by Calculated Risk on 3/02/2021 10:49:00 AM

It was 11 years ago that we started discussing the turnaround for apartments. Then, in January 2011, I attended the NMHC Apartment Strategies Conference in Palm Springs, and the atmosphere was very positive.

The drivers in 2011 were 1) very low new supply for apartments, and 2) strong demand (both favorable demographics, and people moving from owning to renting).  The move "from owning to renting" ended several years ago, and demographics for apartments are much less favorable than a decade ago.  

On demographics, a decade ago, a large cohort had been moving into the 20 to 29 year old age group (a key age group for renters).

As I noted in 2015, in the 2020s, a large cohort would be moving into the 30 to 39 age group (a key for ownership).   The drivers now are 1) very low supply of homes, and 2) strong demand (favorable demographics). 

NOTE: This graph uses the Vintage 2019 estimates. There are questions about these estimates, and we will have much better data when the 2020 Decennial Census data is released.

Click on graph for larger image.

This graph shows the longer term trend for three key age groups: 20 to 29, 25 to 34, and 30 to 39 (the groups overlap).

This graph is from 1990 to 2060 (all data from BLS: current to 2060 is projected).

We can see the surge in the 20 to 29 age group last decade (red).  Once this group exceeded the peak in earlier periods, there was an increase in apartment construction.  This age group peaked in 2018 / 2019 (until the 2030s), and the 25 to 34 age group (orange, dashed) will peak around 2023.  

For buying, the 30 to 39 age group (blue) is important (note: see Demographics and Behavior for some reasons for changing behavior).  The population in this age group is increasing, and will increase significantly over this decade.

This demographics is now positive for home buying, and this is a key reason I've expected single family housing starts to increase this decade.

by Calculated Risk on 3/02/2021 08:35:00 AM

Notes: This CoreLogic House Price Index report is for January. The recent Case-Shiller index release was for December. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: In High Gear: Annual US Home Price Appreciation Reaches Double Digits in January, CoreLogic Reports

CoreLogic® ... today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for January 2021.

2020 was a landmark year for the housing market. Factors such as record-low mortgage rates encouraged first-time homebuyers to dip their toe into the housing market and allowed home price growth to remain strong, despite economic uncertainty. The momentum continued into 2021, with home price growth experiencing its first double-digit annual appreciation since November 2013 in January at 10%. However, as we look forward to the rest of 2021, we may expect to see challenges for some prospective homeowners.
...
“Record-low mortgage rates were a significant driving force behind last year’s rebound in housing market activity,” said Frank Martell, president and CEO of CoreLogic. “However, heavy competition for the few houses on the market drove home prices to historic highs, and mortgage rates are no longer enough to sway the affordability challenges for consumers. While new construction may help balance home prices towards the end of 2021, we may expect to see demand slow in the medium-term.”
...
Nationally, home prices increased 10% in January 2021, compared with January 2020. On a month-over-month basis, home prices increased by 0.9% compared to December 2020.

“Despite first-time buyers driving high demand, entry-level homes remain in short supply,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Homes priced below 75% of the local median price had 14% annual appreciation, negating most of the benefits of record-low mortgage rates. When interest rates rise, the affordability squeeze for first-time buyers will become even more of a challenge.”
emphasis added

by Calculated Risk on 3/01/2021 07:06:00 PM

SPECIAL NOTE: The Covid Tracking Project will end daily updates on March 7th.

From Bloomberg on vaccinations as of Mar 1st.

"In the U.S., more Americans have now received at least one dose than have tested positive for the virus since the pandemic began. So far, 76.9 million doses have been given. In the last week, an average of 1.82 million doses per day were administered."

Here is the CDC COVID Data Tracker. This site has data on vaccinations, cases and more.

The US has averaged 1.5 million tests per day over the last week.  The percent positive over the last 7 days was 4.4%.

Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to below 1%, so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,224,488 test results reported over the last 24 hours.

There were 48,092 positive tests.

Over 1,200 US deaths have been reported in March. See the graph on US Daily Deaths here.

This data is from the COVID Tracking Project.

And check out COVID Act Now to see how each state is doing. (updated link to new site)

Click on graph for larger image.

This graph shows the 7 day average of positive tests reported and daily hospitalizations. 

The dashed line is the post-summer surge low for hospitalizations.

by Calculated Risk on 3/01/2021 04:00:00 PM

Note: This is as of February 21st.

From the MBA: Share of Mortgage Loans in Forbearance Increases Slightly to 5.23%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased by 1 basis point from 5.22% of servicers’ portfolio volume in the prior week to 5.23% as of February 21, 2021. According to MBA’s estimate, 2.6 million homeowners are in forbearance plans.
...
"A small increase in new forbearance requests, coupled with exits decreasing to match a survey low, led to the overall share of loans in forbearance increasing for the first time in five weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The largest rise in the forbearance share was for portfolio and PLS loans, due to increases for both Ginnie Mae buyouts and other portfolio/PLS loans.”

Fratantoni added, “The winter storm that impacted Texas and other states did lead to some temporary disruptions at servicer call centers, but these centers quickly returned to full operations.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April, then trended down - and has mostly moved slowly down recently.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.06% to 0.07%."

by Calculated Risk on 3/01/2021 01:14:00 PM

Here is another monthly update on framing lumber prices.  

This graph shows CME framing futures through Mar 1st.

Click on graph for larger image in graph gallery.

This is up 142% year-over-year - more than double.

There is a seasonal pattern for lumber prices, and usually prices will increase in the Spring, and peak around May, and then bottom around October or November - although there is quite a bit of seasonal variability.

Clearly there is another surge in demand for lumber.

by Calculated Risk on 3/01/2021 10:15:00 AM

From the Census Bureau reported that overall construction spending increased:

Construction spending during January 2021 was estimated at a seasonally adjusted annual rate of $1,521.5 billion, 1.7 percent above the revised December estimate of $1,496.5 billion. The January figure is 5.8 percent above the January 2020 estimate of $1,437.7 billion.
emphasis added

Both private and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,160.0 billion, 1.7 percent above the revised December estimate of $1,140.9 billion. ...

In January, the estimated seasonally adjusted annual rate of public construction spending was $361.5 billion, 1.7 percent above the revised December estimate of $355.5 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 5% above the bubble peak (in nominal terms - not adjusted for inflation).

Non-residential spending is 8% above the previous peak in January 2008 (nominal dollars), but has been weak recently.

Public construction spending is 1% above the previous peak in March 2009, and 38% above the austerity low in February 2014.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 21.0%. Non-residential spending is down 10.1% year-over-year. Public spending is up 6.8% year-over-year.

Construction was considered an essential service in most areas and did not decline sharply like many other sectors, but it seems likely that non-residential will be under pressure. For example, lodging is down 23% YoY, multi-retail down 31% YoY, and office down 4% YoY.

This was well above consensus expectations of a 0.7% increase in spending, and construction spending for the previous two months was revised up slightly.  A strong report.

by Calculated Risk on 3/01/2021 09:47:00 AM

One of the key questions for 2021 is: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?

Tracking inventory will be very important this year.

Click on graph for larger image in graph gallery.

This inventory graph is courtesy of Altos Research.

As of February 26th, inventory was at 325 thousand (7 day average), compared to 724 thousand the same week a year ago.  That is a decline of 55%.

A week ago, inventory was at 337 thousand, and was down 53% YoY.  Seasonally inventory should bottom in early March.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 3/01/2021 08:24:00 AM

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the vaccine is distributed.   

IMPORTANT: Be safe now - if all goes well, we could all be vaccinated by Q2 2021.

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

Click on graph for larger image.

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

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

This data is as of February 28th.

The seven day average is down 55.5% from the same week in 2019 (44.5% of last year).  (Dashed line)

There was a slow increase from the bottom, with ups and downs due to the holidays - but TSA data has mostly moved sideways in 2021.

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

Thanks to OpenTable for providing this restaurant data:

This data is updated through February 27, 2021.

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

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

Dining picked up during the holidays, the slumped with the huge winter surge in cases.  Dining is picking up again.

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

Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through February 25th.

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

Movie ticket sales were at $9 million last week, down about 94% from the median for the week.

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

The red line is for 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year since the Great Depression for hotels - before 2020).

Even when occupancy increases to 2009 levels, hotels will still be hurting.

This data is through February 20th. Hotel occupancy is currently down 23.8% year-over-year. In a few weeks, the year-over-year comparisons will be easy - since occupancy declined sharply at the onset of the pandemic - but occupancy will still be down significantly from normal levels.

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

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

Blue is for 2020. At one point, gasoline supplied was off almost 50% YoY. Red is for 2021.

As of February 19th, gasoline supplied was off about 19.8% (about 80.2% of the same week in 2019).

Note: Gasoline supplied was impacted by the snowstorm in Texas and other states.

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

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

This data is through February 27th for the United States and several selected cities.

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

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

According to the Apple data directions requests, public transit in the 7 day average for the US is at 53% of the January 2020 level. It is at 45% in Chicago, and 55% in Houston (the dip was a weather related decline) - and moving up a little recently.

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

This graph is from Todd W Schneider. This is daily data since early 2020.

This data is through Friday, February 26th.

Schneider has graphs for each borough, and links to all the data sources.

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

by Calculated Risk on 2/28/2021 09:30:00 PM

Weekend:
• Schedule for Week of February 28, 2021

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for January. The consensus is for the ISM to be at 58.9, up from 58.7 in January. 

• Also at 10:00 AM, Construction Spending for December. The consensus is for a 0.7% increase in construction spending.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures are up 28 and DOW futures are up 208 (fair value).

Oil prices were up over the last week with WTI futures at $62.22 per barrel and Brent at $65.11 barrel. A year ago, WTI was at $45, and Brent was at $51 - so WTI oil prices are UP about 45% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.73 per gallon. A year ago prices were at $2.43 per gallon, so gasoline prices are up $0.30 per gallon year-over-year.

by Calculated Risk on 2/28/2021 07:16:00 PM

SPECIAL NOTE: The Covid Tracking Project will end daily updates on March 7th.

From Bloomberg on vaccinations as of Feb 28th.

"In the U.S., more Americans have now received at least one dose than have tested positive for the virus since the pandemic began. So far, 75.2 million doses have been given. In the last week, an average of 1.74 million doses per day were administered."

Here is the CDC COVID Data Tracker. This site has data on vaccinations, cases and more.

The US is averaged 1.5 million tests per day over the last week.  The percent positive over the last 7 days was 4.5%.

Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to below 1%, so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,346,785 test results reported over the last 24 hours.

There were 54,288 positive tests.

Over 71,000 US deaths have been reported in February. This was the third worst month of the pandemic (2nd worst month on a per day basis). See the graph on US Daily Deaths here.

This data is from the COVID Tracking Project.

And check out COVID Act Now to see how each state is doing. (updated link to new site)

Click on graph for larger image.

This graph shows the 7 day average of positive tests reported and daily hospitalizations. 

The dashed line is the post-summer surge low for hospitalizations.