When does anecdotal information become important? I have no idea, but here are a few interesting signs in the category of higher prices cure higher prices.
The New York Times just ran an article about how the city will begin limiting Airbnb and VRBO listings (September 5, 2023.) Before the Maui disastrous fires, authorities in Hawaii were moving towards a tourist fee. Although the broader population is not normally empathetic to places like Nantucket and Martha’s Vineyard, the short-term rental markets have shown a bright light on insufficient public services and amenities people feel are inalienable rights. Many cities that showed amazing growth during Covid are now frozen over many things we all take for granted – plumbing, water, electricity, refuse removal, parking, traffic congestion among many others.
What I find very interesting is that among all the stories, the position taken by New York City is unique. The premise includes all the above, but the main theme is that purchases made for speculation and income generation that was made possible by artificially low interest rates has caused an unwanted wealth divide by increasing housing prices and rental fees which disproportionally affect lower income people. Although not a huge issue, the rental market is a silent contributor to insurance costs especially in Florida and California where investment property ownership is high. My latest anecdote for real estate are the number of data points where rushed construction to meet the demand the past three years have hamstrung inspectors and builders and the solution may have led to short cuts and poor workmanship. I am hearing many stories about pools and patios. Lastly, I live in a condominium association who changed the by-laws in July so that owners have to physically live in a unit for two years, not including construction, before a unit may be rented.
Since the nexus of investment decisions is the length of time to monetize a strategy, either for a gain or loss, real estate valuations will be a fascinating trend to monitor.