June 12, 2017

You Keep Seeing The Market Going Down

A report from the Arizona Republic. “Condominium developers are building highrises near downtowns, luxury loft-style homes next to shopping centers and smaller infill-connected homes in popular neighborhoods of Phoenix, Scottsdale and Tempe at a record pace. But not every infill housing project is drawing buyers at the rate developers had hoped. Experts attribute the slack sales in those cases to location and pricing. ‘Attached projects dominate the landscape in many parts of the Valley, but the reality is that about one in five infill projects is selling really well and others are struggling,’ said real estate analyst Jim Belfiore of Phoenix-based Belfiore Real Estate Consulting.”

The Journal Sentinel in Wisconsin. “The Beam House has features found in many other Walker’s Point apartments that have been converted from historic industrial buildings. Beam House developer Peter Moedee isn’t concerned about the local apartment market possibly being overbuilt, which has led some developers to cancel, delay or downsize their projects. He’s building the units at River Place Lofts to a high enough quality level so they could eventually be converted to condos. ‘I think there’s still room for new projects,’ Moede said.”

The Post and Courier in South Carolina. “Apartments in the Lowcountry are less expensive than the national midpoint, and prices are falling just as rates across the country are on the rise. In its June study, Apartment List notes that Charleston’s median rent stands about 6 percent below the national average. ‘As rents have fallen in Charleston, many other large cities nationwide have seen prices increase, in some cases substantially. Charleston is still more affordable than most similar cities across the country,’ the company says.”

From Michigan Biz. “Stakeholders in West Michigan’s commercial real estate and construction industries remain generally upbeat as they look toward the second half of the year. However, they share concerns about one of the region’s key sectors: urban multifamily apartments. With minimal inventory and high occupancy, downtown Grand Rapids and its surrounding neighborhoods still have more than a thousand units under construction or in various stages of development.”

“Apartment developers like John Wheeler contend that while their projects continue to garner significant interest from renters, they may encounter a different situation six months or a year down the road. ‘I’d say a year from now, I wouldn’t want to be bringing a whole lot of apartments on,’ he said. ‘There’s going to be a whole bunch of them. A year out from now, I think there’s going to be cause for concern. There’s a lot of units coming on.’”

“Other active apartment developers in Grand Rapids share Wheeler’s skepticism about how much longer the current real estate cycle can last. Derek Coppess CEO of Grand Rapids-based 616 Development LLC, also noted that he believes the growth period is in its late innings. ‘I think we’re at the top end of this market cycle now,’ said Coppess, whose firm just completed a joint venture with a Mid-Michigan property management group. ‘I don’t say that out of fear. You just have to know where you’re at. I think we’re ready to look at some different development opportunities and just be prepared for a downturn.’”

From Miami’s Community Newspapers in Florida. “As of June 2nd, the Pinecrest market remains soft, but slightly better than in March. Homes listed over $1M are at 18 months of inventory, indicating a strong Buyers’ market. A healthy market is 3-6 months of inventory. If you’re a Seller, it’s tough out there.”

From Real Estate Weekly on New York. “Citi Habitats president Gary Malin said he sees certain segments of the sales market in New York City doing well, with people looking at both sides of transactions to see what makes sense for them. ‘I certainly know there’s definitely activity, but when you get above $5 million, people are getting more deliberate in their approach,’ said Malin. ‘Things are not moving. The average time on the market is high. I think there’s plenty of demand, and plenty of people who would like to transact, but plenty of construction is coming online and people feel that they have options.’”

“Level Group salesperson Jeremy Swillinger feels that the residential market is not where it used to be, and buyers that were once motivated to purchase a property in order to get into the New York market have ’simply disappeared.’ ‘While the demand is still here in New York City, we’re less with buyers purchasing on a ‘must’ basis,’ he said. ‘They’re not just buying something to buy something in New York, they are wise about it.’”

“‘There are still some investors, some foreign buyers, but instead of looking at five properties and making a decision, they’re seeing 25 properties and making a decision, and when they do, they’re not pulling the trigger and getting the asking price, they’re taking their time and making sure the comps make sense, and making offers at a lower price,’ he said. ‘Anything above $3 million struggles. They don’t struggle like the $8 million and up market, that market has crashed.’”

“With interest rates continuing to rise, Swillinger sees those who purchase with the help of a mortgage entering the market more and more, while those who are cash-only buyers ’sitting and waiting.’ ‘There’s nothing pushing them to go and buy something,’ he said. ‘What’s the motivation if you keep seeing the market going down, especially in the higher brackets?’”

“A couple years ago, Swillinger could show a client five properties and they’d make a decision and the deal would get done ‘incredibly’ easily. Now, he has to ‘go to bat’ for a client and negotiate ‘every hat trick’ to get the deal done, including throwing in incentives, being flexible and making sure the terms are best for both buyer and seller. ‘My clients are making offers, but there’s a disparity, from where my clients as buyers are and where sellers are, the gap is slowly narrowing,’ he said. ‘I think sellers now realize the market’s not where is used to be and are decreasing prices.’”

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Comment by Ben Jones
2017-06-12 08:12:57

‘Anything above $3 million struggles. They don’t struggle like the $8 million and up market, that market has crashed.’

‘Homes listed over $1M are at 18 months of inventory, indicating a strong Buyers’ market. A healthy market is 3-6 months of inventory. If you’re a Seller, it’s tough out there.’

Strangely absent from the MSM.

Comment by Avg Joe
2017-06-12 08:47:55

Pretty sure that the average MSM reader doesn’t really care what’s happening in that price range.

Comment by Ben Jones
2017-06-12 08:51:27

When they lose their job they will.

Comment by Avg Joe
2017-06-12 10:39:02

Maybe, but my point is that the MSM prints what people want to read. Almost no one can relate to rich people having trouble selling their 8M houses.

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Comment by palmetto
2017-06-12 11:17:50

OTOH, there are many who enjoy a little bit of schadenfreude at the expense of the parasites. I may not be able to relate to someone having trouble selling their 8 million dollar home, but I might get a kick out of it depending upon whose house it is.

And also, it sort of confirms that something else is going on besides “the rich” having got that way for being smart. If you can’t unload your home, then maybe you ain’t all that bright to begin with. Maybe all that moolah came your way for a different reason.

Comment by Fan
2017-06-12 11:18:26

You’ll get relational when that $8 million​ drops to 4.5 million pushing everything under lower. With or without the green handshake.

Comment by Ben Jones
2017-06-12 11:28:01

‘Almost no one can relate to rich people having trouble selling their 8M houses’

Who mined the raw materials and drove the trains and trucks that deliver it? Who operates the cranes, welds the steel, lays the bricks? Who cleans them, parks the cars, does payroll for all of the above? Whose money financed it? I would think that any crash is news when that bastion of cerebral discussion NPR can break in and tell me every 10 minutes what pork bellies are doing. Especially in one of the biggest cities in the world. And this isn’t just super expensive: what about those Arizona condos?

The media has been downplaying these problems for a while. Just earlier this year the Wall Street Journal discovers: gosh, there’s a glut in luxury apartments. Then, “A farm bust is upon us!” Then nothing. I posted a quote from a farm country congressman recently saying agriculture is in the biggest depression in 50 years. The farm thing is three years in, how often do you read anything about it in the big media? NYC RE has been in the crapper around a year and a half.

Comment by Neuromance
2017-06-12 16:02:42

Ben Jones: The farm thing is three years in, how often do you read anything about it in the big media?

The advertisers wouldn’t like that.

How many times have we heard “your house is an ATM?” It’s like a mantra. Takes a lot of money to turn that line into a mantra. Advertising money.

That’s who really pays journalists: advertisers.

Comment by Avg Joe
2017-06-12 16:34:04

The MSM’s job is not to report facts. It’s to make as much advertising money as possible.

Of course everyone cares on the way up. Why do you think people watch the Real Housewives?

Comment by Tony, Tim, Dave, Mike and Dan..... And John.
2017-06-12 16:55:49

I can pay a publication to write favorable things about something?

Comment by Carl Morris
2017-06-12 17:12:36

It’s much simpler than that. Just buy some advertising with them.

Comment by Raymond K Hessel
2017-06-12 17:17:16

Maybe, but my point is that the MSM prints what people want to read.

Wrong, Pollyanna. The MSM prints The Narrative it’s oligarch owners want the sheeple to read.

Comment by Karen
2017-06-12 12:36:25

Pretty sure that the average MSM reader doesn’t really care what’s happening in that price range.

Oh, but they cared plenty on the way up. We were treated to an endless stream of uber-expensive house porn by the msm while prices were going up up up.

Comment by Living In Your Head
2017-06-12 12:43:24

As a wise man once said, nothing accelerates the economy like falling prices to dramatically lower and more affordable levels. Nothing.

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Comment by acutehemroid
2017-06-12 19:35:08

“Homes listed over $1M are at 18 months of inventory, indicating a strong Buyers’ market.”

Doesn’t this mean that these are too expensive for Buyers?

Just asking.


Comment by rms
2017-06-14 01:41:33

“Strangely absent from the MSM.”

Indeed. Add the Canadian experience. “Real reporters.”

Comment by Ben Jones
2017-06-12 08:16:03

‘Though May was the third consecutive month national multifamily rents increased, the rate at which rents grew continued to cool. According to Yardi Matrix’s monthly survey of 121 markets…this slowdown is expected as the market is unable to sustain the record levels of growth experienced in the past few years. A large wave of new supply expected to come online later this year is also impacting rents.’

‘Yardi Matrix predicts multifamily supply will peak this year, with 360,000 new apartment deliveries expected to come online in Q3 and Q4. Though supply will remain robust in 2018 and 2019, Yardi predicts the pace will slow. Already the firm notes a slowdown in capital being deployed for multifamily construction, resulting in a delay in projected inventory growth for 2018.’

“One of the things we see is the delay of capital. Projects intended to be started are being delayed … primarily in larger gateway cities like Houston, Chicago and Los Angeles,” Yardi Director of Operations Doug Ressler said, adding that investors are taking a wait-and-see approach to determine how economic conditions and rising interest rates will impact cap rates and the overall market.’

‘A Tsunami Of New Supply’

‘Much of this year’s apartment delivery will be in the form of high-end Class-A apartments and will be concentrated in a handful of rapidly expanding markets, including Charlotte, Nashville, Austin, Houston, Miami and Denver.’

‘There remains a large disparity between the luxury apartments coming online and the working-class Americans who need units. This divide is driving renters from expensive core markets with inflated rents like San Francisco and New York to more financially manageable areas.’

Comment by whirlyite
2017-06-12 13:54:49

I daresay if you take a 75 mile circumference around the nation’s soon to be third largest city, you will find nothing but luxury Class A being built.

Comment by Ben Jones
2017-06-12 08:21:19

‘These Cities Have Too Many Stores, and They’re Still Building’

‘Cleveland, Memphis, and Chicago lead the way among metro areas where retail development has outpaced growth in demand.’

‘What were they thinking in Cleveland? Real estate developers built more than 21 million square feet of new store space in the Northeast Ohio metropolitan area from 2000 through the first three months of this year, increasing its retail footprint by 21 percent.’

‘But while the new stores were moving in, the shoppers were moving out. The metro area’s population declined by more than 90,000 over a similar period, and it became a stomping ground for students of the dying American mall.’

‘Across the U.S., retail real estate development that outpaced demand marked the early years of the new millennium. Now retailers are going bankrupt at a record rate, and hedge funds are betting against the commercial mortgages used to finance mall properties. Credit Suisse this month predicted that as many as 275 malls, a quarter of the U.S. total, will close in the next five years. ‘

‘The woes of brick-and-mortar retail come partly from the rise of e-commerce, which has grown to about 8 percent of retail sales, from less than 1 percent in 2000. But they are also self-inflicted, according to Suzanne Mulvee, director of research at CoStar Group Inc. The industry built new stores faster than the consumer could spend at them.’

‘In Cleveland and Chicago, developers chased growth that was being undercut by shrinking or static populations. In Phoenix and Atlanta, the builders erected new retail space in anticipation of population growth that was delayed when the housing bubble burst. Even in Houston and Dallas, whose local economies fared relatively well through the Great Recession, developers outbuilt the growth in buying power.’

‘But shuttered stores and dying malls haven’t brought construction of new retail space to a halt. A collection of 55 U.S. metros will add 831 million square feet of retail space in the next five years, CoStar projects.’

‘Why do developers keep building, even as stores close? In 2000, the Cuyahoga County Planning Commission published a report noting that the Northeast Ohio market was already saturated, and that new development about to come online threatened to push vacancies up and rents down. After the report was published, the commission got pushback from real estate developers, Kevin Leeson, one of the authors, recalled: “We heard a lot of ‘We don’t have too much retail. We have too much obsolete retail.’”

‘More than 12 percent of the metro’s retail real estate sat vacant in the second quarter of 2017, according to data compiled by CBRE Group, the highest rate in more than 10 years. The area will add another 4 million square feet of retail space by 2021, according to CoStar.’

Comment by Ben Jones
2017-06-12 08:24:35

‘A collection of 55 U.S. metros will add 831 million square feet of retail space in the next five years’

But it’s impossible to build affordable housing.

Allow me to offer a simple explanation. Prices got so high it created overbuilding.

Comment by phony scandals
2017-06-12 08:40:02

Sarah Peters Palm Beach Post Staff Writer
2:05 p.m Thursday, June 8, 2017 Northern Palm Beach County

A going out of business sale continues at the Gander Mountain store off of Northlake Boulevard in Palm Beach Gardens on June 2, 2017. (Richard Graulich / The Palm Beach Post)


Comment by SW
2017-06-12 09:40:58

Do you mean developers got greedy because they saw high prices so they built more even though it wasn’t needed?

Comment by Ben Jones
2017-06-12 09:59:23

This is where I am grateful my economics professors made us plot supply and demand curves by hand. Price sends a message to market participants. It tells them what to supply, where and by how much. In NYC for instance, CRE doubled in price between 2014 and 2016. You can debate the reasons (IMO it was a mania), but it seems clear now that the price signal was false. It told developers, pay more for land, build lots more and make it expensive. Along the way they created justifications for the trends. One the residential side, new paradigm stuff like rich millennial renters who demanded bocci ball courts and glass bottomed swimming pools and accordingly were happy to spend 60% of their (overestimated) income on rents. Another one was downsizers who could afford a house payment but wanted to live near bars, etc. It’s really the whole urban living baloney reheated from the last decade. Commercial was similar: high end eating, retail etc. Rents have been way up there too, to try and justify the prices paid. Now you’ve got too much that’s too expensive.

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Comment by Mr. Banker
2017-06-12 10:43:34

“Price sends a message to market participants.”

And sometimes this message is interpreted by fools as “Buy now or be priced out forever”.

Comment by SW
2017-06-12 12:18:00

Thanks for clarifying Ben.

Comment by Mr. Banker
2017-06-12 09:59:49

The high prices said that they were needed but the high prices lied.

Nuthin’ new here. Schmucks drive prices and the craziest schmucks in the enormous pool of crazy schmucks set the craziest prices.

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Comment by Karen
2017-06-12 12:48:02

Even in Houston and Dallas, whose local economies fared relatively well through the Great Recession, developers outbuilt the growth in buying power.’

And they’re still building like mad here! This is not past-tense, like, oh, developers made mistakes and overbuilt but then they learned their lesson and stopped the craziness.

There is a local paper here called Community Impact that I receive free in my mailbox. It details new construction and business openings and closings. Perusing it yesterday, I noted at least one business that opened last year has already closed. It was one of these stand-alone, privately run “ER’s”.

There’s practically one on every street corner, but they keep building them. Like Ben says, it’s the dry cleaner effect. It kills everyone’s profitability.

Comment by In Colorado
2017-06-12 13:46:46

And they’re still building like mad here! This is not past-tense

When this happened last time, I recall that the common wisdom on the HBB was that builders keep building (until they fold and go out of business) because building is what builders do.

Comment by Karen
2017-06-12 18:38:57

This is commercial real estate. Nothing to do with “builders”.

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Comment by In Colorado
2017-06-12 20:16:06

So all that new construction just pops out of the ground like mushrooms?

Comment by Tony, Tim, Dave, Mike and Dan..... And John.
2017-06-12 20:42:30

Crime and fraud.

Comment by Jingle Male
2017-06-13 01:04:04

I think Colorado is referring to developers as builders. They are easily interchangeable terms.

Comment by Karen
2017-06-13 09:24:39

Buildings are built by contractors. As my friend on this board has repeatedly schooled people, “builders” such as Toll Brothers don’t build anything. They are marketing agencies who subcontract out all the actual work.

And of course contractors will keep building as long as someone is paying them to do so. Why wouldn’t they?

But none of this has anything to do with what I posted. Contractors do not initiate or cause the overbuilding of commercial RE, which the msm acts like happened in the past tense, but which is, in reality, massively ongoing as we speak.

Comment by Jessica
2017-06-12 08:49:23

The denial is strong in Northern VA. Home prices continue to climb to unaffordable levels. Cranes everywhere building more high price apt buidings, 500k+ townhomes etc

Nobody is talking about the RIFS that will hitting the area next year.

Comment by taxpayer
2017-06-12 11:48:59

it’s like Hillery got elected- even if trump is stifled by congress he gets to chop some heads

Comment by butters
2017-06-12 12:26:29

You can’t maga when you riff.

Comment by Jessica
2017-06-12 14:22:30

Yes - yes, you can!

Comment by aqius
2017-06-12 09:11:13

so Mr. Swillinger, the UHS, is now upset that the commission checks no longer walk themselves into his bank account & he has to put forth some actual effort for his 6%.

welcome to real world.

next thing you know he’s dropping his cable. dressing down to shop at WalMart. only filling up his Lexus to half-tank. has his cousin take new head shots instead of Olin Mills. generic booze.

oh, the humanity.

Comment by Ben Jones
2017-06-12 09:35:27

‘next thing you know he’s dropping his cable. dressing down…’

This is related to what I commented above. When this happens on a large scale it’s trouble. I’ve mentioned before, the 80’s bust in Texas was primarily in commercial real estate. Houses were probably too high but nothing like now. Yet shack foreclosures skyrocketed as people lost jobs.

It feeds on itself. How many cities are building like crazy? A 72 year high in housing construction in San Francisco, 62 year high in Boston. A video I posted last night in the comments noted there are enough condos being built in SF to house 145,000 people. This is a city of under 900,000. See the problem?

Construction means a lot of money flowing around. Materials, professional work, finance, and labor. Construction workers spend a bunch, but when there’s no work, that dries up. This is a multi-decade boom and it will likely be followed by a pull back similar in magnitude. The depth of that will be determined by the degree they go too far, and right now it doesn’t look promising. Interest rates should have been raised years ago. Lenders should have been told to cool it. None of that happened.

Comment by Mr. Banker
2017-06-12 10:10:23

“Lenders should have been told to cool it.”

You and your jokes.

Comment by redmondjp
2017-06-12 10:47:53

Yup. Construction workers account for a not-insignificant part of the local economy when times are a-boomin’, due in part to their non-spend-thrifty ways. It’s a self-reinforcing feedback loop.

Comment by In Colorado
2017-06-12 13:48:24

Yup, they sure do love those super pricey pickup trucks, especially the heavy duty ones with diesel engines.

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Comment by Carl Morris
2017-06-12 13:58:34

How often does J6P get to write off something he can hot rod and roll coal at protesters, that can pull his toys around, and that makes him look and feel cool? The rich have their yachts and planes…

Comment by scdave
2017-06-12 16:11:49

Construction means a lot of money flowing around. Materials, professional work, finance, and labor. Construction workers spend a bunch, but when there’s no work, that dries up ??

There is a lot of travelers (out of state workers) here. They come from near and far. I know 2 electricians that are here from Tenn. when the work drys up they are headed home.

Comment by rms
2017-06-14 01:58:11

“welcome to real world.”

A sample of the other world:

Comment by ZHi
2017-06-12 09:32:22


Tech-Wreck Continues - FANG Stocks Tumble Below Friday Flash-Crash Lows

Comment by SJ
2017-06-12 09:54:59

Not in San Diego rather prices keep going up and up and away. I am still waiting for folks to prove me wrong on this. I do wish it would crash and burn as I hate having to move far away to own a home. Oh hell maybe buy cheap place out of Kommiefornia then save and buy when it does crash in 12 years.

Comment by aqius
2017-06-12 11:22:59

well, I can personally testify that a real bummer to “Kommifornia” is all the necessary utilities increase like clockwork.

whatever actual meager prop 13 savings are wiped out as you huddle in your “low prop tax” cold, dark shack eating ramen, looking forward to Del Taco Tuesdays whilst reading your bills by flashlight.

but we got GREAT WEATHER so keep on coming!

Comment by MightyMike
2017-06-12 11:29:41

utilities increase like clockwork

That’s probably true everywhere.

Comment by Ben Jones
2017-06-12 11:54:29

I saw this little exchange on the previous comments:

‘Chinese FBs tend to react badly to crushing housing losses. Just wait till it happens on a grand scale and China’s Keynesian central planners lose the Mandate of Heaven.’

Comment by MightyMike

‘Keynesian central planners’

‘At this point Keynesian has become a word akin to socialism, devoid of meaning.’

That’s Mike for ya, always telling us what words we can use etc. There’s just one little problem Mike: this is the dominant economic theory in use today. So it’s there but what do we call it? Krugmanism? Mike’s Cure All and Snake Juice? You react to the word socialism like it’s a lactose intolerant fart even though you are a socialist.

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Comment by butters
2017-06-12 12:31:46

Keynesian-ism brought in the 08/09 collapse. We are trying to fix that with Monetarism.

Either way tears everywhere when all said and done.

Comment by MightyMike
2017-06-12 14:53:48

I’m not telling anyone not to use a word. If Ray and tens of millions of other Americans want to use a word in a way which doesn’t appear to have any meaning, they’re free to do so.

Comment by Ben Jones
2017-06-12 15:10:27

‘which doesn’t appear to have any meaning’

Get a dictionary Socialist Mike, I’m pretty sure it’s in there.

Yet again, you aren’t answering the question. (I’m trying to show you how ridiculous you are with stuff like this). Say I turn to the big chapter in economics about Keynesian theory. What is it supposed to say? The Theory That Lost It’s Name Because It’s Devoid Of Meaning? What are history books to call socialism? Nobody seems to have a problem with it but you. And rio. he had the same hang up.

Comment by MightyMike
2017-06-12 15:37:51

Of course, the word socialist has a meaning. It’s just that so many people who love the word so much don’t know the meaning. In fact, if you ask them, they can’t give you one, not even an incorrect meaning. So they’re using the word in a way that’s different from other words that they use.

Remember that socialism has its own special recent history in America. It wasn’t used much ten years ago. Then, out of the blue, right around this time of the year in 2008, the word experienced a big increase in popularity. Some people may forgotten this history already. It wasn’t exactly socialism that was the word, it was socialist. It was Barack Obama who was accused of being a socialist. If I was in the car at lunch time listening to Limbaugh or Hannity, I could hear it repeated over and over again. Obama’s a socialist! Obama’s a socialist! Once again, it was unclear what they thought it meant, but it didn’t matter. They thought that repeating that assertion, that word, over and over again, would ensure Obama’s defeat. I wondered why they had never referred to previous Democratic candidates as socialists, like Kerry, Gore or Clinton. Did it have to do with Obama’s color, or had they just not thought of it before? I never really figured that one out.

So now let’s look at that definition.

a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.


I never saw any evidence that Barack Obama was in favor of such a system of social organization.

Comment by Fan
2017-06-12 15:55:28

Socialist Mike is fitting. No green handshake necessary.

Comment by Blue Skye
2017-06-12 15:59:07

The subject is “Keynesian”.

Like trying to nail jello to a tree.

Comment by Neuromance
Comment by MightyMike
2017-06-12 16:45:01

The subject is “Keynesian”.

I was ridiculing Ray’s use of the term “Keynesian central planners”. Go and Google Keynes and central planning and you find this from a guy who has apparently read Keynes’ General Theory.


The interesting part is that Keynes praised Hayek’s Road to Serfdom when it came out.

Comment by Raymond K Hessel
2017-06-12 17:21:13

Stop being such an apologist for socialist Keynesian grifters, Mikey.

Comment by In Colorado
2017-06-12 13:53:20

That’s probably true everywhere.

Perhaps, but when my Santa Clara colleagues (who are dual income with around 300K per year income) tell me their electric bills swell to 500, 600 or more dollars in the summer when they run the A/C, I can visualize “ordinary” people in California counting every kilowatt hour.

I sure don’t miss SDG&E rates.

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Comment by Tony, Tim, Dave, Mike and Dan..... And John.
2017-06-12 14:53:13

My bay area friends are the poorest people I know. These are $200k a year plus fat bonus types.

Comment by In Colorado
2017-06-12 15:28:47

If they’re paying $600 a month to cool their poorly insulated, 60 year old shack, it’s hardly surprising they’re broke.

Comment by MightyMike
2017-06-12 16:35:42

There’s just one little problem Mike: this is the dominant economic theory in use today.

There’s not really any one dominant economic theory in use today.

Comment by SLynsns
2017-06-13 00:53:30

This knowledge is for Colorado.

Here in the bay area, us in the non-luxury end (apartments and crap shacks) don’t even have air conditioning for the most part. The highest utility bill I’ve ever had was about $130 in the winter for heating. It’s cheap out here. South Bay isn’t that hot or cold or expensive to utility-wise. In MA, winters were $300 easy.

Comment by MIke in Carlsbad
2017-06-13 21:04:52

if your city shuts down your only nuclear power plant you can expect prices to go up 30%. San Onofre Nuclear Generating station + desalination would have been a real savior during the drought.

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Comment by scdave
2017-06-12 16:20:04

But it’s especially true here MM. particularly the muni’s that are not rate controlled like PG&E. These muni’s use their utility rate increases like a money printing machine.

Comment by scdave
2017-06-12 16:25:27

Perhaps, but when my Santa Clara colleagues ??

That’s exactly whom I am talking about. They do clockwork rate increases on everything.

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Comment by new attitude
2017-06-12 09:59:46

Co’s who survive on gov subsidies:

I know, you thought it was only Tesla.

The federal contractor with the most grants and tax credits is General Electric with $836.5 million, mostly from the Energy and Defense Departments. General Atomics comes in second with $614.7 million from Energy. Other major defense contractors—United Technologies, Boeing, Lockheed Martin, Honeywell, and Raytheon—have each received tens of millions of dollars in Pentagon grants.

GE has also received $28.5 billion in loans and loan guarantees, most of which is bailout assistance from the Federal Reserve. (Since loans are eventually repaid, and the government sometimes makes a profit on the lending, Good Jobs First tallied the loan and bailout amounts separately from grants and allocated tax credits.) The contractor with the most in loans and loan guarantees is Boeing, with $64 billion from the Export-Import Bank. Boeing’s hundreds of billions of dollars in federal contracts and nearly $65 billion in federal subsidies and other financial support since 2000 make it one of “Uncle Sam’s favorite corporations,” according to a report accompanying the revamped database.

Comment by Blue Skye
2017-06-12 13:48:15

Yeah, but the Tesla is emblematic of simple stupidity. It costs $60K more than a Ford Focus. You’d have to drive that awesome thing for 50 or 100 years to save anything, including the planet.

Comment by In Colorado
2017-06-12 13:54:54

It’s a status symbol for rich people (and posers), no different than a high end Benz or BMW.

Comment by Carl Morris
2017-06-12 14:06:30

Everyone should experience a sub 3.0 0-60 at least once in their life. A high end Tesla is like driving a government subsidized Lamborghini every day while getting to trick the system into letting you use the HOV lanes with only one person in the car any time you want. It’s not actually save-the-planet types driving them, but it’s a great disguise in a place like CA. If I had the kind of money to live an upper middle class lifestyle in CA (7 figures a year) I’d definitely have one as a daily driver.

Comment by In Colorado
2017-06-12 15:32:10

If you live in Silly Valley, you’ll have to do the 0-60 thing in the wee hours of the morning, otherwise it’ll be hard with all the traffic.

As for experiencing sub 3.0 0-60, I’ve ridden roller coasters with induction launch. I think they were faster than that :-)

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Comment by Carl Morris
2017-06-12 15:53:29

If you live in Silly Valley, you’ll have to do the 0-60 thing in the wee hours of the morning, otherwise it’ll be hard with all the traffic.

The interstates are horrible in the morning and evening. But the neighborhoods are fine and the weekends are nice everywhere except the roads to/from the beach.

I’ve meant to ride one of those high acceleration rides sometime but never had the opportunity so far. I’ve exceeded one G in my own car though.

Comment by scdave
2017-06-12 16:31:26

I have ridden in one. They are pretty cool but not 100k cool.

Comment by MIke in Carlsbad
2017-06-13 21:08:19

I had a $3000 Yamaha crotch rocket in high school, pretty much took the fun out of everything else, roller coasters, fast cars, etc. Just a flick of the wrist and that Lamborgini was 1 blocks back… so were the cops ;)

Comment by Carl Morris
2017-06-14 09:44:23

Yeah, bikes have always been fast. But fast cars are much faster now than they used to be. It’s tough to launch a bike as hard as a high powered AWD car that’s set up to launch at full boost and high rpm…or is electric.

Comment by Raymond K Hessel
2017-06-12 17:26:57

Not sure digging up all that lithium is doing the planet any good, if that’s the point of a Tesla.

Comment by aNYCdj
2017-06-12 10:54:29

Children’s apparel retailer Gymboree files for bankruptcy


Comment by In Colorado
2017-06-12 13:56:33

They make the Oshkosh clothes for kids look inexpensive.

Comment by Apartment 401
2017-06-12 11:16:22

Mortgage fraudsters American Financing just aired a commercial for cash out refis that says you can use the money for your “wish list” LOLZ.

And I “wish” you good luck when you’re cutting pills in half and eating cat food in retirement, loosers :(

Comment by aNYCdj
2017-06-12 11:58:39

93,000 People Apply for 104 Subsidized Apartments at Essex Crossing Site


Comment by ZHi
2017-06-12 14:37:25


Wheatridge Co housing craters 7% yoy

Comment by Apartment 401
2017-06-12 15:55:53

A nation of broke @ss loosers:


“This sucker could go down” — George W. Bush, 2008

Comment by scdave
2017-06-12 16:37:54

It did go down until Bush & Paulson stepped in stopping it from going into the Abyss.

Comment by Carl Morris
2017-06-12 16:53:47

…foaming the runway with the tears of savers everywhere.

Comment by scdave
2017-06-12 17:09:44

Sure but what was the alternative. Go into the Abyss ? The systemic fallout both nationally and world wide we will never know.

Comment by Carl Morris
2017-06-12 17:16:14

This is the critical difference between the two sides of this issue. One side thinks it was the best option in a list of bad options and the sacrificing of the savers avoided the abyss. The other side thinks it was unavoidable and the longer we avoid it the longer and harder it will be to climb back out when it’s over.

I’m with the second group…the piper will be paid and it just keeps getting uglier…we will know eventually and we will wish we took our medicine sooner.

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Comment by MightyMike
2017-06-12 17:19:11

sacrificing of the savers

Are you referring to the current low interest rates and not the Wall Street bailouts?

Comment by Carl Morris
2017-06-12 20:44:25

I’m talking about the low interest rates AND that prices were not allowed to reach the natural bottom where savers would have gotten good deals. Because if that happened the banks were toast, and it was all about saving the banks.

Comment by Mr. Banker
2017-06-12 20:55:53

“… and it was all about saving the banks.”

🏠 = 🏧

Comment by Neuromance
2017-06-12 16:20:37

Chinese Efforts to Stem Housing Bubble Shows Promise
• New regulatory and monetary tightening policies are starting to rein in developers and speculators.
by Junheng Li
June 11, 2017, 10:00 PM EDT

Since President Xi Jinping said at the annual Central Economic Work Conference in December that “houses are built to be inhabited, not for speculation,” the central government’s plan to get housing under control has been strong and clear. The consensus among decision makers is that without curbing speculative activities, driven by both home buyers and developers, the stability of the economy and the society will be endangered. Stabilizing the housing and financial markets has been elevated as a national security issue.


Comment by Rentor
2017-06-12 17:12:29

Finally, a world leader steps forward and says the obvious. Houses are meant to be lived in not speculated on. If the Canadian or Australian PM what would happen to the bubble?

Comment by Neuromance
2017-06-12 18:06:58

Politicians in Western countries will have to be in extremis before they speak ill of rising house prices. After all, cash-starved politicians get quite a cash infusion from property taxes resulting from rising house prices.

Comment by In Colorado
2017-06-12 20:12:31

FWIW, not all Western nations have onerous property taxes like those in some parts of the USA.

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Comment by new attitude
2017-06-12 17:07:41

it is starting: https://slo.craigslist.org/apa/6133345110.html


Comment by AbsoluteBeginner
2017-06-12 22:29:45

Just a random Denver entry off of Zillow:


Note the 200k increase in price the past 2 years. Also, is the neighborhood really $470K good?

Comment by Raymond K Hessel
Comment by Raymond K Hessel
2017-06-12 17:42:43

Can anyone recommend a favorite popcorn stock for when the Fed’s asset bubbles and Ponzi markets start bursting all at once?


Comment by Mr. Banker
2017-06-12 19:43:40

Popcorn stock or popcorn type?

Here’s a suggestion …


Comment by Mr. Banker
2017-06-12 19:45:43

For those who prefer buttered popcorn …


Comment by Mr. Banker
Comment by ZHi
2017-06-12 17:58:23


Flower mound, Tx housing CRATERS 6% yoy

Comment by Raymond K Hessel
Comment by ZHi
2017-06-12 19:29:19


Record “Wealth” In America? 72% Of US Businesses Are Not Profitable

Comment by Mr. Banker
2017-06-12 20:16:01

“Record ‘Wealth’ In America?”

A reminder …


Money is like fertilizer: It does no good unless it is spread around.

Comment by new attitude
2017-06-13 10:39:47

this is true

Comment by Karen
2017-06-13 09:38:38

Thanks for posting this. I wasn’t sure of the exact percentage of businesses which are profitable, but I was pretty sure that right now most small businesses aren’t.

Comment by rms
2017-06-14 17:03:41

It’s too bad that such a high percentage of household income has to go toward keeping a roof overhead. That’s money that can’t be spent in the consumer economy pursuing hobbies or other interests.

Comment by AbsoluteBeginner
2017-06-12 22:14:06

I bet this place went for $10,000 in the 1980’s:


What’s up with the asking price jump over price paid last month?

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