With so many factors influencing the real estate world today, it’s difficult to determine where that market is headed. Record high inflation – coupled with labor scarcities and lumber shortages – has erected huge roadblocks for the construction industry.

Inventory is at an all-time low. And as funds from Biden’s infrastructure bill hit the industry, competition for building contracts is heating up.

In the residential realm especially, there’s been an unprecedented run on housing. Demand is at an all-time high and, with it, prices have soared through the roof.

In cities like Austin, Texas, and Denver, Colorado, many homebuyers can expect hectic bidding wars. The result can be a final buy price that’s intensely, even insanely, higher.

Ouch!

As the Federal Reserve continues its campaign to raise interest rates, many hope demand will subside and inventory will increase. Unfortunately, though, this inventory problem may get worse before it gets better.

 The Wall Street Journal reports:

“Housing starts fell 2% to a seasonally adjusted 1.56 million [in June], the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal expected housing starts to rise 1.4%. Building permits slipped 0.6% to 1.69 million, but held 1.4% higher than the figure in the prior year. The drops came as interest rates climbed and a global housing boom faded.

“The construction decline was driven by a drop in building in the South. Western states also saw a notable drop. Construction activity increased in the Northeast last month.”

This isn’t just bad news for homebuyers. It’s also a telling trend in the broader economy.

As most of us know, real estate investors are some of the savviest economic enthusiasts on the market. So a drop in new construction endeavors tells us that their confidence is waning, even though we’ve seen record demand.

In short, it seems many builders are trying to button up their assets before the market turns.

Of course, new construction is only one sign of economic strength in this sector. Previously owned home sales are also a key indicator.

Today, we expect new data from The National Association of Realtors to reflect sales of existing homes. (That comes out after I’ve sent this copy in to be published.) But we already know that last month, those sales declined by 0.9%.

If we see a bigger drop today, we may see more investor anxieties and a further decline in inventory still. And if the Fed raises interest another 0.75%, this softening could become a long-term trend.

More Non-REIT News to Know About 

Alright then. Back to Twitter (TWTR)…

Things just got more serious in its feud with Elon Musk. Yesterday, a Delaware judge agreed to fast-track Twitter’s lawsuit to hold the world’s richest man to his original offer.

Chancellor Kathaleen St. Jude McCormick – chief judge of the Delaware Chancery Court – set a trial date in October. That wasn’t what Musk wanted at all, but them’s the breaks.

Her stated reasoning is that Twitter could face serious setbacks from the uncertainties over its future as a public company. Therefore, forward they should proceed as quickly as possible.

“Those concerns are on full display in the present case,” she said. “Typically, the longer the merger transaction remains in limbo, the larger the cloud of uncertainty cast over the company and the greater the risk of irreparable harm to the sellers.”

That’s precisely the argument Twitter made.

In the hearing yesterday, Musk’s attorneys accused Twitter of railroading him to close the deal while ignoring the truth over the number of fake and spam accounts – exactly as expected. They also explained that Musk has no interest in harming the company, which is probably a good point.

After all, he’s still Twitter’s second-largest shareholder.

The World According to REITs 

One of my favorite data real estate investment trusts (REIT) is Digital Realty (DLR).

The company just reaffirmed its partnership with cloud computing giant Oracle (ORCL) after leasing critical infrastructure to the blue-chip clients in its Interxion Paris Digital Park. Located just a few kilometers from that famed city, IPDP provides cloud- and carrier-neutral data center services across the region.

Oracle’s choice to access IPDP infrastructure was made in direct response to the demand surge for hybrid cloud services coming from Paris’ public and business sectors. This expansion marks the opening of Oracle’s 38th global cloud region.

Christophe Negrier, a senior executive of Oracle France, said:

“After the opening of our first cloud region in Marseille, we have selected Interxion again to help deploy our critical infrastructure and offer Oracle Cloud Infrastructure via our newest cloud region in Paris. This relationship is based on a common objective to support the digital transformation of companies by limiting their environmental impact.”

Right now, DLR is sitting around $123.63, up over three points in the last 24 hours. And with continued confidence from clients like Oracle, I’m super excited to see what its next steps will be.  

Author’s Note: If you do determine this stock is right for you, make sure to purchase it at a smart entry point. Even the best of companies can burn you badly by buying in at inflated prices.

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