What I’m Reading
Slim Pickings: Despite increasing mortgage rates, housing inventory is still at a record low. One thing to watch here as the vaccine rolls out: COVID exposure has been given as one reason that people are reluctant to list their homes. While that was undoubtedly true last spring, I suspect that difficulties in finding a new place to live now plays a much larger role. New tech and cleaning safety protocols have helped to mitigate the COVID exposure issue but selling a home isn’t like selling a stock. Sellers need to find a new place to live and that is increasingly difficult in a world with soaring prices and little to no inventory. Calculated Risk
Downstream: In the more popular asset types where demand exceeded supply, institutions and investment managers are starting to look to smaller properties to generate better returns. Targeting smaller, “below the rhumb line” assets with less institutional ownership as a way to generate alpha is where RanchHarbor has been focused since we launched. Our asset management and advisory business lines make it easer to deal with scaling challenges encountered while building a portfolio in this space. It will be interesting to see if larger players continue to focus in this space or revert back to larger transactions down the road. Globe Street
Inverted: In a historical anomaly, San Francisco apartment rents have plunged so far that some units look like a bargain next to neighboring Oakland. LA Times
Bounce: While mortgage rates are still very low on a historical basis, they have bounced off of the highs and are now above 3% again on average. Refinances will likely slow from here. Oh, and LoanDepot went public two weeks ago but raised a lot less than initially targeted. Looks like the market realized that non-bank originators are not a great investment in this environment. Mortgage News Daily
Boom: Expectations for U.S. growth in the first quarter, for the year and even for 2022 are roaring higher as economists race to price in the impact of big government spending, vaccinations and higher inflation. Axios
Chart of the Day
Real estate, especially properties with shorter term leases or CPI rent bumps stands to perform very well if we experience heightened inflation.
Source: Bank of America Global Research
WTF
They’re Grrrrreat! Cincinnati Customs and Border Patrol officers seized 44 pounds of corn flakes coated with cocaine, a shipment which could have a street value of up to $2.8 million. Looks like someone is going to have to rely on boring old coffee to wake up in the morning instead. ABC 9
I Respect the Hustle: An Arizona man faked his own kidnapping in order to get out of going to work. NY Post
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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