What I’m Reading
Holding the Line: The bid/ask gap between buyers and sellers of property types impacted by the pandemic is closing, with buyers mostly meeting seller demands. However, substantial gaps still exist in some markets. Sellers refusing to meet buyers’ expectations on price over the past year is a great reminder that distressed transactions require not just deterioration of fundamentals but also a catalyst to actually transact. Sellers will hold firm on pricing expectations so long as counterparties allow. Globe Street
Up, Up and Away: Single family rents are growing at their fastest rate in nearly 15 years as people continue struggling to afford to buy new homes yet desire more space. Somewhat surprisingly, the most rapid growth is happening in the higher price range. CNBC
Mixed Bag: As the economy reopens, people are returning to restaurants, stores and hotels in large numbers thanks largely to pent up demand. However, office occupancy is still lagging, leaving service businesses in office-centric locations hurting. Wall Street Journal
Whipsaw: Lumber prices are down 41% since their May high. Even after the decline, lumber is still extremely expensive on a historical basis and, thanks to housing demand, is expected to price at elevated levels for years. Morning Brew
The Great Migration: New IRS data compiled by research outfit Wirepoints confirm the flight from high- to low-tax states. The news gets even worse for high tax states when the data is analyzed in income terms. Generally, high-tax states aren’t just losing more taxpayers—they are losing higher-income ones. Similarly, low and no income states are generally gaining more taxpayers who also earn more. The end result is that the middle class taxpayers who remain in high tax states wind up paying significantly higher tax rates. Wall Street Journal
Chart of the Day
High Tax States are hemorrhaging AGI.
Source: Wall Street Journal
WTF
Top: Tiger King’s Joe Exotic plans to start selling NFTs and weed from prison in a new partnership while serving a 22 year sentence. Apparently prison is now a grifter incubator of some sort. Gizmodo
Up in Smoke: California is offering $100MM to bail out its struggling legal marijuana industry. Rich irony here is that the industry is struggling explicitly because insane regulations have left it in an extreme competitive disadvantage versus the thriving black market. Brings to mind this old Ronald Reagan quote:
“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Basis Points – A candid look at the economy, real estate, and other things sometimes related. Visit us at RanchHarbor.com