The Across-The-Board Price Decline
A report from KATU in Oregon. “According to the February edition of Portland State University’s Center for Real Estate Quarterly, the effective rent growth rate for an apartment in Northwest Portland is slowing down. Carlo Castoro, a realtor in Portland, says the reason behind the negative growth rate can be explained by an Economics 101 concept: supply and demand. The supply in Northwest Portland was bolstered by new buildings. ‘There have been, what we call in the industry, deliveries in that market,’ Castoro explained. ‘What that means is that there are a lot of new apartment buildings that have been built [in Northwest Portland] and are now accepting residents. It’s just the basic function of supply and demand. Where you have more supply of apartments and demand has not met that supply, it puts a downward pressure on prices.’”
From Philadelphia Magazine in Pennsylvania. “National Real Estate Development, LLC (NRED), the union-affiliated development firm that’s behind the East Market mixed-use development, announced that it had closed on a $57 million loan from Wells Fargo that will allow work to commence on the project’s second apartment tower. Dan Killinger, NRED’s managing director of development expressed no worries that this project would suffer as what appears to be a looming glut of apartments is coming down the pipeline. ‘What we’re trying to make is a new neighborhood, and a critical mass of residential is necessary to make the retail component vibrant and drive the street life in the area.’”
“Which doesn’t mean NRED didn’t explore other options before settling on apartments: Killinger said that the company had also studied office and hotel uses for the tower but decided that their first impulse remained the right one and that ‘residential would be the way to go now.’”
From Time Out Chicago in Illinois. “The good news is that rents for one- and two-bedroom apartments in Chicago are lower than they were this time last year. And, cheaper rents aren’t a one-off for the month of March. When you look at the year-over numbers, the price decreases are significant. One-bedroom rents are down 7.5 percent from this time last year, and two-bedrooms have dropped a whopping 10.6 percent.”
From Bloomberg on New York. “Rents fell last month for Manhattan apartments of all sizes, the first across-the-board price decline in at least four years, as a construction boom brought more buildings to market. Apartments available for rent at the end of February totaled 6,872, a jump of almost 12 percent from a year earlier. The number of new leases fell 28 percent last month to 3,634. ‘In the months of January and February, we had customers requesting three to four months free, which is pretty unheard of,’ said Melinda Sicari, a broker with Douglas Elliman.”
The Real Deal on Florida. “As new condo units continue to come online in 2017, resale pricing in Miami’s urban core is reporting a drop for the first time in eight years. Greater Downtown Miami’s condo inventory will grow by 3,456 new units this year, the largest surge of new product expected over the next three years, according to the latest Miami Downtown Development Authority report authored by Integra Realty Resources.”
“In 2016, 2,202 condo units were delivered in Miami’s urban core, which is more than half of the condo inventory that’s been delivered since 2012, according to the report. While the absorption of new units to the Greater Downtown Miami market is slower, preconstruction condo pricing is holding steady. ‘If you don’t buy today I don’t know how you can complain about the rent three years from now,’ said Anthony Graziano, Integra Realty principal and the report’s author, citing lower prices at condo projects like Hyde Midtown and Centro.”
“The wave of new inventory has led to a decline in pricing. Existing condos saw a 7 percent decrease in prices in January compared to the year before. ‘I think we are going to see indexes down another 5 [percent or] 6 percent this year,’ Graziano told The Real Deal. ‘I keep telling everyone, don’t wait for ‘the crash.’ Take advantage of the interest rates now.’”
The Houston Chronicle in Texas. “So many luxury apartments have opened recently that landlords are offering move-in bonuses, free rent and chances to win week-long cruises just to fill them up. Some Houston developers say it’s time to start building more. The owner of Memorial City Mall, for example, announced Thursday it would begin construction this month on an 8-story building with 327 luxury rental units and a rooftop pool.”
“That’s not to say this year isn’t going to be brutal for landlords. Occupancy will continue to drop, as will rental rates, especially in the urban neighborhoods where much of the construction has taken place. Willett said rents are off about 6 percent from where they were last year. Some 27,000 new units are in the lease-up phase, yet only about 30 percent of those are rented, said analyst Bruce McClenny of Apartment Data Services. About 13,000 more units are expected to be developed this year.”
“Despite the glut, other developers have pitched new projects, which they expect to be open once the recovery has taken hold. ‘I’m not at all alarmed what’s happening now,’ said commercial mortgage veteran Hal Holliday. Holliday said developers should be planning for future demand. ‘If we slam on the brakes and don’t try to gently push on the gas we’re going to find ourselves back into a pent-up demand situation, and that’s always accompanied by rising rents and probably too many people jumping in,’ he said.”
‘In the months of January and February, we had customers requesting three to four months free, which is pretty unheard of,’ said Melinda Sicari, a broker with Douglas Elliman.”
Ah yes, Melinda, but now that creditworthy tenants are in the cat-bird seat, you better get used to “unheard of” concessions.
It was just a couple of months ago we had a poster telling us lower end rents would only go up. She’s got mouthful of crow today.
Such posters tend to vanish without a trace rather than recant their dogma.
Unlamented and quickly forgotten, I might add.
It was probably me. I’m not really disappearing, but thank you for the thought. I also qualified my comments that anything can happen with all this new supply. I’m not sure that’s recanting a position. Oh well. So when can we expect to see prices in San Francisco bottom out at 1986 levels, as predicted by Charles Hugh Smith?
You weren’t who I had in mind, Oxide. Don’t always agree with you but nonetheless respect your opinions.
It may be hard for a chemist to understand how the substitution effect redistributes high-end losses, due to the glut of luxury, accross the full price spectrum.
My worry is about “The Law of Supply and Demand”, and specifically what that Economics 101 Law will ultimately do to these “high-end lux” apartments, condos, and houses. There will be (”will be” not “might be”) landlords declaring bankruptcy, maintenance and upkeep neglect, abandoned properties. I’m sure there are a million variances and stuff that I haven’t thought of. Oversupply to a limited population - individuals with high disposable income - never ends well. Think multiple families living in one apt paying a discounted rate on the same floor as someone who paid a premium to live there. LoS&D. It has interesting effects.
I can go on and on about oil prices. That is for another post I guess.
Regards,
Roidy
P.S. Why aren’t real estate agents touting “water front property” much anymore? Flooding, costs to live there, insurance risk. Ya’ think?
I liked TxChk much better than RussoChk er, NyChk.
“She’s got mouthful of crow today.”
Some possible remedies to the odious and odoriferous ramifications of eating an over-abundant supply of crow …
https://www.google.com/search?q=crow+breath+mints&tbm=isch&tbo=u&source=univ&sa=X&ved=0ahUKEwiwjMri-c7SAhWLilQKHbkFCYwQsAQIGQ&biw=1360&bih=651
‘From Bloomberg on New York. “Rents fell last month for Manhattan apartments of all sizes, the first across-the-board price decline in at least four years, as a construction boom brought more buildings to market.”‘
It kinda sorta sounds like rents are falling accross-the-board, not confined to luxury.
Care for some more crow?
What I would do is ask for 3-4 months concession AND a 3-year lease that specifies my annual rate would be set at the lowest current rent paid by any tenant in the building.
Yellon bucks can die whenever and wherever, but not at MY expense.
‘a $57 million loan from Wells Fargo that will allow work to commence on the project’s second apartment tower. Dan Killinger, NRED’s managing director of development expressed no worries that this project would suffer as what appears to be a looming glut of apartments is coming down the pipeline’
‘Greater Downtown Miami’s condo inventory will grow by 3,456 new units this year, the largest surge of new product expected over the next three years’
‘So many luxury apartments have opened recently that landlords are offering move-in bonuses, free rent and chances to win week-long cruises just to fill them up. Some Houston developers say it’s time to start building more’
These are examples of what has been driving this CRE bubble all along: available money. It never had much to do with rich, bocci ball playing renters. That was a story they made up. And it shows another aspect: Yellen bucks looking for a place to die. Why the big push when there’s already too much? Pension funds/life insurance companies shove money under their nose and they make up a rational of how it will work, and take it - poof!
‘a $57 million loan from Wells Fargo that will allow work to commence on the project’s second apartment tower.
I want to know whether the taxpayer is on the hook for this “Wells Fargo” loan or not… My guess is yes—somehow backed by some FHA program or other.
Of course they’re on the hook.
The response should be “how do I recoup?” without breaking the law or being amoral / unethical.
And do so efficiently and at no expense.
Time for us here to play hard ball when negotiating / doing anything else financial. The time is now.
Stayton, OR Housing Prices Crater 7% YoY
https://www.zillow.com/stayton-or/home-values/
‘If you don’t buy today I don’t know how you can complain about the rent three years from now,’ said Anthony Graziano, Integra Realty principal and the report’s author, citing lower prices at condo projects like Hyde Midtown and Centro.”
Nice try, Anthony. But I decline to buy at the peak of a bubble that is going to collapse under the weight of its own unsustainable valuations. See you at the liquidation auction.
Realturds are funny. Next year they will be back working at Payless Shoes.
When will it collapse in your opinion? Do you believe both home and rent prices will fall to previous historic lows?
Thanks for your time.
It’s already cratering my friend….. already cratering.
‘Have Office Markets Plateaued? All Signs Point To Yes’
‘CMBS delinquencies for the month of February were led by office loans. Though this has little to do with fundamentals, office building owners are increasingly more than 60 days past due on payments. The office sector’s unpaid debt rose 54 bps to 7.65%, offsetting improvements made by the other four property sectors, Trepp reports.’
“On our end, occupancy for offices behind CMBS loans have started to plateau,” Trepp analyst Sean Barrie said. “Over the last 12 months, the delinquency rate for the office sector has risen more than any other major property type.”
Commercial RE is toast.
http://www.oftwominds.com/blogmar17/CRE-domino3-17.html
I have recently noticed a plethora of “For Lease” signs at office complexes around San Diego for the first time in years.
‘I’m not at all alarmed what’s happening now,’ said commercial mortgage veteran Hal Holliday. Holliday said developers should be planning for future demand. ‘If we slam on the brakes and don’t try to gently push on the gas we’re going to find ourselves back into a pent-up demand situation, and that’s always accompanied by rising rents and probably too many people jumping in,’ he said.”
I wonder how many Xanax Mr. Holliday is popping each day.
“Pent-up demand” is as real as the Tooth Fairy.
And the mythical “cash on the sidelines.” Keep keeping’ it real, Brah.
‘The coming financial implosion…will be concentrated on Insurance Companies, Pensions Plans, Trusts and Endowments and small banks and credit unions. These are the institutions with the bulk of their invested assets in some form of U.S. commercial real estate! The availability of cheap debt has propelled property investment sales.’
‘Fitch rating company estimates that if interest rates rise at a quicker-than-expected pace, borrowers, on most of those loans, will not be able to refinance. These under-performing assets borrowers may be forced to come up with extra equity to cover valuation gaps. Where will they get the money from? This is the weak link in the chain in regards to the global economy.’
‘U.S. Capital Trends shows “Commercial property deal volume fell last January 2017, 47% YOY. This was the sharpest monthly decline since the depths of the downturn in 2009.”
There’s a graph at this link showing how much CRE has gone up since 2009.
‘Fitch rating company estimates that if interest rates rise at a quicker-than-expected pace, borrowers, on most of those loans, will not be able to refinance’
Pretty much what I said before many of these loans were made two years ago, except it doesn’t matter what rates do. Why luxury? Because there was a bubble in land prices. I could see it coming because their motivations were wrong. What followed was new paradigm thinking. There aren’t new paradigms in residential housing. And then there was the over-exuberance. Remember the lending guy saying, “like everyone on the planet, we’re financing and refinancing as much multi-family as we can get our hands on.”
I’ll never forget that “everyone on the planet” line. You blew it again Fitch.
This would be the same Fitch that gave AAA ratings to toxic-waste MBS securities bundled and sold to “investors” in the run-up to the last housing bubble.
Yep—some things never change.
Or maybe the better way to say it is nothing changed, because the Fed stole the teaching moment away.
The Fed created the teaching moment that quickly reflated the bubble. This will become clear through the retrospect of history.
Ben, what’s wrong with the “everyone on the planet line?” You’ve been posting articles about bubbles and overbuilding all over the world: India, China, Nigeria, Canada, Australia, Outer Mongolia, etc. And most of it appears to be financed multifamily. I guess you mean it was financed with *poof* money?
“There aren’t new paradigms in residential housing.”
The only way I could possibly have envisioned the euphorists to look right through the lens of the rear-view mirror is if a flood of new immigrants offset declining fundamental demand in the U.S.
Guess what? We currently are cracking down on easy entry to the U.S., which is the kiss of death for residential demand.
I disagree - we are cracking down on easy entry for immigrants too poor to buy anything.
For highly-paid H1B, H2A, H4 and a slew of other alphabet-soup-program immigrant tech workers, there is no slowdown, yet. These are the people who are buying in my area, and their families in the home country also pool their money so they can afford to buy here. And as soon as the techie couple has their first anchor baby, the grandparents come over and move in with them to provide free childcare.
Only gov workers will get their pensions
See IL
‘the union-affiliated development firm that’s behind the East Market mixed-use development, announced that it had closed on a $57 million loan from Wells Fargo that will allow work to commence on the project’s second apartment tower. Dan Killinger, NRED’s managing director of development expressed no worries that this project would suffer as what appears to be a looming glut of apartments is coming down the pipeline’
Public unions are the largest political contributors of all time.
They give nearly 100% to democrats.
Expect democrat states to continually bail out public union pensions with higher and higher taxes and no cuts to the insane pension plans.
Until these states go bankrupt as people and businesses flee.
Expect republican controlled states to force cuts to the public union pensions in their states.
And we are seeing these trends already.
Here’s some other trends to think about: the coming implosion of the central bankers’ massive debt and credit bubbles.
https://www.peakprosperity.com/blog/107796/when-all-blows
Ray
Good article. I shudder to think of the possible things that can cause a meltdown.
GDP growth can startle us thru massive automation - but that might cause un or underemployment.
Has any state pension plan reduced payments? Many are admitting that they’re in a hole they can never hope to climb out of, but I haven’t heard of a single state pension plan that is reducing benefits.
CalPERS Cuts Pension Benefits For First Time | Fox Business
http://www.foxbusiness.com/politics/2016/12/…/calpers-cuts-pension-benefits-for-first-time.ht...
Dec 20, 2016 - FOX Business Network’s Adam Shapiro reports from the front lines of America’s pension crisis unraveling between CalPERs and the City of …
In a first, CalPERS may cut small town’s pensions | Calpensions
https://calpensions.com/2016/09/26/in-a-first-calpers-may-cut-small-towns-pensions/
Sep 26, 2016 - To avoid deep pension cuts, Loyalton owes CalPERS a $1.66 million …… Perhaps nobody, and the payments will be reduced or simply end.
Worker Pensions Cut By 60 Percent In Small California Town
http://www.snopes.com/2016/12/29/worker-pensions-cut-60-percent-small-california-town/
Dec 29, 2016 - CalPERS implemented the cut in Loyalton after it opted out of the … CalPERS will reduce the four affected retirees pension benefits from the …
Second California appeals court rules pension benefits can be reduced
http://www.pionline.com/…/second-california-appeals-court-rules-pension-benefits-can-be-r...
Jan 3, 2017 - Case involves 2013 pension reform that eliminated CalPERS … court panel has said that vested pension rights can be reduced or eliminated in …
Top stories
CalPERS prepares to reduce pensions for nearly 200 retirees of defunct San Gabriel Valley job training agency
The San Gabriel Valley Tribune · 13 hours ago
More for CALPERs reduced pension
CalPERS Finds the City of Loyalton in Default for Non-Payment of …
https://www.calpers.ca.gov/page/…/calpers-news/…/city-loyalton-non-payment-pensio...
Nov 16, 2016 - The decision means that Loyalton’s retirees will see their benefits reduced in accordance with California Public Employees’ Retirement Law.
Calpers Cuts Investment Targets, Increasing Strain on Municipalities …
https://www.nytimes.com/2016/12/21/…/california-calpers-pension-fund-investment.htm...
Dec 21, 2016 - The board of California’s state public pension system, Calpers, voted … to pay more, either through higher taxes or reduced public services.
How a pension deal went wrong and cost California taxpayers billions …
http://www.latimes.com/projects/la-me-pension-crisis-davis-deal/
Sep 18, 2016 - CalPERS had projected in 1999 that the improved benefits would cause no … Wilson also reduced retirement benefits for new state employees, …
The Pension Fund That Ate California | City Journal
https://www.city-journal.org/html/pension-fund-ate-california-13528.html
CalPERS’s corruption, insider dealing, and politicized investments have overwhelmed … or CalPERS, the nation’s largest pension fund for government workers.
Thanks, Ben. Apparently the belief that .gov workers’ pensions will be made whole isn’t ironclad.
Pay raises and extended lifespans have magnified the impact of the sweetened benefits
Extended lifespans do to quitting/not smoking…i still say they will never admit to this.
‘a realtor in Portland, says the reason behind the negative growth rate can be explained by an Economics 101 concept: supply and demand…’Where you have more supply of apartments and demand has not met that supply, it puts a downward pressure on prices’
Negative growth rate.
Zoning?
Fire safety?
Parking?
Sewer capacity?
Etc.
—-
Tech workers find communal living a solution for high rents
Reuters | 3/11/2017 | Gabrielle Lurie and Melissa Fares
Zander Dejah, 25, pays $1,900 a month rent to live in a downtown San Francisco house with at least 40 other people, many of whom sleep in bunk beds.
Dejah is a resident of The Negev, a communal living space that styles itself as a home for millennial tech workers to brainstorm ideas, write code and create apps, even if they have to share toilets and bathrooms with dozens of others.
Houses like The Negev, located in a neighborhood known as “SoMa” or South of Market, have cropped up around San Francisco as an influx of young professionals, many of whom are tech workers, have faced the city’s notoriously high rents and apartment shortages. It has three floors and roughly 50 rooms, filled with bunk beds, beer bottles and laptops, according to residents.
Dejah, born and raised in New York, graduated last year with a degree in computer science and math from McGill University. Unemployed, he moved to California six months ago and found his room at The Negev on Craigslist.
“I thought New York was expensive,” said Dejah, who quickly landed a job as a virtual reality engineer at consulting firm moBack. “It’s basically an extension of college. We sort of live in a frat house.”
Housing advocates have complained that this new dorm-like style of living has pushed up rents and forced longtime residents to move out.
Alon Gutman, who co-founded a company called The Negev and began leasing the building on Sixth street in 2014, said, “We have never made somebody move out of that building,” adding that his tenants pay 30 percent to 50 percent less than others in the neighborhood.
Sounds like my personal idea of hell. Not to mention municipal sewer and utility systems were never intended for “Negev”-style drone hive living arrangements.
The only reason they put up with it is the hope the start up they work for will either IPO or get bought out by Amazon or Facebook and that they will walk away with millions from their stock options.
They’re in for a rude awakening when the Fed’s Ponzi markets and asset bubbles implode in the not-too-distant future.
Even without the bubble popping, most startups fail and options end up being worthless. Of course, when the house of cards comes crashing down there will be an exodus out of the Bay Area.
the big .com bust did not have a lasting effect on the area
Yeah, because the Fed conjured up trillions of “stimulus” out of thin air and gifted it to its Wall Street cohorts to keep the party going. Without that financial crack cocaine, true price discovery is going to assert itself and the flight out of Silly-Con Valley and the Bay Area will be epic.
the big .com bust did not have a lasting effect on the area
The prices were not as insane last time and people didn’t live together like hamsters.
Back in dot con bubble 1.0, I and my friends got calls from headhunters all the time. A few went but the cost of living was so high that they didnt realize any gain versus staying put in socal. Many have some great stories of working 70-80 hour weeks, paying large chunks of their salary to live in a shack, and that point of recognition where you realize your company is toast. One quote: what we thought was a 50 million dollar market was more like a 500K market. It aint what you make, but what you keep.
What bothers me most about this dot-com stuff is that in this wired world, why do these young folks have to physically live in Silly Valley to “exchange ideas” or whatever? Why aren’t they all working from home and communicating by cell phone, Skype, Go-to-Meeting, email, etc? Based on the hype I’ve heard, these people should be able to live in a Tiny Home in the woods, work from an iPad, and still pull in six figures. Even the stodgy federal government has these capabilities for people to telework. Sure it’s not always reliable, but it’s not the gov’s focus and feature, while these dot-coms live on it.
Gathering in an office every day is so 20th century.
Hey Donk.
What bothers me most about this dot-com stuff is that in this wired world, why do these young folks have to physically live in Silly Valley to “exchange ideas” or whatever?
Ultimately they don’t, even if they don’t yet want to admit they don’t. I work from my home in WA for a company in San Diego county. Been doing it for about 5 years. Get far more done than I ever have in an office: fewer meetings, fewer random distractions, no time wasted commuting, and better morale.
Every few months I fly down to the office (paid for by the company), get some face time with the bosses and my coworkers, and we plan the next few months of work.
Funny thing is a lot of my coworkers who work in the office prefer the tools you mentioned over person-to-person communication. So they all work in the same office and just use Skype to chat to the person in the cube next to them, use GoToMeeting instead of physically going to the meeting down the hall, etc…
What bothers me most about this dot-com stuff is that in this wired world, why do these young folks have to physically live in Silly Valley to “exchange ideas” or whatever? Why aren’t they all working from home and communicating by cell phone, Skype, Go-to-Meeting, email, etc? Based on the hype I’ve heard, these people should be able to live in a Tiny Home in the woods, work from an iPad, and still pull in six figures.
I think most of them would love to live cheaply (or like kings, it’s a fine line) back in the home town with a 6 figure remote job. It’s the managers that have a hard time doing their job that way.
I would bet that many are smarter and have better acumen than does new attitude.
They’re brilliant and shiny. And full of youthful energy. Worthy of work in San Francisco.
Yet they live in a dump.
Clearly, today’s brightest and youngest don’t go anywhere near San Francisco.
Few can afford to. Few of those that can are willing to denigrate themselves to that extent.
Those that do submit likely are from India and other hellholes where squatting with dozens of others is par for the course.
I am constantly being contacted by Silly Valley headhunters, who blow in my ear with promises of 160K salaries. But it just isn’t worth it.
No, it isn’t worth it.
It’s amazing to me that those old timers in coastal California believe that “smart” people elsewhere are dying to live in Simi Valley or similar.
Why would anyone with a brain subject themselves to that?
Why subsidize those already living high on the hog?
I am constantly being contacted by Silly Valley headhunters, who blow in my ear with promises of 160K salaries. But it just isn’t worth it.
I’m doing it right now. Not really worth it but I needed a job fast when my old arrangement crashed and burned and that’s easier to do here. But it would have made a lot more sense for me to do it 20 years ago, pump up my salary, and then go live in Colorado. But I have a habit of living my life backwards.
Reminds me of China’s “ant tribes.” Yet another blessing of globalism and the race to the bottom for wage slaves.
https://www.buzzfeed.com/kevintang/chinas-ant-tribe-lives-in-the-worlds-most-cramped-apartments?utm_term=.ec916a8XY#.eqqPNX3yp
All I see here is questionable (I say “questionable” instead of “poor” because I don’t know this guy’s motivations) decision making from someone educated enough to be able to make better decisions.
No one forced him into this living arrangement. He chose to move to SF, the city with the most expensive housing in the country. Why did he do so? There are plenty of jobs for software engineers elsewhere in the country (including elsewhere in CA), where you can spend $1900/month and not have to live in a dorm.
Did he research cost of living and average entry level salaries in the area and compare them to other areas? If not, then this is a good life lesson. If so, then it was a conscious decision he made to live in a dorm to be able to live in SF.
In Colorado’s probably right that he’s doing this in hopes of making millions from his stock options. In which case he’s likely to learn another life lesson when it doesn’t turn out that way. And even then I would argue that there are plenty of startups elsewhere in the country with similarly low chances of success where one doesn’t have to live in a dorm.
Gross.
No phone, no pool, no pets, I ain’t got no cigarettes…
https://www.youtube.com/watch?v=OmOe27SJ3Yc
Iris DeMent - Living in the Wasteland of the Free
https://www.youtube.com/watch?v=Ak6E6IL4PT4
So with this supposed abundance of new jobs and the “recovery” touted by Old Yellen, why aren’t these supposedly confident consumers eating out more?
http://wolfstreet.com/2017/03/11/restaurant-recession-meets-february-debacle/
“A macro view leaves little room for optimism,” the report said, whose data is based on sales from over 26,000 restaurant units and 145 brands, representing $66 billion dollars in annual revenue. “February’s results were among the weakest in the last four years,” it said.’
Wasn’t Mike telling us yesterday how strong eating out was? Maybe he meant for crow.
https://www.google.com/search?q=crow+breath+mints&tbm=isch&tbo=u&source=univ&sa=X&sqi=2&ved=0ahUKEwijgejC_M7SAhWmjlQKHargCUgQsAQIGQ&biw=1360&bih=651
Yesterday I met a friend for lunch at a nice little Korean restaurant near my house. We were the sole costumers in the place, even though we went at noon and the food is delicious and reasonable. The owner and his wife looked pretty despondent.
You see whats going on in South Korea? Leader gets the boot but doesnt want to leave. Sound familiar, no? Dis gunna be gud!
More canaries keeling over in the coal mine.
http://www.zerohedge.com/news/2017-03-11/restaurant-sales-and-traffic-tumble-february
Do any of you pukes remember this … ?
https://finance.yahoo.com/quote/GRLD?p=GRLD
How is that at zero already??!?
(Meant to short it, but never got around to it…)
Meant to say: How is that NOT at zero already??!?
The soaring cost of living belies Yellen’s pronouncements of sub-2% inflation. Something has to give, as the “health care” cartels and Big Pharma are pauperizing middle and working class Americans and higher education costs have become exorbitant.
http://charleshughsmith.blogspot.com/2017/03/why-is-cost-of-living-so-unaffordable.html
Using the “Burito Index” the real cost of living has soared 160% since 2001, with no end in sight. Heckova job, Greenspan, Bernanke, and Yellen.
http://www.oftwominds.com/blogaug16/burrito-index8-16.html
“Despite the glut, other developers have pitched new projects, which they expect to be open once the recovery has taken hold. ‘I’m not at all alarmed what’s happening now,’ said commercial mortgage veteran Hal Holliday. Holliday said developers should be planning for future demand.
There won’t be an increase in the need for Upscale Rentals in Houston if the Cost of Oil stays in the 40’s or drops to the $30’s. It appears to me that it belongs in the $30’s.
I lived in Houston in the 80’s and it got real ugly.
If this drop mirrors the 80’s there is still lots of downside here.
The newly renovated Apartment 401 and its gleaming laminate flooring:
http://www.picpaste.com/20170310_160336.jpg
Only renters get to live like this. People with mortgages who want this have to either pay alot of money to a contractor or waste alot of time and money going to Loan Depot or Blowe’s to do it themselves.
And in case you forgot, I have so much money left after “throwing money away on rent” every month that I don’t know where to throw it.
Looks like they redid the ceilings….
Any windows in that apt?
Where do you BBQ?
I have that same problem, not sure where to put all the saving from renting. 1% in the bank is no fun.
I hate laminate floors.
I want REAL wood floors, and if I don’t have that, I’ll gladly take carpet. This laminate crap looks every bit as dated and tacky as granite countertops. It’s all so 2002.
This other, newer trend toward 1×3 inch black/white or pea green/off-yellow tile backsplashes in the kitchen, has to go. Looks like shit.
But, to each his own.
Enjoy your floors!
Testify, Sister MacBeth….
I think that the biggest PITA about reflooring is moving everything out of the way. Having the apartment next door empty definitely made the task easier, plus not having a roommate (especially of the female variety) reduces the amount of stuff to move and move back.
And I agree, laminates are cheap looking. My brother has them in his house and it just doesn’t look good. Buy since it’s a rental, who cares?
I had a long talk with a flooring installer/carpet cleaner contractor once. At one point he said, “I don’t know why anybody buys carpet.” Over time I’ve come to agree, and I’ll never buy one square foot of it again. It’s hard to clean, stinks, stains easily. In rentals it’s a constant problem. People don’t vacuum it often enough and the dirt grinds on the fibers when walked on. That’s how those pathways get worn where people walk. Spend the money for tile or laminate and if you must, throw a rug on it.
Sorry, Ben. I’m sure it makes sense economically if you’re landlord, but I’m a tenant. I don’t care about the landlord’s profit, I care about my costs and my comfort.
I’m in flyover. Laminate floors and tile get very cold. Tile is very sterile in appearance…might as well be in a mausoleum. It doesn’t look fresh or clean - it looks uninviting, immovable, inflexible. Tile in living rooms and bedrooms … geez. I know it’s popular in desert areas and all - but there must be lots of grit and sand on tile floors in Arizona.
I never wear shoes in the house .. it’s not something people in snow country do. Good way to ruin the carpet. I rarely wear socks indoors. They come off immediately, along with the shoes. It’s nice to hop out of bed in the morning onto carpet.
I like to lay on the floor. I read on the floor. I stretch and work out on the floor. I spread out maps on the floor.
I sleep on the floor - on purpose - about once every ten days on average. Great for alignment of the back. I highly recommend it.
Floors constitute highly useful and valuable square footage.
Why would I want to give that up?
I am paying for it. I want to make use of it.
At first glance I thought you had low pictures, step over doors and a spittoon on your floor. Which I thought was pretty cool by the way.
But alas, when I clicked on the picture to get a closer look at your crown moulding it flipped your lid and you had regular doors, your spittoon turned into a ceiling fan and your crown moulding was a shoe mould the laminate dude used to cover the gap at the base.
Floor looks good, enjoy.
Comment on Houston Article
https://www.bloomberg.com/news/articles/2017-03-10/race-to-bottom-on-costs-may-cause-oil-to-choke-on-own-supplies
Article talks about costs as low as $12 at break even and Norway has lowered break even on new projects from $70 to $40.
Poor, poor OPEC. Lol.
more fiat should make us wealthier right?
As long as you can convince the Fed to give it to you and not your neighbors.
“We extract this data point out of a mass of interconnected data, plot it on a chart, fit an equation to it, recite some psychobabble to claim it’ll make things better, and ultimately the one thing it’s guaranteed to do is make us and Wall Street wealthier (you don’t think we’d do anything to harm ourselves do you? Even if it helped the country? Our policies do cause harm, but never to us) The psychobabble and equation gives us all the cover we need. The media parrots what we say, and pseudo-intellectuals parrot what the media says.”
I understand taking decisions away from the buffoons who inhabit Congress. So disappointed with Elizabeth Warren refusing to talk about government pumping money into education loans causing the skyrocket of education costs. If someone assiduously avoids talking about an obvious point, they’re in on the scam.
But… giving power to a group of technocrats also has consequences - they’re not going to take actions that harm themselves or their constituencies.
Sometimes, the interests of Wall Street run counter to the interests of the country. Wall Street owns Congress and the central bank, either directly or indirectly. I’m not sure the way out of this trap. I think the populist tendencies around the world are a first attempt to change this state of affairs.
Talk about a housing bubble
Tech workers find communal living a solution for high rents Zander Dejah, 25, pays $1,900 a month rent to live in a downtown San Francisco house with at least 40 other people, many of whom sleep in bunk beds.
http://www.reuters.com/article/us-san-francisco-tech-images-idUSKBN16H2EE
Where do they park their Beamers?
Dude…Ben posted that hours ago. Try to keep up….
Yellen sees no bubbles.
http://www.marketwatch.com/story/these-stocks-have-soared-over-1000-in-the-bull-market-2017-03-10
New update is available for the JoshuaTree extension for Chrome: 3.0.10. I believe Chrome will auto-update extensions by default, but in case not…
The new version moves to a common codebase for both the Firefox and Chrome versions (if mozilla.org will ever get around to approving the new version) and contains a few minor bugfixes, perf improvements, and UI tweaks.
For the Firefox users, I will post here if/when the new version gets approved. At the rate things are going, it won’t be for at least a week sadly.
Thanks for your ongoing efforts to make it easier to engage in this extended conversation.
“If you have been in a poker game for a while, and you still don’t know who the patsy is, you’re the patsy.”
piping in to share my experience at an open house today. Tiny house, 900 square feet in bellevue WA. Alas, a white couple for once. They were already gossiping with the realtor about the ‘foreign buyers’ and ‘all cash offers.’
The realtor suggested the lady millennial wrote a letter with her offer, to tell the old owners that she would use the ramp outside to help her quadriplegic brother visit her and her one-day-hopefully large family.
Altogether it is a sweet story and I like seeing young couples in love, I’m sorry their youth was stolen by this housing bubble. This is a one bedroom house, guys. With an acre of land that you can’t touch because of the easement, it’s got high transmission power lines in the backyard. And lest you think you might at least save on taxes, you’d be wrong because around here taxes are based on acreage and you got a lot of it!! And the house is 680k, and sold 1.5 years ago for 550. Why are they selling and why do they need so much profit??!
Why do I torture myself going to open houses ‘for fun.’
When mileniums complain the boomers have all the money and they are broke….
Redmond, WA Housing Prices Plunge 11% YoY On Cratering Housing Demand
http://www.movoto.com/redmond-wa/market-trends/
good morning patsy
Poet…. Liquidate and hold onto every dollar you can…. You’ll me later.
Bonita Springs, FL Housing Prices Crater 8% YoY
https://www.zillow.com/bonita-springs-fl/home-values/
“Liquidate and hold onto every dollar you can”
I am thinking about liquidating and putting it all on the Cleveland Browns to win the 2018 Super Bowl.
Super Bowl 2018 odds: Patriots, Cowboys favored to meet in Minnesota
The Patriots are Super Bowl champions again and are favored to repeat next year.
by Adam Stites Feb 6, 2017, 2:25pm EST
For the believers who want to swing for the fences, the Chicago Bears, Cleveland Browns, and San Francisco 49ers are the huge long shots. The Bears are +10,000 and both the Browns and 49ers are +15,000, meaning you could multiply your money by 150 if you bet on Cleveland or San Francisco and they finish the year as Super Bowl champions.
It’s probably not the wisest investment, though.
Here are the full, entirely too early, odds for the 2018 Super Bowl:
http://www.sbnation.com/2017/2/6/14523944/super-bowl-2018-odds-new-england-patriots-dallas-cowboys
Who runs this city…..???
——
Phoenix Diverting Money From Schools to Large Developers
Email Public Message | 03/11/17 | Sal DiCiccio
For years, the City of Phoenix has been quietly diverting money away from schools and giving it to large developers for projects like new apartments. It’s plain and simple corporate welfare and I’ve consistently voted against this practice.
This tax transfer is called a GPLET. (Government Property Lease Excise Tax)
Worse yet, as the Mayor and Council voted to take these needed monies from schools, they also set up a “lease scheme” allowing Phoenix to profit.
See my report below on how Phoenix profited by approximately $45 million while denying schools of critical funding.
“Manhattan Luxury Housing In Freefall: J.Crew CEO Slashes Tribeca Loft Price By Over 40%”
http://www.zerohedge.com/news/2017-03-11/manhattan-luxury-housing-freefall-jcrew-ceo-slashes-tribeca-loft-price-over-40
Given the way retail is circling the drain, the J Crew CEOs salary and compensation should probably be slashed by a lot more than 40%.
http://www.wbaltv.com/article/american-suburbs-are-dying/9104770
Ah, the trappings of suburban life: white picket fences, yards full of lush grass, and neighbors just a lot over. But it seems that way of life may all be coming to an end soon, if a series of new trends is to be believed.
I will call the BS flag on this article with its theory businesses and jobs are moving back to big cities.
1. The article mentions not one example. If this was a trend - there would be dozens of cases to discuss.
2. The reasons businesses moved out of big cities - high taxes, poor schools, high crime, massive corruption, insane publuc unions, etc have not changed.
In fact, things have gotten worse.
Total
I hear rumblings about the retail investor loading up on stocks cause they were under invested. Classic sign we are near the top of this sh@t show.
Hong Kong buyers in the world’s hottest residential bubble are finally thumbing their noses at overpriced homes and apartments.
http://www.scmp.com/business/article/2078223/hong-kong-home-buyers-thumb-their-noses-increased-prices
Maybe we should stay out of complicated, no-win wars in places like Yemen.
http://www.independent.co.uk/voices/yemen-war-donald-trump-us-military-iran-middle-east-isis-counter-terror-operation-william-owens-seal-a7622471.html
I’ve allowed this comment because I want to show how FUBAR reporting is:
‘Undeterred by the disasterous commando raid on Yemen in the first days of his Administration, where plenty of civilians were killed but the target got away, President Donald Trump has escalated US military involvement in the tragic Yemen conflict to an unprecedented level.’
Daniel McAdams is director of the The Ron Paul Institute for Peace & Prosperity.
But what do we have here?
‘(Reuters) - Yemen’s local al Qaeda wing appealed for help on Thursday to fend off an offensive by the armed Houthi movement in central Yemen, and accused the United States of coordinating attacks with the Iran-aligned group, according to an online statement.’
‘Ansar al-Sharia referred in the statement on its Telegram channel to repeated air strikes by the United States in recent days. “The Christian Americans have focused their military and spy planes on hitting the Sunni tribes in this front … the Americans have carried out dozens of night raids in past days against those steadfast at this front in a clear coordination between the Americans and the Houthis,” the statement said.’
“Hurry, hurry to reinforce this front before it falls,” it added.’
‘AQAP boasts one of the world’s most feared bomb makers, Ibrahim Hassan al-Asiri, and it has been a persistent concern to the U.S. government ever since a 2009 attempt to blow up a Detroit-bound airliner on Christmas Day.’
‘The militant group has also taken advantage of a civil war pitting the Iran-aligned Houthis against the Saudi-backed government of President Hadi to try and widen its control and influence in the impoverished Arabian Peninsula country.’
In other words, the US military has completely changed sides and are now fighting the head chopper Sunni’s that we previously armed and supported in Syria. Interesting that such a switch was not noticed by all these big media outlets (nor Ron Paul’s outfit). Sure, I would rather the US not be involved in such things, but guess what? Ron Paul had more than one chance and couldn’t pull it off. So if we are going to be involved, at least let’s bomb the head choppers.
Thanks for the analysis, Ben. Given the state of the media, including some well-meaning but inaccurate outlets, this sort of examination of reporting is very much in order. I have not been happy with the Syria situation, however, it would appear perhaps much the same thing is happening there and you’ve put my mind a little more at ease about it. Assad has a different point of view, but let’s see what happens.
There is a shia-sunni world war going on.
We can either pick a side or stay out of it.
Or perhaps pit them against each other.
If the war is between the Great Satan and Islam then the Great Satan would do well to pit the various opposing factions of Islam against each other.
If the Great Satan declares the entity of Islam as a whole to be the enemy then the various opposing factions of Islam would unite (even if only temporarily) and - united - they would go to war against the Great Satan.
But if the Great Satan officially declares Islam as a whole to be a religion of peace then it will be free to support one faction of Islam over another. If one faction begins to prevail over the other then it would switch sides, switch sides in order for one faction to never be defeated.
Bidding wars go something like this. A clever seller wants the living room of the house he is trying to sell to be filled with bidders.
Normally one would think an adversary relationship would be limited to the buyer and the seller - each seeking his own interest at the expense of the other - but when the bidders are many then the adversarial relationship shift from being buyer-seller to being buyer-buyer.
IOW the buyers are separated into factions and are then pitted against each other - to the benefit of the seller.
The Sunni-Shia feud has been going on for 1400 years. Shias are the minority, but include (mostly) Persian Iran, which could wipe the floor with most of the corrupt, debauched Gulf Arab states if the latter didn’t have Uncle Sam in their corner, thanks to the petrodollar deal with the Saudis and massive military sales to their armies by US defense contractors. The Saudis and Gulf Arabs also employ huge numbers of former US military specialists to help them operate their tanks, planes, radars, logistics systems, etc.
The Houthis are an off-shoot of Shia Islam, but they are a fiercely independent mountain people who are at war with al-Qaida groups who infest Yemen. They are also at war with the Saudis who attacked them after they helped overthrow an unpopular Saudi-backed Yemeni president. They are a rag-tag army but have shown themselves to be formidable warriors, frequently routing much better equipped Saudi forces and overrunning their bases and outposts in the border areas. They are no friends of ours, but their quarrel is with the Saudis and Sunni extremists like al-Qaida. Iran appears to be supporting them to some degree, possibly as a payback for Saudi Arabia supporting Syrian Sunni insurgents against the Assad Regime, which Iran is heavily backing. There are a number of YouTube videos showing their successful attacks on Saudi forces and their combat prowess.
The Yemen situation is complex and complicated, and has “quagmire” written all over it. Meanwhile, Russia, China, and Iran are aggressively building up their strategic war fighting capabilities, while North Korea’s lunatic leader keeps testing long-range missiles and touting his country’s status as a nuclear power.
I’m all for bombing the hell out of radical jihadist head-choppers who are trying to attack US interests. But we need to be cautious about potentially open-ended military interventions rife with unintended consequences, so as not to overstretch our military forces, deplete our warfighting capabilities, and hasten our national bankruptcy.
“Oceania had always been at war with Eastasia.”
The debt and credit binge enabled by central bank money-printing is starting to manifest as inflation.
http://dollarcollapse.com/inflation/2016-debt-binge-produces-2017-inflation/
Off topic, but I believe this to be an excellent observation by somebody, and because I am such a wonderful person I decided to share …
The media are a business, not an information resource. Their product is not news but your eyeballs. They sell them to advertisers.
There’s no market for hard news (think city council meetings). So except for one-offs like Princess Di or JFK Jr or the originator of it all Jessica-in-the-well, hard news can’t pay the daily bills.
There’s one market that will tune in every day, news or no news, and that’s the soap opera audience. They’re 20% of the population but that’s big enough to pay the daily bills, so soap opera narratives is what you’ll always get. If something isn’t soap opera, it will be rewritten so that it is, lest the soap opera audience tune away.
That’s a business constant. It can’t change without the media going out of business.
Politicians free-ride on that business necessity, by supplying soap opera narratives for the media to run.
The tastes of soap opera people edit every public debate, as a result. An entertainment choice determines public policy.
The solution is ridicule, so that at least the media don’t any longer have the aura of seriousness that they’ve been trading under.
Trump got elected by demonstrating he could throw sand in the media narrative gearbox, as he continues to do. Perhaps once again actual problems that could not be talked about can show up in public debate.
Remember…. A housing ‘recovery’ is falling prices to dramatically lower and more affordable levels by definition.
Marin County, CA Rental Rates Crater 7% YoY
https://www.zillow.com/marin-county-ca/home-values
Public service announcement for goon.
https://www.youtube.com/watch?v=0GiJlpCUa_U