The Ping Pong Of The Fed Raising Rates
The point here is – no matter how effective you’re opponent’s offense appears to be (inflation), never give up. Ping pong is not a great analogy but hey, I loved the video – wait for it!
And here’s a very illustrative way to account for all that extra rent you’re shelling out on the first of the month.
Rents due on the first♬ original sound – Your landlord
But I digress…
The Fed Raises Rates With A Promise To Do That Six More Times In 2022
Well, it just happened. The FOMC Open Market Committee did their thing and rates ticked above 4%. I think this is a favorable development for the housing market. Although the Fed tried real hard in 2018 to do the same thing, this time, the economy is more robust and the changes reflect the current economic boom. For some reason, I remain skeptical they will be able to execute all six rate increases though if supply chain issues noticeably improve.
Does anyone really think there is a long term benefit to the housing market by having:
- a collapse of listing inventory?
- a 20% YOY rise in housing prices?
- more than half of sales going to bidding wars?
- a rapid reduction in affordability?
- spending all our free time cruising Zillow?
Low rates make housing less affordable in the long run and rates have been on a long downward trend.
Listing inventory has been obliterated by heavy sales volume due to low rates to the point where it has been keeping sales lower than they could have been.
Among Super Luxury Sales Markets Like Londongrad, Housing For Oligarchs Is Getting Awkward
While I’m not advocating that we ignore real property rights, I do admire their moxie.
In this WSJ piece: Goodbye Londongrad: Russian Oligarchs Put Pressure on U.K. Property Market:
Over the past two decades, London’s high-end property market was overrun by the global superrich led by Russian oligarchs who did so many big, brash deals that locals called the city Londongrad.
The government has introduced a raft of measures targeting the Russian elite. It has frozen all assets tied to multiple Russian oligarchs with mansions in the city, while some lawmakers have called for the government to seize and sell those homes. It shut down a visa program that gave wealthy foreigners a quick path to citizenship, and is introducing rules that make it harder for property buyers to stay anonymous, a feature that had been an attraction of London.
While Oligrachs don’t dominate U.S. sales above $50 million that I collect, they certainly enjoy a large presence near the top of the list. Here’s the latest update of U.S. residential closed sales at or above $50 million. It does look like those mega sales are off to a slow start in 2022 but it’s not clear yet whether 2022 will be a record year or more in the range of the past decade.
Kastle: Return To Work Severely Lags Return To Other Activities
Comparing activities to 2019, being in the office is severely lagging other aspects of life, just cracking the 40% threshold over pre-pandemic levels. And this has far-reaching implications for the home-work relationship, likely causing above-average churn as consumers and their employers try to figure it out. I have the sense I am going to be writing about this a lot over the next 3 to 5 years.
2022 Axios-Generation Lab Next Cities Index Does’t Rank The Sunbelt In Top 5 Destinations
This was a fascinating poll allowing a possible look out into the future the new inputs of remote work well underway.
Apparently, the news about the death of New York was premature (I can see that firsthand just by working there).
NY Fed Business Leaders Survey Shows A Strengthened Regional Future
I’ve been a respondent to the Business Leaders Survey survey for quite a while and have found it extremely helpful in gauging the regional economic outlook.
This month, perception of economic conditions (climate) are far more negative than reported conditions (activity). Perhaps more rose-colored glasses are called for, but unfortunately, they’re stuck on a cargo ship on the coast of San Diego. When focusing on business activity, the spring of 2021 was looking like a massive boom until Delta and then Omicron variants kicked in.
Via TikTok: What’s Inflation?
My favorite charts of the week of our own making
Seasonal residential leasing patterns in NYC are quite apparent:
My favorite charts of the week made by others
We forecast Russia's GDP will fall 30% by end-2022, far worse than 2009. Sanctions are tightening financial conditions hugely (blue), which will choke off domestic demand. Russia can print money to ease this crunch, but that'll just bring a devaluation-hyperinflation spiral… pic.twitter.com/8SpShVAeKo— Robin Brooks (@RobinBrooksIIF) March 12, 2022
Len Kiefer‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
I took a break this week but rest assured, with all the hearings and actions on the horizon, I’ll be back next week.
OFT (One Final Thought)
Looking forward in time is hard.
In 1974, Arthur Clarke predicted the future of Internet and mobile computing pic.twitter.com/nJRefcYTxm— Vala Afshar (@ValaAfshar) March 18, 2022
32 years ago, Steve Jobs predicted the use of technology to build a company where people can work from anywhere pic.twitter.com/t9yYMSF72e— Vala Afshar (@ValaAfshar) March 18, 2022
Brilliant Idea #1
If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:
- They’ll be more ping;
- You’ll be more pong;
- And I’ll paint the lightswitch.
Brilliant Idea #2
You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.
See you next week.
Reads, Listens and Visuals I Enjoyed
- Compass Scales Back Stock Awards for Employees [The Real Deal]
- Top 12 Secrets of Fort Greene, Brooklyn [Untapped New York]
- FinCEN must regulate real estate industry to keep out dirty money [Citizens for Responsibility and Ethics in Washington]
- Affordable housing tax break to cost city almost $1.8B, comptroller says [Crain's New York]
- Your Distracted Co-Worker Is Probably on Zillow [Wall Street Journal]
- Fed raises rates and projects six more increases in 2022. [NY Times]
- Pandemic Led Many to New Home Dreams [Realtor Magazine]
- Inflation explained: How prices took off [Washington Post]
- House-Flipping Tech Powers a Boom in Single-Family Rentals [Bloomberg]
- Kastle Systems – Data Assisting in Return to Office Plans [Kastle]
- Return to the Office? Not in This Housing Market [Time]
- Activists stormed a Russian oligarch's mansion in London and unfurled a sign saying the property had been 'liberated' [Business Insider]
- Exclusive: Seattle is the top destination where college students want to land [Axios]
- Goodbye Londongrad: Russian Oligarchs Put Pressure on U.K. Property Market [Wall Street Journal]
- Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom [Bloomberg]
My New Content, Research and Mentions
- Manhattan rents rise to an all-time high [CNN]
- On Real Estate: Bleak buyers’ market likely to get worse before it gets better [Crain's New York]
- Here’s how to negotiate lower rent as prices soar after their COVID lull [Fortune]
- Business Leaders Survey [FEDERAL RESERVE BANK of NEW YORK]
- Rent: Up, Up and Away for Single-Family Homes [TheStreet]
- Russian Oligarchs hide money in plain sight in luxury New York city Condos [Newsweek]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 2-2022 [Miller Samuel]
- Elliman Report: Hamptons/North Fork Decade 2012-2021 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 2-2022 [Miller Samuel]
- Elliman Report: California New Signed Contracts 2-2022 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 2-2022 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 2-2022 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 2-2022 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 1-2022 [Miller Samuel]
- Elliman Report: Manhattan Decade 2012-2021 [Miller Samuel]
- Elliman Report: Long Island Decade 2012-2021 [Miller Samuel]
Appraisal Related Reads
- Understanding The Appraisal Part 3: The Cost Approach [Birmingham Appraisal Blog]
- Starbucks cups & price per sq ft in real estate [Sacramento Appraisal Blog]
- Proposed Design of the URAR [Dave Towne/Appraisers Blogs]
- Fannie ANSI Update – 19 New FAQs [Appraisal Today]
- Appraisers should be ‘valuation pilots,’ industry vet says [Valuation Review]
- West Virginia HB4285 | 2022 | Regular Session [LegiScan]
- Anti-Appraiser Agenda – Follow the Money! [Appraisers Blogs]
Extra Curricular Reads
- What Will It Take for Architects to Stop Working With Autocrats? [Curbed]
- Starbucks wants to become the gas station of the future for EVs [Fast Company]
- The US Tried Permanent Daylight Saving Time in the '70s. People Hated It [Washingtonian (DC)]
- Opinion | Welcome to Londongrad, Where Kleptocrats Wash Their Money Clean [NY Times]
- The complete idiot's guide to military logistics [Timothy Noah]
- Why so many Russian billionaires are called oligarchs [NPR]
- American Fools [The Atlantic]
- Victims [The Reformed Broker]
- Fall Back? Spring Ahead? How About Neither, Experts Say. [NY Times]