The Economist has written a couple articles about this. I'll copy and paste one to avoid the paywall. Will the gargantuan stimulus spending, fueled by deficits and increases in the money supply, overheat the economy? Data going back centuries reveals that prices tend to rise after a plague anyway, as consumer demand recovers faster than supply. https://www.economist.com/leaders/2020/12/12/after-the-pandemic-will-inflation-return
I'd be more worried about the entire economy crashing. We haven't seen anything yet. The commercial real estate market is going to tank. Hard. The spillover from that will wreak havoc on all aspects of the economy.
if it does I won't blame Biden. Seriously, I won't because because economics - on the global scale especially - is an incredibly complicated science and some things can't be completely controlled by any president or leader of any country. Granted the response/reaction can be somewhat dealt with, but you might as well consider economics like the weather - it's going to do whatever it does.
Jesus H. Christ. The commercial real estate market crashing has nothing to do with Biden or Trump or any other politician. COVID-19 has proven that remote working arrangements can be successful. In an effort to reduce costs, companies are going to be dumping property and letting leases expire. Basically, they're going to shift the cost of office space to white collar workers.
Great point, and it gives me a crazy idea. If indeed companies will dump property and let leases expire why can't somebody (the government at some level? Private enterprise?) turn those properties into simple but functional & safe homes for the homeless or working poor? I honestly believe that politics aside - if that's even possible - this can be done and be a win-win-win both in the short term and in the long term.
I really hope so. Like, on the one hand it's been terrible to small retailers down here-but mostly the newer ones that were already paying exorbitant rents. On the other, the air quality last spring during lockdown due to the drop in commuter traffic was amazing. Haven't looked in on residential lately, but there was a bit of a renters' market as over leveraged air b'n'bers tried to cut their losses.
for whatever reason here, it's often more cost effective if they own the land/building to hold onto it as derelict property and not pay (a lot of the) taxes on it while the value goes up every year.
This is already happening with my wife's job. Her company won't be renewing the lease on their office space (an entire floor in a high rise building) when it's up in a few months. They just need to find a place to securely store their FDA records. It sucks for me because when I take a vacation days now, I won't have the house to myself. It also really sucks (and this will come as a big surprise to lots and lots of people) because thank's to *rump's moronic tax plan, home office space is no longer deductible if you're an employee. On a related note, this ran earlier this morning.
Looks like Brady is in the Super Bowl again. So maybe we should be worried about DEFLATION returning!
Residential is hopping from everything I've seen, for two reasons that are both related to spending a lot of time at home ... people going "I can't stand this house anymore" and people going "I can't stand my spouse anymore."
Sometimes those conversions do happen, but there are often financial implications for a company writing off the value of property. You see it lots with dying retail locations, as businesses leave the free market would suggest rents would go down to retain the remaining stores and attract new ones. However to drop the rents would lower the perceived value of the property, and so they spiral into oblivion. Many commercial properties also don't have much in common with those suitable for residential uses besides having a roof. Commercial properties water and sewage is often a fraction of what residential requires. Large floor plans mean that many residential areas would have zero natural light, and so on. The costs to get them to a usable state quickly matches that of a new build.
oh I see. Still it's such a waste to see dozens of entire multistory office buildings empty and hundreds of homeless in the streets outside the office buildings.
This is being done to some extent. I heard it in the chicken coop on NPR. The problem is that commercial properties that we're talking about are high-rise offices in urban areas. They don't have the services nearby that these people would need.
silly high rates in 1980s. Mortgages were more than 18% for a while. But rates are constantly being adjusted. The period from 2015 to 2019 they were on the rise.
It's a beautiful idea and maybe in the post-COVID era it could come to pass. In my observation, though, particularly in NY (first Manhattan, currently Staten Island), empty warehouses and "waste ground" have been transformed into snooty middle- and upper-middle-class loft spaces (q.v. Tribeca). Just anecdotally, I'm told by people in NY that "rents are crashing because, post-COVID, people are fleeing NY." Um, well, that's nice. So what you're saying is that a $4,500 unit in Manhattan pre-COVID is going for $3,000? Yeah, not helpful. But maybe when enough of those landlords carrying empty warehouses that they've turned into "luxury loft apartments" start hurting enough, change is gonna come.
