Houston Coronavirus Tracker Update 7/04/20

Previous editions:  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 Happy Independence Day!

HAND SANITIZER AND FIREWORKS DON'T MIX. I figure it goes without saying, but what would we do without experts?

HOUSTON GAINED 74,000 JOBS DURING MAY. Enough with the bad news. I haven't seen this anywhere. But that's a phenomenally strong performance considering the economic uncertainty at play during May and with much of the economy still shut down. Half the gains were in hospitality (which is about 10% of total MSA employment) so some are likely at risk with the predictable resurgence of the virus we are now experiencing. But still, why not head into the holiday weekend with some good news?

SO WE'RE NOT ONE OF THE WORST AFFECTED? Nearly the entire pandemic I've heard how Houston is one of the worst regions for impacts from the coronavirus because of the "double hit" of pandemic and oil. Oxford Economics just released the above analysis which indicates Houston's job losses on a percentage basis are right in line with the US, and at five years out Houston significantly outperforms the nation. Again.

GO READ DR GILMER'S LATEST COLUMN. It's really an exceptional explanation of Houston's economic recovery scenarios. It's lengthy but worth the time.

TARGETED STRATEGIES WOULD SAVE 2X LIVES. Entering the second phase (or wave or spike, the world needs a Thesaurus) of infections here. A recent study at Berkeley showed that 90% of contact reduction (or social distancing) was voluntary and occurred before mandatory lockdown policies. These are estimated to have cost as much as $1 trillion, but only saved the economy $250 billion. A second study was released in May by MIT and the National Bureau of Economic Research; it concluded that twice as many lives could be saved if governments focused limited resources on protecting the most vulnerable people rather than squandering them on those who seem to face almost no risk, such as children. Doesn't sound plausible? Remember that about 43% of deaths have come from nursing homes, which is about 0.46% of the population.

WHY DON'T YOU LEAVE IT TO THE EXPERTS? Occasionally I get this question. I usually refer the asker to an article like this. Symptomless transmission makes the coronavirus far harder to fight. But health officials dismissed the risk for months, pushing misleading and contradictory claims in the face of mounting evidence. Warning: it's long, and it's likely to make your stomach turn.

HOSPITAL WATCH. I don't know what to make of all the drama this week regarding TMC, ICUs and their dashboard. Above is the SETRAC dashboard and for clarity I've limited it to Houston MSA counties. It's full, but not overwhelmed yet. MISSED OPPORTUNITY. I pulled the total chart back to the beginning of the pandemic. Hospital admits started to rise June 6 and ICU on June 15. 99% of patients express symptoms in 14 days, with the median at 5-6. Without getting into the politics of "what caused the spread," our hospitalizations were flat from April 4 until June 6. I've heard Texas "opened too soon" - I think instead we opened too late. The virus was obviously still spreading and we could have gone through these phases when the economy was more stable, before 550,000 Houstonians had lost their jobs, and before what we had to know would be a difficult time to avoid group gatherings like Memorial Day, Independence Day, graduations and weddings. I'm curious if anyone knows about this. We've heard some scary numbers about the positive testing rate. There appears on the chart belwo to be a very distinct correlation between the number of tests given and the positivity rate. The more tests given on a particular day, the lower the rate. This at least suggests selection bias on lower testing rate days.

MODELERS WERE ASTRONOMICALLY WRONG. This is a quick interview with John Iaonnidis on the impact of following advice generated from bad models.

MORTGAGE APPLICATIONS HOLDING. It's a little hard to tell if the dip is a return to a more seasonal pattern, but the levels remain significantly above prior years.

MARKET Even with declines in April and May, sales in the first two quarters are higher in 2020 than in 2019. First week of Q3 shows weekly sales have almost tripled last year's number of closed transactions. Average price took a dip in July on rising sales - but this is just over two days' data. Pending sales remained unchanged.

Cancellations are still running ahead of last year in the $200K-$299K price range. No net difference in cancellations in Q1 versus last year; the biggest gap in cancellations was in March and June reversed that trend significantly.

On the other hand, rentals show a slight decline in April and quick recovery - this sector appears almost entirely unaffected by the virus either in velocity or price.

Some viewpoints worth reading: Amid coronavirus pandemic, excess deaths from heart disease, diabetes, stroke Experts and Lockdowns and Protests, Oh my! Contact Tracing is the Best Tool We Have Until A Vaccine Alarm Grows Over Covid-19 Spike Among Young Americans Young Americans Are Partying Hard and Spreading Covid-19 Quickly Most with coronavirus not sure how they caught it

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