September 18, 2017

Becoming Collector Items

A report from the Boulder Daily Camera in Colorado. “More than 1,000 apartments and rooms for rent are sitting empty in Boulder right now, either too expensive or too old or just too inconveniently located for someone to claim. Renters have never had more choices, as reflected in the 7.9 percent vacancy rate — a 10-year high watermark. ‘We cringe every time we see a new complex approved,’ said Gary Epperson, of Longmont’s PMP Realty, which manages hundreds of for-rent rooms and homes in Longmont. He admitted there is always a chance of oversupply as financial backers of such projects, reacting to a stated need, overindulge on the promise of a healthy return.”

“The picture is much the same across the region. From 2011-2016, 56 percent of all new housing units in Boulder County were multi-family, the projects more likely to be rented than owned. And active development in the two biggest cities, Boulder and Longmont, is even more skewed: For every single-family unit under construction or in the permitting process, there are three planned multi-family dwellings.”

“The demand for houses to buy is strong as well, as indicated by double-digit price growth. But other barriers stand in the way of single-family building: the scarcity and high cost of land limit what can be built affordably enough to guarantee that someone can buy it. ‘Unless the zoning laws are changed, there’s just not that many more single family homes that can be built in the county,’ said Jay Kalinski, of Re/Max of Boulder. ‘Single-family homes are becoming like collector items.’”

From NBC Bay Area in California. “High housing costs are nothing new to the Bay Area, but one recent sale has even the locals scratching their heads. A home in Sunnyvale recently went for nearly $800,000 over the asking price of $1.7 million. True story. Listing agent Dave Clark said it’s certainly a desirable location, and that’s why he priced it aggressively.”

“‘We did not overpay for it; we paid market value,’ said Mini Kalkat of the Troyer Group, the agent for the buyers. ‘These are smart, sophisticated buyers buying in a very cosmopolitan area that’s now competing against London and Manhattan and all the places we never thought we’d compete against.’”

“Some neighbors see the surging prices and want to sell. Others are looking to double down on the neighborhood. ‘When our son graduates from high school, we’re thinking of renting our house because we don’t want to give up or sell the property,’ homeowner Rosemary Brooks said. ‘It’s just too valuable.’”

From News Hub in New Zealand. “Real estate agents insist a fall in profits in this year’s finale of The Block NZ is proof the Auckland housing bubble has burst. Winners Andy and Nate claimed the highest profit of $31,000 in last night’s dramatic episode, as well as $100,000 in prize money. That’s just a fraction of the profits made in previous years last year’s winners made $380,000, not including the $100,000 bonus.”

“‘We’re feeling pretty sorry for the other teams,’ says Andy. ‘Everyone is trying to celebrate and then you’ve got teams who are walking away with $1000, teams that thought they won two minutes before and then [have it] stolen away. It was a real double-edged sword.’”

“‘It feels great that we’ve gotten the money, but ripped off at the same time, because you can’t really celebrate,’ adds Nate.”

“Jeremy O’Hanlon from says what viewers saw last night is also happening in auction rooms across the city. ‘It shows that there’s a bit of a slowdown in the market. It’s harder to get buyers into the room at the moment.’ Real estate agents told Newshub they were impressed The Block NZ homes managed to sell at all, as buyers are taking a wait-and-see approach.”

From Pramit Bhattacharya. “Ten years ago, in August 2007, the French investment bank BNP Paribas SA told those investors that it was suspending redemptions because the bank’s fund managers were no longer sure what those mortgages were worth. Ripples of panic spread across financial markets, and the resulting financial contagion led to a global credit freeze. The global financial crisis has also morphed into a social and political crisis, producing mass discontent, and challenging the global neoliberal consensus forged after the collapse of the Soviet system between 1989 and 1991.”

“Given the pivotal role of economists in forging that consensus, the cracks in the consensus have created a crisis for the discipline of economics itself. The problem with economists is not that they make assumptions. After all, any theory or model will have to rely on simplifying assumptions. But when critical assumptions are made just to circumvent well-identified complexities in the quest to build elegant theories, such theories will simply end up being elegant fantasies.”

“Just before the collapse of Lehman in 2008, former International Monetary Fund (IMF) chief Olivier Blanchard wrote a paper extolling the virtues of the neoliberal consensus, claiming that the convergence of views and methodologies in the discipline showed that the ‘state of macro-economics is good’. It is only several years after the crisis that a senior economist from the Fund dared to wonder out aloud if neoliberalism had been oversold.”

“One way in which economists could have compensated for the lack of engagement with other social sciences is by studying economic history. But economic history has been relegated to the margins over the past several years, and many graduate students remain unacquainted with the subject still.”