CALCAP CONNECTIONS
June 2020
PRINCIPAL'S CORNER
 
The Surprisingly Resilient Housing Market

Data released this week showed a record gain in pending U.S. home sales. In May, the index rose 44% compared to April—the largest increase since the National Association of Realtors began tracking the index in 2001. This comes after two months of steep declines as the COVID-19 shutdowns dampened sales. Pending home sales are still down more than 10% from their pre-COVID numbers in February.

The number of pending home sales is a leading indicator of home sales activity. Pending sales are defined as having a signed contract on a home that is yet to close. This data indicates a potential “V” recovery in the housing market which few would have believed just a couple of months ago. According to Lawrence Yun, chief economist for the NAR said, “this bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

Housing starts released by the Census Bureau showed an increase of 4.3% in May with 934,000 new starts recorded for the month. Building permits increased 14.4% over April. According to Doug Duncan, chief economist at Fannie Mae, single-family starts should see a stronger June thanks to a meager housing supply and record low mortgage rates. Real estate brokerage firm Redfin released data recently that showed homebuying demand up 25% over per-pandemic levels. Bidding wars also increased in many parts of the country.

The latest housing data has a one-month lag, which could now change with the recent rise COVID cases. Some early indications using real time data shows weaker consumer demand among residents in the Southern and Western regions of the U.S. which have seen spikes in reported cases. We remain cautiously optimistic about the recovery, but still believe we will see a choppy, fragmented and more Nike swoosh path forward. 


Edward M. Aloe
President and CEO
626-229-9057
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Latest Headlines...

Real estate investors feeling optimistic about the housing market, LendingHome survey finds

A majority of brokers believe the impact of the pandemic will be short-lived

“There was more optimism than we expected, and we were a bit surprised,” said Matt Humphrey, cofounder and CEO of  LendingHome .

When asked how long they thought the pandemic would affect their business, 42% of total respondents said it would be one to six months while 26% said it would be seven to 12 months. Interestingly, 12% said there would be no impact.

However, when broken out by type of respondent, 88% of brokers thought the pandemic would be short-lived, while 80% of full-time real estate investors and 74% part-time investors felt the same.


Here’s why there aren’t enough homes to buy right now

Homebuilding will continue to lag household formation, NAR’s Yun says

Housing  starts  that measure how many single-family homes builders break ground on probably will fall to 770,000 this year, the lowest level since 2015, as the economic fallout from the COVID-19 pandemic makes it tough to do business, according to a forecast from Lawrence Yun, chief economist for the National Association of Realtors.

Economists who at the start of 2020 were projecting the biggest year for homebuilding since 2007 now are saying construction won’t be able to solve the historic dearth of homes for sale. The 1.47 million properties on the market  at the end of April  was the lowest ever recorded for the month, according to NAR data.


The apartment market goes on a rollercoaster ride

There is a silver lining

According to Brian Zrimsek, industry principal at MRI Software, “while we applaud the use of electronic payments, which bring convenience to renters and landlords alike, the use of credit cards could signal increased risks if residents are paying with cards because of restricted cash flows as opposed to a desire to accumulate reward points.”
On a positive note, new 12-month leases were up 12% in volume in May 2020 compared to May 2019, the report said, and 12-month renewals were 7.4% higher in volume year over year.

On the lighter side....
About CALCAP Advisors
About CALCAP
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 $300mm in Assets Under Management. To learn more visit www.calcapadvisors.com.
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.
LOS ANGELES
The Sanborn House
65 N. Catalina Avenue   
Pasadena, CA 91106

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

PHOENIX
740 N. 52nd Suite 200
Phoenix,AZ 85008 

SANTA BARBARA
1309 State Street Suite A
Santa Barbara, CA 93101


ALISO VIEJO
92 Argonaut Suite 205
Aliso Viejo, CA 92656

Edward M. Aloe, President & 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
CEO, CALCAP Lending, LLC
949-439-1044

Mark A. Mozilo, Principal
(626) 229-9056
View our website: www.calcapadvisors.com  
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