What I’m Reading
Tough Nut to Crack: The price of a home sold in March set a record, as inventory dwindled and sales fell. Sharply rising mortgage rates are not showing much of an impact on housing yet. CNBC As discussed here previously, I believe that structural factors in the housing market – tight supply, existing owners with low fixed rates and institutional investors buying new homes – will keep a lid on housing supply and a floor on price. At the same time, affordability will continue to strain which will put upward pressure on rents This dynamic will continue until we reach a point of demand destruction (recession).
Silver Lining: Higher interest rates are providing pension funds with a unique opportunity to de-risk their portfolios after increasing risk to chase yield for the past decade. Klement on Investing
Stretched: The Sunbelt has benefitted from its relative affordability as well as good weather and growing economies. However, soaring rents are eroding the affordability edge in Sunbelt cities. Globe Street
Sticker Shock: As offices reopen, workers are facing the reality that the cost of a daily routine – travel, coffee, food, etc – is far more expensive than it was two years ago. New York Times
Danger Zone: Low-rated U.S. companies borrowed record amounts in the leveraged loan market last year, taking advantage of floating interest rates and generous credit. Now all that debt is starting to get more expensive. Wall Street Journal
Chart of the Day
Imagine being a non-bank mortgage lender right now.
Source: Kathy Jones
WTF
Munchies: A bride and wedding caterer were arrested after allegedly serving a reception dinner (allegedly) laced with marijuana because Florida. Fox32
Happy Hour: A kindergarten student in Michigan brought a bottle of ready-to-drink Jose Cuervo margaritas and shared it with several of her classmates during snack time. News 4 Detroit
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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