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There ’ s No Place Like Home The Global Housing Shortage |
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Real Estate Armageddon Economy , Interest Rates , and Inflation |
The U . S . continues to face an overwhelming housing shortage that has resulted from decades of underbuilding .
The recent era of “ free money ” ended abruptly following a blistering pace of Fed rate hikes . The federal funds rate is now at its highest level since 2007 .
The National Apartment Association ( NAA ) and the National Multifamily Housing Council ( NMHC ) estimate that the U . S . needs to build 4.3 million more apartments by 2035 to meet the demand for rental housing . Other research suggests a cumulative housing shortage of 5.5 million units between 2001-2020 . |
4.3 MILLION
more apartments needed by 2035 to meet the demand
|
5.3 %
0.5 %
|
The SOFR benchmark rate has climbed from 0.5 % in March 2022 to 5.3 % as of late March , while the 10-year treasury is hovering around 4.3 %. Despite pressures to reduce rates , for now , the Fed is holding steady . |
4
AI : How Intelligent Is It ?
AI is advancing at lightning speed .
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Alexa , Where ’ s My Stuff ? Supply Chain , Logistics , and U . S . Onshoring
A decade ago , about 60-65 % of all containerized goods were flowing through the West Coast ports of L . A . and Long Beach with 30 to 35 % coming from the East Coast and Gulf Coast ports . Now that flow of goods has flipped the other way .
Where we are at the end of 2023 with AI 3.0 is integrating new and alternative forms of data and new forecasting techniques . However , in this AI 3.0 , we ’ re still in the process of merging massive databases into one clean data source that includes alternative data sets .
5
Employers are struggling to find workers and keep up with the changing labor market .
|
The monthly Job Openings and Labor Turnover Survey
( JOLTS ) report consistently shows more job openings than there are available workers . As of Nov . 30 , the unemployment rate remained low at 3.7 % and job
|
8.8
MILLION
|
openings stood at 8.8 million . |
job openings |
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Where Have All The Workers Gone ? The Labor Shortage
Population Shock Migration ’ s Impact on Real Estate
The U-Haul Growth Index provides insights into where people are moving .
The states that top the list are Texas , Florida , and South Carolina , with cities attracting the most inflows including the likes of Ocala , FL , Surprise , AZ , and Madison , WI .
Cities benefiting from that growth have three key ingredients :
1 AFFORDABILITY 2 GOOD AIRPORTS 3 HOUSING
The East Coast and Gulf Coast ports can move containerized goods through their ports inland and reach 70 % of the country ’ s population at twice the speed of West Coast ports at half the cost .
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The Price is … Wrong ? Do Markets Need a Pricing Reset for Values to Normalize ?
Although there is some acceptance that prices have dropped , there is less willingness to take write-downs in values . The main bellwether for asset repricing is interest rates and capital costs . The 10-year has increased 200 + basis points from 1.6 % in January 2022 to 4.3 % as of late March , while the 1-month SOFR rate has jumped 500 + basis points to hover above 5 %.
10
CONTAINER GOODS 70 %
500 + basis points
London Bridge is Falling Down Finding “ a Third Way ” to Advance America ’ s Infrastructure
The U . S . has been getting sub-par grades for the country ’ s infrastructure for the past 20 years .
The tremendous need for new and improved infrastructure is now being met with “ once-in-a-generation legislation ” with the $ 1.2 trillion Bipartisan Infrastructure Law and $ 783 billion within the Inflation Reduction Act .
$ 1.2 $ 783
TRILLION
Bipartisan Infastructure Law
BILLION
Inflation Reduction Act
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