What I’m Reading
Piggy Bank: Cash out refinances have hit their highest level since the financial crisis as homeowners take advantage of low rates. Cash out transactions were muted over the past decade in the wake of the Great Recession but came back with a vengeance in 2020 as mortgage rates hit record lows and housing values soared. This is undoubtedly positive in the short term but has negative long-term implications if it gets out of hand. Wall Street Journal
Money Pit: The American Dream Mall in New Jersey has been a nightmare for the Ghermezian family who are about to lose almost half of their stake in the West Edmonton Mall in Canada and Mall of America in Minnesota as a result. The Ghermezians used those assets as collateral to finance the troubled (to say the least) $5 billion New Jersey project, which has a troubled history to say the lease, was finally gaining its footing and then leveled by the pandemic. The Real Deal
Narrative Violation Alert: Yes, homebuyers are heading to Florida during the pandemic but nearly as many are moving out and the state’s population growth just hit its lowest rate since 2014. Wall Street Journal
Reverse Course: There are signs that a meaningful portion of Wall Streeters who fled New York for Florida during the pandemic are already folding up tent and headed back to the Big Apple. Would still love to see some geolocation data to back this up but Bloomberg does a great job of covering the mindset of some Wall Street bigwigs. Also, this quote is absolute gold (disclaimer: I don’t hate Florida like some of you guys think. I do, however, love Florida crime stories):
“The main problem with moving to Florida is that you have to live in Florida,” said Jason Mudrick, who oversees $3 billion at Mudrick Capital Management and has resided in Manhattan for more than two decades.
Ouch. Bloomberg
Chipping Away: Yet another federal judge, this time in Ohio, has ruled that the CDC exceeded its authority with the eviction ban. The ban is scheduled to expire at the end of March but will almost certainly be extended (I think). Will be interesting to see where these legal decisions lead as they will almost definitely be appealed. CNBC
Opportunity Knocks: Good story from Reuters last week about how real estate investors are navigating the post-pandemic world in an attempt to generate yield and hedge against inflation. I found the following quote about inflation particularly interesting:
Inflation is “a slow-burning fire hanging over financial assets, but it’s a tailwind for real assets such as real estate”, said Mike Kelly, head of multi-asset at PineBridge Investments, which bought Britain-based real estate fund manager Benson Elliott last October.
Chart of the Day
Real estate is still undervalued relative to bonds despite the recent spike in interest rates.
Source: Green Street
WTF
Fake It Till You Make It: A woman pretending to be a plastic surgeon was arrested after she botched a man’s nose job, leaving him disfigured because Florida. Tampabay.com
Perfect Crime: A Texas man used a loaner vehicle from a BMW dealership to drive to a bank and rob it. He then took the money back to the dealership to buy a car where he was arrested because someone saw the loaner license place and called the police. CBS DFW
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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