US Census Bureau: 2Q homeownership rate up 260bps q/q...

 Headline: U.S. Census Bureau reports 2Q20 homeownership rate soar 260 bps to 67.9%, the highest since 3Q08.

Consideration: Using an estimated US housing stock of 135mm homes, that’s a +3.5mm move over a single quarter. The bureau did note that “a change in methodology that could have impacted the numbers. Because of the COVID-19 pandemic, in-person interviews were suspended and most of the survey was conducted by telephone.”

Even the generally cheerful National Association of REALTORS® chief economist Lawrence Yun noted, “Usually homeownership data moves at more of a glacier-slow pace, so to see a sudden move like this was quite surprising. Some of this increase could be due to the change in data measurement.”

The second quarter ended with a strong yet not uniformly blowout June, with a 13 year high in new home sales and a +20.7% m/m in existing home sales boosted by an 18.2% y/y drop in existing home supply. While I’m upbeat about 2Q20 residential housing trends, I’d keep the champagne on ice until we get further details about the impact of the new methodology.

WSJ: Existing home sales up 20.7% month-over-month

More appropriate headline: “Existing home sales up 20.7% month-over-month from a coronavirus-induced trough.”

A better indicator of the strength of housing is that, while seasonally-adjusted annual sales of existing homes was down 12.4% year-over-year, the supply of those same homes was down 18.2% from a year ago.

Looking ahead, assuming you believe that housing trends will revert to normal, reasonable given the size of Millennial/Gen-Z cohort just getting into their housing formation years, we may be seeing a "squeezing of the balloon" - the air gets pushed down for now, but doesn't disappear.

Urban Institute: We need a Federal liquidity facility for government servicing

Amidst the generally positive news on CARES Act mortgage forbearance (Mortgage Bankers Association “reported that only 7.8% of mortgage loans nationwide were in forbearance as of July 12, equating to roughly 3.9 million homeowners. It represents the smallest share of loans in forbearance in more than two months.”) this Urban Institute piece spotlights the risks attendant with Ginnie Mae mortgages, with borrowers much more in the cross-hairs of the coronavirus-driven recession from economic perspective and with a structure that places more risk on the issuers.

The Disruption We Need is Not in Technology

Call to arms on disruption by my friend Kelsey Weaver, co-founder of Neocova as she seeks to bring the Big D to community banking...

WSJ: For pensions, difficulty of valuing real estate during a pandemic

Valuing a wide-ranging basket of real estate assets, always difficult, has been made tougher with the divergent near-term impacts emanating from the coronavirus pandemic, not to mention the prospect of a long-term, sustained transformation consumer behavior.

“The scarcity of tra­di­tional data points means es­ti­mated val­ues may not price in the true im­pact of the pan­demic, said Christy Fields, a man­ag­ing prin­ci­pal with con­sul­tant Meketa In­vest­ment Group.”

With US public pensions already facing a shortfall estimated at greater than their entire $4Tr holdings, properly marking the 6.1% share in real estate (+60% over the past 13 years) takes on added import.