September 21, 2017

When You Can’t Fill Units, The Price Has To Drop

A report from City Lab. “If renters paid just what they could afford in rent, the average household would have $6,200 a year more in their pocket to spend on groceries, childcare, medical care, and education—things one in five households have been skimping on to make rent. Collectively, that would amount to $124 billion that can help fuel economic growth.”

“These estimates of the 100 most populous U.S. cities come from a new analysis by the National Equity Atlas—a joint project by PolicyLink and the USC Program for Environmental and Regional Equity. ‘Renters are the lifeblood of cities,’ said Angela Glover Blackwell, CEO of PolicyLink. ‘If rents were affordable, renters could meet their basic needs like transportation, food, and child care and contribute even more to thriving communities. This would have a positive ripple effect throughout their regions.’”

The Mercury News in California. “The Bay Area’s brutal spikes in home prices have spurred more than half of its residents to dream of escaping from the expensive region, and the urge to flee is strongest among millennials, according to new poll results. The new Berkeley Institute of Governmental Studies Poll determined that 65 percent of the Bay Area’s registered voters and 48 percent of voters in California describe the issue of housing affordability as an ‘extremely serious’ problem.”

“‘The only folks who are cheering our region’s astronomical housing costs are the folks at U-Haul who are helping residents move right out of the state,’ said Carl Guardino, president of the Silicon Valley Leadership Group.”

The Salt Lake Tribune in Utah. “Real estate agent Kip Paul gets the question all the time: ‘Are apartments being overbuilt?’ With all the big apartment buildings going up in downtown Salt Lake City and Sugar House, it seems like a logical concern. Governments around the Salt Lake Valley issued 4,500 permits for new apartment units in 2016, the most since 1984. As of July, nearly 6,600 units were under construction in 35 complexes, and another 6,400 were in various stages of approval.”

“This scenario is good for owners of apartments and the contractors who build them, Paul said. As for renters, ‘if you can afford that top-line project, and you want something new and contemporary and are willing to pay for it, there are a lot of fantastic choices in Salt Lake with amenities you can’t believe,’ he said. ‘But if you’re a moderate or low-income person, these rising rents are hurting you.’”

“Because of the high demand, only 22 percent of the apartment communities surveyed by Cushman & Wakefield were offering incentives to entice people to sign leases. But more could be in the offing. With 13,000 apartment units projected to hit the market in the next four years, the report said, “the supply of new rental units could exceed demand by as much as 1,000 units by 2020 … which could result in a vacancy rate near 6 percent by year-end 2018.”

From AZ Big Media in Arizona. “Arizona’s housing market is getting more competitive leaving those at the lower end of the market struggling to compete, and many developers opting to build luxury homes and projects instead. Rental housing may be the next housing bubble to burst. ‘The problem is in renting, because people do not go through the underwriting process like they do when they are applying for a mortgage loan,’ said Mark Stapp, a real estate professor at Arizona State University’s W.P. Carey School of Business. ‘This leads to people getting in over their heads with rents they cannot afford.’”

“Landlords may be realizing they have outpriced many tenants, Stapp said. ‘When you can’t fill units, the price of rent has to drop,’ Stapp said.”

From Montana Kaimin. “One thing comes to mind when thinking of college houses and dorm rooms: Luxury. Affordability is of little concern to students at UM. More than half of renters spend over 30 percent of their income on housing, which the Missoula Organization of Realtors considers an ‘inadvisable’ amount. But since when were college students considered advisable?”

“But do not fear. If budget cuts force you to drop out, you can still live at ROAM, despite being touted unexceptionally across its website as student housing. According to the site’s frequently asked question of ‘Do I have to be a student to live here?,’ the answer is simply, ‘No, you do not.’ So don’t sign any extended leases on that overpriced shit hole you’re in now, because this time next year you could be the proud new tenant of a private, luxury, student (not limited to students) housing unit.”

The Daily Illini in Illinois. “Just last semester we celebrated a big anniversary for our University; it’s been 150 years of truly impacting the two cities which we span. With this in mind, realize how many ‘luxury’ student housing complexes have opened in the last decade. This summer, two new ‘luxury’ apartments were completed in time for Fall 2017 move-in, both within a block of each other.”

“But many are planned and operated by the same realtors, doing the most to make sure your money is in their pockets — even if that means using questionable construction practices to make sure their properties are built as quickly as possible before the next ‘hot property’ comes along. I am not calling out HERE apartments, but then again, their elevators never work and last year the elevator inspection sheets hung up were months out-of-date.”

“In fact, the ‘luxury’ apartment buildings are housing so many students that it is leaving many houses in ’senior land’ and Urbana vacant. The vacant houses in these areas go down in rent. Of course, I enjoy the amazing view, staring right at another apartment building through my window (ha). But I know I will do my best to convince my friends to live with me in a cute Champaign house next year because, if anything, I am never waiting 13 minutes (I timed it once) for an elevator at 8:00 a.m. on this campus ever again.”

From Bisnow on Illinois. “Conventional wisdom dictates the multifamily construction boom in Chicago will not last forever. So do the numbers: over 12,000 new apartments are being added to downtown Chicago’s inventory through 2019. A tipping point may be near in this development cycle. Fifield Cos. CEO Steve Fifield compared the growing confluence of factors to the apartment boom of the 1970s and ’80s. Developers believed that boom period would go on forever, but then the Cook County Assessor reclassified apartment complexes as commercial properties, which sent real estate tax bills skyrocketing 2.5 times overnight. ‘We’re taking for granted that this period will continue,’ Fifield said.”

“The problem is that those rent increases get passed down to tenants, who are already struggling to pay their monthly notes. Another indicator that a reckoning is coming is in the percentage of renewed leases. Fifield said retention rates at his firm’s apartments last winter fell for the first time in five years. Golub Executive Vice President Lee Golub said that with abatements on new lease-ups, like one month free rent, apartments have become a transient business for the renter. Golub has seen retention rates decline at some of his firm’s developments over the past two years, and said sometimes 35% to 45% renewal rates are seen as strong. With a growing inventory of new apartments, renters have opportunities to seek out favorable abatements to keep their costs down, and shop the market. ‘A real renter does not care where they are,’ Golub said.”

“JRG Capital Partners principal Harry Huzenis said the length of the development cycle and changes to the ARO are negatively affecting land pricing. He believes Chicago is in the late innings of the cycle, judging from the number of apartments in the pipeline, flat downtown rent increases, and vacancies in submarkets where there were waiting lists a couple of years ago. ‘You cannot get bigger units rented,’ Huzenis said.”

The Milwaukee Business Times in Wisconsin. “It was surprising to hear the recent announcement that Bartolotta Restaurant Group will end its partnership with Phoenix Hospitality Group for four restaurants at The Mayfair Collection development in Wauwatosa. The first of those restaurants, Osgood’s, opened less than two years ago. The move raises an interesting question. After several years of a boom of new restaurants in the Milwaukee area, is the market now oversaturated? Several new restaurants have opened in the area in recent years, and a slew of additional new restaurants are on the way.”

“Speaking of closures, Associated Banc-Corp recently revealed that 36 bank branches will be closed and their operations consolidated with nearby branches in its acquisition of Bank Mutual Corp. Brick-and-mortar branches are becoming a smaller part of the banking business. So who is going to make use of the 15 vacated branch buildings? It is going to be hard to find banks to absorb all of them. Restaurants are another option but, again, how many more of them can the market support?”

“Another sector showing signs of oversupply in the area: hotels. Several new hotels have been built in recent years downtown and in the suburbs, and more are under construction or being planned. Occupancy rates have dipped this year. Case in point, the Park East Hotel near downtown Milwaukee was recently sold to developers who plan to convert it into an apartment building. But apartments are another sector that has been built up in recent years, especially downtown. Two of the area’s largest multi-family apartment developers have indicated they are tapping the brakes on additional downtown projects, for now.”

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Comment by Ben Jones
2017-09-21 09:23:24

‘Rental housing may be the next housing bubble to burst. ‘The problem is in renting, because people do not go through the underwriting process like they do when they are applying for a mortgage loan,’ said Mark Stapp, a real estate professor at Arizona State University’s W.P. Carey School of Business. ‘This leads to people getting in over their heads with rents they cannot afford.’

It’s important to understand apartments aren’t valued by comps.

‘Downtown LA vacancy rate hits 17-year high. Landlords are giving out free parking—and free rent’

‘With so many available units, building owners are offering lavish perks, from six months of free rent to one year of free parking to try to lure tenants. The median price of a one-bedroom in DTLA is about $2,500 per month. These “concessions” essentially equate to lowered rent if considered in aggregate, Paul Habibi, a real estate professor at UCLA’s Ziman Center For Real Estate and an apartment building owner, tells Curbed.’

‘Why offer them instead of a lower monthly rate? Habibi says high “contract rents” represent a high earning potential for a building if a owner decides to sell.’

Comment by Ben Jones
2017-09-21 09:29:50

Some shortage. Apartments are valued for financing and refinancing using a calculation of net operating income and investment. Higher rents, higher value. This is what’s fueling the value add boom. Fix it up, lick of paint, raise the rent: voila, you just made a couple millions.

Here’s where it breaks down: these guys are operating under the assumption that there’s no limit to how high rents can go. It’s worked because of the enormous amount of money chasing yield. Lenders aren’t scrutinizing what rents are sustainable, just that contract rents hit the button for the loan. So older stuff goes up, new stuff is luxury, rents are up! they say. Well for a while. It also went on for too long, and now we have oversupply. So the calculation of value will reverse. And most of these projects have short term financing.

Comment by Mr. Banker
2017-09-21 10:29:11

“And most of these projects have short term financing.”


Comment by scdave
2017-09-21 13:19:49

And most of these projects have short term financing ??

Usually a construction loan that rolls over into a 25 year amortization with a 10 year call…

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Comment by BlueSkye
2017-09-21 21:17:04

Well that raises an eyebrow, because we think the amortization rate of a loan isn’t anything like the duration of the loan guarantee. So, with that first step misplaced, what about the rolling over claim? Does a builder automatically get a long term mortgage (10 yr) if the property doesn’t pencil on completion? If this is part of the deal, then why does anything have to “roll over”?

Comment by Rental Watch
2017-09-21 21:28:14

Such loans are called “mini-perms”. The construction loan rolls into a permanent loan…25 year amortization, due in 10.

Usually such loans are underwritten at ~65-75% of cost, which ends up being some lower percentage of value (60%? 55%?
Less?), with a healthy debt coverage from rents.

If rents fall, that’s bad, but there is a cushion built in. It’s the equity that gets hammered first.

Comment by BlueSkye
2017-09-22 06:52:36

What’s the catch? If the building is not rented out sufficiently to pay the permanent loan, does it still roll over or is the builder screwed?

Comment by Rental Watch
2017-09-22 09:11:13

Usually there are debt coverage requirements, so yes, if the building is not sufficiently leased to generate the income necessary to service the loan, the builder is screwed.

They either need to sell to pay off the debt;
Refinance to a different loan (maybe raising more equity to do so);
Or default.

Usually there is an equity investor that has an incentive to solve the problem…whether or not they can, or choose to, is case-by-case.

Comment by Ben Jones
2017-09-21 09:35:17

‘What’s at stake for big condo project at Van Ness and Market’

‘Other speakers talked about how limited the developer’s affordable housing contribution is. Affordable housing activist Calvin Welch noted that the city is already producing more than 220 percent of the luxury housing it needs and less than 25 percent of the affordable housing, particularly for families with children. Most of the affordable units the developer wants to build are “postage-stamp efficiencies” suitable only for one person, he said.’

Some one won’t be retiring:

‘already producing more than 220 percent of the luxury housing it needs’

Comment by Ben Jones
2017-09-21 09:40:28

‘Saddled with market-topping lease and rental rates, stressed out US retailers have begun asking building owners for financial relief, claiming their rents are too damn high, sources tell The Post. Faith Hope Consolo, who chairs Douglas Elliman’s retail division, said the calls started slowly in early September, but she is now getting queries every day.’

‘It’s an “epidemic,” Consolo said, noting that “some tenants aren’t asking for relief but a 50 percent reduction. That’s pretty aggressive.” The stores involved, she says, “are on every major avenue” and in hot areas like Soho and the Meatpacking District, where rents rose dramatically over the last few years.’

‘Tom Mullaney, co-chair of JLL’s restructuring division, said it was not just New York City stores that are trying to win lower rents. “We are seeing it on Market Street in San Francisco and on Michigan Ave. in Chicago,” Mullaney said.’

‘In New York, Mullaney also says that the most problems are in Soho and along Fifth and Madison avenues, where asking rents are down from 25 to 50 percent from their peaks two to three years ago. “The storm is getting worse,” he added. “The only part of the retail landscape getting through this unscathed is the sharp-priced retailer like Family Dollar, T.J. Maxx and Costco.”

“The smart [landlords] work constructively and make lemonade out of lemons,” Mullaney said. But others feel they needn’t budge. Still, at some point, Mullaney warned, the tenant may simply hand back the keys and say, “See you in court.”

Comment by Ben Jones
2017-09-21 10:05:46

Here’s a headline from another article:

‘How its Times Square superstore helped drive Toys R Us into bankruptcy’

Comment by In Colorado
2017-09-21 11:37:36

I still think it was WalMart that ate their lunch.

Though some chains do surprise me with their survival. One such place is Hobby Lobby. On the rare occasion when I go into one, I find that it is always quite empty. Maybe they markup everything 500%, I don’t know.

Comment by oxide
2017-09-22 07:52:30

Wal-Mart (and Amazon) have what I think is an underestimated advantage: one-stop shopping. Americans are spoiled rotten by the ability to buy fresh tomatoes, a magazine, windshield wipers, tennis balls, men’s boxers, and Star Wars Legos standing in line only once. Just toss the Legos in the cart with the ground beef and there’s no need to go to ToysRUs.

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Comment by rms
2017-09-23 07:25:27

I agree… one-stop shopping, and 24/7 too.

Comment by 2banana
2017-09-21 10:18:42

Now that is a hair cut!

And it is going to get much worse….


“where asking rents are down from 25 to 50 percent from their peaks two to three years ago.”

Comment by Avg Joe
2017-09-21 10:51:32

Good to see that the NY Times and WashPo are all over this story.

Comment by Mr. Banker
2017-09-21 11:17:47

Bahahaha … now let me see if I understand this correctly: Shopping pukes
aren’t shopping because too much of their money is being sucked up by housing rent, and store owners can’t make a go of it because shopping pukes aren’t shopping PLUS their rent is also going up.

Yes? If yes then the problem lies in …

(ta da)

… rent.

Comment by Mr. Banker
2017-09-21 11:28:01

This puts the PTB in a box: They can’t fight high rent because high rent justifies high prices for the underlying equity, and this equity is widely interpreted as wealth.

Soooo … what are they to do?

Comment by 2banana
2017-09-21 11:28:14

Citizens having no spending money and not having a real raise in their income for at least the last eight years is a symptom.

Housing prices and rents increasing to astronomical levels without any underlying fundamentals is a symptom.

I will give you a hint on the real disease.

Debt does not = wealth

Comment by BlueSkye
2017-09-21 21:23:35

Yet housing experts like Rental Watch assure us that the long term CPI adjusted Shiller massaged price trend is the only metric that matters. It defines the norm, not what people can afford. There’s a gap of explainability here somewhere.

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Comment by Rental Watch
2017-09-21 21:32:07

It’s not the only metric that matters, but it is certainly an indicator of where we are in the price cycle.

And right now, by my metric, prices are consistent with higher than a market peak. Buyer beware.

Affordability only really matters for the marginal buyers, and if there are relatively few new homes being built for sale, then you are talking about only relatively few buyers…generally people with the higher incomes in the pool of potential buyers.

Comment by Econ_Teacher
2017-09-22 13:35:46

Children, where are prices set?

That’s right; prices are set at the margins.

If our marginal buyers can’t afford the price, pressure is downward. Based on current debt ratios, you will now have not falling peices, but cascading prices.

Comment by In Colorado
2017-09-21 11:40:07

Yes? If yes then the problem lies in …

(ta da)

… rent.

But I thought rent is supposed to be soooo cheap. Like one poster here says, he has so much money left after “throwing it away on rent” that he doesn’t know where to throw it.

Comment by Apartment 401
2017-09-21 19:57:17

It’s rent and lifestyle and consumption expectations.

If you can control the latter, the first two cost less.

And all it costs to climb mountains is the gas to drive there…

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Comment by BlueSkye
2017-09-21 21:40:09

” lifestyle and consumption expectations”

Hit the nail on the head. Nobody who lives above their means through debt can comprehend this. As far as they can get is to determine that they couldn’t afford to rent the place they bought, which they couldn’t afford either.

I’ll be living for the next 20 years or so off the money I saved by renting for a decade. The reduction of consumption is a big key. You can’t do that or comprehend that if you are on the lifetime of debt wheel. You are locked in and you better bend your mind to that.

Comment by rms
2017-09-23 16:32:27

“If you can control the latter, the first two cost less.”

What does Mrs Gandhi think about that?

Comment by Rental Watch
2017-09-21 21:06:21

Heard a podcast with a thoughtful “value” investor being interviewed. His take on retailers:

1. Amazon isn’t that big a deal…they only represent something like 1.5% of all retail sales.
2. Smart Phones and their accessories have bled a much larger amount of money out of the pocketbooks of consumers, thus making them less apt to spend money shopping in traditional stores.
3. The move to casual workplace attire (not just casual Fridays anymore) has decreased the need for people to shop for clothes.
4. The US is very over-retailed (as we have discussed). Lots of large footprint stores will need to shrink, but we are not going entirely online.

I’ve heard 4 and some people argue #1 before, but #’s 2 and 3 were new to me.

Comment by BlueSkye
2017-09-21 21:47:52

On #2, I kind of think a grand or two overspending on shelter casts a big shadow on a $100 smart phone plan.

On #3, I haven’t bought a white shirt or a tie in 25 years. But this is just noise in the overall budget.

Housing mania, credit expansion and the commodities bubble have cost all of us tremendously while wages have been flat.

Comment by Rental Watch
2017-09-22 09:12:27

When people freak out about whether same store sales are up 3%, or down 2%, every little bit counts.

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Comment by rms
2017-09-23 16:37:18

“3. The move to casual workplace attire (not just casual Fridays anymore) has decreased the need for people to shop for clothes.”

I recently saw a clip of some security guy regarding Experian… youngish, obese, sweaty white tee shirt and a rooster hairdo. WTF?

Comment by Senior Housing Analyst
2017-09-21 09:42:34

Lone Tree, CO Housing Prices Crater 5% YOY

Comment by Ben Jones
2017-09-21 09:43:56

Get this:

‘Southwestern Connecticut is not about to shut the door on additions to its apartment stock.’

‘Fueled by the ongoing migration of New York City residents, the area is building thousands of units. Public officials throughout the area have mostly accepted the growth as a sign of their communities’ desirability as places to live, and no major proposals suggest ending multifamily housing construction. But the expansion has sparked debate about its pace and oversight.’

‘Real estate advisory firm Marcus & Millichap indicated in a recent report that Fairfield County apartments were in high demand among New York City workers “seeking relief” from high rents. Some 3,000 units are under construction in the area, the report said. Many of the marquee projects are concentrated in Stamford, which has built several thousand apartments in the past decade. Stamford has also added college dorms to its housing inventory.’

‘In downtown Norwalk, developer M.F. Discala will begin active leasing in early October of the new Head of the Harbor apartments, which will include 60 units. Alan Webber, chief financial officer of M.F. Discala, said the firm did not undertake any formal assessment of Norwalk’s market capacity for additional apartments. He and his colleagues did note the rapid rate at which units have been snapped up at other projects.’


‘the firm did not undertake any formal assessment of Norwalk’s market capacity for additional apartments’

These guys aren’t the only ones.

Comment by Ben Jones
2017-09-21 10:03:49

‘more than half of its residents to dream of escaping from the expensive region’

Sounds like almost no one wants to live there. Jobs going away, thousands of empty condos and apartments with thousands more on the way. What say you, supply and demanders?

Comment by 2banana
2017-09-21 10:10:33

Just bring in more illegals to fill up those empty condos and apartments.

They can live four to a bedroom.

Comment by Ben Jones
2017-09-21 10:22:37

I heard yesterday that the new Obamacare replacement will slash the cash going to California. See, it was one of 4 (solid Democrat) states that had 20% of the population, but were getting 40% of the money. And under the new rules California is free to give healthcare to all. Sanctuary state, free healthcare, much less federal monies - ouch!

Well at least you got that mortgage interest deduction going for ya.

Comment by 2banana
2017-09-21 10:26:26

Soon or later the socialists run out of other people’s money.

And they will NOT use their own money. Charity is not a concept to them.

God Bless DJT. God Bless that man.

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Comment by Obama Goons
2017-09-21 10:34:57

Amen. The way he jams it to the thugs in congress(both parties) is nothing short of Nirvana. He is guaranteed reelection if he kills the monster known as the individual mandate.


Comment by Montana
2017-09-21 15:39:17

Yeah it would be sweet to not have to lay that penalty on my tax clients.

Comment by 2banana
2017-09-21 10:37:46

God Bless that man.


Red States Would Benefit Disproportionately Under Graham-Cassidy
Newsmax | Wednesday, 20 Sep 2017 | Theodore Bunker

The healthcare bill submitted by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., would benefit Republican-run states more than Democratic ones, The Washington Post reported.

The bill “would implement a decades-old conservative concept, capping the amount that taxpayers spend on Medicaid and giving states full control over the program,” write the Post’s David Weigel.

“What’s new, thanks to the Affordable Care Act, is a discrepancy in state-by-state funding that would be flattened out by the block grants. Most states used the ACA’s funding to expand Medicaid; some Republican-run states, liberated by the Supreme Court’s decision to make the funding optional, did not. As a result, 14 of the 15 states that would stand to gain from block grants are run by Republicans; Democratic megastates including California, New York, and Massachusetts would lose billions of dollars, a feature both Graham and Cassidy have talked up to conservatives.”

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Comment by Ben Jones
2017-09-21 10:54:26

What’s missing here?

‘Blue States Were Rewarded Disproportionately Under Obamacare’

Comment by MightyMike
2017-09-21 11:33:24

So Graham/Cassidy would be a form of redistribution.

Comment by Ben Jones
2017-09-21 14:27:24

‘a form of redistribution’

In governmental accounting they call it a year after year, multi-billion dollar schlonging.

Comment by MightyMike
2017-09-21 15:18:42

So, it’s good that it’s likely to go down in flames.

Comment by Ben Jones
2017-09-21 15:24:23

Yeah, Maxine Waters can use her good graces with the White House to work out a deal.

Comment by rj not in chicago anymore
2017-09-21 15:59:50

And Pelosi’s comment about the Dreamers doing a ‘good thing’ for Murika - THAT was classic!!!

Comment by Ben Jones
2017-09-21 16:09:55

‘Meanwhile, Sanders is pushing for his bill. He called the costs of the current system “insane and unaffordable”

Insane and unaffordable eh? Kinda what Bill Clinton said about Obamacare before the election.

Comment by jeff
2017-09-21 16:10:21

“We do not have a crisis at Freddie Mac, and particularly Fannie Mae, under the outstanding leadership of Frank Raines.”

Maxine Waters

Comment by oxide
2017-09-21 18:13:27

What was classic was that group of illegal immigrant activists protesting at Pelosi that they would not accept anything less than citizenship for all 11 million illegals. As if they were in a position to make demands. And as if Pelosi was in a position to grant those demands.

Memo: Trump has changed the “default” position from let them all in, to kick them all out. Congress can’t just do nothing anymore. And these activists, by asking for everything, are likely to get nothing.

Comment by Ben Jones
2017-09-21 19:12:58

‘CHAOS As Nancy Pelosi Meeting STOPPED by “Undocumented Youth”

Comment by In Colorado
2017-09-21 21:01:00

We’ll see if congress will vote to make DACA the law of the land. I doubt they will. Trump is probably trying to goad them into submitting a bill, which will be used against them next midterm election: “Congressman Donny Democrat voted to grant amnesty to illegal immigrants … Donny Democrat doesn’t put Americans first … just whose interests does he serve? … vote for Ronny Republican, he will put America first.” Or something like that.

Comment by 2banana
2017-09-21 10:04:41

Well, that is one bubble that has popped…


49ers-Rams tickets reselling for the price of two stadium pretzels
Bill Disbrow - September 21, 2017 - SF Gate

Thursday night’s Rams-49ers game may be the toughest sell in the history of Levi’s Stadium.

As of Wednesday, resale tickets were being offered on StubHub for as low as $14 to see the team host the Los Angeles Rams at 7 p.m. That price is just cheaper than buying a pair of $7.50 pretzels through the Levi’s Stadium app and comparable to the price of a beer and a hot dog at the the three-year-old arena. According to the team’s seat licensing map, the cheapest original face value for any seat is $85.

“The current get-in price of $17 is the Niners’ cheapest game this season with an average asking price of $88 — also the cheapest of the season. The average ticket price across all remaining home games for them is $179,” says Ralph Garcia of TicketIQ, who says the team has seen the average list price decline 32 percent since the stadium opened in 2014, according to their internal numbers. “This is, however, the 49ers’ cheapest home game since the move to Levi’s. The previous low was Dec. 11, 2016 vs. the Jets.”

Comment by Mafia Blocks
2017-09-21 10:19:08

Pay to watch the worst team in the league while getting mugged by hoards of homeless and harassed by pimps, hookers and drug dealers?

No thanks.

Comment by 2banana
2017-09-21 10:29:30

But…but…social justice multi-millionaire warriors taking a knee…

They will not get a SINGLE dollar from me.

Comment by In Colorado
2017-09-21 11:46:52

As of Wednesday, resale tickets were being offered on StubHub for as low as $14 to see the team host the Los Angeles Rams at 7 p.m.

They’d have to pay me more that $14 to watch that game … what is it? … they expect me to pay $14 …. bwahahahahaha!

The NFL doesn’t want to admit it, but outside of a few key markets (Green Bay, Dallas, Denver, Boston, etc.), it’s finished. A lot more people will watch USC play Cal this weekend than the Chargers or Rams will draw combined.

Comment by Sean
2017-09-21 13:15:00

It’s not the protests (although that doesn’t help), it’s the play on the field. The NFL is such a horrible product to watch these days, plus going to a game is like walking into another dimension. Drunks, drug addicts, fights severywhere you go, things getting thrown at you…..not worth it.

Plus teams like the Chargers charging $100 to park your car in the stadium lot. $100… park your car!

Comment by azdude
2017-09-21 16:17:17

i hope they bring in some urinals for all the homeless roaming around santa clara .

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Comment by SFMF
2017-09-21 16:41:30

All this was true 2 years ago as well. The decline in ratings coincides exactly with the BLMification of the league, starting last August.

Last year they blamed the election. Because at no time since 2016 had a presidential election happened during football season.

This year they are blaming hurricanes. Because people in CA aren’t going to or watching games due to a hurricane in Houston and Florida. LOL

Hey I know, maybe if players wear some more pink, that will bring back the fans.

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Comment by In Colorado
2017-09-21 18:34:16

The No Fun League had a good run.

I still don’t understand why the Chargers moved to LA. Sure, they didn’t have a following like the Packers, Cowboys or Broncos, but they had their fans and would sell out.

Now they are playing in a tiny stadium (the home of the LA Galaxy soccer club) and they can’t fill it up.

Comment by OneAgainstMany
2017-10-02 16:49:13

It’s not the protests, it’s the nature of the game. Football is bad for the brain, and people are waking up to that. Sensible parents are steering their children to less damaging sports. Also, the demographics of the nation are changing. Baseball and football are on the decline, soccer and basket ball are on the upswing.

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Comment by junior_kai
2017-09-21 14:13:48

Owners dont care, they got their shiny new stadiums built on the taxpayers’ dime. Another reason to flee the cities - your taxes pay for that chit.

Comment by Mr. Banker
2017-09-21 15:13:56

A nation of totally dumbed-down fools.

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Comment by da bear
2017-09-21 17:49:00

Might have been more UCLA fans at the game against the Memphis Tigers (in Memphis) than there were 49ers fans in the stand this past weekend.

da bear

Comment by 2banana
2017-09-21 10:06:52

Public union pensions will be paid…


Hours After Hurricane Irma, Miami-Dade County Tickets Residents for Code Violations
Reason Magazine - 9/21/2017

Mere hours after Hurricane Irma, Miami-Dade County was ticketing residents for building code violations on their wrecked properties.

Celso Perez was helping his neighbors remove some fallen trees blocking their street when a county code enforcer rolled up and issued him a safety notice for having a downed fence. “I laughed,” Perez tells WSVN-TV. “I thought he was kidding. ‘You are kidding right? We just had a hurricane six hours ago.’”

It wasn’t a joke. The official told Perez that the downed fence—which encloses a pool—was a safety hazard, and that if it wasn’t fixed by the time he returned, Perez would be hit with a fine. The official then hung the safety citation on the portion of Perez’s fence that remained standing, leaving him and his neighbors to finish clearing the debris from their street.

Comment by 2banana
2017-09-21 10:15:29

Anyone here think this would have ever happened under Hillary!

This WILL impact housing.



QE Unwind starts Oct. 1. Rate hike in Dec. Low inflation, no problem.
Wolf Street - 9/21/2017

The two-day meeting of the FOMC ended on Wednesday with a momentous announcement that has been telegraphed for months: the QE unwind begins October 1. It marks the end of an era.

Countless people, worried about their portfolios and real estate investments, have stated with relentless persistence that the Fed would never unwind QE – that it in fact cannot afford to unwind QE.

The vote was unanimous. Even no-rate-hike-ever and cannot-spot-housing-bubbles Neel Kashkari voted for it.

The Fed also telegraphed that it could raise its target range for the federal funds rate a third time this year, from the current range of 1.0% to 1.25%. There is only one policy meeting with a press conference left this year: December 13, when the two-day meeting ends, remains the top candidate for the next rate hike.

Now markets don’t believe anything the Fed tries to communicate. They’re hoping that at the next market squiggle, the Fed will re-flip-flop, cut rates, and restart QE. Markets are dreaming.
“Low” inflation, no problem.

When securities mature, they’re redeemed. Whoever holds them gets paid face value, and the securities become void and disappear. So when the Treasury securities that the Fed holds mature, the Treasury Department transfers the money to the Fed. If the Fed doesn’t buy other assets with the money, that money just disappears.

In October 2017, it will shed $6 billion of Treasury securities, to be increased every three months by $6 billion, to reach $30 billion a month by October 2018.

In October 2017, it will also shed $4 billion of mortgage-backed securities, to be increased every three months by $4 billion, to reach $20 billion per month by October 2018.

Combined, the Fed will unload $10 billion in October 2017 and raise that to $50 billion a month by October 2018.

Comment by Carl Morris
2017-09-21 11:38:17

They’re hoping that at the next market squiggle, the Fed will re-flip-flop, cut rates, and restart QE.

Gee I wonder where they got that idea?

Comment by taxpayer
2017-09-21 13:14:22

so a 3 to 2 ratio
bolder than I thought

Comment by Rental Watch
2017-09-22 10:15:27

It’s not really that bold. As of the end of Q2, the Fed held $2.562T of Treasuries, and $1.823T of MBS.

That’s roughly a 3:2 ratio.

For the first 6 months of 2017, $116B of treasury securities were repaid to the Fed (principal payments or maturities), so if they want to shed $6B per month, they need to reduce their purchases from $19B per month to $13B per month.

Let me say that again, in order to shed $6B of Treasuries, the Fed will still need to be a buyer of $13B of Treasury securities in the month of October.

It’s similar for MBS…they had $139B of MBS repaid for the first 6 months of the year, so to reduce their holdings by $4B for the month, they will still need to be a buyer of ~$19B of MBS for the month.

They are not selling bonds back onto the open market (yet), they are simply buying slightly fewer of them.

I suspect that they will never be active sellers of MBS onto the market, but only bleed off as much as they can without selling.

Doing a little bit of math, it looks like by the time they hit $20B of reduction per month in a year, they will not need to be buyers of MBS in the market at all, and the amount of the reduction per month will approximately equal the amount of principal reduction each month.

To maintain $20B of reduction per month, they will need to be active sellers of MBS each month by the early part of 2019…but I don’t see that happening…I suspect they will simply let it bleed off naturally then.

By my math, 5 years from now, there will still be ~$900B of MBS at the Fed (at which time they will be bleeding off about $11B per month).

10 years from now, ~$400B of MBS (bleeding off about $5B per month).

Of course, with amortization schedules as they are, the natural bleed off will be in reality slightly accelerated from my model…as I used a straight line of principal reduction.

Comment by Rental Watch
2017-09-21 21:23:56

I think it will impact long-term rates, but I think it will take a while. Remember, lots of the cash that was pushed out into the economy when the Fed purchased all that paper simply ended up as excess reserves right back at the Fed. So, we will see excess reserves shrink first…and there is something like $2T or so of excess reserves to bleed off.

Remember the “Taper Tantrum”? Everyone predicted that the Fed tapering off their purchases of debt would lead to a spike in rates…it was a big nothingburger.

I think this will be a something burger, but it will take a while.

Comment by Mike
2017-09-21 10:19:53

“If renters paid just what they could afford in rent, the average household would have $6,200 a year more in their pocket to spend on groceries, childcare, medical care, and education—things one in five households have been skimping on to make rent.”

I think the misery index needs to be reformulated like this:
Percent increase in housing costs - percent increase in wages.

The higher the number, the greater the misery

Comment by CorporateShill
2017-09-21 10:22:49

I bailed out of the San Francisco Bay Area during the first .com run up mostly due to the high cost of living then. I see this as being a repeat and late in the cycle. There seem to be dark clouds on the horizon regarding Apple having problems around newly released products, law suits regarding online ad campaigns (99% of Google revenue), etc. and one wonders how quickly the FANG stocks could tank.

Regarding apartments and mutli-family in general, I have been trying to figure out how to invest mainly in markets near where I live or had lived (Austin now Tampa). This is nearly an impossible prospect due to CAP compression and Yellen bucks chasing yield as you all know.

Ben let me ask you, what is your overall RE investment strategy? Are you content waiting on the sidelines until after this thing corrects? Do you invest in non 1st, 2nd tier markets where cash flow can be found?

Comment by Ben Jones
2017-09-21 10:28:54

It’s gonna be another twitter. This is a mania, and instead of catching falling knives in oversupplied markets, it’s probably best to buy foreclosures. It’s already started, especially in the student market.

‘I am not calling out HERE apartments, but then again, their elevators never work and last year the elevator inspection sheets hung up were months out-of-date’

Sounds like a cash flow issue.

Comment by 2banana
2017-09-21 10:43:33

It is a feature - like the apartment on the Big Bang Theory sitcom.

Comment by CHE
2017-09-21 13:00:31

Radio guys on local talk station KFI are constantly hawking investment in a REIT that will buy student housing. Of course, this in between mortgage commercials.

Oh and nothing warms my heart the stories I hear on the “Keep Your Home California” about some shlub getting my tax dollars to to reduce their mortgage payments and balance.

Comment by taxpayer
2017-09-21 13:19:00

some single villa type condos are cheap in FL. They call them townhomes so northerners think they are multistory=noisy w stairs


Comment by Montana
2017-09-21 15:50:27

I like those one storey condos. Those were the first kind I ever saw, circa 1974. I could totally go for that.

Guess they’re not profitable anymore.

Comment by 2banana
2017-09-21 10:40:57

I only post this as a metaphor.

The shaman is all the house flippers and ladder climbers of the last eight years.

The crocodile is the real cost of their debts when housing prices actually go down.

The supernatural powers of the FED are an illusion also.


Horrific moment shaman who said his supernatural powers would protect him in crocodile-infested lake… is suddenly dragged beneath the waters as shocked onlookers gasp
Daily /mail UK - 9/21/2017

This is the moment a man claiming to have supernatural control over crocodiles died after one of the reptiles appeared to drag the shaman under water.

The man, named Suprianto, died after the suspected crocodile attack in Kutai Kartanegara, Indonesia, despite his supposed powers.

In the shocking video, he is seen swimming into the waters to look for the body of a teenager, called Arjuna, who was attacked the previous day.

But Suprianto was dragged under mid-mantra…

Comment by CorporateShill
2017-09-21 11:56:39

It’s a relevant methophor. I don’t know that you could classify everybody that invests in RE as a ladder climber. I am and have been interested in investing in RE because I would like to retire before I’m 90 and up until the bubble blew to massive proportions, RE was a good add to a portfolio.

The space has become very crowded after rates have been pushed to the floor causing everybody to look for yield crumbs in every nook and cranny within almost every area of investment. I’m convinced that BTC trading has been partly driven by the fact that there is volatility to be traded whereas there is hardly any in the equity and bond markets (along with poor yields which don’t justify the risk).

I blame the FED and the .gov.

Comment by Apartment 401
2017-09-21 11:24:52

Realtors are liars.

Comment by 🖕Realtors
2017-09-21 19:49:23

That’s not nice

Comment by Apartment 401
2017-09-21 20:15:51

The National Association of Realtors is a corrupt and criminal organization. Anything quoted from an “economist” employed by them is paid propaganda from an organization of professional liars.

Time to watch Glenngary Glen Ross again…

Comment by Carl Morris
2017-09-21 11:50:37

Message for Jingle:

Looks like a possibility I could end up living in Folsom…I’d be curious to pick your brain a little more offline. Got any public contact info I could look up?

Comment by Carl Morris
2017-09-21 13:44:36

If you don’t have a throwaway address just email me at carldmorris2 at everyone’s favorite search engine’s email service.

Comment by palmetto
2017-09-21 13:06:41

I’ve got a front row seat to the market freeze-up in the Tampa Bay area. Irma didn’t help any, that’s for sure.

Kinda like bubble 1.0, standoff between people who want to get “muh price” and those looking for a deal.

Decent rentals for a reasonable price are in short supply in this area, though. Not a lot of apartments were built. So most of the stock is houses and condos in the hands of property management realtors.

Comment by taxpayer
2017-09-21 13:13:01

Program for Environmental and Regional Equity

soviet sounding names

Comment by palmetto
2017-09-21 13:23:50

Yah, the commies have ratcheted up their offensive game and are mobilizing big time. Things have started slipping away from their slow and steady march through the institutions, thus all the hysteria and violence.

Weird stuff going on up in my old home town in CT. Some Move-On funded group is going all in to take over the citizen participation government seats up for grabs in the town (it’s a town meeting form of government). This is not the only town in the country where this is happening, they’ve targeted towns across the US with similar local government.

Comment by jeff
2017-09-21 14:29:40

I love me some Agenda 21

ICLEI - Local Governments for Sustainability

Comment by palmetto
2017-09-21 15:01:09

Check out “Indivisible Greenwich”, ugh.

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Comment by jeff
2017-09-21 15:20:55

“We are informed, engaged, and concerned constituents seeking results-oriented action to counter what we see as a fundamental threat to our nation’s democracy.”

No wonder Brunswick whips up on Greenwich High’s Football team nowadays.

They recruit from outside the Snowflake Zone.

Comment by palmetto
2017-09-21 15:57:10

Haven’t been following the local sports, did they recruit some Polynesians? Those are some bad mamma-jammas. You definitely want them on your side.

They really did a number on Greenwich High. Niece recently graduated from there.

Comment by palmetto
2017-09-21 16:55:47

“They” meaning the PC crowd.

Comment by Taxpayers
2017-09-21 15:16:06

Local gov r spending any n all real estate appreciation
Next year taxes up while re flattens out

Comment by Senior Housing Analyst
2017-09-21 13:44:48

US Housing Demand Craters To 20 Year Low

Comment by snake charmer
2017-09-21 14:13:08

More below from the hilarious piece in the University of Montana student newspaper. “Patagucci,” I hadn’t heard that before.

“Students will finally be able to live in condos complete with private security staff, soundproof music rooms and a ski-and-bike tune-up shop, according to the extensive amenities list on ROAM’s site.

UM students can probably count on shelling out a little extra for the comfort of ROAM and its Patagucci aesthetic, although rent prices for the new facility were unavailable at the time of publishing.

New state budget cuts were announced last week, facing students with the possibility of less financial aid and another tuition increase. We’re totally in a position to spend on creature comforts. Plus, Campus Advantage offers staff-organized events like dances and scavenger hunts that are sure to bring you right back to the glory days of middle school.

Comment by Mr. Banker
2017-09-21 15:20:29

College attendance = Prolonged adolescence

Peter Pan’s never-grow-up Never Never Land.

Comment by redmondjp
2017-09-21 21:26:39

Not if you’re an engineering major.

Comment by Montana
2017-09-21 15:58:29

So, this is Pell Grant and student loan money paying for these amenities, yes?

I live in Missoula and that complex is is on some primo real estate. I predict it will have its share of older renters who want to be near all that youth.

Comment by oxide
2017-09-21 18:35:35

Yup… the creep factor is pretty high. Those young ladies are going to *need* that security.

Comment by junior_kai
2017-09-21 16:01:26

The University has been established by the Leftist Proglodytes as the safe space for their shock troops - safe only from reality. A mere 25 years ago me and my friends lived in cars, tents, underneath skateboard ramps, sold blood, plasma, urine and worked every crummy job you can imagine to get through college - and we loved it, raw life. A lot of these kids today never washed a car, bussed a table, or pulled a weed for money. Their knowledge of the world is whatever is trending on FB or Insta through a 5″ window they stare at 24/7.

The reckoning this society is in for over these next few years is going to be something to behold. Lots of people thinking winter is a thing of the past are going to learn some hard lessons. Kind of reminds me of those videos of the tsunami that hit Thailand, etc. back in 2004 - peoples understanding of the ocean (reality) was so limited or distorted they couldnt process that something was out of whack and they needed to flee.

Comment by MightyMike
2017-09-21 16:09:22

Fifty years ago the old fogies were saying similar things about the long-haired college kids of those days. This phenomenon goes back to ancient Greece.

Comment by Michael Viking
2017-09-21 18:54:25

Hey Mike, how much faster does society change today compared to ancient Greece? Do you think the speed of technological changes affects the speed of societal changes? The difference between generations is growing in leaps and bounds…

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Comment by palmetto
2017-09-21 19:29:18

The difference between generations is growing in leaps and bounds…

And yet, so are the similarities. Meet Generation Z. They’re going to both kick and save our butts.

Comment by Michael Viking
2017-09-21 21:40:49

They’re going to both kick and save our butts.

Not the kids I see. They can barely lift their heads from the screens they stare at. Which kids are you seeing?

Comment by BlueSkye
2017-09-22 06:50:03

We may learn something from what happens in Puerto Rico. Reports say the power may be out there for months.

Comment by snake charmer
2017-09-22 08:26:35

The shift in college atmosphere, from providing an education to providing an unrealistic and unrepresentative “experience,” isn’t limited to institutions dominated by the political left. But I agree with the rest of what you wrote. It was raw life. And that was a large part of its charm.

Comment by Senior Housing Analyst
2017-09-21 15:43:20

Decautur, TX Housing Prices Crater 7% YOY

Comment by rj not in chicago anymore
2017-09-21 16:05:11

Yesterday you posted that old joke about Chicago - Thanks for that - I-80 is the only way outta there. Laughed my butt off at that.

And Ben today posts the overbuilt apartment story and the issues Chi town is having - I sense the whole thing is gonna blow at some point there.

Comment by oxide
2017-09-21 18:43:39

Glad to help. :-) Actually that joke is just a variation. I first heard it as: What’s the best thing to come out of Ohio? I-70. You can apply it to almost any state or highway.

All those apartments are going to go to crap. I predict that the lenders will go bankrupt, some slumlord will buy the debt for pennies on the dollar, and Section 8s will move into the luxe (while the middle class gets shafted AGAIN). Only this time, unlike the brick or CBS Class B garden apts of the 60’s and 70’s, this OSB-and-Tyvek crap is not going to survive the onslaught of poor.

Comment by rj not in chicago anymore
2017-09-21 16:05:22

Yesterday you posted that old joke about Chicago - Thanks for that - I-80 is the only way outta there. Laughed my butt off at that.

And Ben today posts the overbuilt apartment story and the issues Chi town is having - I sense the whole thing is gonna blow at some point there.

Comment by Senior Housing Analyst
2017-09-21 16:11:13

“Denver Home Sales And Prices Drop in July, Putting Area Brokers On Alert”

Comment by Apartment 401
2017-09-21 20:26:10

People are beginning to realize all the media hype was a joke.

They move here, and then they’re really disappointed.

Comment by azdude
2017-09-21 16:19:04

how many years will it take for the FED to reduce the balance sheet?

I have a feeling most of us wont be around when it happens.

Where does the next balance sheet come from to prop up asset prices?


Comment by palmetto
2017-09-21 17:47:58

I have a feeling the FED won’t be around when it happens.

They’re goin’ down, they just don’t know it yet.

Comment by azdude
2017-09-21 16:35:42


Comment by Senior Housing Analyst
2017-09-21 17:09:02
Comment by jeff
2017-09-22 07:37:25

“Realize this, extremely violent times will come,”

End-of-world prediction interrupts TV broadcasts in Orange County

By SCOTT SCHWEBKE | | Orange County Register
PUBLISHED: September 21, 2017 at 4:16 pm

Some Orange County residents were stunned Thursday, Sept. 21, when television programming was suddenly interrupted for about a minute with an ominous message predicting the end of the world.

Stacy Laflamme of Lake Forest said she was watching the HGTV channel via Cox Communications about 11:05 a.m. when suddenly an emergency alert flashed across her screen followed by a voice.

“Realize this, extremely violent times will come,” a man’s voice boomed, according to a video of the alert.

Laflamme said she was alarmed.

“It almost sounded like Hitler talking,” she said. “It sounded like a radio broadcast coming through the television.”

The problem occurred because of one or more radio stations conducting an emergency test, Joe Camero, a spokesman for Cox, said Thursday.

Cable systems pick up such alerts, and viewers should have seen just a typical emergency-broadcast test.

“With these tests, an emergency tone is sent out to initiate the test,” Camero said. “After the tone is transmitted, another tone is sent to end the message. It appears that the radio station (or stations) did not transmit the end tone to complete the test.”

Then the broadcast picked up some audio feed that bled into the alert.

Camero said Cox technicians shut down the emergency test as soon as they became aware of the problem.

Comment by Carl Morris
2017-09-22 10:04:27

Stacy Laflamme of Lake Forest said she was watching the HGTV

That does make it a lot funnier.

Comment by jeff
Comment by azdude
2017-09-22 08:12:33

send him a check

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