Things That Make You Go Hmmm...

Having worked Wall-Street adjacent at the Journal, spending many a happy hour with traders after hours, and at a posh, super-secret investment banking firm on 5th Avenue, I tend to be skeptical about talks of stock market corrections in the summer or in December because I know just how much this set enjoys the beach and winter break. I mean, if they can’t go to the Hamptons in the summer what is it really all for?

This year’s version of the now all too familiar summer-is-gearing-up-in-the-Hamptons article from the Wall Street Journal focused on just how pricey a girl’s weekend in the Hamptons could be.

That price tag for a simple weekend could be $5,000 or more. The writer honed in on the “new” extravagance-for-content angle (Instagram photos and TikTok videos), but I remember when reading this article published in May that despite the writer arguing that there was something new about the impetus for these trips (seemingly based on her experience watching Sex and the City), it seemed to me that not much had changed since I lived in New York in the late 90s and early 2000s. For a certain group of folks, these trips are aspirational, especially for the ladies. What is $5,000 if you can get a connection, job interview or husband out of it? I know several people where that return on investment worked out just fine. Not recommending this course of action, of course, but just sayin’.

There is nothing new under the sun and lavish spending in the Hamptons is certainly not new, just ask Nick Carraway. If we call the 1920s the Roaring 20s, I call these the Raging 20s. Rage, roar…it’s just a different flavor. Many of the almost 500 mansions on the Gold Coast were destroyed or repurposed after the Great Depression as there were fewer rich to afford the upkeep. I believe we will experience something similar in our future as I see luxury sitting empty all over the country.

This property in East Hampton was listed eight days before the above article was published.

So far, no takers. 33 of the 337 homes listed on Realtor.com in East Hampton are priced over $10 million dollars. If you know East Hampton and just how small it is, that is a lot. This one, just down the road, recently had a $2M price drop.

And a $5M price drop for this property:

You are probably thinking to yourself what is a couple of mil’ to these folks? Having spent a lot of time in East Hampton when I worked for the widow of an entertainment mogul, I know for a fact that those millions matter to many in East Hampton who live on leverage. Every day now someone shares on xTwitter a new post from Facebook or Reddit from a poster in distress who invested in real estate deals gone bad.

Unfortunately, these tales of woe will turn from a whisper to a roar in the days to come. There are many investor properties as well as real estate investors in the Hamptons, and I believe next year’s Hampton’s article will be a bit different.

How do I know? Let’s take a look at changes in spending from Bank of America’s proprietary credit card data (h/t @Don Johnson from

MacroEdge

)

The drops in air travel, lodging and entertainment are quite concerning. I remember when I first started studying macro I would wonder why folks would get so upset about small % drops here and there. I then realized how much of our economy focused on growth, not status quo. It’s not enough for us to consume the same, we have to consume more and more for things to keep trucking along at the pace needed to sustain the Raging 20s.

The green shoots in the table above are also part of the story. Could transit spending be up because more people have been called back to work, or because more people need to work, or work multiple jobs? Could restaurants and bar spending be up because as more people go back to the office they end up spending more going out to eat or at happy hours? Could some be taking more trips out to eat to nurse the wound of not being able to vacay? Could online retail be up because that is where you can get the best deals? I just bought a ridiculous amount of Earl Grey on Amazon because it was $2 cheaper per box, and I have been noticing a concerning lack of it on grocery store shelves. I’m addicted.

Those small percentage drops in lodging will mean a lot to our hotel and mini-hotel operators. According to Mashvisor’s short-term rental proprietary data “the average occupancy rate in the US market in the spring of 2025 is around 50%, down from 57% last year” largely due to the “influx of new short-term rental listings that have outpaced demand growth, inflation-induced belt-tightening among US travelers, and a lull in international arrivals amid ongoing political uncertainties.” Airbnb has only ever had one play - add listings. As increases in listings start to slow, the company itself will suffer more stock price heartache, but I’m more concerned for the folks that got in over their heads, taking out leverage to own multiple short-term rental properties based on dubious occupancy projections.

I just searched Airbnb for rentals in East Hampton from July 1st to July 6th and there are 129 still available.

Yeppers. Are they ridiculously overpriced? For sure! But someone was banking on that income. When it does not arrive, distress mounts. As distress builds, more and more of these owners will list their properties as they can no longer stomach the increases to property taxes, insurance and cost of upkeep. I’ve heard through the grapevine about California residents receiving notices from their insurance carriers of 40% price hikes to cover losses from the fires…even in areas that are not prone to fire. I can only imagine what it looks like for those that are. Could this be why I saw an inordinate amount of 30+ delinquency for one of my clients who is heavy in CA that I did not see elsewhere? Perhaps.

These macro themes take a very long time to play out but play out they do. This week we received both new and existing home sale results for May and boy, do they have a story to tell. Black Knight also reported that the largest single-month volume for foreclosure sales in two years occurred in May.

Below I will review detailed sales, price and inventory results, including shifts in market share between existing and new homes. I will compare my existing home sales forecast for May and show you some very interesting things I’ve found in the data and revisions that gives one pause. Unfortunately, we are now too familiar with the downward revisions to the jobs report which call into question the Strong and Resilient! proclamations about the economy.

What of revisions in housing data? They are getting curiouser and curiouser. Last year, the Census took a machete to the new home sales and price numbers whacking the all-time median price high from $496,800 in October 2022 to $460,300, a -7.35% chop chop to the peak in new home prices. Those home prices drive financial models across the hyperfinancialized system just as those jobs numbers do. As much as I think the leadership at some of these builders has the intellect of a box of rocks, I remember just how confused my former leadership was based on reports from industry analysts. I’ve told you previously that NAR was forced to revise its results due to a challenge from CoreLogic in the last cycle. Surely, NAR learned their lesson and wouldn’t do such a thing again, right? Let’s look at some interesting patterns in the data. Additionally, we will be heading to Minnesota, home of Nick Carraway’s creator, stopping in Minneapolis, to dive into what appears to be a stronger market than most in the United States.

Ulysses Awsumb

will also share his thoughts on his home state of Minnesota and how it has changed as well as delve into his experience with some of the affordable housing public/private partnerships there.

Without further ado, let’s find out what May home sales results have to tell us about our path and current speed…