April 18, 2017

Losing Momentum Due To A Historic Construction Boom

A report from the Colorado Real Estate Journal. “There will be stunning views from Shea Properties’ 28-story apartment building in the middle of downtown Denver, but the most interesting view may be from the street. Passers-by of the high-end apartments on Curtis Street will look up to see people swimming behind a 40-by-9-foot wall of glass at the end of the pool. ‘This is going to be iconic,’ said Peter Culshaw, Shea Properties executive vice president. While Culshaw said there probably are a ‘few too many’ apartments being built downtown right now, he doesn’t believe the market is wildly out of scale, and he thinks there are many millennials who will continue to rent vs. buy.”

From Crain’s Chicago Business in Illinois. “The developers of a 29-story apartment tower in the Fulton Market neighborhood have put the ‘For Sale’ sign up, even before taking the ‘For Rent’ sign down. Chicago-based Shapack Partners and its partners are cashing out quickly, capitalizing on a downtown apartment market that has been on a roll but is losing momentum due to a historic construction boom that’s increasing competition for tenants.”

“Other new luxury apartment buildings in downtown Chicago have sold for more than $500,000 a unit, and a few have fetched more than $600,000 a unit.”

ABC 15 in Arizona. “Developer Michael Lafferty tells ABC15, the draw of downtown caused a boom in apartment construction–with more than 3,500 apartments slated to be built or in the process of being built in downtown Phoenix. The boom of living units is causing rents to fall flat, but developers like Lafferty aren’t worried. ‘People will now be able to afford downtown, and we will fill the 3,500 units,’ he said.”

“Many developers are sealing the deal with huge incentives, making the current market a renter’s dream come true. Lafferty says the most outrageous deal going right now is 3 months free rent. ‘Probably every month for the next six months there will be a better [offer], so if I was a shopper for rent in the downtown market I would wait until summer.’ he suggested.”

The Houston Chronicle in Texas. “Jose Guerra is ready to start his afternoon shift at a fancy wine bar downtown. There’s just one problem: His 1997 Mercury Grand Marquis broke down, and there’s no public transportation from the friend’s house where he’s staying. Rents in and around downtown, which average $1,750 for a one-bedroom, would seriously stretch his income of about $3,500 a month. And, Guerra says, he has it relatively easy: Housekeepers make less than half his earnings and those who find something close put up with crowded and unsafe conditions in boardinghouses. ‘They’re constantly worried about how to pay their rent,’ Guerra says.”

“If current trends continue, it’s the kind of problem that could sneak up on the city, leaving downtown establishments without the workforce they need to stay open. ‘It’s getting tougher for candidates to live in the downtown area on lower salaries,’ says Amber Watts, the Houston Branch manager for the staffing firm Robert Half. ‘I’ve spoken with several candidates that can’t afford a car and housing in the area.’”

The Ocolly in Oklahoma. “Like spring flowers, new apartment complexes are popping up in Stillwater to meet the demand for amenity-flush living from students willing to pay top dollar while challenging local landlords to stay competitive and modernize. Longtime property owners are absorbed in fierce competition, a touchy subject after years of foregoing maintenance and upgrades because of little competition in the neighborhoods near campus. They must now spend thousands on new bathrooms and kitchens or see their units go empty, they said.”

“Even OSU is adjusting housing rates, offering Apple Watches and free parking to returning students and touting its amenities, including the Colvin Recreation Center, trying to fill dormitories. Stillwater is one of many cities across the country that private developers have targeted in recent years for student housing development, adding almost 281,000 beds to college town markets from 2012 through fall 2016, according to Axiometrics. Kelsy McGuire, a sales and marketing specialist at Aspen Heights, which has operated in Stillwater four years as one of the newer complexes farther from campus, said the increase in student housing has had an impact. ‘Each time a (complex) is built they are the new exciting thing,’ McGuire said.”

The Times-Picayune in Louisiana. “A promised crackdown on short-term rentals in the French Quarter could shake up the real estate market in the city’s priciest neighborhood, where an estimated 400 houses and condos were listed on Airbnb last month. ‘You’re going to have a tattle-tale system like none other,’ said Bob Ellis, a French Quarter resident and an attorney representing short-term rental operators in the city. Ellis said he’s never seen so many for-sale and for-lease signs when he walks through his neighborhood, and some landlords and owners are worried.”

“‘There are a ton of people that have vacation rentals here,’ Ellis said. ‘That’s how they offset the cost of owning a home here. It’s going to be extraordinarily hard on people, and I think that’s why you see so many listings right now.’”

“Lisa Shedlock, a French Quarter real estate agent and resident, said since last fall, more properties have become available for sale and for rent in the neighborhood, but that should be attributed to the market correction rather than a reaction to short-term rentals.”

‘The French Quarter rental market has changed,’ said Robert Ripley, another French Quarter real estate agent. ‘Rents are dropping in the French Quarter.’ Rent for a typical two-bedroom with a balcony has gone down from about $2,500 to $1,800, he said. A one-bedroom that used to be rented for $1,500 to $1,750 now fetches only $1,100 to $1,300, he said. “

RSS feed


Comment by Senior Housing Analyst
2017-04-18 15:31:13

Kent, WA Rental Rates Crater 12% YoY


Comment by 2banana
2017-04-18 16:05:54

Add New Orleans to the list of cities tripping over the edge…

Comment by Ben Jones
2017-04-18 16:49:14

‘a downtown apartment market that has been on a roll but is losing momentum due to a historic construction boom that’s increasing competition for tenants’

Increasingly it looks like oversupply will sink these markets. Danielle Booth said it over a year ago: it’s all the money chasing yield. You get stuff like this:

‘While Culshaw said there probably are a ‘few too many’ apartments being built downtown right now, he doesn’t believe the market is wildly out of scale, and he thinks there are many millennials who will continue to rent vs. buy’

Rents have been falling in downtown Denver for over a year.

Comment by Professor Bear
2017-04-19 04:47:46

Yellen bux seeking their final resting place…

Comment by Larry Littlefield
2017-04-19 06:37:23

You can’t say we didn’t need more apartments.

Wall Street doesn’t get in trouble by doing things that are flat out stupid.

It gets in trouble by doing things that are smart until they are overdone, and then become disastrous.

The internet will be a big thing (1990s). Americans like to own homes (2000s). A higher share of millennials want to live in apartments in cities (2010s).


Comment by Ben Jones
2017-04-19 07:19:06

Apartments are supposed to be affordable housing. Like the Houston article shows, workers can’t afford to live there. No, we didn’t need that. Now we’ll see hundreds of billions maybe trillions lost, credit will freak out and as always, people will lose their jobs. All for a mammoth wave of apartments that don’t even make much money if any.

Comment by Ethan in Northern VA
2017-04-19 11:35:58

They will sell them as condos.

(Comments wont nest below this level)
Comment by rms
2017-04-19 12:26:13

Does fannie do multi-family these days?

Comment by Carl Morris
2017-04-19 13:50:43

They will sell them as condos.

Makes sense…but then they might crash the value of condos. Which would normally be fine except it might de-foam the runways for the banks. I say it all goes Section 8 :-).

Comment by redmondjp
2017-04-19 15:02:51

Or they’ll end up being Section 8 housing.

Comment by Rental Watch
2017-04-19 16:23:36

Not all apartment projects are mapped. Building to condo spec usually costs more money, so many forego the extra cost/effort of putting on a map.

Comment by oxide
2017-04-19 16:56:05

I agree they will go Section 8. They’l be doing lines off the granite.

Comment by MWR
2017-04-18 16:53:17

Are constuction loans tied to Prime +. The commercial loans I deal with are prime + but they aren’t construction loans.

Reason I ask is prime is up 50 bps since Dec and is forecast to go up at least 50 bps more. Now 100 bps on a $10 MM loan is $100,000 a year. If a project takes 3 years to complete and started last Oct/Nov. 2016. The cost could easily be $250,000 more. (I assume interest only)
How bad will that screw up the profitability/cap rate scenario?

Comment by scdave
2017-04-18 17:49:20

Are constuction loans tied to Prime + ??

It depends how big of a dog you are. Small dog ?? The answer is yes. Big dog ? The answer is no. Big dogs boroow at 10 year notes + a small premium.

Comment by Ol'Bubba
2017-04-18 19:22:27

1 month LIBOR + 225 to 300 basis points for construction loans. Usually a 36 month term with interest only until completion of construction.

Comment by Ben Jones
2017-04-18 17:16:07

We have a poster who thinks he’s discovered something in the previous comments:

“I just noticed something on Craigslist…you can’t simply look at the number of listings as an indicator of total available units in a market…many units are listed more than once.


Here is the Marina in SF, for instance.

It shows 308 units available.

However, if you change the word “newest” to “Price” with an up arrow (cheapest to most expensive), you’ll instantly see repeats.


There is a live-aboard boat that was posted on 4/13, 4/14, and 4/15…each time it shows up as one of the 308 overall listings.

There are a couple of studios with cheesy brokers each listed 3 times.

In other words, there aren’t 308 available…somewhat fewer (10%? 20%?).

If these people are too lazy to edit and existing posting (and simply add another), are they also too lazy to remove ones that are leased?”

“For the Marina listings, it looks like about 60 of the 308 are duplicates (20%).

I just did a similar look at Cleveland…many more are duplicates there…

The worse the market, the more people need to post more than once before the listing is rented.

It would be an interesting study…what percentage of the listings on Craigslist in any given market are duplicates…as a measure of market strength (or weakness)”

OK, so if I have 25 or 50 new apartments to rent, am I going to put up 50 ads, or just a couple?

And if you search any major market, it looks like this:


1 - 120 / 2500

Always exactly 2500.


1 - 120 / 2500

Comment by Rental Watch
2017-04-19 09:30:52

The default view for Craigslist is that the newest postings get top billing (i.e. show up on the first page).

So, if I have one unit available, I post today, tomorrow, and the next day, so my listing is always on the first page.

Those three postings all count toward the total.

I agree that if I had 50 identical one bedroom apartments, all with the same lease rate, I would probably only list one time (but do so every day).

However, if there are different lease rates, I suspect I would do one posting for each unit.

For your second Boston posting, I changed the filter to declining prices, and this listing was at the top:


Posted 11 times–there aren’t 11 of these ridiculously priced units.

I changed the filter to inclining prices, and this listing:


Shows up 4 times on the first page. There may be plenty of flea-ridden beds available in Boston, but this particular flea-ridden bed surely isn’t available more than once.

Comment by Ben Jones
2017-04-19 09:43:56

You can renew the post and it will go to the top, you don’t have to create a new post. Craigslist is just a tool, and is created by people trying to sell something. You have to take it for what it’s worth.

Comment by Rental Watch
2017-04-19 11:29:53

Of course I understand that CL is just a tool, but understanding that many people don’t renew their listing, and create a new one is important if you are looking at the overall number on the page as any indicator of total apartment availability.

I understand that some of the more sophisticated property management software packages link with CL in order to update posts daily in order to make them “fresh”. I suspect they simply renew the listing though…if they didn’t, the number of duplicates would be far more.

(Comments wont nest below this level)
Comment by Ben Jones
2017-04-19 12:12:39

They expire after 30 days or so. To renew you just click on a button. I get the most out of them by going through the pages and seeing the incentives. You can see real quick there isn’t any shortage of housing anywhere in the country. Like I’ve said, I can fill a vacancy in one day, every day. But it will likely be people I end up wishing I had never known.

Comment by rms
2017-04-19 12:30:49

Mom used to own some run-down apartments; none of the tenants had a FICO score worth paying $30 to see. Doing business with them meant knocking on doors every month to collect rent.

Comment by Rental Watch
2017-04-19 13:06:39

What’s interesting to me isn’t just the incentives, but seeing if there are changes in the duplicate listings.

Sometimes you can see a listing posted 3 or 4 days in a row at one price, then the 4rd or 5th day a lower price.

It’s not necessarily a great indicator of overall market movement (because people can list for too much to start), but it’s interesting if people are cutting asking rents 1% to try to entice someone to show up (an orderly process), or cutting asking rents by 10% (desperation).

Comment by Rental Watch
2017-04-19 09:39:20

BTW, seems like they top out at 2500 listings that they show…clearly there are more than that available.

However, if you put in more detail, I’m sure the number falls (within 1 mile of a certain zip code, no more than a certain dollar amount, etc.).

If you wanted, you could parse up any market enough to figure out whether the real number is 10,000 or 50,000.

For instance, in Boston, if I limit the search to properties that cost less than $1,000 per month, I get 195.

If I then do $1,001 to $1,500, I get 648.
$1,501 to $1,750: 1,259
$1,751 to $2,000: 1,696
$2,001 to $2,250: 1,305
$2,251 to $2,500: 1,308
$2,501 to $3,000: 2,119
$3,001 to $4,000: 2,260
$4,001 and up: 1,164

The real number looks to be about 12,000. With plenty of repeat postings in that number.

Comment by Charlestown
2017-04-19 10:18:14

We’re swimming in new condos in Boston.

Comment by butters
2017-04-19 13:32:41

If you build them, they will come.

China is relaxing its capital control. There are your suckers!

(Comments wont nest below this level)
Comment by Senior Housing Analyst
2017-04-18 17:21:18

San Rafael, CA Housing Prices Crater 13% YoY


Comment by sod
2017-04-18 17:44:18

I pay close to $1600 a month for a two bedroom on Daniel Island SC (near Charleston). Daniel Island is completely planned, it’s like a movie set. It’s a nice place though with lots of walking trails and stuff.

There’s a ton of new apartments coming online here so I’m hoping rents will dip. The new Wharf 7 (live, work, play!) has 600 sqft studios starting at $1200 and a 2/2 like I have now between $1800-1900.

Something’s gotta give. Can’t even opt out of the valet trash.

Comment by Ben Jones
2017-04-18 18:09:55

March 1, 2017

“Looking to rent a place in the sun with good golf courses nearby? Your best bet might be the coastal South Carolina town of Myrtle Beach, a once hot tourist destination for golfers that has now become overbuilt, according to RentRange. The average vacancy rate, which demonstrates the percentage of all available units in a rental property that are vacant or unoccupied at a particular time, showed that the highest rates are in the Southeast, where vacancy rates range from 10.5 percent in Charleston to 20.4 percent in Myrtle Beach.”

“‘In these areas, builders and investors may need to compete for a limited number of renters,’ said RentRange, pointing to the oversupply of new properties that’s driving up vacancies and pushing rental rates down. ‘This is happening in Myrtle Beach, where more than 3,100 new homes were built in 2015, a 94 percent increase compared to two years earlier.’”


November 13, 2016

“Nearly three-dozen apartment developments with 6,251 units are either planned or under construction in the city of Charleston. More than half of those units are already being built, while others are grinding their way through the city’s approvals process. Some developers may abandon their projects before breaking ground, but in general, the apartment wave appears to be an all-time high for the city. ‘It makes us ask the question: are we growing in a way that is sustainable for the community, or are we growing in a way that works for developers to come in and title properties, then flip those properties and move on with a profit?’ Kristopher King, executive director of the Preservation Society of Charleston, said.”

“There is an opt-in zone already on the books that requires apartment developers in the Upper Peninsula to dedicate 15 percent of their total units to workforce housing. Of the roughly 2,000 units in that zone, about 300 will be for workforce housing. King added that many of those units are only suitable for single-person households. ‘You look at these workforce housing units, they average about 600 square feet and they’re basically studios,’ he said. ‘Are we building housing for everybody, or are we just creating a lot of inventory for college students and very young professionals?’”


November 7, 2016

“Baseball season came to a thrilling end in Cleveland early Thursday morning, but the game lives on as an analogy for the smoking-hot commercial real estate business. Shellacked in the last recession, the industry has been in rally mode for the better part of seven years. That kind of a hitting streak draws the inevitable sports comparison among real estate economists like Bob Bach. Bach, director of research for the Americas at the commercial real estate firm Newmark Grubb Frank Knight, was in Charleston last week to help kick off a panel discussion about the state of the industry, both nationally and locally. The title of his opening talk summed up the big question that most everyone in the room and in the business is asking right now: ‘Past the Freshness Date?’”

“It’s arguably best of times. Vacancy rates at income-producing properties such as office buildings and apartment complexes are sinking in most markets, nudging up rents and spurring new construction. ‘I call it the golden age of commercial real estate,’ Bach said.”

“Charleston is a golden child of this gilded era. Apartments continue to go up at a rapid clip across the region, and hotel developers can’t seem to add rooms quickly enough. As in the pre-recession era, all of the frothiness is raising concerns as prices continue to climb and spread development of all kinds farther inland. At the national level, and at the Federal Reserve, much of the hand-wringing stems from whether the industry is in a bubble pumped up by years of low interest rates and the pursuit of higher returns. ‘We’re still seeing a lot of capital coming into commercial real estate - and lot of capital from overseas,’ Bach said. ‘That’s why the Fed is worried about a bubble.’”

“‘I don’t see anything on the horizon that will tip us into a recession,’ Bach said. But he also cautioned that downturns are difficult to predict. And they’re more likely to start after a presidential election, Bach added. The takeaway for anyone with skin in the real estate game - from brokers to bankers to builders - is to be prepared for the inevitable slump. For when the bats go quiet. For when vacancies and values go the other way. A game of baseball, in theory, can go on forever. An already long-in-the-tooth real estate rally most certainly won’t. ‘There will be another recession,’ Bach said. ‘We have to be practical about that.’”


Comment by sod
2017-04-18 19:02:52

Thanks for those. Hotels, yes, going up all over too. Traffic is really starting to suck here. The new-ish Ravenel bridge that connects Mount Pleasant to Charleston is really impressive and had good traffic capacity but the older bridges that dot the 526 outer belt aren’t magically adding lanes.

I understand it’s not DC or LA bad but I’ve lived here long enough to have seen the build up which is worse somehow then moving somewhere that’s already overbuilt and congested when you get there.

The growth doesn’t seem “natural”, it’s exponential. It seems like it’s like that across the nation, which to me is inexplicable. Where are all the people coming from? Where are they working? Am I the crazy one??

Comment by Race Bannon
2017-04-18 19:18:23

It’s the old narrative “all the rich people are moving in”. It’s a myth.

Remember…. population growth is at record lows and housing inventory at record highs.

(Comments wont nest below this level)
Comment by oxide
2017-04-19 07:42:32

“Where are they working?’

What are they driving? That could provide a clue. My area is wall-to-wall beaters and WHITE VANS with magnetic business labels stuck all over them. Not hard to figure out what they are doing.

(Comments wont nest below this level)
Comment by Race Bannon
2017-04-19 13:24:37

Hey Donk.

Comment by snake charmer
2017-04-19 07:13:21

All the emphasis on live-work-play, for people who in years past would have aged out of the “play” part of that equation, is very reminiscent of “Brave New World.” Time for casual sex and Obstacle Golf! And keep plenty of Soma on hand.

Now that I think about it, there’s a lot more in that book that is relevant today.

Comment by palmetto
2017-04-19 11:33:07

“Time for casual sex and Obstacle Golf!”

Sounds like The Villages.

Comment by Karen
2017-04-18 18:03:35

“The Ocolly in Oklahoma. “Like spring flowers, new apartment complexes are popping up in Stillwater to meet the demand for amenity-flush living from students willing to pay top dollar while challenging local landlords to stay competitive and modernize. Longtime property owners are absorbed in fierce competition, a touchy subject after years of foregoing maintenance and upgrades because of little competition in the neighborhoods near campus. They must now spend thousands on new bathrooms and kitchens or see their units go empty, they said.”

A lot of college landlords ‘forgo maintenance and upgrades’ because of the way college kids trash places. Aside from the fabricated story of rich college kids with money to pay for fancy places, I can’t imagine what a lot of these apartment complexes will look like after a few years of sex-drugs-rock’n'roll.

Comment by Ben Jones
2017-04-18 18:12:12

February 4, 2017

“If you asked a real estate executive to rank property types by bubble risk, odds are they’d start with condos. Then, probably retail with its precariously high vacancy rates. Third might be the office market, where supply has surged. Way down in the bubble-risk ranking would likely be multifamily: the asset class in which, conventional wisdom goes, rents tend to rise and never crash (not even during the depths of the 2009 recession).”

“With that in mind, you’ll forgive this reporter for almost falling out of his chair when Mark Zandi, chief economist at Moody’s Analytics, picked multifamily lending as one of the two greatest near-term risks to U.S. financial institutions (along with automobile loans). And Zandi isn’t alone.”

“As early as December 2015, federal banking regulators issued a joint statement warning that banks’ increased commercial real estate and multifamily lending poses a threat to financial stability. In April 2016, Madison Realty Capital’s Michael Stoler wrote an op-ed warning that ‘trouble might be coming’ for loans backed by rental apartment buildings.”

“But lenders haven’t slowed down. Between the first and second quarter of 2016, the volume of outstanding multifamily debt in the U.S. grew by $27.6 billion to $1.09 trillion, according to the Mortgage Bankers Association. Since 2007, the dollar volume of multifamily debt held by banks, thrifts and bond investors has more than doubled. And in the trade group’s year-end survey, 92 percent of lenders said they had a ’strong or very strong appetite’ to issue new commercial and multifamily loans.”

“Banking regulations accelerate this trend. Banks doing multifamily loans need to hold less capital as an insurance against losses, making such mortgages more attractive compared to office or construction loans. Are we at risk of a multifamily mortgage bubble?”

“Bubbles can form in any asset class, but they are particularly dangerous in those perceived as unsinkable. It is precisely the multifamily market’s perceived stability and crash-resistance that should give investors pause. But just because an asset class has strong underlying demand and a track record of stability doesn’t mean it’s immune to a crisis. ‘Like all markets that get overdone, they start with good fundamentals — good logical reasons why you would invest there,’ Zandi said.”

“As of May 2016, more than 500,000 apartment units were under construction in the U.S. — almost twice the historical average and the highest total since 1985, according to CoStar. In some southeastern cities like Nashville, Charleston and Fort Myers, new construction as a share of existing inventory is precariously high. In New York, new supply is still widely regarded as lagging behind demand and nobody expects the market to hit a prolonged downturn amid strong fundamentals. But the risk is that investors overestimate the potential for future rent increases and overpay for properties.”

“Earlier this week, Madison Realty Capital filed to foreclose on an East Village apartment building after its owner, Raphael Toledano, defaulted on a $34 million loan — offering a taste of how multifamily investing can go wrong.”

“‘Many people all over the world seem to have thought that since we are running out of land in a rapidly growing world economy, the prices of houses and apartments should increase at huge rates,’ Yale economist and Nobel laureate Robert Shiller wrote in 2009, analyzing the subprime mortgage crisis. ‘That misunderstanding encouraged people to buy homes for their investment value – and thus was a major cause of the real estate bubbles around the world whose collapse fueled the current economic crisis. This misunderstanding may also contribute to an increase in home prices again, after the crisis ends.’”


Comment by Professor Bear
2017-04-19 04:55:06

“Chicago-based Shapack Partners and its partners are cashing out quickly, capitalising on a downtown apartment market that has been on a roll but is losing momentum due to a historic construction boom that’s increasing competition for tenants.”

Take the Money and Run

Comment by Carl Morris
2017-04-19 09:46:08

Shapack Partners

Geeze I misread that as “Crapshack Partners” the first time.

Comment by acutehemroid
2017-04-19 07:07:06

While Culshaw said there probably are a ‘few too many’ apartments being built downtown right now, he doesn’t believe the market is wildly out of scale, and he thinks there are many millennials who will continue to rent vs. buy.” …

My sons are graduating college with CompSci degrees. Neither of them are even hinting at home ownership. I asked what they thought about owning their own homes or condos several times. Blank looks and “I don’t want to” replies. They’re young, but this appears to be more entrenched at their age - or at least my eldest son - than it was at my age. Time will tell. I look at my GenX BIL, he has rented all of his life. He has a huge bank balance and no I don’t know what it is. Never considered ownership AND has been laid off of a good accounting job (CPA). Universal automatic home ownership is a thing of the past in my neck of the woods. All you are getting now is ‘investors’, retirees, and flippers.

Now, as far a the Vieux Carre’ goes, it doesn’t surprise me in the least that rents are dropping. You need to have a high employment in downtown New Orleans to support those levels of rent. Also, people who actually want to live in the Vieux Carre’ are required if rents are to be at those nosebleed levels.

Supply - demand will cause a reversion sooner or later. That is the lesson from housing.

Comment by PitchforkPurveyor
2017-04-19 09:02:00

“Universal automatic home ownership is a thing of the past in my neck of the woods. All you are getting now is ‘investors’, retirees, and flippers.”

That’s what happens when you turn shelter into an “asset class.”

Comment by Blue Skye
2017-04-19 11:16:47

The entire planet has been a boom town for a long time now. It hasn’t been because of any great new technology, mining strike, or found treasure. It’s all built on cheap easy credit. Credit doesn’t create wealth, it transfers wealth, and everybody thinks they will be on the winning end just by showing up.

Comment by Ben Jones
2017-04-19 08:45:03

‘Markets Start to Ponder the $13 Trillion Gorilla in the Room’

‘Underscoring just how diverse the programs have become, the ECB’s securities purchases have included French yogurt-maker bonds, while the BOJ’s holdings through exchange traded funds include shares of Japan’s top soy-sauce brewer.’

Any of you supply and demanders want to run the market forces thing by me again?

‘The Fed also accumulated almost one-quarter of the mortgage bonds sold by government-linked agencies over the last year.’

Comment by taxpayer
2017-04-19 11:58:45

wow, those 2016 morts will be stinky,but the 05,06,07,08,will be even more rank
when Yellen offers to sell some why doesn’t anyone in congress call her bluff?

Comment by oxide
2017-04-19 12:56:25

I dunno Ben, to be honest, I rather like the idea of the ECB investing in yogurt and soy sauce. At least those things are tangible products. Not some nebulous concept like “being connected” and “”sharing” and “click views” and “content.”

Comment by palmetto
2017-04-19 14:49:55

Good catch, oxide. Perhaps a foreshadow of a return to investing in viable goods and services. Sort of a capitulation.

Comment by Blue Skye
2017-04-19 16:01:37

I have a hard time thinking of it as capitulation (of the government) or investment. The government spends “our money” and when they use it to hoard our necessities they have stolen both our money and our stuff.

Just my take. Creeping socialism, Japan, Europe, Venezuela or anywhere else.

(Comments wont nest below this level)
Comment by Carl Morris
2017-04-19 16:12:41

The government spends “our money” and when they use it to hoard our necessities they have stolen both our money and our stuff.

Yes, that’s my problem with the Fed being allowed to buy stuff to prop up prices to “save” the system. Eventually it leads to them owning everything, because there is no limit to how much they can print and no limit to things that need “saving” from price discovery.

Comment by Race Bannon
2017-04-19 16:26:22

Eventually it leads to them owning everything collapsing demand

Comment by Apartment 401
2017-04-19 08:54:06

Buy overpriced housing in Denver and you’re infecting yourself with financial Ebola:


Comment by rj not in chicago anymore
2017-04-19 12:09:51

@ 401:
Man oh man after being here for a mere 7 mos in CO - the construction - Been out near Green Valley Ranch lately - or how ’bout Aurora - out east of Smokey Hill?
Houses and hipster apts. going up all over the place. And the traffic - more cars no more road - sheesh!! What has become of this place?

Still better than the utopian paradise called Chicago ILLANNOY any day of the week.

Though I don’t check in as often as I used to - alot busier these days with the job -I still try to read as often as I can.


Comment by palmetto
2017-04-19 12:56:59

Hi, rj, I was just thinking about you the other day and wondering how you were doing. Glad to hear you’re settling in and have a gig. I hope it is working out for you.

We’re all seeing certain areas of the country inflate. Florida gets nuttier every day.

Comment by Apartment 401
Comment by ZH
Comment by Ben Jones
2017-04-19 12:24:29

There’s a crow circling Albuquerque.

Comment by Albuquerquedan
2017-04-19 14:33:59

Really Ben, a one day move? Oil in storage actually fell and production increases slowed down (EIA storage report). We have about twice the rigs operating as a year ago and they have double the reach of their laterals to almost two miles. Despite that, production per well has stagnated and they are burning through the sweet spots at four times the rate of last year. (EIA drilling report and news items).

Comment by Ben Jones
2017-04-19 14:38:13

What was it you said the other day? $65 a barrel isn’t that far away. Like the wicked witch, “You’re meeeelting!”

(Comments wont nest below this level)
Comment by Albuquerquedan
2017-04-19 14:48:45

I think an oil trader would say that the price of oil fell today because it did not go up. Translation, the overall EIA report should have been a positive for oil prices when the market did not respond that way, the traders took profit. I don’t remember saying that $65 was near but since I do believe it, I will say it now. World wide oil demand is increasing by about 120,000 barrels per month, right now that is about the increased production from fracking. However, the Permian will soon decelerate the increasing production due to the “red queen” effect where you have to run faster and faster to stay in the same place. Remember you lose more than 1/3 production in the first six months more and more of its wells are reaching that point.

Comment by Race Bannon
2017-04-19 15:00:45

With plunging demand, massive excess production capacity and a globe swimming in crude oil, is it any wonder why oil prices are nosediving?

Comment by Albuquerquedan
2017-04-19 15:21:07

Or its the end of contract month and prices are always volatile the last day and prices often move just opposite to how they moved the rest of the month due to profit taking.

Comment by Race Bannon
2017-04-19 15:42:06

Oil is much closer to $12/bbl considering oil is profitable at $7/bbl.

Arlington County, VA Housing Demand Plummets 15% YoY


Comment by Blue Skye
2017-04-19 16:10:40

I find the “down is up” mindset quite ironic, if not outright amusing. Yesterday Dan insisted that China lies about its economic growth rate and “reasoned” that since the stated numbers are falling, China must be doing quite well. Must be their high IQ.

Dan will always evade our crow expectations, because he will believe it is Peking Duck.

Comment by Carl Morris
2017-04-19 16:13:55

“Peking Crow” :-). I’ll have to keep that in my back pocket for future use in the outside world.

Comment by Race Bannon
Comment by taxpayer
2017-04-19 11:55:35

if the repatriation of foreign corp accounts doesn’t happen you’ll have a bigger, fatter recession and your kids will be in the basement forever. The rest is superfluous.

Comment by palmetto
2017-04-19 12:46:09

I listened to Chris Martenson’s podcast yesterday where he interviewed Brad Birkenfeld, author of Lucifer’s Banker, the guy who blew the whistle on UBS, was in federal prison for 2 1/2 years and received a $104 million dollar award upon his release.


Had a lot to do with US money on the down low abroad.

Comment by Senior Housing Analyst
2017-04-19 12:18:47

Downtown Boston Rental Rates Crater 7% YoY


Comment by Senior Housing Analyst
Comment by California Renter
Comment by oxide
2017-04-19 13:06:28

So what does this juicer do that you can’t already buy at a local Jamba Juice for the same price?

And this Internet of Things is getting really annoying. I don’t need a smartphone app for a juicer.

Comment by Burned Alive in Tucson
2017-04-19 14:10:16

Let’s say you’re in the Starbucks parking lot playing hacky-sack and meet a boneable hipster chick. You take her back to your crapshack for a roll in the hay and although you’re having trouble closing the deal because you’re a smelly dope with a man-bun, you suddenly remember to show her your 700$ internet-connected juicer….and before you know it you’re the hairier half of the beast with two backs.

Comment by Albuquerquedan
2017-04-19 15:58:19

Does the juicer film the encounter and broadcast it on the Internet?

(Comments wont nest below this level)
Comment by oxide
2017-04-19 17:18:55

I had to look up “man-bun.” Yikes, so ridiculous… and so common.

(Comments wont nest below this level)
Comment by California Renter
2017-04-19 17:08:57

Nothing, they developed a box that just squeezes juice out of a bag for $120 million dollars. What’s next an IOT can opener?

Comment by palmetto
2017-04-19 13:12:00

Good. God. A-mighty.

Comment by Albuquerquedan
2017-04-19 16:09:06

OK I get that the owners of strip malls are desperate for tenants. However, it you lease your property to “Juan Wang” what do you really expect?


Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post