Last Week Review - Economy, Multifamily, Rents, Employment & More

[Jorge Abreu]

QUICK REVIEW OF HOW THINGS STOOD AS OF LAST WEEK. 

Covering the Economy, Multifamily Real Estate, Rent Collections, Employment, Interest Rates & Stocks.

ECONOMY:

Staggering Rise in Unemployment

The official unemployment rate stood at 14.7% in April but will likely rise to over 20% by the end of Q2. Cumulative jobless claims since March amount to approximately 26% of the U.S. labor force. Some states have fared better than others. Georgia, Hawaii, Michigan, Nevada and Washington are some of the states that have fared worse because of a high proportion of tourist or manufacturing jobs. Colorado, New York and Massachusetts have fared somewhat better with more resilient sectors, such as life sciences and financial services, and a high proportion of jobs that can be performed from home. Jobless  .k/l.numbers should begin to fall in Q3 as the economy comes out of lockdown. 

RENT COLLECTIONS:

Data are collected weekly, with the first data collection happening the 1st through the 6th, and all data
collections following will be cumulative. For example, the second collection will be the 1st through the 13th, the
third will be the 1st through the 20th and so on for the remainder of each month.

INTEREST RATES:

May 18th. According to the Mortgage Bankers Association, the share of mortgage loans in forbearance increased to 8.16% on May 10th, a 25 basis-point increase from the prior week, and up from 0.25% in early March. The total number of mortgages on forbearance plans now exceeds four million.

STOCK MARKET:

May 21st. Treasury Secretary Stephen Mnuchin indicated Thursday that additional stimulus likely will be needed to counteract the coronavirus’s negative impact on the economy, although it is unlikely to occur immediately. Secretary Mnuchin also expects Q2 2020 to be the
trough for the economy, with a surge in output occurring in Q4.

EMPLOYMENT:

MULTIFAMILY:

CoStar’s Asking Rent Declines 0.9% in COVID-19 Period. CoStar’s daily asking rent PSF data shows the March 11st through May 25th total change at -0.9%, slightly improved from earlier reporting. (See chart below.) Keep in mind that the asking rent data does not include concessions.

Mixed Story about Class Performance. NMHC’s rent collection data indicates that Class A is doing better than B, and that Class C is doing the worst (although the spread between the three is not dramatic). However, statistics on rent change in the COVID-19 period indicate that Class A rents have fallen more than Class B and C. This is what happened during the last downturn. In the Figures section below
are two examples. ApartmentData.com shows the change in rents in DFW and Austin from the end of March to mid-May. Austin Class A rents dropped 3.1% vs. - 2.1% in Class B and C. For DFW, Class A and B had similar results (rents down 1.7% and 1.5%, respectively) while Class C was down 0.7%.

SOURCE: CBRE

[Jorge Abreu]

@Nicholas Mann Thank you. I got the majority of it from a CBRE report but I thought it was great information to share with the bigger pockets community.