A September of home sales, overseas central banks pausing their rate hikes and Jamie Dimon’s decision to sell his JPMorgan shares. From the wild and wooly world of real estate, here are the hits and misses for the week of Oct. 23-27.
Hit: Score One for Resiliency. Mortgage rates might be creeping up to 8% and housing affordability is the most elusive of commodities, but Americans are still eager to buy homes despite the hurdles in their way. Data this week from the National Association of Realtors found pending home sales up 1.1% from August to September while the U.S. Census Bureau and Department of Housing and Urban Development reported sales of new single‐family houses in September up by 12.3% from August. Of course, this doesn’t mean everything is copacetic on the housing front – but it shows that some buyers are willing to adapt to the new normal in pursuit of their own homes.
Hit: Lessons from Abroad. Earlier this week, the Bank of Canada maintained its key overnight rate at 5%, a 22-year high that was achieved through 10 rate hikes between March 2022 and this July. Across the Atlantic, the European Central Bank left interest rates unchanged at 4%, the first time in more than a year that the pause button was smashed on rate hikes. Hopefully, Federal Reserve Chairman Jerome Powell will take a hint from the example of his foreign counterparts and learn abstain from another hike when the central bank’s policymaking committee gathers next week.
Hit: A Quahog Confusion. Last Sunday, the “Family Guy” animated series poked fun at reverse mortgages with the always-bumbling Peter Griffin signing up for the product after watching a TV commercial featuring Tom Selleck pitching “Hey Alright Reverse Mortgages – or HARM.” Selleck, a longtime celebrity spokesman for American Advisors Group’s reverse mortgages, did not lend his voice to the show’s parody of the product, which has been the subject of confusion and criticism for as long as it has been on the market – back in 2015, I did a news piece for another outlet about televangelist Pat Robertson’s bizarre explanation of reverse mortgages during a “700 Club” segment. Maybe the “Family Guy” romp is a reminder to the reverse mortgage sector that it still needs to do a better job in explaining its product.
Miss: When Crime Damages Retail. The National Retail Federation’s (NRF) 2023 Retail Security Survey offers a grim picture of how organized retail crime is damaging this sector of the commercial real estate industry. The report found inventory loss, also known as “shrink,” was at an average rate of 1.6% in 2022, which represented $112.1 billion in losses – a 1.4% increase from one year earlier. External theft accounted for the greatest share of shrink – 65% – and the metros most impacted by retail theft in 2022 were Los Angeles, the Oakland-San Francisco region, Houston, New York City and Seattle. And NRF glumly observed, “Daily media reports show that no business is immune, and these issues touch retailers of all segments, sizes and locations across the United States.”
Hit or Miss: A Dimon Sale. Jamie Dimon, the chairman and CEO of JPMorgan Chase, is embarking on a divestiture of his stock ownership in the banking giant that he has led since 2005. The Wall Street Journal reported that Dimon and his family will sell 1 million of their roughly 8.6 million JPMorgan shares, or roughly 12% of their stake in the bank, starting in 2024. According to a filing with the U.S. Securities and Exchange Commission, the Dimon family said their action is rooted in “financial diversification and tax-planning purposes.” As of yesterday’s closing price, the Dimons would gain more than $140 million from their sale. This marks the first time Dimon has ever sold his shares in the bank – whether that’s a good thing or a problem is something that we can’t say. But somehow, I suspect the Dimons will be able to cover their bills going into 2024.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
<em>Cover photo of Jamie Dimon courtesy Fortune Live Media / Flick Creative Commons</em>