Answering Your Top Questions on Real Estate Economics (Part 3) - EP 80
Jan 11, 2024
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The podcast dives into migration patterns impacting real estate markets, with Sun Belt cities growing while expensive coastal cities experience out-migration. Topics include high mortgage rates, leveraging equity, office debt risks, recession risk perceptions, builder sentiment, comparing renting to homeownership costs, and the financial benefits of owning over renting.
Sun Belt cities experience in-migration while coastal cities face out-migration, indicating a shift in population dynamics towards suburbs.
Exports contribute more to GDP than imports, with the strength of the dollar affecting export competitiveness and consumer inflation.
Deep dives
Migration Trends in Housing Markets
Cities in the Sun Belt like Austin and Dallas experienced strong in-migration, while larger coastal cities such as New York and Los Angeles faced out-migration. Urban areas in large cities saw population decline while mid-sized cities and suburban areas gained population, indicating a shift away from urban cores. Millennials have been moving to suburbs, driven by factors like job growth, good weather, and the ability to work remotely.
Trade Balances and Exports vs. Imports
Exports matter more than imports in terms of economic activity since exports contribute directly to GDP while imports reflect consumption. The trade balance itself does not significantly impact the economy; rather, export numbers are crucial. The strength of the dollar affects export competitiveness, influencing prices and inflation for consumers.
Impact of Mortgage Maturity on Commercial Real Estate
Maturity of office debt poses risks for lenders, but the impact is more pronounced for smaller banks than larger ones. While significant office debt maturing in the next years could affect market dynamics, it is unlikely to lead to systemic risks similar to the 2008 financial crisis due to improved capital requirements and reduced exposure to derivatives. Transaction volume may increase as mortgage maturities drive some property owners to sell, impacting the commercial real estate market.
In this episode of The REconomy Podcast™ from First American, Chief Economist Mark Fleming and Deputy Chief Economist Odeta Kushi gather the entire First American Economics team one more time to address your top questions, examining migration patterns, inflation, the rate lock-in effect, maturing office debt, recession risk and more.
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