What I’m Reading
Staying Remote: PriceWaterhouseCoopers is freeing the entirety of its U.S. workforce to work remotely full-time, a decision that will impact 40,000 client services workers. The Real Deal In response, the CMBS markets did their best honey badger impression. Will be interesting to watch this one play out:
The CMBS markets don’t seem to care. Loan on One North Wacker in Chicago where PWC occupies almost a quarter of the space and can terminate in 2025 was just securitized. Good luck to the B-piece buyer – Rialto!
— CRE Lender (@CREDebtFund) October 1, 2021
Shortage of the Day: In today’s episode of everything is a shortage, schools across the country are offering less healthy lunch options as they struggle with dwindling supplies, delayed shipments and fewer cafeteria workers. This pretty much all traces back to labor shortages, of course. New York Times
Bill Coming Due: With the replacement rate falling and a massive portion of the population aging, long term care will continue to become a bigger drain on the economy. The trend is one of the major reasons that I don’t think that inflation will be with us in the long term even though it is spiking today. We’ve seen this recently in Europe and Japan. No reason to believe that it will be different this time in the US. Bloomberg
Catch Up: There is a good chance that owners equivalent rent will spike in 2022, even as measures of new leases like indexes from Zillow and Apartment List flatten out. Calculated Risk
Also, IF (huge if) this inflation forecast from Goldman Sachs is accurate, it could be the perfect storm for rental housing to outperform:
Goldman on inflation: “We expect that ongoing supply chain disruptions will raise the prices of some goods further above the pre-pandemic trend and boost core inflation through end-2021. “
— Bill McBride (@calculatedrisk) October 2, 2021
1/3
Goldman: “We forecast core PCE inflation of 4.25% at end-2021 (vs. 3.9% previously), 2.00% at end-2022, 2.15% at end-2023, and 2.20% at end-2024 based on our bottom-up inflation model.”
— Bill McBride (@calculatedrisk) October 2, 2021
Here We Go Again: Lumber prices hit $1,670.50 per thousand board feet earlier this year, effectively choking off development projects that couldn’t handle the additional cost. Prices then dropped rapidly, bottoming around $450 last month (historically, it trades around $225-$425). However, supply chain issues are far from solved and prices have spiked above $600 once again. The “new normal” is looking like higher cost to build. Globe Street
Chart of the Day
The US birth rate has fallen off a cliff. This is one of the big reasons why I’m extremely pro-immigration.
Source: AEI
WTF
Reduced Charge: An Iowa man who threatened to blow up a McDonalds because he did not receive dipping sauces with his 30-piece Chicken McNuggets order has pleaded guilty to a misdemeanor harassment charge. The Smoking Gun
“E” For Effort: A shirtless woman tried to rob two stores using only body spray as a weapon – and failed – because Florida. CBS 12 News
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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