One Big Thing
One of my blogging topics is narrative violation. A narrative violation what happens when a piece of data runs counter to a popular story or trend. The classic example of this was the whole “millennials never want to own homes or cars” thing that was making the rounds for several years starting around a decade ago. Eventually published reports by groups like JBREC and others began to show some serious cracks in that narrative when they found that millennials – as with every American generation before them – didn’t want to be apartment dwellers forever but rather lacked the finances to purchase homes. Investors who picked up on this narrative violation were able to get out in front of both SFR growth and the rise in home values. I like to look out for narrative violation stories to blog about as they tend to make for interesting contrarian opportunities and a better understanding of what is actually occurring behind the economic headlines.
Last week I linked an article about how Postal Service COA or change of address data showed that the well-publicized San Francisco exodus was flowing into neighboring counties far more than places like Austin and Miami as often portrayed in the news. This story has been widely shared over the past few days and mostly accepted at face value. Green Street picked it up and featured it in a market update so the report is not being shared only by bloggers and internet randos.
Since linking, I’ve become aware that COA data may to be as reliable a metric as someone in his early 40s (me) would think. Scott Barnard, a friend who I will quickly add is well over a decade my senior and has kids in their 20s astutely pointed out that this data set is flawed because young people (under 35) have no use for the mail and therefore didn’t bother to actually file COA forms when they move. I didn’t believe this at first and reached out to several friends and colleagues who fall into this age range to confirm.
Long story short, what I found in my highly anecdotal survey is that young people indeed do not give a shit about their mail, much of which is junk. The feedback that I received was than anything important is done via the internet, not snail mail – jury duty notices and voter registration forms be damned. Before this, I had naively thought that almost everyone who moved still filed a COA. Looks like it’s time for me to sign up for an AOL email address, buy a fax machine and fully embrace boomerhood.
The primary takeaway here is that the evidence of where people leaving San Francisco are actually going is not conclusive because the data set is flawed and likely heavily biased towards older, more established folks who are less likely to venture as far because they are at a stage of their lives where they value stability over mobility. In a city with a young, mobile population like San Francisco, it is particularly difficult to draw any big conclusions based on data that contains this flaw. The majority of people may be moving to other Bay Area locales as the study suggests or they may be moving to Miami and Austin in droves (as moving company pricing suggests) but Postal Service data is apparently is a less reliable metric then I had thought. Scott did point out that perhaps the best way to judge in and outmigration patters is geolocation metrics via social media databases that track cell phone usage. If anyone has access to such a report, please message me as I’d love to see it. In the meantime, I’ll just sit here, read a print newspaper, eat some Metamucil and feel old AF as I wait for the latest batch of junk mail.
What I’m Reading
Help Needed: In an age of slowing native population growth, the US needs smart immigration reforms like simplification of the visa and green card processes to maintain its position in the race for global talent. Fortune
Boom: From home price gains to sales records and mortgage originations, the US COVID housing boom was massive. However, it was also very concentrated among top earning households with high credit scores and growing affordability issues could slow things down in 2021 despite strong demographic tailwinds. Bloomberg
Swinging For The Fences: The Biden administration is planning unprecedented levels of fiscal stimulus when it comes to COVID recovery, eschewing concerns about a 70s-style inflation overshoot that have constrained such efforts over the past +/- 40 years. Financial Times
Winner, Winner: In yet another sign that the fee-fee-for service model will prevail over the rent arbitrage model in the co-working space, CBRE is buying a 35% interest in Industrious, becoming its largest shareholder. BusinessWire
Chart of the Day
This is a sight for sore eyes.
Source: Johns Hopkins
WTF
Choose Your Fighter: A Scottish woman bit off part of a man’s tongue in a street brawl and a seagull promptly swooped down and ate it. Conclusion – Scottish Woman > Florida Man. The New York Post
Please Make it Stop: Anyone who streams “The Muppet Show” on Disney+ will see a declaimer first — warning of “offensive content” due to “negative depictions and/or mistreatment of people or cultures.” We are now reached a point where we are too woke to let kids enjoy The Muppet Show without some self-flagellating warning. Congratulations, everyone. The New York Post
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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