Is that a forest, or just trees? 🌲
Happy Saturday!
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I had an in-depth letter about another company similar to Here.co all tee'd up for today, but that will have to wait. We've got some fresh, odd information to make sense of.
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- 37% of US small business were short on their October rent payment.Â
- Opendoor is in big trouble, which will inevitably affect home prices.
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There was quite a bit in the news cycle this week; from Elon's twitter takeover fiasco, to the World Series market crash predictions.
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To me, those big headline stories (which seem to always compound during an election cycle) are just trees. Mostly distracting trees, in my opinion. In my world, with real estate stuff, I feel like I'm always struggling to zoom out and see the forest: to catch those big shifts in the undercurrent of the industry.
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The dead cat that has been suspended in mid-air since we hit the lockdown button is about to hit the pavement again, hard, I'm afraid.
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I was talking to my buddy Chuck this week about the fact that 37% of all small businesses in America couldn't make their full rent payment in October; up 7% from last month. As you might've guessed, for restaurants and after-school tutoring centers, that number was well over 50%.Â
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America's Hat (Canada) is faring even worse, creeping up on 1 in 2 small business tenants being in rent delinquency.Â
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Wait, didn't big corporations put all the little guys out of business? Why is this news?
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Not even close. Small businesses still employ about half the of US population, so the idea that a huge chunk of these employers are (presumably) about to hit a "lockdown" button of their own, which will undoubtedly include mass layoffs, is of great concern.Â
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In all this, it seems like at least one outcome will be a further consolidation of price/supply controls, by way of replacing mom-and-pop shops with multi-national chains, and a reduction in both consumer choice and product quality, quietly shuffled into the deck in the hopes nobody complains too much. Congratulations, Blackrock!
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Moving on...
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Opendoor, who could be seen a year ago bragging about embarking on a $9 billion home-buying spree after the utter failure of their Zillow rival, is now feeling the hurt.
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For some perspective, Opendoor sold 8,520 homes in the last 90 days and took a $982 million dollar bath. Yes, they had a net loss of almost a billion dollars.Â
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Just like the way Zillow Offers was behaving right before they imploded, Opendoor seems to have taken on the attitude that it's better to offload their product now at a loss, than wait around for some short-term uptick.
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If all the "wicked smaht" analysts over at Opendoor have this outlook, and the numbers are in on many small businesses probably not recovering from this year, I have to then ask myself, is the forest on fire? ....and am I unaware of the seriousness because I'm choosing to only look at a small thicket of "still green" trees that the fire hasn't reached yet?
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Anything you've seen recently that's helping you "see the forest for the trees"? Drop me a reply! 📥
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Best,
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Stephen Cameron
Founder/Pres.