DECEMBER 4, 2024 – Between this and the new administration demanding government workers be in the office 5 days a week, the demand for office buildings may rebound. Personally, every 100,000sf+ multi-tenant office building appraisal (buildings are typically of 1970s and 1980s construction….old and outdated they say) I have reviewed over the past two years has had occupancy from 96%-100%. Demand remains high for those that must use office space for their business.
Shalom,
The Mann
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FINRA ending the pandemic exemption for home office inspections could be a real game changer for remote work in the banking and broader financial services industry.
“Work-from-home regulations for banks are changing, and some of the industry’s biggest players would rather bring employees in five days a week than make the effort to comply—including making regular inspections of workers’ homes.”
During the pandemic, brokerage industry watchdog the Financial Industry Regulatory Authority (FINRA), suspended rules on workplace inspections to make it easier for banks to allow their employees to work from home. The agency is now moving back to its pre-pandemic requirements for monitoring workplaces, meaning some home offices will have to be registered with regulators and remotely inspected at least every three years under a new pilot program.
https://finance.yahoo.com/news/banks-don-t-want-inspect-093400950.html
Tag Archives: The Mann
INFLATION UPDATE
NOVEMBER 15, 2024 – The October report came in at 2.6%, in line with my estimate at 2.6%. ((NOTE: Per the way CPI was calculated in 1980, inflation is actually 10.3%)). The 3-month annualized inflation rate is 1.1%. The 6-month annualized inflation rate is 1.0%. These figures are well below the annualized rate (2.6%) and thus indicate the annual CPI should decline slightly. However, the data is predicting a reading of 2.9% next month. I think it will be between 2.8% and 3.0% over the next two months. Then in the 1st Quarter of 2025 we may see a significant decline.
As a side note, the monthly CPI has been at 0.20% or lower for 6 straight months. There are many areas of deflation out there.
The market has the Fed Funds Rate priced at 4.4%. It was recently cut to 4.75%. The Fed doesn’t have much some catching up to do. And Powell confirmed such this week when he said they are in no rush to cut rates. Til next month.
Shalom,
The Mann
STOCK MARKET UPDATE
NOVEMBER 8, 2024 – IN 2023, with the Dow around 34,000, I was the only person I could find predicting 40,000 in 2024. In May 2024, I posted the following:
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TARGET 1 – The current rally peaks out around 40,522. This is followed by a decline to the 37,008-38,350 range. Then a final rally to the 42,872-45,640 range with possible targets within the range being 44,214 and 44,298.
TARGET 2 – The current rally peaks out around 41,906. This is followed by a decline to the 38,392-39,734 range. Then a final rally to the 44,256-47,819 range with possible targets within the range being 44,256 and 45,598.
Obviously, it would be best to round the numbers and use general ranges. Based on the above, I would say the current rally should take us above 40,000 and up to 42,000 at the high end. A small decline should end in the 37,000 to 39,000 range. And the last big move in this Bull Market should end between 43,000 and 47,000.
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The Dow hit a low of 38,499 on August 5th. Right in the target range forecast above. Today the Dow has crossed 44,000 for the first time. Right around the targets identified over 6 months ago. I am pleasantly surprised how many analysts now (try to) use the Elliott Wave Theory. 44 years ago probably only a handful of people in the world used it. I have relied on it my whole adult life. The above shows it works.
With Trump winning, I will be watching to see if this Bull Market can be extended beyond the ranges forecast above. I won’t get into that right now. Maybe I will do that the last week of December when I make my various 2025 forecasts.
I will leave you with a forecast that Bitcoin will go to $100,000-$190,000 in 2025. A wide range yes. But, this is a volatile asset with a relatively short period of historical data and trends to analyze. I am heavily invested in it and silver which should go above $40.
Enjoy the Holidays!
Shalom,
The Mann
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TARGET 1 – The current rally peaks out around 40,522. This is followed by a decline to the 37,008-38,350 range. Then a final rally to the 42,872-45,640 range with possible targets within the range being 44,214 and 44,298.
TARGET 2 – The current rally peaks out around 41,906. This is followed by a decline to the 38,392-39,734 range. Then a final rally to the 44,256-47,819 range with possible targets within the range being 44,256 and 45,598.
Obviously, it would be best to round the numbers and use general ranges. Based on the above, I would say the current rally should take us above 40,000 and up to 42,000 at the high end. A small decline should end in the 37,000 to 39,000 range. And the last big move in this Bull Market should end between 43,000 and 47,000.
————————————————————
The Dow hit a low of 38,499 on August 5th. Right in the target range forecast above. Today the Dow has crossed 44,000 for the first time. Right around the targets identified over 6 months ago. I am pleasantly surprised how many analysts now (try to) use the Elliott Wave Theory. 44 years ago probably only a handful of people in the world used it. I have relied on it my whole adult life. The above shows it works.
With Trump winning, I will be watching to see if this Bull Market can be extended beyond the ranges forecast above. I won’t get into that right now. Maybe I will do that the last week of December when I make my various 2025 forecasts.
I will leave you with a forecast that Bitcoin will go to $100,000-$190,000 in 2025. A wide range yes. But, this is a volatile asset with a relatively short period of historical data and trends to analyze. I am heavily invested in it and silver which should go above $40.
Enjoy the Holidays!
Shalom,
The Mann
MY LAST ECONOMY UPDATE
NOVEMBER 8, 2024 – As with my election forecast, I think this will be my final economy post. For different reasons though. I believe I have made the point clear that all you need to do to know where the economy is going is to watch the stock market. I believe that is still the Dow 30 Industrials. Albeit, I will watch over time to see if the NASDAQ 100 takes over as the better indicator. For now, I do not see that happening.
So, as I have said numerous times before, the stock market is forecasting 6 months into the future. Right now, the market is working in May 2025. With the Dow at an all-time high, we are assured that there will be no recession through the 2nd Quarter of 2025. And since it takes two consecutive negative GDP figures to get a recession, the odds of a recession next year are getting very slim.
3rd Quarter GDP came in at a super strong +2.8% (remember, anything above 0.5%-0.7% is incredible strong). 4th Quarter GDP is currently forecast to be above +2.0%.
Based on the early August downturn in the markets, we might have some kind of hiccup in the 1st Quarter of 2025. It won’t result in a negative GDP though.
So, I leave you with this last post on the economy as you now know how easy it is to forecast. The best part is you don’t need to watch a thousand indicators like ISM, M-2, PPI, CPI, Consumer Sentiment Index, yield curve blah blah blah. Economists follow all of that and, as my step-daughter says about weathermen, it must be nice to get paid to be right only 30% of the time. LOL They do all of this work and analysis only to be wrong.
For the past 2.5 years since the still not recognized Recession of early 2022, I have showed you what the stock market has said about the economy and it has been 100% correct. The vast majority of economists and pundits have been 100% wrong. I don’t try to take credit for being right the past 2.5 years. Why should I? I simply followed what the stock market said and it was the market that was right all along.
The one thing I will take credit for is I forecast that about a dozen recession predictors would fail this time around. Some of these indicators had perfect records for over 50+ years. So, I was out on a limb saying that one after another was going fail this time around. I still have yet to explain in detail how I knew that. Maybe one day. The point is not even those (still) very good indicators are worth following. The stock market does everything for you. It is that simple. As they say, KISS.
So, for FREE, you know all you need to know about future economic conditions for the remainder of your life. You do not need to waste your time reading or listening to economists and pundits or even doing your own research and analysis. Now that is a great deal for such an important forecast!
I am always here if you want to discuss anything. When someone asks me to look at something specific, I usually do it for them. As I have said, for some reason I was born to forecast the future. It is just what I love to do.
A stock market post is forthcoming.
As an aside, it has been fun to watch all of the pollsters make up excuses for being wrong. Truly pitiful to be honest. One pollster said ‘I think people….blah blah blah.’ I about jumped out of my chair yelling ‘you think’?!?!? Why in the heck didn’t you ask people why they did such and such!!!!!!! You have one job and you don’t do it? You are going to guess? It is a different era for sure. I was brought up in an era where when you said something you better have the proof to back it up. Oh well.
Thanks for the messages from millions of readers…ok dozens:)
Shalom,
The Mann
A POST-MORTEM OF MY ELECTION ANALYSIS
NOVEMBER 6, 2024 – This is not a gloat post for the Trump side. All along, I have tried to present the facts and note where I think there is a gray area. That is basically what I do when explaining anything I do. So, here goes a summary of what we have learned over the past 3 months.
This was my final forecast:
“I can see Trump winning it and the election 312-226. That is what I have been predicting for the past month or more.” Although AZ, MI, and NV still have not been called, they all look like they will go to Trump. That will give him 312 electoral votes. I will take this perfect count and retire from forecasting elections:)
WHAT I GOT WRONG – Michigan and not thinking the results would be known Election Night. As I noted in my final analysis, Michigan had conflicting indicators. I switched to Harris and probably shouldn’t have. The States greatly improved their vote counting. That is a good thing to be wrong about.
SUMMARY – My entire adult life I have told people to do their own analysis and make their own decisions when it comes to investing or trading in stocks, commodities, real estate, et al.
Never listen to the talking heads like Jim Cramer or Goldman Sachs or anyone. I have never been wrong betting against what the great Goldman Sachs has forecast. They just get paid alot more than me:)
I worked extremely hard over the past 3 months on my election analysis. It was exhausting. I did all I could to account for the poll margins of errors, for the now validated 3 times argument that Republicans get underrepresented in the polls, the thought that those Republicans not answering pollsters would vote against Trump, illegal immigrant votes, et al. In the end, it looks like all that hard work got it exactly right. As I get paid the big bucks to provide my analyses, I think I will go out on this forecast. The amount of work was enormous. (Thanks to everyone that has sent me thanks for me sharing my analyses. I appreciate that. This is a labor of love for sure.) Maybe a rich person will pay me millions to provide my analyses privately to him/her:) Hopefully, I showed that you can do your own research and do better than the pundits and the economists and the analysts that get paid the big bucks. You can do it!
The one blunt thing I will say is that if you don’t accept as a FACT that the pollsters are equal to the Fake News Media in being owned by the Democrats, you are just not facing reality. It is funny to hear Democrats curse the pollsters this morning when it was them that told the pollsters to make it look like Harris was winning! Hypocrites and sore losers.
HOUSE – This won’t be settled for days or a week as expected.
I still think neither party will win by more than 3 seats. The word over night was the Dems were making some surprised pickups and might win the House. There was limited data for me to analyze so no way could I forecast a specific result. I could only conclude a plus or minus 3 seat difference for each party. We shall see how it ends up.
SENATE – All along, I said this was a 100% certainty that the GOP would get the 51-seat majority. I honestly did not try to make a specific count. I was simply focused on one of the parties getting to 51. The GOP already has 52 and could get up to 55. The high end might make it such that in 2026 the GOP will be certain to maintain the Senate. Please don’t double-dog dare me to make a forecast about that election lol
Hopefully, we will now eradicate DIE, ESG, the climate change hoax, men playing in women’s sports and being in their locker rooms, anything woke, et al. Americans spoke loud and clear about their disapproval of all that junk.
Lastly, Viva Fossil Fuels!!!
Shalom,
The Mann
INFLATION UPDATE
OCTOBER 12, 2024 – The September report came in at 2.4%, in line with my estimated 2.4%-2.5%. The 3-month annualized inflation rate is 1.5%. The 6-month annualized inflation rate is 1.9%. These figures are slightly below the annualized rate (2.4%) and thus indicate the annual CPI should remain in this area or decline slightly. The data is predicting a reading of 2.6% next month. I think it will be there or higher.
As a side note, the monthly CPI has been at 0.20% or lower for 5 straight months.
The market has the Fed Funds Rate priced at 4.4%-4.6%. It was recently cut to 5.0%. The Fed has some catching up to do. Til next month.
Shalom,
The Mann
As a side note, the monthly CPI has been at 0.20% or lower for 5 straight months.
The market has the Fed Funds Rate priced at 4.4%-4.6%. It was recently cut to 5.0%. The Fed has some catching up to do. Til next month.
Shalom,
The Mann
STOCK MARKET UPDATE
UPDATE AUGUST 12, 2024 – One of the reasons I have followed the Elliott Wave Theory for 44 years is it has predetermined points where you need to realize a market isn’t going where initially thought and you need to reverse course. Yesterday, the major market indices (except the Russell 2000) crossed lines that said the recent correction was actually part of the ongoing bull market and not the start of a new bear market. This suggests the economy will be strong thru the 1st Quarter of 2025 at a minimum. Right now, I am seeing +2.0%-2.9% estimated for 3rd Quarter GDP. I suspect the 4th Quarter will be equally strong. Too early to see where 1st Quarter 2025 will be. Albeit, I think the market says there will be a bit of a hiccup then.
Gold is at new all-time highs. Silver is struggling, but should go up into the $30’s per ounce. I did take positions in Copper and Natural Gas as they are at lows that over the past 20 years have signal major bottoms. Cryptos have acted well since the downturn 10 days ago. CPI came in at +2.9% today. I will post about that tomorrow. Hope everyone has had a good Summer. – The Mann
AUGUST 2, 2024 – Wow, what a week this was. As everyone should know, I love Bear Markets way more than Bull Markets. It killed me to be all out bullish for the past 2 years. But, I rode the upturn to its fullest I think and sold all my stocks a week ago on Friday July 26th when the Dow was up about 700 points. And this week as 10-Year Treasury Notes and further out went below 4%, I locked in a 4.8% annuity for 3 years. Easier to sleep this weekend and beyond. Albeit, I did leave some play money to play the downside:) Bear markets are quicker and harsher than bull markets. Easy money to be made if the bear market is truly underway. On to some numbers and forecasts. This is going to be VERY LONG as I am going to layout a lot of specific targets for numerous markets. AGAIN NONE OF THIS INVESTMENT ADVICE. Just my hobby of forecasting the future.
One thing that annoys me most about most analysts are they make forecasts and don’t provide a point (aka as a stop-loss) where they say their forecast is wrong and has to be reconsidered. That leaves their followers not knowing what to do when the person they are following has missed a call. I never care when the market crosses a stop-loss point. Yes, it means my analysis was wrong and, if I traded it, I took a loss. But, if you take trades where your expected profit/loss ratio is at least 3-4/1, then the small losses are nothing compared to the large profits.
DOW 30 INDUSTRIALS – The DOW broke below the 39,411 level today that I mentioned would indicate the peak on July 18th was the Bull Market top. The only problem was this was a closing target, not an intraday figure. The DOW closed at 39,737. Also, the wave theory I follow does not clearly show a change in trend. With all other stock indices clearly in a Bear Market, I am going to assume the DOW is, too. If it gets back to 40,061-40,353, I will probably go short with a stop-loss around 41,000. If it is in a Bear Market, it should not see 41,000 again.
NASDAQ – The Bull Market top occurred at 20,691 on July 10. As I predicted a few weeks ago, the DOW has been much stronger than the NASDAQ. There have been several days recently where the DOW was up a few hundred points and the NASDAQ was down a few hundred. First support is around 17,000-17,500. It is very early, but I am thinking the Bear Market might bottom between 10,500 and 13,500. A 35%-49% decline would be moderate for the NASDAQ. In the past, major declines have been over 80%. Right now, it will take a move to a new high to end the Bear Market case. That isn’t ideal. But, sometimes that is all you have. Right now is not an ideal entry point to short the NASDAQ 100 or S&P 500. Although, I think some more carnage lies ahead next week, a rally after that back to anywhere around 19,000 on the NASDAQ 100 would give me a great place to short. I just am not sure it will ever get back to that level. Today’s close was 18,441. A Bear Market doesn’t like to give short-sellers an easy time either:)
RUSSELL 2000 – The Bull Market top actually occurred back in November 2021 at 2,459. The Bear Market rally topped at 2,300 on July 31. Today’s close was 2,109. If I can get a move back to about 2,172 to close a gap on the chart that occurred today, I will go short with a 2,300 stop-loss. My analysis suggests the high end of the Bear Market bottom range is 1,475 with 965 being the bottom end. Two separate wave relationships point to 965. So, I give that most weight. Thus, a short trade initiated at 2,172 would have an expected profit of 697-1,207 points with a stop-loss being at 128 points. That is a 5.5-9.4/1 profit/loss ratio. Those are the kind of trades I like:)
TREASURY BONDS – The rally I have called for continues and accelerated today. The US 30-Year Treasury Bond price closed at just over 125. Around a 4.1% yield. The main target is around 131 or about a 3.5% yield. The high-end price target is about 144 or about a 3.0% yield. I guess if I had to pick a stop-loss point it would be about 120.5.
ECONOMY – I have reiterated many times that economists waste their time trying to forecast the economy when the stock market tells us what is happening 6 months into the future. The market has correctly forecast the strong economy for the past 2 years and already said it will be strong through the end of the year. However, if the market is in a Bear Market, then it is telling us that next January and February will show us an economy in trouble. As I mentioned almost a year ago, a way early indicator was pointing towards a 2025 recession. The market is now pointing that way, too. And the market doesn’t get this wrong. My expectation is that the economists and pundits that have been dead wrong for two years about a recession occurring will start to say no chance of a recession in 2025 because the Federal Reserve starts lowering interest rates in September and interest rates fall significantly as I have forecast. Also, Trueflation is now down below 1.4%. The pundits will be overwhelming you with how great things are as inflation is tamed and mortgage rates are down, blah blah blah. I do hope they will be bullish right as the recession gets underway. As a reminder, when the yield curve (10-year minus 2-year Bonds) gets to +100bp we will be in a recession. It is down to about -20bp. The lowest I have seen in a year or two. We have lots of lead time to get from -20bp to +100bp. Could that lead time be 6-9 months as the market has indicated? Coincidence? 🙂
UNEMPLOYMENT – On July 1st, I posted it will be 4.4%-4.5% by year end. It went up to 4.3% in today’s report. The whole world now knows about the Sahm Rule (I will let you look it up to see what it is.). Supposedly, it was triggered today. I thought it already had been. I think there is a similar rule with a different name measured in a slightly different way. Everyone talks about its 100% perfect record predicting recessions since 1970 or such. What everyone doesn’t know apparently is that the rule has only a 50% accuracy rate when unemployment rates get adjusted after the initial announcement. A flip of the coin is definitely more accurate than economists and weather forecasters! But, it doesn’t help me in my analysis.
GOLD & SILVER – I am getting tired. If you are still reading, I am sure you are, too:) The gold target is still $2500-$2600. Silver looks extremely good with a move to the $34-$40 range likely. I will probably hop on this trade Monday morning.
LASTLY – One last thing came to mind. Over a year ago when the SVB debacle occurred, I posted about buying when no one else wanted to. Everyone predicted 400+ banks to close up and the housing market to crash. Here is what those experts cost you if you didn’t invest in those sectors. Granted no one would be able to buy at the exact low and high. But, the bull moves were as follows – The S&P Regional Index (KRE) bottomed at 34.52 and the recent top was 59.59. A 72% move. Even if you just caught the middle part of the move for a 50% profit remember all of those pundits that told you banks were in trouble. The S&P Homebuilders ETF (XHB) was around 64 at the time of the SVB event. But, the bull move had started a year earlier at 51. The recent top was an ALL-TIME HIGH at 121.23. Over the past 15 months it went up a measly 89%. If you threw in the towel today, you would have made over 70%. Remember to thank all of those people that have been predicting a housing market crash. And seriously folks, look up on YouTube or wherever the videos from around the SVB event forward and find those analysts that were forecasting armageddon – and NEVER EVER listen to them again!!!
I might be back here sooner than later. I live for bear markets. I get very active when they are occurring. This bear doesn’t hibernate:)
Shalom,
The Mann
FINAL RULE ON AVM QUALITY CONTROL STANDARDS
JULY 25, 2024 – The Federal Agencies have issued the Final Rule on Real Estate Valuations: Quality Control Standards for Automated Valuation Models. Hopefully, you can cut and paste the URL below. If not, go to an Agency website and type in the above words in Search and it should come up.
https://www.fdic.gov/news/financial-institution-letters/2024/final-rule-real-estate-valuations-quality-control-standards?source=govdelivery&utm_medium=email&utm_source=govdelivery
This guidance was desperately needed because we all know computer models actively seek out the skin color and/or gender of borrowers. Once they find this information and the borrower(s) is not of a specific hated class, then the AVM will apply a -20% adjustment to whatever initial value it generates. If the borrower is of a specific hated class, then obviously no downward adjustment is applied. Who knows, maybe even an upward adjustment is applied heh heh
Yes, sarcasm intended. What a freakin’ joke! Gotta watch out for them darn racist and sexist computer models;)
Shalom,
The Mann
https://www.fdic.gov/news/financial-institution-letters/2024/final-rule-real-estate-valuations-quality-control-standards?source=govdelivery&utm_medium=email&utm_source=govdelivery
This guidance was desperately needed because we all know computer models actively seek out the skin color and/or gender of borrowers. Once they find this information and the borrower(s) is not of a specific hated class, then the AVM will apply a -20% adjustment to whatever initial value it generates. If the borrower is of a specific hated class, then obviously no downward adjustment is applied. Who knows, maybe even an upward adjustment is applied heh heh
Yes, sarcasm intended. What a freakin’ joke! Gotta watch out for them darn racist and sexist computer models;)
Shalom,
The Mann
ECONOMY UPDATE
JULY 29, 2024 – A quick note that the 2-year vs. 10-year Treasury spread is down to a -16bp. Probably the lowest it has been in a few years. If you have read my prior posts, I mentioned that a coincident indicator will be when this spread hits +100bp — at that point we will be in the middle of a recession. The good part is first it has to get back to par and then it has a long way to get to +100bp. So, we have ample time to know a recession is the light we see at the end of the tunnel. Just another item that is starting to increase the odds of a recession occurring in 2025. Probably the best indicator we will have is when we see the headline – ‘Economists do not see a recession occurring in 2025.’ 🙂
JULY 26, 2024 – Just to be transparent, I cashed in most of my holdings today. When the Dow is up 700 points it is a good day to sell:) We continue to see the Dow perform way better than the NASDAQ. My expectation of one more new high move by the Dow not being confirmed by the NASDAQ looks better and better.
JULY 25, 2024 – 2nd Quarter GDP came out above expectations at +2.8%. We have now completed 2 full years of strong economic growth. Something that 99% of the economists and pundits said would not occur.
I do some of my best thinking in my dreams. I have long thought of them as an alternate reality and am amazed at some of the things they come up with. As I dreamed about the economy, an analogy came to mind. A traffic stoplight.
For the past 2 years, the economy has been on solid Green. Economists and pundits kept calling for Yellow or full Red. We never had a chance of such and never came close.
However, for the first time in over 2 years, I am switching my signal from solid Green to that hard to see split second when Green starts to turn to Yellow. As I have mentioned many times, the stock market (Dow 30 for my analysis) is forecasting the economy 6 months into the future. Right now, that is the end of February 2025. Basically, next Spring.
The NASDAQ 100 has a good chance of having topped on July 10th. Thus, it would be in the first stages of a Bear Market. My analysis is calling for the Dow to make one more move to new highs peaking as low as 42,000. 43,000 still remains possible. The NASDAQ 100 would also rally. But, not to new highs. If the Dow does put in a final top over the next month, then it would be saying the economy will peak by the 1st Quarter of 2025 and start a downturn after that. I forget how long ago it was that I mentioned a long lead time indicator was suggesting a recession in 2025. Also, the first year of a Presidential cycle often sees a recession.
In summary, it looks like the economy’s Green light is just starting to change to Yellow. Using another analogy, the stock market appears to be the first car on a rollercoaster that has passed the top and started downward.
I will say that my 50+ years of experience says that stock market tops are tough to call as they stretch out over a period of time. Stock market bottoms are usually easy to see as they take a ‘V-formation.’ Interestingly, commodities do just the opposite.
Lastly, ALL sentiment indicators say almost all stock markets (NASDAQ, S&P 500, Dow, Russell, etc) are around a top.
We shall see how the next month or so plays out. There is a small chance the Dow has already topped, too. I will be watching closely.
Shalom,
The Mann
HOUSING MATH DOESN’T ADD UP
UPDATE JULY 17, 2024 – So far, no objections to what I wrote below. I wanted to add some data. According to Zillow, inventory is higher than last year in 48 out of the 50 Major Metropolitan areas. It rose last month in 45 of the 50 markets. If we are so short on housing, why aren’t all of the houses for sale bought instantly? How can the inventory possibly increase? And, no, it is not because of high (not really high, around where they should be) mortgage rates. Simply put, the forever housing shortage rant is a hoax. False information. Propaganda.
JULY 1, 2024 – Here is your chance to email me why NAR and the NAHB may be even remotely right about our housing shortage and why I am wrong. I researched the intraweb, as my step-daughter jokingly refers to it, and found that NAR has said we have a shortage of 4.5 to 5.5 million housing units. Their logic is the annual number of houses built since the Year 2000 has been below what was needed. To paraphrase Henry Ford, that is bunk.
Let’s look at some facts and some math. First, the demand for houses by 18-55 years olds today is about 25% (!) of what it was when Baby Boomers were the same age. Second, annual population growth has declined significantly from around 2% at the start of this century to 0.53% last year. I have seen as high as 0.7% in the past few years.
Yes, total population has obviously increased over time. But, it is not double or triple what it was 20 or 40 years ago. Demand for housing is about 1/3 to 1/4th of what it used to be. So, you cannot continue to forecast based on 1980s or 1990s rates. As I note in other posts, annual GDP of +3% or +4% has been replaced with a good-excellent range of +1% to +2%. Everything is slowing down and will continue to slow down for decades ahead.
To the math….As of today, the intraweb says we have 341,814,420 people. Let’s say last year’s growth rate was low and the 0.7% rates before that were high. We will use 0.6%. (I note that CoStar uses +0.5% annually for the next 5 years.)
That means this year’s population growth is about 2,050,000 people. Average household size was 2.53 people in 2020. It too has been declining for decades. Let’s assume it is down to 2.40 today. The math says we need about 850,000 new housing units for the upcoming years.
Laughingly, NAR says we need 1.8 million new housing units and since only 1.4 million are being built we will add to our shortage. In fact, based on real math, we will have an oversupply of 550,000 housing units brought onto the market this year alone!!!! Every report I see shows apartment vacancy rates are way up from 3 years ago (about doubled in past 3 years nationwide!) and new homebuilders have a crisis of oversupply. NO ONE but NAR suggests we are not building enough housing units.
So, here’s the riddle to me. If we are short millions of housing units, wouldn’t vacancy rates for SFRs and apartment properties decline each year? If we aren’t building enough units, wouldn’t vacancy go down? Wouldn’t we see people lined up to get into the next apartment or SFR unit that becomes available?
According to CoStar, the USA had 927,018 vacant apartment units in 2021. As of today, we have 1,544,497 vacant apartment units. Over 600,000 apartment units have become vacant in a period where NAR screams that every year we are increasing our shortage by hundreds of thousands of units. Where is the logic? This doesn’t even include our 10 million vacant SFRs! (BTW, this count does NOT include second/vacation homes.)
I have contended for years that if we didn’t build a single housing unit nationwide for 5-10 years we still would not absorb all of our vacant units.
I look forward to your thoughts. The one I will say that doesn’t work for me is the vacant units are not where the people want to be. Some may be. But, most of the new supply for decades has been in the Sun Belt where the greatest demand has been. And people can live anywhere and move anywhere (especially since 2020). A few units might be old and badly located. But, old product is removed from the stockpile annually.
I will leave this one at that. Depending on feedback, I might follow up with another post on the subject.
Shalom,
The Mann
GeorgeRMann@Aol.com