Delve into the latest economic indicators as hosts analyze consumer confidence and the impacts of housing statistics. Discover insights into market dynamics with recent movements in equities and fixed income. The discussion heats up with a unique 'policy potluck' segment, covering crucial updates from Washington, including banking information and government efficiency measures. They also explore intriguing proposals on federal land development aimed at tackling the housing shortage. Prepare for a whirlwind of real estate insights!
Recent economic signals reveal consumer caution, indicated by increased savings and decreased spending, amidst concerns of a potential recession.
In the housing market, while prices rise due to limited supply, new home sales decline, highlighting challenges for builders and opportunities for investors.
Deep dives
Economic Data Insights
Recently published economic data shows a notable increase in personal income by 0.9% in January 2025, suggesting a stronger-than-expected financial footing for consumers. However, personal spending decreased by 0.5%, and the personal savings rate rose to 4.6%, indicating a more cautious consumer attitude ahead of the Federal Reserve's upcoming policy decisions. Despite the positive reception of the PCE price index data that demonstrated a slight decline in inflation pressures, its pace of deceleration remains slow, indicating that consumers may not see substantial relief in interest rates soon. This combination of factors exemplifies the complexities facing the economic landscape, particularly as consumer confidence and spending patterns appear to fluctuate.
Trends in Consumer Confidence
The Consumer Confidence Survey reveals a concerning dip, with the index falling seven points to 98.3, suggesting growing apprehension among consumers regarding the economy. This decline raises alarms as 68% of respondents believe a recession is likely within the next year, reflecting heightened anxiety about job security and economic stability. The falling expectations index, which dropped below 80, often signals looming recessionary pressures, suggesting consumers are bracing for tougher economic conditions. Consequently, this waning confidence may negatively impact sectors, particularly retail and hospitality, potentially leading to increased investor caution and opportunities in more resilient industries.
Housing Market Dynamics
Recent data from the S&P CoreLogic Case-Shiller Home Price Index reveals a 3.9% annual increase in home prices as of December 2024, hinting at a recovery in the housing market despite previous declines. Notably, regions like New York and Boston reported significant gains, driven by ongoing underbuilding and limited supply, particularly in single-family homes where demand is still prevalent. However, new home sales fell by 10.5% month-over-month, indicating challenges for builders amid rising construction costs and interest rates. This duality in the housing market creates intriguing opportunities for investments, especially in areas where supply remains constrained and demand continues to grow.
Market Response to Geopolitical Developments
Recent geopolitical tensions, particularly relating to U.S.-Ukraine relations and tariff implementations, have prompted a risk-off sentiment among investors, impacting market performance significantly. The yield on the 10-year U.S. Treasury has declined, reflecting increased demand for safer assets as investors react to uncertainty regarding global developments and economic stability. Concurrently, the volatility index has risen, indicating heightened market apprehension, while sectors such as real estate are showing resilience amidst the broader sell-off. Despite the downturn affecting consumer discretionary and technology sectors, real estate equities appear to benefit from lower yields, showcasing a shift in investment preferences during uncertain times.
Our hosts, Omar Eltorai and Cole Perry, deliver a packed agenda this week with a discussion on recently released economic data, including PCE, GDP, consumer confidence, and housing statistics. They also share a brief update on the state of the markets, focusing on movements in equities and fixed income, as well as the latest earnings reports from retailers. Finally, the team serves up a "policy potluck," where we cover a variety of topics from Washington, and provide updates on aggregate banking information.
Key Moments:
0:51 Economic data highlights
05:50 Market updates and retailer earnings
08:45 Housing market insights
12:08 Treasury yields and market movements
16:58 Retailer earnings deep dive
21:55 Policy potluck: Banking and government updates
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