Opening Comments
Happy Passover and Happy Easter to all the Rosen Report Readers. I hope you enjoy your holiday. Early send to give people time as I feel there are a few important items in the piece today.
I coordinated a great dinner for a group of South Florida business people the other day and ate at Bice in Palm Beach. I valet parked the car and the attendant changed my lights to on from “auto,” but I did not realize it. Generally, my lights turn off automatically after 30 seconds. The next day I could not start my car. Kia has a great roadside program and sent someone to my home within the hour to jump start the car, which was stuck in the garage. Quite irritating.
When you move to Florida, you can find some questionable folks. There are some interesting news stories around Excell Auto (exotic car dealer) in Boca. It appears many customers, lenders, other dealers and the landlord may have lost money and cars due to the owner’s creative business dealings. (Read articles attached.) This kind of stuff happens down here far more frequently than NYC on a population adjusted basis. One article suggests, “Excell Auto Group has officially filed for Chapter 7 Bankruptcy protection, claiming that it has between $0 and $50,000 in assets but owes between $10M and $50M to creditors.” A few years ago, I was introduced to the owner of Excell Auto and I drew up legal documents to make loans on cars. Despite drafting what the owner and I had agreed to verbally, the owner refused to sign my documents. So, I refused to lend. Sounds like I got off easy despite eating the legal fees. I just felt uncomfortable with the way he did business and moved on. My gut was right. When I was at the showroom below it was packed with exotic cars. Not so much today. Lots of rumors out there. Not sure what is true, but I know there are some upset lenders and clients out there.
If you read two bullets in Quick Bites, Make it the Musk/Twitter and age/term limits. For a laugh, read the Noma Restaurant section. Today’s note is the on the shorter side from a writing perspective and a longer side if you include the pictures. Lots of pictures today, especially around ZZ’s.
Picture of the Day-Optical Illusion
ZZ TOPS
Quick Bites
Markets
Musk/Twitter and the Mainstream Panic Attack
Biden Oil Drilling Policy
Egg Prices-You Guessed it, HIGHER
Term Limits
CNN on Biden Polling Data
College Acceptance
Noma-#1 Restaurant Pop Up in Brooklyn
Other Headlines
Virus/Vaccine-CASES INCREASING MORE SHARPLY IN US
Real Estate
General Comments
Miami Rent Hikes
Miami Spec Home
Some Spots Starting to Slowdown?
Picture of the Day-Optical Illusion-Look at Picture Before Reading
What did you see first? I saw a butterfly and then quickly saw two faces. A total of 71 percent are able to identify the butterfly while 29 percent see two faces looking at each other. Bhavin Shah, an optometrist at Central Vision Opticians, explains why we see different things. Bhavin said: "Many people will see the butterfly first, before zeroing in on the detail of the faces. "Humans have a propensity to human faces and are always drawn to them. "There are parts of the brain that respond specifically to faces so once we've seen it in the illusion, we'll tend to see that more." Some neuroscientists believe we have special relationships to faces, as we have regions of the brain specifically dedicated to processing them.
ZZ TOPS
Going to high school in the 1980s, I fondly remember ZZ Top hit songs including Gimme All Your Lovin’, and Sharp Dressed Man. Although I was never a huge ZZ Top fan, parties always played their songs and they were quite popular on the radio. Billy Gibbons was voted the 32nd best guitarist of all time by Rolling Stone in 2001. Why bring up the band with the crazy long beards? The Rosen family was invited to a private club in Miami’s Design District called ZZ’s which is owned by Major Food Group and it reminded me of the band. I had heard about this club, but had not been until last week when friends invited us for a great dinner. The Rosen family had a great time with amazing hosts. The private dining club experience was fantastic. I love the concept of ZZ’s, but believe the price point is a bit aggressive.
I called a few people I know who are members to better understand ZZ’s before going. I was told the best things on the menu to order and that we would be in for a big treat. I know many people believe ZZ’s is among the best restaurants and experiences in Miami, so my expectations were quite lofty. Below are the menus and as you can see, they are fully priced, but offer something for everyone with a focus on meat and sushi/fish with a Japanese flair.
I like Major Food Groups restaurants which include Carbone, The Pool, Grille, the Lobster Club, Parm and others, but have been less impressed with the Flamingo they opened in Boca. I believe Carbone (NYC) and ZZ’s are the best of the bunch. Parm is a solid inexpensive and casual restaurant as well. Also of note, ZZ’s Clam Bar in NYC received a Michelin Star every year since 2016.
ZZ’s is casual and cool (jeans and T-shirt can be worn) and behind the Gucci store on NE 41st Street in the Design District. We sat outside, and given the challenge in making a reservation, we were on the early side at 6:30pm. It was quiet, but changed quickly as the crowds filled in by 7:30pm. The service was top notch, as the wait staff was quite attentive and knowledgeable about the menu and facility/history.
We ordered a bunch of starters, as they are meant to be shared. We began with Wagyu Sando, Tuna Toast, Steamed Lobster Dumplings, Miso Caesar, and a couple others. For me, the Wagyu Sando (1st picture) stole the show and was the best thing on the menu. The meat was seasoned and cooked to perfection and presented well. Those went in a hurry and were $75 for 4 small sandwiches. YIKES! Next time, I might get this as my entree.
The Miso Caesar was very good and a different take on Caesar with sesame seeds, but is $27 with no meat. One salad is enough for 4 people to share.
Tuna Toast was great, but very expensive at $24 for the small plate. I could have eaten 6 myself.
I ordered a Patron Silver Tequila ($25) and they said they were out and suggested Clase Azul ($65) instead. I passed as I refuse to have any drink for that price. All the drinks and wine are quite expensive.
The entrees came and the clear winner was the 8oz Japanese A5 Waygu filet ($110). It was flavored and cooked perfectly and thinner than most filets (no sides of substance). I could not find a picture of the filet, but found this steak as an example of the presentation. I believe this is the Spicy Tomahawk for $195.
I ordered sushi which was quite good, but not life-changing and my sushi rolls were also well prepared, but far too expensive. Each piece of sushi is $7-20+. Chef Masa Ito and Kevin Kim run the sushi side and earned a Michelin star while working at NYC’s Sushi Zo. As a result, I expected to be blown away by the sushi experience. The sushi was memorable, but fell slightly short of my lofty expectations, especially at the price point. I still prefer the sushi at Shuko in NYC.
I felt ZZ’s Potatoes were a little underwhelming, especially at $22 for a tiny dish. I did feel the garlic fried rice was solid as was the spicy cauliflower.
The dessert was different. They had a huge Japanese shaved ice which interesting from a texture perspective and enough for a large table to share. ZZ’s had a key lime option which was pretty good, but overall, the dessert was a little disappointing. Below is the Snickers shaved ice which I did not see on the menu and would have preferred to our fruit shaved ice.
The service, ambiance and food were all solid at ZZ’s. I feel it is a hip place with a good vibe and a very young crowd (opposite of Boca). However, the prices are quite frankly, insane. A friend went with 6 people for dinner and it was $3,600 (no wine/just liquor). Another buddy went with his wife and another couple for $1,600 (no wine). I heard of a crazy story where someone spent $35,000 due to a substantial wine bill. I was told membership is up to $13k initiation, and there is a long waitlist. Given the wealth which has descended on Miami, ZZ’s will have no problem being full every night. Membership gives you preferred reservations at all the Major Food Group restaurants, a big positive given how hard it is to get a reservation. I would definitely go back to ZZ’s, but the prices are too rich for my blood to go with any regularity. If you have a big appetite and some drinks, it is effectively the price of a Michelin Star NYC pre-fixe meal. Again, the Wagyu Sando stole the show and the meats were great. Inside looks nice too. On the second floor, they have a cigar terrace, backgammon balcony and bar/lounge. Overall, it is a very hip place, and you should go if you can get the invite, but bring your Amex Black Card and be prepared to see some interesting and wealthy patrons. For South Florida, there are not many restaurants which are better in terms of food quality, scene or service.
Food-A-
Wine/Drinks-A
Service-A
Ambiance/Decor-A
Price-Offensive
Quick Bites
The S&P 500 and Nasdaq fell Thursday, capping a losing week as investors digested mixed earnings results from major banks and rising inflation. The broad-market index fell 1.21% to 4,393, while the Nasdaq lost 2.14% to 13,351. Meanwhile, the Dow lost 113 points, or 0.33%, to 34,451. The S&P 500 is down 2.13% for the four-day holiday week. The Nasdaq is off 2.63%, and the Dow is down 0.78% for the week. YTD, the S&P is now down 7.8%, NASDAQ -14.7% and Dow -5.2%. Trading was closed at the NYSE on Friday. The market’s moves came as inflation took center stage in investors’ minds this week. Treasury yields climbed higher, and two back-to-back U.S. inflation reports showed sharply rising prices. On Thursday, the benchmark 10-year U.S. Treasury yield (1st chart) rose back to multiyear highs, climbing 13 basis points to top 2.8%. Oil is back up to $106.5 and was up 8.5% on the week. After peaking at $4.33, gasoline is at $4.08/gallon. Natural gas continues to climb well over$7 (2nd chart) and is up over 105% YTD and almost 200% in 12 months. Inventories are low and I am sure the European/Russian situation is not helping matters. Gas tends to drop as temperatures warm up in the spring and rise in the winter. BTC is at $40k and ETH at $3k, but flat to up slightly on the week.
10-Year Treasury Yield Below
Elon Musk offered to buy Twitter for $54.20 a share, or about $43 billion.
“I invested in Twitter, as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk wrote in a letter sent to Twitter Chairman Bret Taylor. According to Musk, the social media company needs to go private because it can “neither thrive nor serve” free speech in its current state.
“As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced,” he wrote. Musk, you are my hero and arguably among the most important people in the world. Thank you for all you have done for mankind and hope Twitter sells to you. Call me if you want me to be involved. I have been screaming about social media bias for two years on my blog. I just want consistency of treatment and do not want either party at a disadvantage. Social media has far too much power to influence outcomes in my mind. In the “NO MEDIA BIAS HERE” example, MSNBC’s Katy Tur warns viewers about the “massive, life and global altering consequences” if Musk buys Twitter. I don’t care what side of the political spectrum you sit, it is impossible not to see the incredible bias in the media. Musk would bring a welcome balance to social media in my opinion. Of note, the Twitter Board unanimously voted to adopt a poison pill, by diluting Musk if he accumulates over 15% of the company. In the plan, Twitter would allow other shareholders to buy shares at a discount if Musk accumulates over 15% of the company. I hope Musk starts a competitor and TWTR becomes obsolete. It gets worse, you must watch this 42 second video of Mika Brezinski on Morning Joe from 2017. "The dangerous edges here are that he (I presume He is Trump) is trying to undermine the media, trying to make up his own facts, and it could be that while unemployment and the economy worsen, he could have undermined the messaging so much that he can actually control exactly what people think..." "...and that is our job." To which Joe Scarborough replies: "Yeah.” That is our job? She actaully said that. Fast forward to today and Mika called Musk’s potential takeover a "very dangerous precedent" for America. It’s not a problem when Bezos owns WaPo or Zuckerberg controls Facebook/Meta, but when someone questions the incredible bias of the media it is a “dangerous precedent?” I hope my readers are troubled by the responses from the mainstream media. Here is yet another bomb from the Business Insider. How is it possible to be so biased and be in the media? How can we take any of these networks/publications seriously? Robert, one of my biggest contributors sent me this picture. How can the Business Insider be taken seriously?
The Biden administration announced lease sales for oil and gas drilling on federal land Friday, but said it would sharply reduce the acreage available for leases and charge higher royalties on the oil and gas produced. The Interior Department said it would make roughly 144,000 acres available for oil and gas drilling through a series of lease sales, an 80% reduction from the footprint of land that had been under evaluation for leasing. Companies will also be required to pay royalties of 18.75% of the value of what they extract, up from 12.5%. Royalties for onshore oil and gas drilling generated about $1.5 billion to $3 billion a year for the U.S. Treasury during the last decade, according to the Congressional Research Service The announcement comes after weeks of pressure on the Biden administration to take action to address historically high energy prices driven by the economic rebound from Covid-19 and Russia’s invasion of Ukraine. To me, this is a step in the right direction. Energy independence is critical for the US. However, I need to understand the details of the acreage made available. Is this for show or is the land easily accessible and drillable at a reasonable price? I just don’t know the details and a reader expert on the matter had some concerns and the quality of land released by the administration.
I have written about inflation more than any other topic, but chart around egg prices was interesting from a WaPo article. Due to Avian flu in a couple dozen states, the price of eggs has risen sharply from $1 in November to $2.95 today. Everything I buy is up sharply in price. Food, consumer products, restaurants, services, cars, homes, gas, clothes….I forgot to fill up at my local station which is cheaper than anywhere else (Shell on Hillsboro and US1). I had to get gas and spent $4.69/gallon at the Mobile in Delray on Saturday. For my boat, I paid $5.99/gallon this weekend. At the bottom of the market in 2020, I paid $2.5/gallon in 2020 to fill up the boat. Here is yet another example of inflation: Amazon announces 5% 'fuel and inflation' surcharge for sellers. The charge will be added on top of existing fees paid by 'Fulfilled by Amazon' merchants. I presume this will be passed on to the customers.
I have written on the subject of term and age limits in Congress for some time. This is a bi-partisan issue, and I am writing as 88 year old Diane Feinstein is defending herself as many are questioning her capacity to fulfill job responsibilities in the Senate. An article from one year ago outlines the average age of Congress and has many details in it. This CNN video goes into details on Feintstein with troubling examples of her diminished capacity. Four Senators are questioning her capacity as are some of her staff. The charts below are self-explanatory, but very frustrating to me. No 88 year old can travel and be as sharp as you need to be to fulfill your duties as in Congress. I want term limits and age limits for Congress. This link shows the longest standing members of Congress and the record is over 59 years and #20 on the list is well over 45 years of service. Here is an idea, go serve your country for up to 20 years and then go get a job where you actually make a difference rather than wasting trillions and getting very little accomplished. I will rest my case with the Congressional approval rating of 21% with 75% disapproval. Time for some changes. Quite frankly, I am shocked the approval is 21%, I would have thought 10%. My approval rating is ZERO. Again, not a partisan statement. This comment impacts both sides of the isle. John Dingell has been serving for over 59 years. Make it stop.
I thought this CNN article on Joe Biden’s polling numbers was interesting given the sharp decline in support around young people. I also think it is fascinating that there is a decent change of behavior of the media being more critical of Biden in recent months. The unwavering support of Biden is lessening as his poll numbers plummet. In the early days of Biden's presidency (from January 2021 to June 2021), an average of 6 in 10 adult members of Generation Z -- those born between 1997 and 2004 -- approved of the job Biden was doing. During the period spanning September 2021 to March 2022, that number had plummeted to an average of just 39%. Among millennials -- those born between 1981 and 1996 -- the collapse is similarly stark. Biden's approval rating among that group stood at 60% in aggregated Gallup numbers in the first half of 2021, compared with 41% more recently. Regardless of the reason, the fade in youth support for Biden is a major problem for Democrats. Especially when you consider that he won 60% of the youth vote -- those aged 18 to 34 -- in the 2020 presidential election, according to exit polls. It was, by far, his best performance among any age cohort.
WSJ article on standardized tests for college admittance and some schools bringing back the requirements after a reprieve. Roughly three-quarters of colleges around the country haven’t required standardized tests from applicants during the pandemic, many ditching the scores to accommodate teens whose SAT and ACT exams were canceled because of the public-health crisis. The reprieve is now over at the Massachusetts Institute of Technology, which will again mandate test scores for next year’s applicants. Those trying to get into the Georgia Institute of Technology will also need to submit results. I don’t care if standardized tests are eliminated, as I do believe wealthy kids have an unfair advantage on these tests given the ability to tutor. When I think of my SAT (no money, no tutor) and my GMAT (Princeton Review, I had a materially better outcome). However, schools need to be sure that credentials matter. Grades, extra-curricular activities, leadership positions, class rank… should all factor into the equation.
To continue on the restaurant theme, I just read a Bloomberg article about the top-rated restaurant in the world, Noma, in Copenhagen. It has been the best in the world on 5 different occasions. Noma will open a pop-up location in Brooklyn, N.Y., for five nights, May 16-20, in a specially built venue at 26 Bridge St. in the Dumbo neighborhood. The restaurant will serve 50 guests each night. Nine-course dinners, which will include beverage pairings and service, will cost $700, not including sales tax. Reservations will go live on Wednesday, April 27, at 12 p.m. East Coast time on Resy. If any reader goes, please let me know about the experience. You need to be an Amex cardholder to get a reservation. One concerning point is if you look at the Noma regular menu in Copenhagen, there is some scary stuff on it. Brain, mold, ants, moss, and other things I would not want to spend $700 to eat. I am not making this up. The #1 restaurant in the world on 5 different occasions serves reindeer penis and brains. On second thought, I am going to pass on Noma as despite over 150 Michelin stars under my belt, Noma lost me on the “exotic” menu.
Other Headlines
Jack Dorsey Tweet NFT Once Sold for $2.9 Million, Now Might Fetch Under $14,000 - WSJ
I have been critical of most of the NFT prices as insanity. I have never purchased one. The other day the best price was $280 and now the bid is up to $14k, or a 99.5% discount to the last price. I went ballistic when Beeple sold an ugly NFT for $69mm.
This is a damning story about the Bills new stadium. The cost is between $850mm-1bn of which 60% will be paid for by taxpayers despite the owner’s $5.8bn net worth. The author makes a compelling argument against this funding. The old stadium is rarely used (8 home games/year). Is this really the best way to spend tax-payer dollars? in 50 years, the current stadium held a total of 35 non-NFL game events.
Uber ‘taking advantage’ of unsafe NYC with astronomical fares: outraged riders
What Jared Kushner’s $2 Billion Saudi Payout Says About The Post-Presidential Hustle
Poll: 68 Percent of Americans Less Likely to Do Business with Disney over Sexualized Content
Trans doctor who helps teens transition says it’s now ‘gone too far’
Interesting perspective from a psychologist who has helped hundreds of teens transition. She feels too many of these decisions are based on it being “trendy.”
It was consensual according to the article. I am just laughing at the idiocy of letting people with male genitalia into a woman’s prison. Every man in a traditional prison should claim they identify as trans and be sent to a woman’s prison.
Kentucky lawmakers override governor's veto of bill banning transgender athletes from girls' sports
I agree with this conclusion. I do not feel trans athletes should be able to compete against woman. I am opposed to Lia Thomas, a transgender swimmer at UPenn, and her titles as a biological male competing against biological females.
41 repeat offenders account for 147 thefts across Upper East Side: NYPD
Nothing can be said to make me support the lunacy which is taking place around crime and the lack of consequences. 167 arrests? How about some serious jail time? Why are these policies good for the community and the people who are contributing to it? The red outline below is the 19th Precinct on the Upper East Side, my former residence was right in the middle at 74th and Park.
Philly’s gun violence surged with 24 people shot in 24 hours Thursday and Friday, police say
Jamie Dimon, other JP Morgan executives donated to centrist Democrat Kyrsten Sinema
Although I have never once made a political donation, I support centrists, as they bring rationality to the table. Jamie, don’t make me beg for you to run in 2024. Chief of staff, here I come? I am loyal and will always let you know where I stand.
Frank James, Suspect in Brooklyn Subway Shooting, Ordered to Be Held in Jail
AMAZING. Finally, we now know what it takes to be denied bail in NYC. Go on a subway and shoot at dozens of people in a terrorist attack and you must stay in jail. Everything else you are free to cause havoc.
Video shows Michigan cop fatally shooting black man
The man was pulled over for wrong plates and runs and then resists arrest with the police office pleading him to stop resisting. The man gets the taser and the cop pulls his gun and shoots. Scary to watch.
Car looks great and the reviews are positive. A 600-mile+ range is a game changer. Article explains the technology.
Bite killed man found dead in Md. house full of snakes
Social Darwinism at its finest. What an idiot.
Four men arrested for ‘raping’ Bengal monitor lizard in western India
The idiocy of people never ceases to amaze me. How desperate must one be to rape a monitor lizard?
Missouri man jailed for trying to hire hitman on boy he alleged molested
10 years in jail for molesting a boy and then hiring a hit man to kill him seems light to me. How about life in jail?
Russia warns of nuclear deployment if Sweden and Finland join NATO
Russia's loss of its Black Sea flagship Moskva is a 'massive blow,' and maybe also 'poetic justice'
Other reports suggest the ship was abandoned and as of Thursday, Russia is suggesting the cruiser sunk. Multiple news outlets are suggesting the ship may have been carrying nuclear weapons. Also of note, stories are suggesting many on the crew died and believe 510 were on board. It has been 40 years since a ship of that size sunk during war according to this article.
Russia preps for major offensive in eastern Ukraine, Donbas D-Day unclear: senior defense official
The link suggests Russia is creating context to use WMD in Ukraine by accusing the US of running biological weapons in Ukraine in recent days.
Russian state TV declares World War Three has started after sinking of Moskva
Pope Francis Prays for Peace in Ukraine and Warns of Nuclear War
Virus/Vaccine
Cases have taken a material turn for the worse, as growth exploded. I know dozens who tested positive. My daughter, Julia, did not feel well and took her for a rapid-test and it was negative. On April 6th, in my Wordled piece, I wrote that cases were growing in 10 states and needed to be watched closely. Well, things have deteriorated from a case growth perspective. I want to preface the 38% growth over two weeks by the fact that cases had plummeted since peaking at 807k/day on 1/14. The daily cases fell to a low of 27k on 4/3 and are now up to 38k/day for the two-week average. Almost 60k new cases were reported on 4/14, and of note, many people I know who test positive, do it at home and it goes unreported. So the new cases are likely substantially under counted. At least 33 states are showing an increases in cases over the prior two-week period. DC, MI, RI, PA, DE, NH, MD, MA, NY, NJ, VT, KS, IL, ME, OR, and WI all have growth of over 60% from the prior two weeks. On a positive note, hospitalizations and deaths continue to go in the right direction, albeit the declines are at a slower pace. Hospitalizations are down to under 15k from a peak of 160k and deaths are down to almost 500/day from a peak of 3.3k. Note some incredible picture editing below by my savvy staff (me). All done on iPhone.
The stories are crazy. Note to self, I will never go to China.
Real Estate
A 1.58 acre intracoastal lot in Boca (372 NE 5th Ave) was sold for $30mm in after the owner assembled four lots in 2020 for $15mm and knocked down the homes. The location is an “A” from my perspective, on the water, close to the inlet, walking distance from restaurants, near the Boca Resort and a short bike ride to the beach. I asked a broker what these lots would have sold for pre-pandemic and he suggested $8.5-10mm. Separately, a friend bought a place 18 months ago for $3.2mm and is selling it for $6.5mm in Miami near LaGorce. It is a townhouse on the water with a dock and is approximately 5,000 ft. I just do not recall so many doubles and triples in real estate in months or a year or so in my life. Below is a map of the 1st house discussed. The Red mark in the middle of the picture is the house.
Miami led the U.S. in rent hikes during the pandemic. Miami’s median apartment rent skyrocketed 58 percent to $2,988 per month since March 2020, according to a newly released report from Realtor.com. Median rents increased nationwide by 19.3 percent to a new high of $1,807, with Sun Belt cities seeing many of the biggest gains. The trend follows migration to these markets since the onset of work-from-home shift, with many residents leaving pricier Big Tech hubs. Over the past two years, Miami became a magnet for techies, as well as hedge funders and venture capitalists, quickly earning the city the moniker of “Silicon Valley of the South” or “Wall Street of the South.” I am incredibly impressed with the caliber of people in Miami now relative to what it was when I moved 5 years ago. Bright, successful, young, hungry, professionals are relocating for good reasons.
A spec home on the water on Venetian islands sold for $24mm. It sold for $4.6mm in 2017 and the new home of 5,188 was built on it. I can’t imagine more than $4mm was spent building, so the developer is in at $8.6 and sold for $24mm. Not bad, if you ask me.
In speaking with brokers in NYC, it seems in recent weeks there has been some pockets of slower activity. Is it rates? Fears of economy slowing down? One person listed their small, but high-end apartment, and after two weeks called the broker asking how it was going. ZERO showings. Maybe it was just too high of a listing price? Another reader is listing their apartment and the broker suggested things are not moving as quickly as a month ago and expect a lower price than discussed last month. However, in the Hamptons, things are hot as summer approaches with limited inventory. The broker told me this story: “Friend of mine went to the first showings for a house in Water Mill that listed for $1.725mm. Dozen people at first open house and it is supposedly going in to contract for $2.225mm.”
This article echos the sentiments that pockets of the R/E market in the US are cooling (NOT CRASHING), but slowing down. This article entitled, “The Sky-High Pandemic Housing Market Finds Gravity Does Exist,” gives examples for those who want to check it out. Open houses have thinned. Online searches for homes have dropped. Homebuilders, many of whom have accrued backlogs of eager buyers, say rising mortgage rates have forced them to go deeper into those waiting lists to sell each house. In a recent survey of builders, Zelman & Associates, a housing research firm, found that while builders were still seeing strong demand, cancellations had inched up, though still well below historically low levels. Builders have also grown increasingly concerned about rising mortgage rates and surging home prices.
Another article discussing cracks in the market is from Bloomber and discusses Boise, Idaho. Typical home values in Boise rose just 0.4% last month, down from a 4.1% monthly pace in June, according to Zillow data. That makes it the first of the country’s top 100 housing markets to flirt with falling prices this year.
For existing home priced between $100-250k, sales fell 26% from one year ago according to the WSJ. Some other charts on rates and existing home sales. No, I am not looking for a crash, but do believe a combination of rates, affordability, concerns around the economy will all leads to a cooling off. A 250bps move in rates equals $25k/year in interest expense on a $1mm mortgage for perspective.
