Hi Daniel. Let me comment on JB's behalf for now (although I suspect he will pop up to answer some comments too). So I completely agree. Data centers have been bid, and industrial is bid as well. But the strength is these sectors will struggle to offset the weakness in retail or office. The key distinction is urban vs suburban. The suburban markets are squeezing and hard, partly due to lack of inventory and partly to urban flight. The urban markets are suffering. Multi-family is an interesting case in question. Yes suburban multifamily is doing well, but large scale urban multifamily not so much! Not that its disastrous, but it certainly isnt good. Re: construction, as credit tightens its just really hard to imagine that we wont see lower overall levels construction. And credit is definitely tightening. We are starting to hear of failed appraisals in smaller scale multi-family deals. Regional banks are not taking proforma pricing, are questioning vacancy assumptions and are generally starting to require more "realistic" underwriting of deals. Understandably moratoriums on evictions undermine lending confidence, as does increasing unemployment. I remember in 2008 when we saw the superficially weird scenario of working people fighting to keep car payments while allowing themselves to go into default on mortgages. In retrospect, that made perfect sense. They were upside down on their real estate and they needed their car to get to work. Will we see something like this with rents - a big buildup of arrears?

Thank you for the explanation Harry. It would be great to see a chart showing the total inflation adjusted dollar amount of loans over the last 5 years vs Cash purchases. Might be a good chart to keep an eye on because the impact on prices could be dramatic.

Harry, do you expect condo living to fall further than that 10-15% discount in urban areas like Miami as the cycle continues to play out and forbearance is eventually taken away? Id like to potentially buy something in Ft. Lauderdale/Miami but just comparing the GFC it wasn't until 2011 that real estate finally bottomed, well in to an economic expansion. If condo space is to play out in a similar way we may still be 12+ months away from seeing much better deals. Am i thinking about this correctly?

Its definitely happening, and it reflects both a desire for tangible assets, and the really low level of rates. There really is a lot of money which is now scrambling for a home. It may tell us a lot about why the equity markets are so strong. However it seems like whats happening on a smaller scale in suburban markets is completely different to whats happening in the large scale urban markets. If you wanna buy a condo in New York, Miami or SF you will be able to get a 10-15% concession on list price. Whereas if you go to Greenwich or Sag Harbor you will pay 10% above list to get it. And 5th Avenue is increasingly full of boarded up shop fronts and not just because of rioters. And if you want to buy an Upper East side 30 story condo building then you can pick up a debt at 80 cents in the dollar and you have a really good chance of coming out of a restructuring owning 300 apartments. That's assuming you want 300 NYC apartments with their overheads.

What about the Seattle suburban area? Do you have any clue what may happen here? With the growth of Amazon, Microsoft, FB and Google in the area it is hard to believe real estate prices will go lower in suburban Seattle?

Hi John. So part of the squeeze reflects an absence of inventory. This is partly a function of Covid. As Covid recedes, the absence of inventory will ease. However when Covid recedes is another matter. Its also worth noting that you will be able to score some great bargains in places like NYC in the very near future. Its already a buyers market. The suburban situation depends on where you are. If you are in Florida or Georgia for example, I wouldn't worry so much provided you are happy to live in a new tract development. There is no real shortage of land and there will be a lot of new construction. But in the North East or California. That might be tougher cos its so much harder to find land to build on. I'm reminded of the 1st, 2nd and 3rd fundamental laws of real estate. Location, location, location. And yes. You do not want to stay in cash in this environment for too long. If the dollar is weak on the currency markets it should be a reminder to find something to buy. The authorities can always "print" more dollars by pressing F9 on their keyboard. Thats not my idea of a safe store of wealth?

Thanks for your input Harry, much appreciated.

There is another point I really should have made Miguel. Miami is still benefiting from the turmoil in South America. There is still a flow of buyers from Brazil, Colombia looking to park capital somewhere they consider safer than their home countries. Further instability in Latam will ensure that flow continues.

Forgive me for offering an answer (my guess is that JB will probably come along and answer as well a bit later). So I would start looking and studying the market now. My understanding is the Ft Lauderdale/Miami condo market is already suffering, particularly at the top end of the market where the management fees can be quite fierce. I would guess that market continues to deteriorate, but you might find that developers who are on the edge might already be willing to discount their inventory providing you keep it quiet. Thats if you are ok with buying in a new development.