Houston Coronavirus Tracker Update 7/11/20

Previous editions:  July 4, June 27, June 20, June 13, June 6, May 30, May 23, May 16, May 9, May 2, April 25, April 18, April 11, April 5

HOSPITALIZATIONS. I'm feeling that this data is becoming increasingly more unreliable as the counts increase. I don't think this is nefarious - more a function of slow reporting from a system under stress. If anything, the numbers are probably worse than what we are seeing reported. ICUs appear to be very near full.

A COUPLE OF CHARTS FOR CONTEXT. As Houston struggles with one of the country's most severe outbreaks, some context would be useful. The first map below shows the progression of coronavirus outbreaks by state since April - suggesting a wave movement to the virus. The second map reflects that 42 percent of all COVID deaths in the US come from just three states—New Jersey, New York, and Massachusetts. These three states account for nearly 56,000 of the nearly 133,000 deaths in the US, even though they represent just 10 percent of the population. There seems to be a 3-5 week lag between cases and deaths and although Houston's numbers will undoubtedly rise, Texas' per capita death rate is an order of magnitude lower than these three states.

WHY YOUNG PEOPLE ARE SPREADING THE DISEASE. It is virtually undisputed now that the spread of the virus now is among those aged 20-40. There's a very credible reason why we are seeing this; an effective policy would do better to recognize the motivations here and address them. They Are Less Likely to Die From It. According to Dr. John Ioannidis, for people younger than 45, the infection fatality rate is almost 0%. It’s Causing Them More Mental Health Problems Than Other Generations. A group of universities including Harvard Medical School collaborated on this study: The survey also revealed that adults younger than 50 were much more likely to report emotional impact of the pandemic compared to older adults. "This finding surprised us, given that older adults are at higher risk of serious illness if they become infected with COVID-19," said Ballou, who is also an instructor in medicine at Harvard Medical School. "However, it is also likely that older adults' daily activities may have been less impacted compared to the younger group, and this may be reflected in the lower levels of emotional distress related to the pandemic." They are more likely to be financially impacted by pandemic control measures. As the pandemic drags on, it’s exposing generational fault-lines that were set in train a decade ago when the financial crisis hit Millennials hard and left Generation Z -- described by Pew Research as those born after 1996 -- with a legacy of insecure work and stunted opportunities. Across the west, seemingly regardless of the fiscal support, the youngest workers are more likely to be out of a job. It’s actually a rationally-based risk assessment. A psychologist who deals with young people primarily put it this way: "They are appropriately realizing that isolation is a risk for them as well — it's a risk factor for depression, and depression is a risk factor for suicide … After not being protected, after not being taken seriously, they were asked to take extreme measures to protect other groups and to put themselves at risk by doing so.”

GDP DOWN 35%, UP 15%. The latest estimate is that GDP declined 35% in the last quarter and forecasts are for 15% this quarter and continued but declining increases going forward.

CREDIT CARD TRANSACTIONS SUGGEST SLOWDOWN. It's a small dip in just one data point, but it appears Texas consumer spending is reversing trend and heading downward. It is not certain yet how accurately this indicator will predict recovery trends, but it is worth watching.

NEW HOMES. The new home market has remained fairly resilient given the twin health and economic crisis the city has faced this year. After increasing significantly in June, sales have remained flat in July.

Weekly YOY sales continued to increase as we passed the half-way mark for the year. A second shutdown is a significant risk here to sales - you can see the affect of the first shutdown in weeks 14-17.

2020 average closing prices recovered from the spring declines related to the first shutdowns, but have dipped again in July. We'll try and chase this down this week.

At just over 3,200 contracts pending sales have remained steady.

Terminations have remained higher in the Under $200K and $200-$299K price ranges, probably reflecting the segment most affected by pandemic-related shutdowns. Over $1 million is also up slightly over last year. Terminations were higher in April 2020 than 2019 and then reversed -- it would appear that they are increasing again in the first two weeks of July.

Home rentals remain strong, with only slight declines in March and April. In the monthly rental ranges most competitive with new homes, there have been more leases in 2020 than last year.

Some viewpoints worth reading: The Faltering Escalator of Urban Opportunity Pooled Testing is Super Beneficial This paper shows while the shutdowns did save net lives, that came at a significant cost - in other lives lost. Wait Times for Results is Running A Week or More. What Happened to Contact Tracing It's OK to go to the Beach

Are you looking at new deals? Want to understand what's going on in the market today? We're here to help, even if it's just a short conversation. Stay well.

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Sincerely, Scott Davis Location Strategy, LLC 832.304.3478