#176 - Back to Writing / Real Estate Market Charts

"If we stoke division along lines that can't be changed, then we're really in a cul de sac, you will always be what you are, and our divisions can't be resolved. And those are the things that wind up becoming generational conflicts, civil wars, Rawanda..." - Tucker Carlson, All In Pod Update & Market Environment

Hello to all of the CoC subscribers out there! It's been quite a while since I last shared an update.

Over the past five years, I've slowly grown this newsletter organically to over 1,000 investors and entrepreneurs, many of whom I have corresponded with and have developed relationships with over time. As time commitments became more demanding between raising two young kids, running two businesses, and starting two more, writing and podcasting fell by the wayside. But I miss the relational aspect of sharing my thoughts and hearing others' reactions, and am working to carve out more time for a semi-regular writing schedule, possibly on a monthly basis, to continue building the network. To jump back into the swing of things, this week, I will share a few charts on where we are in the real estate cycle, and also pose a question to readers. Most folks who have followed my newsletter know that I am in the private real estate development and investment space. From where I sit in the residential and commercial real estate market, the transaction landscape has undergone a massive transformation: 1. A shift to lower transaction volumes and more creative terms required to get deals done. 2. Bid-ask spreads in multifamily and office properties have widened significantly, making closings more challenging. 3. Foreclosures and fire sales are accelerating in major markets where oversupply and high vacancies are prevalent. 4. Construction lending is much tougher to come by and much more conservative in terms of loan-to-value / loan-to-cost metrics. 5. The major rerating in office pricing is just beginning. Given the high interest rate environment and the amount of maturing debt coming due, I think 2024 will be a tough year for overleveraged, overburdened real estate operators in need of a refinance or sale to make good on their debt obligations. To add context, I snipped a few charts from recent newsletters that illustrate where we are in the market cycle. Enough about real estate - what are you seeing? How have transactions and deal making conditions been impacted in your sector / market / geography based on the prevailing economic environment? I will share responses anonymously in the next update. Charts Construction lending standards are almost as tight as mid pandemic:

Fear and greed in various RE sectors:

Price compression has not been equal across the board:

Office property deeds in lieu are up big time:

LINKS NVIDIA CEO Jensen Huang - Acquired Podcast Casey Mericle - The Art of the Deal: Unconventional Deal Structuring in Real Estate - The Fort Podcast Gary Shilling thinks the CRE bubble is about to pop - Fortune John Lennox - "2084: Artificial Intelligence and the Future of Humanity" - Lecture Phil Ruffin details his CRE career, turning gas stations into casinos and hotels - X Post Peter Zeihan - The End of the World Is Just the Beginning - Lecture Multifamily goes from darling to distress in Texas - The Real Deal GraphCast: AI model for faster and more accurate global weather forecasting - DeepMind