Good Tuesday AM,

The sole data out today was housing starts and permits.

Both beat estimates by a bit but were down comparatively to recent months. Market reaction has been muted as bonds are focused on the next Fed meeting in two weeks. Markets currently projecting a 90% chance of a .25% rate hike and that will be the last hike.

The holes in the commercial real estate damn are starting to leak. Another hit to that market (with more to come as there is 2 Trillion in loans that need to be refinanced or worked out in 2023)…

Brookfield funds have defaulted on a $161.4 million mortgage for a dozen office buildings, mostly around Washington, DC, as rising vacancies hit property values. The loan transferred to a special servicer who is working with “the borrower to execute a pre-negotiation agreement and to determine the path forward,” according to a filing on the commercial mortgage-backed security. Some landlords are defaulting on debt as borrowing costs surge and the prospects of filling up office towers wanes given the rise in remote and hybrid work. Those trends have weighed on values, with prices on office properties falling about 25% in the past year, according to Green Street. 

And I thought this was an interesting glimpse into why sellers are selling.

Moving closer to friends and family is a big motivator.

Short and sweet for today.

Please remain safe and stay healthy, make today great.