Weitz Commercial Real Estate, Legal & Economics Blog
My Career and My passion: Economic, Financial & Legal insights. These are my opinions only and not meant to be relied upon. Respectful disagreement encouraged.
Friday, March 7, 2025
FHA delinquencies rise dramatically and inventory increasing across the nation
Thursday, March 6, 2025
NWMLS February Market Stats
Below are the recent stats of the NWMLS for February 2025 ...
Active Listings
- The number of homes for sale increased 39.4% year-over-year throughout the NWMLS service area. There were 10,448 active listings on the market at the end of February 2025, with 24 out of 26 counties seeing a double-digit increase compared to February 2024. When compared to the previous month, active inventory increased by 207 listings (+2%), up from 10,241 in January 2025.
- The six counties with the highest increases in active inventory were Kittitas (+76.7%), Snohomish (+65.3%), Grant (+54.2%), King (+52%), Whatcom (+48.2%) and Chelan (+42.7%).
Closed Sales
- There were 4,268 closed sales of residential homes and condominium units in February 2025, an increase of 1.9% when compared to February 2024 (4,189). When compared to the previous month, the number of closed sales increased by 14.5%, up from 3,727 sales in January 2025.
- The total dollar value of closed sales in February 2025 for residential homes was $2,856,599,410 and $463,877,754 for condominiums ($3,320,477,164 in total), an increase of 5% when compared to February 2024.
Median Sales Price
- Overall, the median price for residential homes and condominiums sold in February 2025 was $630,000, an increase of 3.6% when compared to February 2024 ($608,111).
- The three counties with the highest median sale prices were San Juan ($880,000), King ($820,000) and Snohomish ($734,975), and the three counties with the lowest median sale prices were Columbia ($224,000), Pacific $292,500) and Okanogan ($322,500).
New Construction
- NWMLS brokers reported 745 closed sales of new construction units in February 2025. This was a year-over-year decrease of 12.1% when compared to February 2024 (848 units).
- The median sales price for new construction units sold in February 2025 was $773,420, an increase of 5.9% from the February 2024 price of $730,000.
Thursday, January 30, 2025
FHA Delinquency Report
Below numbers from FHA.... this is direct cut and paste from the report I read. As I've been saying for months.... buckle up.
FHA Report on Delinquencies
The FHA’s latest report showed that 30-day mortgage delinquencies rose to 6.0% in November 2024, which is up 2.1% from the beginning of 2022.
Serious delinquencies, or those 90+ days delinquent, have also begun to rise. Within the report consumers shared the reason for not being able to make mortgage payments.
Consumers saying that they cannot make a payment due to being unemployed has risen significantly. The share reporting this back in Q4 2020 was 1.8%, which then rose to 7.7% in Q4 2023, and more recently rose to 12.1% in Q4 2024! That is a huge increase, potentially showing that the labor market may not be as strong as the published figures are showing.
Additionally, those not able to pay because of excessive obligations, or too much debt, has risen from 2.71% in Q4 2020 to 20.1% in Q4 2024.
Another sign that consumers are stretched and overloaded with debt.
Thursday, January 23, 2025
Wells Fargo CFO take on CRE
A recent article in the Puget Sound Business Journal highlighted the CFO of Wells Fargo.
Since the article is behind a pay wall, I will outline the highlights/ lowlights and give my take as usual.
CFO Mike Santomassimo had the following takes on the state of the CRE market:
"Commercial Real Estate Office fundamentals have not changed and remain weak".
"We expect CRE office losses to be "lumpy" as we continue to actively work with our clients. We are 18 months into seeing the losses materialize...we have 'quarters' to go.
Weitz - I'm laughing as I expected this article to be so much more (more terrific journalism these days), but since we've gone this far, I won't waste the quotes as as the premise is still material for our purposes.
When Bank CFOs are telling listeners on a earnings call where they typically will paint as rosy picture as possible to maintain or boost stock prices, its worth listening. Obviously, all CRE is local and some markets will fair better than others, but this general opinion matches my thoughts in that both owners and lenders and 'kicking the can' and praying for miracle to save them. At some point, they will have to take losses barring a dramatic shift. That could be very, very....very.....ugly.
As our new President takes office, I commend his pro-business mentality, but I don't see him have the power to turn the ship around for better or worse.
For more information on Snohomish Commercial Real Estate, follow this blog or shoot me an email.
Have a great weekend,
Scott Weitz
www.weitzcommercial.com
t: 206.306.4034
Monday, January 6, 2025
NWMLS Release - 2024 December Stats
NWMLS December Release
December 2024 Key Takeaways
Active Listings
- The number of homes for sale increased 25%
year-over-year throughout the NWMLS coverage area, with 21 out of 26
counties seeing a double-digit increase compared
to December 2023.
- The five counties with the highest increases in
active inventory for sale were Snohomish (+46.1%), Douglas (+43.3%),
Cowlitz (40.8%), Grant (+39.9%) and Skagit (+38.2%).
Closed Sales
- There were 4,812 closed sales of residential homes
and condominium units, an increase of 19.8% when compared
to December 2023 (4,018).
- The total dollar value of closed sales in December
2024 for residential homes was $3,284,574,394 and $409,740,278 for
condominiums ($3,694,314,671 in total), an increase of 24.8% when
compared to December 2023.
Median Sales
Price
- The median price for residential homes and
condominiums increased by 4.3% year-over-year from
$597,975 in December 2023 to $623,500 in December 2024. Prices decreased
month-over-month by 3.33% when compared to November 2024
($645,000).
- The three counties with the highest median sale
prices were San Juan ($849,500), King ($800,000), and Snohomish
($744,995), and the three counties with the lowest median sale prices were
Ferry ($125,000), Adams ($292,300) and Pacific ($320,000).
CNBC: "Worrying supply trend" in housing market
CNBC recently posted an article on a "worrying supply trend" in the housing market. We will explore in more detailed below.
Key takeaways
The Housing Market is heading into 2025 with a worrying
supply trend:
Active Listings in November were 12.1% higher than they were
in November 2023 and hit the highest level since 2020.
More than half of those homes stayed on the market for at
least 60 days without going under contract.
The latest report from S&P Case Shiller showed prices up
nationally 3.6% compared to October 2023.
Weitz Take: For those that follow this blog, this is not a surprise
whatsoever. We expect to see more distressed sales, increasing inventory and
eventually more price drops. This will be especially interesting when the new
ADU laws (I'll be posting an overview in the coming days/ week) are put in place in cities around the State (Washington State).
As I’ve mentioned in previous blogs, I believe we have seen
the highest of pricing in general and expect more pressure on prices as we move
deeper into 2025. The only thing that would change that would be a fairly steep
reduction in interest rates (or inventory goes down dramatically again) but for now, that doesn’t seem to be in the works.
For more information on Snohomish Commercial Real Estate, consider contacting a Snohomish Real Estate Investment Broker.
My Contact
Scott Weitz
Scott@WeitzCommercial.com
T: 206.306.4034.
www.weitzcommercial.com
Monday, December 2, 2024
Want a State / Federal funding commercial loan....here's your chance....
Washington’s Department of Commerce will issue $26M to businesses
across the State over the next 7 years, targeting those owned by socially and economically
disadvantaged individuals. The funding is available via the State Small
Business Credit Initiative (‘SSBCI’).
More information can be found on the Puget Sound Business Journal or on the US Department of Treasury site.
Heritage Bank was selected to operate the program in Washington.
The program offers a standard companion loan under market interest rates as
well as a loan for up to 9% of the purchase cost with a 1% interest rate forgivable
after 10 years.
To qualify, Heritage requires businesses to have fewer than
750 employees, reside in WA and have a loan size up to $20 Million.
Weitz: This one is for all my local business owner followers. I'm not going to endorse taking out a loan given my clear prospects for the general market and the current rate environment, but I really see this as a great tool if you want to develop already owned land and/or need that extra little push to buy your commercial space if you can't afford the typical commercial down payment. If interested, you can reach out to Heritage Bank directly.
For more on Snohomish County Commercial Real Estate, reach out to Snohomish County Commercial Broker or email me at Scott@WeitzCommercial.com
Regards,
Scott Weitz
Weitz Commercial
105 Union St
Snohomish, WA
Monday, November 11, 2024
CNBC - What a Trump Presidency could mean for the housing market
CNBC article on what a Trump presidency could affect Housing Affordability.
CNBC Article on Trump could do for Real Estate market
The Highlights:
“We’re going to
open up the tracks of federal land for housing construction said in a Aug 15th
news conference. We desperately need housing for people who can’t afford what’s
going on”.
As of mid -2023,
there has been a shortage of 4 million homes in the US according to the National
Association of Realtors (NAR).
There’s been a
small increase in new homes built this year, but its still not enough to meet the
high demand for housing…experts say.
Here’s how Trumps
policies could affect the housing market:
1) Deregulation
to increase affordability.
At the end of his
first Presidency, Trump signed an executive order “Eliminating regulator
barriers to affordable housing: Federal, State, Local, and Tribal opportunities”.
[Weitz – the author
references this, but then provides no details on what this entails. I intend to
look up this order and provide a post on it in the coming days..... the report can be found here: HUD Report].
We will eliminate
regulations that drive up housing costs with the goal of cutting the cost of a
new home in half, Trump said in speech at the Economic Club of New York on Sept
5th.
About 24% of the
cost of the single-family home and 41% of the cost of a multifamily homes are
directly attributable to regulator costs at local, state and federal level.
2) Impacts on construction
workforce
Trump blames
rising home prices on a surge of illegal immigration.
“Proposals like
mass deportation and tighter border control could impact housing affordability”.
“It's been
difficult to recruit native born workers in the construction industry”.
Weitz – this is a
shame in my opinion. I’d highly recommend kids getting into the trade industry…. the money can be great especially if you learn the industry and start your own
company.
3) Tariffs could
hike building costs
Trump proposed a
10% to 20% tariff on all imports…. [which] could push housing costs higher as
well as materials for home renovations.
Trump mentioned
plans to release federal lands for housing, but federal lands tend to concentrate
in rural areas. That does do anything for these densely populated blue areas that
really need the most help, Daryl Fairweather, Chief economist at Redfin says.
Weitz – Mr.
Fairweather, can the Federal Government dictate the permitting process of city/
local governments? No. These cities are digging their own ‘prospective’ graves.
If they make it too burdensome to build in their areas, why would a private developer
risk their time/ capital in those areas? These cities need to create their own
streamline processing to make it worthwhile for such builds.
WEITZ TAKE
I love the
idea of a streamlined version of permitting for every jurisdiction. It’s become
so expensive and burdensome in many areas that developers focus the higher
value options to maximize their time/ investment return. If the government
worked to allow more multi-family options easier, I could see a major shift in where
resources and capital are allocated to more projects like that.
That said, as
I’ve said many times, we are at a bit of crossroad - I don’t see a magic bullet
to ‘cure affordability’, but not lower housing prices in general which will
lead to pain for homeowners, developers, investors, and consequently banks, insurance
companies, etc. It’s a bit of damned if you do, damned if you don’t situation.
For more information on Snohomish County Commercial Real Estate, feel free to email me at Scott@Weitzcommercial.com or even text me at 206.306.4034.
Scott Weitz
Weitz Commercial
Tuesday, November 5, 2024
Harvard Business Review - U.S. Commercial Real Estate Is Headed Toward a Crisis
Interesting article from the Havard Business Review
I’ll include some
excerpts from the article as it’s rather lengthy. The original link can be
found here.
Harvard Business Review CRE Article
“Over
the next two years, more $1 Trillion in CRE loans will come due”.
The
damage could metastasize into a full blown financial cris if small and midsize
banks fail simultaneously.
As
the Federal Reserve keeps interest rates elevated and CRE risk worsen with
falling property values, businesses will continue to experience restrictive financial
conditions. Executives can nonetheless take steps to potentially mitigate the
fallout – including examining banking relationships, extending debt maturities,
and securing adequate working capital.
HOW
DID WE GET HERE?
The
risks of US Commercial banks being overexposed to CRE have intensive as the
global pandemic upended long held economic assumptions: perpetually subdued
inflation, low interest rates and in office work.
Exacerbating
the situation are CRE management costs – including insurance premiums, labor,
and energy prices.
THERE’S
TROUBLE BREWING
Hundreds
of banks hold an outsized amount of CRE loans on their books relative to
capital. Small banks and midsize banks have CRE loan values far exceeding risk
based capital levels at 158% and 228%, respectively. According to the Conference Board calculations using FDIC Institutional Financial Reports data.
This is compared to 142% for large banks and 56% for the largest banks.
[I’ve
cut and pasted the following provisions as the depth of data is frankly more
than I want to try and summarize]
As
CRE property values fall and the debt service on associated loans accumulates,
borrowers are becoming delinquent or defaulting. The portion of these loans
that are nonperforming more than doubled — from 0.54% to 1.25% — over the six
quarters from the Q3 2022 cycle low, according to data compiled from
BankRegData.com and the FDIC. Compare this with the just 0.87% rate six
quarters after the cycle low, in the second quarter of 2006, which preceded the
2008–09 Great Recession. However, only the largest banks are reporting increases
in nonperforming loans and charge-offs (i.e., losses). Reported CRE loan
delinquencies exceeding 90 days have surged from under 1% in mid-2022 to 3% in
early 2024 for the largest banks, while delinquency reports for all other banks
remain near 1%, according to The Conference Board calculations using FDIC
Institutional Financial Reports data. (By comparison, delinquency rates reached
5% in 2010 in the wake of the 2008–09 Great Recession.)
Meanwhile, CRE loan losses for the largest banks spiked to 0.6% in early 2024, while other banks are reporting virtually zero losses. By comparison, such losses topped 1.4% in 2010.
The reason for the different behaviors is that the biggest banks face greater regulatory scrutiny and are required to maintain larger capital cushions, prompting swifter realization and write-offs of souring loans. Smaller and midsize financial institutions — many of them regional and community banks — are evidently not marking down CRE loan losses but may be managing stresses differently.
These institutions are likely engaging in “extend and pretend” behaviors that lengthen loan maturities with the hope that property valuations will recover in the future. They also may be seeking to widen capital buffers through M&As with similarly sized or larger financial institutions.
WHAT
COULD TRIGGER A CRE CRISIS
Multiple troubled banks simultaneously raising equity capital would prove challenging and potentially destabilizing for the U.S. banking system. Any hint of doing so could cause massive depositor flight (i.e., bank runs), creating a redux of the March 2023 panic across global financial markets when only three U.S. banks came under pressure. Digital banking has accelerated the speed at which these runs might occur.
The clock is ticking for banks delaying recognition of CRE loan losses, and the timing of the financial market fallout — potentially starting later this year — could be during a vulnerable period for the economy. The Conference Board expects that U.S. real GDP growth may be weaker, the unemployment rate slightly higher, and interest rates still near multi-decade peaks, when a cascade of banks begin reporting losses.
Other CRE crisis triggers could include a U.S. recession; interest rates that stay higher longer than expected; and/or financial market upheaval from a fiscal crisis (e.g., the looming January 2025 debt ceiling) prompting investors to demand greater credit risk compensation in the form of higher yields.
THE POTENTIAL FALLOUT
As these loan losses begin to mount, an increasing number of banks — mostly regional and community banks — risk having insufficient capital cushions. A 10% loss on CRE loans would leave more than 100 mostly small and midsize banks, representing nearly $700 billion in assets, undercapitalized. A 20% loss would render over 900 banks undercapitalized, including some larger banks.
Pandemic
accelerated troubles in CRE markets may take more than a decade to resolve. The
sharp rise in interest rates has caused commercial subtypes to lose value. Commercial
properties prices have already fallen 21% from their mid-2022 peak according to
Green Street.
HARDENING
COMPANIES FOR A CRE STORM
Corporations
should prepare for an extended period of tight lending, elevated borrowing
costs, and possible market liquidity shortages. Prudent corporate managers
should extend their debt maturities and add a cash liquidity buffer – now.
Corporate
managers should know of any provisions allowing their financial institutions to
transfer depositors’ assets to third parties for management. In such cases,
executives should be aware of the safeguards their banks have I place should
third party asset managers come under duress.
It's so refreshing to find an article like this.... I can't confirm their data is correct, but the context is right on. It's hard to say how long the 'can will be kicked down the road', but I struggle to see a cure for this without significant bank losses and upending of many parts of the commercial market.
For more information on Snohomish County Commercial Real Estate, continue to follow this blog and/or reach out to me anytime.
Weitz Commercial
Scott@WeitzCommercial.com
T: 206.306.4034 (feel free to text me)
108 Union Ave
Snohomish, WA 98290
Monday, October 28, 2024
National Inventory Level on the rise
Happy Monday All,
Per usual, I start my day with a search of all my go-to news sources for anything interesting to write about as I start the week. Apparently, the NFL has taken over the American news landscape as most of the news related around the Cowboys stinking and the Bears giving up a last second TD. But alas, we carry on and find our own news.
I have tons of internal sources for tracking real estate locally - I can tell you exact data at time as a member of the NWMLS, but rarely do we find real data on some basic information on a national level.
I found a great website put up by the St. Louis Fed on economic data...hard to get much more credible than that. What I found was quite interesting. If you have read this blog in the past year, you know INVENTORY is the main factor I think will determine the direction of the market. I know it's rising in my area (Washingotn State), but really wasn't sure nationally...well, we found it and it's not pretty.
Here's a general recap of the last few years...There was a low of 354,016 in February 2022 which makes sense given many areas were still on COVID lock downs, but what's happened in the last couple years is interesting....
A year later in February 2023, we jumped to 579,264 listings and then a subtle increase to 554,716 a year later in February 2024. All of that seems fairly easy to rationalize .....
.......But wait.... there's more..... From Feb to September of this year, we went from 664,716 to 940,980 active listings.... that's 41% increase in 7 months! ...and approximately ZERO news outlets (that I'm aware of and I follow everyone that I think is remotely competent) are talking about it. Frankly, the state of journalism in this country is a sad affair (a conversation for another day), but more importantly, this is simply more fuel to the fire that we will start to see a considerable price compression in the coming months/ years.
So all the "expert" brokers out there banging the drum that you need to buy now, as prices will "skyrocket" when rates come down (I see you Barbara Cocoran), ask them what happens if inventory starts to rise. I'd bet the answer is silence.
Anyways, it's just another piece of the puzzle as we follow what I believe will be a unique period in America Real Estate. Text me if you need Snohomish Commercial Real Estate help at 206.306.4034 or email at Scott@WeitzCommercial.com.
Have a great week,
Scott Weitz
Thursday, October 17, 2024
Washington State market update and general thoughts on the real estate markets....
It's been a while since I posted anything. I've done some traveling
overseas and spent some time in the hospital (all is well now) ...anyways, it's
been a hectic month to say the least, but we are back and headed full steam
into election season 2024 and the Harris/ Trump election appears to be one for
the ages.
I've been looking for the last week or so and can't find
hardly any articles or stats on inventory. My sense on a local level and in
dealing with a lot of real estate brokers is that inventory seems to be
increasing. If you have read this blog at all, you know that inventory is the
main thing I'm looking at in determining the direction of the market. Frankly,
it's a bit odd. I have about 10 sources I generally go to for stats/ data and
none of them have any Real Estate news of substance. It's almost as if it's being
shielded during the election for some reason. Nevertheless, since I have access
to the Washington MLS, I thought I would pull their most recent published
figures and report on those....so here we go...my feedback will follow. I have
simply copied and pasted from their website....
September 2024 NWMLS Key Takeaways
Active
and New Listings
- The
number of homes for sale increased throughout the NWMLS coverage area,
with 22 out of 26 counties seeing a double-digit year-over-year
increase.
- There
was a 31.4% increase in the total number of properties listed
for sale, with 15,748 active listings on the market at the end of
September 2024, compared to 11,983 at the end of September 2023.
- NWMLS
brokers added 8,508 new listings to the database in September 2024, an increase of 12.7% compared to September 2023 (7,551).
- The five
counties with highest increases in active inventory for sale were Douglas
(+67.8%), Pacific (+42.2%), Clallam (+41.6%), Grant (+40.5%) and San Juan
(+39.8%).
Closed
Sales
- The
number of closed sales increased by 1.9% year-over-year (5,828 in
September 2024) compared to 5,722 in September 2023.
- 11 out
of 26 counties saw an increase in the number of closed sales
year-over-year, while 15 saw a decrease.
Median
Sale Price
- Overall,
the median price for residential homes and condominiums sold in September
2024 was $635,000, an increase of 5.8% when
compared to September 2023 ($600,000).
- The
three counties with the highest median sale prices were King ($859,995),
San Juan ($829,000), and Snohomish ($760,000), and the three counties with
the lowest median sale prices were Ferry ($209,500), Adams ($270,000) and
Columbia ($325,000).
Consumer
and Broker Activity
NWMLS
also provided insights into consumer activities during the month of September
2024:
- The
total number of property showings scheduled through
NWMLS-provided software remained steady, with 119,927 showings in August
2024 and 119,900 in September 2024.
- In
September 2024, there were 16,668 listed properties that were eligible for
the Down Payment Resource (DPR) program offered by NWMLS.
Weitz take: in recent posts, I've hinted that we are at or near a market top, I will double down on that take, and I believe we start to see real softening in the coming months as sellers become more desperate to sell and move on with some of their equity. 22 of 26 have double digit increases in inventory; a 34% increase in properties for sale, etc). Whether it be retirees, or relocations, or simply a need for cash, it's bound to happen as homes are starting to sit on the market longer. The Fed is waffling on rates, but frankly, it won't matter. The difference between a 6% rate and 7% at these prices is negligible for the average American as the payment is simply HIGH regardless. Buckle up.
For more
information on Snohomish Commercial Real Estate Investing, you can reach me at Scott@WeitzCommercial.com
or text me at 206.306.4034.
Tuesday, September 24, 2024
Willy Walker: "Crisis Averted in commercial real estate"
Tuesday, September 10, 2024
CNBC interview with Rick Caruso on CRE prospects
OVERVIEW
See interview with Rick Caruso, founder of ‘Caruso’. He’s a
major player in the Los Angeles area Commercial Real Estate market who lost a bid
for Mayor of Los Angeles in the recent years.
Caruso takes:
“I don’t think we’ve seen the bottom [of office sector] has
hit…it’s not about going back to work. Its about where you want to go back to
work”.
Consumer taking on more debt than ever…more ‘pay later’, yet
he is confident in the future with a “little turbulence”.
What's next for him? He is looking to build more resorts and adding more residential into existing retail portfolios. Check out his current portfolio here.
Weitz Take:
It's hard for me to reconcile the idea that 1) the office bottom is not in; 2) we face turbulence ahead, along with 3) confidence in the future. I suppose if none of those are on the same timeline, but you simply can't have all at the same time. If you are telling me the 'bottom is not in' then the banks funding those loans will eventually have to take loses, are probably hesitant to lend now or in the near future if they see huge potential loses ahead. Reading between the lines, I think Caruso feels like he has a great high-end niche (which seems to be true) which will fare well in any economy (perhaps a bit presumptive) and yet thinks the markets as a whole will suffer in the coming years.
Friday, August 23, 2024
3Fourteen's Warren Pies take on the market
I'll be honest. I keep hearing from people that a rate cut will "produce a soft landing" and that real estate prices will start to increase rapidly again.
NOPE.
Inventory is starting to rise and homes aren't selling. Will rate cuts help? Sure. Will they save this market? Zero chance unless inventory goes back down. We sure seem to have short memories as a society in that rates were hanging around 2-4% for 10-20 years YEARS, and yet we think that a small cut to say 6% is going to save the market? No chance. Simply put, nearly everyone that can afford to buy a home has bought one. Distressed markets continue to bubble and while I am seemingly a one man island right now, I don't see a big upside for real estate at all. In fact, I think the 'soft landing' is based purely on hope......... We shall see.
Thursday, August 22, 2024
4 month sales losing stretch broken according to CNBC
The Headline: "Existing home sales broke a 4 month losing stretch rising 1.3%/ month".
That said, the ONLY THING THAT MATTERS HERE IS SUPPLY IS RISING.
1.33 M homes for sale at end of month....up 18% Year over year.
Weitz Take: What's it all mean? I suppose the 'jury is still out', but if you read this blog routinely, you know SUPPLY IS EVERYTHING in my opinion.
With high supply comes more likely price drops if properties are not sold. I will reaffirm my previous statement that we are at or very near the top of this market cycle and it could get very ugly.
The next 3-6 months will be very interesting. If rates aren't cut, I think we start to see major cracks in the market especially if inventory continues to rise.
Enjoy the end of summer as we start what will surely be an interesting Fall on many levels not the least of which is the most emotional Presidential election I think our generation has ever seen.
Tuesday, August 20, 2024
Government preliminary bench mark jobs off as much as 1 MILLION?!
The BLS jobs report off as much as 1 Million this year. No biggie...just 1 Million of a labor market that is approximately 167 Million people in total.
Goldman Sachs and Wells Fargo economists expect the
government's preliminary benchmark provisions on Wednesday to show payroll
growth was at least 600,000 weaker than currently
estimated. Goldman Sachs indicates it could be as large as a million jobs that
were overestimated. There are a number of caveats in the preliminary figure,
but a downward revision to employment of more than 500,001 would be the largest
in 15 years and suggest the labor market has been cooling for longer than
originally thought. The final numbers are due early next year.
WEITZ:
1) We seriously can't get accurate payroll numbers for an entire year?!
2) Up to 1 Milllion off?!
3) What's the point of even tracking this if the numbers are wildly off?!
Here's an article on the makeup of the BLS jobs report and its incomptence of being a notable indicator on the economy.
Sorry- I don't buy this. Its either corrupt or incompetent. Zero in between. With the technology we have today, this is totally inexcusable considering its used as an important factor in the Fed determining interest rates. Rates have remained high because things have been 'good' yet we are only A MILLION JOB OFF..... I'm so very tired of this crap. Can you imagine if the private sector was off by this much for something substantial. Everyone involved would lose their job. It's completely absurd.
The slow-motion economic train wreck continues on its course......
Monday, August 19, 2024
Goldman Sachs says 'recession' now unlikely
Goldman Sachs Chief Economist interviewed about recession possibilities: His rationale is based on the following "Better Data”:
a.
Retail Sales up 0.3%
b.
Decline in Jobless claims
c.
Earnings reports from Q2 – positive commentary
on the consumer
WEITZ- This is so aggravating. Goldman Sachs is treated as the bellwether
of the economic world and even these ‘best and brightest’ have trouble in
avoiding reactionary thought rather than predictive thought.
According to Attom, July foreclosure data are up 15% from a
month ago and that's with no real depreciation in RE as of yet.
U.S.
Foreclosure Activity Sees a Monthly Increase in July 2024 (attomdata.com)
Perhaps I'll be the one with 'egg on my face', but I don't see this aging well for Goldman Sachs and their spot as 'top dogs' on Wall Street... although, let's be frank, the accountability on Wall Street has been virtually non-existent since the late 2000 crisis.
Friday, August 2, 2024
Yahoo - "Jobs Report stokes fears the Fed may have waited too long"
See latest from the AP today; Markets down big on Job Report
Some of the most pertinent excerpts below:
* The US economy added fewer than expected jobs last month with softer wage gains underscoring concerns that the Fed Reserve reluctance to lower interest rates is choking off growth prospects.
* BLS (Bureau of Labor Statistics) said that a net 114,000 new jobs were created in July.
* "Job gains have dropped below the 150,000 threshold that would be considered consistent with a solid economy".
* Data on Thursday showed weekly jobless claims jumped to the highest levels in nearly a year with around 250,000 Americans filing for unemployment benefits.
* "The trends in inflation were heading in the right direction but the softening labor market never seemed to get the focus when discussing their dual mandate".
WEITZ: Welcome to reality everyone. This is just the beginning. The monetary expansion / money printing/ lending during COVID and under Biden was completely unsustainable. Now we must face a downward period to reach somewhat of a reasonable equilibrium and I don't see that being pretty. With inflation, many are being squeezed and attempting to pass it along in higher prices which will lead to less demand and a negative cycle that will be tough to get out. Buckle Up. I fully expect to see mortgage delinquencies rise by year's end, if not sooner. That's the next shoe to drop beyond weak jobs reports and increased layoffs in my opinion.
Side note: Intel just came out today and said they were reducing 15% of their workforce. When the large tech companies are feeling the squeeze, it's certainly worth noting.
Wednesday, July 31, 2024
WSJ- Commercial Real Estate "bottom near' as foreclosures surge?!
WSJ
WEITZ – I’m dictating this as I’m reading so I don’t know what
this article entails, but the title alone is so intriguing, I know it’s a post
worthy. I can’t wait to see how this journalist spins that a ‘surge in foreclosures’
somehow is a good thing….
here we go….
Highlights from the article:
“Banks and other lenders are seizing control of distressed commercial
properties at the highest rate in nearly a decade, a sign that the sector’s punishing
downturn is entering its next phase and approaching a bottom”.
In Q2, portfolios of foreclosed and seized office buildings,
apartments and other properties reached $20.5 B according to MSCI. That’s a 13%
increase from Q1 and the highest since 2015.
Defaults and other ‘kinds’ of distress have been steadily building
and near historic levels because of interest rates and slow return of workers
to office buildings.
“It is possible that
commercial property values could deteriorate even further if the US economy
falls into recession and companies start to lay off works and want less office
space”.
Office is by far the most troubled property class. In Q2,
the volume of office property seized in foreclosures and other action was up
about $5B from Q2 of 2023.
Weitz: I have to say journalism these days, even at a
reputable place like the WSJ, has gone to absolute sh*t. Name one thing about
these facts that would indicate a market bottom. Foreclosures are increasing so
we must be close to a bottom?! Sorry…. until we see a decrease in distress
assets and even a scintilla of evidence that market conditions are improving, I
don’t see how anyone could remotely indicate we are ‘at or near a bottom’.
If any, this is the beginning of what I’ve been
calling for on this blog…. I think this party is just getting started and the
time to build your ‘war chest’ is now. As the old saying goes, don’t try and
catch a falling knife. There will be many opportunities in the coming years.
Every local market can be different, but for the most part, the macro-economic
conditions are not good and getting worse by my estimation. It seems crazy to
say that as the stock market is reaching all time highs, but the disconnect is
obvious to me. Perhaps I’m wrong, but I haven’t been this confident in down
turn since 2007/ 2008.
For more information
on investing in Snohomish County Commercial Real Estate, you can find me at Scott@WeitzCommercial.com or send
me a text at 206.306.4034.
Tuesday, July 30, 2024
New Driving Range plans for Everett Mall area
The Owner of Everett Mall has filed plans to build a 3-story entertainment center with driving range, restaurant, bar and event space.
Brixton Capital is planning a 68,000 SF building with an 11-acre
driving range as part of the mall’s redevelopment.
Filings from late May show plans to demolish existing LA
Fitness and Burlington Coast to may way for the golf center.
Weitz: Locally, this is really exciting. I’ve always thought
that Everett has tremendous potential with its airport, port, and proximity to
Puget Sound.
This should make the argument even stronger and be great for the area.
Monday, July 22, 2024
WSJ - Evictions surge in major cities in the American Sunbelt
WSJ - Evictions surge in major cities in the American Sunbelt. Highlights below.
The Facts:
Tenant evictions look stuck at elevated levels in several concerns
of the US.
Evictions are up 35% or more compared to 2020 norms.
The includes Las Vegas, Houston and Phoenix where landlords
filed more than 8,000 eviction notices in January.
Overall, eviction notices were up 15% or more in 10 of 33
cities tracked by Eviction Lab.
“Increased rents have made it difficult for a lot of
households in many areas and you can see that reflected in the eviction filing
increases”.
About a quarter of renter households in American spend 50%
of more of their income on housing, according to Harvard University Joint
Center of Housing Studies.
GoFundMe said eviction related fundraisers have risen 40%
since before the pandemic and 10% from May to June.
Weitz – I don’t think GoFundMe as popular pre-COVID so I’ll
take this with a grain of salt, but 10% increase in a month is worth noting.
Overall, this is more evidence that the underlying isn’t as strong as the stock market or ‘experts’ would think. I expect this trend to continue unfortunately in the short to intermediate term.
For more information on Snohomish County Commercial Real Estate, consider contacting our firm.
Weitz Commercial
Scott@WeitzCommercial.com
t: 206.306.4034
Scott Weitz
Friday, June 28, 2024
CNBC Report- inventory levels increase 35% YOY
See CNBC latest...
The basics:
For the four weeks ended June 23rd the typical home sold for slightly less than its asking price. Average home price growth slipped from 4.6% in May to 3.5% in April the slowest growth rate in seven months.
Supply is starting to build which is leading to cooling and
prices. Total active listings are now 35% higher than they were at this time
last year according to realtor.com.
Weitz - As I've said for a long time, I believe the biggest leading indicator by far of where we will see this market go is inventory levels. To see that they have increased 35% from a year ago likley confirms my belief in recent posts that we have reached or are very near a top. I would encourage and expect retirees to start to wake up to this in the near future, and start to try to max out their potential gains of their long term real estate holds as they head into retirement years. This will lead to a significant increase in inventory which coupled with the current interest rate environment (provided it stays relatively high) will lead to significant sluggishness in the market and market depreciation. The time bomb is slowing ticking.
Wednesday, June 19, 2024
Home prices begin to come down in some pandemic boomtowns.
See article here:
Home prices begin to come down in pandemic boomtowns like Austin, Tampa (yahoo.com)
The basics:
Home prices in some large US cities declined in April,
according to mortgage data company ICE Mortgage.
San Antonio, Austin, and Tampa saw the biggest monthly price
declines.
“The key differentiator we’re seeing in terms of growing inventory
levels is a rise in Sellers willingness to list their homes for s sale”.
SW – So you mean inventory is rising?
This article is horrifically written so I’m not going to
waste much time on it, but it marks the first hint of price depreciation for
residential caused by the obvious factor of increased inventory. The mention this
isn’t a sign of ‘market crash’. I think its just the beginning of one. Time will
tell.
Friday, June 14, 2024
May, 2024: US Home sales “crumble in May” on higher rates and record prices. - Reuters
REUTERS Residential update key facts
US Home sales in May fell to the lowest levels in the past
decade, according to Redfin as both SUPPLY and DEMAND remain sluggish.
Housing affordability is at an ALL TIME LOW.
The number of home sales remain roughly 25% pre-pandemic
levels, according to Redfin.
In May, 407k homes were sold. Only October 2023 and May,
2020 (the heart of COVID) recorded fewer sales.
Home sales dropped 2.9% from a year earlier while pricing
rose 5.1% year over year.
New listings rose .3% month over month in May, and 8.8% from
a year earlier.
I'll echo my previous call that we are fast approaching a market top. I would expect this summer will end up being the top of the market for some time. This fall will be chaotic given the political climate with political and economic tensions becoming abundantly apparently.
My info:
Weitz Commercial
Scott Weitz
Scott@WeitzCommercial.com
Text: 206.306.4034
Monday, June 3, 2024
Past Due CRE loans increase to 9% - highest in a decade
The facts:
1) Past due nonresidential commercial real estate loans increased by 1.8B or 9% form the previous quarter according to the FDIC coupled with a 64.2B (79.5%) increase in profits.
2) The default (or "non-current" as they call it) for non-owner occupied commercial real estate loans is not at its highest level since Q4 2013.
3) This increase is contributing to the amount of 'problem banks' that either have low capital reserves, a high number of nonperforming loans, weak management, consistent losses or liquidity problems according to CoStar.
The number of banks on the FDIC problem list went from 52 in Q4 '23 to 63 in Q1 '24.
Weitz Take:
None of this is a surprise if you follow this blog. Expect more of the same. I'd expect that we start to see bank failures making the news by end of '24/ 1st half of '25. I have to say - between wars escalating across the globe, the current situation of political weaponization of the legal system in the USA, and what I perceive as obvious economic peril quickly approaching, I've never been more uncertain of this path of this country or the world leadership. If nothing else, it will fascinating (if not sad) to watch it play out.
Tuesday, May 28, 2024
Office Loan Modifications jump dramatically May, 2024
Office Loan Modifications Jump
Recent update from CNBC here:
The details:
Rising office loan modifications and delinquencies.
1.42B in office modifications in Q1 2024 vs. $117M in Q1
2023
"Government intervention may be needed".
See more on loan modifications stats in Commercial RE posted on this blog in April.
Weitz – I have a hard time seeing government intervention
just 15 years after the last bank crisis where the “too big too fail banks” became
even bigger. That said, memories are shockingly short and the importance of a
healthy banking sector can’t be understated in a system based entirely on debt. Time
will tell I suppose, but I’m guessing the political will to save banks won’t be
there.
I'd also suggest that the 'kicking the can down the road strategy' will eventually run out of steam. I don't want to say it won't work, but owners may find that getting cash out of their properties may be better than paying large fees/ interest rates and simply hoping things rebound soon.
For more help on Snohomish Commercial Real Estate, feel free to email or call me:
Weitz Commercial
Scott@WeitzCommercial.com
t: 306.306.4034
Thursday, May 23, 2024
New Home Build sale drop significantly. May, 2024
CNBC article highlights new build weakness.
See article here.
The Highlights:
Sales of newly built homes dropped 4.7% in April compared
with March and fell 7.7% from the prior year the US consensus said
Thursday.
March sales were also revised significantly lower.
Weitz take: So tired of downward revisions by the government. How is it so hard to get those figures right and why release them until you do have them accurate?
Builders say they cannot lower prices due to the high cost
from labor and materials.
Weitz take: Ummm hmmm.... Their profits would indicate otherwise.
For all the happy talk from the big builders the entire
build industry is selling new homes at a pace below the five year average
according to Bleakley Financial Group.
With the nationwide shortage of roughly 1.5 million homes the lack of housing units is the primary cause of growing housing affordability challenges policymakers at all levels of the government need to enact policy changes that will allow builders to construct more homes such as speeding up permit approval times providing resources for skilled labor training and fixing building material supply chains” cited Robert Dietz, the NAHBs chief economist.
Weitz: this is so true. The bureaucracy of local governments has become totally outrageous. The length and costs of simply having the 'approval/ right' to construct does not coincide with the huge need for reasonably priced housing.
Overall, this coincides with my call for a top in the market in the near future (if not now). It's all about inventory, but if new homes are not selling, that will add onto the inventory levels and as I've said, that is the #1 indicator for prices as we move forward.
Wednesday, May 22, 2024
National Real Estate market update - May, 2024
The latest Realty Check from CNBC's Diana Olick
The basics and my analysis:
Median Price of a home sale rose 5.7% to $407,600, a 5.7% increase.
Inventory rose 9% month over month and up 16% YOY.
Sales were down 1.9% from last year.
"Home prices reaching a record high for the month of April is very good news for homeowners, said NAR Chief Economist Lawerence Yun, however the pace of price increases should taper off since more inventory is becoming available". (WEITZ - AKA - price drops).
Weitz take: TIIIIIIIIMMMMMMMBBBBBBEEEERRRRRRR..... here is the inventory number we have been talking about and anticipating. That is by far the biggest predictor on pricing moving forward (along with interest rates at a close 2nd). If inventory continues to rise and rates stay anywhere close to where they are, we will start to see price slashing.
I'll go ahead and make a bold prediction...... The current market top has either been reached or will be reached in the next few months....I think we will have notable price drops by year's end in almost every major market.... you don't get that on CNBC! I may be wrong, but I strongly believe this inventory increase will start to cause ripples.
If you are interested in investing in Snohomish County Commercial Real Estate, shoot me an email or a text and I'd be happy to help.
Weitz Commercial
108 Union St.
Snohomish, WA
Scott@WeitzCommercial.com
t: 206.306.4034