Daniel Hogan

Managing Director of Research at @Lument

[Daniel Hogan @RED_DanielHogan]

Multifamily construction surged in July. Builders started work on 49,400 units (547,000 SAAR), the largest 1-month NSA figure since 1986, evincing strong market confidence. Substantial gains in the Northeast and South regions were almost entirely responsible for the advance.

[Daniel Hogan @RED_DanielHogan]

The BEA released the 2Q20 Real GDP Flash report this AM. GDP declined at a 32.9% SAAR pace, beating the -35.0% consensus and RED Research's -38% modeling assumption. Plunging personal consumption, especially for services, was the principal catalyst. The price deflator fell 1.5%

[Daniel Hogan @RED_DanielHogan]

EQR L.A. (-3.5%) and New York metro (-3.1%) region revenues suffered the largest declines. SFBA (-2.5%) and Boston (-2.7%) were next. As expected, DC (-0.6%) recorded the strongest performance.

[Daniel Hogan @RED_DanielHogan]

UDR and EQR reported 2Q20 earnings yesterday. Before bad debt reserves, UDR revenue declined 0.4% YoY. NOI fell 1.6%. Comparable EQR results were -0.9% and -1.2%. Notably, EQR report that rents for new leases engaged in July decreased 8.3% from 2019.

[Daniel Hogan @RED_DanielHogan]

Existing home sales increased slightly in April, providing welcome positive news for the housing sector. Sales proceeded on a 623,000 SAAR pace, up 0.6% from March (-6.2% YoY). Sales increased most in the hard hit Northeast Region (8.7%), and fell only in the West (-6.3%).

[Daniel Hogan @RED_DanielHogan]

CPT reported strong 1Q20 results. Same-store revenue. OPEX and NOI advanced at 3.7%, 0.1% and 5.7% respective annual rates. The PHX (6.3%), RAL (6.1%) and DC (4.6%) regions powered revenue growth. Only SE FL (2.5%), ATL (2.8%) and HOU (1.8%) failed to post 3% or faster rev gains.

[Daniel Hogan @RED_DanielHogan]

Likewise, UDR reported strong 1Q20 performance. Respective YoY revenue, OPEX and NOI growth rates were 3.0%, 1.7% and 3.5%. The West (3.5%) and Southwest (3.9%) regions delivered fastest rent growth, while the balance of the portfolio chalked gains in the low- to mid-2% range.

[Daniel Hogan @RED_DanielHogan]

AVB followed EQR with another solid 1Q20 report. Same-store revenues, expenses and NOI increased 3.1%, 3.2% and 3.0% YoY, respectively. The East Coast provided the rev impetus, led by BOS (3.8%) and the M-A (3.8%). CA and PAC NW markets posted low-3% gains. NYC (2.0%) trailed.

[Daniel Hogan @RED_DanielHogan]

EQR reported 1Q20 results today. Same-store revenues, expenses and NOI increased 2.9%, 2.3% and 3.2% YoY, respectively. Regionally, SEA (5.4%) revenue growth was fastest, followed by SD (3.5%), OC (3.4%), BOS (3.3%) and SFBA (3.1%). LA (2.1%), NYC (2.1%) and DEN (-0.1%) lagged.

[Daniel Hogan @RED_DanielHogan]

Multifamily construction activity held up well in March. The USCB report that construction valued at $4,958 million was put-in-place, down only -5% from Mar 2019. Expressed on a seasonally-adjusted annual rate basis construction increased 2% from February, and 5% from December.

[Daniel Hogan @RED_DanielHogan]

GDP declined at a -4.8% SAAR in 1Q20, rather better than we expected but weaker than the -3.8% consensus. It is notable, that unusually strong residential construction and sharply lower imports contributed 3.06% to GDP. Absent these accounts, the headline would have been worse.

[Daniel Hogan @RED_DanielHogan]

The USCB reports that 1-4 family home sales declined -15% (SAAR) from February to March, reflecting thinner buyer traffic. Sales in the Northeast (-42%) and West (-39%) regions were most severely affected. Sales in the South (-1%) and Midwest (-8%) were steadier by comparison.

[Daniel Hogan @RED_DanielHogan]

Permitting strengthened, however, suggesting developers remained optimistic about space demand. Builders pulled permits for 33.7m (423m SAAR) units in March, compared to 26.2m (402m SAAR) in February. Permits for 1-4 unit structures, by contrast, fell sharply from coast to coast.

[Daniel Hogan @RED_DanielHogan]

The Census reported Thursday a steep decline in March multifamily starts. Builders broke ground on 27.3m units, down from 37.2m in seasonally weaker Feb. The datum translated to a seasonally-adjusted annual rate basis was 347m, down from 511m sequentially.

[Daniel Hogan @RED_DanielHogan]

Payroll employment fell by 701,000 and unemployment increased 0.9% to 4.4% in March. Both statistics were materially worse than the respective Street consensus forecast. Jan and Feb payrolls were trimmed by a total of 57,000 jobs. Wages advanced 3.1% YoY, spot on expectations.

[Daniel Hogan @RED_DanielHogan]

The labor market strengthened in Feb. RCR expected an above consensus print, but reality was mightier than our models. NFP increased 273m jobs, and Jan was revised up 48m to 273m! Simultaneously, wage growth moderated from 3.1% YoY to 3.0%, and unemployment fell 0.1% to 3.5%.

[Daniel Hogan @RED_DanielHogan]

Multi-housing Sensitive Econ Calendar

3/2: PMI Mfg Index (Consensus=50.8); Jan Construct Spend (C=0.6% M/M);
3/4: Feb ADP Emp (C=170m);
3/6: Feb NF Payrolls (C=175m, RCR=195m); Avg Hourly Wage (C=0.3% M/M, 3.0% YoY).

First key measures of coronavirus impact on economy Friday.

[Daniel Hogan @RED_DanielHogan]

Multihousing Sensitive Econ Calendar

2/25: Dec. FHFA+Case-Shiller 20-city HPI (Consensuses 4.9% +2.8% YoY);
2/26: Jan New Home Sales (C=2.0% M/M SAAR);
2/27: Jan. Durable Goods (C=-0.9%, Ex-Trans=0.3%); 4Q19 GDP Rev. (C=2.1%);
2/28: Jan. Personal Income+Spending (0.3% + 0.3%).

[Daniel Hogan @RED_DanielHogan]

Multifamily developers kept the pedal to the metal in January. Permits (SAAR) increased 15% from December and 19% (NSA) year-on-year. Starts advanced 3% sequentially and 83% YoY on surging activity in the South and West regions. Completions also increased materially (+20% YoY).

[Daniel Hogan @RED_DanielHogan]

UDR reported 4Q19 results yesterday. Same-store revenue and NOI increased 3.3% and 4.1% YoY, respectively, against 3.7% and 3.9% gains in 3Q. West Region (4.2%) was rev growth leader; SE, SW and M-A (3%-3.2%) regions followed. The NE (1.3%) struggled after a 2.6% 3Q advance..