Daily Digest

Debt & Equity Finance

October Numbers To Watch

October 10, 2022

Colliers Quick Hits | October, 2022 | Data from Aaron Jodka, Director of Research, U.S. Capital Markets

Consumer Confidence is Up

Consumer confidence rose to an index level of 108 in September, per the Conference Board, well above the consensus of 104.6. This comes as the Fed continues to battle inflation and higher interest rates. However, energy prices have stabilized, reducing some of the inflationary pressures on consumer goods. In particular, lumber prices have returned to pre-pandemic levels, reducing the cost to build new homes significantly.

New Home Sales Surge

New home sales surged in August to an annualized rate of 685,000, per stats from the Department of Housing and Urban Development, also well ahead of the consensus of 500,000. However, existing home sales slipped by about 0.4%, and homes nationwide continue to see price drops.

Home Price Appreciation Slows

The S&P CoreLogic Case-Shiller index showing slowing home price appreciation in July (the latest statistics available). The deceleration of 2.3 percentage points marks the most significant month-over-month decline in the index’s history. Nationally, prices were down 0.33% month-over-month.

Mortgage Rates Hit 7.0%

Bankrate reported that the average 30-year fixed-rate mortgage hit 7.0% in late September, the highest since 2008. This is further slowing the already decelerating residential housing market as buyers are priced out of the market.

Refinances at a Low

The Mortgage Bankers Association noted that refinancing is, unsurprisingly, at a 22-year low.

Home Sales Fall Through

Redfin reports that in August, sales of more than 20% of homes under contract fell through in Jacksonville, Las Vegas, Atlanta, Orlando, Fort Lauderdale, Phoenix, Tampa, Fort Worth, San Antonio, and Houston. National, in August, that figure was 15.2%. Typically, 12% of home sales fall through.

Remote Work Pushes Home Prices

The Federal Reserve Bank of San Francisco found that more than 60% of home price appreciation in the two years ending in November 2021 was attributable to remote work. As many companies shift their WFH policies, the market has yet to see what returning the the office will do to home prices.

Cities With Highest Levels of Remote Work

The Census Bureau’s latest American Community Survey ranked Washington D.D., (48.3%), Washington State (24.2%), Maryland (24%), and Colorado and Massachusetts (tied at 23.7%) as having the largest shares of employees working from home in 2021.

Restaurants Back to Normal

OpenTable reports that the number of seated diners has returned to 100% of pre-pandemic levels. This news comes as commercial retail properties see their strongest performance since pre-pandemic times and e-commerce retreats. Most notably, Amazon has backtracked on several million square feet of industrial space as their online retailing branch slows.

Office Space Lagging

Kastle Systems reports that its back-to-work barometer remains at less than 50% nationally. Meanwhile, Microsoft surveyed over 20,000 employees and found that 84% would be motivated to return to the office to socialize with co-workers. Tenants today are looking for high-quality, collaborative workspaces that offer employees an engaging environment.

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