakota 1.25% Kansas -0.26% Missouri 1.66% Nebraska 1.15% Alaska -0.87% Minnesota 1.65% Virginia 1.14% West Virginia -0.97% Massachusetts 1.64% North Dakota 1.11% Wyoming -1.38%

Texas Jobs Jobs (Thousands) Seasonally Adjusted 12,500 2.22% Prior 12 Months 12,000 266,600 Net New Jobs in Past 12-Months 11,500 11,000 10,500 10,000 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Job Growth 12 Months Ending May 2017 12-Months Percent Jobs-Thousands MSA-Division Change New Total Abilene 1.04% 0.7 67.8 Amarillo 1.41% 1.7 121.9 Austin-Round Rock-San Marcos 2.84% 28.3 1,023.1 Beaumont-Port Arthur -0.24% (0.4) 163.0 Brownsville - Harlingen 2.06% 2.9 143.6 College Station - Bryan 2.38% 2.7 116.2 Corpus Christi 1.89% 3.6 194.0 Dallas-Ft Worth-Arlington 3.17% 110.8 3,602.4 Dallas-Plano-Irving Metro Div 3.46% 86.1 2,571.7

Job Growth 12 Months Ending May 2017 12-Months Percent Jobs-Thousands MSA-Division Change New Total El Paso 2.72% 8.4 316.8 Ft Worth-Arlington Metro Div. 2.55% 25.7 1,032.0 Houston-The Woodlands-Sugar Land 1.70% 51.0 3,048.3 Killeen-Temple 2.86% 4.1 147.3 Laredo 2.46% 2.5 104.2 Longview -0.72% (0.7) 96.5 Lubbock 0.89% 1.3 147.3 McAllen Edinburg-Mission 2.18% 5.5 257.5 Midland 1.38% 1.2 88.4

Job Growth 12 Months Ending May 2017 12-Months Percent Jobs-Thousands MSA-Division Change New Total Odessa 0.00% - 69.8 San Angelo -0.61% (0.3) 48.9 San Antonio-New Braunfels 2.21% 22.4 1,034.6 Sherman-Denison 1.95% 0.9 47.1 Texarkana -0.99% (0.6) 60.3 Tyler 2.59% 2.7 106.8 Victoria 0.48% 0.2 42.2 Waco 1.01% 1.2 119.6 Wichita Falls -0.69% (0.4) 57.3

Existing Home Sales & Median Prices Sales Trailing 12 Months Median Price $ Thousands Home Sales 12-Months Millions 5.6 $250 5.4 $225 5.2 $200 5.0 $175 4.8 '14 '15 '16 '17 Median Price Homes Sales

Texas Home Sales & Median Prices Sales Trailing 12 Months Median Price $ Thousands Home Sales 12-Months Thousands $230 340 $220 330 $210 320 $200 310 $190 300 $180 290 $170 $160 280 14 '15 '16 '17 Median Price Homes Sales

Housing Sales https://www.recenter.tamu.edu/data/housing-activity/

Texas Residential Building Permits 2017 Latest Number of Dwelling Units 12 Months 240,000 Single Family Multi 200,000 160,000 120,000 80,000 40,000 0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 165,269 Permits is the past 12 Months, 266,600 Net New Jobs 1.61 Net New Jobs Per New Dwelling Unit

Texas Population Forecast Growth Scenario Migration = 2000-2010 Percent Cumulative Year Population Change Growth 2015 27,695,284 2020 30,541,978 10.28% 10.28% 2025 33,699,307 10.34% 21.68% 2030 37,155,084 10.25% 34.16% 2035 40,892,255 10.06% 47.65% 2040 44,955,896 9.94% 62.32% 2045 49,416,165 9.92% 78.43% 2050 54,369,297 10.02% 96.31% Source: Texas State Data Center

Texas Population Forecast Texas Hispanics Texas Percent Cumulative Hispanic Percent Cumulative Percent Year Population Change Growth Population Change Growth Hispanic 2015 27,695,284 11,084,763 40.0% 2020 30,541,978 10.28% 10.28% 12,968,026 16.99% 16.99% 42.5% 2025 33,699,307 10.34% 21.68% 15,135,957 16.72% 36.55% 44.9% 2030 37,155,084 10.25% 34.16% 17,575,656 16.12% 58.56% 47.3% 2035 40,892,255 10.06% 47.65% 20,248,388 15.21% 82.67% 49.5% 2040 44,955,896 9.94% 62.32% 23,156,968 14.36% 108.91% 51.5% 2045 49,416,165 9.92% 78.43% 26,342,195 13.75% 137.64% 53.3% 2050 54,369,297 10.02% 96.31% 29,859,012 13.35% 169.37% 54.9% Source: Texas State Data Center Growth Scenario Migration = 2000-2010

http://hispanicwealthproject.org/state-of-hispanic-homeownership-report/

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 $200 $190 $180 $170 $160 $150 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Percent Millennial Shopping Done in Stores 70% CBRE Millennial Study