What I’m Reading
Lifeline: Of the three relief bills passed by Congress over the past year, the latest is probably the most beneficial to the CRE industry. Here’s a summary of what the bill contains that will help the industry:
- $40 billion for rental assistance
- $25 billion in restaurant industry aid
- $200 billion for state and local governments to assist small businesses, tourism and hospitality
As always, there will be a chorus of people claiming that the bill did either too much or not enough and there are certainly concerns about the strings of increased government oversight that will likely be attached. Much more in this synopsis from Yardi Matrix’s Paul Fiorilla. Commercial Property Executive
Unbundled: WeWork is moving from a short term leasing subscription model to a pay-as-you-go model in an effort to appeal to tenants who want the ultimate flexibility. It’s a bold move and certainly has some appeal in todays turbulent office market. That said, I can’t imagine that substituting predictable subscription cash flow with a more transactional model will do wonders for the valuation, even if it generates more revenue. Tech Crunch
Day and Night: Residential home sales are hitting peaks last seen in 2006, but volume is where the similarities end. Whereas the last boom was driven by easy money and sketchy mortgages, this time mortgages are stricter, down payments are higher, and tight supply is supporting prices. Wall Street Journal See Also: While cash out refinances are way up, we are nothing close to a crisis thanks mostly to incredibly strong borrower balance sheets. Housing Wire
Missing Middle: The affordable housing crisis gets most of the headlines and rightfully so – we have far fewer affordable units than what is needed. However, middle income housing stock in the US is suffering from extremely low supply levels as well, especially in the most populated markets. The ULI Terwilliger Center’s 2021 Home Attainability Index identified gaps in home attainability across the U.S., and highlighted occupations that have been significantly affected by the global pandemic and the resulting economic disruption. ULI Americas
Bounce Back: Last year, banks built up tens of billions in reserves to cover troubled loans, negatively impacting their earnings in the process. Those losses still haven’t materialized a year into the pandemic and with full economic reopening imminent, those untapped reserves could now represent billions of dollars of profits in 2021. Wall Street Journal
They Make It Up On Volume: Opendoor and Zillow lost a combined $1.2 billion buying and selling homes over the past two years, including $607 million in 2020, according to a new analysis from industry observer Mike DelPrete. That’s a loss of around $40,000 per home. It’s difficult for me to see how this is a sustainable business model. The Real Deal
Chart of the Day
Source: Axios
WTF
Inside Job: An elementary school vice principal and her teenage daughter have been arrested after authorities say they were responsible for fraudulently casting hundreds of votes for the high school’s Homecoming Court because Florida. (h/t Tad Springer) ABC News
In a Pickle: A naked man was arrested after he was caught masturbating with a pickle on private property because Florida. (h/t Steve Sims) The Smoking Gun
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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