What’s Lurking Below The Surface?

Keith Jurow, an excellent real estate analyst, has published another piece on the current state of home ownership in the U.S. His latest article can be found as an opinion piece on the MarketWatch website. Titled, “The COVID-19 lockdown is squeezing real estate from all sides and threatens to burst the housing and mortgage bubble”, this article is scarier than a Steven King plot. Although things appear relatively calm on the surface, Keith points out that rough seas are about to set upon us.

I would encourage you to read his article, especially if you are a current institutional owner of real estate or more importantly, thinking about increasing your allocation. Here are some of the low lights:

In New York City, sales in July collapsed by 35% from July 2019. Even worse for New York, listings soared by 65% in July as residents continued to flee the lock-down calamity in the Big Apple.

Online apartment broker Apartment List publishes a monthly survey of roughly 4,000 renters and homeowners. The most recent survey published in early August found that 33% of those surveyed had been unable to make a full rent or mortgage payment the first week of August.

Denver — one of the hottest markets in the nation a few years ago – led the nation in August with 41% of home sellers compelled to reduce their asking price.

The latest survey published by the National Association of Independent Landlords (NAIL) revealed that the percentage of small landlords who received a full rent payment from their tenants plunged to 55% in June from 83% in February. As a point of reference, there are roughly 15 million small landlords who count on this income to support their livelihoods and properties.

These are but a few of the frightening statistics that Keith shares in his article. Covid-19 has delivered a significant blow to our economy. Likely not strong enough to knock us out, but it certainly has us staggering. Some sectors will recover nicely, but like the equity market (S&P 500 -2.1% as I write this) many will take much longer to regain their footing. Pension systems cannot just do the same old, same old, and expect a different outcome. Caveat emptor.

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