There’s A Renters Market Brewing
A report from Multi-Housing News. “Is the growth in residential development, coupled with decreasing construction costs, a sign that the industry is reaching the current cycle’s peak? ‘Yes, we expect multifamily completions to peak in 2017. We’ve already seen weakness in starts and permits data, meaning that construction will start tapering off in 2018,’ Paula Munger, director of industry research and analysis at the National Apartment Association, told Multi-Housing News. ‘The luxury segment in urban core markets like New York (and) San Francisco is getting overbuilt as there’s just not enough demand to keep up with the new supply.’”
From The Oregonian. “In recent years, people looking to rent in Portland generally had to be ready to pounce on an apartment the moment they walked through the door, and sometimes even sight unseen. But there’s a renter’s market brewing in the central core, where a flood of gleaming new apartments is coming online at once. Until recently, the practice of offering free rent or other concessions was mostly limited to new apartment buildings, which concentrated on filling empty units as quickly as possible. Now it’s occurring in buildings that have been open for years in Portland’s close-in neighborhoods.”
“‘There’s no question that there’s softness within the urban core,’ said Patrick Barry of the appraisal company Barry & Associates. ‘These new units are coming in, and they have some attractive pricing on them to get them full. All of a sudden they’re competing with … the renovated, older-vintage units.’”
The Capital Times in Wisconsin. “Last year, when the former Messner, Inc., building on East Washington Avenue was proposed as a day resource center for the homeless, the Tenney-Lapham Neighborhood Association strongly opposed the project. A new proposal could also help the homelessness, and this time the neighborhood is on board. The project could also be an answer to residents’ concerns about rising house prices and a glut of luxury apartments, said Patty Prime, Tenney-Lapham Neighborhood Association president.”
“East Washington is the site of several new high-rise apartment developments. ‘Some people are tired of high towers shadowing out other buildings,’ Prime said.”
From Crain’s Chicago Business in Illinois. “Six years after the market hit bottom, an index of Chicago-area commercial property values is still about 7 percent shy of its 2007 pre-crash peak. High prices have allowed owners of apartment, office and other commercial buildings to pocket big profits by selling or refinancing their properties. But many properties are still worth less than they were before the crash of 2008-09. In January, after going through foreclosure, the office building at 123 N. Wacker Drive sold for $147 million, well below its 2005 sale price of $170 million.”
“Overseas investment fell last year, but rising interest rates tend to attract money from foreign investors seeking higher returns. Whether that lifts real estate values is an open question.”
“‘The wild card is whether further rate hikes will continue to bolster the dollar, and whether prospects of dollar strengthening will drive overseas investors into (U.S. commercial real estate) assets,’ Heidi Learner, chief economist at real estate brokerage Savills Studley, said in a statement. ‘It’s too soon to tell whether 2017 cross-border volumes will fall again, but it’s unlikely that there will be a wave of foreign capital that will be competing with dollar investors to drive cap rates lower.’”
From WSBT in Indiana. “If you live in St. Joseph County, you might have noticed a lot of construction projects in the area. Developers are building more than seventeen apartment complexes and condos in South Bend and Mishawaka alone. That means around 700 units coming online by the end of the year. ‘You’ll see rents go down or you’ll see a bunch of freebies come up,’ says James Cunningham, COO of Marquette Management, who owns Main Street Village in Granger. ‘Hey stay with us, you’ll get a free garage for the term or your lease,’ or ‘you get two months free if you sign a 14-month lease.’ There will be much more incentives going around from a lot of different communities.’”
“But, what’s good for the goose isn’t necessarily good for the gander. ‘The losers, if there are losers in this, is the impact to the existing apartment owners,’ Cunningham says. ‘It impacts the ability of an individual owner to be as profitable as it was before, when there was less competition.’”
The Real Deal on New York. “With its undulating glass facade, 252 East 57th Street was among the marquee new developments that promised to reshape Midtown East back when it debuted in late 2014. But after an extended period of sluggish sales – just under half the condominium’s 95 units remain unsold – the developers decided it was time to take drastic measures. On top of price cuts last year, World Wide Group and Rose Associates are now offering brokers a 4 percent commission, including 1 percent that’s non-refundable and will be paid as soon as a contract is inked.”
“Faced with stiff competition from a heap of new luxury product on the market, developers are paying transfer taxes, offering discounts, dangling gifts cards and other sweeteners in front of brokers and buyers. It’s all about getting deals done as quickly as possible.”
“‘They don’t want to give off the perception that they’re lowering prices, so they may offer a concession,” said Douglas Elliman’s Vickey Barron. ‘They’re not wrong for doing it,’ Barron added. ‘You don’t want to be sitting with empty apartments.’”
“Developers whose construction loans are coming due have the most on the line, and are anxious to stave off lenders anxious about getting paid back. ‘The pressure on developers is starting,’ said one marketing executive. ‘I’ve been getting calls from banks asking what the larger units will rent for.’”
‘SOUTH BEND — Two new apartment projects are beginning to test the market for upscale housing in the heart of the city, with promising early results. Work is nearly complete on The LaSalle, a 67-unit apartment project in the former LaSalle Hotel, and Studebaker Lofts, a 52-unit project in the former JMS Building.’
‘The projects, developed with support from taxpayers, represent the tip of the spear in terms of new market-rate housing downtown, with as many as seven similar projects set to come online by the end of 2019. Still, who will occupy all the new apartments remains to be seen.’
‘A 2013 study by Zimmerman Volk Associates found downtown could absorb as many as 670 new market-rate housing units over five years as millennials and baby boomers abandon the suburbs for the convenience and excitement of downtown.’
‘But the prices for some of the units — $800 to $2,600 and up so far — leave room for question in a city where, according to the online rental site Apartment List, a typical one-bedroom apartment costs $600 per month.’
‘The same 2013 study found that just 30 percent of the potential market for new downtown housing — empty nesters and retirees, traditional and non-traditional families and younger singles and couples — could afford to pay more than $1,500 per month in rent. Only 8 percent could afford to pay more than $2,000 per month.’
‘At the same time, plans for hundreds of new market-rate apartments at Eddy Street Commons, the popular mixed-use development south of the University of Notre Dame, and in downtown Mishawaka promise to introduce even more competition to the market.’
‘Still, developers show no signs of concern.’
‘Like Studebaker Lofts, The LaSalle offers vinyl plank flooring, granite countertops, stainless steel appliances, in-unit washers and dryer and dramatic views of downtown and the St. Joseph River. It also offers access to an on-site fitness center and a community room with large-screen TV and ping-pong table. Rents in the building range from $798 for a one-bedroom unit to $1,298 for a two-bedroom unit.’
‘No tenants have been announced for The LaSalle, but Centier Bank and The Lark, a “champagne salon,” plan to open inside of Studebaker Lofts later this year.’
The level of absurdity in this multifamily madness is impossible to overstate. It’s like an infection that has spread everywhere.
“Vinyl plank flooring” LOL
And as someone who lives in a complex where only the bedrooms are carpeted, I cannot tell you how wonderfully extra-noisy it is to live beneath others when there’s no carpeting. The footsteps echo, and so do the voices, with no carpet to muffle sound or provide a barrier.
You don’t think all these renters are actually going to buy enough throw rugs to cover their floors? Surely you jest.
And of course everyone these days has a couple of dogs. Thump thump thump go the running feet and clack clickety clack go the untrimmed nails as they run back and forth. And then there’s the kids. Sometimes it’s hard to tell the difference.
It has spread and for a reason. First they drove up prices in the big cities and with money being thrown at them (see the Atlanta article) conjured up the rich renter myth in towns far and wide. The land has tripled or more in the last 4 or 5 years. That’s why they had to invent the amenity thing. Ever higher rents couldn’t be justified with walls, a roof and a parking space. Remember the vitamin C infused dog water bowls?
This whole economy is a lie, care of central bankers’ currency games.
Apartment living on multiple floors and few windows would drive me to take a second job.
“‘Like Studebaker Lofts, The LaSalle offers vinyl plank flooring, granite countertops, stainless steel appliances, in-unit washers and dryer and dramatic views of downtown and the St. Joseph River. It also offers access to an on-site fitness center and a community room with large-screen TV and ping-pong table.”
Junk, junk, junk, junk and junk. Now where’d the money go?
Lam flooring- A 0% extra
Rock counter- A 20% extra or $3000
Cheap stainless skin- A 0% extra
A washer and dryer +branch and sanitary rough in- $4000
A community TV and pingpong table- $1500.
You paid how much investor money to construct this 4 story shanty? Again…. Where did the money go?
Downtown” south bend ???
Wtf ?
FYI, South Bend is the home of the University of Notre Dame, which is notorious for its old-money legacy student body. You very well *could* have some parents willing and able to pay $2600/month for Precious Junior to live with a couple buddies in a unit and play video games together. But there certainly are not enough of these folks to fill a lolz luxe building!
Sure there are! Catholic kids in Calif dream of going to ND.
‘A 2013 study by Zimmerman Volk Associates found downtown could absorb as many as 670 new market-rate housing units over five years as millennials and baby boomers abandon the suburbs for the convenience and excitement of downtown.’
Um, yeah. “Downtown” = exciting encounters with feral Hillary supporters as crime soars in our cities. No thanks.
‘When it comes to investor appetite, Atlanta has gone from being the red-headed stepchild to one of the belles of the ball, especially when it comes to multifamily. That trend may not be ending anytime soon. Peter Muoio, chief economist at the online property auction site Ten-X, said cities like Atlanta are seeing strong sales velocity for being later to the economic recovery trend than gateway cities. “I’m not … surprised by that at all,” Muoio said. “Atlanta’s not in that priced-to-perfection, riskier profiles” like Miami or New York City.’
‘The other risk: potential oversupply in gateway markets that have led to rising vacancies and cooling rents, according to the Ten-X report. “I think we’re probably near peak value for this cycle,” Muoio said. “The pressure from rising interest rates and valuations have been bid up … makes it a more vulnerable segment if rates do indeed rise.”
‘Atlanta has seen a flood of capital into apartments in recent quarters. By the third quarter of last year, transaction activity jumped 17% with buyers shopping even B and C assets, according to Marcus & Millichap, nearly double the activity seen in the previous year. And with average apartments trading at $90,400/unit, properties in Downtown, Midtown and Buckhead can trade as much as $45k/unit more, with cap rates in the low 4% to 5% range for the choicest of properties.’
‘Investor appetite for apartments came full bore on Kyle Brock a year ago. The managing director for multifamily developer Crescent Communities had just finished a new luxury apartment complex in Tampa and was nicely leasing units up when the firm began receiving offers to buy — even though it was not officially for sale.’
‘But the deals were too good to pass up. Crescent sold its Crescent West Shore, a 374-unit complex just a few miles from Tampa Bay, to Nashville Investment Co. for $80M. “I mean, it traded before stabilization. We certainly didn’t expect to sell it that soon,” Brock said. “There was just enough interest, really unsolicited interest. It just made sense.”
‘Brock said Crescent did not even have to discount the price for the 40% vacancy rate at the apartment at the time of the sale. The buyers were apparently confident enough in the mid-market’s fundamentals and the asset itself that it would stabilize soon enough.’
A casual reader of this blog knows more than these ding-dongs.
david stockman is calling for the sh@t to hit the fan after tomorrow over the debt ceiling.
It will be increased. Roles will be reversed. Repubs will support the increase dems will oppose.
Amerikka, what a fukushima!
Repubs will support the increase dems will oppose ??
Blackman liberal spending = Bad
Billionaire white man spending = Good
It is simple. Debt cannot rest. Grow or Die.
Rising interest rates will burst the housing bubble.
http://www.businessinsider.com/rising-mortgage-rates-take-aim-at-the-housing-bubble-2017-3
If she raises rates its either incompetence or a deliberate attempt to crash the asset ponzi scheme.
If she raises rates its either incompetence or a deliberate attempt to crash the asset ponzi scheme ??
Its neither….They will be reacting to their mandate…Employment and inflation…Both have been running hot and the numbers are now starting to reflect that…Tapping on the brakes now is warranted…
30 year now around 4.3%…With three possibly or four rate hikes coming that will push the 30 year to 5% or so…
Employment is running hot? If so, where are the big raises and retention bonuses?
If so, where are the big raises and retention bonuses ??
Thats coming…Wage increases are a lagger…I know wages are up here not sure about Colorado or other locals…Construction and development costs are at all time highs here…I just had lunch with a friend yesterday who is building a 9 unit apartment building…Design is a bit expensive but he told me that the bid he is considering is at $450. per square foot…
Beware the ides of March:
Here in SoCal the word on the street is that several school districts are getting ready for layoffs, and a couple major private employers are doing the same. Where I work we’ve been through the ‘voluntary retirement’ phase, and on Friday the ‘voluntary lay-off’ phase begins (involuntary will follow, no doubt).
Our stock is at all time highs, btw.
Our stock is at all time highs, btw.
My employer makes $10B profit on $40B sales, but we just had layoffs and money is too tight to mention. Expecting another year of no raises except for the “walk on water” types, and even for them they will be teensy-weensy.
My employer makes $10B profit on $40B sales, but we just had layoffs and money is too tight to mention. Expecting another year of no raises except for the “walk on water” types, and even for them they will be teensy-weensy.
Just yesterday weren’t we talking about Colorado vs Silicon Valley? You just outlined the reason to work in SV nicely, even with everything that sucks about it. At least the average competent worker has some leverage here.
Same here.. Voluntary retirements at the end of the month to be followed by non-voluntary cuts. Bonus and raises still…
So much for lower prices / revenue accellerating the economy. LOL
Just yesterday weren’t we talking about Colorado vs Silicon Valley? You just outlined the reason to work in SV nicely, even with everything that sucks about it. At least the average competent worker has some leverage here.
FWIW, my mega employer does the same thing (no raises) in Silly Valley. The turnover there tends to be much higher, except for all the H1-B’s who stick around longer. Given how the young’uns change jobs every 1-2 years regardless I guess there’s no point in giving an incentive to stay.
It doesn’t have to be that way…but it sounds like they would rather resign themselves to not being able to retain anybody but H1Bs in SV than actually pay what it takes. I was an STK guy back in the day…I know the deal on that. Luckily there are a lot of other options here.
So much for lower prices / revenue accellerating the economy. LOL
Lower prices tend to be driven by higher productivity, and when employees are more productive … well … you just don’t need as many as before, especially in manufacturing which is steadily automating more and more. As some news articles point out, while factories are coming back, they aren’t creating a whole bunch of new jobs, except maybe for robot repairmen.
IIUC, “productivity” is a relatively new metric, within the last 20 years. When I first saw it I was somewhat dismayed, thinking, “wouldn’t that have a natural ceiling?”
Sure enough, last month some wag on Bloomibergi radio was jawing about “what does this mean for productivity growth.” So that’s the goal now: productivity growth, with no ceiling I guess. Of course, every company’s goal is to have no employees at all. But until then, they are going to flog more profit out of each employee: longer hours, fewer benefits, fewer regs and taxes, etc. Because it’s not enough to grow the business or customer base. Nope, gotta grow the productivity per employee.
That’s where the profit is, and you can never have enough of it.
Employment is running hot? If so, where are the big raises and retention bonuses?
The benefits appear to be accruing to the low paid. Even given this, warm may be a better description than hot.
The Most Underrated Story About the U.S. Economy
Income growth is faster at the bottom than at the top. Thank a growing economy, falling unemployment, and minimum-wage hikes across the country.
DEREK THOMPSON MAR 9, 2017
For decades, the story was simple: The gap between the rich and the poor grew ever-wider as incomes increased faster at the top than the bottom. The story was true, too. Wages have been rising faster for the top 5 percent than for the bottom 20 percent almost every year this century.
But in a remarkable reversal, annual wage growth has been greater (as a percent) for the poor than for the rich in the last few years. A new report by the left-leaning Economic Policy Institute found that wages grew faster in 2016 for the poorest quintile than for the richest. The trend was particularly pronounced for white workers. The poorest 10 percent of white workers collectively saw a 5.1 percent raise in 2016, twice as faster as the 2 percent growth among the richest decile percent.
https://www.theatlantic.com/business/archive/2017/03/wages-rising/519114/
But in a remarkable reversal, annual wage growth has been greater (as a percent) for the poor than for the rich in the last few years.
Might that be driven by regional increases to minimum wage? Here in the Centennial state it’s scheduled to rise from $8 to $12/hr in the next 4 years or so. We’ll see how that works out.
Some of us , not me, were told to go on glassdoor and give the company good reviews, all the bad reviews are hindering hiring.
Our recruiter is lagging to pull this IMO
Santa Clara based chip design company. You guys are software I think ?
I get my review any day now and if its 2% again I’m going to be really pissed. But down here in Ventura co. maybe like Colorado no leverage, so what u going do I’m getting too old to be easily hired.
Plus most layout goes to China now , my Chinese bosses like it that way.
<emSanta Clara based chip design company. You guys are software I think ?
Both HW and SW, including chips (sparc).
“Some of us , not me, were told to go on glassdoor and give the company good reviews, all the bad reviews are hindering hiring.”
Whenever a recruiter calls me, I invariably go to glassdoor to check out its reviews.
Most places seem to have the same reviews:
Long hours
Lots of layoffs
Poor benefits
Tiny or no raises at all
Clueless management
I’ve come to the conclusion that any place that uses external recruiters is a lousy place to work.
So that’s the goal now: productivity growth, with no ceiling I guess. Of course, every company’s goal is to have no employees at all. But until then, they are going to flog more profit out of each employee: longer hours, fewer benefits, fewer regs and taxes, etc. Because it’s not enough to grow the business or customer base. Nope, gotta grow the productivity per employee.
Growth in productivity is the main way we see standards of living increase.
Creating more with less labor, means people can have more with lower cost.
I listened to an EconTalk podcast with three economists talking about the problem with Europe’s economy…all three pointed to the same thing…low productivity growth.
saw a 5.1 percent raise in 2016, twice as faster as the 2 percent growth among the richest decile percent.
Using *percentage* as their metric skews the headlines. Remember, if a house value in Detroit increases from $1 to $2 that’s a 100% increase. “100% increase” looks great on paper, but in reality it’s insignificant. Same thing here.
For a low-end white guy making $20K, a 5% raise is $21K.
For a high-end white guy making $150K, a 2% raise is $153K.
I’m not sure that this is that much of a difference, not on the payroll side.
Creating more with less labor
Did you miss my comment about productivity having a natural ceiling? Yes, there’s something to be gained from that initial burst of rightsizing and efficiency. But how far can it go? If the PTPB are using productivity growth as a goal, do you think at some point they’ll say, “ok productivity is maxed out and leveled out. Our employees simply can’t do any more. Maybe we need to measure something else?”
Hell no. They will try to grow productivity further by making the employees cheaper (no benefits, or outsource/illegal immigrant, or “gig economy) or wrining more revenue out of each employee (long hours).
That said, I would say there’s more room for productivity growth in Europe than in the US. Isn’t Europe notorious for relatively light work schedules, lots of vacay time, etc?
There isn’t a natural ceiling to productivity in an economy…that’s the flaw in your logic.
You don’t just make the economy more productive by getting each employee to make more stuff with the same or lower cost. You also make the economy more productive by providing additional tools to those employees that might allow them to do the same work more safely, or more of the same work.
Kiva systems for Amazon…made warehouse “picker” employees much more efficient–the products were brought to them by robots instead of the person looking through the warehouse.
Manufacturing uses more robots, allowing more “stuff” to be built with fewer employees.
Artificial intelligence allows discovery to take place in lawsuits with many fewer attorneys doing the work.
Computer programs to help drivers avoid bad traffic allows people to get where they want to go and use less time/fuel.
Smarter search algorithms allow people to research more efficiently–less time wasted.
AI in Oncology helps better direct treatment for cancer–fewer wasted resources going toward treatments that don’t work.
AI in silly things like thermostats reduce the heating and cooling of empty buildings.
Self-Driving cars will save lives and unnecessary heathcare costs after accidents. They will reduce the number of drivers, so rides become cheaper, but also increase the number of people who live without cars, reducing capital invested in automobiles that don’t get used very often.
Instead of focusing on the road while driving to work, someone can respond to e-mails, read the paper, etc.
Yes, these enhancements reduce the need for labor. But they also help increase productivity in the economy as a whole. Get more for less.
Some of us , not me, were told to go on glassdoor and give the company good reviews, all the bad reviews are hindering hiring.
That’s hilarious. Good sign that things will have to change eventually.
“Here in SoCal the word on the street is that several school districts are getting ready for layoffs, and a couple major private employers are doing the same.”
Housing prices will surely rise on this news.
<emSanta Clara based chip design company. You guys are software I think ?
Someone’s not using my extension
Remember….. Nothing accelerates the economy, creates jobs and raises the standard of living like falling prices to dramatically lower and more affordable levels. Nothing.
Campbell, CA Rental Rates Tank 19% YoY
https://www.zillow.com/campbell-ca/home-values/
‘The luxury segment in urban core markets like New York (and) San Francisco is getting overbuilt as there’s just not enough demand to keep up with the new supply.’”
As is the case with the entire market. The fact they draw a distinction and call it “segments” and “urban core” is mildly amusing.
NY Metro Rental Rates Crater 8% YoY
https://www.zillow.com/ny/home-values/
‘The pressure on developers is starting,’ said one marketing executive. ‘I’ve been getting calls from banks asking what the larger units will rent for.’
Saw this coming over 2 years ago.
How long, maybe another 2-3 years to the bottom?
‘Hey stay with us, you’ll get a free garage for the term or your lease,’
That would not appeal to me since i drive an old car, but for someone with a new expensive car, beats taking a chance of it getting stolen or jacked up for the rims
I’ve been on the waiting list for a garage for 6 months now. Here in San Jose I don’t think I’m at too much risk of being robbed, there’s a lot nicer stuff than my 2008 BMW parked outside. But the funny thing is that besides the sap and pollen and everything all over my car, the biggest pain is remembering where I parked it. Sounds like a joke, but it’s not. This complex meanders all over the place and parking is scarce after about 8:00pm. So if I’m out somewhere later than that I might be parked a long way away…after months of that you start to forget where you left your car each night.
Get a GPS. Use the MOB function.
A shiny office building near me just sold for 75% less than the 2011 price
The projects, developed with support from taxpayers,”
add gov and stir
and u ALWAYS get sht
more gov in HC coming up
From the article about the new affordable housing in Wisconsin:
Plans are for the project to be funded through affordable housing tax credits and possibly the county’s Affordable Housing Development fund.
So the only way to get affordable housing built is for government to do it. It’s just not profitable enough for private developers to do on their own. That said, I hope they build nice garden apartments instead of towers like those doomed projects in Chicago.
So the only way to get affordable housing built is for government to do it. It’s just not profitable enough for private developers to do on their own.
I reject that. I think as soon as there is no free Fed money looking for a home supply and demand will resolve that issue. “Profitable enough” will have a different meaning at that point.
I hope you’re right, Carl. But there’s the possibility that a builder would rather exit that segment of the industry altogether than settle for a low profit. No matter if people “need” housing; they’d rather see people in the street than stoop to making “enough” profit at 5%.
And do what? Get in retail? Oh ya, there’s always dining.
Contractors with any level of sophistication and drive move onto high dollar volume work. Margins on SFR’s(all of them) is higher than all other work but there just isn’t enough demand there to grow the business.
Actually, builders don’t just seek out the highest profit margin deals. They also look at depth of market, and pace of sales as very important indicators of the viability of a project.
Said another way, a builder might require a 15-25%+ margin to build very expensive housing, since they know there are fewer buyers, and those buyers can choose to buy cheaper. The result of which is greater risk and a greater potential for a lower pace of sales.
They might only require an 8% margin to build very inexpensive housing, since they know there are a lot of buyers, for whom they might be the lowest cost provider.
However, they won’t build to a 1%, or 2%, or 4% margin in any event.
There are some markets in CA where they aren’t building inexpensive housing because they can’t build inexpensively enough to generate an acceptable profit (which would be lower than high priced homes).
But there’s the possibility that a builder would rather exit that segment of the industry altogether than settle for a low profit.
That’s my point. People are spoiled with all the free money sloshing around. They won’t get out of bed unless there’s a lot of profit. But it can’t go on forever that way…
“So the only way to get affordable housing built is for government to do it. It’s just not profitable enough for private developers to do on their own.”
Now there’s the Donkism of donkisms.
“So the only way to get affordable housing built is for government to do it. It’s just not profitable enough for private developers to do on their own.”
From what I have read, that’s how it’s done in parts of Europe. The rents are low and it isn’t unusual for people to stay in those rentals until they die. When we were in Vienna last year our tour guide bragged to us about how great that system is. I guess as long as there is someone else to subsidize it that it’s “great”, that is until they run out of other people’s money to spend.
So the only way to get affordable housing built is for government to do it.”
yes unless you want to build it out of old garage doors or shipping containers.
2.7% yoy cpi
see ,we made inflation, aren’t we smarter than
see !
oh sht ,we made inflation
Here is just a SAMPLE of what is being built/completed/planned in St. Louis Missouri
http://40southnews.com/evo-former-manhassett-village-move-ins-begin/
http://www.riverfronttimes.com/newsblog/2017/03/01/meet-the-everly-1475-month-studios-and-a-128-million-tax-break-from-city-hall
http://www.bizjournals.com/stlouis/news/2014/04/02/former-roberts-tower-finally-ready-for-occupants.html
http://www.encore.apartments/
http://www.stltoday.com/business/local/new-owners-plan-hundreds-of-apartments-offices-and-retail-for/article_c504983f-e1d3-5746-a8f9-a4dddbac21f2.html
http://theorioncwe.com/
http://www.constructforstl.org/paricmchugh-nail-bucket-shot-to-top-out-212-meramec-tower/
http://worldarchitecture.org/architecture-news/cggcv/studio_gang_unveils_its_first_flowerlike_tower_in_st_louis.html
Are we heading toward another subprime mortgage crisis?
excerpt:
In Freddie’s 2016 Annual Report, the agency says 36% of its obligations are “credit enhanced,” meaning they carry mortgage insurance of one sort or another, which is typically used for weaker mortgages. The insurance against default is only as good as the enhancing firms, and none is rated above BBB+. If these weak subprime mortgages begin to fail in large numbers, so also will the insuring companies.
There is one critical difference between today’s situation and that of 2008: There is very little private capital that would be at risk if there’s another subprime mortgage bust. Before the crisis, there was some market discipline, however imperfect it was, because potential buyers of mortgages would look at their quality carefully. Now only Fannie and Freddie are examining the quality of the mortgages. And it is taxpayers who would carry the burden of bailing out Fannie and Freddie, since their obligations are guaranteed by the US government.
According to the Fannie/Freddie annual reports for 2016, it is surely the case that subprime mortgage issuance is one force driving house prices once again — up by about 30% over the past four years and now about back to the elevated peak in 2006.
Will subprime debt begin to fail again when house prices level off?
Why isn’t the Fed talking about this matter? Someone please convince me that “this time is different.”
I would have guessed PMI rates are over 50%. Who wants to put 20% down?? Or has it?
Once prices go up, I think new appraisals can get your PMI eliminated.
I saw a blog posting that showed a “bright spot” in the refinance market being the number of FHA loans that are refinanced into traditional Fannie/Freddie loans after there is enough “equity” in the home.
some lenders require PMI for 18-24 mos, regardless.
FHA now requires PMI for the life of the loan regardless of LTV.
That might explain the “bright spot” of FHA refinancing into traditional loans.
so also will the insuring companies.”
Are traders shorting the insurance companies like last time?
Oh wait they ( Paulson and crew ) had the government bail the insurance companies out so their big shorts would actually pay off.
That’s how they do
“San Diego pops up on ‘worst’ list — no surprise to renters”
http://www.sandiegouniontribune.com/news/columnists/diane-bell/sd-me-bell-20170314-story.html?utm_source=Voice+of+San+Diego+Master+List&utm_campaign=b8855ec9ef-Morning_Report&utm_medium=email&utm_term=0_c2357fd0a3-b8855ec9ef-81843721&goal=0_c2357fd0a3-b8855ec9ef-81843721
an Diego is the second worst market for renters in the country. That’s the word from Forbes’ 2017 ranking of 46 metropolitan areas, where only Miami is worse.
Analysts factored in San Diego’s monthly apartment rent ($1,748), vacancy rate (3.1 percent), annual rent increase (4.8 percent) and the portion of income spent on rent (30 percent).
In fact, six regions in California — San Diego, Los Angeles, Orange County, Riverside-San Bernardino, Oakland and Sacramento — ranked among the 10 worst.
“This is happening in California and is a major part of the division between the haves and the have-nots,” commented Lloyd Rochambeau, of San Marcos, in a recent letter to the editor protesting rising rents. “Of course, rent control could solve the problem and very well may be the only solution short of a revolution.”
“Of course, rent control could solve the problem and very well may be the only solution short of a revolution.”
Or renters could vote with their feet and leave the state. Rent control will only guarantee one thing, which is what all price controls do: a perpetual shortage.
Of course, moving without having a job lined up waiting for you can be a scary thing for most people, especially since few have any savings to speak of.
Well, not all price controls. Control the medical costs: i.e. how much hospitals can bill patients. Will there be additional shortage in that industry already suffering from serious shortage? Not likely. Will the doctors run to Canada or Mexico? That market is supply-controlled. Some price control will have little effect.
The biggest issue with socialized healthcare is wait times for care. In large part this is because there are price controls…so there are fewer people who want to be doctors there.
What if there is no other option? If it is price-controlled everywhere? The labor market in the industry is highly protected yielding unusual costs for the labor. That is, doctors are making a lot more than what a free market would dictate. If we can’t increase the number of trained staff rapidly, it would be fair to reduce their paycheck.
With the increased demand due to ACA at the stagnant increase in supply, medical staff would demand raise because of deteriorating working conditions, which means more costs to the healthcare. In fact, during the Obama administration, the growth rate in the number of employees in the general and surgical hospitals was rather flat than the usual rate before and after. Check out the data from the BLS. The change is the slope is just too obvious.
Current political trend targeting insurance has no luck. The fundamental problem is the medical costs. What if we have annual price cap to bill patients with chronic diseases? They will do their best to make them better at a lower cost instead of keeping them ill for steady cash flow. Most of the time, people with chronic illness just need medication, not the doctors.
Yes, rent control. That’s the solution.
They have rent control in SF…how’s that working?
‘Lloyd Rochambeau’
That dude’s last name is roshambo…how cool is that?
I recently read that the Rock Paper Scissors World Championships have been canceled. These are truly dark times.
“brewing?”
wtf on this board we had nothing but examples of rent dropping for 6 months w 0 cities going up
But you have to look and think for yourself. For example, median shack prices in Houston are at all time highs. Real prices have been falling for two years. The REIC can’t be trusted and that goes for the data firms. Remember the NC apartment guy saying property managers lie so the banks don’t know how bad vacancies are? If you want to know what kind of people we are dealing with, read the Indiana article near the end.
examples of rent dropping ??
Just wait until all the over supply comes online….Then the Elephants put on the boxing gloves and cannibilize each other…Everyone in the B & C apartment category that has purchased in the last 2-3 years could get their a$$ handed to them if they are in the 75% LTV range….For them, vacancy rates will go up dramatically and rents will go down…Operating costs, already high will continue to increase…I have seen this play out before…
I posted a report recently that said 80% of apartments in Tucson needed to refinance in the next year. About operating costs: when I was in Midland I went into a new luxury leasing office. There were at least 10 employees milling about in office clothes and more out working in and around the buildings. Like the big DC apartment guy said, “these amenities don’t earn any revenue.” This luxury thing will be like an anvil around their necks.
There were at least 10 employees milling about in office clothes and more out working in and around the buildings.
But once they lease up, most of those employees will disappear and then there won’t be enough people to deal with everything involved in running an apartment complex.
“For them, vacancy rates will go up dramatically and rents will go down…”
Just for them?
How will your friend do who is building apartments at 4 Fitty a foot?
“I just had lunch with a friend yesterday who is building a 9 unit apartment building…Design is a bit expensive but he told me that the bid he is considering is at $450. per square foot…”
Allen, TX Housing Prices Tank 10% YoY
http://www.movoto.com/allen-tx/market-trends/
Early last year I was checking out every open house in my socal area, maybe 10 every couple weeks. I just had time to do so again last weekend and I was overwhelmed, 438 open houses.
I went to 3 in my neighborhood, one was for sale last year I looked and must have been rented out for the year. It is listed 20% higher than last year. Yesterday it went to contingency status which I notice are all fallin through around here.
Music to my ears.
Palo Alto, CA Rental Rates Crater 9% YoY As State Economy Tanks
https://www.zillow.com/palo-alto-ca/home-values/
I am waiting for housing in the bay area and southern California market rents to drop back to reality.
Me too. I’ve noticed that the midrange stuff in my neighborhood seems to be dropping slightly or at least giving concessions, but the higher end complexes are asking for even higher prices at this moment. No idea if they are actually getting it or not…tons of listing lately in my area. I’m just renting a room from a former Airbnb host at the moment and watching…even with the slight softness there’s no way I’m paying these prices just for myself.
Silicon valley shows no signs of real correction.
I am watching areas such as Milpitas (mid lower range) to Warm springs (mid range) and Los Altos (high range). Everything is still up (thanks to Stock market).
Milpitas has odor problem (dump site making air stink), a jail next to it, terrible schools, crimes, nothing beautiful, still it climbed up from 550K to 650 to 750 to 850K year after year (junk housing).
Even folks working in google are running out of space and moving to Milpitas now.
Can not believe it.
“Milpitas has odor problem (dump site making air stink), a jail next to it, terrible schools, crimes, nothing beautiful, still it climbed up from 550K to 650 to 750 to 850K year after year (junk housing).”
FWIW, Milpitas was home to blue collar workers from two automobile assembly plants.
Dimon never loses money -
“If the Fed is raising rates into a stronger environment, the stronger environment is far more important than rates going up 25 basis points,” said Jamie Dimon, the CEO of JPMorgan, during the Business Roundtable’s media briefing on Tuesday. For the Fed, “the ‘why’ is more important than the ‘what,’” he said.
Portland, OR Housing Demand Collapses 33%
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
Complete wrong, Race . . .
Portland demand is as high as it ever has been. They are playing catch-up to Seattle.
Data my good friend. Study the data.
Seattle, WA Housing Demand Craters 19% YoY
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
Your data is bad, Housing Analyst, so no need to study it. GIGO
Data my good friend data.
Falls Church County, VA Housing Prices Crater 10% YoY
https://www.zillow.com/falls-church-city-county-va/home-values/
The article in the post above says something about supply outpacing demand. It’s not the first. BTW, the writer was one of those I sent the report about the UHS praising shadow inventory to keep prices up. Never heard back.
Hmmmm….
State of house flipping in 2016……
http://www.corelogic.com/blog/authors/bin-he/2017/03/the-state-of-house-flipping-in-2016-part-i.aspx?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+corelogic%2FpGxJ+%28CoreLogic+Insights+Blog+RSS+Feed%29#.WMm3oDvytPY
I’ll take Manhattan……
Ella Fitzgerald is a wonder on this - oh the good old days!!
https://www.youtube.com/watch?v=YJsa0OfWcGA&list=PLa8ySGsymo_2mlORDZvdSwTzqQ82Km4Tj&index=18
Chevy Chase, MD Housing Prices Crater 17% YoY
http://www.movoto.com/md/20815/market-trends/