CALCAP Connections                           May 2019

Economic Update
According to official GDP reports, the U.S. economy has been expanding since the summer of 2009. This July, barring any downturn, will set a record as the longest running recovery in history. It has also been one of the weakest expansions we have ever seen. The 2.3% annual growth rate trails far below the average growth generated of 3.8% between April 1991 and December 2000. Although slow and steady, recent reports support that growth may be accelerating. 
The BEA announced the advance estimate of 1Q 19 GDP to be 3.2%. This suggests the economy is still enjoying robust momentum after a strong 2018, and the preponderance of data suggests continued growth. Net job gains were 263,000 in April, and the 3.6% unemployment rate is the lowest since 1969.
The Federal Reserve held Fed funds steady in May, between 2.25% and 2.5%. More importantly the Fed signaled its intent to keep the policy rate at this level, and Fed Chair Jerome Powell repeatedly characterized the committee's posture as "patient". The key indicator the Feds are watching is inflation. Inflation has been running chronically below the Fed's target rate of 2%. Despite stubbornly low inflation, there is little evidence supporting that the economy is stalling out. Economic growth in 2019 will most likely remain positive, albeit slower than 2018's pace. Chairman Powell and his colleagues seem confident that moderate growth, along with low unemployment and stable inflation will continue. 
In the real estate markets, solid fundamentals remain intact. There is still plenty of debt and equity available and cap rates remain at historic lows.  Rising land costs along with labor shortages and conservative loan underwriting, have kept over-supply in check.
Edward M. Aloe  
President and CEO  
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Latest Headlines...

Yardi: National Average Rent Rises $5 to $1,436  
Year-over-year rent growth falls to 3.0%, but rents rose 0.8% this year to date. 
Rents rose in all of the top 30 markets over the past year, led by Las Vegas and Phoenix metros with 7.3% rent growth year over year. Southwest markets take many of the top spots this month; most of the top 30 markets show consistent rent growth between 2% and 4%, landing close to long-term averages. Only Houston, at 0.6%, has rent growth lower than 1.4%.
In Phoenix, market-rate Renter-by-Necessity rents rose by 8.0%, compared to 6.3% growth in luxury Lifestyle rents. In Las Vegas, Lifestyle rent growth outpaced RBN at 7.5% to 6.8% - one of the only markets in the nation where luxury rent growth outpaces workforce rent growth. 
View Article Here  
Redfin: Americans are on the move, here's where they're headed
The number of Americans migrating across housing markets reaches a record high
"People are feeling more confident about the economy and now feel financially secure enough to make a cross-country move to a metro where their money will go further," Redfin Chief Economist Daryl Fairweather said. "Homeownership may be out of reach for current residents of San Francisco or New York, but there are plenty of affordable homes and lower taxes in places like Phoenix, Atlanta and Austin."
In fact, Redfin's report revealed that Phoenix, which experienced a net inflow of 7,949 homeowners in Q1, was named this quarter's top migration destination.  Additionally, Phoenix's net inflow growth now holds the highest migration reading since Redfin began tracking data in 2017. 

View Article Here
LendingTree: Student loan debt is driving Millennials to buy fixer-upper homes
88% of homebuyers with student loan debt consider purchasing a fixer-upper 
"Buyers paying off a student loan balance are more likely to consider purchasing a fixer-upper house than those with other kinds of debt, including personal loans, auto loans and credit cards," LendingTree writes. "More than a quarter of homebuyers without debt don't want to purchase a home that requires significant renovations or repairs."
While purchasing a fixer-upper may seem like a good way to save cash, LendingTree indicates that 48% of homeowners have made major home improvements within the last two years.
On the lighter side....
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
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
Edward M. Aloe, President & CEO
(626) 229-9057

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

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

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

4747 North 7th Street Suite 170
Phoenix, AZ 85014
                                                      Drew Buccino, COO
(602) 419-3381

1309 State Street Suite A
Santa Barbara, CA 93101
Greg Blix
Director of Investor Relations
(805) 896-8500

2603 Main Street, Suite 850
Irvine, CA 92614
Len Israel

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