A longish comment, apologies in advance. In your CRE data, the least impacted was Hotel and Industrial. I found that interesting. I am in a GP that is doing CRE development in Mexico. Hotel, Office and Multi res in Mexico City and Industrial in Guadalajara. Started about 2019. I don't have current market rate of change information or detailed market information but can say based on financial reporting our Industrial is on profit targets, Hotel looks very promising while we are suffering in Office and Multi Res is so so. Office we are looking to dispose of and focus more on Industrial in Guadalajara. The Multi res in Mexico City is rebuild in place as there is no new land there. I suspect that the same issues with inventory oversupply you are describing in the US are part of the issue in Multi Res as many Mexico City neighborhoods are gentrifying and sales are slower than expected. I am also doing different LP's in Toronto, Canada starting in 2017 which are single family and multi res/purpose built rentals. We are not seeing the high inventory issue you describe there. We have severe issues on cost with fees, up to 25% of total unit cost and zoning/permits up to 4 years in approval. One 245 single house development is 2 years late as we are only granted partial building permits but the houses are occupied as soon as we finish whatever build the city allows. Opposite problem to what you are finding on your road trips. Length of approval is long enough it yields a business model funding the zoning process on multi res urban densification projects and then selling the zoned property to a developer which we are also doing. I am very interested to follow your work and look for parallels I can apply to Canada and Mexico. Finally I am in another LP that is US centric and your CRE profile fits the most recent financial updates where we are already significantly reducing return expectations. Thanks for the hard work!
Wow. Fascinating. Thank you so much for reading and for sharing (never apologize about length). I love hearing about other places....and I find Mexico and Canada very interesting. One of my big worries in the U.S. is how much empty industrial I saw. Everyone is banking on it being fine, but there is a lot, a lot out there.
And those permit delays...we were seeing some of that here in places like Florida, but then the floodgates opened. I think the delay causes confusion about how much inventory is and isn't there (at least in the U.S)
Please keep me posted as I'm so curious. And you are most welcome. Thank you again for the intel.
The empty industrial is interesting. I turned down an Industrial GP in early 2022 that was focused on the southern US. The US LP I am in took part in the LP that the Industrial GP set up. The hypothesis was that a lot of the existing industrial stock was warehouse that was built to a particular height. Advancements in automated pick pack and ship technologies enabled much higher storage capabilities and more complete automation. So a lot of the existing stock would not be able to handle the new technology, lacking the height. Companies could consolidate more existing stock into fewer new warehouses leaving existing warehouse stock stranded. They got a quick hit mid 2022 on a piece of land beside the Tijuana border crossing but the rapid expansion of the warehousing space has slowed, your trip to Port St Lucie I believe, is a case in point. So they are not anticipating as rapid a growth cycle for the forseeable future. You might be seeing some of the impact of the consolidation. I will be interested to hear details on the trip.
Oh- that is so, so interesting! Maybe that is indeed what it was. Some of them looked brand new and some were just cleared lots with "Coming Soon". I will train a sharper eye on it now and will also look at the height. Great intel and thank you so much!
Howdy Melody. Enjoying your substack. Great work. I like your “on the ground” approach, and I think that perspective is very important. My perspective from the cheap seats near Austin is that there are A LOT, and I mean A LOT, of potential first time homebuyers who are pretty frustrated (to put it mildly) that they are boxed out of their desire to own a home first due to prices and now due to rates. I can’t help but believe that the oncoming inventory in Austin would be easily absorbed if one or both of those problems were solved. On that note, I wonder if you are correct and those problems will be “solved” by a crash. It is certainly logical. But then I can’t help but consider that a “crash” would be accompanied by the same unemployment, falling wage, deflation badness that screwed first time home buyers in 2008 (and during the depression). I guess the question is, which do our overlords desire more: deflation or inflation? The Fed is certainly on an inflation tear at the moment, but faced with a high unemployment Depression-Recession versus a fully employed but higher inflation, I can’t help but believe that politicians and bureaucrats would prefer the latter. Inflation is easier. Sneakier. And the people tend to squeal far less that way. And when the Fed decides to flip-flop, boy do they flip-flop hard in the other direction (as we’ve seen in the past two years). So in Austin (and nationally) are we headed for a nasty crash on the back of a surge in new home (and maybe distressed) inventory combined with higher for longer interest rates? Maybe, but I am not as certain as you. And I keep the door open for the other extreme as well. In any case, keep challenging my brain and keep up the good work.
Hi Dustin - Thank you! Yes - it is a bit tricky at the moment. I think barring an exogenous event my forecast is that this takes several years to play out and there will absolutely be demand at the right price point. And, I totally agree with you that if rates go down it will be because of a troubling economic situation. One other way some of that pent-up demand might get satiated is with gov't solutions we haven't seen yet. There is already a significant amount of downpayment assistance left over from COVID for first-time buyers. And, there is a gigantic HUD budget under consideration. I think there will be a fight over that, but gov't money is coming. Right now though they believe the only solution is to build more with which I completely disagree. I think people assume I think the crash is imminent, but my forecast is much more conservative. We have a housing crisis that will take some time to play out. Thank you so much for the comment, and I plan to do just that!
Melody, loved your interview with Adam. I heard you say you lived in Florida so maybe you can help me with a question. I own 3 rental condos in Estero Florida. Good neighborhood with a golf course. The HOA, POA , and insurances are all going up. I have increased rent a bit. In your opinion do you think this area is also in danger of declining prices? If I do decide to sell is there an ideal time to get out? Thanks for your help. I'm glad I found you as I don't see many talking about the housing market on the same level as you. Thank you.
Hi there - thank you so much for coming over and the kind words! So, I think affordability in Florida is getting crushed with insurance, etc. To me, it's important to know - who your ideal renter is and then also what your competition is by looking at new multifamily, new built-to-rent as well as short-term rental in the neighborhood. So much coming online soon. I will be heading over to that area next week and if I have time I will swing by to see what I see. And, a lot, a lot really comes down to how much you like being in the rental business. If you like it, then downturns are manageable. If it's a hassle, it will likely get to be more of one in the near future...hopefully that helps. Thank you for reading!
I have always been suspect of a lot of the big CRE data providers. They seem like they are paid to shill for the CRE industry. Always seem to have a perma-rosey outlook. Some owned by large CRE brokers. Conflict of interest?
Found your substack following your Wealthion appearance and really excited to read and learn more! I really appreciate your boots on the ground insights The revelation about some significant portion of these new builds in certain areas are not really being tracked or going into the statistics was surprising to hear about. When those types of transactions pick up, would that mostly affect the home prices fairly adjacent to those new communiities? I'm a first time homebuyer (in 2026, at thisi rate) lookinig at neighborhoods that don't have these new build communities too close by, nor are they likely to be much affected from the impending Airbnb implosion.
(I will say that in my area, whicih is the suburbs south of Houston, list prices seem to more or less have peaked last May/June, which was around a 50% run-up from late 2019 prices , but are still close to that top. Starting to see some price drops and slightly longer days on market for the not-perfect houses.)
Hi there - thank you so much for reading. So, my thesis includes some other components as well including the short-term rental. But, I think generally everything is going to be hit. Houston has had a ton of building of both multifamily and SFH, so I honestly believe it is set for correction. I didn't stop but I drove by when leaving Austin to head to FL and saw so many new-builds. I believe by later this Fall we will start to see inventory steadily climb. Houston on a net basis has increased in listings for sale since Jan about 5%. And, it is already happening faster in many cities. You might enjoy this article I wrote in January that outlines the whole thesis. https://www.housingwire.com/articles/debunking-the-housing-inventory-myth-in-preparation-for-2023/. Thank you again!
OK, good to hear you will move to annual. You can still get up-to-the-current-minute trends by comparing year to year by plotting change in the annual comparison from the previous week. Noise, by definition, does not yield meaningful analysis. And market prices are inherently noisy. I am in the real estate development business and I do read your blog. I am somewhat bearish, less so than you, but it is good cautionary reading for me. And I am totaly a data monger.
Hi Philip - thank you. I think we may be misunderstanding each other. Firstly - it's not about moving to annual - it's about looking at data from all sides. I understand you believe that is the best way to look at data generally and appreciate your suggestion when I have the full year for the listings for sale. I do look at and include the Y-o-Y for MSAs, etc. where I have it.
But I'm trying to see something else here which is a real-time shift week-over-week as people often change these listings from long-term rental and to listings for sale. And, you may not be aware, but I'm tracking many of these cities for readers. I've included the major cities as well special requests. I want to see all of it. And, I give the month-over-month and year-over-year in the monthly summary and included some Y-o-Y info above with the weekly data above as a snippet - I would include it all if I had the time. And as a data monger, if you would like to assist in any way that would be appreciated. For instance, I would happily include a year-over-year each week in the reference section, but I don't have the band with. Let me know if you are interested.
May I suggest that your data would be meaningful if you compared to the same period one year prior. For example, showing Bentonville up 76% is obviously fall colors tourist traffic. You should compare to the same week or month the previous year, which would mostly remove seasonality. Comparing to the previous week is really mostly noise.
Oops - if you are talking about STR I misunderstood and let me clarify some more. I think Bentonville is football as colors haven't changed in the South yet where I've seen, but that is a good idea about the NE. And as stated in the post when I have August numbers it will be the year over year comparison for STR. You may have missed the summary of the year-over-year comparison for the top 5 for July in the post. For listings for sale and rent those are the harder ones to get for non-MSA on a historical monthly basis- not the STR. I have all that monthly data going back 5 years. That isn't available on a weekly basis, so I triangulate to get a full picture. The full summary will be available next week of all cities as stated in the post. I typically link it so people can request to see a more comprehensive view of all the cities I track.
Hi Philip - thank you. Very familiar with data science and best practice and why most don't look at weekly. I have a very different goal here and show those types of comparisons in the monthly summary where I have them. This data is supposed to be more real-time to show me where/when the inflection happens and the "noise" often shows me the transition from STR, to LTR to listing for sale - that is what I'm after. And, often you cannot get it at this granular level (for free). IYou can only get at the MSA. Once we round the corner to January I will have a full year for all cities I started tracking then. Thank you for reading.
Being newish to your writing I just wanted to say thanks for sharing all your wonderful research, I'm loving it!
Thank you so much for reading - I usually do it all in one post, but it was a bit of a crazy week. Appreciate the kind words!
A longish comment, apologies in advance. In your CRE data, the least impacted was Hotel and Industrial. I found that interesting. I am in a GP that is doing CRE development in Mexico. Hotel, Office and Multi res in Mexico City and Industrial in Guadalajara. Started about 2019. I don't have current market rate of change information or detailed market information but can say based on financial reporting our Industrial is on profit targets, Hotel looks very promising while we are suffering in Office and Multi Res is so so. Office we are looking to dispose of and focus more on Industrial in Guadalajara. The Multi res in Mexico City is rebuild in place as there is no new land there. I suspect that the same issues with inventory oversupply you are describing in the US are part of the issue in Multi Res as many Mexico City neighborhoods are gentrifying and sales are slower than expected. I am also doing different LP's in Toronto, Canada starting in 2017 which are single family and multi res/purpose built rentals. We are not seeing the high inventory issue you describe there. We have severe issues on cost with fees, up to 25% of total unit cost and zoning/permits up to 4 years in approval. One 245 single house development is 2 years late as we are only granted partial building permits but the houses are occupied as soon as we finish whatever build the city allows. Opposite problem to what you are finding on your road trips. Length of approval is long enough it yields a business model funding the zoning process on multi res urban densification projects and then selling the zoned property to a developer which we are also doing. I am very interested to follow your work and look for parallels I can apply to Canada and Mexico. Finally I am in another LP that is US centric and your CRE profile fits the most recent financial updates where we are already significantly reducing return expectations. Thanks for the hard work!
Wow. Fascinating. Thank you so much for reading and for sharing (never apologize about length). I love hearing about other places....and I find Mexico and Canada very interesting. One of my big worries in the U.S. is how much empty industrial I saw. Everyone is banking on it being fine, but there is a lot, a lot out there.
And those permit delays...we were seeing some of that here in places like Florida, but then the floodgates opened. I think the delay causes confusion about how much inventory is and isn't there (at least in the U.S)
Please keep me posted as I'm so curious. And you are most welcome. Thank you again for the intel.
The empty industrial is interesting. I turned down an Industrial GP in early 2022 that was focused on the southern US. The US LP I am in took part in the LP that the Industrial GP set up. The hypothesis was that a lot of the existing industrial stock was warehouse that was built to a particular height. Advancements in automated pick pack and ship technologies enabled much higher storage capabilities and more complete automation. So a lot of the existing stock would not be able to handle the new technology, lacking the height. Companies could consolidate more existing stock into fewer new warehouses leaving existing warehouse stock stranded. They got a quick hit mid 2022 on a piece of land beside the Tijuana border crossing but the rapid expansion of the warehousing space has slowed, your trip to Port St Lucie I believe, is a case in point. So they are not anticipating as rapid a growth cycle for the forseeable future. You might be seeing some of the impact of the consolidation. I will be interested to hear details on the trip.
Oh- that is so, so interesting! Maybe that is indeed what it was. Some of them looked brand new and some were just cleared lots with "Coming Soon". I will train a sharper eye on it now and will also look at the height. Great intel and thank you so much!
Howdy Melody. Enjoying your substack. Great work. I like your “on the ground” approach, and I think that perspective is very important. My perspective from the cheap seats near Austin is that there are A LOT, and I mean A LOT, of potential first time homebuyers who are pretty frustrated (to put it mildly) that they are boxed out of their desire to own a home first due to prices and now due to rates. I can’t help but believe that the oncoming inventory in Austin would be easily absorbed if one or both of those problems were solved. On that note, I wonder if you are correct and those problems will be “solved” by a crash. It is certainly logical. But then I can’t help but consider that a “crash” would be accompanied by the same unemployment, falling wage, deflation badness that screwed first time home buyers in 2008 (and during the depression). I guess the question is, which do our overlords desire more: deflation or inflation? The Fed is certainly on an inflation tear at the moment, but faced with a high unemployment Depression-Recession versus a fully employed but higher inflation, I can’t help but believe that politicians and bureaucrats would prefer the latter. Inflation is easier. Sneakier. And the people tend to squeal far less that way. And when the Fed decides to flip-flop, boy do they flip-flop hard in the other direction (as we’ve seen in the past two years). So in Austin (and nationally) are we headed for a nasty crash on the back of a surge in new home (and maybe distressed) inventory combined with higher for longer interest rates? Maybe, but I am not as certain as you. And I keep the door open for the other extreme as well. In any case, keep challenging my brain and keep up the good work.
Hi Dustin - Thank you! Yes - it is a bit tricky at the moment. I think barring an exogenous event my forecast is that this takes several years to play out and there will absolutely be demand at the right price point. And, I totally agree with you that if rates go down it will be because of a troubling economic situation. One other way some of that pent-up demand might get satiated is with gov't solutions we haven't seen yet. There is already a significant amount of downpayment assistance left over from COVID for first-time buyers. And, there is a gigantic HUD budget under consideration. I think there will be a fight over that, but gov't money is coming. Right now though they believe the only solution is to build more with which I completely disagree. I think people assume I think the crash is imminent, but my forecast is much more conservative. We have a housing crisis that will take some time to play out. Thank you so much for the comment, and I plan to do just that!
Totally agree and anticipate that Congress will pour vinegar into Uncle Jerome’s wine with lots of expensive legislation.
Melody, loved your interview with Adam. I heard you say you lived in Florida so maybe you can help me with a question. I own 3 rental condos in Estero Florida. Good neighborhood with a golf course. The HOA, POA , and insurances are all going up. I have increased rent a bit. In your opinion do you think this area is also in danger of declining prices? If I do decide to sell is there an ideal time to get out? Thanks for your help. I'm glad I found you as I don't see many talking about the housing market on the same level as you. Thank you.
Hi there - thank you so much for coming over and the kind words! So, I think affordability in Florida is getting crushed with insurance, etc. To me, it's important to know - who your ideal renter is and then also what your competition is by looking at new multifamily, new built-to-rent as well as short-term rental in the neighborhood. So much coming online soon. I will be heading over to that area next week and if I have time I will swing by to see what I see. And, a lot, a lot really comes down to how much you like being in the rental business. If you like it, then downturns are manageable. If it's a hassle, it will likely get to be more of one in the near future...hopefully that helps. Thank you for reading!
Thank you Melody. I'll check back in with you after next week. Keep up the good work :)
Thank you!
I have always been suspect of a lot of the big CRE data providers. They seem like they are paid to shill for the CRE industry. Always seem to have a perma-rosey outlook. Some owned by large CRE brokers. Conflict of interest?
Exactly - by hook or crook, right? Rose-colored glasses at least.
Found your substack following your Wealthion appearance and really excited to read and learn more! I really appreciate your boots on the ground insights The revelation about some significant portion of these new builds in certain areas are not really being tracked or going into the statistics was surprising to hear about. When those types of transactions pick up, would that mostly affect the home prices fairly adjacent to those new communiities? I'm a first time homebuyer (in 2026, at thisi rate) lookinig at neighborhoods that don't have these new build communities too close by, nor are they likely to be much affected from the impending Airbnb implosion.
(I will say that in my area, whicih is the suburbs south of Houston, list prices seem to more or less have peaked last May/June, which was around a 50% run-up from late 2019 prices , but are still close to that top. Starting to see some price drops and slightly longer days on market for the not-perfect houses.)
Hi there - thank you so much for reading. So, my thesis includes some other components as well including the short-term rental. But, I think generally everything is going to be hit. Houston has had a ton of building of both multifamily and SFH, so I honestly believe it is set for correction. I didn't stop but I drove by when leaving Austin to head to FL and saw so many new-builds. I believe by later this Fall we will start to see inventory steadily climb. Houston on a net basis has increased in listings for sale since Jan about 5%. And, it is already happening faster in many cities. You might enjoy this article I wrote in January that outlines the whole thesis. https://www.housingwire.com/articles/debunking-the-housing-inventory-myth-in-preparation-for-2023/. Thank you again!
OK, good to hear you will move to annual. You can still get up-to-the-current-minute trends by comparing year to year by plotting change in the annual comparison from the previous week. Noise, by definition, does not yield meaningful analysis. And market prices are inherently noisy. I am in the real estate development business and I do read your blog. I am somewhat bearish, less so than you, but it is good cautionary reading for me. And I am totaly a data monger.
Hi Philip - thank you. I think we may be misunderstanding each other. Firstly - it's not about moving to annual - it's about looking at data from all sides. I understand you believe that is the best way to look at data generally and appreciate your suggestion when I have the full year for the listings for sale. I do look at and include the Y-o-Y for MSAs, etc. where I have it.
But I'm trying to see something else here which is a real-time shift week-over-week as people often change these listings from long-term rental and to listings for sale. And, you may not be aware, but I'm tracking many of these cities for readers. I've included the major cities as well special requests. I want to see all of it. And, I give the month-over-month and year-over-year in the monthly summary and included some Y-o-Y info above with the weekly data above as a snippet - I would include it all if I had the time. And as a data monger, if you would like to assist in any way that would be appreciated. For instance, I would happily include a year-over-year each week in the reference section, but I don't have the band with. Let me know if you are interested.
May I suggest that your data would be meaningful if you compared to the same period one year prior. For example, showing Bentonville up 76% is obviously fall colors tourist traffic. You should compare to the same week or month the previous year, which would mostly remove seasonality. Comparing to the previous week is really mostly noise.
Oops - if you are talking about STR I misunderstood and let me clarify some more. I think Bentonville is football as colors haven't changed in the South yet where I've seen, but that is a good idea about the NE. And as stated in the post when I have August numbers it will be the year over year comparison for STR. You may have missed the summary of the year-over-year comparison for the top 5 for July in the post. For listings for sale and rent those are the harder ones to get for non-MSA on a historical monthly basis- not the STR. I have all that monthly data going back 5 years. That isn't available on a weekly basis, so I triangulate to get a full picture. The full summary will be available next week of all cities as stated in the post. I typically link it so people can request to see a more comprehensive view of all the cities I track.
Hi Philip - thank you. Very familiar with data science and best practice and why most don't look at weekly. I have a very different goal here and show those types of comparisons in the monthly summary where I have them. This data is supposed to be more real-time to show me where/when the inflection happens and the "noise" often shows me the transition from STR, to LTR to listing for sale - that is what I'm after. And, often you cannot get it at this granular level (for free). IYou can only get at the MSA. Once we round the corner to January I will have a full year for all cities I started tracking then. Thank you for reading.