Opening Comments
Now that I can walk, I was invited on my friend’s beautiful 68’ Viking to fish an overnight trip leaving Thursday night and back Saturday afternoon. I hope to have some great pictures and a freezer full of fish. We will be heading approximately 120mm NE of Boca and fishing for Yellowfin Tuna, Marlin, Queen Snapper, Yelloweye Snapper and Grouper. We will sleep on the boat and not get within 25 miles of shore. Not sure if there will be time for a piece on Superbowl Sunday as a result.
My mother-in-law came into town Tuesday from NYC to surprise the kids. It will be good to have her around for a couple weeks. The pandemic made it so hard to spend time with family. The kids were so excited to see her.
I am also posting the Rosen Report on a new platform. Prometheus is a social marketplace for professional investing. Think of it as the Facebook for investment industry pros combined with a marketplace to directly invest in the funds run by these pros. This is where you can get more real-time commentary on investing from myself and other buysiders and sellsiders. The product will be released in the coming months, but readers of “The Rosen Report” can have exclusive beta access now. Just e-mail hello@prometheusalts.com with subject line “Beta Access” and you’ll receive a token to access the app.” I have read a few interesting pieces in the last few days from it.
My last report was entitled, “Don’t Put All Your Eggs in One Basket” and can be found here.
Picture of the Day-2021 Migration Patterns
I'm a Social Media Moron
Quick Bites
Markets, Meta, Inflation, Commodity Prices
British Inflation, Record Consumer Debt
Work From Home, NYC Crime
Michael Lewis Books
Crazy Super Bowl Story
Other Headlines
Virus/Vaccine
Data-Cases Falling Rapidly, -69% From Peak
500,000 Omicron Deaths Globally
Canadian Protests
Real Estate
General Comments-Dwindling High End Inventory in South Florida
New Zeckendorf Building Downtown Manhattan
January 2021 vs 2020 Manhattan Market Update-Elliman
Bloomberg Article on Volumes of Home Sales Over $10mm
Article with Statistics about the Great Migration
5 Residential R/E Market Predictions for 2022
Picture of the day-2021 Migration Patterns
I found the story on Yahoo!Money and it outlines the states who had the best and worst flows of people in 2021. It should come as no surprise that among the worst performers were NY, IL, DC, and CA, while the better performers were ID, UT, MT, AZ…TX was #7, NV#8 and FL#9. I can tell you from living in Florida that many of the people relocating down here are the top 1% based on R/E prices and the lack of inventory. What will the medium and long term impact be to the state budgets of cities/states which lose the millionaires and billionaires and the associated income taxes, sales takes, shopping, restaurants and overall consumption?
For example, the District of Columbia — which raised income taxes in 2021— saw its population downsize an estimated 2.8% between April 2020 and July 2021, while New York, which has some of the highest taxes, lost 1.8% of its residents. This was followed by Illinois, Hawaii, and California — all high-tax states — which make up the top five states with the largest population losses.
By contrast, low or no personal income tax states saw the biggest population increases, including Florida, Texas, New Hampshire, South Dakota, Nevada, and Tennessee.
While the last two years of the pandemic have allowed people with increased mobility to make this move, high tax levels are not the only reason some have packed up a U-Haul, according to Walczak.
“There are also second-order effects,” Walczak (Center for State Tax Policy at the Tax Foundation) said. “States with lower tax burdens and with more pro growth tax codes have higher rates of growth and higher economic opportunity – and people will move to seek out those things even beyond their own tax burdens.”
My personal belief is taxes only explain part of problem and the flow of people leaving the states outlined in red will be reduced when they give constituents better service for the money with less crime, homelessness, rules, taxes, filth and regulation. Articles in my report today about NYC crime in Quick Bites and LA crime in Other Headlines show other reasons people are leaving certain states.
I'm a Social Media Moron
I vividly recall 2004/2005 and visiting my mother in Florida when I lived in NYC. She still used dial-up for the internet and it was incredibly painful. I am not lying, it could take 30 minutes to open an email. By this time, broadband was available, but she refused. I offered to pay partially for my own sanity, but for hers as well and mom would not have it. She used AOL and was fine with spending a day to send an email with the infamous “Dialing…” This irritating picture would stay on your screen for a frustrating amount of time when trying to get on-line. All you young whippersnappers have no idea, as the speeds today are hundreds of times faster than the irritating dial up days. The amount of time wasted getting on line, opening an email, sending an email…Don’t even try to download anything big with dial up.
To my mother, I was the equivalent of Bill Gates or Steve Jobs from a technology perspective despite the fact that I was tech idiot then too. It is all about the theory of relativity, and my mom’s tech game was literally a zero out of 10, so me being a 2 out of 10 made it seem as though I were a tech genius. I was effectively the tallest Lilliputian. I dreaded staying at mom’s house as I was unable open or send emails and impatience/ADHD would kick in and I would lose it. I recall trying to respond to an email from my boss at the time, John Steinhardt, and it took over an hour. I pride myself on my responsiveness and nearly had a nervous breakdown. John was the single most responsive boss in history and I wanted him to know I appreciated it. To respond to the email, instead of mom’s computer, I had to use my Blackberry, still my favorite over the dreaded iPhone. I could type like Mavis Beacon (world famous typist) on the Blackberry.
Now, I think I understand what my mother felt like as I have become a moron with respect to social media relative to all these youngsters today. I do not Tweet, use Instagram, or Snapchat. I do use Linkedin and will post my newsletter on Facebook, but do not actively check those sites. I once went nearly 10 years between logging into FB and found I had hundreds of messages which went unanswered. People thought I had died.
Sunday evening after I sent out my note, “Don’t Put All Your Eggs in One Basket,” a loyal reader and contributor, Val, reached out to me. She explained that posting a story on LinkedIn was not enough, and I was perplexed. I thought I was a social media genius when in recent weeks I started posting the Rosen Report on LinkedIn as it led to more opens. She confirmed I was indeed a social media lightweight. She told me that I need to “tag” people who were part of the story and use hashtags on topics I wrote about in the newsletter. For example, I had Mark Cuban in my last report and she had me put @Markcuban in my post. With respect to hashtags, I thought they were only for Twitter. Yes, I have become my mother in an embarrassing turn of events. Apparently, this thing, #, is a big deal across social media. Val suggested my LinkedIn profile include this: ##markets, ##politics, ##economics, ##realestate, and ##personalinterests. She also wanted my LinkedIn post intro to have sentences, tags and hashtags as seen in the picture below:
I am hoping my newfound social media savvy helps my piece get noticed by @Markcuban and his 8.6mm followers and he does whatever people do to make it go viral. If not, maybe the next one will. So, if you see tags, hashtags and more social media prowess, it is due to the assistance of my readers, including Val, teaching an old dog new tricks. If we have any social media marketing experts, I am all ears.
I will say that I am shocked at how much time this newsletter takes me to publish. Between writing my research, writing, editing, answering countless emails, texts and calls, I have been spending over 30 hours/week. Now, I need to do all this tagging/hash-tagging as well. It is the worst type of full-time job….zero salary. Maybe I am not just a social media moron…I am just a moron in general. Wall Street and the Hedge Fund business were slightly more lucrative than zero. Come to think of it, so was ##flippingburgers, ##valetparkingcars, ##washingdishes.
Quick Bites
U.S. stocks rose on Wednesday as tech shares led a broad rally, clawing back some of their losses after a rough start to the year. The Nasdaq jumped 2.08% to close at 14,490. The S&P 500 gained 1.5% to 4,587, while the Dow rose 305 points, or 0.86%, to close at 35,768. Wednesday’s gains were highlighted by some of the same stocks that outperformed during the pandemic lockdowns in 2020. E-commerce stock Shopify gained more than 5%, while Etsy gained 3.8%. Stay-at-home favorites such as DocuSign and Zoom Video jumped 5.2% and 4.8%, respectively. After the close Disney and Uber beat handily and the stocks were up sharply. Also late today, Salesforce told employees it is working on NFT cloud services. The 10 Year Treasury was largely unchanged at 1.95%, but crypto continued the recent rally after a rough patch. BTC is approaching $45k and ETH is 3.2k and both are well off the recent lows of $35k and $2.3k respectively.
META shares were down 33% over 5 days through Tuesday, 2/8, but rebounded 5% on Wednesday. After the earnings call, the large drop occurred, but rather than bouncing, additional pressure pushed the stock down another 10% to $220 or -$100/share in a week. The market cap is below $600bn, the threshold for a “covered platform” for competition bills targeted to big tech. For perspective, the META market cap was almost $1.1bn in 6 months ago. The chart below is the 3 year market cap of FB/META through 2/8.
This is a Bloomberg story entitled, “U.S. Inflation Is Probably About to Spike Yet Again.” Inflationary pressures in the U.S. continued to heat up at the start of the year, data are expected to show, likely putting a Federal Reserve interest-rate increase next month on autopilot. The consumer price index probably jumped 7.3% in January from a year ago, the largest annual advance since early 1982, according to the median projection in a Bloomberg survey of economists. Excluding volatile energy and food categories, the CPI is projected to have risen 5.9%. “With energy and food prices still rising, Bloomberg Economics estimates that January inflation continued to exceed the average monthly run rate consistent with an annual 2% inflation target. We expect inflation to peak in February. Slightly more reassuring is that elevated inflation has not seemed to cause long-term inflation expectations to unanchor yet.” I remain of the view that inflation is more of a 2021 and first half of 2022 story but will moderate due to a less accommodative Fed, rising rates, and overall higher costs cutting into spending. The supply chain issues should improve dramatically by summer as well as outlined in this Bloomberg article. Also, the “free money” of being paid to not work is in the rear view mirror. The other point to consider is that inflation comps will be harder relative to 2021 vs 2020. In 2020, everything was depressed with lockdowns and spending fell sharply. I just don’t believe the gains in autos, homes, and other major items will be as large in percentage terms in 2022 relative to 2021 as was the case last year. However, I believe wages will be “sticky” given people have demonstrated they don’t want to work and prices will remain elevated, just won’t grow by as much. This CNBC video link discusses a sharp deceleration in inflation in the 2nd half of 2022. The first Bloomberg link has a lot of good charts/information.
I follow Jeff Currie, head of commodities research at Goldman Sachs. The chart below is the Bloomberg Commodity Spot Index “I’ve been doing this 30 years and I’ve never seen markets like this,” Currie said in a Bloomberg TV interview. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.” This CNBC article is entitled, “Oil will hit $120 a barrel if Russia invades Ukraine, strategist predicts.”
British households are facing the worst cost of living crisis for decades, as soaring inflation, declining real wages and an energy crisis eat into household incomes. Inflation in the U.K. has soared to levels not seen for decades, with the latest reading hitting an annual 5.4% for December — the highest it’s been since March 1992. The latest official data showed that average earnings, when adjusted to account for inflation, fell by around 1% in November from a year earlier — the first decline in wages since the height of the coronavirus pandemic. Meanwhile, taxes on earned income are set to increase by 1.25 percentage points from April to help fund health and social care costs.
On Friday, data from the U.K.’s Office for National Statistics revealed that between Jan. 19 and Jan. 30, one in five British adults said they had found it difficult to pay their bills over the past month compared to a year earlier. The first link was to a CNBC story and this link is to a Bloomberg story on the British inflation topic.
Consumers ended 2021 with record levels of debt, leading into a year in which interest rates are expected to rise substantially. Total U.S. consumer debt at the end of the year came to $15.6 trillion, a year-over-year jump of $333 billion during the fourth quarter and just over $1 trillion for the full year, according to data released Tuesday from the Federal Reserve’s New York district. The quarterly rise was the biggest since 2007, and the annual gain was the largest ever in records going back to 2003. Offsetting these concerning numbers is the data around home price appreciation which added $9.1 trillion to the total value of the US housing market according to Fortune.
I continue to write about work from home/work from anywhere and continue to feel this a lasting impact of the pandemic. This Bloomberg article is entitled, “Goldman Sachs’ Work-From-Office Policy Is the Aberration Now.” Companies large and small are now adopting hybrid work patterns unrecognizable from pre-pandemic routines — all but killing off the five-day-a-week commute. Few predicted such a seismic shift, even when the pandemic began. “Everybody really did have an expectation that it would all go back to normal. And I think now is a dawning realization that it isn’t,” said Julia Hobsbawm, author of The Nowhere Office: Reinventing Work and the Workplace of the Future. More than two-thirds of people (68%) now prefer a hybrid working model, according to Future Forum’s latest quarterly survey of almost 11,000 knowledge workers in Australia, France, Germany, the U.K. and U.S. Just 30% of those surveyed currently work from the office every day. In addition, 95% of respondents want flexibility over times when they work. I know someone with a large job at a major investment bank in NYC. Kids go to school in Florida and he is commuting. This would not have been realistic pre-pandemic and I hear more about these situations and more hedge fund managers and other die-hard New Yorkers relocating.
Nearly every single city police precinct has seen spikes in crime so far this year — including five in which the rate has doubled, according to the latest troubling NYPD statistics. “No neighborhood is safe,” one Brooklyn cop warned Tuesday. “At this rate, we will lose the city by St. Patrick’s Day.”
The only precinct in Manhattan to not see its crime rate jump was the 22nd Precinct, the one covering Central Park. “Only the squirrels are safe,” another cop added wryly. “Tourists will never come back.” Seventy-two out of the Big Apple’s 77 police precincts saw crime rise, leaving just five at 2021 levels or dipping below their figures for the same period a year earlier. Mayor Adams, the city needs your help and the statistics are not pretty. Safety should be your biggest concern right now. There were also 15 reported hate crimes against Jewish people in January, a 275% increase relative to last January.
I love Michael Lewis as an author. My favorite book about Wall Street was Liar’s Poker which was published in 1989 and helped push me towards a career working for banks/investment banks. Lewis has also written Flash Boys, The New New Thing, Moneyball and the Big Short, The Blind side and others. This CNBC interview is of Lewis is great and touches on a host of topics. Some of his books are below. I have read approximately 10 of them. A decade ago I had contemplated writing a book about my career and experiences and reached out to him. He could not have been nicer.
Given the Super Bowl is Sunday, I thought this WSJ story was interesting: “He Retired. He Coached Pop Warner. Now He’s Playing in the Super Bowl.” Before Los Angeles Rams safety Eric Weddle came out of retirement just ahead of the playoffs, he was the mastermind behind another football juggernaut: a Pop Warner football team called the Rancho Bernardo Broncos. Having returned to San Diego in 2021 after retiring, Weddle had an itch. He wanted to coach his own team. He reached out to Pop Warner, the national youth football organization, and asked if he could apply for any open coaching spots nearby. The vetting process didn’t last very long.
Pop Warner: “What’s your name?”
Eric: “Eric Weddle.”
Pop Warner: “You don’t need to interview.”
“I just want you guys to know: I’ve played 25 straight years of tackle football, and I never once won a championship,” he would say to the kids. By the time the season was over, the Rancho Bernardo Broncos were 11-1 and won the title game against Carlsbad 44-15. Eric Weddle finally had his first championship. Then just before the NFL playoffs, Waddle got a call from the Rams due to a string of injuries. After Weddle didn’t play in a single regular-season game, or play at all last year, the Rams signed him just before their first playoff game. He played 34% of the team’s defensive snaps in the opening-round win against the Arizona Cardinals. That skyrocketed to 85% against the Tampa Bay Buccaneers. By the time the Rams beat the 49ers in the NFC Championship, Weddle had played every single defensive snap—and led the team in tackles. What a story he can tell his players after playing in the big game Sunday.
Other Headlines
Could the 14th Amendment keep Trump out of the Oval Office? Test case happening in NC
Interesting suggestion in this article and worth a look.
SEC Chair Gary Gensler wants to know more about what hedge funds and private equity are doing
There is $17 trillion of assets under management in these funds and Gensler wants to “freshen up” the Form PF filing and require additional disclosures.
Congress moves toward banning members from trading stocks
How this insider trading has been allowed for decades is beyond me. Make it stop.
Nissan exec says new European emissions rules will make combustion engine unviable
Peloton slashes its full-year revenue outlook as company overhauls C-suite, cuts 2,800 jobs
The stock is -81% from its 52 week high level.
‘Outrageous’: Bank of England chief slammed for asking Brits not to demand a big pay raise
What are workers supposed to do with inflation at 30-year highs? Talk about out of touch with reality.
Shocking that a country which treats its people so well would subject elite athletes to such poor conditions (Sarcasm). Why did the Olympic Committee allow the games to be held in China? I refuse to watch these games and I love the Olympics.
Bay Area calls on homeowners to help house homeless residents
I don’t know about you, but I am not inviting homeless people, many of them mentally ill and on drugs into my home with my children. What could possibly go wrong here? The program is not attracting many homeowners who want to let homeless in.
Los Angeles Sheriff’s Office may have to fire 4,000 employees over vaccination status
I believe there are approximately 10,000 officers in LA County and the murder rate is sky rocketing while the pandemic is easing. Do we really think firing 40% of the police force is a great idea? These officers are subject to weekly testing.
Where’s the beef? Video shows man stealing 10 steaks from NYC Trader Joe’s
Remind me why this is good for NYC, the retailers and the people who actually pay for goods.
Mom files complaint with Tenn. school claiming students got lesson on ‘how to torture a Jew’
New York governor plans to end the state's indoor mask mandate for businesses, NYT reports - CNN
Four states set timelines for the end of school mask mandates
Personally, I am not convinced masking children at school was a huge help. Despite a mask mandate, in one week, my daughter’s school had close to 100 confirmed cases. I have seen the way the kids wear masks and it is so uncomfortable, I cannot imagine 8 hours a day in one. Glad these mandates are ending.
MIT researchers create new material as strong as steel and light as plastic
The material is several times stronger than bulletproof glass, and the amount of force needed to break it is twice that of steel, despite the fact that the material has only about one-sixth the density of steel, according to MIT. The implications are incredible on this invention.
31M Americans to bet on Super Bowl, gambling group estimates
Sotheby’s to Auction 104 CryptoPunks for Estimated $20M-$30M
The legendary “Punk Sweep” of July 2021, originally bought for about $7 million, is going up for sale. If it sells for $25mm, that is a massive return in 6 months. I just cannot bring myself to buy this crap. Do you know the real art collection I can build you for $25mm?
Tom Cruise's 'Mission: Impossible 7': How COVID Blew Up the Budget
The article suggests the cost is $290mm in a rough movie environment.
Chris Cuomo wants as much as $60 million from CNN
The articles on this topic are interesting and suggest Cuomo has a lot of dirt which is being kicked up including information on Zucker. This is going to get interesting.
Spotify CEO apologizes to staff for Joe Rogan controversy as episodes get removed
"Ditch The Misinformers" - Neil Young Attacks Spotify CEO, Big Banks In Latest Open Letter
I love Neil Young and one of my favorite songs to play on guitar is “Old Man,” despite my voice not exactly managing pitch. The link to Old Man is my favorite as it is from 1971. I support Young’s calling out Rogan if he disagrees, as that is the freedom of speech. Of note, Young did participate in a “Freedom of Speech” tour in 2006 which again goes in the face of his Rogan speech. By they way, I disagree with Rogan at times as well, but want to bring up hypocrisy given how vocal Young has become. Now Young is being hypocritical again as he uses private planes and is calling out banks around fossil fuels. This is a video of Young being called out for private plane use. You cannot have it both ways. Like it or not, we will be reliant on fossil fuels for decades and rising oil/gas prices are a regressive tax. Lastly, it should be noted that sex traffickers, rapists and anti-Semites remain on Spotify without issue. So Rogan is bad for his pandemic misinformation, but Louis Farrakhan and the pedophile known as R. Kelly are all good? Let’s not forget about Bill Cosby, Gary Glitter and Nick Cannon who also are on Spotify without any questions.
Virus/Vaccine
As expected, cases have tumbled sharply since peaking at 807k/day on 1/14. The US is down to 253k/day or -69% from peak and -63% from two weeks prior. Hospitalizations are falling faster -27% and the 7-day average is 111k, but actual hospitalized is approximately 100 today. The death rate growth is slowing, but remains at 2.6k/day and was +9% from the prior period. The curve seems to be flattening and expect it to turn down more sharply in days.
The World Health Organization lamented Tuesday that half a million COVID-19 deaths had been recorded since the Omicron variant was discovered, calling the toll "beyond tragic." The WHO's incident manager Abdi Mahamud said that 130 million cases and 500,000 deaths had been recorded globally since Omicron was declared a variant of concern in late November. It has since rapidly overtaken Delta as the world's dominant COVID variant because it is more transmissible, though it appears to cause less severe illness.
Following the example of the thousands of Canadian truckers protesting COVID-19 vaccine mandates in the capital of Ottawa, truckers in other countries have begun organizing their own versions of the "Freedom Convoy." From Leeuwarden in the Netherlands to Wellington, New Zealand, to London to Canberra, Australia, truckers are hitting the road to send a clear message: stop the mandates. Another group of truckers is planning a protest in the United States, driving to the U.S. Capitol in Washington, D.C. The U.S. trucker effort was "just shy of 140,000 people when Facebook dropped us." On Feb. 2, Facebook removed a Facebook page called "Convoy to D.C. 2022." Clearly the professors from Johns Hopkins who published a research piece suggesting lockdowns did not move the needle is helping to fuel the fire as well.
Real Estate
In Royal Palm in Boca Raton, there are now 4 homes for sale out of 750. Two are under construction; one is a 1971 tear down for $14.5mm and the other is an outdated 1999 home for $12mm. In Jupiter, in Admirals Cove community, there are now 10 homes for sale out of 950. In Palm Beach Gardens, Old Palm has ZERO homes for sale out of 313. In Miami Beach on North Bay Road, there are currently two water front homes for sale ($20-30mm for knockdowns) out of 220 on that coveted street. Traditionally, the market would see 7-10% of the total homes for sale at any one time at the big communities such as Royal Palm, Admiral’s Cove or Old Palm. Out of approximately 2,230 homes, .7% are for sale. I am told by major brokers that almost 50% of high end homes in South Florida are never listed and aggressive buyers/agents knock on doors to uncover properties. I just spoke with my friend at Panther National (new development in WEST Palm Beach). There are 218 homes being built with the 1st deliver in August of 2023. Reservations started three weeks ago and 115 are reserved including mine, which was #18. I wrote about Panther National extensively in my report entitled, Puff Piece in the R/E section on the bottom. Below is an aerial picture of Admiral’s Cove in Jupiter. I do believe the amount of high-end supply increases greatly over the next 24-36 months in the Jupiter, Hobe Sound, Stuart areas as many large developments are planned. I now know of 10 new golf courses being built in the area, and they are quite high-end.
I have been into 15 CPW dozens of times and prior to 220 CPW, it was my favorite building (not location) in the city. The Zeckendorf’s know what they are doing. The location of the new building in the link is a little west for me, but much prefer the location to the Upper East or West sides. For perspective, this new building is 1.2 miles north of the Goldman Sachs headquarters on West street and walking distance to Carbone and other NYC hotspots. Another “Limestone Jesus” — the popular nickname for 15 Central Park West — is poised to soon rise over the Hudson River downtown. A joint venture partnership of Zeckendorf Development, builders of boldface-filled 15 CPW, and Atlas Capital Group have just signed a hush-hush contract to purchase 570 Washington St. — a 1.3-acre empty lot between Houston and Clarkson streets on the West Side Highway, sources told The Post exclusively. The developers plan to erect a $1 billion-plus, roughly 36-story, super-luxury condo tower affording open river and skyline views, according to the sources. Apartments will be priced in the $5,000 per square foot range — unheard of for downtown.
I received this data from Jared Halpern from Douglas Elliman
Jan ‘22 vs Jan ‘21
FOR CO-OPS
Average sales price increased to $1,764,014 from $1,452,605
Median sales price increased to $1,068,750 from $997,000
Discount from Original Asking Price decreased to 5.8% from 16.6%
Discount from Last Asking Price decreased to 0.7% from 5.5%
Initial Index offer decreased to 5.49% from 7.99%
Transactions over $1,000,000 increased to 50% from 49%
Transactions under $1,000,000 decreased to 50% from 51%
Median number of days on market to C/S, from last ask price increased to 107 from 84 days
57% of Coops Sales are financed of which 72% are contingent on financing
5% of buyers are international
25% of Coops sold at ask & above the asking price.
FOR CONDOS
Average sales price decreased to $2,788,342 from $2,929,454
Median sales price increased to $2,000,000 from $1,729,090
Discount from Original Asking Price decreased to 2.9% from 14.4%
Discount from Last Asking Price decreased to 2.2% from 11.6%
Initial Index offer decreased to 3.21% from 9.60%
Transactions over $1,000,000 decreased to 77% from 80%
Transactions under $1,000,000 increased to 23% from 20%
Median number of days on market to C/S, from last ask price increased to 96 from 84 days
56% of Condo Sales are financed of which 79% are contingent on financing
15.7% of Condo Sales are New Developments
13% of buyers are international
34% of Condos sold at ask & above the asking price.
Brad, a reader, sent me this Bloomberg article on luxury R/E. The rich, who got even richer in the pandemic era, are unceasingly deploying their wealth into luxury homes. More than $40 billion worth of residential real estate valued at $10 million or higher changed hands in 2021, according to a report from real estate brokerage Compass Inc. That’s more than double the amount in 2020. There were more than 2,300 transactions of homes priced at $10 million or higher last year — a 112% jump from 2020. Los Angeles had the most, followed by Manhattan and Palm Beach. With the stock market booming and interest rates low, the past two years have been good to the richest 0.1%. The luxury home market in turn is being flooded by those looking to both trade up and and potentially protect their money from rising inflation. And despite the prospect of tighter Fed policy and market volatility, purchases show little sign of slowing down. I disagree with little sign of slowing down. Volumes will be lower due to the lack of inventory as outlined in my first R/E bullet today.
I had a great Financial Times article in the last report and must have received 50 emails, calls and texts about the migration to Florida. A reader, Rich, sent me this article entitled, “COVID-19 migration: Who's moving to Florida and why there's a New York exodus.” It is a very different article from the last one, but this has far more data in it about the migration. Too much for me to attempt to summarize. More than 547,000 people exchanged out-of-state driver’s licenses last year for ones with Sunshine State addresses. That’s a 40% increase from 2020 and nearly 20% greater than the five-year average between 2017 and 2021. The license swaps — largely from New York (11%), New Jersey (6%) and foreign countries (14%) — are acutely felt in Florida real estate markets where inventory is anemic and prices aggressive. The median sale price on Palm Beach County single-family homes ended 2021 at nearly half-a-million dollars with the average price pushing seven figures. Demographers believe the relocations are no tropical dalliance because a driver’s license switch is a sign of determination to make Florida home even if hurricane season and August's sweltering humidity are spent in cooler climes away from storms and sticky air.
Top 5 states moving to Palm Beach County
State 2021 driver's licenses Change from 5-year average
New York 8,107 37%
New Jersey 4,088 32%
Foreign country 4,061 -6%
California 1,895 51%
Pennsylvania 1,518 12%
Top 5 states moving to Florida
State 2021 driver's licenses Change from 5-year average
Foreign country 76,442 -4%
New York 61,728 34%
New Jersey 32,083 33%
California 27,081 43%
Illinois 26,076 31%
Top 5 counties with most license swaps in 2021
Miami-Dade, 48,266
Hillsborough, 35,626
Orange, 35,582
Broward, 34,084
This Market Watch article has residential real estate predictions for 2022. I don’t think anything in the article is earth shattering, but agree with most of it. For each of the 5 bullets below there is a paragraph explaining the point. Given the massive increase in R/E prices over the past 18 months, it is hard for me to fathom the price growth can continue, given how un-affordable homes have become. Couple this with rising rates and the substantial double digit price growth should be harder to come by in most markets. The lack of inventory should keep residential R/E elevated, but believe the recent price growth is not repeated.
Prediction 1: Mortgage rates will rise
Prediction 2: Home price growth may ‘return to normalcy’
Prediction 3: Expect near-term bidding wars
Prediction 4: It will still be a tough market for buyers though
Prediction 5: But there are still wildcards