Houston Coronavirus Tracker Update 8/20/20


THERE'S A LOT THIS WEEK. I appreciate the occasional indulgence you allow me here. I have another this week but otherwise a lot of information, so I'm going to be heavy on charts and a little light on information.

A NOTE OF APPRECIATION. I'd like to take a moment to recognize Genilyn Anisor from our office who has been putting most of these together, at least since May. Also, if you receive work from me and everything is spelled correctly, you can be sure it came from her.

LOCATION STRATEGY IS WORKING ON NUMBER OF PROJECTS IN OUTLYING COUNTIES. IF YOU'RE CONSIDERING SOMETHING THAT USED TO BE "REMOTE" YOU MIGHT DROP US A NOTE. WE PROBABLY HAVE RECENTLY DONE WORK NEARBY.

ARE YOU GETTING READY FOR BUSINESS PLANNING? CLICK HERE TO EMAIL FOR INFORMATION ABOUT LOCATION STRATEGY'S BUSINESS PLANNING PACKAGE. OUR PACKAGE INCLUDES INFORMATION ON NEW HOME SALES, LOT DEVELOPMENT AND FORECASTS FOR SALES AND JOB GROWTH, ALONG WITH ALL OF THE OTHER ECONOMIC INFORMATION YOU'LL NEED FOR YOUR PLAN AT A VERY REASONABLE PRICE.
HOSPITALIZATIONS. As I have said repeatedly, I don't trust the case numbers to show the extent of infections in Houston. If you want to know how many cases the Houston area has, test the viral loads at wastewater treatment plants. Until then, the most reliable indicator is what you see on the chart below, and if you'd like to monitor them yourself, you can follow the SETRAC dashboard. COVID patients are occupying 10.7% of general hospital beds, and are in 24.3% of ICU beds. That's almost back to their levels in June.
HOW ARE PEOPLE STILL BUYING HOUSES WITH SO MANY JOB LOSSES?. I have told everyone who has asked me this it's because all the job losses are at the bottom. Now we have some data to prove it. This review of Census data shows that there are more jobs paying over $65K/year than there were in January 2020. There is still about a 20% decline in jobs paying under $40k/year. I believe this is how we are still able to find so many buyers for new homes.
MISPERCEPTION OF RISK. Franklin Templeton commissioned Gallup to do a survey of Americans' perception of risk from the coronavirus. Six months into this pandemic, Americans still dramatically misunderstand the risk of dying from COVID-19:

  1. On average, Americans believe that people aged 55 and older account for just over half of total COVID-19 deaths; the actual figure is 92%.
  2. Americans believe that people aged 44 and younger account for about 30% of total deaths; the actual figure is 2.7%.
  3. Americans overestimate the risk of death from COVID-19 for people aged 24 and younger by a factor of 50; and they think the risk for people aged 65 and older is half of what it actually is (40% vs 80%).
  4. The research also showed members of one political party dramatically overestimate the risk of dying from the coronavirus; in the interest of being non-partisan, you'll have to read the article to find out which one it is.
  5. More alarming graphics tend to be used more frequently, as they generate greater engagement.

This has a number of consequences; people who are fearful postpone buying decisions. and people can be made more fearful when they are shown alarmist graphics devoid of the appropriate context.

I believe the differential gap between risk perception between the parties is why we have seen such irrational policy responses - and why we can't achieve more rational ones. From the study:
The policy decision of what activities to keep shut and for how long is a very difficult and consequential one. It requires balancing two opposite effects of uncertain scale: on the one hand the benefits in terms of slowing COVID-19 contagion, on the other hand the harm to the economy and to people’s long-term health and livelihoods. This decision is strongly influenced by public perceptions of dangers, not only because politicians are sensitive to the public’s concerns but also because politicians are people too, subject to some of the same biases. Our poll results suggest fundamental misperceptions of the risk of death or serious adverse health consequences from COVID-19 could be distorting these decisions.

Lastly, the authors conclude the study with a discussion on a "safety premium" and how much people with varying levels of risk would pay for it. My read of this section is that if you have a set of "safety premium" upgrades, you might want to find out if your buyer votes red or blue before offering it.
SHARE OF COVID-19 DEATHS BY AGE: BELIEFS VS. DATA
Estimates of the distribution of COVID-19 deaths reported by the Centers for Disease Control and Prevention (CDC)
FEAR OF HEALTH CONSEQUENCES FROM COVID-19 VS. ACTUAL MORTALITY DATA, BY AGE BRACKET
Share of respondents worried for serious health effects from coronavirus compared to deaths reported by the Centers for Disease Control and Prevention (CDC)
The charts below show daily deaths per million first for Texas and Florida, and the second shows New York and Florida. The study reports that people who saw the first chart were much more likely to support shutdown measures in those states than were people who saw the second one.
WHY DOES THEIR DATA ALWAYS LOOK LIKE THIS? I don't like these stories. I only bring this one up as one of the presidential candidates promised lockdowns yesterday. We've covered the murky origins of these measures before - social distancing (high school science fair project) and the 6' limit (based on 28 people who got sick on a flight).

The initial impetus for lockdowns was the forecast from Neil Ferguson/Imperial College London (dubbed "the worst software mistake in history" by the CEO of the largest software firm in Britain). One of the reasons for the error in this model was it overestimated the infection rate because it relied on data from Wuhan. Specifically, the ICL team thought the percentage of people repatriating out of Wuhan that tested positive would be a good proxy, which led them to review data and tests for 6 flights totalling 689 passengers:
It gets worse. Of those 689, only 6 tested positive - so that was the data they used even though they knew it was not consistent with results on the Diamond Princess, which remains one of the few locations with 100% testing.

The author concludes:

As we live through the consequences of economic depression and the (hopefully temporary) destruction of our way of life, remember that it all comes back to the belief that finding six people with Covid on six flights was a good way to estimate how many people had the disease.

I'm not anti-virus response measures. In the very first edition on April 5, I told you about a study from Hong Kong that showed masks were 25% more effective than handwashing at stopping the coronavirus. But does it make sense to "listen to the scientists" when what they are practicing doesn't look very much like science? I certainly don't want to listen to people that were ready to unleash trillions of dollars of economic damage and likely cost the lives of hundreds of thousands of people through delayed medical care, and increased suicide, homicide and drug overdoses based on little more than a high school science fair project and the experience of a handful of passengers on a few flights. Those may be fine ways to discover potential policies, but they should have firmer research behind them before they are adopted.
FOR WHEN YOUR EMPLOYEES WON'T STOP CHEWING THEIR TAILS. The State of Maine may have achieved peak coronavirus this week with the governor's edict that “front-of-house staff in restaurants who choose to wear face shields must now wear them upside down so that they are attached at the collar instead of the forehead, so that their breath is directed up, not down,” And before you ask, YES THIS IS REAL.
MARKET

After we took a break for the market update last week, here's our weekly data:

  • August sales declined versus 2019. Part of this could be lagging in employment numbers, or it could be a result of the announcement that school openings were suspended until October.

  • On weekly basis, week 34 shows a slight increase of sales comparing to 2019 but it was not enough to lift the month of August ahead of last year.

  • Average closing price for this month is $10,000 lower than last year's.

  • Pending sales remain unchanged.
We saw a significant rise in terminations in August. In some informal surveys, we've found that job-related issues are the number one reason given.
Even though we are still on the third week of August it seems that this month has the biggest decline in home rentals for this year. It's uncertain why they are falling off here; perhaps the delays in in-person schooling have removed the time pressure renters typically feel.
WORTH A READ:



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Stay well.
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Sincerely,

Scott Davis
Location Strategy, LLC
832.304.3478