Consumer Confidence Stabilizing:The COVID-19 crisis revealed the strong relationship between the health of the U.S. economy and the active participation of the American consumer. The Conference Board reports their Consumer Confidence Index rose to 86.6 in May from April’s 85.7 revised level. Lynn Franco, Senior Director of Economic Indicators at The Conference Board, says “following two months of rapid decline, the free-fall in Confidence stopped in May.” (link to The Conference Board press release, #6172) Breaking down these numbers reported by Moody’s Analytics, there are some notable observations.
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Commercial Real Estate Transaction Activity Grinds to a Halt:Two months since the onset of the coronavirus crisis, commercial real estate transaction activity has reached a standstill, complicating plans across the industry to deploy capital and harvest returns. Real Capital Analytics (RCA) reports that total transaction volume in April totaled $11.0 billion—a 71% decline compared to a year ago—and every property type experienced a slowdown. Many investors have undoubtedly pulled back because of a combination of factors including the heightened uncertainty about the future trajectory of rents and occupancy levels. RCA reports that the number of unique active buyers plummeted during April and that the share of collapsed deals rose sharply. Government-imposed restrictions have also likely contributed to the halt in activity as stay-at-home orders and social distancing complicated efforts to conduct due diligence. Looking ahead, market participants can expect increased difficulty and uncertainty when pricing assets as the lack of transaction activity will limit the number of comparable sales.April Commercial Real Estate Transaction Volume by Property Type ![]() |
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Pace of Residential Construction Dropping and Existing Home Sales Slowing:Despite most state and local governments deeming construction as an essential business, residential construction activity decelerated in April, which if continued could aggravate housing shortages and undermine single-family home affordability. The Census Bureau reports that privately owned housing starts dropped 30.2% during April compared to the month prior and that residential building permits fell 20.8%. However, demand for new homes remains robust as the Census Bureau’s preliminary estimates of 623,000 new homes sold in April is 6.2% lower than one year ago.
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Pandemic Could Induce More People, Including Millennials, to Leave the City:The number of urban residents expressing interest in relocating to the suburbs has swelled in recent weeks, according to multiple media outlets. If confirmed, this would add to the ongoing net outflow of people from many major cities. The Brookings Institute conducted analysis two years ago identified shifting migration patterns in which suburbs began to grow more rapidly at the expense of core urban areas started as early as the middle of the last decade.
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The Weekly Briefing - May 26th, 2020
The Weekly Briefing – May 26th, 2020
In This Week’s Brief
- Consumer Confidence Stabilizing
- Commercial Real Estate Transaction Activity Grinds to a Halt
- Pace of Residential Construction Dropping and Existing Home Sales Slowing
- Pandemic Could Induce More People, Including Millennials, to Leave the City