Moses Sternstein

The old guard of big cities is giving way to a new guard of something else

It's obvious that mortgage rates drive property values, but by how much? Could be a lot. Here's a plot of home prices (blue) v. the value of an $100K 30year loan (red) (i.e. the present-value of the right to get $100k in 30 years):

It's not 1:1, but there's a strong relationship. When rates are low, money is plentiful, so the discount to "future money" is low (and therefore the present value of 100K-in-30y is high). A house bought with a mortgage is functionally a "future asset," so unsurprisingly, the present value is also relatively high (to the amount borrowed).

When rates go up, money-today becomes more valuable, whereas money-tomorrow becomes less. That's the red-line falling off a cliff. Homes are less liquid, so no reason to expect prices to follow a similar dive, but whatever is moving now, is definitely going to take a haircut. If rates stay high for a while . . . that blue line will eventually follow.

Last time, real estate brought down the banks . . . what if, this time, the banks are returning the favor? https://system2randomwalk.substack.com/p/magic-money-wands-and-unringing-bells

A big think on enduring secular trends for the next cycle. Lots of implications for housing, regional brands, service industry, prices, and up v. downmarket offerings https://system2randomwalk.substack.com/p/a-change-is-gonna-come

Different-ish perspective on SVB. Plus, some good charts. https://system2randomwalk.substack.com/p/not-mad-just-disappointed

$NKE $LULU

Plus a little check in on $HD and $LOW where the short call was right, albeit too early . . . better late than never, I guess?

Earnest foottraffic shows the extraordinary gap between "downtown" and "not-downtown" locations. None has returned to pre-pandemic levels (except LA), but downtown is really struggling.

From Ramp's spending analysis, $META is making a comeback, but man did TikTok make a run for marketshare