April 2021
Housing Continues to Soar

While COVID-19 and the subsequent lockdowns plunged the country into a recession, the housing market has exploded. The stock market has continued to climb. It appears that the U.S. recovery from the economic impact of the COVID-19 pandemic is a K-shaped recovery. Certain sectors have recovered quickly or even thrived, while others have not recovered at all or are recovering very slowly. Between September 2019 and September 2020, it is estimated that homeowners accumulated an additional $1 Trillion of home equity! The pandemic has affected both supply and demand.
Preference for more space was exacerbated by the virus as people were forced to spend extended time at home. As we began working from home, the mindset of people thinking they had to live near where they work began to change. As we have discussed before, this caused a flight from denser urban cities to less dense suburban environments that provided extra space and greater affordability. Historically low interest rates also fueled buyer demand. Mortgage rates reached a record low of 2.66% at the end of 2020.
Beyond these demand factors, the largest contributor to the current housing boom has been lack of supply. Before entering the 2020 downturn, there was already a supply shortage of 2.5 million units, according to Freddie Mac. Onerous regulations at the local level coupled with rising material costs has kept new supply tempered. Single family homebuilding declined 8.5% month over month in February to an annual rate of 1.040 million units. Bad 2021 winter storms contributed to the problem in many parts of the country. Economists estimate the annual rate of new units needs to be closer to 1.5 million to keep up with demand. Starts for new multifamily projects plunged 15% to an annual pace of 381,000 units, also trailing behind needed rental supply.

Unsold inventory was at a 2.1-month supply in March, continuing to represent near historic lows since the NAR began tracking the metric in 1982. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly. Properties only remained on the market an astonishing average of 18 days in March!
While the prospects of higher interest rates could slow the buying frenzy, all indicators right now are still full speed ahead for the housing markets. This extreme supply/ demand imbalance will continue to support both higher prices and higher rents. Our investment and lending in the workforce housing space should remain strong for the foreseeable future.
Edward M. Aloe
Founder and CEO
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Developers Struggle With Escalating Lumber Prices

According to the NAHB, relief is not yet in sight.

The issues began a year ago when lumber mills shut down due to COVID-19 pandemic lockdowns and then didn’t come back at full capacity once reopened.

“Lumber pricing and availability continues to be problematic for stick-frame construction. Mill capacity has yet to ramp back up to pre-COVID production levels, and demand is increasing with multifamily projects that were stalled during COVID now restarting,” says Jay Hiemenz, president and chief operating officer at Alliance Residential Co., one of the nation’s leading multifamily builders and developers. “Single-family new construction starts have picked up as well. Lumber costs are at or near all-time highs. Construction costs have had to adjust as a result.”

Yardi Matrix Anticipates 18- to 24-Month Recovery for Urban Cores

According to the Multifamily National Outlook, the future of Class A and B investment will depend on 'the nature of the future of work.'

As of April, the economy is heating up, with 916,000 jobs added to the market in March and unemployment down to 6%. Gateway markets and urban cores are still struggling, but appear to be turning a corner, while tech hubs continue to grow. Yardi owes the strength there is to the ongoing approval and distribution of COVID-19 vaccines. Inflation is a concern to watch, as asset and input prices are on the rise.
According to Adler, a year of office closures has created a “general spreading of the population” as residents who no longer need to commute move farther from gateway cities. This has sparked discussions about whether, and which, work-from-home arrangements may be temporary or permanent. Demand for single-family rentals is also surging, and with it a spike in single-family build-to-rent projects and players.

NMHC Rent Payment Tracker: 79.8% of Apartment Households Paid Rent by April 6

This marks a 1.9 percentage point increase from the share who paid through April 6, 2020.

According to the National Multifamily Housing Council’s Rent Payment Tracker, 79.8% of apartment households made a full or partial rent payment by April 6, based on a survey of 11.6 million professionally managed apartment units. This is a 1.9 percentage point increase from the share who paid rent through April 6, 2020, and compares with the 82.9% share of apartment households that paid rent by April 6, 2019.

This report marks the first anniversary of the Rent Payment Tracker, formed in response to the onset of the COVID-19 pandemic.

On the lighter side....
About CALCAP Advisors
California Capital Real Estate Advisors, Inc., and its affiliate entities (CALCAP Asset Management I & II, CALCAP Properties, CALCAP Lending, and CALCAP Senior Healthcare I, collectively known as "CALCAP"), is a California based investment company founded and 2008 and headquartered in Pasadena, California. The Company sponsors alternative real estate investment opportunities focused on demographically driven housing. CALCAP has been able to consistently provide both individual and institutional investors with outstanding returns over the last 10 years. The Company's core strategies look to actively create alpha for investors while managing risk. CALCAP currently has over $350mm in Assets Under Management. To learn more visit
Social Mission
CALCAP has created the CALCAP CARES program to encourage employees to find a way to give back to the neighborhoods where we invest. CALCAP has created "GiveTime4Autism" as its initial program which will allow employees the ability to donate unused vacation and sick days for a very worthy cause.
The Sanborn House
65 N. Catalina Avenue   
Pasadena, CA 91106

12626 High Bluff Drive, Suite 360
San Diego, CA 92130 

740 N. 52nd Street
Phoenix, AZ 85008 

1309 State Street, Suite A
Santa Barbara, CA 93101

92 Argonaut, Suite 205
Aliso Viejo, CA 92656

Edward M. Aloe, Founder & CEO
(626) 229-9057

Patrick A. Wakeman, Principal
(858) 764-4890

Drew Buccino, Principal and COO
(602) 419-3381

Greg Blix
Director of Investor Relations
(805) 896-8500

Len Israel

Mark A. Mozilo, Principal
(626) 229-9056
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