FHFA House Price Index (HPI) Monthly Report: “The 12-month gain of 10.2% in October is the highest annual appreciation observed since the 2004- 2005 period. Extremely low mortgage rates and a limited supply of homes for sale continue to propel price gains. The data do not yet reflect renewals of some local and state COVID-19 restrictions.”
This index is derived from data on mortgages conforming to Fannie Mae and Freddie Mac limits.
"The S&P CoreLogic Case-Shiller index covering home prices of all nine U.S. census divisions, reported an 8.4% increase in October from a year ago. The National Index is now up 24.5% from its former high in July 2006."
Many reasons, but the one provided by the guy overseeing the index, that “it’s likely COVID-19 has pushed buyers to move from urban apartments to suburban homes” is one of the less plausible ones since the we have yet to see undisputed data supporting thesis of a secular bum rush out of the cities (ex-NYC).
“The National Index is now up 24.5% from its former high in July 2006.” — This daunting stat translates to a slightly less almighty CAGR of roughly 1.6%
The median Manhattan rent of $2,776 this past November was down 12.7% year over year, exceeding “the biggest price drop during the Great Recession, when prices fell nearly 10 percent,” while the suburbs witnessed 20%+ growth in median sale prices. Looking forward, however, the number of new signed contracts in NYC’s urban centers have been on an upswing while the suburbs are reverting to long-run norms.
As ever, The New York Times seems to have forgotten that land mass west of the Hudson in its reporting, where “sales of luxury homes skyrocketed 101.6% year over year.”
“The 49 most populous U.S. metropolitan areas all experienced at least double-digit growth in luxury-home sales during the three months ending Nov. 30. The biggest jump was in Newark, NJ, where sales of luxury homes skyrocketed 101.6% year over year.”
As we head into the second calendar year of this pandemic-fueled housing bull run, we seem to have encountered two word pairs that likely have not entered our collective consciousness in a single sentence in well over fifty years - “Newark, NJ” and “luxury homes.”
In all seriousness, the Northern NJ market has been a key beneficiary of the one major evidence-rich migration story of 2020, the once-in-a-generation outflow of residents from NYC that have also tilted definitively toward the upper end of housing stock. Despite my sophomoric attempt at humor, kudos to Redfin for illustrating the dispersion of trends across the housing stratifications.
Thoma Bravo acquires RealPage, Inc. for $10.2 billion. The pace of proptech transformation is quickening.
After losing his Tennessee bid for the US Congress, Davy Crockett was quoted as saying to his constituents,
"Y’all can go to hell and I will go to Texas"
In this epoch, middle-aged aged tech pioneers seem to be adopting this mindset. Another week and Oracle, one more tech giant with its hypergrowth phase a distant memory, has announced its HQ move to Texas.
Will these moves catalyze a new manner of collaboration across the Red-Blue divide, with Texas and California, in essence, holding joint custody of a growing number of major corporations?
Akin to divorces, one hopes that a spirit of cooperation, however uncomfortable, will arise after dawning realization of the futility of antagonism and games of one-upmanship. The fate of both states will be inextricably connected for the foreseeable future.
While we are ending 2020 with mortgage originations “on pace for best year ever” (https://lnkd.in/grd-epN) turbocharged by refinance volume, should we be concerned by the increasing disparity in Fannie Mae home purchase sentiment between those who already are homeowners and those renters looking to get into home ownership? The latter category have been harder hit by the economic ravages associated with pandemic and have been sitting on the sidelines during this housing value bull market.
Door #1: The HPSI disparity between cohorts must converge for a long term sustainable purchase mortgage market, or
Door #2: We have nice single family rental unit for you...
What to make of a year-over-year comparison of the top housing markets as published by realtor.com?
Despite the mounds of breathless anecdotes about discontinuous mobility, the real action is in the larger established markets, as consumers take the leap into home ownership, existing ones trade up and others incrementally fan out within the metro areas in search of space and affordability.
The M2 grew by $3.5Tr since early March. In other words, nearly one in five of all US dollars were created during the period. By comparison, the supply expanded by less than $1.0Tr during the Great Recession. (Source: Federal Reserve Bank of St Louis)
“The (buy now, pay later) movement has left banks puzzled.” Clear example of the incumbents lacking customer empathy. By enabling the tracking of spending in terms of set cash flow, BNPL provides consumers a level of simplicity and real control to counter the complexity and illusory control of open ended credit cards.
