20202019Rent Payments Collected by April 27th91.7%95.9%Rent Payments Collected by May 27th93.3%94.8%*Data brought to you by NHMC Rent Payment Tracker
CurrentPrior Week Change10 Year Treasury0.667%+0.010%DOW25,400.64+926.52S&P 5003,029.73+81.22Unemployment Rate14.7%--Total US COVID-19 Cases1,724k+146kTotal US COVID-19 Tests15,190k+2,960k*Metrics as of 11am EST on Friday, May 22
What's Happening Now
It appears that we’re entering into another interesting phase of the crisis in the coming weeks with talks of another possible round of stimulus, some states/cities/businesses partially opening back up and the markets having seen a pretty strong run to put the DOW back over 25,000, all while jobless claims have climbed over 40 million and more than 100,000 people have died from the virus in the US.
Take a second to read that paragraph again. There’s a lot of conflicting information in those sentences, yet, that’s where we find ourselves.
Expand that to the real estate world where you’ll read in our selection of articles this week that lenders are being far more conservative in their underwriting, requiring larger cash reserves, lower loan to value ratios and generally are in a risk-off mode. Contrast that with an extraordinary amount of capital being raised to take advantage of what many believe to be a risk-on distressed buying opportunity in the coming months/quarters.
Something to watch
The theme of these competing factors seems to persist in many facets of the current state of affairs, and until we gain confidence around the health side of this crisis, we anticipate the uncertainty will also persist. What we do know though, is we still believe in the fundamentals of real estate as a wealth creation strategy, and we don’t believe this crisis will change that over the long term.
Stay healthy out there, try to send somebody you haven’t talked with in too long a note of gratitude, and remember that the only way we’re getting out of this is together!
-Adam Hooper, CEO
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U.S. real estate economists are predicting some light at the end of the tunnel.
Silicon Valley and Seattle giants — Facebook, Microsoft, Apple, Twitter — were the first to send their employees home as the virus spread to the U.S. Now they’re among the last to return them to the office.
Some underwriting standards across the board have being tightened up as lenders begin to finance deals again.
Given unraveling retail rents, a J.C. Penney REIT might be a tough sell in this environment. But the chain’s stores might become a goldmine for Amazon.
When the stores re-open, about 130 Apple stores will be operational in the United States.
“We will move slowly and carefully, driven by business need, with safety as our highest priority,” the bank said in the memo.
As the coronavirus pandemic keeps Americans confined to their homes, nearly every industry has been negatively impacted by the disease, and businesses losing out on cash flow have started laying off workers.
Those hoping the coronavirus-fueled recession will bring another round of bargain-basement real estate prices are likely out of luck.
Investment firms are sitting on “a staggering amount of dry powder” as they wait for big property discounts brought on by the pandemic.
Where We Go From Here
*If you like this post, be sure to enroll in our free six week course on the fundamentals of commercial real estate investing — RealCrowd University.*
