What I’m Reading
On the Clock: The 2017 tax law contained a provision allowing for bonus depreciation on eligible assets, allowing investors who qualify as a real estate professional to shelter income, even in the absence of a 1031 exchange. A sunset provision was built into the law, meaning that after Dec. 31, 2022, the bonus depreciation will start to phase out, ending Dec. 31, 2027. Commercial Property Executive IMO, this has been an underrated tailwind over the past few years. It has the potential to pull more demand forward, putting upward pressure on prices before the sunset provision kicks in.
Hard to Unwind: Citigroup doesn’t see any meaningful supply chain relief until late 2022 and possibly not until 2023. Their conclusion is that it will take cooling of demand to truly resolve the backlog. Bloomberg
Cause and Effect: Mortgage rates are rising quickly and are now close to 100 basis points higher than they were a year ago. With home prices up substantially across the country, that is putting substantial pressure on affordability. At the same time, inventory is still at record lows – possibly a side effect of rate increases FOMO. Take a guess how this will impact rents. CNBC
Rain Check: Wildfire risk in California is driving some major insurers to pull policies for multimillion dollar homes following years of no-renewals by smaller competitors. Wall Street Journal
Showdown: Around 250 LA truck drivers working for XPO Logistics, who are currently independent contractors, are seeking to unionize. The drivers are claiming that they are employees and asking for benefits. This could get interesting. Bloomberg
Chart of the Day
Friendly periodic reminder that the US market is relatively tame when it comes to housing insanity.
Source: Full Stack Economics
WTF
Down With the Ship: A woman who crashed her car into a frozen river was spotted standing on top of said car taking selfies as the car sunk because Canada. National Post
Mother of the Year: A Connecticut teacher left her two children at home alone while she vacationed with her boyfriend in Florida. She allegedly told the 11 and 9 year old children to stay out of sight in the residence’s basement and “just eat candy” for dinner. The Smoking Gun
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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