What I’m Reading
Risky Business: With interest rates rising, and property prices at all time highs, Canadian homeowners are increasingly turning to variable rate mortgages as a lower cost alternative. Variable rate mortgages, which offer a substantially lower initial payment now make up over half of all new home loans in Canada. Issue is that the Bank of Canada is expected to hike rates several times this year alone to quell inflation. As seen in the US 15+years ago, this works great until it doesn’t. Bloomberg
Contrarian: Billionaire Sam Zell thinks that office will recover much faster than retail. CNBC I disagree but then again, I’m also not a self made real estate billionaire….. FWIW, there is a ton of nuance here. New class A office is doing fine as are certain types of retail centers (grocery anchored, strip malls, class A malls, etc). Class B and C mall and office properties, not so much.
Insatiable Appetite: BREIT’s purchase of Resource REIT for $3.7 billion is the latest example of how – to steal a line for Andreessen Horowitz – private permanent capital is eating the commercial real estate world. Bloomberg Side Note: With all of the talk of Sunbelt multifamily being overheated, its interesting to see the biggest and most sophisticated macro player out there go all in.
Still on the Move: The share of homebuyers looking to relocate is back near the pandemic peak. Seems as though this trend is here to stay. Redfin
Going Where The Demand Is: Amazon is making a push into the suburbs with its Amazon Go cashier-less stores in an effort to capture more business from work from home shoppers. Business Insider
Chart of the Day
Housing starts are still below levels historically associated with recessions when adjusted for population.
Source: Emily Hamilton
WTF
Streaker: A naked California man slugged an officer during an arrest for attempted burglary. (h/t Nicole Deermount) OC Register
Clearance: A Texas woman was arrested after a bizarre encounter inside a Walmart store where she is accused of offering another shopper $500,000 to buy the woman’s baby. NY Post
Basis Points – A candid look at the economy, real estate, and other things sometimes related. Visit us at RanchHarbor.com