Xander Snyder

Institutional home buying remains constrained—just look at this chart ResiClub queried the Parcl Labs API directly to determine where institutional operators bought (and sold) the most homes in May 2024 My latest for ResiClub https://lnkd.in/guH3vuaK

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An analysis by USA TODAY based on data provided by the National Association of Realtors found that since 2020, median homeowners in all seven #swingstates - #Arizona, #Georgia, #Michigan, #Nevada, #NorthCarolina, #Pennsylvania and #Wisconsin - accumulated housing wealth at a much higher rate than median homeowners across the United States. The gap was the most pronounced in North Carolina. While the median U.S. homeowner saw their home value go up by 34%, the median Tar Heel homeowner enjoyed a 60% boost. Median homeowners in Arizona and Georgia saw their home’s net worth rise by 56% and 58% respectively, while Michiganders enjoyed a 47% increase.  Among the three remaining swing states, home values rose 43% in Pennsylvania; 50% in Wisconsin and 46% in Nevada. Homeownership has been the backbone of wealth building in the U.S. dating back to the 1950s.  And now in an election with razor-thin margins, between Trump, a Republican, and Vice President Kamala Harris, a Democrat, it may very well come down to home value gains in seven swing states and the effect it has on voter intention. Statistically speaking, homeowners tend to vote in much bigger numbers than renters.  For instance, in the 2022 midterm elections, that difference stood at 21 percentage points, with 58.1% of homeowners and 36.5% of renters voting, according to data from the U.S. Census Bureau.   Interviews with housing economists, researchers and independent homeowning voters in swing states indicate that the additional financial cushion provided by the upswing in housing wealth could tip the balance in favor of the incumbent party.  In fact, the phenomenon has a name: “Homevoter hypothesis.”  That’s when home equity gains or losses could change voter preference for candidates.  According to research study published earlier this year found that for every 1% increase in home value appreciation, voters who previously voted for the incumbent were .3% more likely to stay with the incumbent nationally. But in swing counties, they were .44% more likely to stay with the incumbent and not flip to a challenger.  Lawrence Yun #DarylFairweather National Association of REALTORS® https://lnkd.in/ecKfnBNB

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Brevan Howard's $12 billion flagship fund is down 2.4% this year. 🏢 Despite gaining 0.77% in May, Brevan Howard's Master Fund is falling behind the industry average. 🏢 Hedge funds have averaged 5% gains year-to-date, according to data from research firm HFR. 🏢 Macro hedge funds have beaten equity and emerging market funds to post average gains of 6.5% this year. #hedgefunds https://lnkd.in/eBNMyhMX

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Here's an interesting juxtaposition of two opinion articles published today on which way the Fed "should" go with interest rates. These authors aren't quite taking diametrically opposite positions, but it's close.   The first, co-authored by Mark Zandi (chief economist and Moody's) and Jim Parrott of Parrot Ryan Advisors, argues that the Fed needs to cut rates now. Their argument centers around how shelter costs are measured in the CPI and PCE, saying that owners equivalent rent is an inadequate measure that doesn't accurately capture housing costs and, as a result, shows higher inflation that is actually happening. They also mention that other countries don't measure housing costs this way, and if we excluded home ownership from housing costs, inflation here is already at 2%.   The second, from Vivekanand Jayakumar (professor of economics at University of Tampa), argues essentially the opposite, that the Fed needs to 1) raise its forecast of the *long-term* neutral rate and 2) expand its guidance of target inflation to a 1.5-2.5% range rather than just 2%. A higher neutral rate would indicate a "equilibrium" rate at which the Fed's monetary policy is neither restrictive or loose, but "just right", in other words admitted that a meaningfully higher rate is required than what the Fed admits to maintain a goldilocks policy position.   Read both opinion pieces here: https://lnkd.in/egVVsJ6W   https://lnkd.in/exWUD7ut   I don't have an opinion on what the Fed "should" do, only what might happen to long-term rates if short term rates don't fall by much. You can read my take on that here: https://lnkd.in/ehkbidrU

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A recent conversation with a major VC captured a provocative sentiment: “For the next decade, it’s clear—Long NYC, short SF.” Audacious? Maybe. Classic New York hubris? Definitely. But the reasoning stands. New York’s dense ecosystem of Fortune 500 companies is an advantage. With large language models commoditizing tech infrastructure, his argument is coding is now widely accessible. The real differentiator will be in customer relationships and go-to-market strategies. Thus his outlook. As the focus shifts from pure tech to relationship-driven moats, NYC is primed to capture significant business value. In the end, success will be about who best leverages relationships in this evolving landscape.

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U.S. DC plans cannot get enough passive assets! $600 bil. to $3.8 trillion. DB plans have focused on alternatives.... All of the data can be found here: https://lnkd.in/enWi6RY7

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U.S. office vacancy rates have increased to 18%+. (See: https://lnkd.in/gS5dHVCc) This is placing significant downward pressure on valuations, as evidenced by the recent sale of offices in NYC at a heavy 67% discount to valuation. With over $110 billion of CRE loans due to be repaid in 2024, or in need of refinance, the pressure continues to build on the banking sector exposed to this asset class. #usa #cre #impairment #debt

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The dominant narrative of 2024 was that the housing market would pick up steam as rates came down. Pretty conventional thinking that was backed up by empirical data about the usual response of sales to falling mortgage rates. It was certainly our forecast at the start of 2024. But it just hasn't happened. The biggest miss in terms of our forecast has been the Lower Mainland where sales activity has yet to wake up (other markets have been more or less following the script). I still think a recovery is on the horizon, but it might a 2025 story at this point. #housing

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The Federal Open Market Committee (FOMC) today announced that it will leave the Federal Funds rate unchanged at 5.25-5.50 percent for a sixth consecutive meeting. However, in a new development, it announced an easing of its quantitative tightening policy. Starting in June, the Fed will lower the roll-off rate of its Treasury Securities from $60 billion to $25 billion per month. This means that, while the Fed will not begin selling Treasuries in June, it will be allowing fewer of them to mature. It will not alter its roll-off rate for mortgage-backed securities (MBS), which will remain at $35 billion per month. So, what is quantitative tightening (QT)? And how does this move represent a slight easing of monetary policy? In addition to setting the Federal Funds rate, which directly impacts short term rates, the Fed also has some control over longer-term interest rates through what’s called “Open Market Operations” (OMO). This simply refers to either the buying or selling of Treasuries or MBS. By growing or shrinking the Fed’s balance sheet with OMO, it can indirectly influence longer-term interest rates as well. When the Fed buys bonds, demand for bonds increases, driving up their price and reducing their yield. This is referred to as Quantitative Easing (QE), which occurred after the Global Financial Crisis. When the Fed sells securities or allows securities it holds to mature without replacing them, it decreases the demand for bonds, which decreases their price and increases interest rates. This is referred to as Quantitative Tightening (QT). Slowing the rate of balance sheet shrinkage, which is what the Fed decided to begin doing in June, equates to a slight loosening of monetary policy. It is, however, a gradual easing, as directionally the Fed will still be shrinking its balance sheet by $60 billion per month.

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COLUMN: The Nareit index is among the several standards many real estate securities investors now use to benchmark the performance of their U.S. REIT securities portfolios. And the FTSE EPRA Nareit Global Real Estate Index, likewise, has become the standard that many real estate securities investors use to benchmark the performance of their European real estate securities portfolios.

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My latest WSJ article focuses on a cool study by three finance professors* who used their own money to carry out ~7,000 options trades at 6 retail brokers and measure the execution quality at each one. The results showed a frankly shocking discrepancy between the prices they got at the worst-performing broker (Robinhood) and the best (Vanguard #1, followed by Fidelity #2). Robinhood is disputing the study but hasn't yet pinpointed what, in its view, the authors did wrong. One caveat with this study is that it measured transaction costs not accounting for fees; Robinhood charges near-zero fees for options trading, and not 65 cents/$1 per contract like the other brokers. Accounting for fees, Robinhood is the best broker for options with a one-cent bid-ask spread, but when spreads are wider, you're better off elsewhere, the authors say. Note that there isn't mandatory disclosure of execution quality data in options, like there is in equities with Rule 605 reporting, and brokers don't voluntarily release stats about this on their websites. So this study is, to my knowledge, the first analysis of its kind to be released publicly. *Xing Huang, Phillippe Jorion and Christopher Schwarz https://lnkd.in/e2gegdBs

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Isabelle Bousquette takes an insightful look at the war for what still remains the greatest resource, AI notwithstanding: human talent.

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MSCI Inc.'s third quarter report shows more signs that the apartment transaction market is picking up. Apartment sales posted year-over-year increases for the second straight quarter in Q3 as they rose 9% to hit $35.8 billion. While prices fell 6.3% YOY in Q3, the pace of decline is moderating. Data from the National Multifamily Housing Council backs up the MSCI report. In the association's October 2024 Quarterly Survey of Apartment Market Conditions, respondents indicated that sales volume, equity financing and debt financing came in above the breakeven point in Q3. Here is my story on the market uptick: https://lnkd.in/eHd2999d

▶️ New Podcast: Crypto.com Sues SEC After Receiving Wells Notice ➡️ Crypto.com has filed a lawsuit against the SEC, claiming that the regulator is overstepping its authority by attempting to regulate secondary market sales of certain crypto tokens on their platform. ➡️ The lawsuit was filed in response to a Wells Notice, a preliminary warning from the SEC informing Crypto.com of potential charges. ➡️ The lawsuit seeks to prevent the SEC from expanding its jurisdiction over crypto transactions and to clarify the legal status of such transactions. https://lnkd.in/eXTxJnUf

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Large US banks may be more exposed to commercial property than many appreciate because of credit lines and term loans they provide to real estate investment trusts, who disproportionately use such facilities in times of stress A new study by Viral Acharya at NYU and colleagues in the US and Germany shows that big banks’ exposure to CRE lending grows by about 40% when that indirect lending to REITs is added Their intensive draw-downs in times of stress poses a risk to bank balance sheets that's generally been ignored in recent discussions around CRE exposure, they argue Such exposure can create “sudden encumbrance of capital and/or liquidity,” the report says, adding that regulators should better incorporate a lender’s exposure to property investment trusts when conducting stress tests on bank capital “Collateral damage to the largest banks from intensive credit line draw-downs means that systemic risk from total CRE exposure is probably much greater than if you only look at direct exposure,” said Manasa Gopal, an assistant professor of finance at Georgia Tech, who’s one of the report’s authors, along with Acharya, Max Jager and Sascha Steffen Read the full write-up on Bloomberg News ⬇

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For fintech customers caught in the Synapse collapse, the ball is unfortunately in the bankruptcy court, meaning resolution is likely to be maddeningly slow. But it's hard to ignore the tepid regulatory response to the collapse of Synapse. Fintechs are NOT banks and do not take deposits -- and thus are not insured. Regulators need to do something about this problem. https://lnkd.in/gAJ67tY5  

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It's interesting that the Federal Reserve is trying to improve on how banks tap the Discount Window, which has been a topic of discussion since the spring of 2023, when both Silicon Valley Bank and Signature Bank did not contracts in place or the proper collateral to borrow from the facility. Instead, those banks went to the Federal Home Loan Banks, which are also under scrutiny. The Fed's Vice Chair Philip Jefferson is wading into the discussion and trying to transform bankers' views that borrowing from the emergency lending facility is highly stigmatized — and shouldn't be. Roughly 80% of all banks in the United States — about 3,900 eligible banks — now have contracts in place to be able to borrow from the discount window and among those, 2,000 have already pledged assets to the window totaling nearly $2.6 trillion of discounted value.  #federalreserve #banks #bankingsector https://lnkd.in/gBrN8EqN

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New story on AI & CRE: The application of artificial intelligence in commercial real estate has been accelerated, with lenders and advisors using this more robust technology/algorithm to generate critical insights for properties and portfolios. For an inherently data-rich industry like commercial real estate, including AI in business strategies can inspire cutting-edge thoughts and innovation that eventually help with making investment decisions, market participants said. Many thanks to tingting zhang at The TerraCotta Group, Salumeh Companieh at Cushman & Wakefield, Peter Weiss at Alpaca Real Estate, Jorge Aldecoa at reAlpha, Jeff Bolte at Trimont, Kala Halbert and Hannah Overhiser at Prophia, and Douglas Weill at Hodes Weill & Associates, who shared their observations and first-hand experience in utilizing AI in CRE. https://lnkd.in/g4hM4Bgd #commercialrealestate #ai

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