What I’m Reading
Long Shot: Zelman and Associates released a contrarian residential market call, claiming that today’s tight housing market is already getting overbuilt thanks to the downward trajectory of population growth per the 2020 Census. CNBC
Other analysts, like Jay Parsons of RealPage were quick to jump on this as a “hot take” citing that the key age cohorts for household formation are still growing rapidly as seen below in a chart that Calculated Risk published a few years ago.
Zonda Chief Economist Ali Wolf also pointed out that the report made some broad based assumptions about structural headwinds and acknowledged that the math would change if they were incorrect about those drags.
immigration, declining marriage rates, demand pulled forward, & a structural shift to more young folks living at home long term. I think a few are more short-term trends (immigration+young folks living with parents) and they acknowledged in their report that if they were wrong on
— Ali Wolf (@AliWolfEcon) October 13, 2021
what the prices need to be on the other side when those homes come to market and where those communities are relative to the CBD
— Ali Wolf (@AliWolfEcon) October 13, 2021
IMO, no one has more credibility than Ivy Zelman and her team when it comes to calling turns in the housing market. Ivy was among the first to do so back in 2005 and took a lot of heat early on. That being said, I’m still a little skeptical of forecasts that rely too heavily on the pandemic year Census as there was a baseline, for household creation, especially when the prime household formation 30-39 cohort will continue to grow until the end of this decade.
Space Wanted: Despite adding 20 million square feet of new product over the past year, Inland Empire industrial market vacancy has dipped below 1%, with rents soaring 29% YOY according to a new quarterly report from Newmark. Commercial Observer
Space Race: Affluent city expats are fueling a huge spike in demand for ranch homes in remote residential communities from Colorado to Texas. Mansion Global
Flexing: Amazon is offering employees more flexibility when it comes to office work. Instead of implementing a one-size-fits-all approach, the ecommerce giant will allow workday policy to be determined by individual team directors. Cnet
No End in Sight: Construction costs will continue to rise at a faster-than-average rate for the next 12 months at least, according to JLL’s second half construction outlook report. Here is what the increases to date look like in context, going back to 1940:
Replacement costs are going to continue rising. Good news for owners of existing, well located buildings.
Source: JLL
Chart of the Day
Want an idea of how hot the employment market is? Private sector quits have gone so high that they required an adjustment to the y-axis.
Source: Conor Sen
WTF
Protected: Ozzy Osbourne claims that worshiping Satan has kept him from contracting COVID, despite several family members falling ill. MSN
Hanging Out: A naked female passenger was spotted at Denver International Airport asking other passengers where they were from. CBS Denver
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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