by Calculated Risk on 11/22/2021 08:35:00 AM

These indicators are mostly for travel and entertainment.    It is interesting to watch these sectors recover as the pandemic subsides.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

This data is as of November 20th.

Click on graph for larger image.

This data shows the 7-day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red).

The dashed line is the percent of 2019 for the seven day average.

The 7-day average is down 14.3% from the same day in 2019 (85.7% of 2019).  (Dashed line)

Overall, air travel had been off about 20% relative to 2019 for the last four months (with some ups and downs) - and picking up recently.

----- Restaurants: OpenTable -----
The second graph shows the 7-day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

IMPORTANT: OpenTable notes: "we’ve updated the data including downloadable dataset from January 1, 2021 onward to compare seated diners from 2021 to 2019, as opposed to year over year." Thanks!

Thanks to OpenTable for providing this restaurant data:

This data is updated through November 20, 2021.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Dining picked up for the Labor Day weekend, but declined after the holiday - and appears to be declining slightly again.  The 7-day average for the US is down 5% compared to 2019.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through November 18th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales were at $89 million last week, down about 66% from the median for the week. 

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

This data is through November 13th. The occupancy rate was down 4.0% compared to the same week in 2019.

Notes: Y-axis doesn't start at zero to better show the seasonal change.

The occupancy rate will now decline seasonally into the new year.

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Red is for 2021.

As of November 12th, gasoline supplied was up slightly compared to the same week in 2019.

There was the ninth week, out of the last 20, that gasoline supplied was up slightly compared to the same week in 2019 - so consumption is running close to 2019 levels now.

----- Transit: Apple Mobility -----
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

This data is through November 20th 

for the United States and several selected cities.

The graph is the running 7-day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 112% of the January 2020 level. 

New York City is doing well by this metric, but subway usage in NYC is down sharply (next graph).

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. 

This graph shows how much MTA traffic has recovered in each borough (Graph starts at first week in January 2020 and 100 = 2019 average).

Manhattan is at about 42% of normal.

This data is through Friday, November 19th.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".

by Calculated Risk on 11/21/2021 07:03:00 PM

Weekend:
• Schedule for Week of November 21, 2021

Monday:
• At 8:30 AM ET: Chicago Fed National Activity Index for October. This is a composite index of other data.

• At 10:00 AM, Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for 6.20 million SAAR, down from 6.29 million in September. Housing economist Tom Lawler expects the NAR to report 6.34 million SAAR.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 4 and DOW futures are up 50 (fair value).

Oil prices were down over the last week with WTI futures at $75.46 per barrel and Brent at $78.29 per barrel. A year ago, WTI was at $42, and Brent was at $44 - so WTI oil prices are up 80% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.39 per gallon. A year ago prices were at $2.10 per gallon, so gasoline prices are up $1.29 per gallon year-over-year.

by Calculated Risk on 11/21/2021 11:44:00 AM

Calling the beginning or end of a recession usually takes time.   However, the economic decline in March 2020 was so severe that the National Bureau of Economic Research (NBER) quickly called the end of the expansion in February.

The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.
...
The usual definition of a recession involves a decline in economic activity that lasts more than a few months. However, in deciding whether to identify a recession, the committee weighs the depth of the contraction, its duration, and whether economic activity declined broadly across the economy (the diffusion of the downturn). The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.

And then - just two months later - in July 2020, the NBER called the end of the recession:

The committee has determined that a trough in monthly economic activity occurred in the US economy in April 2020. The previous peak in economic activity occurred in February 2020. The recession lasted two months, which makes it the shortest US recession on record.
...
In determining that a trough occurred in April 2020, the committee did not conclude that the economy has returned to operating at normal capacity. An expansion is a period of rising economic activity spread across the economy, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.

The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession associated with the February 2020 peak. The basis for this decision was the length and strength of the recovery to date.

It will take some time for all major indicators to be above their previous high after the pandemic recession because of the severe contraction as the graphs below show.  All of the following graphs show each measure as a percent of the previous peak.

GDP is the key measure, as the NBER committee notes in their business cycle dating procedure:

The committee views real GDP as the single best measure of aggregate economic activity.

Click on graph for larger image.

This graph is for real GDP through Q3 2021.

The previous high for real GDP was in Q4 2019.

Real GDP was above Q4 2019 levels in Q2 2021. 

This was a very quick return to new highs, especially given the severity of the downturn.  However, as NBER noted, this was the shortest recession on record (due to the pandemic).

The second graph is for monthly industrial production based on data from the Federal Reserve through Oct 2021.

Industrial production is off 2.5% from the previous peak.

Note that industrial production was weak prior to the onset of the pandemic, and industrial production has recovered to the pre-pandemic level.

The third graph is for employment through October 2021.

Historically employment was a coincident indicator for the end of recessions, but wasn't true for the previous three recessions (1990-1991, 2001, 2007-2009).

Employment is currently off about 2.8% from the pre-recession peak (dashed line).  This is a significant improvement from off 14.7% in April 2020.

There is still ways to go for employment to recover to pre-pandemic levels.

And the last graph is for real personal income excluding transfer payments through September 2021.

Real personal income less transfer payments was still off slightly from the previous peak in September.

These graphs are useful in trying to identify peaks and troughs in economic activity.

Although economic activity bottomed in April 2020, only one of these four major indicators (GDP) is above the previous peak (although real personal income excluding transfer payments is close).

by Calculated Risk on 11/20/2021 02:58:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• The "Household Conundrum" And Early Read on Existing Home Sales in October

• 5th Look at Local Housing Markets in October No Signs of Slowing

• Housing Predictions: Guesses and the Data What could cause inventories to increase?

• Most Housing Units Under Construction Since 1974 Housing Starts Decreased to 1.520 Million Annual Rate in October

• October California Home Sales Sales Down 10.4% YoY. Active Listings down 18.3%

• 4th Look at Local Housing Markets in October Adding Des Moines, Maryland, South Carolina, and Washington, D.C.

This is usually published several times a week, and provides more in-depth analysis of the housing market.

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/  Currently all content is available for free - and some will always be free - but please subscribe!.

by Calculated Risk on 11/20/2021 08:11:00 AM

The key reports this week are October New Home sales, Existing Home sales, the second estimate of Q3 GDP, and Personal Income and Outlays for October.

For manufacturing, the Richmond Fed manufacturing survey will be released this week.

----- Monday, November 22nd -----
8:30 AM ET: Chicago Fed National Activity Index for October. This is a composite index of other data.

10:00 AM: Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for 6.20 million SAAR, down from 6.29 million in September.

The graph shows existing home sales from 1994 through the report last month.

Housing economist Tom Lawler expects the NAR to report 6.34 million SAAR.

----- Tuesday, November 23rd -----
10:00 AM: Richmond Fed Survey of Manufacturing Activity for November.

----- Wednesday, November 24th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 270 thousand initial claims, up from 268 thousand last week.

8:30 AM: Gross Domestic Product, 3nd quarter 2020 (Second estimate). The consensus is that real GDP increased 2.1% annualized in Q3, up from 2.0% in the advance estimate of GDP.

8:30 AM: Durable Goods Orders for October from the Census Bureau. The consensus is for a 0.2% increase in durable goods orders.

10:00 AM: Personal Income and Outlays for October. The consensus is for a 0.2% increase in personal income, and for a 1.0% increase in personal spending. And for the Core PCE price index to increase 0.4%.

10:00 AM: New Home Sales for October from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.

The consensus is for 801 thousand SAAR, up from 800 thousand in September.

10:00 AM: University of Michigan's Consumer sentiment index (Final for November). The consensus is for a reading of 66.8.

2:00 PM: FOMC Minutes, Meeting of November 2-3, 2021

----- Thursday, November 25th -----
All US markets will be closed in observance of the Thanksgiving Day Holiday.

----- Friday, November 26th -----
The NYSE and the NASDAQ will close early at 1:00 PM ET.

by Calculated Risk on 11/19/2021 07:26:00 PM

Today, in the Real Estate Newsletter: The "Household Conundrum"

Excerpt:

Housing economist Tom Lawler discusses the “household conundrum” - why it is unclear how many households there are in the U.S..
...
One of the challenges facing housing analysts in trying to assess the current and future state of the US housing market is the lack of timely and reliable estimates of the number of and characteristics of US households. This challenge has become even more acute since the onset of the pandemic, as significant declines in response rates to government surveys of households have adversely affected the accuracy of already imperfect household estimates. The lack of reliable household data makes it difficult to assess how much of the astonishing strength in the housing market since the middle of last year has been related to “demographics,” as opposed to behavioral and preference changes associated with the pandemic and, more recently, the surge in investor purchases of single-family homes.
...
While HVS household estimates have always been volatile (partly related to the small sample size of the CPS), and have not matched decennial Census results, the estimates produced since the onset of the pandemic have been … well … ridiculous. Below is a table of the HVS estimates of total and owner-occupied households.

As the table indicates, the number of households estimated from the HVS exploded upward following the onset of the pandemic, and the number of owner-occupied households rose by an astonishing and completely unbelievable amount. And following that surge the HVS estimates of total households fell, and the number of owner-occupied households plummeted!

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by Calculated Risk on 11/19/2021 07:19:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 448,155,906, as of a week ago 437,352,000, or 1.54 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	59.0%	58.7%	≥70.0%1
Fully Vaccinated (millions)	195.9	194.7	≥2321
New Cases per Day3🚩	94,260	73,366	≤5,0002
Hospitalized3🚩	40,579	40,221	≤3,0002
Deaths per Day3🚩	1,069	1,024	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 5 states that have achieved 70% of total population fully vaccinated: Vermont at 72.4%, Rhode Island, Connecticut, Maine, and Massachusetts at 70.6% .

KUDOS also to the residents of the 16 states and D.C. that have achieved 60% of total population fully vaccinated: New York at 67.9%, New Jersey, Maryland, Washington, Virginia, New Hampshire, Oregon, District of Columbia, New Mexico, Colorado, California, Minnesota, Pennsylvania,  Illinois, Delaware, Florida, and Hawaii at 60.6%.

The following 19 states have between 50% and 59.9% fully vaccinated: Wisconsin at 59.1%, Nebraska, Iowa, Utah, Michigan, Texas, Kansas, Arizona, Nevada, South Dakota, North Carolina, Alaska, Ohio, Kentucky, Montana, Oklahoma, South Carolina, Missouri and Indiana at 50.4%.

Next up (total population, fully vaccinated according to CDC) are Tennessee at 49.2%, Georgia at 49.1%, Arkansas at 48.9%, Louisiana at 48.5% and North Dakota at 48.4%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

by Calculated Risk on 11/19/2021 04:00:00 PM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 6.34 million in October, up 0.8% from September’s preliminary pace and down 5.8% from last October’s seasonally adjusted pace. Unadjusted sales should show a larger YOY decline, reflecting this October’s lower business day count relative to last October’s.

Local realtor reports, as well as reports from national inventory trackers, suggest that the YOY decline in the inventory of existing homes for sale was slightly larger than was the case in September.

Finally, local realtor/MLS reports suggest the median existing single-family home sales price last month was up by about 12.9% from last October.

CR Note: The National Association of Realtors (NAR) is scheduled to release October existing home sales on Monday, November 22, 2021 at 10:00 AM ET. The consensus is for 6.20 million SAAR.   Take the over.

Note that the NAR reported median prices were up 23.6% Year-over-year (YoY) in May, 23.4% in June, 17.8% in July, 14.9% in August and 13.3% in September. And it appears the YoY growth slowed a little more in October.

by Calculated Risk on 11/19/2021 12:55:00 PM

Today, in the Real Estate Newsletter: 5th Look at Local Housing Markets in October

Excerpt:

This is the fifth look at local markets in October. This update adds Alabama, Austin, Boston, Charlotte, Indiana, Minneapolis, Phoenix, and Rhode Island.
...
Here is a summary of active listings for the housing markets that have reported so far in October. For these markets, inventory was down 6.5% in October MoM from September, and down 24.1% YoY.

Of the markets that have reported so far, inventories in Jacksonville and San Diego are at record lows. Sacramento and Washington, D.C. are the only markets so far with inventory up YoY in October (Austin is essentially unchanged YoY).

Inventory almost always declines seasonally in October, so the MoM decline is not a surprise. Last month, these markets were down 22.1% YoY, so the YoY decline in October is slightly larger than in September. This is not indicating a slowing market.

In California, the C.A.R. reported inventory was down 18.3% YoY, but this isn’t included in the table below since C.A.R. doesn’t report monthly numbers.

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by Calculated Risk on 11/19/2021 11:18:00 AM

From BofA:

We continue to track 6% qoq saar for 4Q GDP growth. [November 19 estimate]
emphasis added

From Goldman Sachs

We left our Q4 GDP tracking estimate unchanged on a rounded basis at +5.0% (qoq ar). [November 17 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2021 is 8.2 percent on November 17, down from 8.7 percent on November 16. [November 17 estimate]

by Calculated Risk on 11/19/2021 08:14:00 AM

This data is as of November 16th.

From Andy Walden at Black Knight: Mid-November Forbearance Exits Low and Slow

In what has become a familiar pattern, the number of active forbearance plans held relatively steady entering the third week of November.

According to our McDash Flash daily forbearance tracking dataset, the number of active forbearance plans increased by 2,000 (0.2%) this week. Modest declines among FHA/VA loans (-2,000) and GSE (-1,000) were offset by a 5,000 rise in plan volumes among portfolio and PLS mortgages as plan activity hit its lowest level since mid-August. Start volumes edged higher, driven by an increase in new plans among FHA/VA loans, which hit their highest level since early October.

As of November 16, 1.01 million mortgage holders remain in COVID-19 related forbearance plans, representing 1.9% of all active mortgages, including 1.2% of GSE, 3.1% of FHA/VA and 2.4% of portfolio held and privately securitized loans.

Click on graph for larger image.

Overall, the number of forbearance plans is still down by 230,000 (-18%) from the same time last month, with the potential for additional improvements as we enter December. More than 200,000 plans remain with October/November reviews for extension/removal and nearly 300,000 more are slated for review in December – half of which are expected to be reaching their final expirations.
emphasis added

by Calculated Risk on 11/18/2021 08:18:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 446,250,342, as of a week ago 434,486,889, or 1.47 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	58.9%	58.5%	≥70.0%1
Fully Vaccinated (millions)	195.7	194.4	≥2321
New Cases per Day3🚩	88,482	76,223	≤5,0002
Hospitalized3🚩	40,579	40,221	≤3,0002
Deaths per Day3	1,032	1,057	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 5 states that have achieved 70% of total population fully vaccinated: Vermont at 72.2%, Rhode Island, Connecticut, Maine, and Massachusetts at 70.6% .

KUDOS also to the residents of the 16 states and D.C. that have achieved 60% of total population fully vaccinated: New York at 67.8%, New Jersey, Maryland, Washington, Virginia, New Hampshire, Oregon, District of Columbia, New Mexico, Colorado, California, Minnesota, Pennsylvania,  Illinois, Delaware, Florida, and Hawaii at 60.5%.

The following 19 states have between 50% and 59.9% fully vaccinated: Wisconsin at 59.1%, Nebraska, Iowa, Utah, Michigan, Texas, Kansas, Arizona, Nevada, South Dakota, North Carolina, Alaska, Ohio, Kentucky, Montana, Oklahoma, South Carolina, Missouri and Indiana at 50.3%.

Next up (total population, fully vaccinated according to CDC) are Tennessee at 49.1%, Georgia at 49.1%, Arkansas at 48.8%, Louisiana at 48.4% and North Dakota at 48.3%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

by Calculated Risk on 11/18/2021 04:50:00 PM

Notes: The expansion to the Panama Canal was completed in 2016 (As I noted a few years ago), and some of the traffic that used the ports of Los Angeles and Long Beach is probably going through the canal. This might be impacting TEUs on the West Coast.

Also, incoming port traffic is backed up significantly in the LA area with numerous ships at anchor waiting to unload.

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was down 0.5% in October compared to the rolling 12 months ending in September.   Outbound traffic was down 1.4% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year.

2021 started off incredibly strong for imports - and with the backlog of ships, will probably continue strong into 2022 (no break again in February or March).

Imports were down 6% YoY in October (recovered last year following the early months of the pandemic), and exports were down 15% YoY.

by Calculated Risk on 11/18/2021 03:17:00 PM

From housing economist Tom Lawler:

Investor Share of Home Purchases Surges

Recent reports from Redfin and Corelogic indicate that the investor share of home purchases has surged this year.

Here is a chart from a Redfin report released on November 15th.

Click on graph for larger image.

Redfin identified an “investor” as follows:

We define an investor as any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes. We also define an investor as any buyer whose ownership code on a purchasing deed includes at least one of the following keywords: association, corporate trustee, company, joint venture, corporate trust. This data may include purchases made through family trusts for personal use.

Using this methodology, Redfin would probably miss small, “mom and pop” investors.

Redfin also noted that the share of investor purchases that were single-family homes hit a record high last quarter, and that lower-priced homes made up a significantly lower share of investor purchases than in previous quarters.

In a report released October 6th, Corelogic issued a report showing that the investor share of home purchases surged to a record high in the second quarter of the year (their data only go through June).

Here are the data from a chart in their report.

CoreLogic’s share of investor purchases is larger than Redfin’s, apparently because their methodology identifies smaller investors while Redfin’s does not.

CoreLogic also noted that there has been an especially large increase in “large” investor purchases, and that investors purchases of higher priced homes had increased significantly.

These data seem to confirm anecdotal reports of huge investments in private equity and other institutional investors in the single-family rental market this year.

What is interesting, and perhaps a bit disturbing, about these data is that the surge in investor buying happened (1) AFTER home prices had surged; and (2) at a time when the inventory of homes for sale was exceptionally low.

Second Home Buying Off from Post-Pandemic High But Still Way Above Pre-Pandemic Levels

In a recently-released report, Redfin using analysis of mortgage-rate lock data from real estate analytics firm Optimal Blue, said that “(d)emand for second homes was up 70% from pre-pandemic levels in October, outpacing August’s 48% gain but below January’s record 91% growth.”

Here is a chart from that report.

Note that this “demand index” is based on mortgage rate-lock data. Since the share of second home purchases that are cash-financed is typically fairly high, the index may not fully reflect trends in second home purchases.

I’ll have more on these topics later. However these data suggest that the astonishingly strong rebound in the housing market following the onset of the pandemic is not solely due to, and perhaps not much related to, “demographics.”

American Home 4 Rent (ticker AMH) Strategic Strategy: Grow, Grow, Grow (from a November Investor Presentation)

American Homes 4 Rent, one of the largest publicly-traded companies in the single-family rental market that has embarked on an aggressive “build-to-rent” program, included the following data in its November “Investor Highlights” report.

	2018	2019	2020	2021(3)
Total	2,351	1,379	2,592	4,650
National Builders	408	148	381	350
Traditional Acquisitions	1,552	286	564	2,250
AMH Development	391	945	1,647	2,050

AMH Land Development Pipeline (Lots Owned or Controlled)
2016	217
2017	2,046
2018	4,203
2019	6,377
2020	8,954
2021(e)	16,000

by Calculated Risk on 11/18/2021 12:08:00 PM

Today, in the Real Estate Newsletter: Housing Predictions: Guesses and the Data

Excerpt:

Currently my view is house prices seem too high, but lending has been reasonably solid, and there are some fundamental reasons for the high house prices (See: The Housing Conundrum)

If inventory stays low, then house prices will continue to rise fairly quickly (although it appears house price growth is slowing). Double digit house price increases aren’t sustainable, so the question I’m asking now is: What will cause inventories to increase?

I’m considering three possibilities: 1) mortgage rates rise fairly quickly, slowing demand, 2) economic problems in China spillover into the US, and 3) unregulated areas of finance cause economic problems.
...
This is something I mentioned on my blog in 2013:

Each new generation of Wall Street wizards figures out a new way to turn lead into gold, and to become wealthy while damaging the financial system.   Some of these wizards are probably perfecting their financial alchemy right now.

...
The most likely cause of higher home inventories will be higher mortgage rates, but unregulated areas of finance are always a concern and something I’ll be watching.

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by Calculated Risk on 11/18/2021 10:54:00 AM

Note: Since occupancy declined sharply at the onset of the pandemic, CoStar is comparing to 2019.

From CoStar: STR: US Weekly Hotel Rate Maintains Growth Over 2019

U.S. hotel performance increased slightly from the previous week, according to STR‘s latest data through November 13.

November 7-13, 2021 (percentage change from comparable week in 2019*):

• Occupancy: 61.6% (-3.9%)
• Average daily rate (ADR): $129.98 (+2.6%)
• Revenue per available room (RevPAR): $80.02 (-1.4%)

*Due to the steep, pandemic-driven performance declines of 2020, STR is measuring recovery against comparable time periods from 2019.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The occupancy rate will now decline seasonally into the new year.

by Calculated Risk on 11/18/2021 08:34:00 AM

The DOL reported:

In the week ending November 13, the advance figure for seasonally adjusted initial claims was 268,000, a decrease of 1,000 from the previous week's revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256,000. The previous week's level was revised up by 2,000 from 267,000 to 269,000. The 4-week moving average was 272,750, a decrease of 5,750 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week's average was revised up by 500 from 278,000 to 278,500.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 272,750.

The previous week was revised up.

Regular state continued claims decreased to 2,080,000 (SA) from 2,209,000 (SA) the previous week.

Weekly claims were above consensus forecast.

by Calculated Risk on 11/17/2021 08:21:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 260 thousand initial claims, down from 267 thousand last week.

• Also at 8:30 AM, the Philly Fed manufacturing survey for November. The consensus is for a reading of 24.0, up from 23.8.

• At 11:00 AM, the Kansas City Fed manufacturing survey for November.

by Calculated Risk on 11/17/2021 05:39:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 444,789,186, as of a week ago 434,486,889, or 1.47 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	58.9%	58.5%	≥70.0%1
Fully Vaccinated (millions)	195.6	194.4	≥2321
New Cases per Day3🚩	85,944	74,751	≤5,0002
Hospitalized3🚩	40,408	40,277	≤3,0002
Deaths per Day3	1,028	1,091	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 5 states that have achieved 70% of total population fully vaccinated: Vermont at 72.2%, Rhode Island, Connecticut, Maine, and Massachusetts at 70.5% .

KUDOS also to the residents of the 16 states and D.C. that have achieved 60% of total population fully vaccinated: New York at 67.8%, , New Jersey, Maryland, Washington, Virginia, New Hampshire, Oregon, District of Columbia, New Mexico, Colorado, California, Minnesota, Pennsylvania,  Illinois, Delaware, Florida, and Hawaii at 60.5%.

The following 19 states have between 50% and 59.9% fully vaccinated: Wisconsin at 59.0%, Nebraska, Iowa, Utah, Michigan, Texas, Kansas, Arizona, Nevada, South Dakota, North Carolina, Alaska, Ohio, Kentucky, Montana, Oklahoma, South Carolina, Missouri and Indiana at 50.3%.

Next up (total population, fully vaccinated according to CDC) are Tennessee at 49.1%, Georgia at 49.0%, Arkansas at 48.8%, Louisiana at 48.4% and North Dakota at 48.3%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

by Calculated Risk on 11/17/2021 11:20:00 AM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Demand for design services moderates but remains strong

Architecture firms reported increasing demand for design services in October, according to a new report today from The American Institute of Architects (AIA).

The ABI score for October was 54.3. While this score is down slightly from September’s score of 56.6, it still indicates very strong business conditions overall (any score above 50 indicates an increase in billings from the prior month). During October, scoring for both the new project inquiries and design contracts expanded, posting scores of 62.9 and 58.0 respectively.

“Unlike the economy-wide payroll figures, architecture services employment has surpassed its pre-pandemic high,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Staffing continues to be a growing concern at architecture firms and may serve to limit their ability to take on new projects.”
...
• Regional averages: Midwest (61.9); South (58.2); West (53.4); Northeast (48.6)

• Sector index breakdown: mixed practice (58.7); commercial/industrial (57.4); multi-family residential (55.8); institutional (51.4)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 54.3 in October, down from 56.6 in September. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index was below 50 for eleven consecutive months, but has been solidly positive for the last nine months.  

The eleven months of decline represented a significant decrease in design services, and suggests a decline in CRE investment through most of 2021 (This index usually leads CRE investment by 9 to 12 months), however this suggests a pickup in CRE investment in 2022.