@Jay Hinrichs I think that economist is right, but only in very specific markets, like the way you described Portland’s DT market. These “18 hour” cities like Portland, Austin, Denver, etc. built a lot of new multi family, and almost all of it was class A. (Who would want to build garden apartments, when cap rates were so low in these new up and coming cities- hence 18 hour, and not 24 hour cities ;) So now those buildings will offer discounts, etc., and may also attract some class B tenants from the garden buildings. I guess some of those 18 hour cities will roll back to being 12 hour cities...
24 hour cities such as NYC, Boston, SF, and recently Seattle have always been expensive and hence supported higher end buildings for years. But even in SF they are offering some deals, as not everyone wants to pay $4500 for a small 2BR. Those are people I’m attracting to my smaller, more residential oriented properties.
But no matter where, I do think rents will soften across the board, and for various reasons. Even class C (What, 8 hour cities ;) will feel it, as people double up, move back with family, etc. Simply put, when people loose jobs en mass, they are forced to get creative. And that was the cardinal sin IMO that this country did- it should have NOT forced companies to lay people off. Gov should have said right away, “don’t lay off your staff. Have them go home and gov will cover their base salary for 1-2 months, until we open the economy again.” Now many are laid off, no pathway to return to an old job, running around trying to collect unemployment, the enhanced unemployment sometimes is more, sometimes Is less than what someone made...it’s a total mess. We’re spending trillions of $$ anyways. It is this unemployment dislocation that reverberates downwards to basic needs like food and housing.
Lastly, once we get out of this mess, yeah I do think we will hit a significant inflationary trend. Maybe a few years from now, but it’s coming. There is no way that we can pay off all the debts we are about to absorb without inflating the currency. And that will mean that everything will go up, including salaries. Those sticking with large cash holdings will be hurt. Those with hard assets with low interest rates will benefit significantly. And those in the middle will float along, salary increasing, along with everything else, as a cup of coffee exceeds $10. Minimum wage of $15 will be a joke. It will have to go up as well. It will feel weird, but so does looking at empty cities, huge stadiums, etc. today feels weird. Look it’s either that or China becomes the dominant financial leader and currency reserve. And trust me, however Trump, corona virus, etc. may feel weird today, China becoming the global leader will make that all feel rather quaint.
my2c on the future :)
