Urbanexus Update - Issue #97
H. Pike Oliver compiles this weekly update of real estate and community development news focused primarily on the USA. The inclusion of an article does not imply endorsement. And please note that some links may lead to items that are behind a paywall.
The economy and real estate investment
Impotent FED — archive.aweber.com
In 2008 the FED took the Federal Funds Rate (FFR) down to 0%-.5% before finally raising in 2015. Unfortunately, this did little to stop the market from plummeting and cratering asset prices. ZIRP policy appears to be back and coming to a store near you. The FED has long been painting themselves into a corner with no apparent exit strategy in sight. At some point (as a matter of practicality) the FED will have to let the market fully cleanse itself and normalize interest rates. Will that be in 2020? 2030? 3000? Who knows...
Schroders integrates climate change returns forecasting
Schroders has integrated climate change into its global investment returns forecasts for the next 30 years, the UK-listed asset manager announced today.
Releasing research on the move, it said it had developed a three-stage process for quantifying the likely impact of climate on long-term returns.
The steps encompass:
quantifying how output per capita will change as temperatures rise (“physical costs”);
the economic impact of the steps taken to mitigate temperature increases (transition costs); and
understanding the potential costs of stranded energy assets.
Entitled ‘Climate change and financial markets’, Schroders’ research paper can be found here.
Office
Analyzing 2019’s largest office leases Tech companies led the way and accounted for the biggest share of space in the 100 largest office leases signed in 2019, according to CBRE.
REI’s new headquarters are like summer camp for grown-ups — www.fastcompany.com Complete with blueberry bogs and a campfire.
Housing
A shrinking finished lot supply in the USA
Nearly every production homebuilder in the USA needs more land, and for privately-capitalized players whose capital financing often redounds to personally guaranteed loans, investor deals, and their own money, this is where things get painful.
Scarcity of lots beyond 2020 and 2021 is a serious matter. For publicly trader homebuilders, however, they can go out and buy private companies to add to their lot pipelines in addition to adding the incremental in-year volume.
"Although new lot deliveries have more than quadrupled since 2010, it is barely keeping up with the demand and placing limitations on the overall growth in starts.," says Metrostudy senior VP David Brown. "The overall months' supply of Vacant Developed Lots is hovering in the 22 to 23-month supply range. However, that does not give a complete picture of the tight supply. Lot supply in the 'A' locations and most active communities is far more restricted and in many markets less than a 12-month supply."
Washington, DC area tech boom and apartments
Investors deeply committed to the Capital region may have experienced a moment or two of doubt in recent years. But their market confidence promises to be rewarded in good time, and recent developments suggest the wait will not be long.
Institutional singe-family home rental investment abuses Hundreds of thousands of single-family homes are now in the hands of giant companies — squeezing renters for revenue and putting the American dream even further out of reach.
Community development
Density or sprawl? Land use regulation is making cities unaffordable. In an unfettered market, how would Americans choose to live?
Liens, liens, liens
A review of items that often show up on real estate title reports--such as financial liens, monetary liens, deed of trust, mortgage lien, court judgments and mechanics liens.