What I’m Reading
Holdback: Soaring home prices mean that more appraisals are coming in below contractual sales prices, causing deals to collapse. The fact that it often takes a couple of months to close these transactions means that comps, which appraisers rely heavily upon, tend to lag. While painful for buyers and sellers, this is preferable to the appraisal situation leading up to the GFC where appraisals were little more than a rubber stamp, helping inflate a bubble. Wall Street Journal
Quality Control: Overwhelmed with orders and dealing with shortages has resulted in RV manufacturers producing vehicles that are of declining quality. Jalopnik
Beneath the Headlines: The headline number for September’s jobs report was well below expectations. However, much of the miss was due to strange statistical quirks around school reopening. The unemployment rate dropped (for good reasons), previous months were revised higher and average hourly earnings increased. The above helps to explain why bond yields spiked despite the “disappointing” report. New York Times
Hot Spot: Investor activity in single family homes is still surging and most of the move is being driven by large players. Of all investor purchases made in June 2021, 20% were made by large investors. This is much higher than 11% in 2020 or 14% in 2019. Globe Street
Storm Cloud: Over $40 billion in CMBS associated with struggling retail properties is maturing in the next three years. Estimates vary but roughly 70% reportedly cannot be refinanced due to valuation and cash flow declines. Bisnow
Chart of the Day
Shrinking household size + increasing household formation + not enough homebuilding = shortage.
Source: Pew
WTF
Employee of the Month: A Wendy’s manager in Tennessee was arrested after dousing a customer with hot oil after a verbal altercation, resulting in burns. The Smoking Gun
Boom: A man who was reloading ammo caused an explosion that destroyed 75% of his house because Florida. The Tampa Free Press
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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