Urbanexus Update - Issue #78

Oct 21, 2019

H. Pike Oliver compiles this weekly update of real estate and community development news. Please note that some links may lead to items that are behind a paywall.

Quantitative easing and real estate

Ten years later—did QE work?

By November 2008, the Global Financial Crisis, which originated in the residential housing market and the shadow banking system, had begun to turn into a major recession, spurring the Federal Open Market Committee (FOMC) to initiate what we now refer to as quantitative easing (QE). This blog post, draws upon the empirical findings of post-crisis academic research to shed light on the question: Did QE work?

QE may be different this time around

Comments by Lindsay Williams in a podcast interview with Lee Adler suggest that what looks like a recent renewal of quantitative easing may be driven by something other than the need to adequately fund temporary open market operations (TOMO) -- the repurchase and reverse repurchase agreements that are designed to temporarily add or drain reserves available to the banking system. Hat tip to Ken Rogers for finding this one.

ECB’s Draghi warns of bubble risk — confoundedinterest.net

“The financial stability environment remains challenging, as the global economic outlook has deteriorated,” European Central Bank President Mario Draghi told fellow policymakers on the International Monetary and Financial Committee in Washington on October 18,2019. “There are mild signs of overstretched valuations in the euro area in some riskier segments of the financial markets, as well as in real estate markets, with marked differences across regions.” Hat tip to Tony Sanders for noting this.

Real estate investment

Family office investment allocation changes

A net 16% of family offices expect to increase direct real estate exposure

Office

Office growth in the USA over the past decade According to real estate data provider Yardi Matrix, regionally across the U.S., the areas of growth were relatively distinct. Urban areas in the Pacific Northwest grew by nearly 32%, adding a total 112 properties and 19.8 million square feet.

Housing

Housing and recessions — www.calculatedriskblog.com

New home sales appears to be an excellent leading economic indicator, and currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight.

Homebuilder sentiment surges — seekingalpha.com Homebuilder sentiment rose from 68 up to 71, compared to expectations for the index to remain unchanged at 68. With October's gain, overall sentiment is current

Lower interest rates helping seniors housing

The sharp drop in interest rates over the past several months has not only lowered the cost of capital for borrowers, but it has also helped offset higher operating costs at a critically important time, say seniors housing lenders.

The rise of single housing buyers in the USA

Married couples have always ruled the housing market—and they continue to, accounting for 63% of recent buyers in the National Association of Realtors’ 2018 Profile of Home Buyers & Sellers—but singles are serious up-and-comers.

Higher income renters A record number of six-figure-income families rent, as student debt and meager savings cloud their financial future. Because buying a house was historically a pathway to savings, this phenomenon could exacerbate the nation’s wealth gap.

Modest masterpiece' of public housing — www.citylab.com Goldsmith Street, a publicly funded development of 105 homes in the U.K. city of Norwich, is a “modest masterpiece,” has won the RIBA Stirling Prize.

Retail

Cool streets report

Cool Streets are shifting from being a new crop of retail districts emerging in North America to something even further and wider... Since Cushman & Wakefield's first report in 2016, there has been an explosion of overall growth (including Cool Street neighborhoods) in secondary and tertiary metropolitan areas.

Hamilton Beach closing all 160 stores

Hamilton Beach Brands Holding Co. (NYSE: HBB) has announced that it will close all stores of its retail subsidiary, The Kitchen Collection, by the end of the year. Kitchen Collection employs approximately 800 people at 160 stores across 37 states. The company previously closed about 35 underperforming stores in an effort to maintain long-term profitability, but higher operating losses in the first half of 2019 have prompted Hamilton Beach Brands to shutter the chain entirely.

Hospitality

Pro sports have little effect on hotel demand Pro sports do not translate to increased tourism dollars in terms of hotel demand, based on recent findings by West Virginia University researchers who analyzed 15 years' worth of data from hotels near the Staples Center in Los Angeles.

Healthcare and real estate

Healthcare REITs

Fundamentals for real estate investment trusts focused on the healthcare sector of the economy have improved during 2019.

Transportation and community development

Mobility culture

An influx of new mobility solutions are paving the way for a cultural shift – and the birth of mobility culture. Resulting from the intersection of transportation and technology, this cultural shift will be driven forward by a new generation of consumers – those just now coming of driving/ride-sharing age.

Environment and resilience

Less driving, more electrics will reduce Emissions

People need to live and work radically differently if the United States can even hope to get halfway towards becoming carbon neutral by 2050, but a new paper released last month says the most important change would come in how we get around.