Policing in the aftermath of the George Floyd tragedy

While watching the PBS series on Asian Americans episode touching on the 1992 LA riots, I couldn’t help but notice the evolution of riot police gear over the past three decades. And remember, this was the Daryl Gates-era LAPD, pioneers in the militarization of police.

WSJ: US consumes more renewables than coal for the first time in 134 years

“The shift from coal is widely ex­pected to con­tinue for the fore­see­able fu­ture as util­i­ties com­mit to am­bi­tious goals to ad­dress cli­mate change. That is ex­pected to ac­cel­er­ate clo­sures of coal-fired power plants al­ready chal­lenged to com­pete with nat­ural-gas, wind and so­lar sources, which are all now cheaper forms of power than coal.”

Why is the pandemic not impacting housing prices like that last crisis?

“This Time is Different” is the darkly humorous title of the masterful recounting of nearly a millennia of financial crises by Reinhart and Rogoff. While drawing conclusions about the #housing market at this juncture is like calling a prize fight based on the situation after round one, it’s clear that we will not see a #realestate knockout of the 2008 vintage. 

AEI Housing Center: State y/y change in purchase rate lock activity (wks 20-21, 2020)

Don't fight the last war in housing...

“For those still stuck in 2009, it’s worth remembering that #housing simply can’t fall as much as it did in the last recession. There’s just not enough room to fall” 

How coronavirus may cut "superstar" cities down to size

“If the beneficiaries of remote work expand to the next top 25 places, "that would be extremely helpful to other smaller places if cities in their state were truly vibrant," Muro said. ‘There's a cascading benefit.’”

According to Brookings, in 2017, 90% of the nation's tech-sector jobs had concentrated in the top five innovation cities —Boston, San Francisco, San Jose, Seattle and San Diego.

Now, I doubt there will be a residential real estate bear market in the top cities since plenty will still want to move in and existing residents will seek to exploit value opportunities

“When the market restarts, buyers in studios will reach up to one-bedrooms. Two-bedroom folks are going to be spreading their wings to the three-bedrooms. Cash buyers will feel emboldened by their sexy cash position and will be looking for a good deal. At every price point, buyers will be looking to expand their footprint.”

How many are making use of their forbearance plans?

The safety net of the #coronavirus-driven forbearance plans, taken up by nearly 10% of US #mortgage holders, looks to be getting quite a workout. In April, nearly 50% of those on #forbearance plans were still able to make their mortgage payments. Thus far in May, that cohort is down to one-fifth.

Capital seeking title and closing innovations

News of an aggregate $152 million raised by States Title and Spruce is further indication that title and closing, what’s generally seen as the mundane portions the #mortgage process, has been receiving an excess of attention in the age of #coronavirus-driven social distancing and the resulting need for digital, virtualized transactions. 

What will happen to Manhattan if the WFH takes hold?

“A lot of people have learned that they can work at home." (Warren Buffet)

This may be a positive for many who work in Manhattan, where the average commute time of 43 minutes is among the highest in the nation. This may also also have a significant negative impact to the City since real estate taxes provide a third of city revenue and two-thirds of economic activity occurs in office buildings.  

New York City Comptroller Scott Stringer predicted "a whopping $3.2 billion loss to the city’s tax revenues over the next six months."

Online lenders battered by Coronavirus crisis

Online consumer and small business lenders facing challenges from all fronts

Funding has been problematic...

“Because these companies operate outside of the banking industry, they have never been able to turn to deposits as a stable source of loan funding. Instead they have relied heavily on alternative sources of liquidity — securitization markets, hedge funds and other private investors — that skeptics warned were likely to dry up during the next crisis.”

Also facing consumers that are behaving very conservatively: (1) not borrowing at previous levels; coming into this crisis with a 27% lower debt as portion of income than at the start of the Great Recession, and (2) saving record amounts, with 30% of consumers depositing their stimulus checks in savings and 25% using the checks to deleverage.

Whither #strategicDefault, the #credit bugbear this time around will likely be #strategicDelinquency

For further details, take a look at the #GoingConcern note in OnDeck’s latest 10Q.

First American: What a service sector-driven recession means for homeownership demand

First American’s Odeta Kushi delves into why “the pool of potential home buyers may not shrink as much as the jobless claims and unemployment rate may suggest” by examining #homeownership rates in the group most ‘vulnerable’ to the service sector-driven job losses. As the chart shows, even at its current lows, the homeownership delta between non-vulnerable and ‘vulnerable’ is slightly over 50%. While this #coronavirus-driven recession will certainly cause substantial pain across our entire economy, she puts forward a reasonable argument that this will “unlikely to result in a one-to-one decline in homeownership demand.”

The resi-mortgage forearance tsunami proceeds...

“By the end of June, almost one in 10 #mortgages – and possibly one in eight, depending on the condition of the economy – could be in #forbearance, Black Knight said in the report.”

The current 8.8% translates to $1 trillion in unpaid #mortgage loan principal.

First Republic Bank out with the first PL-RMBS securitization in the COVID-19 era

First Republic Bank plans to launch a $300 million private label residential #mortgage backed securities deal. 10 year interest-only ARMs made to high net worth borrowers.

What will be the impact of tech workers seeking to escape Bay Area housing costs?

The chart in Bloomberg Businessweek’s piece about “tech workers considering escaping Silicon Valley’s Sky High Rents” makes it evident that employers may be seeing this as a means off escaping Silicon Valley’s sky high salaries. Whatever the motivation, this may offer some relief to the Bay Area #housing cost crisis.

WSJ: Wall Street ramps up home leasing

“After a slow second half of March, April showings for American Homes 4 Rent rose 5% over the previous year and the company recorded some 9,500 showings during the last weekend of April and the first weekend of May.” Single Family Rental platforms like Invitation Homes Amherst Residential Front Yard Residential are weathering the economic crisis far better than feared.

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