Urbanexus Update - Issue #103
I am H. Pike Oliver and I enjoy compiling this weekly update of real estate and community development news. The inclusion of an article does not imply endorsement. And please note that some links lead to items that are behind a paywall.
The coronavirus continues to have dramatic effects on health and the overall economy and real estate and community development. I pray for all who are affected by the negative health and economic effects of this pandemic.
The economy
How deep will economic downturns in rich countries be?
Per The Economist, those in central and southern Europe seem most vulnerable.
Federal Reserve Beige Book summary for the USA
As of April 15, 2020, economic activity had contracted sharply and abruptly across all regions in the USA as a result of the COVID-19 pandemic. The hardest-hit industries—because of social distancing measures and mandated closures—were leisure and hospitality, and retail aside from essential goods. Most Federal Reserve Districts reported declines in manufacturing, but cited significant variation across industries. Producers of food and medical products reported strong demand but faced both production delays, due to infection-prevention measures, and supply chain disruptions. Some other manufacturing industries, such as autos, mostly shut down. The energy sector, suffering from low prices, reduced investment and output. Districts reporting on loan demand said it was high, both from companies accessing credit lines and from households refinancing mortgages. All Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months.
Putting the pace of job losses in the USA in perspective In the last four weeks, 22 million Americans filed initial jobless claims. Here's how that staggering number compares to the peaks of past recessions.
Health impacts
Coronavirus becoming leading cause of death in the USA How does the coronavirus compare to other major causes of death in an average week?
Housing
How Will COVID-19 Lockdowns Hit The Housing Market?
Actual data for U.S. homes sold after the lockdowns began will not be available for a while, and everyone is grappling with preliminary indications of just how ugly this is going to get.
Mortgage forbearance requests rise
The Mortgage Bankers Association’s (MBA) Forbearance and Call Volume Survey,revealed that the total number of loans in forbearance jumped from 2.73% to 3.74% during the week of March 30 to April 5, 2020. Mortgages backed by Ginnie Mae showed the largest weekly growth (1.58%) and the largest overall share in forbearance requests by investor type (5.89%), while independent mortgage bank (IMB) servicers have a higher share of loans in forbearance (4.17%).
Zillow and Redfin's estimates are still guesswork We can see the price of everything, but estimates can be deceiving.
Retail
Clash over rent payments during coronavirus Mall and shopping-center owners are compiling a blacklist of large, usually financially stable tenants that haven’t paid their April rent.
Industrial
Not only has industrial been the darling of the real estate market for the last few years, but it’s likely to be the most successful asset type both during and after the pandemic.
Hospitality
Plunge in convention travel puts municipal bonds at risk The industry can withstand a downturn of a month or two, experts say, but a longer delay could hamper financing for projects in development.
Analyzing economic turmoil and real estate
Real estate portfolio stress testing
Real estate portfolio stress testing is one method for assessing an investor's ability to weather upcoming (or ongoing) economic turmoil.
Metropolitan and regional dynamics
Will COVID-19 rebalance economic geography?
In fact, the pandemic might intensify the unevenness of America’s divergent economy, with disturbing implications. Despite the increasing adoption of digital technology in American workplaces, economic activity has become more—not less—concentrated. In the decade following the Great Recession, the tech sector boomed in a way that greatly intensified the concentration of innovation workers and firms in just a few big cities—San Francisco, Seattle, New York, San Diego, Boston, and Austin, Texas. Nor did a long list of negative side effects of this hyper-concentration—bumper-to-bumper traffic, spiraling housing crises, an epidemic of homelessness—reverse the dynamic.
Environment and resilience
Retreating from the coast With rising waters, stronger storms and more devastating flooding, the time to start pulling back is now, experts say.