What I’m Reading
The Great Unbundling: A recently published Federal Reserve analysis of household formation shows a meaningful decline in living with roommates / others since the pandemic, coupled with a rise of living alone. This happened as consumption of housing went up during the pandemic and I’ve referred to it here as household unbundling. It has fueled household formation, leading to much higher home prices and rents over the past two years. The question is how much can living costs increase until it this trend reverses. Federal Reserve
Money Machine: Non-traded REITs continue to raise capital at a blistering pace, hitting a record of $36.5 billion last year , with 2022 projected to be even higher. A whopping 68% of that 2021 total was raised by BREIT. The move to permanent capital is accelerating among the world’s biggest investors. WealthManagement.com Platforms with good growth prospects and low recurring capex requirements will continue to be extremely valuable to these platforms.
Draw Down: The average amount of personal savings dropped 15% from $73,100 in 2021 to $62,086 in 2022, according to Northwestern Mutual’s recent 2022 Planning & Progress study. And 60% of U.S. adults say that the pandemic has been “highly disruptive” to their finances. CNBC
Falling Behind: Early on during the pandemic, increases in wages outpaced increases in prices. However, since mid-2021, real wages have been below their pre-pandemic level and have been even further below where they would be if they continued along their pre-pandemic trend. Brookings
Stuffed: Bloated inventories have hit profits at Walmart, Target and other retailers, leading to lower trucking demand. Freight Waves
Chart of the Day
Great illustration of how much rate cap costs have soared this year. What the chart doesn’t show is that cap costs were also up substantially in 2021 but the move this year has been so massive that it would barely register on this chart. This move has been massive and some have likened buying a rate cap right now to buying flood insurance as a hurricane is making landfall. Side note: Is the fact that this niche is making headlines in a mainstream publication like Bloomberg after months of exponential gains a sign that the worst is over?
Source: Bloomberg
WTF
Boom: A man was arrested for allegedly blowing up a mailbox over a landscaping payment dispute because Florida. Click Orlando
Let it All Hang Out: A naked man was arrested after biting a police officer who tried to remove him from a McDonalds parking lot because Florida. Tampa Free Press
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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