What I’m Reading
Shock Absorber: Normal recessions often produce a vicious cycle of foreclosures. When rents and property values fall, building owners stop paying their mortgages and lenders foreclose, pushing prices into a further downward spiral. That hasn’t happened in this cycle as regulators allowed bank to delay loan payments without having to declare a default, leading to very little distress in the commercial real estate market. With prices remaining stable and the economy reopening, investors are once again upping their CRE allocations, anticipating a rebound in hard-hit sectors. Wall Street Journal
Don’t Call it a Comeback: Apartment rents are rising again in tech hubs after languishing over the past year. Globe Street
Catalyst: Migration has been slowing in the US over the past ten years. However, the pandemic changed that and migration – led for the first time by high income households – accelerated in 2020. Apartment List
BTFD: Lumber futures are off over 20% from their high of $1,733.50 on May 10th. As a result, builders looking for deals but finding few as the cash market for lumber has not yet caught up with futures. Bloomberg
Target Rich: The pandemic will ultimately a accelerate productivity gains in the construction industry which has been stagnant for decades. Companies are adopting and deploying new technologies faster than scheduled. Expect more automation, modular, and panelized construction to gain market share. The winners in this space stand to make billions in an industry that could look radically different a decade from now. McKinsey
Chart of the Day
Home builders are taking market share as inventory dries up.
Source: John Burns Real Estate Consulting
WTF
Dine and Dash: An alligator chased people through a Wendy’s parking lot before being captured by wildlife officials because Florida. NBC
Super Size Me: Airlines may start weighing passengers on US flights as the obesity epidemic has resulted in balancing issues on planes as well as increased fuel costs. Daily Mail
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