The Weekly Briefing - February 22nd, 2021

Multifamily Construction Notches Gains, While Single-Family Starts Remain Elevated

Multifamily housing construction picked up added momentum last month after seeing somewhat subdued activity for much of 2020. Multifamily starts, which include buildings with five or more units, jumped 17.1% during January to 418,000 units nationwide. And multifamily permits spiked 28.0% to the highest level in five years, suggesting a likely faster pace of construction this spring. Meanwhile, single-family housing construction continues at an elevated pace despite starts slowing 12.2% last month. Homebuilders recorded 1.2 million annualized starts during January, compared to an average of 893,000 starts per month during 2019. Single-family permits also rose last month by 3.8% as home builder sentiment remains near historic highs. The robust pace of residential construction could put continued upward pressure on lumber costs that have risen drastically over the past year, which is translating into higher new-home prices and impacting commercial real estate construction. The National Association of Home Builders says lumber costs have caused new-home prices to rise more than $24,000 since April 2020. Annual Monthly Single-Family and Multifamily Housing Starts Retail Sales Impress with Biggest Increases in Several Months

Retail sales and food services spending climbed 5.3% last month, the fastest pace since mid-2020 and a reversal after three months of modest declines. Sales at restaurants, stores, and online totaled $568.2 billion during January, marking a 7.4% YOY increase. The jump in retail sales was broad-based as every major category experienced an uptick in activity, but discretionary sectors led the way. Furniture merchandisers, electronics stores, and online retailers each saw sales increase at a double-digit clip. Despite slowing somewhat during 4Q20, internet shopping continues to maintain an elevated pace compared to pre-pandemic trends. The second round of stimulus payments likely contributed to last month’s jump in retail sales. Real-time data provided by Opportunity Insights indicates consumer spending, a broader measure of consumer activity than retail sales, spiked in early January when the stimulus checks were dispersed. Further, the same dataset shows that the largest spending increases last month occurred in low-income neighborhoods to 10% to 20% above January 2020 levels. Spending in middle- and low-income zip codes also jumped but at a more modest pace. Percentage Change in Consumer Spending Relative to Jan. 2020 by Zip Code Income Level Improvements in Aggregate Household Financial Metrics Mask Continued Distress

One paradox of the pandemic is that some measures of consumer financial health have improved in the face of elevated unemployment rates and continued labor market softness. These gains underscore the uneven impact of the downturn and the k-shaped nature of the recovery that has seen some economic sectors quickly rebound while others have languished. Experian reports that the average consumer credit score climbed seven points last year compared to an average increase of one point per year during the last expansion. The average credit score now stands at 710, the highest level on record, while credit card delinquency rates have declined to a record low as of 3Q20. Consumer loan balances (mostly credit card debt) have also fallen to 13.4% below year-ago levels. At the same time, nationwide savings account balances are up 15.4% YOY, suggesting many households have managed to grow their financial cushions over the past several months. And consumers continue to demonstrate caution, setting aside 13.7% of their disposable income as savings in December 2020, which is nearly double the pre-pandemic average. Many of these financial gains could prove transitory, however, without additional fiscal stimulus and stronger labor market performance. The most rapid declines in credit card balances and gains in savings have coincided with stimulus check payments. And the end of forbearance programs rolled out by lenders at the start of the pandemic could push delinquency rates higher. Consumer Loans & Total Savings Deposits

Disclosures and Disclaimers

This is a general analysis of the real estate market prepared by Bridge Investment Group LLC (“Bridge”) and is not related to any specific products or services of Bridge or any affiliate. Sources for statistics and other factual data included herein are maintained by Bridge Research. Such data has not been verified by Bridge and we can give no assurance that it is accurate or complete. Statements contained herein that are nonfactual constitute opinions of Bridge, which are subject to change. Financial projections contained herein are estimates only and are based on assumptions, including assumptions regarding future rent growth, the availability and cost of financing, changes in market capitalization rates, and various micro- and macro-economic trends. No assurance can be given that either the projections or the assumptions will prove to be accurate. Investment in real estate involves substantial risk of loss.

This analysis contains various forward-looking statements that are not historical in nature. You are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this presentation. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements and we cannot guarantee future results or the successful implementation of the strategies discussed in this presentation. We are under no duty to update any of the forward-looking statements after the date of this presentation to conform these statements to actual results. Certain information contained herein has been obtained from published sources, agencies of the U.S. government and from third-parties, including without limitation, market forecasts, market research, publicly available information and industry publications. Although such information is believed to be reliable for the purposes used herein, Bridge does not assume any responsibility for the accuracy or completeness of such information. Similarly, forecasts or market research, while believed to be reliable, have not been independently verified and Bridge does not make any representation as to the accuracy or completeness of such information. All information is provided on an “as is” basis only. By using this information, the reader agrees that Bridge shall not have any liability for the accuracy of the information contained herein, for delays or omissions therein, or for any results based on your use of the information which are not consistent with your objectives. Without limiting the foregoing disclaimers, the information provided herein is not guaranteed to be accurate or complete, nor does Bridge take responsibility for it. The information contained herein has not been audited and Bridge does not guarantee its suitability for any purpose. All information is subject to change and/or withdrawal at any time without notice. Certain information included herein may refer to published indices. Indices that purport to present performance of certain markets or the performance of certain asset classes or asset managers may actually present performance that materially differs from the overall performance of such markets, asset classes or asset managers.

Past performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy. Any research in this document has been procured and may have been acted on by Bridge for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of Bridge or any of its affiliates and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any Bridge funds and has not been prepared in connection with any such offer.

Copyright 2021, Bridge Investment Group LLC. “Bridge Investment Group” and certain logos contained herein are trademarks owned by Bridge.