3 episodes

Podcast + newsletter that explores Atlanta's dynamic real estate market

atlantarealestate.substack.com

Atlanta Real Estate Report Podcast Exploring Atlanta's dynamic real estate market

    • Business

Podcast + newsletter that explores Atlanta's dynamic real estate market

atlantarealestate.substack.com

    ATL Housing Market: What can we expect in 2023 and beyond?

    ATL Housing Market: What can we expect in 2023 and beyond?

    The Atlanta Real Estate Report by ATLsherpa is a podcast & companion website for those interested in the Atlanta real estate market. This includes individual buyers, sellers and investors. It also includes architects, builders, developers, lenders, realtors and urban planners; anyone involved with the local real estate ecosystem.
    In addition to the Substack app, this podcast is available on Spotify and Apple Podcast.
    In this episode…
    NOTE: This podcast consists of four separate segments and each has its own audio recording. The audio players appear under their respective segment headings. The length of the audio recording appears in brackets below. This post serves as an outline for the entire podcast and is integral to discussion.
    * Secular View: BUY ATL! [18:59]
    * Atlanta Gentrification Map
    * Single-Family Homes: The “crown jewel” of residential real estate in the ATL [29:32]
    * Cautionary Notes
    * Demand Pull Forward: Newton’s Third Law of Motion
    * Cyclical View: Bubblicious [22:25]
    * Demand Pull Forward in the local housing market
    * The Fed Factor (still weighing on the markets)
    * Wealth Effect
    * Home Prices Roll Over
    * What can we expect in 2023? [17:37]
    * Lance Lambert — Fortune (interactive map)
    * John Burns — John Burns Real Estate (real estate cycle)
    * Ali Wolf — Zonda Home (deep dive into RRE industry)
    * Sheryl Palmer — Taylor Morrison (housing recession)
    * Jeff Blau — Related Companies (Office of the Future, zombie buildings, etc.)
    * Jonathan Gray — Blackstone (Univ of Cal $4B investment in BREIT)
    Secular View: BUY ATL!
    * BUY ATL for the long-term (3+ years)
    * Perfect Storm (pandemic created a “Cat 5”)
    * RE market is hyper local
    * City of ATL is a city of neighborhoods
    * Metro ATL is a region of cities / communities / subdivisions (suburbs & exurbs)
    * Population of 21-county region = 6.1 million
    * Population of City of Atlanta = 500,000
    * SFHs offer the best appreciation potential
    See also…
    * Perfect Storm — June 2018
    * Game-Changers: 10 Projects that are Transforming ATL Right Now — 2019
    * How long will the ATL housing boom continue? — Dec 2020
    * Things are heating up along ATL's "Ring of Fire" — Jan 2021
    * Microsoft: Generational Game-Changer for ATL — May 2021
    * Imperfect Storm: Cat 5 Housing Market Cools to a Cat 3 — Nov 2022
    * Wall Street Meets Main Street — Dec 2022
    Single-Family Homes: The “crown jewel” of residential real estate in the ATL…
    Cautionary Notes…
    * Demand Drivers are secular and powerful, albeit variable*
    * Extreme volatility and uncertainty* (makes forecasting more difficult than usual)
    * Pandemic Effect: Years of demand “pulled forward” (wealth effect)
    * Economic headwinds (recession, layoffs, etc.)
    * Black swan events (aka, What could go wrong?)
    (*) I discussed these at length in my last podcast
    Demand Pull Forward: Newton’s Third Law of Motion
    “For every action in nature, there is an equal and opposite reaction.”
    Sir Isaac Newton’s Third Law of Motion — 1686 @ 23 years old

    Cyclical View: Bubblicious
    Demand Pull Forward in the Local Housing Market
    * The House Price Index in the ATL MSA bottomed in Q2/2012 at 132.14. At the end of Q3/2022, the index stood at 344.83 (~16% per year)
    * The S&P/Case-Shiller U.S. National Home Price Index rose ~13% per year during that same time (ATL: +3% vs USA)
    * From Q2/2012 to Q2/2020 (start of pandemic) the ATL index increased 9.5% per year (132.14 to 232.25)
    * From Q2/2020 (start of pandemic) to Q3/2022 the ATL index increased 24.5% per year (232.25 to 344.83)
    * What does “normalization” mean?
    * Reversion to the mean
    The Fed Factor (still weighing on the markets)
    While speaking at a Brookings Institute event on Tuesday, Fed Chair Jerome Powell said the run-up in home prices during the Pandemic Housing Boom qualifies a "housing bubble."
    “Coming out of the pandemic, [mortgage] rates were very low, people wanted to buy houses, they wanted to get out of the cities and buy houses in the suburbs

    • 5 min
    Wall Street Meets Main Street

    Wall Street Meets Main Street

    The Atlanta Real Estate Report is a podcast & companion website for those interested in the Atlanta real estate market. This includes individual buyers, sellers and investors. It also includes architects, builders, developers, lenders, realtors and urban planners; anyone working in or supporting the local real estate ecosystem.
    NEW » In addition to the Substack app, this podcast is available on Spotify and Apple Podcast.
    PRO TIP » The text portion of this podcast contains dozens of hyperlinks, charts and graphs that are integral to the discussion. If you can have that open (preferrably on a desktop computer) while listening to the audio portion, you will get A LOT more out of it.
    In this episode, we will…
    * Consider how and where Wall Street and Main Street meet
    * Discuss the benefits of understanding this dynamic intersection
    * Look at some publicly-traded companies in the housing sector
    * Explore how these Wall Street companies impact Main Street
    * Learn what we can glean from stock charts and earnings announcements
    * Take a sip from the Wall Street “fire hydrant”
    Future Episodes…
    * Looking Ahead to 2023…
    * Institutional Investors: Who are they, and how do they impact the housing market?
    * Real Estate Investment Trusts (REITs)
    * Resources: Newsletters + Podcasts + YouTube channels
    Let’s start with some definitions…
    For the purposes of this discussion, the term “Wall Street” refers to the capital markets, in general, but especially equities. Our primary focus will be on publicly-traded companies in the real estate sector. The term, “Main Street” refers to economic activity, both at the local and national level. It also refers to us, as contributors to and beneficiaries of that econmic activity.

    “When it comes to real estate, there are two ways we can benefit by understanding the relationship that exists between Wall Street and Main Street. The first lies in our ability to build equity by becoming owners in some of the most dynamic companies in the world. That is, to participate in the growth of this industry in ways that go beyond owning property directly. The second relates to the insights we can gain from the regular (required) reporting of the financial performance of these companies.”

    Publicly Traded Companies: A Primer
    * What defines a “public” company?
    * They go from private to public via an Initial Public Offering (IPO)
    * Securities trade in the public markets (NYSE, NASDAQ)
    * Business and financial information disclosed to the public on a regular basis
    * Ways to invest in publicly traded companies
    * Stocks = Equity = Owner = Wealth Creation
    * Bonds = Debt = Creditor = Income Generation
    * Derivitives (options & futures) — hedging, speculation and income generation
    * Investing vs. Trading (own vs rent; local vs tourist)
    * Many people own public companies directly in the form of individual stocks and/or participate indirectly via ETFs, mutual funds and 401k plans
    * Typically, larger than private companies
    * Regional, national or international footprint
    * Private companies tend to be local, especially in the residential RE space
    * Continuous and real time “price discovery” while the markets are open
    * Subtle but important point
    * Makes them highly liquid
    * Contrast this to direct ownership of real property
    * Highly efficient vs highly inefficient pricing (objective vs subjective)
    * This is the key difference between stocks and real property!
    * Stock prices are a leading indicator of…
    * Economic activity at the index level (DJIA, S&P 500, etc.)
    * Industry trends at the industry level (banks, home builders, etc.)
    * A company’s outlook at the stock-specific level
    Let’s look at a few charts to gain some perspective…
    The sheer size of the equity markets makes them a powerful force when it comes to their economic impact on Main Street…
    > > > Click on the images below to enlarge the charts…
    In the chart above, note the move from the GFC low in 2009 to the pandemic high of

    • 14 min
    Imperfect Storm: Cat 5 Housing Market Cools to a Cat 3

    Imperfect Storm: Cat 5 Housing Market Cools to a Cat 3

    Welcome to the Atlanta Real Estate Report
    The Atlanta Real Estate Report by ATLsherpa is a podcast & companion website for those interested in the Atlanta real estate market. This includes individual buyers, sellers and investors. It also includes architects, builders, developers, lenders, realtors and urban planners; anyone involved with the local real estate ecosystem. In addition to the Substack app, this podcast is available on Spotify and Apple Podcast.
    In this episode…
    Timestamps appear below in case you want to jump to specific topics…
    * Perfect Storm 3.0: Update on the ten demand drivers [03:40]
    * Weather Forecast: Perfect storm weakens to Cat 3 [30:20]
    * Supply & Demand: More here than meets the proverbial thinking [44:45]
    * Monetary & Fiscal Policy: Topic de jour by Chef Jerome [58:26]
    Perfect Storm 3.0: Update on the ten demand drivers [audio: 03:40]
    * Perfect Storm: Why the Atlanta Real Estate Market is Booming — June 2018
    * How long will the ATL housing boom continue? — December 2020
    * Imperfect Storm: Cat 5 Housing Market Cools to a Cat 3 — November 2022
    “Atlanta has been a pretty popular place to live since 1837, when a fledgling railroad town called Terminus was formed. However, nothing compares to what is happening in Atlanta today when it comes to real estate. A confluence of events has created a "perfect storm" in the Atlanta real estate market. The result can be described as a huge gap between the supply of homes and the demand for them. This explains why we have seen an unprecedented increase in real estate prices since the economic downturn of 2008 - 2012. Here are some of the drivers that have created this rare economic event...”
    "Perfect Storm: Why the Atlanta Real Estate Market is Booming" — June 2018

    Demand Drivers
    * Location
    * Population (ES)
    * Lifestyle (ES)
    * Demographics
    * Diversity
    * Atlanta BeltLine (ES)
    * Quality of Life
    * Transportation (ES)
    * Higher Education
    * Jobs (ES)
    Recent Notes & Observations
    * All ten drivers are structural in nature. Strong, long-term trends.
    * Some drivers are more economically sensitive (ES) than others, which leads to variable demand.
    * The pandemic accelerated the impact of most of these drivers, leading to a temporary demand surge.
    * Self-fulfilling prophecy and flywheel effects are at play here.
    * Volatility has become extreme, which makes forecasting more challenging. It also increases the probability of overshoots and undershoots.
    “In summary, the ten drivers described above have created a unique and powerful economic event. Remember that these are structural trends; not cyclical ones. The supply and demand imbalance for housing should last for decades. Will there be corrections along the way? No question about it; but the long-term trend is decidedly UP! Those who are in a position to purchase or invest in Atlanta real estate will have an opportunity to create generational wealth.”
    “How long will the ATL housing boom continue?” — December 2020

    Weather Forecast: Perfect storm weakens to Cat 3 [audio: 30:20]
    The Atlanta real estate market is hyper-localized, which simply means that current and future market conditions can vary greatly from one neighborhood to another. That said, Atlanta is a dynamic metropolis with a robust economy that is inextricably linked to the economies of other cities, both domestic and international. The ATL economy is integrally connected to global industries such as film, healthcare, technology, tourism, transportation and logistics. As the state capital, Atlanta is co-dependent on a diverse state economy, that is evolving and thriving in its own right.
    As such, the Atlanta real estate market is and will continue to be influenced by cyclical events and structural trends that are occurring around the world and within specific industries. My mission, with the Atlanta Real Estate Report, is to help you keep up with and make sense of those events and trends.
    Current Conditions
    Homebuilders say they’re

    • 1 hr 16 min

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