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Friday, September 10, 2021

Q3 GDP Forecasts: Downgraded to Around 4%

by Calculated Risk on 9/10/2021 01:11:00 PM

GDP forecasts have been downgraded sharply for Q3 due to COVID.  

The surge in COVID cases has impacted some consumer spending, caused further supply chain disruptions, and possibly some downgrades due to policy (expiration of unemployment benefits during a COVID wave).

Here is a table of some downgrades over the last 40 days.


From BofA Merrill Lynch:
We continue to track 4.5% qoq saar for 3Q GDP. [Sept 10 estimate]
emphasis added
From Goldman Sachs:
We now expect GDP growth of 3.5% in Q3. [Sept 9 estimate]
And from the Altanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2021 is 3.7 percent on September 10 [Sept 10 estimate]

Hotels: Occupancy Rate Unchanged Compared to Same Week in 2019

by Calculated Risk on 9/10/2021 10:52:00 AM

Note: The year-over-year occupancy comparisons are easy, since occupancy declined sharply at the onset of the pandemic.

The occupancy rate was unchanged compared to the same week in 2019 due to Labor Day demand and Hurricane Ida.

Labor Day weekend leisure travel and Hurricane Ida-related demand lifted U.S. hotel occupancy out of a five-week slump.

After declining for the past five weeks, weekly U.S. hotel occupancy inched up 30 basis points for the week ending Sept. 4 to 61.3%, according to the latest data from CoStar hospitality analytics firm STR. Weekend occupancy, Friday and Saturday, increased to 77%, which was the country’s highest since the first week of August.

Compared with Labor Day weekend in 2019, which was a week earlier, occupancy was nearly the same, indicating the desire to travel remains strong despite the increase in COVID-19 cases, and occupancy declines over the past several weeks are more due to the return of in-person schools and the slow materialization of business and group travel.
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy RateClick on graph for larger image.

The red line is for 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

Occupancy is above the horrible 2009 levels and weekend occupancy (leisure) has been solid - but, according to STR, occupancy has been declining due to both seasonal factors and the "pandemic situation".

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

With solid leisure travel, the Summer months had decent occupancy - but it is uncertain what will happen in the Fall with business travel - usually weekly occupancy increases up to around 70% in the weeks following Labor Day due to renewed business travel.

Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Decreased

by Calculated Risk on 9/10/2021 08:45:00 AM

Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.

This data is as of September 7th.

From Black Knight: Forbearances Decrease

The number of active forbearance plans fell by 92K (-5.4%) this week, driven by lingering August expirations and new activity taking place in September.

Volumes fell significantly across all investor classes, with portfolio/PLS plans seeing the greatest decline at 40K (-7.7%). Plans were also down 26K among both FHA/VA and GSE loans, for -3.8% and -5.1% declines, respectively. Overall, plan volumes are now down 129K (-7.4%) from the same time last month and have fallen by 3.1M (-67%) from their peak in May 2020.

Additional activity is expected later in the month as well, with nearly 540K plans still scheduled for review for extension/removal in September. Of those, nearly 400K are set to reach their final plan expirations based on current allowable forbearance term lengths.

Black Knight ForbearanceClick on graph for larger image.

Significant volume declines could still be seen in coming weeks as those plans reach their final expirations and exiting borrowers return to making mortgage payments in October.
emphasis added
Black Knight reports 1,618,000 loans in forbearance, or 3.1% of all mortgages.

Thursday, September 09, 2021

Portland Real Estate in August: Sales Up 2% YoY, Inventory Down 23% YoY

by Calculated Risk on 9/09/2021 06:19:00 PM

Mostly I'm going to post local market data (Sales, Active Inventory, New listings) weekly on the CalculatedRisk Newsletter.

Please subscribe to the Newsletter!  

Here are the first 6 of about 30 local markets that I track: 6 Local Housing Markets in August. This includes Denver, Las Vegas, San Diego, North Texas (Dallas/Ft. Worth), Northwest (Seattle) and Santa Clara (San Jose).

For Portland, OR:

Closed sales in August 2021 were 3,219, up 2.2% from 3,149 in August 2020.

Active Residential Listings in August 2021 were 3,066, down 23.3% from 3,995 in August 2020.

Months of Supply was 1.0 Months in August 2021, compared to 1.3 Months in August 2020, and 2.3 months in August 2019.

Inventory in August was down 3.6% from last month, and up 59.5% from the record low in March 2021.

COVID and the Economy

by Calculated Risk on 9/09/2021 04:59:00 PM

I'm tracking new cases, hospitalizations and deaths due to COVID, mostly to assess the impact on the economy.

Just over a month ago, many Americans, and economic analysts, assumed COVID was mostly behind us. Unfortunately they were wrong, and COVID has impacted the economic outlook once again.

For example, on July 30th, Goldman Sachs wrote: "we are launching our Q3 GDP tracking estimate at +9.0% (qoq ar)"

Then in mid-August, they downgraded their forecast: "We have lowered our Q3 GDP forecast to +5.5%, reflecting hits to both consumer spending and production."

And this week, on September 6th, they downgraded their forecast again: “We now expect GDP growth of 3.5% in Q3." That is about one third of the real growth they expected just 5 weeks ago!

Other analysts have made similar downgrades for Q3. There are several reasons for the change: the surge in COVID cases has impacted some consumer spending, supply chain disruptions are ongoing (and COVID is impacting the supply chain recovery), and possibly some downgrades due to policy (expiration of unemployment benefits during a COVID wave).

Right now it is looking like new cases are peaking, but far above the 12,000 per day level we saw in June.   And it looks like we might see another Winter wave for several reasons:

1) There is a huge reservoir of virus (about 150,000 new cases have been reported per day).

2) Schools are reopening, and kids spread the virus easily.

3) Many Americans have moved past taking even the easiest mitigation efforts (like wearing masks indoors).

4) Only 53.4% of Americans are vaccinated, and the percent is increasing very slowly.

5) Thanksgiving is only 77 days from now (followed by Christmas and New Years).  Families will want to gather in person this year.  

A severe winter COVID wave could be a significant economic drag in Q4, and Q1 2022.  And the most vulnerable are losing their extended unemployment benefits, and could be facing eviction.  Hopefully there won't be another wave.  Best to all

September 9th COVID-19: Some Progress

by Calculated Risk on 9/09/2021 03:34:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 377,622,065, as of a week ago 372,116,617. Average doses last week: 0.79 million per day. 

COVID Metrics
Percent fully Vaccinated53.4%52.7%≥70.0%1
Fully Vaccinated (millions)177.4175.0≥2321
New Cases per Day3136,558156,340≤5,0002
Deaths per Day31,0761,214≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%).
2my goals to stop daily posts,
37 day average for Cases, Currently Hospitalized, and Deaths
🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths
✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of the 11 states that have achieved 60% of total population fully vaccinated: Vermont at 68.4%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland. New Jersey, Washington, New York, New Mexico, New Hampshire at 60.4%.

The following 13 states and D.C. have between 50% and 59.9% fully vaccinated: Oregon at 58.8%, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, and Michigan at 51.0%.

Next up (total population, fully vaccinated according to CDC) are South Dakota at 49.9%, Kentucky at 49.6%, Arizona at 49.4%, Kansas at 49.1%, Ohio at 49.0%, Nevada at 48.7%, Texas at 48.6%, Utah at 48.5% and Alaska at 48.1%.

COVID-19 Positive Tests per DayClick on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

Leading Index for Commercial Real Estate "Loses Steam in August"

by Calculated Risk on 9/09/2021 02:26:00 PM

From Dodge Data Analytics: Dodge Momentum Index Loses Steam in August

The Dodge Momentum Index dropped 3% in August to 148.7 (2000=100) from the revised July reading of 154.0. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

The commercial planning component lost 2% in August, while the institutional component fell by 6%.

Projects entering the earliest stages of planning have declined following the torrid pace set in the spring. The decline in August was the third consecutive drop in the Momentum Index, which is now off 14% from the most recent high in May, since May the commercial component is down 10% and the institutional component is 22% lower. This reversal comes as prices for materials used in nonresidential buildings increase in combination with a shortage of labor and a rising number of new COVID-19 cases from the Delta variant, all working in concert to undermine confidence in the fledgling construction recovery. There were some pockets of strength in August, however, as more data center, education and warehouse projects moved into planning relative to the prior month. Additionally, the overall level of the Momentum Index is 19% higher than one year ago; institutional planning was up 17% and commercial planning was 20% higher than last year.
emphasis added
Dodge Momentum Index Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 148.7 in August, down from 154.0 in July.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a decline in Commercial Real Estate construction through most of 2021, but perhaps a pickup towards the end of the year, and growth in 2022 (even with the decline in the August index).

6 Local Housing Markets in August

by Calculated Risk on 9/09/2021 11:40:00 AM

Starting this month, I'm going to post local market data (Sales, Active Inventory, New listings) weekly on the CalculatedRisk Newsletter.

Here are the first 6 of about 30 local markets that I track: 6 Local Housing Markets in August

This includes Denver, Las Vegas, San Diego, North Texas (Dallas/Ft. Worth), Northwest (Seattle) and Santa Clara (San Jose).

Weekly Initial Unemployment Claims decrease to 310,000

by Calculated Risk on 9/09/2021 08:35:00 AM

The DOL reported:

In the week ending September 4, the advance figure for seasonally adjusted initial claims was 310,000, a decrease of 35,000 from the previous week's revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256,000. The previous week's level was revised up by 5,000 from 340,000 to 345,000. The 4-week moving average was 339,500, a decrease of 16,750 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week's average was revised up by 1,250 from 355,000 to 356,250.
emphasis added
This does not include the 96,198 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 102,521 the previous week.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 339,500.

The previous week was revised up.

Regular state continued claims decreased to 2,662,831 (SA) from 2,796,781 (SA) the previous week.

Note: There are an additional 5,090,524 receiving Pandemic Unemployment Assistance (PUA) that decreased from 5,413,238 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.  And an additional 3,807,646 receiving Pandemic Emergency Unemployment Compensation (PEUC) up from 3,800,000.

Weekly claims were lower than the consensus forecast.

Wednesday, September 08, 2021

Las Vegas Real Estate in August: Sales up 14% YoY, Inventory down 36% YoY

by Calculated Risk on 9/08/2021 08:09:00 PM

The Las Vegas Realtors reported Southern Nevada home prices pause at record level; LVR housing statistics for August 2021

A report released Wednesday by Las Vegas REALTORS® (LVR) shows local home prices holding steady as families were preoccupied getting their kids in school, graduates off to college and all the seasonal reasons that cause what LVR leaders called a momentary pause while the market readies for its last surge before the expected holiday slowdown begins.

Meanwhile, the local housing supply continues to grow slowly, making August the seventh straight month when there were more properties available without offers than in the previous month.
LVR reported a total of 4,098 existing local homes, condos and townhomes sold during August. Compared to one year ago, August sales were up 10.3% for homes and up 29.8% for condos and townhomes. So far this year, local home sales are on pace to exceed last year’s total.

By the end of August, LVR reported 3,256 single-family homes listed for sale without any sort of offer. While up from the previous month, that’s down 29.8% from the same time last year. The 687 condos and townhomes listed without offers in August was down 55.5% from one year ago.
With eviction and foreclosure bans still in place, the number of so-called distressed sales remains near historically low levels. LVR reported that short sales and foreclosures combined accounted for just 0.3% of all existing local property sales in August. That compares to 1.2% of all sales one year ago, 2.1% of all sales two years ago, 2.5% three years ago and 6.1% four years ago.
emphasis added
1) Overall sales (single family and condos) were up 14.0% year-over-year from 3,594 in August 2020 to 4,098 in August 2021.

2) Active inventory (single-family and condos) is down 36.2% from a year ago, from a total of 6,183 in August 2020 to 3,943 in August 2021.  And months of inventory is extremely low.

3) Active inventory is up 7.5% from the previous month (July 2021), and up 68% from the all time low in February 2021 (2,352 single family and condos active listings).