From a small northwestern observatory…

I just returned from a fantastic weekend and series of meetings in Jackson Hole. I had the pleasure of moderating a panel on real estate and sitting on a panel on alternative investments. I’ll share some of my thoughts over the next couple of posts.

First, the “big picture” on real estate mid-year. While many metrics look favorable, the patient isn’t fully ready to go home from the hospital yet. Structural issues still abound, including permitting problems in many major cities and counties (a result of budget cuts and short staffs), mortgage-backed securities pipelines still getting re-routed, and a lack of development infrastructure (permitted and enabled building sites, skilled labor, and such).

Apartment vacancies are projected to rise slightly this year, but there is a lot of new product in the pipeline. I fear that the increased vacancy will all fall on the shoulders of the new apartments. Stay tuned.

High-end hotel funds are paying silly-money for properties right now. Thus-far in 2013, we’ve already seen transaction volume equal to all of 2012 (about $8 Billion in the U.S.) with substantial private money coming in from abroad. Hot cities include Atlanta, Houston, and New Orleans. Resorts account for about 25% of the total, and slightly over half are single-asset purchases.

More later, including some observations about the housing market and the retail sector.