What I’m Reading
Back to the Future: With investors craving yield, Wall Street firms are once again diving into the private-label mortgage market, originating and packaging loans outside of the GSE framework. Despite the recent surge in volume, private level securitizations still make up a mere 4% of the market. However, it is likely to continue growing as a repository of loans that Fannie and Freddie can’t or won’t purchase, such as those tied to investment properties, super-expensive homes or self-employed borrowers. IMO, this is a welcome development IF underwriting standards stay reasonable. Wall Street Journal
Early Exit: At least 2 million American workers retired earlier than expected due to the pandemic. NPR
Bottleneck: The NAHB’s quarterly Multifamily Market Survey unsurprisingly found that demand is at the highest level in decades and vacancy is at it’s lowest level in decades. However, it also reported that developers are running into major roadblocks when it comes to starting new projects.
The challenges include everything from backlogged planning departments to virtual city council meetings and difficulty obtaining construction financing due to eviction moratoriums. Construction is currently booming but most of those projects were approved/funded before the pandemic. If the pipeline issues are not resolved quickly, the affordability crisis will get worse. This benefits owners of existing rental product and hurts tenants. NAHB
On the Road Again: A new report from Kruze Consulting found that analyzed the spending patterns of 400 startups since 2019 found that travel spending – especially on Airbnb – is through the roof. At the same time, spending on rent is down substantially. The average quarterly rent expense for startups in the report was $21,000 per quarter per company. During the fourth quarter of 2019 it was $32,000. Skift
Purgatory: The post COVID economic comeback has provided a strong tailwind for CRE. However, weaker assets like older retail centers in slow growth areas and hotels that cater to business travel continue to struggle and few are becoming current. Lenders have not been aggressive with their borrowers though and still seem more inclined to provide a path to survival. Globe Street
Chart of the Day
Housing is not expensive from a historical standpoint if you are looking at monthly payments.
Source: Barry Ritholtz
WTF
Foiled: A man attempted to rob a bank by threatening to bomb it, stole a vehicle to escape and then crashed into a police car because Florida. Tampa Free Press
Tasty: A man woke up in the middle of the night in his own home to find another man sucking on his toes because Florida. WUSA9
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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