One Big Thing
President Joe Biden comes into office with a housing plan that includes a $15,000 first-time homebuyer tax credit. IMO, encouraging first time homebuying is a worthy goal but doesn’t really solve our current problem – not enough houses are getting built to satisfy existing demand, which would ultimately stabilize prices. Instead, the credit will increase demand further without addressing supply, pushing prices higher and making home ownership even less attainable.
To truly solve the problem, the administration should be focused on the supply side but currently offers little more than platitudes about “encouraging” cities to get rid of outdated zoning regulations. Talk is cheap and, until supply is addressed, the problems will only get worse. The proposed first time buyer credit is one of many reasons why I believe that home values could be headed substantially higher than conventional wisdom suggests. CNBC
What I’m Reading
Harder Than It Looks: Many developers look at failing malls and envision modern office campuses, bustling warehouses or residential buildings. But those brave enough to try are often finding that converting these shopping centers isn’t so easy thanks to an often complicated entitlement process. Wall Street Journal
Soaring: The cost of shipping goods from China to Europe has more than tripled in the past eight weeks, hitting record highs as a shortage of empty containers stemming from the pandemic disrupts global trade. It is happening here as well but not quite at the same magnitude yet and will eventually impact consumer prices and trade. Financial Times
Boom: Colliers International Group’s Global Capital Markets 2021 Investor Outlook anticipates investment activity will pick up by 50% in the second half of the year as vaccine rollouts continue, additional government stimulus funds begin flowing and confidence in property markets swells. Colliers
Chart of the Day
TFW, you could see home prices going up double digits for a second year in a row.
Source: Altos Research
WTF
Doesn’t Pass the Smell Test: A vagina-scented candle sold by Gwyneth Paltrow exploded into flames in the living room of a UK woman. NY Post
You’ve Got Spirit: A wild cell phone video captured three passengers attacking two Spirit Airlines employees who asked them to make sure their carry-on bags were the right size before boarding their flight from Detroit to Atlanta. In unrelated news, Spirit has been named the official airline of the state of Florida. NY Post
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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