A passenger walks through Reagan National airport as the novel coronavirus (COVID-19) pandemic continues to keep airline travel at minimal levels and the U.S. economy contracts in the first quarter at its sharpest pace since the Great Recession, in Washington, April 29, 2020. Kevin Lamarque | Reuters Direction requests Data from navigation tool Apple maps tells a different story depending on the mode of transportation. While requests for driving and walking directions have surpassed pre-pandemic levels, transit directions continue to recover much more slowly. Though that may change as more employees return to work in urban centers like New York, Chicago, and San Francisco, requests for transit directions are still at half of what they were in early March. Restaurant bookings Restaurant bookings through reservation service OpenTable dropped to zero in late March and throughout April before picking back up in May once states eased restrictions on in-person dining. While bookings have risen to a level of being down 60% compared to last year, the upward trend has the potential to stall out as states like Texas and Florida pause their reopening plans amid coronavirus outbreaks. Hotel occupancy Hotels' occupancy rates have continued their upward trend and now measure at 44%, according to data from global hospitality research company STR. The new figures mark the tenth consecutive week occupancy rates have increased. Norfolk/Virginia Beach, Virginia as well as Tampa/St. Petersburg, Florida were both top travel markets that saw occupancy rates of 54% and 49% respectively. However, New York City had an occupancy rate of 44%, down from 46% the week prior. Air travel The number of passengers traveling each day through airport security checkpoints is down more than 70% compared to last year, according to data from the Transportation Security Administration. The numbers represent continued improvement for the troubled air travel industry. American Airlines announced Friday that it will resume flying full planes on July 1 after having a 70% capacity limit for flights. Home purchases Though mortgage applications for purchasing a single-family home are 18% higher compared to the same week last year, they did see a slight decrease from last week, according to data from the Mortgage Bankers Association. Even with continued high unemployment and economic uncertainty stemming from the coronavirus pandemic, the MBA said the home purchase market is still strong.
Rick Nazarro of Colonial Manor Realty talks with a pair of interested buyers in the driveway as a couple waits to enter a property he is trying to sell during a "controlled" open house on May 2, 2020 in Revere, MA. Blake Nissen | Boston Globe | Getty Images After plunging to nearly the lowest level in its history in April, an index measuring consumer sentiment in the housing market bounced back significantly in June. Renters were especially optimistic about homebuying. The share of consumers who think it's a good time to buy a home increased from 52% to 61% month to month, according to the Fannie Mae survey, while fewer Americans said it was a bad time to buy. Renters drove much of that improvement. "The share of renters who say it's a good time to buy a home is now at its highest level in five years, suggesting favorable conditions for first-time homebuying, consistent with the recent rebound in home purchase activity," said Doug Duncan, Fannie Mae senior vice president and chief economist. Current homeowners are also getting slightly more optimistic about the sales market, especially given the lack of housing supply. The percentage of respondents saying now is a good time to sell a home increased from 32% to 41%, although nearly half still think it's a bad time to sell. Home sales jumped dramatically in May, after grinding to a halt in March and April. While new listings are coming on the market, the total inventory of homes for sale at the end of May was 19% lower than May 2019, according to the National Association of Realtors. Pending sales in May, which represent signed contracts on existing homes, jumped a record 44% compared with April. "However, this activity may cool again in the coming months, depending on the extent to which it can be attributed to consumers having chosen to delay or to accelerate homebuying plans due to the pandemic," said Duncan. "We believe the continuing uncertainty regarding the coronavirus' containment suggests an uneven and potentially volatile course toward economic recovery." Consumers are still very concerned about their job security, even as the employment picture improves slightly. Renters and homeowners with a mortgage are particularly worried, according to the survey, given the sudden record-high unemployment brought on by the pandemic. More Americans now think home prices will strengthen, which is a double-edged sword in the market. Home prices were already elevated going into the pandemic, and affordability was weakening despite record-low mortgage rates. On that front, more respondents said they expect mortgage rates to rise over the next year.
Home Depot shares are under pressure Tuesday after the company posted a drop in earnings tied to coronavirus-related expenses. But, even with that decline, Home Depot is still leading against major competitor Lowe's. Home Depot stock remains up 9% for the year, while Lowe's has fallen 3%. That trend of outperformance should continue, according to Nancy Tengler, chief investment officer at Laffer Tengler Investments. "We own both but we own a lot more of Home Depot and the reason is twofold. First of all, they're best in class, they have the best locations, candidly the best management team, and they've been growing the dividend in the 20% range every year for the last five years," Tengler said Monday on CNBC's "Trading Nation." "The free cash flow is healthy, well above dividend, and the online sales have been compelling at 20% or so." Home Depot's dividend yields 2.5%, above the S&P 500's roughly 2% yield. While Home Depot has outperformed Lowe's this year, it has had a slightly weaker run this quarter – it has risen 29% compared with a 37% gain for Lowe's. Ari Wald, head of technical analysis at Oppenheimer, said it should regain its lead. "We do prefer Home Depot stock. It not only has a stronger long-term trend, but we see it as the more tactical idea here," Wald said in the same segment. "If you plot a ratio of the two stocks against each other, Home Depot has actually underperformed since mid-March, and is coming into support at its 200-day moving average, suggesting we're approaching a likely turning point in the ratio." The stock is also back to all-time highs, said Wald, and should continue to move higher. Home Depot is "currently trying to break out above its February peak of $247 so I think that's very telling when you have a stock already getting close to new cycle highs with the rest of the market so well below those peaks. That's really a great display of the relative strength in that stock," said Wald. Home Depot hit an all-time high on Monday, surpassing its February peak. It is now 3% below that record. Disclosure: Laffer Tengler Investments holds LOW and HD. Disclaimer
Signage stands outside the Freddie Mac headquarters in McLean, Virginia, U.S., on Monday, May 11, 2020. Andrew Harrer | Bloomberg | Getty Images The number of borrowers in government and private sector coronavirus-related mortgage bailouts just fell by the largest weekly volume since these plans were put in place. There are, however, warning signs that the programs could swell again. As of June 30, 4.58 million homeowners were in forbearance plans, according to Black Knight, a mortgage data and technology firm. This represents 8.6% of all active mortgages, down from 8.8% the previous week. Added up, all the loans in forbearance represent just under $1 trillion in unpaid principal ($995 billion). After rising the previous week, the number of loans in active forbearance plans dropped by 104,000. That is the largest one-week drop since the start of the programs and brings the total volume to the lowest since the first week of May. The current volume is down by 183,000 from the peak on May 22. "A return to declining forbearance volumes this week was not entirely unexpected. Last week's forbearance volumes may have been adversely affected by late fees charged on the 15th of the month, which tend to put upward pressure on the number of homeowners entering into plans in the following days," said Andy Walden, Black Knight economist and director of market research. Volume also likely fell in part because more than half of all active forbearance plans, many of which were set up with initial 90-day periods, began in late March and early April. They would therefore be scheduled to expire or be reviewed for extension in June. About 2.2 million loans would fall into that category, so the drop therefore suggests that some of those borrowers did not need an extension, but many more of them did. "There is still great uncertainty ahead, given the recent spike in COVID around the country and the scheduled end of expanded unemployment benefits on July 31," added Walden. According to daily mortgage payment tracking data, as of the end of June, roughly a quarter of homeowners in forbearance had actually made their June payment anyway. That's as compared to 46% in April and approximately 30% in May. The bulk of the loans in forbearance are government backed and part of the mortgage bailout program in the CARES Act, which President Donald Trump signed into law in March. It allows borrowers to miss monthly payments for at least three months and potentially up to a year. Those payments can be remitted either in repayment plans, loan modifications, or when the home is sold or the mortgage refinanced. For loans not backed by the government, most banks and private lenders have set up similar plans.
Fewer borrowers are now in mortgage relief programs that allow them to delay their monthly payments due to the coronavirus crisis. The mortgage market, however, is not out of the woods yet. Far from it. After a steep rise in April and a flattening toward the end of May, the number of borrowers in both government and private-label mortgage forbearance programs dropped by 34,000 last week, according to new numbers from Black Knight, a mortgage technology and data provider. This is the first drop since the start of the pandemic. There are still 4.73 million loans in forbearance, representing 8.9% of all active mortgages. Those loans together make up just over $1 trillion in unpaid principal. By loan type, an estimated 7.1% of all Fannie Mae and Freddie Mac loans and 12.3% of FHA/VA mortgages are in forbearance. "The decline was actually greater among government-backed mortgages, which saw 43,000 fewer total forbearance plans than last week, but this was partially offset by an increase of 9,000 new plans on mortgages held in bank portfolios and private-label securities," said Anthony Jabbour, CEO of Black Knight. The vast majority of loans in forbearance, about 3.5 million, are government-backed. The government's bailout program, part of the CARES Act economic relief package, allows borrowers to miss monthly payments for at least 3 months and up to a year. Those payments must be made up in the future, either through repayment plans, or when the home is sold or the mortgage refinanced. While the decline in overall loans in forbearance is promising, there was one red flag in the data. In April nearly half of all borrowers who went into forbearance actually ended up making their monthly mortgage payment after all. As of May 26, that share fell to just 22%. "If that trend holds true through the end of the month, the market should be prepared for another likely rise in the delinquency rate for May," said Jabbour. "Also, expanded unemployment benefits are scheduled to end on July 31. It remains to be seen how that will impact both forbearance requests and overall mortgage delinquencies."
View from a luxury rental at West Half, overlooking Nationals Park, Washington, D.C. Pat Pugliese | CNBC WASHINGTON — When Dr. Anthony Fauci throws out the ceremonial first pitch of this truncated baseball season Thursday night, players, coaches and umpires will see it in person at Nationals Park. But no fans will be in attendance, as part of an effort to stem the spread of the coronavirus. Yet certain tenants at West Half, a new luxury rental apartment complex boasting units with views directly overlooking center field, will be able to watch the World Series champion Nationals take on the New York Yankees "in person," too. The building, owned and developed by JBG, has seen strong demand since it began leasing. "Our residents are very excited about game day," said Tiffany Butcher, executive vice president of residential and management at JBG. Butcher couldn't say whether demand had picked up due to Covid-19 and this fanless baseball season, since the company is public and hasn't reported the most recent quarter's earnings yet. At One Cardinals Way in St. Louis, however, a new $120 million ballpark-side luxury rental building owned in a partnership between the St. Louis Cardinals and The Cordish Cos., leasing jumped in recent months for units overlooking the baseball field. The 29-story tower is part of a $360 million mixed-use neighborhood called Ballpark Village, with retail, restaurant and residential properties. It opens in August, just as games begin at Busch Stadium. Rents range from $1,400 to $7,900 per month. "Your typical new construction apartment building opens about 10% to 15% leased. We're 65% leased today, a few days before the first move in," said Nick Benjamin, Cordish's vice president of development. "We've leased well on pace with our budgets and projections through Covid-19, and now, we're really starting to see momentum pickup as we get close to the start of the season." Ballparks have become increasingly popular as anchors for new real estate developments in recent years. Once situated just on the edges of most cities, ballparks are now the center of new residential, retail and restaurant complexes. Developers and cities alike are using them to rehabilitate parts of their cities, like Washington Navy Yard and The Battery Atlanta. Jeff Stauffer rents a new apartment overlooking Busch Stadium in St. Louis. Donovan Lloyd for CNBC The Atlanta Braves began playing in their new Truist Park in 2017, as a mixed-use development went up. It includes rental apartments, restaurants, a large hotel overlooking the park and even an office building for Comcast's regional headquarters. Cortland, an Atlanta-based developer, manages the residential properties. While its apartments do not offer a full view of a game, the development is using its proximity at least to try to lure fans back. "The Battery got down to about 90.1% occupancy, today it's 95.1%. It was 96.2% before [Covid-19]," said Mike Altman, chief investment officer at Cortland. "We are happy to see it turn. We think the Battery as a whole is going to be very interesting because there are plenty of restaurants reopening around it." The Battery and Ballpark Village are using outdoor screens to show the games to socially distanced fans. They are hoping fans will be lured not only by outdoor dining and drinking, but by the camaraderie of cheering on a team together, even if just outside the turnstiles of the stadium. Jeff Stauffer, an avid Cardinals fan, is about to move into his apartment at One Cardinals Way, where he can watch a game not only from his own unit, but from a large communal terrace on the eighth floor. He expects his popularity to get a boost. "I welcome that. We're friendly people," said Stauffer. "I'm afraid I'm going to probably make a lot more friends, now that we have this view, but it's all good." He added: "I'm looking forward to it." Stauffer and other tenants overlooking the field pay about a $100 premium per month over comparable floor plans, but that's a lot cheaper than season tickets. While developers are undoubtedly taking a hit from the lack of actual in-person fandom at the stadiums, they do say they are doing better with leasing than other luxury towers that are seeing occupancy fall during the pandemic. "One Cardinal Way is going to be one of the only places in the entire city and one of the few places really across the country where you're going to be able to watch live baseball," said Cordish's Benjamin. "That's going to be a huge marketing asset for us." Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC.
An empty parking lot is shown at a closed JC Penney store in Roseville, Mich., May 8, 2020. Paul Sancya | AP A piece of J.C. Penney's proposal to emerge from bankruptcy includes spinning its real estate into a publicly traded real estate investment trust. As part of a plan filed with the bankruptcy court, Penney would reorganize into a new retailer ("JCP"), along with a REIT that would collect rent checks from the retail business. Court documents say as much as a 35% stake in the newly created REIT could be sold to a third-party investor to raise cash, or to provide additional funding for the REIT. Weighed down by a heavy debt load of more than $4 billion and hit hard by the coronavirus pandemic, Penney filed for Chapter 11 bankruptcy protection Friday evening. Some are now questioning if the department store chain, which has been around for more than a century, should still operate. It has been stuck in a sales slump for years. The department store industry as a whole has also been on the demise, with people shifting their spending away from the mall. When Penney filed, it still operated roughly 850 locations at malls across the country. This would not be the first time a struggling department store operator has relied on its real estate value to come up with liquidity. Sears in 2015 spun off roughly 250 properties to form the REIT Seritage Growth Properties. "As soon as reasonably practicable," Penney will list common stock of the new JCP and the REIT on a national securities exchange, court documents say. Penney is also planning to do sale-leaseback deals for its distribution centers, according to the documents, which would help it raise more cash. Such a transaction entails selling real estate and leasing it back. Many retailers, including Macy's, Big Lots and Bed Bath & Beyond, have deployed this strategy in the past to come up with liquidity in a pinch. "JC Penney now finds itself facing another monumental challenge to its business: emerging from the disruption caused by the novel Coronavirus pandemic," CFO Bill Wafford said in his court declaration. Because of the Covid-19 crisis, Penney's year-over-year net sales tanked by roughly 88%, and bricks-and-mortar sales dropped to almost $0, Wafford said. Penney's unencumbered real estate is valued at $1.4 billion when the lights are on, and $704 million when they're shut, Kirkland & Ellis attorney Joshua Sussberg said Saturday during a virtual court hearing. As of the bankruptcy filing, seven Penney stores were operating curbside pickup and 41 were fully open for business again, Sussberg said. All of Penney's shops had been temporarily shut to try to help curb the spread of the Covid-19 virus since March 18. Penney now has until July 15 to strike a business plan and hit certain milestones to receive the full bankruptcy financing package it has struck, or else it must pursue a sale. CNBC's Lauren Hirsch contributed to this reporting.