Calculating Christmas
I’m assuming you know the “The Twelve Days of Christmas” song well, and after reading this paragraph you’ll probably hum it to yourself tonight as you fall asleep. But for those who don’t, the song details gifts to a beloved for each of the twelve days of Christmas. Day one is a partridge in a pear tree.
Thirty-eight years ago, PNC began calculating the price of these gifts, as if you could give someone a partridge in a pear tree, two turtle doves, three French hens (do they have to be born in France or speak the language, I’ve always wondered), and eight maids-a-milking (but only for an hour).
This year, giving your beloved a package of these gifts would cost you $41,205.58, an increase of 5.7%, which bears a striking resemblance to the inflation numbers being bandied about.
I could quibble with each of these but getting eight maids to milk their cows (or goats?) for an hour will apparently cost you no more this year than last, which is odd, given that workers are earning an average of 3.6% more over the past year, according to the Federal Reserve Bank of Atlanta’s Wage Growth Tracker.
PNC does admit that “comparing 2019 data is a better gauge of the impacts of inflation, before the pandemic’s effects took hold of the global economy,” and they were “trying to normalize the comparison by excluding a-once-in-a-century pandemic that had an outsized impact on last year’s data.”
In other words, the 5.7% growth in prices isn’t a 2020 to 2021 comparison, but a 2019 to 2021 comparison. Interestingly, the last time the data jumped like this was around the Great Recession, 2008 to 2013.
The chart below shows inflation was essentially flat from 2012 through 2019, more closely mirroring the period from 1990 through 1995.
2020 was the anomaly of all anomalies.
Dispatch from Miami
I was at the National Association of Real Estate Editors’ 55th annual real estate journalism conference last week. And, despite a crazy rainstorm the day I arrived, it seems the sun is always shining on Miami real estate.
Real estate trends to watch:
The build-to-rent (BTR) phenomenon is just starting. Wall Street is offering homebuilders “stupid” money to build huge communities of rentable single-family homes. More than $20 billion has been invested in this over the past couple of years. It’s causing tough choices for communities but for consumers, this could be a significant investment opportunity, with more than a few challenges.
Post-Covid, suburbs are changing. Yesterday’s suburban office parks are turning into mixed-use development. Developers are getting more savvy about that, so watch for big suburban malls getting remade into mixed-use communities with higher-end rentals or condos plus the kind of retail you need daily, like dry cleaners, hair and nail salons and gourmet/deli food purveyors. Jamba Juice, anyone?
New construction home communities will include more trails, co-working and walk-to amenities. We’re all looking forward to driving less and doing our part to save the planet.
Depending on the measure you use, home prices appreciated more than 24% YOY. I heard from a bunch of speakers that this sort of growth is unsustainable and while we’re not yet into “bubble territory,” some markets might be getting there. Worse, if you have yet to buy your first home, you may soon be out of luck. According to Nick Johnson, of Credible, if appreciation cools to even 5%, prices will be completely out of reach for first-time buyers.
And, this from the National Association of Realtors: In addition to the eastern half of the U.S. being warmer than the west, it’s now cheaper to own a home there as well.
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On a personal note
A nighttime walk through the Miami’s Wynwood neighborhood provided some insight into the amazing art scene Miami offers. Indeed, there is a local neighborhood council to approve building designs, which are required for every exterior wall in this community. They’re inspiring and beautiful. And, if you get thirsty, there are a myriad of delectable offerings.
Next time you’re in Miami, be sure to get out of South Beach.
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