In this issue:

  • October HAR data check
  • A new president and what that means for property investors
  • A Thanksgiving unlike any before

Welcome back fellow property investors!  It has been an exciting past 30 days.  We have a new president…well kind of…at least it seems like we will have a new president.  We’ve unfortunately also got a new wave of coronavirus infections sweeping across the country.  But, fortunately there’s a light at the end of the tunnel with not one but two large pharmaceuticals coming out with vaccines with over 90% success rates in trials.  Not sure how long the tunnel is, but there is officially now a path to getting past the pandemic and this year remains bizarre as noted by the October HAR data released this past week.

October HAR Release
October showed us yet another month of very strong sales at the top end of the market and poor ones at the bottom.  The divergence makes complete sense as you think about which socioeconomic classes are impacted more by the pandemic, but the consistency of this result has been striking.  About an 80% increase in sales year over year for the top end of the market and a decrease in sales of about 30% on the lower end.

    • $1 – $99,999: decreased 32.7 percent
    • $100,000 – $149,999: decreased 27.4 percent
    • $150,000 – $249,999: increased 12.2 percent
    • $250,000 – $499,999: increased 52.5 percent
    • $500,000 – $749,999: increased 78.4 percent
    • $750,000 and above: increased 81.6 percent

Leasing also showed a very mixed bag this month.  The number of single family homes leased decreased by 5% year over year, while the number of townhomes leased increased 11% year over year.  Rental prices increased slightly for both property types as well.  

What kind of insight can we get from this data?  The only thing I’m certain of is the uncertainty.  Each month we see leasing numbers go up or down versus last year, pricing is inconsistent as well.  As is the future for many renters.  Suburbs are becoming more popular, apartments are struggling, and families are adapting to a new work-life balance where work and school both are very much completed at home now.  The trends will become clearer with time, but I personally would not recommend investing in a 1 bedroom house or townhome right now.  There’s my gem for this go round.

What the new presidency means for property investors
Ok, so in the eyes of many we don’t officially have a new president yet.  There are many on the right that are calling Joe Biden the “presumed” president elect.  However, it doesn’t seem that many people see a path to Trump staying in office at this point.  So, I will now go out on a limb and give my thoughts of what a Biden presidency means for real estate investors in the near future.

Stimulus first.  Though contested, the presidency is not really what’s holding up the latest stimulus deal.  It’s Georgia, specifically the 2 Senate runoffs there.  The Republicans and Democrats are running into the same issue as from before the presidential election, they’re too far apart on what the amount needs to be and what proceeds need to go towards.  And, we won’t know until January’s runoffs in Georgia who will have control of the Senate.  So, we have more postering on both sides.  There is real pain out there, and both sides agree stimulus is needed.  I just personally don’t think either side will be willing to give up enough to get a deal done until after we know which party controls the Senate.  So hold on for this one.

Evictions next.  Congress can include eviction relief as part of their stimulus package, but as President Trump and the CDC showed us earlier this year, Congress is not needed to pass a moratorium.  I do expect there to be further eviction relief granted one way or another, either by Congress or by President Biden once in office.  I only hope foreclosure relief comes at the same time, since landlords are hurting across the country and are not afforded the same protections by the government currently.

Taxes last.  More are coming for those making more than $400,000/year, that’s a certainty.  Could be in the form of federal income tax hikes, possibly increases in capital gains taxes, maybe the cancellation of 1031 exchanges, or some combination of all three.  Depending on your income, you really need to pay attention to this.  We don’t know yet what will pass, especially because we don’t know who will control the Senate.  But with Biden in and more stimulus coming in some form, the government needs revenue.  Bad.

We’ve officially hit the holiday season.  I’m seeing Christmas lights on houses already, a local Houston radio station has switched formats to strictly playing holiday music, and turkeys are proudly displayed at grocery stores.  I love food, and I love this holiday.  But this year, I won’t be spending it with any other family than my wife and dogs.  And there are many people who won’t see any family at all this Thanksgiving.  

As difficult as 2020 has been, I have a lot to be thankful for.  I’m thankful for my health, which means a lot more this year than most.  I’m thankful that my family has stayed close via video chat and phone calls, since physical interaction has been put on hold.  And, finally, I’m thankful for you all.  Property management is not an easy task, and this year has forced us to change some of our ways of doing business.  But, our property investors have rolled with the changes, offered their thoughts on ways to improve in the COVID era, and have been great sounding boards when I talk about my thoughts on markets and challenges facing us all.  So, thank you, and I hope you all have a great Thanksgiving.